Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nippon-building-fund-inc" target="_blank" data-smartkarma-citation="entities:1900:1" rel="noopener">Nippon Building Fund (8951 JP)</a> announced a smallish primary offering to assist in funding a portion of its Asset Replacement Campaign involving sales and purchases and an uplift in DPU.</li>
<li>That is an occasion to look at how much of float is held by passive trackers. </li>
<li>A test was done on the top 10 J-REITs on a holder-by-holder basis to see what one could expect at a minimum. The result may surprise some.</li>
</ul>



Nippon Building Fund (8951 JP) announced a smallish primary offering to assist in funding a portion of its Asset Replacement Campaign involving sales and purchases and an uplift in DPU.
That is an occasion to look at how much of float is held by passive trackers. 
A test was done on the top 10 J-REITs on a holder-by-holder basis to see what one could expect at a minimum. The result may surprise some.


Nippon Building Fund (8951) - Calculating Passive Tracking of J-REITs and Index Events Around Offers

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

<ul>
<li>Today after the close, <a href="https://www.smartkarma.com/entities/nippon-building-fund-inc" target="_blank" data-smartkarma-citation="entities:1900:1" rel="noopener">Nippon Building Fund (8951 JP)</a>("NBF") announced a follow-on equity offering to fund part of their recently announced property acquisition. </li>
<li>The primary offer quantity is 47,500 units. In addition, there will also be an over-allotment quantity of 2,500 units. The total size of this offering could be roughly ¥33bn (~US$285mn). </li>
<li>Below is a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.</li>
</ul>


Today after the close, Nippon Building Fund (8951 JP)("NBF") announced a follow-on equity offering to fund part of their recently announced property acquisition. 
The primary offer quantity is 47,500 units. In addition, there will also be an over-allotment quantity of 2,500 units. The total size of this offering could be roughly ¥33bn (~US$285mn). 
Below is a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.


Nippon Building Fund (8951): Offering Could Trigger Outperformance Vs TSEREIT Index

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Japan Prime Realty Investmen / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/japan-prime-realty-investmen" target="_blank" data-smartkarma-citation="entities:495:1" rel="noopener">Japan Prime Realty Investment (8955 JP)</a> aims to raise around US$130m in its Primary Offering, to fund its acquisition of  the Tokyo Tatemono Higashi Shibuya Building and repay borrowings.</li>
<li>The deal is somewhat anticipated, given that the REIT’s asset replacement strategy has been in the works for a couple of months now. </li>
<li>In this note, we will talk about the deal dynamics and run the deal through our ECM framework.</li>
</ul>



Japan Prime Realty Investment (8955 JP) aims to raise around US$130m in its Primary Offering, to fund its acquisition of  the Tokyo Tatemono Higashi Shibuya Building and repay borrowings.
The deal is somewhat anticipated, given that the REIT’s asset replacement strategy has been in the works for a couple of months now. 
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.


