AEW Buys Six Assets to Boost Japan Multifamily Acquisitions to $180M

AEW Capital Management on Tuesday announced its acquisition of two multifamily portfolios comprising six assets in Japan, as the firm continues to locate residential investment opportunities driven by the country’s rapidly urbanising populace.

The latest deal expands AEW’s Japanese multifamily portfolio to 12 buildings with 826 units for a total acquisition value of JPY 23 billion ($180 million), the Boston-based fund manager said in a release.

The six properties, spanning 16,000 square metres (172,223 square feet) of gross floor area, are newly developed and situated in Greater Tokyo, Fukuoka and Osaka, with ready access to nearby subway stations and amenities like restaurants, convenience stores and entertainment, AEW said. Company representatives had not responded to requests for additional detail before time of publication.

“We are delighted to acquire these high-quality assets and expand our multifamily allocation in Japan,” said AEW country manager Kiyomasa Matsuda. “We continue to believe Japan multifamily will be a stable and defensive sector, as it is supported with strong demand projections coupled with steady rental growth.”

Swelling Portfolio

The newest additions to AEW’s multifamily portfolio come three months after the firm acquired four newly completed residential buildings in Greater Tokyo constituting a combined 177 units. That set of properties, featuring mostly studio and one-bedroom apartments, is aimed at young professionals and couples migrating to major cities and seeking convenient locations within Tokyo’s central business district.

AEW made its first investment in Japan last May with the purchase of a pair of apartment buildings for JPY 5 billion ($45.4 million). The two-asset portfolio encompassed 216 units completed in 2020 and 2021 and located within a short commute of the CBDs in Tokyo and Osaka.

Asia Pacific CEO David Schaefer said the Japanese acquisitions would advance AEW’s goal of improving the environmental, social, governance and resiliency credentials of its property investments.

“This is a great opportunity to continue to implement ESG+R initiatives across the portfolio, including environmentally friendly specification upgrades, which demonstrates our commitment to responsible investing,” Schaefer said.

Founded in 1981, AEW and its affiliates managed over $93 billion worth of property and securities worldwide as of last December. The firm announced the final closing of its fourth Asia Pacific value-add fund last September, with the vehicle’s $1.54 billion in commitments exceeding the original target of $1.2 billion.

Fund Managers Feast

Recent months have witnessed several portfolio acquisitions of Japan multifamily properties as the asset class continues to command the attention of global fund managers.

Earlier this month, Nuveen announced the acquisition of three Osaka multifamily properties on behalf of its $2 billion Asia Pacific Cities Fund, with the US investment firm adding 342 units to the core vehicle’s portfolio.

In March, Germany’s Allianz Real Estate revealed plans to purchase a portfolio of residential assets in Tokyo for $90 million, marking the first acquisition on behalf of its recently upsized Japan multifamily fund, and UK-based asset manager M&G Real Estate bought a portfolio of 30 residential properties in key Japanese cities from Blackstone for JPY 49.2 billion ($424.3 million).

Also last month, the asset management arm of investment banking giant Goldman Sachs and Tokyo-based conglomerate Sojitz said they would form a joint venture to acquire $300 million worth of rental residential properties in Japan during 2022 and up to $500 million annually thereafter.