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ULI Japan's Young Leaders Event in Roppongi on Thursday, July 22, 2010 - (27/06/2010)

Amid the stabilizing financial market and growing confidence for economic recuperation, the ULI Japan Young Leaders Group would like to invite you to a speaker event featuring Andy Hurfurt, Executive Director – CBRE Consulting, who will share his views on the latest real estate market conditions.

 

Date: Thursday, July 22, 2010

Place: Roti Roppongi – American Wine Bar and Brasserie

(Piramide Building 1F, 6-6-9 Roppongi, Minato-ku – 03-5785-3671)

 

19:15-19:30    Reception

19:30-20:15    Course dinner with 2.5 hours “nomihodai”

20:15-20:30    Introduction

20:30-21:15    Market Presentation

21:15-21:30    Q & A Session

 

Inquiry

ULI Japan Website http://japan.uli.org

TEL: 03-5297-6132


+ Japanese Logistics Market by the end of Q1 2010 - (21/06/2010)

Japanese economy

All economies in the Asia Pacific region continued their growth trends over the second half of 2009, with some nations seeing acceleration in economic expansion. Only Japan’s outlook remains relatively fragile compared with the rest of the region. While the Japanese economy had experienced three consecutive quarters of GDP growth by the end of 2009, this comes after some major declines in late 2008 and beginning of 2009.

Japan’s exports increased by 5.0% from Q3 2009, and the unemployment rate dropped to 4.9% by the end of the year. In February 2010, exports grew at the fastest pace in about three decades and have improved noticeably in comparison to a year ago. However, they are still some 25% lower than their 2008 level. Growing demand in China and elsewhere in Asia is helping Japanese companies, and this might minimize an economic slowdown in the coming months as government stimulus measures fade.

Economists generally expect that the Japanese economy will continue on its gradual upswing, despite a moderate dip forecast for Q1 2010. With rising exports to China continuing to drive growth in Japanese industrial production, the Government has lifted its view on the nation’s economy.

 

Source: Ministry of Economy, Trade and Industry

The recent strengthening of the yen has fuelled concerns for the export reliant Japanese economy. However, with Beijing expected to let its currency appreciate, this could benefit the Japanese economy going forward as a stronger Yuan will make foreign goods more affordable in China. Japan is China’s top source of imports, with China importing some US$131 billion worth of Japanese goods in 2009.

 

Japanese real estate market

There are growing signs that the real estate market of the Asia Pacific have bottomed. Japan remains the region’s largest investment market, accounting for almost 40% of total investment volumes in 2009. From Q4 2009 sentiment began to improve noticeably in the Japanese real estate investment market. This increased into 2010 amid a brisk flow of small and medium sized transactions. However, investor attention is focused primarily on prime office and retail assets.

After struggling since early 2008, the J-REIT market started to show signs of recovery in the second half of 2009. This was due mainly to support from the Kanmin fund, a Public-Private Real Estate Market Stabilization Fund with total capital expected to reach JPY 450-500 billion. The Fund has been welcomed by the market as it has alleviated refinancing concerns for some J-REITs. Continued government support, mergers and new sponsors are all expected to help prevent a J-REIT sell-off and further deteriorations in asset values.


Logistics real estate sector

Demand for high quality, large scale logistics facilities remains strong in Tokyo. According to CB Richard Ellis the average vacancy rate for large scale multi-tenant logistics facilities declined to 14.2% at the end of 2009. Likewise, vacancy rates for facilities one year and older decreased to 6.8%, which marked the second consecutive quarterly decline in Tokyo. This suggests that demand for high quality logistics space is starting to increase in the nation’s capital, driven mainly by virtually no new supply of modern warehouse space since the GFC.

 

Source: CB Richard Ellis

Tokyo logistics vacancy rates are unlikely to increase further in the short-term with no significant new supply planned in the near future. Average asking rents in the Greater Tokyo area have not shown any sign of recovery since declining in mid-2008. Nevertheless, demand still exists for large scale facilities from companies planning to consolidate and even to relocate to nearby higher quality facilities.

