AXA Real Estate's Tokyo Office Property Fund completes second acquisition (JP)

AXA Real Estate Investment Managers announces that the Tokyo Office Property Fund (‘TOP’ or the ‘Fund’) has completed the acquisition of Kyobashi Square, a core modern 5,884 m² building located in the Chuo-Ku district of central Tokyo, from Godo Kaisha Kyobashi Property, a consolidated subsidiary of Ichigo Holdings K.K.

Kyobashi Square is TOP’s second acquisition and comes shortly after the purchase of Shinjuku Sanchome in the Shinjuku ward of central Tokyo in March 2013. The acquisition was made in co-investment with Sumitomo Mitsui Trust Real Estate Investment Management Co. Ltd’s Tokyo Office Real Estate Investment Fund, which was raised alongside TOP in August 2012.

The 13-story Kyobashi Square building was completed in February 2010 and is located within walking distance of Tokyo Central Station, the main terminal in Tokyo for bullet trains and commuter lines. The property is fully occupied with a total of 10 corporate tenants, both multinational and domestic, from a diversified set of industries, including management consultancy, publishing and retail services.

The ground floor retail space is let to a prominent mobile phone store. In addition, there are currently a number of large office redevelopments underway in the Kyobashi area, which, when completed, are expected to add to the increasing attractiveness of the area as a prime business destination.

The building, designed and built by Taisei Corporation, is furnished with up-to-date earthquake-resistant features, meeting increasing occupier demand for high quality and safe spaces, which minimize business downtime during the event of a quake.

These earthquake resistant features include special buffers implemented in both the construction joints and pillars to absorb and reduce the shock waves and damage from earthquakes as well as a backup generator for emergency evacuation.

The Kyobashi building meets all of TOP’s stated investment criteria to acquire mid-sized core Tokyo office properties, with individual lot sizes between ¥3 billion and ¥10 billion (€25 million and €83 million), located in Tokyo’s five central wards (Chiyoda, Chuo, Minato, Shinjuku and Shibuya) and four adjacent wards (Shinagawa, Koto, Bunkyo and Toshima).

The mid-sized core office market was selected by AXA Real Estate in order to leverage the diversification benefits derived from the sub-market’s attractiveness to wide range of tenants and the near term limited new supply of this asset type, helping to promote rental growth.

Commenting on the acquisition, Hidetoshi Ono, Head of Japan Core Fund at AXA Real Estate, said: “To complete the purchase of Kyobashi so quickly after the Fund’s maiden acquisition is particularly pleasing. The building typifies the assets TOP wishes to acquire being both well-located and well-let. We believe we are transacting at an opportune time in the market cycle to acquire a portfolio of high quality core mid-sized Tokyo office properties which offer stable income streams, low volatility and the potential for capital growth.

“We are currently seeing an increase in appetite from international institutional investors to increase their exposure to this specific asset class, attracted by its compelling investment rationale and market timing, and we aim to hold a second closing later in the year.”

Source: AXA Real Estate

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