Headed East. (Real Estate).

A subsidiary of Beverly Hills-based Kennedy Wilson Inc. and Japanese giant holding company Mitsubishi Corp. have formed a joint venture to develop a residential property in downtown Tokyo.

The partners are investing 1.5 billion yen, about $12.2 million, in a 20-unit mixed-use complex scheduled to be completed by early 2004.

"We can get a higher return on equity by doing a residential development than by buying existing developments," said Richard Mandel, director at Kennedy Wilson Japan.

While Kennedy Wilson Japan has purchased about 50 Japanese properties with various partners, this is the first ground-up development deal and its first with Mitsubishi.

"Land values have gone down," said Mandel. "We bought the land for 700 million yen ($5.7 million). In 1990, it would've been well over 2 billion yen ($16.2 million)."