The following logistics real estate transactions have taken place since the start of the year:

·            On 4 February 2010, the Japan Logistics Fund J-REIT acquired a 90% interest in a prime logistics property in Narashino, Chiba Prefecture, from ProLogis. This was the first transaction between the two parties since the announcement of their pipeline support plan on 31 August 2009, and marked the first J-REIT transaction of a logistics asset in a year. The reported NOI cap rate of 5.9% translates to about 5.2% at current market rents, based on brokerage opinions.

·            On 19 March 2010, the Industrial & Infrastructure Fund J-REIT sold its interest in the IIF Funabashi Logistics Center in Funabashi, Chiba Prefecture, to Dream Logistics Fund for a price consideration of JPY 9.02 billion from a related party. The NOI cap rate is estimated to be about 6.3%.

·            On 30 March 2010, Orix J-REIT acquired the Sakai Logistics Center in Sakai City, Osaka Prefecture, for a price consideration of JPY 10.2 billion from a related party. The reported NOI cap rate was 6.1%.

According to CB Richard Ellis, “prime” Tokyo logistics cap rates currently stand at 5.5% NOI with some compression expected from the end of 2010.

In a sign of increasing investor interest in the Japanese logistics real estate sector, a wholly owned unit of Mitsubishi Corporation has created an unlisted real estate fund specializing in logistics facilities. The assets are worth about JPY 23.4 billion, and the fund is to be operated for five years.

  

Outlook

Having weathered the global credit crunch and the ensuing economic downturn, economies in the Asia region have emerged in good shape relative to the rest of the world. This has been mainly due to Chinese economic growth. However, the Japanese economy has not been as quick to respond as the rest of the Asia Pacific region.

The first few months if 2010 have seen further tangible improvements in sentiment in the local real estate investment market, with more capital coming back to Japan in search of quality assets.

The Japanese economy still remains fragile and highly dependent on export growth to the rest of the region. Greece’s sovereign debt woes and its potential effects on sovereign debt markets around the world, especially in Europe, have added to concerns about a sustainable global economic recovery for the world’s second largest economy.

 

Source: Pelham Higgins, SCA Japan Representative

+ Parkway Life REIT Acquires six new nursing properties in Japan - (16/06/2010)

Parkway has acquired six Japanese properties located in Kyushu for a purchase price of approximately JPY3.9 billion.
The acquisition of the nursing properties is expected to be completed by 24 June 2010.
The Properties have an expected net property yield of 8.08% and have new 20-year operating lease agreements, back-up operators and
rental income guarantees. The property purchase was funded by 5-year unsecured Japanese yen facility at an attractive rate of 2.0

Source: Parkway

+ New Europe Industrial Real Estate Fund Formed - (15/06/2010)

The Australian Industrial Property developer GOODMAN Group has further expanded its footprint into Europe via a $1.3 billion joint venture with CB Richard Ellis Realty Trust.

There will be two new structures, one in Britain and the other in continental Europe. The two funds will focus on buying and investing in industrial real estate - warehouses and distribution hubs. 

The fund will invest only in sites where there is a pre-committed tenant.

Under the scheme Goodman would contribute 20 per cent with CBRE Realty Trust putting in the remaining 80 per cent on a passive investment basis.

Source: SMH

+ Japan Industrial Property Transactions - (15/06/2010)

Bear Logi reports the following industrial property transactions that have occurred in the first quarter of 2010 in Japan.

Transaction Example 1

Key Points

·   Announcement/contract date: 4 February 2010/2 March 2010

·   Property name: Narashino Logistics Centre II

·   Buyer/Seller: Japan Logistics Fund (J-REIT) / ProLogis (Narashino III SPC)

·   Interest acquired: 90% of Trust Beneficiary Interest (TBI)

·   Price: JPY 7.875 billion (90% of TBI)

·   Reported NOI: JPY 517 million (100% of NOI)

·   Reported NOI cap rate: 5.9% (based on 90% of the NOI)

·   Key point: first J-REIT transaction for almost a year

·   Key point: first J-REIT transaction of a high-specification multi-tenant logistics facility

