Press Release
August 8, 2008
Kumamoto Nichinichi Shimbun, August 1, 2008
Fukuoka Investment Company Acquires Shopping Center UTO
Kumamoto Nichinichi Shimbun, August 1, 2008
Fukuoka Investment Company Acquires Shopping Center UTO
Genkai Capital Management Co., Ltd., a real estate investment company located in Fukuoka, has acquired the land and buildings of the Shopping Center UTO, a large commercial facility located in Uto City. The acquisition from owners Carino Co., Ltd. (formerly Kotobukiya Co., Ltd.) and Uto City Plaza, the company operating the mall’s specialty shops, was announced on July 31st. Genkai Capital Management plans to renovate the shopping center with a view to drawing more visitors. Facility operations will be contracted to an affiliate of Carino as of August 1st.
Commercial facilities have been moving into the region at a rapid rate, resulting in a decline in the number of visitors to UTO. However, Genkai Capital, convinced that the situation could be improved through integrated management, made the decision to purchase. Mega-store tenants Jusco and Homecenter Sanko, plus 67 specialty shops, will continue on as tenants uninterrupted.
A contract for the purchase of UTO, featuring land area of 106,000 sq. meters and a two-story building with floor space of approximately 42,000 sq. meters, which will house the stores, was signed on the 31st. The purchase price has not been disclosed. Until the present time, administrative operations were conducted by Uto City Plaza for the specialty shops, and by an affiliate of Carino for the other tenants.
Established in November 1995, UTO was at the time one of the largest shopping centers in Kyushu. Genkai Capital was established in 2006 as a regional fund management company focusing on the Kyushu region. Fund assets stand at ¥70 billion, including commercial facilities, office buildings, and more. The UTO purchase represents Genkai Capital’s second purchase in Kumamoto Prefecture. In deciding upon the UTO purchase, President Masatoshi Matsuo determined that there was great potential in locally-based facility operations, adding that he planned to improve the value of the facility through additional investment.
Difficulties with Initial Plans (President Imoto)
Uto City Plaza’s President Imoto, which operated the specialty shops of the Shopping Center UTO, decided to sell the property to Genkai Capital Management because of difficulties with the initial business cost repayment plan, resulting in challenging financial issues.
Uto City Plaza, which is financed by small locally-based retailers and others, alone invested ¥2 billion in November 1995, establishing the shopping center together with Kotobukiya. Sales for the specialty shops came to some ¥3.5 billion in FY1996, a year after the opening, rising to ¥4 billion during the peak year of FY1998. However, sales have fallen yearly due to competition from other facilities in the vicinity, dipping to ¥2.9 billion in FY2007.
President Imoto remarked that the decision to sell was not a result of sluggishness in tenant sales. He emphasizes, “Our profit-to-debt ratio wasn’t good enough; that is, our initial plans were simply too ambitious. Due to an investment of ¥400 million for large-scale renovation in November 2005, which was part of the initial plan, our profits declined, and we have been in the red as of FY2005. Considering the large costs associated with regular renovation, we began to consider the option of selling the property.”
A party affiliated with one of the tenants remarked, “Though it’s unfortunate that we’re going to change management companies, I think our situation will improve because they’re going to try and boost sales.”
Commercial facilities have been moving into the region at a rapid rate, resulting in a decline in the number of visitors to UTO. However, Genkai Capital, convinced that the situation could be improved through integrated management, made the decision to purchase. Mega-store tenants Jusco and Homecenter Sanko, plus 67 specialty shops, will continue on as tenants uninterrupted.
A contract for the purchase of UTO, featuring land area of 106,000 sq. meters and a two-story building with floor space of approximately 42,000 sq. meters, which will house the stores, was signed on the 31st. The purchase price has not been disclosed. Until the present time, administrative operations were conducted by Uto City Plaza for the specialty shops, and by an affiliate of Carino for the other tenants.
Established in November 1995, UTO was at the time one of the largest shopping centers in Kyushu. Genkai Capital was established in 2006 as a regional fund management company focusing on the Kyushu region. Fund assets stand at ¥70 billion, including commercial facilities, office buildings, and more. The UTO purchase represents Genkai Capital’s second purchase in Kumamoto Prefecture. In deciding upon the UTO purchase, President Masatoshi Matsuo determined that there was great potential in locally-based facility operations, adding that he planned to improve the value of the facility through additional investment.
Difficulties with Initial Plans (President Imoto)
Uto City Plaza’s President Imoto, which operated the specialty shops of the Shopping Center UTO, decided to sell the property to Genkai Capital Management because of difficulties with the initial business cost repayment plan, resulting in challenging financial issues.
Uto City Plaza, which is financed by small locally-based retailers and others, alone invested ¥2 billion in November 1995, establishing the shopping center together with Kotobukiya. Sales for the specialty shops came to some ¥3.5 billion in FY1996, a year after the opening, rising to ¥4 billion during the peak year of FY1998. However, sales have fallen yearly due to competition from other facilities in the vicinity, dipping to ¥2.9 billion in FY2007.
President Imoto remarked that the decision to sell was not a result of sluggishness in tenant sales. He emphasizes, “Our profit-to-debt ratio wasn’t good enough; that is, our initial plans were simply too ambitious. Due to an investment of ¥400 million for large-scale renovation in November 2005, which was part of the initial plan, our profits declined, and we have been in the red as of FY2005. Considering the large costs associated with regular renovation, we began to consider the option of selling the property.”
A party affiliated with one of the tenants remarked, “Though it’s unfortunate that we’re going to change management companies, I think our situation will improve because they’re going to try and boost sales.”
