(Bloomberg) -- A group led by KKR & Co. and one of Japan’s largest real estate companies made a bid to acquire a Tokyo skyscraper owned by Singapore sovereign wealth fund GIC Pte, according to people familiar with the matter.
KJR Management, a Japanese real estate unit of KKR, and Hulic Co. put in the offer for Shiodome City Center, a 43-story office tower in one of Tokyo’s central business districts, the people said, asking not to be identified because the information is private. The bid was priced around ¥300 billion ($2 billion), they added, making any potential sale one of the most expensive office building transactions ever in Japan.
GIC appointed brokers and started marketing Shiodome City Center to potential buyers in mid-2023 with hopes of clinching a deal in early 2024, Bloomberg reported last September. But the sale dragged on as an anchor tenant was replaced, and at one point it was taken off the market, one of the people said.
The KKR-Hulic offer was the sole bid for the building, one of the people said. Discussions are ongoing and the parties involved may decide against proceeding with a deal, according to the people. More capital partners could also join the KKR and Hulic bid, another person added.
Representatives for KKR and GIC declined to comment. Hulic didn’t respond to requests for comment.
Unlike in the US, the commercial real estate market has been stable in Japan as the weak yen and low borrowing costs continue to draw investor interest. Tokyo’s office market has also fared better than other major cities around the world since the pandemic because work from home habits haven’t stuck in Japan. Vacancy rates in the capital’s business areas have averaged around 5.5% this year.
Tokyo’s top-grade office towers rarely change hands as local developers tend to hold on to the properties they build. A GIC affiliate developed Shiodome City Center in 2003 with Mitsui Fudosan Co., one of Japan’s largest real estate companies.
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