Goldman, Aetos to buy Japanese property group for $1.1bn

As Japanese land prices continue to rise, Goldman Sachs has teamed with Aetos Capital to buy a Japanese company with a 179-strong property portfolio.

Goldman Sachs Group and New York-based private equity real estate firm Aetos Capital have made an offer to buy Japanese property company Simplex Investment Advisors for 124.7 billion yen ($1.1 billion; €783 million). Tokyo-based Simplex, founded in 2002, owns 179 properties in cities throughout Japan.

The joint venture made an offer for 80 percent of the company at 215,000 yen per share. Japanese brokerage firm Nikko Cordial, which owns 42.5 percent of the company, has agreed to sell its stake in the company.

The offer comes at a time when investors are flocking to Japan as the country experiences its highest real estate prices since peaking in 1991. After a long period of declining real estate prices, investors are betting that the current recovery has a ways to go before hitting its peak. According to Japan’s Ministry of Land, Infrastructure and Transport, commercial land prices rose one percent in the year preceeding June 2007, the first advance since 1991.

Goldman has been busy in Japan this year. In August, the firm purchased the flagship Tiffany & Co. store in Tokyo’s central Ginza district for 38 million yen, and in September it bought a former movie theater site in Osaka for 6.46 billion yen.

Aetos Capital has two funds investing in Asian real estate: Aetos Capital Asia and Aetos Capital Asia II, representing approximately $3 billion of equity commitments. In June, the firm formed a strategic partnership with China Life Asset Management to identify and evaluate real estate investment opportunities throughout China. In August, the firm also committed up to $50 million to invest in Tian Rui Hotel Corporation, the main franchisor of Super 8 hotels in China.