Tobu Railway Co., the owner of Tokyo Skytree, cut the cost of refinancing to less than a third of what it paid five years ago on expectations that admission tickets and souvenir sales at the world’s tallest tower will boost profit.
The company borrowed ¥20 billion in a syndicated loan comprised of five- and seven-year tranches and led by Sumitomo Mitsui Trust Bank Ltd., according to Tsutomu Yamamoto, a manager in the Tokyo-based railway’s finance and accounting department.
Tobu paid 17.5 basis points more than the six-month Tokyo interbank offered rate on a five-year loan in 2007, Yamamoto said, declining to elaborate on the current loan’s pricing except that it’s about 66 percent less.
Tobu Railway expects the 634-meter tower and its surrounding buildings to draw 32 million visitors in its first year, surpassing the numbers at Tokyo Disney Resort. The development, which includes an aquarium and planetarium, will help bolster net income 12 percent this fiscal period, the firm forecast in April.
“Tokyo Skytree’s contribution to earnings is exceeding the company’s expectations and speeding up improvements in its financial standing,” Mitsuyoshi Takahashi, a senior credit analyst at Mizuho Securities Co., said Tuesday. “Lenders are channeling money to companies they see as safe bets,” helping to reduce borrowing costs.
Tobu, which also operates buses, hotels, shopping centers, department stores, golf courses and sports clubs, has ¥432.4 billion in bonds and loans outstanding, according to data compiled by Bloomberg. Its weighted average bond coupon fell to 1.38 percent in the second quarter, from 1.68 percent the same period two years earlier, the data show.
The Rating & Investment Information Inc. assigned a positive outlook to the company’s debt on July 26, citing Tokyo Skytree’s contribution to earnings. R&I rates Tobu Railway BBB, its second-lowest investment grade.
Tokyo Skytree, which took four years to build and cost ¥65 billion, surpassed the 600-meter Canton Tower in Guangzhou, China, as the world’s tallest tower, according to the Council on Tall Buildings and Urban Habitat. Dubai’s Burj Khalifa is the world’s tallest building at 828 meters.