Blackstone nearing $2.6 billion acquisition of Westinghouse Tokyo headquarters

According to informed sources, Blackstone Inc. (BX.US) has emerged as the frontrunner to acquire a multi-functional office building in Tokyo being sold by Seibu Holdings Inc., a deal that could be worth around 400 billion yen (26 billion dollars). The sources stated that after a bidding process lasting several months, Seibu Holdings has chosen to partner with this unconventional American investment company to sell their Tokyo Garden Terrace Kioicho. The negotiating price is said to be around 400 billion yen, but because the negotiations also involve an agreement for Seibu Holdings to continue operating and managing the facility, the price may change. If the deal is completed at this level, it will be one of the most expensive single real estate transactions in Japan. Informed sources revealed that the goal for both parties is to sign an agreement by the end of this year. The sources also mentioned that negotiations are still ongoing and they may decide not to proceed with the transaction. Other final bidders reportedly include KKR & Co. and BentallGreenOak. In an email statement, Seibu Holdings stated that as part of their medium-term plan, the company has been discussing the sale of the Tokyo Garden Terrace Kioicho and hopes to finalize the deal by the end of the year, but no decision has been made yet. Seibu Holdings' stock price initially rose by 5.1%, but later gave up the gains, falling by 1.2% at 1:40 p.m. Tokyo time. Representatives of Blackstone and KKR declined to comment. BentallGreenOak did not respond to requests for comment from reporters. In May, Seibu Holdings announced they would sell the Tokyo Garden Terrace Kioicho, which includes a 36-story office building, rental apartments, a hotel, and various retail and dining facilities. The property was developed by Seibu Holdings and opened in 2016 in the central area of Japan's capital, near government buildings and the Prime Minister's office. If sold to Blackstone, it would be the largest real estate transaction for this American asset management company in Japan and potentially the largest acquisition by a foreign fund. Due to the attraction of a depreciating yen, low borrowing costs, and strong performance of properties in metropolitan areas such as apartments, offices, and hotels, overseas investors have become more active in the Japanese market. According to data from Jones Lang LaSalle (JLL), commercial real estate investment in Japan in the first half of this year increased by 21% year-on-year to 2.6 trillion yen. JLL stated that Tokyo is the most active global city, ranking ahead of New York and London. As part of their transition to a "light asset" strategy, Seibu Holdings has been selling off their extensive real estate investment portfolio. A document from May showed that activist investor 3D Investment Partners Pte holds a 5.01% stake in the group. This Singapore-based company is known for urging companies to unlock the value of their real estate holdings.