KKR said that 76KK, a subsidiary of KKR, agreed to acquire all of the outstanding shares of Mitsubishi Corp.-UBS Realty Inc. (MC-UBSR), a real estate asset management company in Japan, from Mitsubishi and UBS Asset Management (UBS-AM) for JPY230 billion (US$2 billion).
Founded in 2000 as a joint venture between Mitsubishi and UBS-AM, MC-UBSR is a pioneer in the Japanese real estate investment trust (J-REIT) segment.
Today, it is one of the largest real estate asset managers in Japan with JPY1.7 trillion (US$15 billion) in assets under management, said KKR in a statement.
The business manages two Tokyo Stock Exchange-listed REITs: Japan Metropolitan Fund Investment Corporation (JMF) and Industrial & Infrastructure Fund Investment Corporation (IIF).
76KK will also acquire the units in JMF and IIF currently held by Mitsubishi at market price.
JMF, with approximately JPY1.3 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.
IIF, 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.
Both REITs have established environmental, social, governance (ESG) programs and are included in the MSCI Japan ESG Select Leaders Index.
KKR said the acquisition deepens its presence in Japan and expands its US$41 billion global real estate business to US$55 billion.
Commenting on the transaction, Katsuji Okamoto, President & CEO and Representative Director of MC-UBSR, said, “Mitsubishi and UBS-AM showed us unwavering support over the years, enabling MC-UBSR to become Japan’s outright top J-REIT manager. We are excited to welcome KKR, which brings significant resources and relationships to MC-UBSR, and is well-placed to work with our experienced team to extend our long and successful track record of delivering strong results for the unitholders of JMF and IIF and take the business to the next level.”
“Japan is one of the most important and high-volume real estate markets in the world, and is a market we have been dedicated to investing in with a local team since 2006. MC-UBSR has an excellent track record of serving investors across its REIT offerings and a strong commitment to enhancing its investments through a strategic approach to ESG. We look forward to working with and supporting a team that has served investors so well over the last two decades, and we anticipate that our combined strengths will further enhance MC-UBSR’s ability to deliver for new and existing clients and unitholders,” said Hiro Hirano, CEO of KKR Japan and Co-Head of Asia Pacific Private Equity at KKR.
Takuya Kuga, Group CEO-designate, Urban Development Group of Mitsubishi, said, “We are pleased to have supported MC-UBSR’s development and operations over these past 20 years, and are proud to have grown MC-UBSR into Japan’s leading REIT manager. Mitsubishi continuously strives to optimize and strengthen its business portfolio, and will continue to expand its real estate development and asset management businesses in Japan, led by its wholly owned subsidiaries, Mitsubishi Corporation Urban Development, Inc. and Diamond Realty Management Inc, along with accelerating its initiatives in overseas real estate and large-scale urban development/management business. Welcoming a high-caliber real estate and diversified investment firm like KKR is a major endorsement of MC-UBSR, its team and its business, and we look forward to working with KKR and MC-UBSR.”
Suni Harford, President of UBS Asset Management, said, “In partnership with Mitsubishi, we are proud to have developed MC-UBSR into a leading real estate platform in Japan. We are confident that KKR is well placed to take this business forward and wish the MC-UBSR team every success for the future. The Japanese market remains a cornerstone of our Real Estate & Private Markets business in Asia Pacific, and we remain focused on serving the needs of our clients and capturing growth opportunities in this strategically important region. Through our rapidly growing real estate investment unit, UBS Japan Advisors, we will continue to advise our clients on Japanese property investments.”