TOKYO—AXA Real Estate Investment Managers, one of the largest real estate portfolio and asset managers globally, says it's Tokyo Office Property Fund (TOP) has completed the acquisition of Kyobashi Square. The fund;s second acquisition is a core modern 5,884 sqm building located in the Chuo-Ku district of central Tokyo.

It was purchased from Godo Kaisha Kyobashi Property, a consolidated subsidiary of Ichigo Holdings K.K.  Kyobashi Square comes shortly after the purchase of Shinjuku Sanchome in the Shinjuku ward of central Tokyo in March.  The purcahse was made in co-investment with Sumitomo Mitsui Trust Real Estate Investment Management Co. Ltd's Tokyo Office Real Estate Investment Fund, which was founded alongside TOP in August 2012.

“To complete the purchase of Kyobashi so quickly after the Fund's maiden acquisition is particularly pleasing,” said Hidetoshi Ono, head of Japan Core Fund at AXA Real Estate. “The building typifies the assets TOP wishes to acquire being both well-located and well-let. We believe we are transacting at an opportune time in the market cycle to acquire a portfolio of high quality core mid-sized Tokyo office properties which offer stable income streams, low volatility and the potential for capital growth.”

The 13 story Kyobashi Square building was completed in February 2010 and is located within walking distance of Tokyo Central Station, the main terminal in Tokyo for bullet trains and commuter lines.  The property is fully occupied with a total of 10 corporate tenants, both multinational and domestic, from a diversified set of industries, including management consultancy, publishing and retail services.  The ground floor retail space is let to a prominent mobile phone store. In addition, there are currently a number of large office redevelopments underway in the Kyobashi area, which, when completed, are expected to add to the increasing attractiveness of the area as a prime business destination.

“We are currently seeing an increase in appetite from international institutional investors to increase their exposure to this specific asset class, attracted by its compelling investment rationale and market timing, and we aim to hold a second closing later in the year,” Ono added.

The building, designed and built by Taisei Corporation, is furnished with up-to-date earthquake-resistant features, meeting increasing occupier demand for high quality and safe spaces, which minimize business downtime during the event of a quake.

These earthquake resistant features include special buffers implemented in both the construction joints and pillars to absorb and reduce the shock waves and damage from earthquakes as well as a backup generator for emergency evacuation.

The mid-sized core office market was selected by AXA Real Estate in order to leverage the diversification benefits derived from the sub-market's attractiveness to wide range of tenants and the near term limited new supply of this asset type, helping to promote rental growth, Ono noted.