MGPA captures Tokyo portfolio after CMBS default

The Europe- and Asia-focused private equity real estate firm has acquired an eight-strong portfolio of offices via a defaulted CMBS structure in what is likely to be one of the last investments for Asia’s largest private equity real estate fund.

MGPA,the Europe- and Asia-focused private equity real estate firm, has capitalised on the default of a CMBS structure in Japan to buy a portfolio of eight office properties for a reported ¥12 billion (€119.7 million; $152 million).

The firm announced today it had bought the assets on behalf of MGPA Asia Fund III, Asia’s largest private equity real estate fund, which was established in 2007 and which attracted $3.9 billion in equity commitments. MGPA did not disclose the purchase price for the portfolio, but a report by Bloomberg stated that they cost ¥12 billion, citing two sources familiar with the transaction.

MGPA said seven of the properties are in Tokyo and comprised 97 percent of the acquisition value. Of those seven properties, five are in the city’s more popular central five wards. Their combined gross floor area is 350,000 square feet.

Rio Minami, MGPA’s managing director of capital transactions in Japan, said Tokyo is experiencing early evidence of stronger tenant demand and that the supply of new space in the city’s office market is 30 percent below its long-term average. “We already are seeing strong interest in the vacant space in the portfolio from potential tenants,” he added.

Minami said that, in spite of these attractive real estate indicators, it is still possible to invest at high yields in the city. “We are confident of delivering a solid return on investment in the short term, as well as growth potential over the projected holding period,” he said.

The investment should be one of the latter investments for MGPA Asia Fund III, which saw its investment period extended by 18 months. The extension covered approximately $500 million in equity, which was expected to be invested in Japan and in China.

The fund’s portfolio currently includes both commercial and residential investments in Japan, China and Thailand, although the bulk of the capital has been deployed in two giant offices in Singapore’s Marina Bay area.