Tokyu Land Corp (TLC) and AIP Asset Management (AIP) are planning on introducing themselves to the local investing public as reliable sponsors and managers of REITs and funds. The duo are sponsors and managers of a commercial income REIT to be listed on the SGX.
The introduction comes after the reputation of the S-REIT market has been damaged by the fiasco of Eagle Hospitality Trust’s IPO where unknown sponsor Urban Commons listed EHT and almost immediately defaulted on terms set out in its prospectus. EHT is now suspended calling into question the due diligence done by the trust's financial adviser and issue manager, and the veracity of the information disclosed in the prospectus.
In a press release on Jan 5, TLC announced that it plans to use its Singapore subsidiary, Tokyu Land Asia (TLA) to acquire and develop offices and apartments in Asia, the US, Europe and Australia.
“We view our globalisation as an absolute necessity, as most exciting growth opportunities lie beyond Japan. Our present strategy is to leverage on the rising affluence in Asia, and the steady economic growth in the US to aggressively expand our geographical footprint by acquiring and developing office and apartments in those cities. By replicating our successful business model, we hope to expand our global presence in Europe and Australia in time to come.In 2018, TLC established TLA in Singapore with the intention for it to serve as a hub for international real estate investment so as to accelerate TLC’s foray into various international cities, including markets in Asia, Europe, Australia and more,” says Masaoki Kanematsu, Operating Officer in charge of overseas business of TLC and Executive Director of TLA.
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The announcement by Kanematsu about Tokyu Land serves to reassure local investors that the company is reliable. TLC is a unit of Tokyu Fudusan Holdings Corp, listed on the Tokyo Stock Exchange and a component stock of the Nikkei 225 Index.
In addition, TLC has a REIT platform. It is sponsor to two listed REITs in Japan, an office REIT, Activia Properties, listed in 2012, and Comforia Residential REIT. TLC is also the sponsor and manager of Broadia Private REIT, an unlisted REIT which owns office buildings, commercial facilities and residential properties.
In a separate press release, also on Jan 5, AIP Asset Management, a Korean property fund management company, announced that it has US$4.1 billion of assets under management. AIP’s portfolios in Europe and Australia remained resilient during Covid. According to the announcement, AIP adopts a core income philosophy which focuses on the quality of assets and credit quality of tenants.
Majority of AIP’s assets in Europe feature tenants with strong credit ratings of AA or above and many of its investments also feature double digit weighted average lease expiries (WALE). For example, Astro Tower in Belgium has a WALE of 21.8 years as at Dec 31, 2020, one of the longest WALE among buildings rented by AA-rated government tenants in Europe. AIP’s portfolio which ensures a steady income and low risk of negative rental reversion has allowed it to be cushioned from the adverse impact of the COVID-19 environment, the announcement says.
The success of the IPO of this new REIT with commercial assets in Australia, sponsored and managed by TLC and AIP remains to be seen. Market watchers believe that the new REIT may have garnered sufficient cornerstone investors to lodge and register its prospectus.