Japan Prime Realty Placement - Expected Deal, Has Corrected in the past Month

Now we are getting more interesting. Yesterday 10 May, Starwood Capital Group and its bidding entity 101 LPS raised its bid from ¥20,000/unit to ¥21,750/unit - an 8.75% bump - and lowered the minimum threshold for tender success from 5,344,355 units to 4,341,133 units or from two-thirds plus one share to about 55.27%.I suggested on the 6th in <a href="https://www.smartkarma.com/insights/invesco-office-opposes-starwood-hostile-offer-and-gets-a-distinctly-beige-knight" target="_blank" data-smartkarma-citation="insights:51162" rel="noopener">Invesco Office OPPOSES Starwood Hostile Offer and Gets a Distinctly Beige Knight</a> that it was in Starwood's interest to respond to Invesco's new tactic of having the parent buy shares and do so early on. First was to ensure Invesco had to newly decide to pay more, and second was to make it clear they were paying up. There was an added aspect of them being able to not extend the end of the Tender Offer if they revised by the 10th, which they did.This changes things for investors. More discussion below the fold.<hr>The insights in this series are:<table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 76.5714px;"><h2>The Starwood - Invesco Office REIT Tussle</h2></td></tr>
<tr>
<td style="width: 76.5714px;">Date</td>
<td style="width: 627.429px;">Title</td>
</tr>
<tr>
<td style="width: 76.5714px;">5 Apr 2021</td>
<td style="width: 627.429px;"><a href="https://www.smartkarma.com/insights/starwood-targets-japan-s-first-hostile-reit-full-tob-for-invesco-office-j-reit" target="_blank" data-smartkarma-citation="insights:49976" rel="noopener">Starwood Targets Japan's First Hostile REIT Full TOB for Invesco Office J-REIT</a></td>
</tr>
<tr>
<td style="width: 76.5714px;">8 Apr 2021</td>
<td style="width: 627.429px;"><a href="https://www.smartkarma.com/insights/starwood-hostile-reit-tender-launched" target="_blank" data-smartkarma-citation="insights:50112" rel="noopener">Starwood Hostile REIT Tender Launched</a> </td>
</tr>
<tr>
<td style="width: 76.5714px;">15 Apr 2021</td>
<td style="width: 627.429px;"><a href="https://www.smartkarma.com/insights/invesco-office-j-reit-responds-to-starwood-s-hostile-offer" target="_blank" data-smartkarma-citation="insights:50381" rel="noopener">Invesco Office J-REIT Responds to Starwood's Hostile Offer</a> </td>
</tr>
<tr>
<td style="width: 76.5714px;">23 Apr 2021</td>
<td style="width: 627.429px;"><a href="https://www.smartkarma.com/insights/starwood-rejection-of-extension-means-full-hostile-tender" target="_blank" data-smartkarma-citation="insights:50641" rel="noopener">Starwood Rejection of Extension Means Full Hostile Tender</a> </td>
</tr>
<tr>
<td style="width: 76.5714px;">6 May 2021</td>
<td style="width: 627.429px;"><a href="https://www.smartkarma.com/insights/invesco-office-opposes-starwood-hostile-offer-and-gets-a-distinctly-beige-knight" target="_blank" data-smartkarma-citation="insights:51162" rel="noopener">Invesco Office OPPOSES Starwood Hostile Offer and Gets a Distinctly Beige Knight</a> </td>
</tr>
</tbody></table>

Now we are getting more interesting. Yesterday 10 May, Starwood Capital Group and its bidding entity 101 LPS raised its bid from ¥20,000/unit to ¥21,750/unit - an 8.75% bump - and lowered the minimum threshold for tender success from 5,344,355 units to 4,341,133 units or from two-thirds plus one share to about 55.27%.I suggested on the 6th in Invesco Office OPPOSES Starwood Hostile Offer and Gets a Distinctly Beige Knight that it was in Starwood's interest to respond to Invesco's new tactic of having the parent buy shares and do so early on. First was to ensure Invesco had to newly decide to pay more, and second was to make it clear they were paying up. There was an added aspect of them being able to not extend the end of the Tender Offer if they revised by the 10th, which they did.This changes things for investors. More discussion below the fold.The insights in this series are:
The Starwood - Invesco Office REIT Tussle

