GIC and PGIM Buy Tokyo Offices as Japan Upgrades Growth Forecast

GIC, Singapore’s sovereign wealth fund, is acquiring a 43 percent stake in Shinjuku MAYNDS Tower, a 97,978 square metre Grade-A office property in Tokyo for 62.5 billion yen ($558 million), according to a press release from the fund yesterday.

The Shinjuku SWF deal came just one day after a real estate affiliate of Prudential Financial announced the acquisition of J Tower in Tokyo’s suburban neighborhood, as the latest in an $808 million dollar series of Japanese acquisitions by the company over the past 14 months.

The deals come during the same week that the Japanese government upgraded its outlook for economic growth in the world’s third-largest economy.

GIC Buys into Shinjuku

The Singapore sovereign fund is buying a 43 percent stake in Shinjuku MAYNDS Tower from Daiwa Office Investment Corporation, with the latter retaining the same stake as that of GIC. The Grade-A office is 34-storey office building in Shinjuku, one of Tokyo’s largest commercial and retail districts. Located in the newly redeveloped area south of Shinjuku Station, it is five-minute walk away from the main JR Shinjuku Station. The property has attracted numerous quality tenants due to its prime location, GIC said in the press release.

GIC, which manages over $100 billion in assets, in a statement called the Shinjuku MAYNDS Tower deal “a unique opportunity for the fund to acquire a sizeable and stable income-producing asset.”

Lee Kok Sun, Chief Investment Officer at GIC Real Estate, said. “We have been investing in Japan for nearly 30 years and remain confident in Japan’s continued growth in the long run.” Lee added that the company will continue to pursue opportunities to invest in quality assets in the East Asian country.

PGIM Rocks Japan with Five Office Buys in 14 months

GIC is not the only one stepping into the Tokyo market this week. PGIM Real Estate, a property investment affiliate of Prudential Financial, purchased an 18-story office building with a three-story office annex in Fuchu City, a suburban area near Tokyo’s central business district.

Low vacancy rates, strong tenant demand and limited office supply in Tokyo, against a favorable economic backdrop for Japan overall, created a promising rental growth and stable income, said Benett Theseira, head of Asia Pacific for PGIM Real Estate, in a statement to the media.

Both acquisitions are not the first attempts for the companies to invest in the third largest economy. The Singapore sovereign wealth fund took a 51 percent stake at Tokyo Disneyland Hotel for $463.6 million in September. While PGIM has been on active acquisitions in Japan in the past 14 months, purchasing five office properties in total in Tokyo and Osaka.

Optimism on Japan’s Economy

The government of Japan upgraded its growth projections for the current and next fiscal years to 1.9 percent and 1.8 respectively, from 1.5 percent and 1.4 percent on Tuesday. The optimism is supported by Japan’s recovery in exports. The country’s exports grew for a 12th straight month in November, outperforming economists’ expectations.