Carlyle and Korean pension fund buys Tokyo block for $362m

The Carlyle Group and South Korea's National Pension Service is jointly investing in an office in central Tokyo. The Japanese firm selling the property says it intends to work more closely with Carlyle in future.

The Carlyle Group and the National Pension Service of South Korea have teamed up to buy an office in central Tokyo for around $362 million.

The Washington D.C. firm and the pension service – which manages around $200 billion of assets – have bought the KDX Toyosu Grandsquare office from public Japanese company, Kenedix.

According to the pension fund, it is buying a 49 percent stake, while Carlyle will own the remainder.

Kenedix said the Grandsquare project is the firm’s largest office scheme and was completed in May 2008. Since then, it has been trying to attract tenants to the 63,000 square metre property located in the Tokyo Bay area.

The Japanese office property firm which listed on the Tokyo stock exchange in 2003 also hinted at further co-operation with Carlyle. It said: “With this transaction as a start, the company seeks to develop further business opportunities with Carlyle, such as real estate funds with joint investments.”

Meanwhile, the Korean pension fund said it was planning to increase overseas property investment directly. “With the (Tokyo) investment, NPS plans to expand direct investments in prime property assets in major cities such as New York, London, Paris and Syndey,” it said in a statement.

Earlier this year, the NPS said during an Asian investment conference that it would increase investments in alternative assets abroad having been asked by the Korean government to reduce exposure in 2008 in order to support the national currency.

On Tuesday, Kim Hee-seok, head of NPS' global investment team, said in the interview with Reuters that the fund had earmarked most of a $2 billion alternative investment budget for property in the second half of this year. He added that in 2010, it would raise its portion of alternative assets to 6.4 percent.

The Tokyo deal is not the first time the pension fund has struck an agreement with a private equity firm to invest in property. On 30 October last year, it announced a memorandum of understanding with The Blackstone Group to invest in Korea. According to the agreement, Blackstone would consider making a $2 billion investment in Korean sectors such as real estate as well as infrastructure. The fund would match Blackstone’s contribution to deals. 

Los Angeles-based Oaktree Capital Management, an alternative investments firm, has reportedly also agreed in principle to invest $3 billion in the country.