TH Real Estate has made its debut investment in Japan with the acquisition of a commercial property in Tokyo for $82 million from European real estate investment manager, Standard Life Investments.
In a statement announcing the completion of the deal, the London-headquartered fund manager said it had purchased the Ginza 1 Chome Building on behalf of an undisclosed client.
The property is a 13-story multi-use asset comprising 49,000 square feet of retail spread across nine floors and four floors of office space.
“The property is strategically located on the corner site fronting Showa-dori, a major arterial road in Ginza, providing high traffic and visibility for retail tenants while its close proximity to Nihonbashi central business district on the north and Shiodome central business district on the south draws strong demand for office tenants, underpinning our expectations for stable cash flow,” said Shu Watanabe, director of capital transactions for Asia at TH Real Estate. “We also believe that Tokyo’s demographic fundamentals make it a defensive long term investment, supported by a highly developed social infrastructure and mature economy.”
Standard Life Investments had acquired the property in 2014 for £38.7 million via the Standard Life Investments Global Real Estate Fund. The sale has generated an ungeared internal rate of return of 30.1 percent in sterling terms, the firm said in a statement.
“We are pleased to have fulfilled our business plan for this building, working in close collaboration with our local partners; Sumitomo Mitsui Trust Bank and Sumitomo Mitsui Trust Real Estate Investment Management. Our strategy of taking on a degree of letting risk in a core sub-market has generated exceptional returns for investors. Our remaining Tokyo office, Nishi-Shinbashi, continues to be a core holding providing jurisdictional and currency diversification benefits for the fund,” commented James Britton, fund manager of the Standard Life Investments Global Real Estate Fund.
For TH Real Estate, the acquisition follows a string of Asia-based hires as the firm gears up to expand its investment exposure in Asia. Watanabe was appointed in June this year from JP Morgan Asset Management where he was the fund manager for its Tokyo Recovery Fund. His hire was preceded by the appointment of Harry Tan as the Asia Pacific head of research, and Carsten Kebbedies as the region’s head of business development.