Strategic Asset Solutions (“SAS”) provides companies, both domestic and MNC’s operating in Japan with a multidisciplinary approach to help realize the value of their real estate holdings through liquidity.
A recent transaction involving a European retailer’s distribution center in Nagoya is a great example of SAS’ consultative approach that led to a successful outcome for all parties.
A European retailer owned underutilized real estate that was serving as their distribution center for the Japanese market. Initially envisioned as a 3-phase project, the distribution center was expanded as the 2nd phase but due to a change in strategy, it was never occupied.
The change in strategy also meant the vacant land reserved for Phase 3 would not be required for their use. As a result, they wanted to monetize the real estate yet maintain control of their distribution center constructed as Phase 1. Through our consultative approach, SAS was able to successfully meet the company’s needs.
| Subject Asset | Distribution Center in Nagoya |
| Location | Yatomi-shi, Aichi Prefecture |
| Completion | Phase1(2008) / Phase2(2018) / Phase3 undeveloped |
| Total Land Area | Approx. 263,000 sqm/ 80,000 tsubo |
| Total GFA | Approx. 85,000 sqm/ 25,800 tsubo |
| Ceiling Height | ･ Warehouse Area 11.5m-14.0m ･ Freight Handling Area 5.2m-6.0m |
| Floor Load & Elevation | ･ Elevation=1.3m above roadway surface ･ Floor Load=Approx. 1.5tons/m2 (Office 300kg/m2) |
| Equipment | ･ In-warehouse roof fan(time and auto temp.controls) ･ Air conditioning installed in offices on floors 1 and 2 ･ Fire sprinkers and dispersion systems throughout building |
TRANSACTION OVERVIEW
In June 2019, Strategic Asset Solutions entered into direct discussions with a European retailer on the potential sale leaseback of their distribution center and the acquisition of a vacant warehouse and vacant land.
As noted, a change in strategy made the vacant warehouse and vacant land redundant and the company wanted to monetize the asset whilst maintaining operating control of their distribution. The asset was not being marketed.
A Letter of Intent was executed in September 2019 outlining the basic terms of the deal that would involve all three phases.
Through a consultative negotiation process over a period of 3 months, the deal was revised to exclude the sale leaseback of the distribution center.
In order to provide the seller with full control over their distribution center, the decision was made to separate the vacant warehouse (Phase 2) as a separate parcel that would require demolition of a portion of building and the subdivision of the land.
As a result, the deal changed from the original proposed sale leaseback of their distribution center to the acquisition of a vacant warehouse and development site following the subdivision of the site.
SAS brought in Hines Interests as the investor / developer who will construct a large 4-story, 65,000 tsubo logistics facility on the vacant Phase 3 land. The vacant warehouse (Phase 2) is being leased on a long-term basis to a domestic 3PL provider.
The transaction was fully funded with the closing of Phase 3 in December 2021 and Phase 2 closed in February 2022 upon receipt of certificate of completion following the renovation and demolition.
Original Site Plan
Site Plan at Closing
Hines Yatomi Distribution Center