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GIC plans to buy a 32-storey building near Tokyo’s main railway station for 170 billion yen (S$2.04 billion), according to sources and media reports.
Known as Pacific Century Place Marunouchi (pictured), the property is located in the Chiyoda area, which boasts the highest rents and lowest vacancy rate in the capital.
Singapore’s sovereign wealth fund is now in the final stages of discussion over the said property, after it outbid Goldman Sachs Group Inc’s asset management unit, sources noted.
The prime building was put up for sale by Asian private equity firm PAG’s subsidiary Secured Capital in May, with a tentative price of 180 billion yen (S$2.16 billion). Although the final price is likely to be lower, the transaction is expected to become Japan’s largest property deal since the 2008 Global Financial Crisis.
If GIC managed to acquire the building for 165 billion yen (S$1.98 billion), the company will get a yield of about 2.6 percent, said Tomoyoshi Omuro, an analyst at Morgan Stanley MUFG.
This rate is comparable to the return of the Tiffany Buildings, which house the Tokyo main store of US jewellers Tiffany & Co. It was purchased by Softbank Corp founder Masayoshi Son last year.
While investors usually target returns of around four percent from prime office buildings in Tokyo, yields tend to fall when investors pay higher prices.
(Image source: Wikimedia Commons, user: Yasu)
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this and other stories, email nikki@propertyguru.com.sg
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