Straits Trading unit takes stake in Japanese residential property with 989m yen investment

THE Straits Trading Company is taking a stake in another residential property in Japan's Greater Tokyo region, it announced on Wednesday.

Japanese firm SIM Residence 2 - a silent partner of Straits Trading's JPN Residential TK Holdings subsidiary - is set to take a full trust beneficiary interest in 134-unit rental residential apartment in Saitama.

The value of the deal is 989 million yen (S$12.2 million), to be funded by internal resources and bank borrowings.

The property was completed in March and has a net lettable area of 6,957 sq m (74,885 sq ft), with a five-year master lease.

JPN Residential TK Holdings holds a 86.8 per cent economic interest in SIM Residence 2's pre-tax distributions, and the deal comes by way of a subscription from Savills IM Japan Residential Fund.

Straits Trading committed nine billion yen to the fund in January, through a wholly owned subsidiary. The fund has already struck deals, in late January, for two newly completed rental residential apartments in the Tokyo area.

Straits Trading said that the latest investment - which "is in the ordinary course of business" - is in line with its previously stated strategy of redeploying capital from its existing portfolio of high-quality but low-yielding investment properties, into real estate opportunities with potentially higher returns.

The subscription is not expected to have a material impact on the earnings per share and net tangible asset per share of the group for the year to Dec 31, Straits Trading said. It added that the subscription will not have any impact on the issued share capital of the company.

A copy of the silent partnership agreement will be available for shareholders to inspect during business hours, for three months, at the company's registered office at 1 Wallich Street, #15-01.

Straits Trading closed down by S$0.01, or 0.44 per cent, to S$2.26, before the announcement.