·   Key point: first transaction since announcement of their pipeline support plan on 31 August 2009

·   Key point: quality of the subject property is superior to the average quality of the JLF portfolio

 

Property Details

Building quality

High specification

Levels

5

GFA/GLA

49,809.58 sqm/48,009.85 sqm

Built

20 January 2008 (2 years old)

Occupancy

100% (3 tenants)

PML

11.1%

 

Photograph of the Subject Property



Transaction Example 2

Key Points

·   Contract/transfer date: 9/19 March 2010

·   Property name: Funabashi Logistics Centre

·   Buyer/Seller: Dream Logistics Fund (SPC) / IIF (J-REIT)

·   Interest acquired: Trust Beneficiary Interest (TBI)

·   Price: JPY 9.02 billion

·   Book value: JPY 8.50 billion (as at 19 March 2010)

·   NOI: JPY 566 million

·   NOI cap rate: 6.3%

·   Key point: related party deal due to Mitsubishi Corporation relationship to both buyer and seller

 

Property Details

Building quality

Mid-high specification

Levels

4

GFA/GLA

42,336 sqm/42,180.24 sqm

Built

19 July 2007 (4 years old)

Occupancy

100% (2 tenants)

PML

N/A

 

Photograph of the Subject Property


Source: Pelham Higgins, SCA Japan Representative

+ Japanese machinery orders climbed 4% from March to April - (10/06/2010)

Japan - Japanese machinery orders climbed 4% from March to April, a sign that companies are ready to start spending again as the recession eases.

Higher spend by companies and consumers would help bolster a recovery that is driven by exports and hindered by deflation, reported Bloomberg.

Hitachi Ltd. and Tokyo Electron Ltd. are some businesses benefiting from a recovering global demand, leading them to forecast better earnings and invest in plant and equipment.

"Capital spend is moving out of the trough as a result of improving corporate profits," said Chiwoong Lee, senior economist at Goldman Sachs Group Inc. in Tokyo. "We see continuing improvement centred on manufacturing."

The Cabinet Office is noticing a pick-up in machine orders, after orders stopped falling last month. Compared to a year earlier, they have risen 9.4%.

+ Toll acquires Asian cargo unit from QANTAS - (09/06/2010)

QANTAS appears to have abandoned plans to become a significant player in the Asia-Pacific air freight market after offloading a business it once dubbed a ''great building block for expansion''.

 

The sale of DPEX Worldwide to Toll Holdings has also raised expectations Qantas could sell its stakes in two poorly performing freight enterprises to Australia Post.

Qantas declined to reveal what it sold DPEX for, other than to say it made a ''small profit'' on the sale. When the airline bought the business for $S40 million in May 2007, it trumpeted plans to accelerate the expansion of its freight operations.

 

Source: SMH

+ Japan’s economy may have bottomed - (09/06/2010)

Japan's economy hit bottom in March 2009 after a 17-month downturn that began in October 2007, according to the Japanese Cabinet Office.

 

The office set the recent business cycle's lowest point provisionally at March 2009 based on the views of the Working Group of Indexes of Business Conditions, an expert panel.

 

The nation's economy, which began to sag in October 2007, turned sharply down in fall 2008 following the collapse of Lehman Brothers, the panel said.

 

The speed and steepness of the downturn were at an unprecedented level, the panel said.

 

The rate of the decline, which shows the gap between the peak and trough of the coincident index, was the second-largest since the 1980s, when comparable figures were available.

 

The worst figure was marked during the post-bubble downturn in the early 1990s.

 

A majority of 11 economic indicators began to pick up in April 2009, and the real gross domestic product has kept rising from the April-June 2009 quarter.

 

Source: Asahi

 

+ Hong Kong Air Cargo up 47%! - (08/06/2010)

Air Cargo volume in Hong Kong is surging towards record highs for the trade hub, up 47% year over year, and at the highest level in two and a half years.

 

Hong Kong handled 354,000 metric tons of freight in April, the strongest volume since November 2007, and 38 percent better than the airport reported the same month a year ago amid the steep downturn in global trade.

