Following completion, UI Boustead Reit’s portfolio is expected to expand from 23 to 24 properties, with assets under management projected to rise from $1.904 billion to $1.925 billion (Photo: Google Maps)
UI Boustead Reit (UIB Reit) has entered into a 50:50 joint venture with Singapore-based real estate investment platform Fraxtor Group to develop two logistics facilities in Konan City, Shiga Prefecture, Japan.
After accounting for its partner’s stake in the joint venture company, UIB Reit will hold an effective interest of 24.26% in the development.
The project, known as UIB Konan Phase 3, will be built on a 574,246 sq ft site adjacent to UIB Konan Phase 1 and 2 — existing logistics assets owned by the Reit. The land comes with a 70-year usage right expiring in 2096.
Read also: UI Boustead Reit raises $973.6 mil in IPO with oversubscribed offering
Upon completion in 2Q2027, the two facilities at UIB Konan Phase 3 are expected to have a total gross floor area of 518,162 sq ft and a net lettable area of 508,880 sq ft.
The development is located in southern Shiga Prefecture, a key logistics corridor linking Greater Osaka and Greater Nagoya, and within a four-hour drive of about one-third of Japan’s population. The area is characterised by low vacancy rates and resilient demand for logistics space.
The project is expected to strengthen UIB Reit’s presence in Konan City and capture spillover demand from its existing assets in the area. The Reit also retains an option to acquire the facilities in full upon completion, allowing it to deepen its footprint in the location.
The total development cost is estimated at JPY10.3 billion ($84.1 million), of which UIB Reit’s share amounts to JPY2.5 billion ($20.4 million). Its effective total investment is expected to be about $20.8 million.
Both joint venture partners have committed to contribute up to $7.5 million each, to be injected progressively across development milestones. To date, UIB REIT has made an initial cash contribution of $4.4 million.
Following completion, UIB Reit’s portfolio is expected to expand from 23 to 24 properties. Based on its effective stake, assets under management are projected to rise from $1.904 billion to $1.925 billion.
Read also: UI Boustead REIT targets $1.2 bil IPO raise, with portfolio of 23 properties
The Reit’s exposure to Japan will increase from 28.8% to 29.6%, while logistics assets will account for 30.7% of the portfolio, up from 29.9%.
The development is expected to deliver a yield of about 4.8%.