Creed Office REIT (TSE ticker #8983), after receiving a business improvement order from the FSA on Friday of last week regarding managing conflicts of interests and appraisal processes, announced yesterday (announced in Japanese only for some reason) that its shareholders had agreed to sell 100% of the REIT management company, Creed Investment Trust Management, to Ichigo Asset Management. Ichigo is currently is the largest shareholder in the REIT itself with a 20.37% stake. Creed Corp`s announcement said that the transaction is scheduled for this Friday the 12th. Creed Corp holds 80% of the REIT management, with the other shareholders (Itochu, Chuo Mitsui, Mitsui Sumitomo Bank, and Morgan Stanley Capital, respectively holding 5% stakes).
The REIT manager made clear that the information sharing contracts with the major current REIT management shareholders: Creed Corp, Itochu Corp, and Chuo Mitsui Trust Bank, are to be severed immediately, clearing ties with the current sponsors. Focus is on the economic issue to be dealt with immediately – refinancing of a JPY 10.5 billion tranche of corporate debt due to Shinsei Bank in March. They noted they are working full force on potential sponsor tie-ups to help deal with this and the financing issue in general going forward.
Creed is also giving a quick, strong indication to the market that they are taking responsibility for any mismanagement and helping the REIT to move on. Mr. Hasegawa, the co-president of Creed Corp announced at the same time he is leaving his post to focus on the private fund business arm as new president of subsidiary Creed Real Estate Investment KK (JPY 178 Billion in AUM as of May). The market seemed to pick up on this with a 16% share price gain today and stop limit up on the REIT`s shares with 7%+ gain. Granted these are both still at near all-time lows, but some very good news moving to stabilize the market – hopefully there is more of this (at least indirect) takeover activity to come.