Keppel REIT Exits Japan with $72M Ginza Office Sale

Keppel REIT has completed the sale of its sole Japanese property, KR Ginza II, to an undisclosed listed Japanese real estate company for JPY 11.5 billion ($72 million). The transaction, finalized on Monday, concludes the Singapore-listed trust’s nearly four-year presence in Japan, reversing its 2022 strategy to expand in the country’s office market.

The eight-storey office block, located in Tokyo’s Ginza district, was acquired by Keppel REIT in November 2022 for S$84.4 million (then $60.5 million), representing a 98.47% stake. The latest sale price reflects a 28.4% premium over the original purchase and a 9.7% increase from its July valuation of JPY 10.5 billion.

## Strategic Shift and Portfolio Adjustments

Keppel REIT initially positioned the Ginza acquisition as a foothold for further expansion in Japan, but the sale underscores a shift in strategy. The trust’s CEO, Chua Hsien Yang, highlighted the divestment as a testament to the manager’s ability to identify and capitalize on strategic opportunities while maintaining disciplined portfolio management.

The property, originally named Ginza 2-chome, was purchased with just 36.3% occupancy, with NTT Data as its sole tenant. Keppel REIT successfully leased the remaining space, achieving 100% occupancy by the end of 2025, though occupancy dipped to 85.5% by June. The building spans 3,594 square meters (38,685 square feet) of net lettable area and is powered entirely by renewable energy.

## Financial Impact and Future Plans

The sale of KR Ginza II, which accounted for only 0.7% of Keppel REIT’s S$11.8 billion portfolio as of June, is part of a broader capital allocation strategy. Proceeds from the transaction will reduce the trust’s aggregate leverage from 40% to 39.6%, providing financial flexibility.

Keppel REIT has been active in expanding its portfolio, including the acquisition of a two-thirds stake in Singapore’s Marina Bay Financial Centre Tower 3 for S$1.45 billion and a 75% interest in Sydney’s Top Ryde City Shopping Centre for A$393.8 million ($262 million). These moves contributed to a 16.7% year-on-year increase in property income and a 13.1% rise in net property income for the first half of the year.

Despite growth in distributable income, distribution per unit fell by 4% to 2.61 Singapore cents due to an enlarged unit base. The trust now holds a S$11.7 billion portfolio across 13 properties in Singapore, Australia, and South Korea.