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Temasek’s Mapletree Plans Japan Property Fund After Profit Jump

Mapletree Investments Pte, the real estate unit of Singapore’s state investment firm Temasek Holdings Pte, said it plans to start this year a fund investing in business space in Japan.

The fund, which will be between 25 billion yen ($305 million) and 40 billion yen in size, will invest in property at the periphery of Tokyo’s central business district, said Terence Heng, general manager of Japan at Singapore-based Mapletree. It will also seek assets in Osaka and Nagoya, he said.

“This is an overlooked and underserved sector,” Heng said at a press briefing today in Singapore. “After the recent financial crisis, people are going for stable income assets.”

Mapletree said today it posted a 90 percent increase in full-year profit as rents improved at its Singapore commercial properties and it got income from new real estate in Japan and Vietnam. Its assets and investments abroad will increase at a “much faster” pace than in Singapore, Hiew Yoon Khong, Mapletree’s chief executive officer, said at the briefing.

Net income rose to S$747 million ($597 million) in the year ended March 31 from S$394 million the previous year, it said. Total assets owned and managed by Mapletree rose 19 percent to S$15.4 billion in the year.

Mapletree is “pretty confident” that assets under management will reach $20 billion to $25 billion by the financial year ending March 2013, a year before its target, said Hiew.

“Some assets that we can acquire are quite sizable,” he said.

Listing Units

Mapletree listed two of its units in the past year, with Mapletree Industrial Trust raising S$853 million in October last year and Mapletree Commercial Trust raising S$893.2 million in April.

“Our business model of combining our development expertise with capabilities in investment and capital management has produced good results,” Hiew said.

The Japan fund will target a gross internal rate of return of at least 12 percent, he said. Mapletree will provide at least 30 percent of the fund equity, with outside investors making up the rest, he said. Mapletree has already bought 15 billion yen of seed assets for the fund, it said.

Japan’s economy shrank 3.7 percent in the first quarter after the magnitude-9 earthquake and tsunami disrupted production and prompted consumers to cut back spending.

“The situation is under control and it’s business as usual in Tokyo and other places in Japan,” said Heng.

China Fund

There are “a lot of funds” coming to the real estate market in Japan and transactions are happening, he said. The nuclear situation is contained within Fukushima and is expected to be stabilized in six to nine months, he said.

Mapletree also plans to start a new China-focused fund of at least $500 million to invest in commercial-related properties in first-tier and second-tier cities over two to three years, Mapletree’s group chief investment officer Chua Tiow Chye, said at the briefing.

The company plans to start a $300 million to $500 million Vietnam-focused fund in 2013 after buying one to two more seed assets, Chua said.

Mapletree plans to look for opportunities in new markets like South Korea, while continuing its expansion in Singapore, China, Japan, India and Vietnam, Hiew said.

There are no current plans to list the company, Hiew said, citing Mapletree’s low gearing as one of the reasons.

“We have not tabled it as a proposal to our board or shareholders,’” he said. “We believe we can still scale our businesses significantly without an injection of capital.”

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