Tokyo Office Building Sold for $172M

By Eliza Theiss, Associate Editor

Tokyo—Hamburg, Germany-based property investment manager Union Investment Real Estate GmbH has announced the $172 million (€127 million) acquisition of a fully leased commercial building in Tokyo, Japan, reported Europe Real Estate. Union Investment purchased the asset, dubbed J6 Front, from Singapore-based investment company Alpha Investment Partners. Touchstone Capital Group advised the buyer on the purchase. The new asset will be added to the open-ended real estate fund Unilmmo: Europa, becoming the fund’s second Tokyo office asset.

Located in central Shibuya Ward’s Jingumae submarket, J6 Front features 45,163 square feet of Grade A commercial space. The area is home to a bevy of IT, telecom, apparel and service companies. J6 Front is also close to the dynamic shopping corridors of Meiji-dori and Omotesando and within walking distance of four public transport stations. Completed in 2008, the eight-level building is 100 percent leased to six Japanese companies. According to office.jp, tenants include Tutu Bridal House, Tree of Life, INGNI co. ltd., Japan Residential Development Inc., Central High School, and collectpoint.

“Rents in the Tokyo office property market are at a low level in terms of the economic cycle. Since rents are expected to increase going forward, this is the right time for investors to enter the market,” Martin Brühl, head of Investment Management at Union Investment declared for Europe Real Estate. The company expects to take advantage of the current market upturn and make further investments in the Japanese market, which has emerged from a prolonged period of deflation and economic stagnation, boosted by the economic and monetary policies implemented by Japanese Prime Minister Shinzo Abe at the end of 2012. Tokyo has regained its place next to New York and London as a market for sustainable growth and stability.

J6 Front is Union Investment’s 13th Asia-Pacific holding, bringing the total value of the property investment manager’s APAC holdings to $1.15 billion (€850 million). The company has recently been active in the region, purchasing the 300,000-square-foot under-development Southpoint commercial asset in Brisbane, Australia earlier this year and marking Union Investment’s first foray into the Australian market. According to Europe Real Estate, Union Investment paid $188 million (AUD 200 million) for the Class A asset, set to finish in the second quarter of 2016. The 16-story tower was also included in the Unilmmo: Europe open-ended real estate fund. The 253,000-square-foot office component is fully leased on a 10-year basis, with Flight Centre Travel Group’s future global headquarters as anchor tenant. The 46,000-square-foot street-level retail component was 30 percent pre-leased at the moment of sale, with Australian super-market chain Woolworths as an anchor tenant on a 20-year lease.