Secured Capital, ADIC in $1.1bn default deal

After taking its capital haul for Fund V to $450 million, the Japanese real estate firm has teamed up with the sovereign wealth fund and two other international investors to buy Tokyo’s landmark Shiba Park building.

A consortium of four domestic and international investors have inked a deal to buy Tokyo's landmark Shiba Park building for JPY110 billion (€844 million; $1.1 billion) in one of the country’s largest single-asset deals this year, PERE has learned.

The buyers were led by Hong Kong-based conglomerate Asia Pacific Land and included sovereign wealth fund Abu Dhabi Investment Council, US foundation CV Starr and Tokyo-based private equity real estate firm Secured Capital. The deal was closed off-market, and it is understood to have been under negotiation for more than a year, off and on.

The deal also is understood to be more than 80 percent levered, with the debt being provided by a combination of domestic and international banks. The building itself was bought by aggressive Japanese real estate firm KK daVinci for JPY143 billion – which translated to about $1.5 billion at the time  – in 2006, but the firm defaulted on the loans for the building after the onset of the global financial crisis.

Secured Capital’s portion of the deal’s equity is understood to have come from its Secured Capital Real Estate Partners V fund, which recently brought its committed capital to $450 million after a third close. Once the Shiba Park building deal is completed, Fund V would have about one quarter of its committed capital invested, it is understood. With a target of $1 billion, the firm is understood to be expecting a final close for Fund V within the next few months.

The 1.1 million-square-foot Shiba Park office is considered a core asset, as it is more than 93 percent leased at this point. However, it is understood that favorable terms negotiated up front should give the buyers closer to opportunistic returns. Secured Capital is understood to consider Shiba Park a medium-term asset, with a potential holding period of about five years for its fund.

Secured and other parties involved in the deal declined to comment.