Azerbaijan SWF makes Japan property foray

The state oil fund of Azerbaijan has acquired a retail property in a prime Tokyo district in only its second private real estate investment in Asia.   

The State Oil Fund of Azerbaijan (SOFAZ) has acquired a retail property in Tokyo in partnership with the Japanese financial services firm, Mitsubishi UFJ Trust and Banking Corporation for ¥52.3 billion (€390 million; $435 million). It was the sovereign wealth fund’s maiden real estate investment in Japan.

The two partners have acquired Kirarito Ginza, a retail property located in Ginza, one of Tokyo’s prime commercial and retail districts, SOFAZ said in a statement.

The property has a gross floor area of 168,444 square feet and is let to 47 tenants.

“We are delighted to have made our first foray into the Japanese real estate market. Our investment rationale for this asset is based on its capital preservation capacity. It is the best quality asset in the best location, coupled with its return enhancement potential over the medium to long term,” said Shahmar Movsumov, executive director of SOFAZ.

The state fund has limited prior real estate investing experience in Asia. In March last year, it made its first direct investment when it ventured into South Korea with the acquisition of Pine Avenue Tower A in Seoul, a 25-story office building. According to its latest annual report, SOFAZ purchased made the investment via the Mirae Asset MAPS Frontier Private Real Estate Investment Trust, managed by the Seoul-headquartered Mirae Asset Global Investments.

As of July 2015, SOFAZ had $35 billion in assets under management.

According to its 2014 annual report, 2.9 percent of the fund’s overall portfolio comprised of real estate holdings against the benchmark target of 5 percent to be invested in real estate. Apart from Asia, the fund has so far made real estate investments in London, Paris and Moscow.