KKR Buys J-REIT Manager Mitsubishi Corp.-UBS Realty Inc., Gets Foothold in Lucrative Japanese RE Market
Posted on 03/17/2022
Japan is one of the most high-volume real estate markets on the planet. KKR & Co. Inc. is acquiring all of the outstanding shares of Mitsubishi Corp.-UBS Realty Inc. (MC-UBSR) from Mitsubishi Corporation and UBS Asset Management (UBS-AM) in an all-cash transaction valued at JPY 230 billion (US$ 2 billion). UBS Asset Management is under UBS Group AG and UBS AG.
MC-UBSR is one of the largest real estate asset managers in Japan. Founded in 2000 as a joint venture between Mitsubishi and UBS-AM, MC-UBSR is a major player in the Japanese real estate investment trust (J-REIT) segment. Mitsubishi Corp.-UBS Realty Inc. is one of the largest real estate asset managers in Japan with JPY1.7 trillion (US$ 15 billion) in assets under management. The business has approximately 170 dedicated professionals managing two Tokyo Stock Exchange-listed REITs: Japan Metropolitan Fund Investment Corporation (JMF) and Industrial & Infrastructure Fund Investment Corporation (IIF).
Japan Metropolitan Fund Investment Corporation, with approximately JPY 1.3 trillion (US$ 11 billion) in assets under management as of August 31, 2021, invests in retail, offices, hotels and other assets located in urban areas. Industrial & Infrastructure Fund Investment Corporation, with approximately JPY 0.5 trillion (US$ 4 billion) in assets under management as of January 31, 2022, focuses on industrial and infrastructure properties in Japan.
Mitsubishi Corporation oversees Mitsubishi Corporation Urban Development, Inc. and Diamond Realty Management Inc
UBS’s asset management, wealth management, and investment banking businesses operating in Japan are unaffected by the transaction.
KKR has had a local presence in Japan and team since 2006. KKR’s global real estate business manages US$ 41 billion in client assets as of December 31, 2021.
Details
76KK, a subsidiary of KKR, to acquire all of the outstanding shares of MC-UBSR in an all-cash transaction valued at JPY230 billion (US $2 billion).
76KK will also acquire the units in JMF and IIF currently held by Mitsubishi at market price, thereby strengthening the alignment of interest between KKR and the unitholders of JMF and IIF.
MC-UBSR’s existing experienced management team of professionals is expected to remain in place and continue to manage JMF and IIF. KKR intends to work closely with the existing team to
integrate the business with KKR’s US$41 billion real estate business.
The investment will be held on KKR’s balance sheet, not in any client funds.
The transaction is expected to close in April 2022 and is subject to required regulatory approvals and certain other customary closing conditions.
Advisors
Simpson Thacher & Bartlett LLP and Nagashima Ohno & Tsunematsu served as legal advisers to KKR and Sumitomo Mitsui Banking Corporation served as financial adviser to KKR.
UBS Investment Bank acted as exclusive financial advisor to Mitsubishi, UBS-AM and MC-UBSR. Nishimura & Asahi served as legal advisers to Mitsubishi. Mori Hamada & Matsumoto served as legal advisers to UBS-AM. Anderson Mori & Tomotsune served as legal advisers to MC-UBSR.
