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March 18, 2022

UBS to divest holdings in Japanese real estate JV for $2bn to KKR

UBS Asset Management has agreed to offload its holding in the Japanese real estate joint venture (JV) to private equity firm KKR.

Under the agreement, KKR’s subsidiary 76KK will acquire all outstanding shares of MC-UBSR in an all-cash transaction valued at $2bn.

The transaction, expected to conclude next month, is subject to required filings and regulatory approvals.

The JV, Mitsubishi Corp.-UBS Realty (MC-UBSR), was set up by the firm’s Real Estate & Private Markets business in 2000 in partnership with Mitsubishi Corporation.

It manages two Tokyo Stock Exchange-listed J-REITs, namely, Japan Metropolitan Fund Investment Corporation (JMF) and Industrial & Infrastructure Fund Investment Corporation (IIF), with total assets under management of around $15bn.

UBS Asset Management president Suni Harford said: “In partnership with Mitsubishi Corporation, 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.”

Harford also said that the Japanese market will remain a cornerstone for the firm’s Real Estate & Private Markets business in the Asia Pacific.

He said: “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.”

KKR said that it supports MC-UBSR’s existing strategy and continuity. The firm plans to use its network and global resources to create value for JMF and IIF unitholders.

The deal is also expected to boost KKR’s global real estate business and offer an immediate boost to Japan market, where the firm has been present since 2006.

KKR Japan CEO and Private Equity co-head of Asia Pacific Hiro Hirano said: “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.”

In January this year, a report by Bloomberg said that KKR is looking to acquire Alcentra, the credit investment unit of BNY Mellon.

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