TOKYO Jan 30 Japan's Mitsubishi Corp
is in final talks to buy the building rented by luxury retailer
Ralph Lauren Corp for its flagship store in Tokyo's posh
Omotesando area for about 35 billion yen ($342 million), three
people with knowledge of the deal said.
The purchase by Mitsubishi, Japan's biggest trading firm by
net income, will be the largest property transaction since a
group of investors bought an office building in Tokyo for about
100 billion yen last August. The price represents a premium of
about 13 percent on that paid the last time the building changed
hands, four years ago.
The deal for the four-storey building occupied by the New
York brand in the centre of one of Tokyo's most fashionable
districts comes as hopes grow among real estate operators that
retail rents in general are set to rise amid growing interest in
opening stores in the city.
As part of his efforts to bring sustained growth to the
world's third-biggest economy, Prime Minister Shinzo Abe has
promoted monetary, fiscal and structural reforms - dubbed
"Abenomics" - that are stoking retail sales, fueling demand for
store space in the capital's sprawl of shopping districts.
Mitsubishi, with an array of businesses in finance,
machinery, chemicals and energy, is aiming to buy the building
from a group comprising Japanese property investor Secured
Capital Investment Management, financial services company Orix
Corp and Honolulu-based Trinity Investments.
The current owners paid 31 billion yen for the
eight-year-old, 7,421 square-meter property in 2010 when the
market slowed in the wake of the global financial crisis.
Japan's property business began to rebound last year, boosted by
Prime Minister Abe's pro-growth economic policies.
Also present on Omotesando are stores operated by the
biggest names in the luxury goods business, including LVMH Moet
Hennessy Louis Vuitton SA's Bulgari, Celine and
Vuitton brands, Kering SA's Gucci and privately owned
Both domestic and overseas retailers have ambitions to open
stores in primary Tokyo shopping districts like Omotesando and
the central Ginza area, said Hajime Shibata, a senior consultant
at the Japanese unit of global commercial real estate service
The Mitsubishi deal will follow the acquisition of another
landmark Tokyo retail property, a building housing a Tiffany &
Co store in Ginza. It was bought by Masayoshi Son, the
billionaire founder of tech and telecoms group Softbank Corp
, for 32 billion yen in September.
Shibata said Omotesando remains a draw for retailers because
the area attracts fashion-conscious shoppers. While Omotesando
offers an array of upscale stores, it's also located close to
Harajuku, an area popular with younger buyers of Tokyo's funky
"The market for retail properties in Tokyo has a positive
outlook and we can expect the rents will start increasing," said
Low-cost financing will also fuel property deals.
"Investors will remain aggressive this year because they can
continue borrowing money cheaply," said Takashi Ishizawa, chief
real estate analyst at Mizuho Securities Co.
A Mitsubishi spokeswoman declined to comment on the
transaction. Officials for the current owners also declined to
comment. Ralph Lauren was not immediately available for comment.
Mitsubishi already has a substantial presence in Japan's
property markets with its real estate asset management firm
Diamond Realty Management Inc, which operates a private real
estate trust. Mitsubishi also has a property joint venture with
UBS AG which operates two public real estate trusts.