Goodwin Gaw, CEO of Gaw Capital Partners
Hong Kong private equity firm Gaw Capital Partners has acquired a 13-storey office tower in Tokyo’s posh Aoyama area, the company confirmed in a conversation with Mingtiandi today without revealing financial details of the transaction.
Gaw, which manages real estate investment funds on behalf of some of the world’s largest institutions, is purchasing the asset from New York-based GreenOak Real Estate, with the Hong Kong firm agreeing to pay JPY 84 billion ($750 million) for the property, Mingtiandi has come to understand.
The acquisition follows Gaw’s $1.3 billion final closing of its Gateway Real Estate Fund VI in October last year, which provided chairman Goodwin Gaw and his associates with the capital necessary to take part, together with partners, in four major acquisitions in the ensuing five months of assets worth a combined $3.2 billion.
Gaw’s New Foothold in Tokyo
The deal is Gaw Capital’s first office buy in Tokyo, and their second in the land of the rising sun following their $760 million 2017 purchase of the Minatomirai Center Building in Yokohama. The private equity fund managers, who also own two resort hotels in Okinawa, have now built a Japan portfolio of five properties including the Minato ward asset.
The 47 year-old Aoyama Building is a 302,145 square foot (28,070 square metre) grade B+/A- office tower situated between the commercial areas of Omotesando and Akasaka, 50 metres from the Aoyama-itchome subway station at the intersection of three rail lines.
British luxury car maker Aston Martin has its Japan headquarters in the building while GreenOak’s Tokyo team occupies the seventh floor.
Sellers Triple 2015 Investment
GreenOak bought the office block in 2015, paying Mitsubishi Jisho Investment $500 million for the asset – with the company said to have achieved a three times return on their equity investment with the disposal, according to sources. Under the leadership of partner Dan Klebes, the US firm have now reduced their Tokyo portfolio to 18 office properties following the sale.
The Aoyama Building, Gaw’s new Tokyo acquisition
The disposal follows just over three months after GreenOak, which was founded in 2010 by former Morgan Stanley executives Sonny Kalsi, Fred Schmidt and John Carrafiell, sold a 56 percent equity stake in itself to Canada’s Bentall Kennedy, as part of a merger with the real estate investment subsidiary of insurer Sun Life.
Just last week, GreenOak was said to be taking bids of as much as 2 billion euros ($2.2 billion), for a portfolio of European warehouse assets, after having hired a broker to dispose of the logistics properties earlier this year, according to Bloomberg.
Tokyo Minato Ward Office Market Looks Strong
Gaw’s acquisition gives the firm the opportunity to benefit from climbing rents and low vacancy rates in Minato ward.
According to data obtained from Savills, the ward’s grade A vacancy rate tightened 0.3 percentage points in the last quarter of 2018 and 0.6 percentage points year on year, ending 2018 at just 0.5 percent vacancy. During the last three months of the year, the agency found that grade A rents climbed by 1.6 percent quarter on quarter and 3.8 percent year on year to JPY 32,098 ($288) per tsubo, or $87 per square metre.
Office rents for large-scale grade B buildings also rose 5.7 percent year on year in the last three months of 2018 to JPY 26,376 ($237) per tsubo, or $72 per square metre, while vacancy rates finished the year at 0.7 percent — market conditions that could make this purchase attractive to Gaw.
Boost to Gaw’s Asian Portfolio
With a series of other acquisitions completed since mid-December, the purchase of the Aoyama Building continues Gaw’s drive to expand its Asian portfolio.
In February, Gaw acquired Robinson 77, an office building in Singapore’s Tanjong Pagar area, for S$710 million ($526 million) from a fund managed by CLSA Capital Partners.
The month before, it finalised its second Shanghai purchase in the space of a month when it bought a quartet of grade A office buildings in the Hongqiao area for RMB 2.8 billion ($390 million) from China Resources Capital Management Ltd.
Late last year, Gaw led a consortium of investors, including Goldman Sachs and Blackstone, in the purchase of a portfolio of 12 shopping centres from Hong Kong’s Link REIT for HK$12.01 billion ($1.54 billion).
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