Daily BriefsJapan

Japan: Invesco Office J Reit and more

In today’s briefing:

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

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

By Travis Lundy

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. 

Before it’s here, it’s on Smartkarma