GIC’s Tokyo property attracts $US1.4b bid from Japanese developer Kenedix: sources

[TOKYO] Singapore’s sovereign wealth fund GIC has given Japanese developer Kenedix first negotiation rights to purchase office space in central Tokyo, people familiar with the matter said.

Kenedix submitted a bid of around 230 billion yen (US$1.4 billion) for office floors owned by GIC in Pacific Century Place Marunouchi, said the people, asking not to be identified because the information is private.

Negotiations are continuing, and there is a possibility that an agreement won’t be reached, the people said.

Representatives at GIC and Kenedix were not immediately available to comment.

The potential purchase by Kenedix indicates that domestic developers are also keen on taking part in the biggest property deals in Japan’s capital, after a series of high-profile transactions by foreign firms such as KKR and Brookfield Asset Management. Climbing interest rates are prompting investors to unload property, rather than pay loans with ever-pricier floating rates.

Tokyo real estate prices have been rising for several years. The property market revival has also received a boost from authorities pushing companies to use capital more efficiently, and spinning off non-core real estate businesses is one way to do that. For investors, inflation-fuelled gains in office rents help make the market attractive.

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GIC is offering all of its office space from the 8th to 31st floor in the Pacific Century Place building next to Tokyo Station. The fund acquired the property in 2014 from what is now PAG Investment Management for around 180 billion yen. BLOOMBERG