TOKYO, Dec 6 (Reuters) - Japan real estate asset manager Kenedix Inc has brought in state-owned lender Development Bank of Japan and developer Tokyu Land Corp as partners to develop a property in central Tokyo at a cost of 80 billion yen ($972 million).
Development Bank of Japan, Tokyu and Kenedix said in a joint statement on Thursday they will redevelop the office building, which was formerly owned by a fund run by Morgan Stanley and later owned by its creditors.
The project will be completed in 2017 and will cost about 80 billion yen, a person with direct knowledge of the transaction said.
Kenedix in July won exclusive right to buy the 21-storey building for 51 billion yen.
It was not immediately clear how the three partners will split the total cost.
The deal was delayed from the September closing Kenedix had planned because of the difficulties in securing equity investors, sources with direct knowledge of the transaction have told Reuters.
Kenedix was able to attract the two investors because of the rarity value of the property, said Takeshi Akagi, head of research in Japan for Jones Lang Lasalle, a real estate advisory firm.
"It is very difficult to acquire a property like this in Tokyo now," Akagi said. "There is hardly any space left for new office development in the central part of Tokyo. So this transaction is valuable even for the domestic players."
The transaction has been completed at a time when Tokyo's office property market is set to improve, Akagi added.
The property was purchased by a Morgan Stanley fund known as MSREF VI for 118 billion yen in 2008, the end of the real estate boom in the country. But the fund in 2011 lost the rights to the building after failing to repay its loans on time.
The debt holders had been seeking a buyer for the building, which has been empty for almost two years, generating no cash.
Located near the Imperial Palace and central government offices, the building was originally constructed in 1993 at the end of Japan's asset-inflated bubble economy for the Long-Term Credit Bank of Japan, which was bailed out by the government in 1998 and renamed Shinsei Bank.
Shinsei Bank moved its headquarters to another part of Tokyo in January 2011. ($1 = 82.2850 Japanese yen) (Reporting by Junko Fujita; Editing by Muralikumar Anantharaman)