Aetos buys out Goldman Sachs from Simplex deal

Aetos Capital, the New York-based Asia real estate investment management firm, has bought out its joint venture partner Goldman Sachs from its investment in Simplex Investment Advisors. The partners’ 2007, $1.3 billion purchase of the Tokyo-focussed investment business was reportedly Japan’s biggest real estate transaction.

Asia-focused private equity real estate firm Aetos Capital has taken sole charge of Simplex Investment Advisors, a Japan-focused real estate investment business, after buying out its joint venture partner, Goldman Sachs, according to a report by the Wall Street Journal.
Aetos and Goldman teamed up to take Simplex private in October 2007 in a deal which valued its equity position at $1.3 billion, assuming its $2.9 billion debt pile in the process. The deal is Japan’s largest real estate transaction to date.
Following the global financial crisis however, the value of Simplex’s real estate portfolio, primarily comprising Tokyo office buildings, depleted. This enabled Aetos to purchase Goldman’s shares at a considerable discount, the WSJ said.
The newspaper also reported that in addition to buying out Goldman Sachs, Aetos Capital has also renegotiated approximately $1.8 billion of Simplex’s debt with lenders including Sumitomo Mitsui Banking Corporation. It has also invested a further $121 million from its second real estate opportunity fund, Aetos Capital Asia II, which closed on $2.219 billion in 2005, into the company.
Goldman Sachs has made a number of sales in Japan recently. In January it was reported that it had slated the $446 million of its stake in golf course business Accordia via a secondary public offering of shares, for example. According to data from real estate investment research provider Real Capital Analytics, the bank was also the fifth-largest seller of real estate in Asia in the past 12 months, exiting $1.65 billion of assets.
Aetos on the other hand has become increasingly bullish on Japanese real estate amid signs of stabilising rents and the continuation of various distressed seller situations.
The firm, led by chief executive officer Scott Kelley, is in the midst of raising its fourth private equity real estate fund, Aetos Capital Asia IV Strategic Partners. The fund, which is targeting $1 billion of equity, has already held a $250 million closing and is believed to have raised considerably more.