Overseas Real Estate:

Inaction on Proposals to Sell High-Value Property in Tokyo

NSIAD-95-73: Published: Apr 7, 1995. Publicly Released: Apr 7, 1995.

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Benjamin F. Nelson
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GAO reviewed the Department of State's management of U.S.-owned real estate overseas, focusing on: (1) various proposals to dispose of some U.S. properties in Tokyo, Japan; (2) why some of these proposals have not been implemented; and (3) actions that State needs to take to facilitate its overseas property disposition.

GAO found that: (1) the United States has not taken full advantage of opportunities to sell or lease some of its high-value real estate in Tokyo; (2) U.S. options for better managing its high-value property include selling the Treasury House and Deputy Chief of Mission residence and expanding the housing on the Mitsui compound; (3) constructing additional housing on the compound would reduce U.S. lease costs for employees not housed on the compound; (4) Treasury has offered to turn over its Treasury House to State for disposition because it does not have authority to retain proceeds from real estate sales; (5) the lack of interagency cooperation regarding the Treasury House disposition has caused delays which, in turn, have caused property values to decline and the property to deteriorate so that it is uninhabitable; (6) State rejected two proposals to sell the Deputy Chief of Mission's residence for about $92 million because the embassy strongly opposed its sale; (7) State does not plan to sell or lease portions of the Mitsui compound because it would not be allowed to retain and reobligate the proceeds from its sale, the U.S. embassy opposes its sale, and decreases in overall real estate property values have decreased the property's value; (8) although the U.S. government missed the opportunity to sell these properties while property values were high, the value of U.S. properties in Tokyo remains significant; and (9) State needs to prepare a comprehensive plan for managing the Tokyo property in a cost-effective manner.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In June 1998, State reported that it sold the Treasury House for $3.1 million.

    Recommendation: The Secretary of the Treasury should sell the Treasury House and deposit the proceeds in the general funds of the Treasury.

    Agency Affected: Department of the Treasury

  2. Status: Closed - Not Implemented

    Comments: The agency has rejected this option because the embassy desires to retain this property for representational purposes.

    Recommendation: The Secretary of State should sell the Deputy Chief of Mission property and provide the Deputy Chief of Mission alternative housing.

    Agency Affected: Department of State

  3. Status: Closed - Not Implemented

    Comments: State believes that there is no suitable alternative and further study is unnecessary.

    Recommendation: The Secretary of State should ensure that a plan is prepared and implemented for the Mitsui compound identifying the Tokyo embassy's current and future facilities needs and how the compound can be used to meet those needs. The plan should consider: (1) providing housing for the Deputy Chief of Mission; (2) providing housing for other agencies' employees, which would save the U.S. government the annual lease costs that are currently $4 million to $5 million; (3) consolidating on the compound, to the extent feasible, other government facilities in Japan, such as the language training facility in Yokohama, which would result in savings to the U.S. government; and (4) exploring opportunities to sell or lease portions of the compound and to use the proceeds for other needs.

    Agency Affected: Department of State


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