TOKYO Aug 6 A group including former U.S.
insurance magnate Maurice "Hank" Greenberg and an Abu Dhabi
sovereign fund have agreed to buy a prominent Tokyo office
building for $1 billion, the biggest property deal in Japan
since February, people with direct knowledge of the transaction
The decision by the foreign and Japanese investors to
acquire the ageing but distinctive structure in central Tokyo
highlights expectations that real estate values will revive as
Prime Minister Shinzo Abe's pro-growth economic policies boost
investor sentiment and risk appetite.
It will be Japan's biggest property investment including
foreign investors since the 2008-09 global financial crisis.
The group, led by property investor by Asia Pacific Land,
includes Abu Dhabi Investment Council, Japan's Secured Capital
Investment Management Co and C.V. Starr & Co Inc, which is run
by Greenberg, the billionaire former chief executive of American
International Group Inc, the sources told Reuters.
For the purchase for more than 100 billion yen ($1.01
billion) of the 14-storey Shiba Park Building, the investors
will inject about 10 billion yen in cash, said the sources, who
asked not to be named because the deal is not public yet.
Lenders including Mizuho Bank, Shinsei Bank and
Commerz Japan Real Estate Finance Corp, a real estate lending
unit of Commerzbank, will extend a combined 90 billion
yen in loans, the sources said.
The investors and banks declined to comment or could not
immediately be reached.
SIGNS OF UPTURN
Japan's real estate market, which fell sharply after the
late 1980s asset price bubble, crashed again in the global
financial crisis and rents in Tokyo have fallen steadily ever
But there are growing signs of an upturn: vacancy rates in
Tokyo's quality buildings started falling last year, according
to real estate services company CBRE. Monthly rents in central
Tokyo, which had dropped since 2008, have been flat since last
The Shiba Park Building deal is a sign of confidence that
the 31-year-old building will keep attracting tenants and
maintain steady rental income as Japan's economy is expected to
grow. Investors generally prefer newer buildings whose rental
income is higher.
Property values are expected to rise under "Abenomics", a
programme of heavy government spending and massive monetary
easing meant to end 15 years of deflation. The Bank of Japan has
been pumping money into the financial system to keep interest
rates low, enabling investors to borrow money cheaply.
Anticipating rising property values, U.S.-based Westbrook
Partners led the acquisition in April of a majority stake in a
Tokyo office tower for about 30 billion yen.
Tokyo's Tiffany Building has been put up for sale as the
owner Asia Pacific Land, leader of the Shiba Park Building
group, bets on a recovery in property prices.
The long, imposing Shiba Park Building - nicknamed the
"Gunkan", or "Warship", building - has more than 83,510 square
metres available for rent, much more than other buildings in its
neighbourhood near Tokyo Tower.
Its total floor space of 102,300 square metres puts it in
the same class as the iconic Marunouchi Building, a prime
commercial property in the capital's hottest business district
near Tokyo Station, at 159,720 square metres.
One benefit of a big building is that it can host the
headquarters of a large company. Daiei Inc, which once
was Japan's largest supermarket chain, is a former tenant of
Shiba Park Building.
The structure was bought by a fund managed by K.K. daVinci
Holdings, once an aggressive property investor, in 2006 - near
the height of the pre-crisis boom. It paid 143 billion yen in a
deal with a fund managed by Morgan Stanley. The building
went under lender control when the daVinci fund defaulted on the
loans as the global crisis depressed property values worldwide.