Nippon Prologis Reit (NPR), the real estate investment trust set up by the world’s largest owner of industrial buildings, has raised ¥39.9 billion ($375 million) from a follow-on offering.
The Reit, managed by San Francisco-based Prologis, sold 159,050 units at ¥250,096 per share, a 2% discount to the September 8 closing price of ¥255,200 per share, according to a term sheet. The overallotment option, if exercised, will add on an additional 7,950 units, and bring the total deal size to 167,000 units.
Bankers started taking orders on August 26, with an initial discount range between 2% and 4.5% to the August 25 close of ¥240,000.
Demand from international and domestic investors was robust, with both of these tranches oversubscribed by 10 times, according to a banker close to the deal. The international tranche made up 42% of the total book, while the domestic tranche accounted for the remaining 58%.
Domestic retail investors were also keen on the Reit, with Japanese investors placing orders for 20 times as many shares as was available, the banker said.
There were 150 lines in the international book, a mix of property-focused funds, long-only institutional investors and hedge funds. “There were some hedge funds, but allocations were skewed towards property and long-only investors,” the banker close to the deal told FinanceAsia. The top 20 accounts making up 80% of the book, the banker added.
International support validated the issuer reallocating 5% of the Japanese tranche to the international tranche.
Proceeds
NPR will use proceeds to repay bridge loans to buy five Class-A properties for ¥45.5 billion. These assets, which total approximately 2.5 million square feet, were offered to NPR through an agreement with Prologis, according to a statement on Prologis’s website.
Goldman Sachs, Morgan Stanley and SMBC Nikko oversaw this week’s follow-on, while Bank of America Merrill Lynch and JP Morgan handled the international tranche.
Shares in NPR are up 25% so far this year up to September 10. It raised $1 billion in an initial public offering in February 2013. At the time, Japan’s distribution centres were rebounding from record low occupancy in 2009, as demand for modern storage facilities depleted.
Analysts maintain a positive view on NPR and forecast leasing rates to increase by 2% this year, following a 2.7% rise in 2013.
NPR’s current dividend yield of 2.7% is below other J-Reits that focus on the logistics facility businesses, including Industrial & Infrastructure Fund Investment and Japan Logistics Fund.
Industrial & Infrastructure Fund Investment has a dividend yield of 3.59% and is up 7% so far this year, while Japan Logistics Fund has a dividend yield of 3.2% and is up 6% year-to-date.
GLP J-Reit meanwhile, which has a portfolio of 30 logistics facilities in Japan mostly in Tokyo and Osaka, currently has a dividend yield of 3% and is up 5% so far this year.
GLP J-Reit, the Japanese real estate investment trust of Singapore-listed Global Logistic Properties (GLP) raised ¥34.5 billion from a follow-on offering earlier this month.
All four J-Reits experienced spikes in performance mid-August as global investors returned to Japanese equities. A Bank of America Merrill Lynch survey released earlier last month indicates that 30% of global investors are overweight Japanese equities, the highest allocation in seven months, and an increase from 26% in July. Investors are leaning towards industrial, automotive and technology.
