Mitsubishi Partners with Grosvenor to Expand Real Estate Fund Operations

Mitsubishi Corp. and U.K.-based real estate developer Grosvenor Group Holdings Ltd. are teaming up to expand their real estate fund operations, marking a significant move into the Japanese market. The joint venture plans to launch a roughly 33 billion yen (US$304.1 million) real estate fund for private placement, targeting a yield of around 8 per cent. The partnership aims to tap into growing demand among domestic institutional investors for overseas properties, while also seeking to attract Japanese investors.

Key Takeaways:

• Mitsubishi and Grosvenor are establishing a joint real estate fund with an initial investment of 33 billion yen (US$304.1 million) and a term of seven years.
• The fund will target a yield of around 8 per cent and invest in condominiums in central urban areas.
• The partnership plans to launch more funds in the near future, targeting pension funds and other institutional investors.
• The joint venture aims to expand its real estate investment and fund management operations into Europe, the U.S., and Asia in the medium term.
• Grosvenor owns and manages 7.7 billion pounds (1.5 trillion yen) of real estate in 17 countries, including the UK, Europe, and Asia.
• Mitsubishi expects growing demand among domestic institutional investors for overseas properties, driven by declining yields in domestic real estate investment trusts (REITs).

Statistics:

• 33 billion yen (US$304.1 million) - initial investment in the joint real estate fund
• 8 per cent - target yield for the joint real estate fund
• 7 per cent - average yield of U.S. real estate investment trusts (REITs)
• 3 per cent - current yield level of real estate investment trust dividend yields in Japan
• 7.7 billion pounds (1.5 trillion yen) - value of real estate owned and managed by Grosvenor in 17 countries

Sources:

• Asia Pulse, "Mitsubishi Corp., Grosvenor Group Holdings Ltd. to partner on real estate fund operations"
• Nikkei (Japanese language only)
• Mitsubishi Corp. (TSE:8058)
• Grosvenor Group Holdings Ltd.