Mitsubishi Estate Said Doubling Overseas Property Fund to $9B

Mitsubishi Estate Corporation is looking to double the size of its overseas property investment platform to JPY 1 trillion ($9 billion), according to a report in the Nikkei Asian Review.

The Japanese property giant plans to expand the low-risk, long-term vehicle – which currently manages JPY 500 billion in real estate assets in the US, Europe and Asia – over the next few years.

Mitsubishi Estate is said to be forming a holding company this month to take direct oversight for a pair of regional investment management subsidiaries in the US and Europe and a joint venture in Asia that currently manage and raise funds locally.

The investment vehicles managed by Mitsubishi Estate subsidiaries Boston-based TA Realty and London-headquartered Europa Capital Group, as well as the Japanese developer’s JV with Hong Kong’s CLSA Real Estate, will be packaged up to offer investors a range of worldwide products.

Trademarking MEC Global Partners

The Tokyo-listed real estate giant, which has assets under management of JPY 5.7 trillion, is looking to further consolidate its overseas property fund business after ten years of assembling the component parts under a holding company which oversees the US, Europe and Asia elements of the vehicle.

The holding company will partner with Mitsubishi Jisho Investment Advisors, a real estate investment unit of the Japanese property group that manages Mitsubishi Estate’s property assets domestically, according to the Nikkei account.

The reported move by the company follows a filing on 11 November by Mitsubishi Estate to trademark the name MEC Global Partners as a provider of real estate brokerage, fundraising and investment services.

Assembling a Global Fund

In Asia, Mitsubishi Estate has been managing investments through PA Realty, the company’s Singapore-based joint venture with CLSA Real Estate Partners.

The JV in Southeast Asia’s financial capital was set up just under three years ago with a $300 million mandate to invest in core real estate in Asia Pacific, including Australia, through a fund known as Pan Asia Realty Core Plus SCSp-RAIF.

At the time of its launch in 2017 CLSA was reported to be hoping to raise capital locally that would double or triple the initial capital contributed by Mitsubishi Estate, according to sources cited by IPE.

The CLSA JV was preceded by MItsubishi’s acquisitions of US fund manager TA Realty in 2014 and UK-based real estate investment firm Europa Capital in 2010.

Targeting Singapore and Australia

Since it was established in 2017, the PA Realty-managed fund has contributed to Mitsubishi Estate’s global footprint with acquisitions in Singapore and Australia.

In April last year, Pan Asia Realty Core Plus paid S$520 million ($385 million) to acquire the Chinatown Point Mall in Singapore, along with an accompanying set of four strata office units, from Perennial Real Estate Holdings and a consortium of investors including Singapore Press Holdings.

That Singapore acquisition came a year and a half after the fund purchased a 10,098 square metre office tower at 130 Pitt Street in Sydney from Australia’s Investa Property Group for A$229 million ($159 million).

Expanding Asia Pacific Footprint

Mitsubishi’s expansion of its global real estate fund business has run in tandem with the developer increasing its Asia Pacific exposure outside of Japan, both directly and through its Mitsubishi Estate Asia subsidiary, via a stream of development projects and acquisitions.

Just three months ago, a joint venture between Mitsubishi Estate, Lendlease and Ping An Real Estate marked the completion of an A$1.9 billion skyscraper along Sydney’s Circular Quay by leasing half of the building to Salesforce.

In Singapore, the Japanese property giant in 2017 teamed up with CapitaLand through Mitsubishi Estate Asia, to develop the S$1.82 CapitaSpring mixed-used project near Raffles Place.

CapitaLand’s partnership with Mitsubishi Estate Asia has seen the two firms work together on a series of residential, office and retail projects across Singapore, Japan, China and Vietnam in the last ten years.

In Australia, Mitsubishi Estate Asia has also set up a residential joint venture with Lendlease in Melbourne, and the Japanese firm has set up a retail outlet mall JV in Thailand with the country’s Central Pattana.