MGPA, a private-equity real estate investment firm, will pay 12 billion yen ($152 million) for eight office buildings in Japan, according to two people familiar with the transaction.
Seven of the properties are in Tokyo, according to a statement by MGPA today, which didn’t disclose the price. The eighth building is in Yokkaichi city in Tokai region, an area between Tokyo and Osaka, said the people, who asked not to be named because the information is private.
The buildings have a gross floor area of about 350,000 square feet and were acquired through defaulted commercial mortgage backed securities, or bonds tied to real estate loans, according to a statement today from MGPA, which manages $11 billion in assets. Office property prices in Tokyo, which have declined about 40 percent from their peak in 2007, have been little changed this year, signaling the market is stabilizing, according to CBRE Group Inc.
“The supply of new space in the Tokyo office market over the next several years will be 30 percent below the long-term average,” Rio Minami, MGPA’s managing director of capital transactions in Japan, said in the statement, adding that “demand for office space could well surprise on the upside.”
Danielle Ver Bruggen, a spokeswoman for MGPA, couldn’t be reached in her office for comment.
About 600 billion yen to 700 billion yen of defaulted debt is set to be redeemed in the next two years, according to Moody’s Investors Service’s estimate.
The first default in Japan on loans included in CMBS rated by Standard & Poor’s took place in the second quarter of 2008 and increased to 137 cases with loans totaling 950 billion yen as of March, according to a May 14 report by the rating company. Lenders have recovered about 501 billion yen after the underlying properties were sold, the report showed.
The acquisition is made through MGPA Asia Fund III, which also has properties in Singapore and China, according to today’s statement. MGPA is part-owned by Macquarie Group Ltd., Australia’s largest investment bank.