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Nippon Prologis to acquire 5 properties for ¥61.9B, launches unit offering

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Nippon Prologis to acquire 5 properties for ¥61.9B, launches unit offering

Nippon Prologis REIT Inc., a wholly owned subsidiary of Prologis Inc., announced that it will acquire five properties in Japan for roughly ¥61.90 billion. It plans to fund the acquisitions via debt financing, as well as the issuance of new investment units and a secondary offering of investment units.

Three of the properties are expected to be acquired March 1 from Prologis Inc.'s wholly owned Japan portfolio. Prologis Park Ichikawa 3 and Prologis Park Narita 1-D are in Chiba, while Prologis Park Yoshimi is in Saitama. The other two properties — Prologis Park Koga 3 and Prologis Park Tsukuba 1-A, both in Ibaraki — will be acquired upon their completion dates, Oct. 1 and Dec. 3, respectively, Prologis said.

Prologis said the properties were offered to Nippon Prologis through its sponsor support agreement with Prologis.

The company plans to enter leasing contracts with the tenants at the five properties, which produce annual rent worth roughly ¥3.49 billion.

Nippon Prologis is borrowing ¥22.54 billion from Sumitomo Mitsui Banking Corp. and ¥9.66 billion from The Bank of Tokyo-Mitsubishi UFJ Ltd to partially fund the acquisitions. The borrowing date is March 1 and the repayment date has been set for two years from the borrowing date for the unsecured and nonguaranteed loans.

The company is also offering 122,860 units in a public offering, with the issuing price to be determined at a board meeting scheduled between March 5 and March 7. Prologis said it will retain its 15% ownership stake in Nippon Prologis.

A secondary offering of up to 6,140 units through an overallotment will also be carried out domestically, as well as a third-party allotment option of another 6,140 units.

The Japan-based logistics real estate investment trust changed its forecasts for the fiscal periods respectively ending May 31 and Nov. 30 due to the planned issuance.

For the fiscal period from Dec. 1, 2017, to May 31, the company expects operating revenues of roughly ¥18.28 billion, compared to the previous forecast of roughly ¥17.67 billion. Operating income is expected to be roughly ¥8.68 billion, up from the previous forecast of roughly ¥8.36 billion. Net income is projected at roughly ¥7.91 billion, up from the previous projection of roughly ¥7.73 billion. The forecast for distribution per unit for the period remains unchanged at ¥4,299.

For the fiscal period running from June 1 to Nov. 30, the company expects operating revenues of roughly ¥19.09 billion, compared to the previous forecast of roughly ¥17.79 billion. Operating income is expected to be roughly ¥8.94 billion, up from the previous forecast of roughly ¥8.30 billion. Net income is projected at roughly ¥8.26 billion, marking an increase from the previous projection of roughly ¥7.68 billion. The forecast for distribution per unit for the period was increased to ¥3,777 from ¥3,733.

As of Feb. 23, US$1 was equivalent to ¥106.64.