CBRE set a benchmark for investment in Tokyo’s iconic Shibuya shopping district with the sale of the Shibuya Flag Building to Mori Trust Sogo REIT for US$326 million on behalf of Prudential Real Estate Investors in its role as fund manager for the asset. CBRE’s Institutional Investment Properties group in Japan collaborated with the Investment Consulting team, senior members of the Capital Markets team in Singapore and the Global Capital Markets team to accomplish the sale.
The landmark property is a five-minute walk from the Shibuya railway station and comprises nine floors above ground and two below, with a total area of 7,766 square meters (83,592 square feet). H&M Japan occupies the first four floors of the building. CBRE has an extensive history with the building, having negotiated the lease on behalf of H&M for its Japan rollout in 2008.
“For an asset of this scale there is a more limited pool of groups with capacity and the ability to seriously compete. We were also mindful of ensuring that the process remained completely confidential,” said Ben Duncan, President and CEO of CBRE’s Japan operations.
“The primary challenge was to create a competitive environment in a very targeted and focused fashion. We anticipated interest from a mix of domestic and offshore parties,” said Reid Mackay, Executive Director of Investment Properties, CBRE Asia. “It was one of the largest retail dispositions ever completed in the Shibuya district. The sale helped boost confidence for the Japanese real estate market in 2013 and became a catalyst for investment activity in high-impact retail locations.”
Before the formal marketing process began, CBRE engaged in a co-sell side agency scheme with a local trust bank. CBRE tapped into its global database to identify prospective buyers, then maximized its deep insight into those clients’ needs and priorities to assemble a competitive short list. CBRE then targeted investors in a strategic way through confidential, face-to-face discussions. These buyers included investors who had never previously bought in Asia but had an existing relationship with the wider CBRE Capital Markets team globally and a track record of acquiring high-profile retail properties.
In the end, CBRE recommended a diverse short list, including multiple buyer types and geographies, and advised the seller throughout the process. “Given that it was a confidential and targeted sale, the execution was very important to the client,” said Tom Moffat, Senior Director of Investment Properties, CBRE Japan. “Pricing was a key consideration, but it was also critical to select a group with a strong capability that had undertaken appropriate due diligence on the asset to ensure they could close without complications.”
“We were delighted to work with CBRE to manage a transaction that delivered a landmark property to an important industry peer and generated attractive returns for our investors,” said a Prudential Real Estate Investors Japan executive.