 

With some 230,000 metric tons of exports, outbound volume also was the strongest since November 2007.

 

The latest data was also 4.5% higher than the previous month, March. Moreover, Cathay Pacific (293 HK) recently reported data to confirm the above, highlighting a substantial tightening of capacity utilization year over year:

 

The two airlines [Cathay & Dragon Air] carried a total of 152,808 tonnes of cargo and mail last month, up 24.1% on April last year. The cargo and mail load factor was 79.3%, a rise of 13.6 percentage points, while capacity, measured in available cargo/mail tonne kilometres, was up by 6.4%. For the year to date, tonnage has risen by 24.1% compared to a capacity increase of 1.1%.

 

Source: http://www.businessinsider.com/

+ Property prices in Japan may be near the bottom - (08/06/2010)

Property prices in Japan may be near the bottom because transactions are picking up as loan default rates begin to decline, said Yuji Hashimoto, a director at Standard & Poor’s.

“We’ve started to see some property transactions taking place at about 20 to 40 percent discount,” said Hashimoto, director of the structured finance ratings division at S&P in an interview in Tokyo. “This tells us that the impact of loan default for the property prices is likely to be limited going forward and property prices may have bottomed.”

The percentage of default in loans backing commercial mortgage backed securities rated by the U.S. rating company narrowed to 19 percent in the first quarter, a second straight decline, a report by S&P dated May 7 showed. The default rate shrank from a peak of 63 percent in the third quarter last year.

Investors including Chuo Mitsui Trust & Banking Co. and CLSA Capital Partners have said they will invest in real estate in Japan this year after the nation’s commercial land prices fell to the lowest in at least 36 years. At least 115 billion yen ($1.25 billion) of properties backing CMBS have been sold by special servicers as collateral since the second quarter of 2009, according to Fitch Ratings.

“The best time to invest is before things hit bottom, because if everyone were to agree we are right at bottom, they would all come rushing back in,” said Buddy Ferrie, a general manager of the investment division at property consulting firm Colliers Halifax in a phone interview in Tokyo. “If you have a longer term outlook, now is a very interesting time to be looking.”

Loan Refinancing

Japan’s commercial land prices declined 6.1 percent in 2009 from a drop of 4.7 percent a year earlier, the Ministry of Land, Infrastructure, Transport and Tourism said in a report in March. Values are at their lowest since the ministry began collecting comparable data in 1974.

Faced with decline in property prices, building owners are injecting capital to refinance loans or returning properties to lenders as collateral when loans are coming due or being reviewed by banks.

Shinsei Bank Ltd. sold Pacific Century Place, an office building adjacent to the Tokyo station, after K.K. DaVinci Holdings, the owner of the building, failed to repay loans. Secured Capital Japan Co., an investment management company, bought the building for 140 billion yen, 30 percent less than what DaVinci had paid three years earlier.

“Larger loans are more likely to be rescued or receive extension of repayment because many people believe that it is not wise to sell large properties in the current market conditions,” said S&P’s Hashimoto. “As a result, they are less likely to default.”

 

Source: http://www.businessweek.com

+ JVC sells their office and factory for Y6.3bn - (07/06/2010)

AV equipment manufacturer Victor Company of Japan (JVC) will sell its main office 

and factory in Moriyacho, Kanagawa-ku, Yokohama City for 6.33 billion yen [$68 

million]. The buyer is real estate company SG Realty, an affiliate of logistics 

company Sagawa Express. JVC will vacate the main office and factory and relocate 

by December, but the company’s new location has not been decided.

+ Sanritsu rent new 1.6491 square meter warehouse at Hachiouji - (04/06/2010)

Sanritsu corporation anounced that it will have a lease contract for fixed assets.

Facility of New Hachiouji warehouse (2969-2 Ishikawa-cho, Hachioji, Tokyo) which has 8265.01㎡ area of land, and  16491.15㎡ architectural area. Total of lease fee is 3,548billion yen(tax excluded).

