A 3-story retail building alongside Kotto-dori Street in Omotesando has reportedly sold for 5.383 billion Yen (approx. US$37 million). The seller was the Japan Metropolitan Fund Investment Corporation, a J-REIT. The buyer was not disclosed but is a domestic corporation.
The property was providing an after-depreciation NOI in the mid-2% range for the REIT, pulling down the average returns for its portfolio. Given that the main tenant was under a long-term lease and the property could be sold for higher than its appraised value, the decision was made to sell the asset and invest those funds into properties providing higher returns.
The building has a GFA of 1,727 sqm and sits on 564 sqm of land with both commercial and residential zoning. It was built in 2002. The building is fully leased.
The sale price works out to around 3.1 million Yen per square meter based on the GFA. Five months ago, a retail/office building on the same street was reported to have sold for approximately 4.2 million per square meter based on its GFA. Retail closer to the station may be closer to 6 ~ 7 million Yen per square meter, depending on bundling age and street frontage.
Source: Japan Metropolitan Fund Investment Corporation News Release, August 18, 2023.
