“Japanese Fiscal Year End 2010: Windows of Opportunity.”

Japan Real Estate Market Summary
With pressure from a booming CMBS market and fiscal year end liquidations, some cash rich buyers are finding bargain deals that usually only appear once a year:

In recent news, PREEF announced it’s acquisition of Frontier Ebisu completed in 37 million Euros (4.62 billion JPY currency rate EUR 1 = 124.99 JPY as of 02/22/2010) with an estimated Cap rate of 6.5%.
This deal was on market for 1 year, beginning at an asking price of 7 billion JPY.
This is one example of a distressed seller liquidating at much lower price.
There are some other undergoing deals favoring buyers initiative as fiscal year end distressed selling is now at its peak period until the end of the Japanese fiscal year on March 31.
There are potentially more distressed inventory which we may see on sale within 2010 as refinancing dates approach.

Office Market

Market Status
Small sized office buildings are attractive for it’s higher cap rate, some opportunistic office buildings were available at above 10% cap rate
(built within 5-15 years, lot size JPY 1.0-2.5 billion in Tokyo central 5 wards)
On the contrary, large sized office building in Tokyo central 5 wards are still rare on-market. There is consistent strong demand for prime office buildings from institutional investors and the market level has remained relatively stable.
Market cap rate is about 4.5-5.25% for prime office buildings in Tokyo central 5 wards.
Those deals are most often exclusively available to a very limited network.

Market Cap rate (Central Tokyo Only)
*Office buildings in Tokyo 5 wards prime areas,built in about 5yrs, lot size is more than 5 billion JPY, cap rate is about 4.50-5.00%
*Office buildings in Tokyo 5 wards prime areas,built in about 10yrs, lot size is more than 5 billion JPY, cap rate is about 5.00-5.50%
*Smaller size office buildings (lot size : less than 1 billion JPY) : cap rate is 6.00 - 10.00%

Selected Properties
1.Central Tokyo Office Building (Minato-ku)
Completed : 1985
No. of floor: 10
Building Area : 10,000m2
Occupancy : 70%
Asking Price : JPY 5,000,000,000-
Net Operating Income / Cap Rate : 5.50% (at present occupancy)
Remarks : opportunistic, great deal for value-up investor,

2.Central Tokyo Office Building (Nihonbashi)
Completed : 1986
No. of floor: 10
NRA: 5,700m2
Occupancy : 100%
Asking price : JPY 6,500,000,000-
Net Operating Income / Cap Rate : 6.00%

Residential Market

Market Status
In spite of pressure from a booming CMBS market and fiscal year end sales, residential property market is the most stable attracting individual and corporate investors. Market level shows good support for residential prices.
As signs of increasing occupancy and stabilizing rent prices are seen, large sized and high end residential properties in Tokyo’s prime areas are becoming attractive deals for institutional investors.

Market Cap rate (Central Tokyo Only)
*Residential buildings in Tokyo 5 wards + Meguro & Bunkyo wards , built in about 5yrs, lot size is more than 4 billion JPY, cap rate is about 5.00-5.50%
*Residential buildings in Tokyo 5 wards + Meguro & Bunkyo wards , built in about 10yrs, lot size is more than 4 billion JPY, cap rate is about 5.25-5.75%
*Residential buildings in Tokyo 5 wards + Meguro & Bunkyo wards  ,built in about 10yrs, lot size is less than 1 billion JPY, cap rate is about 6.00 - 7.00%

Selected Properties
1.Central Tokyo Residential & Retail Building (Roppongi / Akasaka)
Completed : 2010
NO. of unit: 20 units (residences & retails)
Occupancy : 40%+
NRA : 3,000m2
Asking price: JPY 5,000,000,000-
Net Operating Income / Cap Rate : N.A
Remarks : Best location in Japan , Brand new building.

2.Central Tokyo Residential Building (Shibuya-ku)
Completed : 2007
NO. of unit : 31 (90% occupancy)
NRA: 850m2
Asking price: JPY 650,000,000-
Net Operating Income / Cap Rate : 5.60%

Hotel Market

Market Status
Hotel investment market is still in a difficult phase; decreasing occupancy rate has slowed down, however time is still needed for recovery. Roughly one fifth of well located and well marketed hotels are on the way to recovery,however the rest of industry are mired in constant price competition.

Some very rare and exclusive hotels are available due to owner distress. Kyoto is traditionally a very conservative city where
real estate deals are kept within a limited network. However recently a hotel superbly located in front of central Kyoto station became available for sale through our networks and is definitely worth to take a look at.

Market Statistics (December. 2009)
*Tokyo Hotel : ADR - USD 261.65  /  RevPAR - USD 189.96  /  Occ.rate - 72.6% (HNN),  76.0% (Hotel&Restaurant magazine)
*Japan Hotel : ADR - USD 161.17  /  RevPAR - USD 113.23  /  Occ.rate - 70.3%(HNN)
*Please contact us for more details.

Selected Properties
1.Brand new limited service hotel in Kyoto
Completed : 2009
Type : Limited service hotel
Access : 1 min to Kyoto station
No. of rooms : 200+
Occupancy :　unknown
Asking price: JPY 7,500,000,000-
*in front of Kyoto station, trophy hotel in Kyoto.

2 A variety of full & limited service hotels in Tokyo, Yokohama & Osaka
available upon inquiry.

(We are dealing development sites for luxury resort development such as destination club and etc,, too. please contact us for resort development in Japan.)

Financing / Debt Market

Lenders are primarily focusing on lending towards A-class properties
and properties with a maximum LTV of 50-60% on senior loans.
The interest rate is about LIBOR + 200-300 basis points for A and B class office buildings in Tokyo.

Asterisk Realty is a first class private Japanese real estate brokerage that markets high net worth Japanese properties to international investors seeking advisory on property development, ownership, investment and occupation.

Superb off-market properties are rarely seen in the open market even during times of financial hardship. However there is a door way into the discrete market where conservative Japanese property owners welcome trusted and accredited “outside buyers”. Asterisk Realty is an exclusive gateway to build trust with foreign investment interest and introduce the best of the best off-market properties.

Please contact us for superb investment opportunities in Japan.

Contact : info@asteriskrealty.jp