By Junko Fujita and Saeed Azhar
TOKYO/SINGAPORE Aug 25 Singapore's sovereign
wealth fund is in talks to buy a Tokyo office tower for about
170 billion yen ($1.6 billion), three people with knowledge of
the deal said, in what would be Japan's biggest property
transaction since the financial crisis.
Singapore's GIC Pte, which already has a large
presence in Japan's property market, outbid the asset management
unit of Goldman Sachs Group Inc, which also participated
in the final bid for the property, which was put up for sale by
Secured Capital, part of Asian private equity firm PAG.
GIC is in the final stages of talks over the 32-storey
Pacific Century Place Marunouchi, located near Tokyo's main
GIC declined to comment. Officials at Secured Capital were
Secured Capital put the property up for sale in May, seeking
more than 180 billion yen. The final price will likely fall
short of the target but the transaction would still likely be
the biggest since Japan's Prime Minister Shinzo Abe took
aggressive measures to end deflation.
Morgan Stanley MUFG analyst Tomoyoshi Omuro said that if
Pacific Century Place was purchased at 165 billion yen, the
price would yield an estimated 2.6 percent.
That would be the similar to the return on the Tiffany
Buildings, housing the main store of U.S. jewellers Tiffany & Co
, bought by Softbank Corp founder Masayoshi Son
about a year ago.
Typically investors expect about 4 percent returns from
Tokyo's prime office buildings. Returns on properties fall when
investors pay higher prices.
GIC earlier this year agreed to buy Meguro Gajoen, a complex
of office properties and retail facilities in Tokyo, but backed
off from the deal due to a legal dispute.
Japanese property developer Mori Trust Co is in talks to buy
Meguro Gajoen for more than 100 billion yen.
Pacific Century is located in Tokyo's Chiyoda area, where
rents are the highest and vacancy rates remain the lowest in the
(1 US dollar = 103.9900 Japanese yen)
(Reporting by Junko Fujita in Tokyo and Saeed Azhar in
Singapore; Editing by Edmund Klamann and Louise Heavens)