Mori Trust Co., Japan’s second-biggest closely held developer by sales, acquired Meguro Gajoen, an office and banquet hall complex in Tokyo that was put up for sale by Lone Star Funds.
Mori Trust’s acquisition includes five buildings on land of 37,000 square meters (398,265 square feet), the Tokyo-based company said in a statement, without naming Lone Star. Mori paid about 130 billion yen ($1.25 billion) to buy the property, known for its gardens and as a favored wedding location, from Lone Star, people familiar with the deal said, asking not to be identified because the information is private. Hudson Japan K.K., a local unit of Lone Star, declined to comment.
GIC Pte, Singapore’s sovereign wealth fund, withdrew from pursuing the bid earlier this year because of a legal dispute involving the land included in the sale, people familiar with the transaction said at the time. Investments in Japan’s property market have been rising after Prime Minister Shinzo Abe introduced measures to revive the economy.
“The sale has been in discussion for a while and it has now found a buyer,” said Kayoko Hirao, head of Japan research at DTZ. “That is an indication of investors’ expectation of market improvement.”
Real estate investment in the country, the world’s most active market after London and New York, surged 70 percent to 4.6 trillion yen in the year ended March from a year earlier, according to a report published in July by Deutsche Asset & Wealth Management.
Meguro Gajoen, in central Tokyo, comprises chapels, banquet halls, restaurants and hotel rooms. A 100-step stairway, used for special occasions, has been declared a cultural asset by the Tokyo Metropolitan Government.
Mori Trust has said it plans to expand its hotel business in Japan amid a rising number of inbound tourists and business travelers. It is considering the renovation of several hotels and development of new resorts in the country, Miwako Date, executive managing director of the Tokyo-based developer, said in an interview in July.
Lone Star, which typically focuses on assets that have a real estate component, made its name buying distressed loan portfolios and lenders in Asia starting in the late 1990s, with investments ranging from golf courses in Japan to office towers in Seoul. The company has raised 12 private-equity funds with combined capital pledges of more than $45 billion since 1995.
The Nikkei newspaper reported the deal earlier today.