Despite the Yen dropping to a 24-year low, a domestic consortium led by Hulic has outbid foreign investors to acquire the Ministry of Finance’s share in the Otemachi Place office tower in Tokyo. And at an astronomical price…
According to the Sankei Shimbun, the sale price is expected to be somewhere in the 400 billion Yen (US$2.8 billion) range, making it the largest single real estate transaction in Japan’s history, and exceeding a previous record set last year for the Dentsu Building, which was sold to Hulic and others for somewhere around 300 billion Yen. The final sale price has far exceeded earlier estimates of a 300 billion Yen market price.
Update: The official sale price as announced by the Ministry of Finance on November 11 was 436.4 billion Yen. The contract was signed the same day with delivery to take place in December.
On September 9, it was announced that Tosei Asset Advisors was the winning bidder for the Otemachi asset, with Hulic one of the main members of the group. Other bidders included US and Asia-based funds attracted to Tokyo due to its higher yield gap than can be found in Singapore, Hong Kong, London, and New York. Rising interest rates in other countries have made Tokyo’s yield gap expand in recent months. However, despite a rapid depreciation of the Yen, some foreign funds have had to take a more cautious stance on international investments due to economic concerns in other international markets and were not able to match bids offered by domestic investors.
The Ministry will enter into a sale agreement with the winning bidder this November with the transfer to take place in December. The transaction is primarily for a share in the East Tower which has Sumitomo Corporation as the anchor tenant.
Sources:
The Sankei Shimbun, September 9, 2022.
TBS, September 9, 2022.
The Nikkei Shimbun, September 9, 2022.
