Akasaka Park Building (Photo: Tsuyoshi Tamai)
REIT Japan Real Estate (JRE) will incorporate the Akasaka Park Building in Akasaka, Minato-ku, Tokyo in its assets for 60.8 billion yen [$750 million]. The seller is Mitsubishi Estate, the REIT’s sponsor.
Mitsubishi Estate will lease all of the office and retail floors from the REIT and sublease them to tenants. All of the residential floors will be leased to Mitsubishi Real Estate Service, which will sublease the units to tenants.
The building is a five-minute walk from the Akasaka subway station. It is adjacent to Akasaka Sacas, a mixed-use complex consisting of the TBS Broadcasting Center, office and retail spaces, a concert hall and other facilities.

The building was completed in 1993 and has 30 floors above ground and two below with 97,489 m2 of total floor space. The office and retail floors have a total rentable floor space of 45,031 m2 and the total rentable floor space of the residential floors is 10,780 m2.

The occupancy rate of the office and retail floors is 99.7% with 22 tenants as of the day of acquisition (November 15). The occupancy rate of the residential floors is 76.2% with 60 end tenants.

Mitsubishi Estate and its subsidiary Mitsubishi Real Estate Service will lease the spaces under pass-through type master lease contracts. The REIT expects the net operating income (NOI) under normal operating conditions at 2.83 billion yen [$35 million] and based on this, the cap rate against the acquisition price is 4.7%.

The REIT announced it will acquire the property because of the concentration of foreign companies in the Akasaka area, the fact that the area’s brand image has been improving following the development of Akasaka Sacas and because the area has convenient access to transportation. The large standard floor space of 616 tsubo [2,000 m2], a rarity in the three wards (Chiyoda, Chuo and Minato) of central Tokyo was also highly valued.

Daiwa Real Estate Appraisal appraised the property at 62.5 billion yen [$770 million] as of 1 October, 2011. Mitsubishi Estate will continue to manage the building after the sale.

Following the acquisition, the REIT will have an acquisition price-based AUM of 718.66 billion yen [$8.9 billion]. The effect of the acquisition on the estimated operating results for the term ending March 2012 (October 2011 to March 2012) will be contained in the financial results for the six months ended September 2011, which are scheduled to be released in November 21.

Mitsubishi Estate, the seller, has set the book value of the property at 35.3 billion yen [$440 million] and the income from the sale of the property will be posted in the current term (the third quarter of the term ending March 2012).


[Outline of Dealing]

Name: Akasaka Park Building

Price: 60.8 billion yen [$750 million]

Rights: Direct ownership

Location: 5-2-20 Akasaka, Minato-ku, Tokyo (residence indication)

Access: 5-minute walk from Akasaka subway station

Land area: 14,198.20m2

Total floor space: 97,489.16m2

Structure: SRC, S

Stories: (above/underground): 30/2

Completion: 1993

Dealing period: November 2011 (handover)

Key tenant: GE Japan, Daiko Advertising