Date
Title


5 Apr 2021
Starwood Targets Japan's First Hostile REIT Full TOB for Invesco Office J-REIT


8 Apr 2021
Starwood Hostile REIT Tender Launched 


15 Apr 2021
Invesco Office J-REIT Responds to Starwood's Hostile Offer 


23 Apr 2021
Starwood Rejection of Extension Means Full Hostile Tender 


6 May 2021
Invesco Office OPPOSES Starwood Hostile Offer and Gets a Distinctly Beige Knight 



Starwood Bumps Terms, Lowers Threshold on Invesco Office

Starwood Capital Group, a well-known real estate investor operating in half a dozen countries around the world, with current global AUM in excess of US$75bn. They manage private REITs globally and also manage the largest commercial real estate investment trust in the United States - <a href="https://www.smartkarma.com/entities/starwood-property-trust-inc" target="_blank" data-smartkarma-citation="entities:9223:1" rel="noopener">Starwood Property Trust (STWD US)</a> 
Together with affiliated investors, on Friday Starwood Capital Group filed that it owned just over 5% of <a href="https://www.smartkarma.com/entities/invesco-office-j-reit-inc" target="_blank" data-smartkarma-citation="entities:7414:1" rel="noopener">Invesco Office J Reit (3298 JP)</a> (filing attached below) and announced its intention to conduct a Tender Offer to buy out minorities. 
Invesco Office J-REIT, for its part, this morning <a href="http://www.invesco-reit.co.jp/file/en-news-060e1e4140efcec71c52617190ca80605a5d1749.pdf" target="_blank" rel="noopener">announced</a> that this was made "unilaterally and with no prior notification." This classifies the action as hostile.
The Tender Offer Price is to be set at JPY 20,000/unit, which is s 13.3% premium to Friday's close, and a premium of 14.68% and 23.71% to the 1mo and 3mo closing price averages. 
This appears to have been put together somewhat hastily as the starwood website outlining the Tender Offer - <a href="https://www.starwoodjapantob.jp/" target="_blank" rel="noopener">https://www.starwoodjapantob.jp/</a> - says the website is still being prepped.
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/198/858/original/Screenshot+2021-04-05+at+8.55.18+AM.png?1617584141" class="editor-image img-responsive" data-smartkarma-image-id="198858"></figure>
</section>
This deal comes in well over book and at something like 19x TTM FFO. 
The market's immediate reaction this morning is to bid the REIT through terms. 
Start Date? Unknown.  Minimum Threshold? Unknown. 
J-REIT takeovers are rare enough that hostile action is also rare, though not unknown. This will, however, be the first TOB of a Japanese REIT where the goal is to delist the REIT.
Hostile action on J-REITs comes with its own issues and parameters. And it is not as hard as it might be for a corporation. Starwood is counting on it. And that limits the Asset Manager's ability to defend itself.

Starwood Capital Group, a well-known real estate investor operating in half a dozen countries around the world, with current global AUM in excess of US$75bn. They manage private REITs globally and also manage the largest commercial real estate investment trust in the United States - Starwood Property Trust (STWD US) 
Together with affiliated investors, on Friday Starwood Capital Group filed that it owned just over 5% of Invesco Office J Reit (3298 JP) (filing attached below) and announced its intention to conduct a Tender Offer to buy out minorities. 
Invesco Office J-REIT, for its part, this morning announced that this was made "unilaterally and with no prior notification." This classifies the action as hostile.
The Tender Offer Price is to be set at JPY 20,000/unit, which is s 13.3% premium to Friday's close, and a premium of 14.68% and 23.71% to the 1mo and 3mo closing price averages. 
This appears to have been put together somewhat hastily as the starwood website outlining the Tender Offer - https://www.starwoodjapantob.jp/ - says the website is still being prepped.



This deal comes in well over book and at something like 19x TTM FFO. 
The market's immediate reaction this morning is to bid the REIT through terms. 
Start Date? Unknown.  Minimum Threshold? Unknown. 
J-REIT takeovers are rare enough that hostile action is also rare, though not unknown. This will, however, be the first TOB of a Japanese REIT where the goal is to delist the REIT.
Hostile action on J-REITs comes with its own issues and parameters. And it is not as hard as it might be for a corporation. Starwood is counting on it. And that limits the Asset Manager's ability to defend itself. 

Starwood Targets Japan's First Hostile REIT Full TOB for Invesco Office J-REIT

Japan

Japan Real Estate Investment Corporation is a real estate investment trust (REIT) which invests in real estate and securitized real estate products. The Company directly invests in office properties with a focus on 3 wards(Chiyoda, Chuo, and Minato) in Tokyo.

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Japan Real Estate Investment (8952 JP)

Nippon Building Fund (8951) - Calculating Passive Tracking of J-REITs and Index Events Around Offers

Nippon Building Fund (8951) - Japan's oldest and largest REIT - announced a small secondary offering. That provides an occasion to look at J-REIT...

Travis Lundy

Nippon Building Fund (8951): Offering Could Trigger Outperformance Vs TSEREIT Index

One of Japan's largest JREITs Nippon building Fund launched a ~US$285mn follow-on equity offering to fund their recent acquisitions. This might...

Janaghan Jeyakumar, CFA

Japan Prime Realty Placement - Expected Deal, Has Corrected in the past Month

Japan Prime Realty Investment (8955 JP) aims to raise around US$130m in its Primary Offering, to fund its acquisition of the Tokyo Tatemono...

Clarence Chu

Starwood Bumps Terms, Lowers Threshold on Invesco Office

Starwood has raised their Tender Price. This is now +19.9% vs Peer-Adjusted Undisturbed, and substantially closes the gap vs "IOJ Asset Market...

Travis Lundy

Starwood Targets Japan's First Hostile REIT Full TOB for Invesco Office J-REIT

Starwood announced it intends to conduct Japan's first TOB Tender Offer designed to delist a J-REIT. J-REIT voting rules/rights are different, and...

Travis Lundy

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