Tokyo-based KK DaVinci is likely to give up control of Pacific Century Place, a city centre asset bought at the height of the market, as it struggles to repay its debts.
The firm, led by Osamu Kaneko, was in talks with creditors to extend a loan facility from September 25, but an agreement to do so is unlikely to materialise, according to a report by Reuters.
If an agreement is not reached for the Marunouchi-based building, which was originally bought for ¥200 billion ($2.2 billion; €1.5 billion), then the lenders, which are reported to include Shinsei Bank, will assume control of the building and then seek a sale.
DaVinci had sought buyers for $4.5 billion of offices in Tokyo, including Pacific Century Place, earlier this year, but no disposals have yet been agreed.
According to a report by Japanese news source Nikkei, three of four “leading managers of real estate funds logged net losses or lower net profits for the January-June half”. The report blamed falling commissions on the back of limited asset sales for the slump.
Only Secured Capital Japan, it said, had returned to the black with a net profit in that time as a result of “gains from buying back and retiring convertible bonds.” Secured Capital Japan was one of 15 firms tipped by PERE to thrive in the Thrivers and Survivors special feature published in September.