Nuveen, Kenedix and Bouwinvest Invest Another $226M in Tokyo Apartment Portfolio

Nuveen Real Estate has teamed up with Japan’s Kenedix to add seven new assets to their Tokyo apartment portfolio, according to an announcement this week.

Tokyo Multifamily Partnership, a venture managed by Nuveen and Kenedix with backing from Dutch pension fund manager Bouwinvest is investing $226 million to acquire the recently completed portfolio which adds 428 homes to their holdings in the Japanese capital.

The investment is the fourth for the two year old partnership, with Nuveen seeing a bright future for apartment investment in one of Asia’s largest markets.

“Through our partnership with Kenedix and Bouwinvest, we have been able to make a series of strategic transactions across the growing multifamily market in Tokyo,” said Nuveen Real Estate’s head of Japan, Shu Watanabe. “We remain confident in the sector as we believe it offers continued resilience due to strong secular fundamentals and growth potential.”

Three of the four apartment investments by Nuveen and its teammates have taken place this year, as the partnership competes with institutional investors including Allianz Real Estate, AXA and Blackstone to secure the steady returns offered by the sector in 2020’s shaky markets.

Adding a Shinjuku Tower

The partnership’s latest acquisition is highlighted by an 18-storey property in Tokyo’s Shinjuku commercial hub, which accounts for 100 of the homes in the portfolio. The other six assets are also located in central Tokyo and enjoy favourable access to public transport, according to a statement.

“This latest acquisition, which was sourced combining ours and Kenedix’s local ‘on the ground’ expertise, benefits from an excellent location and high-quality finish, which we believe will ensure successful leasing going forward,” Nuveen’s Watanabe said, with the portfolio aimed at middle to upper income households.

Last month, Kenedix, which serves as the asset manager for the Tokyo partnership, became the target of a takeover bid with Sumitomo Mitsui Finance and Leasing Co and Singapore’s ARA Asset Management revealing that they are offering JPY 132 billion ($1.3 billion) to buy out the company.

This latest Tokyo transaction brings the partnership’s total portfolio to 35 properties and 1,940 homes with a gross asset value of $810 million. For Nuveen Real Estate, which is a unit of US financial services titan TIAA, the acquisition brings its assets under management in Japan to approximately $1 billion.

The partnership has raised $320 million in funding to date from three institutional investors, including founding investor Bouwinvest, and TIAA.

Japanese Apartments Heat Up

The deal this week comes 11 months after Nuveen, Kenedix and Bouwinvest had acquired an earlier set of seven Tokyo apartment properties in January of this year. In that $224 million purchase, the partnership had picked up properties in Shinjuku-ku, Shinagawa-ku, Taito-ku and Sumida-ku which provided a total of 428 units.

In March, Nuveen spent $140 million to acquire another ten residential properties in Tokyo and Osaka from Hong Kong-based fund manager PAG on behalf of its open-ended Asia Pacific Cities fund.

Earlier this month, Blackstone announced that it had spent JPY 110 billion to acquire a portfolio of commercial and residential properties, primarily in Tokyo and Osaka, with the vendor of that portfolio also said to be PAG. During February of this year Blackstone had spent JPY 300 billion to buy a set of Japanese apartments from mainland China insurer Anbang Insurance.

Also during this month the real estate division of AXA Investment Managers announced that it had invested JPY 70 billion to purchase a Tokyo apartment portfolio, marking its third major Japanese residential investment this year.