The Real Deal Miami

Japanese firm snags 20 percent stake in CIM, owner of SLS South Beach

Mitsui Fudosan America will contribute $450-500M to funds managed by firm
By Katherine Clarke | February 20, 2017 02:15PM

Tatsuo Yasunaga and Avi Shemesh

From the Los Angeles website: UPDATED, Feb. 20, 5:13 p.m.: Japanese trading conglomerate Mitsui & Co. will acquire a 20 percent stake in Los Angeles-based real estate investment firm CIM Group, it announced Monday.

Mitsui (Note: Correction appended) will also contribute between $450 and $550 million toward funds managed by CIM, it said. The two firms have established a dedicated investment vehicle to manage those funds, known as Sabre Investments LLC.

Mitsui Fudosan America will also contribute between $450 and $550 million toward funds managed by CIM, it said. The two firms have established a dedicated investment vehicle to manage those funds, known as Sabre Investments LLC.

The deal is Mitsui’s first foray into the U.S. real estate asset management market, though it’s already in the midst of developing a handful of ground-up real estate projects in both Los Angeles and New York. The company first established a West Coast office in San Francisco in 2014.

The partnership gives CIM, which already manages $19.2 billion in assets, greater access to the Japanese market. The company reportedly aims to raise several hundred billion yen in new capital from Japanese investors in the next few years

“We are excited to partner with Mitsui to position CIM to be the first choice for Japanese investors interested in real estate and infrastructure investments in North America,” Avi Shemesh, co-founder of CIM, said in a statement.

The transaction serves as further evidence that Japanese investors are making a return to the U.S. real estate market.

Japanese investors have been notably absent from the U.S. since the 1990s, when they got burned amid an economic slump. At the lowest point of the crisis, Tokyo’s Shuwa Investment Corporation struggled to work out $10 billion in debt accumulated through its purchase of ARCO Plaza in Downtown L.A., plus several properties in Washington, D.C.

But there are now signs of life.

Mitsui is already planning a 43-story residential tower in Downtown Los Angeles on the corner of 8th and Figueroa Streets, comprising more than 430 residential units, as well as a 40-story, 409-unit tower at 754 South Hope Street in the Financial District. In New York, the company made a $259 million investment in Related Companies’ 55 Hudson Yards tower.

Japanese conglomerate ASO Group also paid more than $300 million for the Google-leased Spruce Goose hangar in Playa Vista late last year.

“[This] could be a banner year for Japanese institutional giants in terms of investing in U.S. core real estate,” Michael Maduell, president of the Sovereign Wealth Fund Institute, recently told The Real Deal.

Tatsuo Yasunaga, president and CEO of Mitsui, said the investment with CIM was “consistent with our strategic plan to expand Mitsui’s real-asset management business to the U.S. and to enhance Mitsui’s global assets under management.”