The lessee is Hachioji facility development Special Purpose Company which is 100% Daiwa house industry's affiliate company

With the warehouse to be newly built in Hachioji as a inland main hub, Sanritsu is going to target consolidating offices' function around Hachioji and expansion of operations by new business acquisition. Making use of the lease, it will promote effective of funds. Leasing will start on April 1, 2011.

+ Investment interest trend continues to recover - (03/06/2010)

The results of the 22nd edition of the Japanese Real Estate Investor Survey were released by 

the Japan Real Estate Institute (JREI), a major appraisal firm. The number of investors 

who answered that they would "proactively make new investments" in the coming year 

has increased significantly, which made it very clear that investment interest is recovering.

Source: Nikkei

+ Mitsubishi Estate has started leasing of JP Tower - (03/06/2010)

Mitsubishi Estate announced that it has started leasing of the tentatively named 

JP Tower. The tower is currently under construction on the former site of the Tokyo 

Central Post Office in front of JR Tokyo Station. 


The company was selected as a contractor offering support in preparation for 

property management, as well for the leasing management of the retail space, 

through a bid held by Japan Post Network of Japan Post Group.


Source: Nikkei

+ Japan Housing starts increased 0.6% in April - (01/06/2010)

Tuesday afternoon MLIT announced new housing starts increased 0.6% to 66, 568 units in April, compared with last year and is the first increase in 17 months. MLIT stated “According to seasonally adjusted annual rate, we can see recovery on the whole, with August, 2009 being the worst point of the market.” However, MLIT sees the market in a state continuing to move back and forth.

 

Condominium units sales turnover was up 35.8% to 9,668 new condominium units. This reflected the construction of large apartment complexes in Tokyo after another, for the first time in 16 months.

 

Source: Nikkei

+ Kenedix to set up $110 mln Japan property fund - (01/06/2010)

 Japanese real estate asset manager Kenedix Inc (4321.T) said on Tuesday that it plans to launch a 10 billion yen ($110.8 million) private fund to invest in Japanese office and commercial buildings, in the latest sign that the country's property market is picking up.

 

FINANCIALS

 

Kenedix said the new fund, with a five-year management period, would use capital acquired from Korean pension funds seeking stable long-term returns.

 

The Japanese property sector was it by a price slump in the wake of the global financial crisis, but some market participants say that it has bottomed out and is gradually starting to improve. [ID:nTOE64901V]

 

Prior to the announcement, Kenedix's shares dropped 2.4 percent to a 12-month closing low of 20,000 yen. (Reporting by Mariko Katsumura)

+ GIC may list Japanese Real Estate Assets - (01/06/2010)

SINGAPORE—Government of Singapore Investment Corp.'s giant real-estate arm GIC Real Estate is considering an initial public offering in Singapore of its overseas assets, a person familiar with the situation said Wednesday.

 

"A final decision may be taken next month," the person said.

 

He said the sovereign wealth fund's real-estate arm is looking to list its Japanese assets, which includes ProLogis Holdings.

 

"If the deal happens it would be huge, multibillion dollars," the person said, adding that GIC Real Estate is talking to bankers about the IPO.

 

"They are still watching the market and the exact timing is yet to be decided given the recent volatility in the equities market," he said.

 

GIC Real Estate invests globally in real estate and real-estate-related assets outside Singapore. It manages a multibillion-dollar portfolio of direct and indirect property investments with close to 300 investments in more than 30 countries.

 

Its parent, GIC, manages Singapore's foreign-exchange reserves. It is the world's fourth-largest sovereign fund in terms of money managed, according to a recent report by Deutsche Bank. Its portfolio stands at more than 250 billion Singapore dollars (US$177 billion).

 

In 2008, GIC Real Estate spent $1.3 billion to buy the China operations of ProLogis as well as the 20% stake in the company's Japanese property that it didn't already own, with an aim to consolidate its existing portfolio in Japan and get a platform to expand its logistics property business in China.

 

"GIC Real Estate sees more advantages coming in through the IPO rather than having it unlisted," the person said.

 

Source: Wall Street Journal

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