Grosvenor Buys Ginza Shopping Tower in Maiden Japanese Retail Play

Britain’s Grosvenor Group is moving into the Japanese retail sector by picking up a 10-storey shopping tower in Tokyo’s Ginza district, adding to the company’s more than HK$6.8 billion ($871 million) in real estate assets under management in Asia Pacific.

Grosvenor Asia Pacific, the group’s regional operating arm, announced the acquisition of the 6,610 square metre property this week. According to real estate information provider Real Capital Analytics (RCA), the vendor is Japan’s Imabari Shipbuilding Co, which bought the building in February 2015 for an estimated price of JPY 25 billion (around $209 million).

A representative of Grosvenor declined to reveal the current selling price, but sources familiar with the Tokyo market informed Mingtiandi that the amount should not be significantly lower than the property’s 2015 price tag.

Through the acquisition of the prime retail tower, Grosvenor is branching out from its focus on value-add residential projects in the Japanese capital, as the property business of the Duke of Westminster’s Grosvenor Estate ramps up its exposure to Asia.

Moving into Japanese Shopping Assets

“As we add prime retail to our investment and development focus, deepening our presence in the market, we are very pleased to have acquired Namikikan Ginza as a significant statement of our intent,” commented Daniel Cox, Grosvenor managing director and chief representative for Japan in a statement.

“We see great potential in Namikikan Ginza for its attractive location and believe that we can use our skills to enhance its value,” added Daijiro Murakami, head of investment and asset management for Japan.

Built in January 2008, the building is located at 4-3-1, Ginza, Chuo-ku in Tokyo’s upscale shopping district. Imabari, one the world’s largest shipbuilders, had purchased the building two years ago from American activist investor Paul Singer’s Elliott Management.

The building is tenanted by retail shops and travel agencies, and exemplifies the vertical retail format – elsewhere dubbed “Ginza-style” – that is proving increasingly popular in Hong Kong.

Grosvenor Branches Out in Japan

Grosvenor opened a Tokyo office in 2001 and has since built a portfolio of residential properties in the mega-city, launching sales at its 52-unit low-rise development The Westminster Nanpeida in Daikanyama district last year.

The retail play in Ginza follows Grosvenor’s first investment in Hong Kong’s retail sector last December, via the purchase of a two-storey shopping podium in Sai Wan’s Kennedy Town through the newly created Grosvenor Hong Kong Value Partnership. Mingtiandi has learned that the property at the western end of Hong Kong’s Isalnd Line includes the ground floor, commercial unit and first floor of Harbour View Garden Tower 3 at 2 Catchick Street.

Benjamin Cha took the reins as Grosvenor’s chief executive for Asia Pacific in the spring of 2015, with a mandate to grow the firm’s Asia allocation from 10 to 20 percent of its global portfolio. As a niche player in the region, Grosvenor is refocusing its attention on value-add investments in its three core markets of Tokyo, Hong Kong and Shanghai.

Grosvenor trimmed its mainland China portfolio last year by selling off the Parkside Plaza mall in Shanghai’s Putuo district to Chinese developer Joy City for RMB 1.4 billion ($202 million). Earlier in 2016, Grosvenor offloaded its last Beijing asset by selling its eight-storey interest in the city’s China Merchants Tower. The company said it plans to redeploy the capital from these disposals into the Shanghai market.

The privately owned firm develops, manages and invests in properties and related businesses across more than 60 cities worldwide, and had eight assets in Tokyo and two assets in Hong Kong as of the end of last year, generating a total return of 6.3 percent. Grosvenor had £6.5 billion ($9.6 billion) of property assets worldwide and £12.6 billion ($18.6 billion) of assets under management at year-end 2016.