Forum Partners, the private equity real estate firm that specialises in taking stakes in firms via debt instruments, has invested ¥11.0 billion ($120 million) in a Japanese REIT.
The firm headed by London-based Russell Platt, revealed today how Asian Realty Income II, which closed on $642 million in August 2006, has invested in Australian-listed Galileo Japan Trust’s on-shore Japan REIT vehicle, Central Master Godo Kaisha.
In a statement, Forum said the $120 million investment has been made in the form of both mezzanine and convertible bonds and the proceeds would stabilize GJT’s capital structure through a reduction of senior loans from Shinsei Bank and eliminate risks associated with short term loan maturities.
GJT owns a diversified portfolio consisting of 26 assets across Japan, including grade B office assets in Tokyo, mass market residential buildings in Osaka, and suburban retail assets. The portfolio had a 95.4 percent occupancy rate.
Forum added the terms of the transaction provided “substantial downside protection” with a first charge pledge on certain assets in GJT’s portfolio and a second lien pledge on the remaining assets. Additionally, the convertible bond can be converted into a 40 percent stake in Central Master Godo Kaisha following the repayment of the mezzanine bond.