REIT ASIAPAC
COVER STORY
Star Asia Group has succeeded in its bid for Sakura Sogo by
using for the first time a rule that allows a unitholder having a
minimum of 3% stake for a minimum of six months to call for an
extraordinary meeting and propose management changes.
Baraki logistics
Amid Japan’s typically amicable REIT culture, Star Asia’s
takeover proposal for Sakura Sogo on May 10 was an unexpected
move. The group, which has about a 5.1% stake in Sakura Sogo
REIT through its affiliate Lion Partners, requested a unitholders’
meeting. It wanted to remove Sakura’s existing executive director
and for its asset manager to be replaced by Star Asia’s asset
manager.
In June, Lion Partners received regulatory approval from the
Kanto Finance Bureau to move ahead with the Sakura Sogo’s
unitholder meeting, which was planned at 10 am (Japan time) on
August 30, 2019.
Concurrently, Sakura Sogo, which manages about 56 billion yen
(US$518 million) worth of assets, had spurned Star Asia Group’s
offer. It announced that it is in friendly merger talks with Mirai
Corporation, whose sponsors are Mitsui & Co. and IDERA Capital
Management. The diversified REIT, which has about 56% of its
assets in the Tokyo Metropolitan Area, scheduled a meeting for
unitholders to vote for the friendly merger at 4 pm on August 30,
2019.
THE CRUCIAL VOTE ON AUGUST 30
On the day, Sakura Sogo’s unitholders voted in favour of Star
Asia’s bid over Sakura Sogo’s proposed merger with Mirai.
Resolutions were passed for the replacement of Sakura Sogo
Executive Director Makoto Muranaka with Lion’s Representative
Director Toru Sugihara. Muranaka resigned ahead of the
meeting. Unitholders also voted in favour of replacing asset
manager Sakura Real Estate Investment Advisors with Star Asia
Investment Advisors.
In the afternoon meeting, an insufficient turnout of unitholders
led to failures to pass the resolutions for the proposed
absorption-type merger with Mirai, according to a Japanese-
language statement from Sakura Sogo.
Cover Story
STAR ASIA IN
UNPRECEDENTED TAKEOVER
OF SAKURA SOGO
The successful outcome should encourage better corporate governance
and could spark similar takeovers of underperforming J-REITs.
“The unitholders spoke pretty loudly, and they were in full support
of the morning meeting as well as the outcome of the afternoon
meeting. Certainly, all of the institutional shareholders whom we
spoke with were very supportive. They all thought that the deal
is in the best interests of the shareholders of both sides,” says
Malcolm MacLean, Co-founder and Managing Partner of Star
Asia Group. He added that a separate J-REIT regulation known as
Minashi, by which non-votes are counted as ”deemed approval,”
did not come into effect at the meeting because of the favourable
outcome. “The vote was strongly in our favour that there was no
need to use Minashi,” says MacLean.
Malcolm F. MacLean IV,
Co- founder & Managing Partner of
Star Asia Investment Management, a J-REIT affiliated with Star
Asia Group, has 102.3 billion yen (US$952 million) of assets
under management.
Star Asia Group
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