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ASIA NEWS: A deal out of default

Secured Capital wasted no time putting its Fund V capital to work in one of Japan’s largest property deals this year. PERE Magazine September 2013 issue.

Not long after Secured Capital held an interim close on $450 million for Secured Capital Real Estate Partners (SCREP) V, the Tokyo-based private equity real estate firm has used the capital to participate in one of the country’s largest single-asset deals this year.

Secured Capital joined a consortium of three international investors, comprising sovereign wealth fund Abu Dhabi Investment Council, US foundation CV Starr and Hong Kong-based conglomerate Asia Pacific Land, to buy Tokyo’s landmark Shiba Park office building out of default for ¥110 billion (€844 million; $1.1 billion). The sale price was far lower than the $1.5 billion that former private equity real estate firm KK daVinci paid for the 1.1 million-square-foot building in 2006.

The acquisition is more than 80 percent leveraged, PERE understands, with debt provided by a combination of international and domestic banks. With a 93 percent occupancy rate, Shiba Park effectively is a core asset, but the firm’s purchasing basis and favorable leasing should lead to opportunistic returns over the medium term. 

This deal comes on the heels of Secured Capital’s A$600 million (€409 million; $543 million) joint venture purchase of a suburban office property portfolio from GE Capital in Australia, an early outlay for SCREP V. Once the Shiba Park deal is complete, the fund’s current equity will be more than one quarter invested, although another and final closing of SCREP V is expected later this year.