Warburg Pincus Buys Tokyo Office Building Under Life Sciences JV With Eastgate

Warburg Pincus on Thursday announced its acquisition of an office building in Tokyo’s Shinagawa ward under the private equity major’s GRC life sciences joint venture with Japanese asset manager Eastgate.

The JV picked up Shinagawa Seaside West Tower as the third transaction under the partnership since its inception in 2023, expanding the portfolio to include assets in both Yokohama and the capital city, Warburg Pincus said in a release. The JV, which the Manhattan-based firm invests in through its Warburg Pincus Asia Real Estate Fund, manages over 1 million square feet (92,903 square metres) of gross floor area and has more than $300 million in assets under management.

Secular trends including a rapidly ageing population, strong growth in the healthcare market and a shortage of leasable space for life sciences and R&D are lending support to the firm’s conviction in the sector, said Takashi Murata, head of Japan at Warburg Pincus.

“By leveraging Warburg Pincus’s deep platform-building experience and operational expertise and Eastgate’s strong track record and local resources, we believe that GRC is well-positioned to meet the evolving needs for high-quality, specialised life sciences and R&D facilities in Japan among a diversified group of tenant base,” Murata said.

Global One REIT Disposal

The 18-storey Shinagawa Seaside West Tower offers 410,000 square feet of gross floor area, with structural specifications suitable for accommodating wet and dry labs, Warburg Pincus said.

The US firm didn’t disclose financial details or the name of the seller. In January, Global One REIT announced a deal to sell a 50 percent stake in the 2004-vintage building for JPY 12.4 billion ($77 million).

The Tokyo-listed trust said at the time that the unnamed buyer planned a conversion of 13,200 square metres of vacant space across nine contiguous floors for “uses other than offices”. Mitsubishi Research Institute DCS, which occupies 60 percent of the building’s leasable area, is moving out at the end of September, according to the trust’s manager.

In November 2023, the JV acquired its first asset, GRC Yokohama Bay Research Park (formerly Technowave 100), a 17-storey mixed-use commercial building with 540,000 square feet of gross floor area suited to tenants from specialist industries like engineering, technology, government research and manufacturing.

The venture acquired the soon-to-be-renamed GRC Yokohama Science Cube in December of last year. The 78,000 square foot property, situated next to Center Kita station in Yokohama, is set to be transformed into an R&D and medical facility, Warburg Pincus said.

“As one of the first movers in this space, having managed R&D assets for more than 15 years, we have observed first-hand the critical undersupply of high-quality, well-managed R&D facilities and the resulting rental premium they command,” said Eastgate founder and CEO Shozo Sekine.

Japan Buys Gather Steam

Warburg Pincus made its latest announcement one day after the firm revealed its acquisition of a 16,192-room shared living portfolio from US fund manager Lone Star, marking its maiden investment in Japan’s rental housing sector.

The Tokyo Beta portfolio was formed by Lone Star after the purchase of more than 1,000 non-performing loans in Japan between 2020 and 2022, the Dallas-based firm said Wednesday in a release. Following the acquisition, Lone Star restructured the management of nearly 1,200 share houses from more than 200 individual property managers, streamlining operations into a single platform of affordable rental units aimed at young professionals and students.

“This portfolio highlights Lone Star’s willingness and ability to develop strong and promising businesses serving not only our investors but also Japanese consumers with improved products and services,” said Lone Star Japan head Mitsuo Matsunaga.