Mitsubishi Estate and its joint venture partner, CLSA Real Estate Partners, have acquired an office tower in Sydney, Australia for AUD229m (€146m).
The seller is the unlisted wholesale Investa Commercial Property Fund (ICPF).
The purchase was made through Pan Asia Realty Advisors (PARA), a vehicle set up by the partners in July to acquire and warehouse assets that will eventually seed an open-ended core Asia fund.
The transaction, done on an initial yield of 3.7%, shows further yield compression in the capital of New South Wales.
Last month, TH Real Estate sold a nearby office block at office block at record yield to Hong Kong buyer.
Jason Leong, ICPF fund manager, described the sale as “an outstanding result”.
He said the transaction achieved a strong return for investors, delivering a premium to current valuation. It justified ICPF’s strategy of divesting non-core assets within the portfolio at an opportune time in the cycle.
Proceeds from the sale will be used to reinvest in developments and acquisitions, he said.
Tokyo-based Mitsubishi Estate said in July that it intended to create a ¥2bn (€1.57bn) pan-Asian core real estate fund in four years through its joint venture with CLSA Real Estate Partners.
The strategy is to accumulate office and retail assets – mostly in Australia and Singapore – funded from Mitsubishi Estate’s balance sheet.
In February, IPE Real Assets reported that Mitsubishi Estate had given CLSA a mandate of around US$300m to invest in core Asia-Pacific real estate.
Asia Pacific is the third leg of Mitsubishi Estate’s global diversification strategy.
In 2014, it acquired the US real estate fund manager, TA Realty, four years after buying pan-European manager Europa Capital.
Its plan is to invest its balance sheet capital in core real estate in all three regions and to use these assets to seed open-ended vehicles.