On November 10, Toyo Keizai Online reported that major music producer Avex is making moves to sell its 18-story headquarters in Minami Aoyama, Tokyo. Avex would then lease the building back from the buyer.
According to insiders, several foreign funds were approached with Canadian fund BentallGreenOak (BGO) obtaining preferential negotiation rights (Avex denied having made a decision a day after this news was announced). Only a month ago the Nikkei Shimbun newspaper announced that BGO has big plans to invest up to 1 trillion Yen in commercial real estate in Japan over the next couple of years (“Canadian firm to invest US$9.5 billion in Japanese real estate”).
The music industry in Japan and worldwide has been hit hard by the coronavirus pandemic, with money-making live shows and concerts cancelled, and low music sales. Avex incurred a 3.2 billion Yen loss for April-September and is seeking voluntary retirement from 100 staff this December.
As the pandemic continues to wreak havoc on some industries, more and more affected companies may start to part with their prized real estate holdings. Investors who have been patiently waiting on the sidelines are seeing this as an opportunity to obtain core assets in prime locations. However, bargains are few and far between with both good financing conditions and heavy competition between domestic and foreign funds keeping demand high.
Avex rebuilt their head office tower in December 2017. The 101-meter tall building has a total floor area of 28,300 square meters (approx. 305,000 sq.ft) and sits on 5,000 square meters of land fronting Aoyama Street.
Toyo Keizai Online, November 10, 2020.
Oricon News, November 11, 2020.
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