Aetos to sell Simplex for $1.3bn

The buyer, Japanese developer Hulic, will in turn sell off some of the divisions in the platform to Mizuho Trust & Banking  

Aetos Capital Real Estate has agreed to sell the Simplex Investment Advisors (SIA) Group to the Japanese developer Hulic for an aggregate value of ¥155 billion (€1.16 billion; $1.28 billion). SIA Group is a Japanese property management and asset management platform that was fully acquired by Aetos Capital Real Estate in 2011 via its $2.2 billion Aetos Capital Asia II fund.

Hulic will only maintain ownership of Simplex Investment Advisors’ portfolio of properties. In a separate statement released today, the developer has announced that the remaining divisions of the platform– Simplex Real Estate Management, the group’s fund management firm; Simplex REIT Partners, which manages the SIA Real Estate Investment Trust (REIT); and the remaining 15 percent investment units of the REIT that are owned by Simplex Investment Advisors – have been agreed to be sold to the Japanese financial services firm Mizuho Trust & Banking.

The sale and purchase agreement between Aetos and Hulic was completed today and the deal is expected to close on November 30.

“Aetos has had a long and successful track record in Japan, which served us well in managing this investment. After the financial crisis, we recapitalized the company, secured 100 percent of the equity, changed management, sponsored and sold assets to a J-REIT, and streamlined operations and the business strategy. During our period of exclusive ownership, the performance of the company has improved in each successive year. This transaction is a good result for our investors and is positive for SIA Group going forward,” Scott Kelley, founder and chief executive officer of Aetos Capital Real Estate, said in a statement.

SIA Group comprises a portfolio of 13 real estate assets, including commercial office buildings, retail assets and the Tokyo Disney Resort hotel. In addition, it manages more than ¥150 billion in assets for third parties.

Aetos Capital Real Estate and Goldman Sachs each initially acquired a 50 percent interest in the SIA Group, reportedly for a combined value of ¥500 billion in 2007. The firm then went on to buy out Goldman Sachs’ 50 percent stake via the fund in 2011.

The news of the platform being put up for sale was first revealed in March this year. The firm is understood have received more than 10 bids from a variety of groups, including Japanese sovereign wealth funds and foreign private equity investment firms.

For Hulic, the transaction is representative of the developer’s ongoing expansion of its real estate holdings in Japan.

“The acquisition of SIA whose portfolio mainly consists of offices in Tokyo as well as a major hotel adjacent to Tokyo Disney Resort is in line with the company’s investment focus on Tokyo offices and commercial facilities as well as properties related to the growing tourism industry,” the firm said in the statement. “The company believes the transaction will contribute to expanding its core business and further its portfolio strategy of selection and concentration.”

On its decision to sell a portion of the Simplex platform to Mizuho Trust and Banking, it said that Hulic’s Group interest was “on SIA and the strategic benefits that may be generated through the acquisitions of its real estate portfolio, and the decision to sell the other divisions was taken because SRM’s strategy may not necessarily match that of the company and given the company already has its own-sponsored J-REIT.”

Mitsubishi UFJ Morgan Stanley Securities was the financial advisor to Aetos for the transaction and Morrison & Foerster LLP was the legal advisor.