M&G Real Estate Raises $250M for Asia Residential, Buys Osaka Portfolio for $68M

M&G Real Estate is ramping up in Asia Pacific residential after winning a $250 million commitment to the sector from its parent group’s life business.

The property division of British insurer and asset manager M&G has furthered its exposure with the acquisition of a $68 million prime residential portfolio in Osaka, according to a Thursday announcement. The buy brings the firm’s total exposure to the global residential sector to $7 billion.

To spearhead its APAC residential expansion, M&G has appointed company veteran David Askham as director of portfolio management for Asia living. The firm will draw on Askham’s track record in portfolio management and analysing market dynamics to capitalise on untapped potential in the sector, said M&G Real Estate Asia CEO JD Lai.

“Our acquisition of prime multi-family assets in Osaka reinforces our long-term belief in Japan’s residential sector,” Lai said. “This investment is a direct reflection of our conviction in the living sector and our vision of building a diversified, high-quality residential portfolio in Asia to complement our existing capabilities.”

Building on Europe Success

The Osaka portfolio comprises 378 residential units across three 15-storey buildings on the edge of the core Namba station district. M&G is targeting CASBEE sustainability certifications for Serenite Namba Grande Nord, Serenite Namba Grande Sud and Serenite Franc Namba, all of which are within a two-minute walk of JR Namba railway station and other transport nodes.

The London-based firm previewed its Asia living drive in January with the purchase of a multi-family residential tower in Tokyo’s Shinjuku area from LaSalle Investment Management for JPY 30 billion ($204 million). The acquisition of the 298-unit Frontier Shinjuku Tower was M&G’s third major purchase of Japanese rental residential assets in recent years, following a 2022 deal with Blackstone and a 2021 buy in Osaka.

The newly announced expansion will build on M&G’s residential investments in Europe and harness the living team’s expertise to seek continued growth across regions, said Martin Towns, deputy global head of real estate.

“As we enter the next real estate cycle, sectors once considered to be ‘alternative’ are now viewed as mainstream by many institutional investors,” Towns said. “We expect the Living sector to be the main beneficiary as investors move to take advantage of today’s attractive entry point.”

Strategic Divestments

While it carries out a long-term plan to raise its exposure to Asian real estate to $2.5 billion, M&G is also unlocking value from its existing portfolio, with the fund manager last week announcing Hong Kong’s largest en bloc industrial divestment of 2024.

M&G sold the LiFung Centre in the Sha Tin area to JD Property for HK$1.8 billion ($232 million), with the British firm saying the logistics asset delivered double-digit annualised net returns over its 15-year-plus holding period.

In April, M&G unloaded the Icon Yeoksam office building in Seoul to Korea’s Capstone AMC as it booked a 44 percent appreciation in value on the deal.

Last year, the firm sold a western Sydney logistics complex to ESR, nearly a year after acquiring a majority stake in a Greater Tokyo distribution centre from the HKEX-listed industrial specialist.

Note: This story has been updated to include more information about the Osaka portfolio.