Japan Insurer Buys Stake in Manhattan Landmark

Nippon Life Insurance, Japan’s largest life insurer, said Friday that it had agreed to buy an 80% stake in the Paine Webber Building, a midtown Manhattan landmark, for $550 million.

Equitable Life Assurance Society will hold the other 20% and continue to manage the 38-story building on the Avenue of the Americas, a Nippon Life spokesman said.

Nippon has invested in five other U.S. buildings in cooperation with Equitable. It owns 20 buildings overseas, of which 18 are in the United States and one each in Canada and Britain.

“We are very nervous about investing in real estate in the U.S. Therefore our investments are mainly based on tie-ups or cooperation with real estate developers and life insurance companies there,” the spokesman said.

Nippon Life, which has assets of more than $156 billion (22 trillion yen), hopes the building will provide long-term stable returns, the spokesman said.

Purchases of American buildings by Japanese life insurers have drawn criticism in the United States because the buildings have tended to be well-known and some Americans have objected to seeing them in foreign hands.

Big Japanese life insurance companies began to invest in U.S. real estate in 1981 and own nearly 50 buildings there. Nearly 90% of overseas real estate held by Japan’s 25 life insurers is in the United States, industry sources said.

“Our real estate investment in the U.S. will peak soon. To diversify risks, we must shift our funds to other countries,” said the manager of the international investment department of one Japanese life insurance company.