Chapter 4 Expansion

1989

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2003

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  3. Chapter 4: Expansion
  4. Section 1. Creating New Urban Spaces
  5. 10. The Shinjuku Daibiru Building and Shiba Daibiru Building Acquisitions

Section 1. Creating New Urban Spaces

10. The Shinjuku Daibiru Building and Shiba Daibiru Building Acquisitions

During the early 1990s, numerous companies that had invested too heavily in real estate experienced business failures when the asset price bubble burst, resulting in a large volume of non-performing loans. While the problem of disposing of non-performing loans was becoming a major issue, foreign funds that were competing to enter the Japanese market began buying up non-performing loans in bulk. With the bursting of the asset price bubble, Daibiru established a policy of concentrating its investments on Greater Tokyo and began acquiring existing properties in addition to the development of new properties.

  • The Shiba Daibiru Building

As part of this policy, Daibiru acquired Shinjuku ALTA, which was located at the east exit of JR Shinjuku Station, in February 2000. Shinjuku ALTA had a prime location for a commercial facility, and it was famous for hosting the television studio responsible for making Waratte Iitomo!, a popular television show at the time. Numerous stores targeted at young people had moved into the building, making it a hub for casual fashion and general merchandise. Daibiru made the acquisition in order to expand its real estate leasing business in Tokyo and to diversify the company’s leasing portfolio. Additionally, the long-term leaseback agreement for the existing building would generate immediate cash flow with little vacancy risk. After the property—Daibiru’s first commercial building in Tokyo—was acquired through negotiation with Mitsukoshi (now Isetan Mitsukoshi Holdings Ltd.), the company renamed it the Shinjuku Daibiru Building and continued to lease the entire building to Mitsukoshi.

In February 2001, Daibiru acquired the Natsume Shoji Honsha Building—conveniently located just a five-minute walk from JR Tamachi Station in Shiba, Tokyo—from Natsume Shoji and renamed it the Shiba Daibiru Building. This acquisition of an existing rental property following the acquisition of the Shinjuku Daibiru Building the previous year was based on the company’s management policy of focusing its investment on Tokyo. Natsume Shoji was in the midst of special liquidation proceedings and was selling its headquarters building as part of its disposal of non-performing loans. The factors that clinched the deal for Daibiru were the fact that it had the Nippon Electric Company, Limited (NEC) as a first-class tenant, the rent was expected to generate a decent yield compared to market rates in that vicinity, the building had been completed in 1989 with advanced specifications and new earthquake-proofing methods, and the price made it a relatively easy investment. Some 30 companies submitted bids, but Daibiru was able to prevail due to its ability to gather information about competitor trends and evaluate the property accurately. Daibiru continued to lease the building in its entirety to NEC after the acquisition went through.

Property overview Shinjuku Daibiru Building
Address 3-24-3 Shinjuku, Shinjuku-ku, Tokyo
Date of completion April 1980
Construction steel-frame reinforced concrete construction
Size eight aboveground floors, three underground floors
Site area 1,283m2
Total floor area 11,255m2
Property overview Shiba Daibiru Building
Address 5-21-6 Shiba, Minato-ku, Tokyo
Date of completion June 1989
Construction steel-frame reinforced concrete construction
Size 10 aboveground floors, one underground floor, and penthouse
Site area 2,047m2
Total floor area 10,833m2

Section1. Creating New Urban Spaces

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