Tuesday, October 11, 2005

daVinci to List J-REIT

It’s been a while since an all-office J-REIT appeared, but Tokyo investors daVinci Advisors plan to list a new J-REIT, the “DA Office REIT (ticker: 8976)”, on October 19. The portfolio will consist of mainly medium-size office buildings, mainly in central Tokyo (42%).

One of the properties in the portfolio, the daVinci Ginza Building, was owned by bankrupt retailer Daiei and called the OMC Ginza Building when they bought it in 2001 for 9.6 billion yen. Everyone thought they were mad to buy this low-ceilinged, decrepit office building when huge quantities of prime office were online for supply in 2003. They did an excellent job refurbishing the place inside and out (some photos here), bringing the specs to state-of-the-art standards, and reduced the operating expenses. Now it is worth 14 billion yen, the largest property in the portfolio. That’s almost a 47% increase in asset value!

My personal impressions of CEO Mr. Kaneko and his team are first-rate. They are one of the shrewdest and most innovative teams in Tokyo, and the company has been an almost-unrivalled success story, starting with nothing just a few years ago. They remain ahead of the curve.

Update: The J-REIT Blog isn't too impressed with this offering, saying the prospectus' projections are too rosy.

Read more on the IPO here.

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