SINGAPORE – Mainboard-listed Straits Trading Company is looking to acquire three freehold apartment buildings in Tokyo, Japan, for a total of 3.08 billion yen (S$39.5 million).
Two of its Japanese subsidiaries, Residence 4 GK and Residence 5 GK, have inked conditional purchase and sale agreements to buy the 100 per cent trust beneficiary interests of the three residential properties, Straits Trading said in a filing on Thursday night (Sept 26).
The proposed acquisitions are in line with the company’s strategy of redeploying capital from the existing portfolio of low-yielding investment properties into potentially higher-return real estate opportunities, Straits Trading said.
The freehold properties comprise two four-storey rental apartment buildings in Meguro-ku as well as a 14-storey rental apartment building in Chuo-ku. The Chuo-ku property is currently under construction and targeted for completion in 2020.
They have a total of 137 apartment units with a total net lettable area of around 2,700 square metres.
The Chuo-ku property lies within the main five-wards of the central business district (CBD), while the two in Meguro-ku are located just south of the CBD.
All three properties are well positioned to capitalise on tenant demand due to their close proximity to key business hubs within the city, Straits Trading said. They are also within short walking distances to metro stations served by the Tokyo Metro Hibiya Line, Tokyo Toyoko Line (Meguro), and the JR Keiyo Line (Chuo).
The aggregate consideration of 3.08 billion yen is supported by external valuations, and will be funded by internal resources which comprise bank borrowings as well as 695 million yen in share subscriptions.
These share subscriptions were made by Savills IM Japan Residential Fund, in which Straits Trading has an investment. The fund had subscribed for a total of 695,000 preference shares in two Singapore-incorporated companies, JPN Residential and JPN Residential TK, at 1,000 yen per share, Straits Trading said on Thursday. Both companies then acquired 100 per cent economic interest of the pre-tax distributions from Residence 4 GK and Residence 5 GK, which are now subsidiaries of Straits Trading and have entered into the conditional agreements for the three proposed acquisitions.
The Savills IM Japan Residential Fund is managed by international property fund manager Savills Investment Management and focuses on acquiring assets in Japan.
The proposed acquisitions are not expected to have a material impact on the earnings per share and net tangible asset per share of Straits Trading for the current financial year ending Dec 31.
Shares of Straits Trading were flat at $2.08 as at 9.25am on Friday.