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GIC said to have backed out of Tokyo property deal

TOKYO — Singapore sovereign wealth fund GIC has backed out of buying a Tokyo property from Lone Star Funds due to a legal dispute over the property’s ownership, said people familiar with the transaction.

TOKYO — Singapore sovereign wealth fund GIC has backed out of buying a Tokyo property from Lone Star Funds due to a legal dispute over the property’s ownership, said people familiar with the transaction.

GIC earlier this year agreed to buy Meguro Gajoen, an office complex and a wedding hall, for about US$1.3 billion (S$1.61 billion). If finalised, it would be one of the largest property deals in Tokyo since the 2008 financial crisis.

However, GIC is now cautious about completing the sale due to a lawsuit filed in April by the family of Meguro Gajoen’s founder, Mr Rikizo Hosokawa, said the sources.

Both GIC and Lone Star declined to comment.

Lone Star gained control of most of the Meguro Gajoen in 2002 by buying debt owed by the founding Hosokawa family from a group of lenders at a discount and made several attempts to sell the property since 2006.

Two of Mr Hosokawa’s granddaughters retained ownership of part of the property, which they sold in 2007 to the Japanese unit of Prudential Real Estate Investors, the property investment unit of Prudential Financial, court documents showed.

The granddaughters said they sold their holdings to Prudential Real Estate after the investment firm agreed to support their campaign to prevent Lone Star from selling its part of the property to a third party, the documents showed.

Prudential Real Estate sold the plot to Lone Star this year around the same time that GIC had made a preliminary agreement to buy the property, the court documents showed.

In their lawsuit, the granddaughters asked the court to void the sale to Prudential because it violated their agreement, the documents showed. AGENCIES

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