The UK’s Aberdeen Standard Investments (ASI) has teamed up with Japan’s Sumitomo Mitsui Trust Bank to form a residential property investment joint venture, the Edinburgh-based company announced today.
The partnership, which primarily targets the Japanese market, will enable the Scottish fund manager, which has assets under management of $50.9 billion across the UK, Europe and Asia Pacific, to further beef up its presence in the region after its purchase of Orion Partners four months ago.
“The joint venture is an important step in expanding our global investment offering, as we continue to address investors’ need for alpha and diversified return,” said ASI’s global co-head of real estate, David Paine. “We are pleased to partner with Sumitomo Mitsui Trust Bank to bring a new Japan-focused real estate strategy to clients, and look forward to building out this relationship.”
JV to Target Value-Add Residential Opportunities
ASI said in its announcement that the joint venture, which will adopt a value-add investment strategy, will target multi-family residences, senior housing, student accommodation and corporate housing across Asia Pacific, but primarily in Japan.
“Over the next decade cities in the Asian Pacific region are set to experience very strong growth, fuelled by both domestic and foreign immigration to major metropolises, which bode well for housing demand over the medium-term,” said Kang Puay Ju, ASI’s head of real estate for Asia Pacific and the company’s global head of real estate multi-manager.
Through co-investment and co-management by ASI and SuMi Trust’s subsidiary Sumitomo Mitsui Trust Real Estate Investment Management, the joint venture will buy newly built properties or older residential buildings that can be renovated, repositioned or converted, ASI said in today’s announcement.
Betting on the Residential Growth in Japan
In a separate announcement today, Sumitomo Mitsui Trust Bank said that although the volume of transactions of existing homes in Japan accounts for a relatively small share of the overall market, investment return on residential assets is more stable than other asset classes, adding that the market for renovated homes is expected to grow.
“It is intended that SuMi Trust Bank will, in the capacity of co-sponsor, make certain equity contribution by way of ‘same boat investment’, and that our group company, Sumitomo Mitsui Real Estate Investment Management Company Limited, will provide asset management services for the properties located in Japan,” the banking company said in the announcement.
The joint venture agreement between the two companies comes four months after Aberdeen Standard Investments acquired Hong Kong-based Orion Partners, along with the firm’s approximately $900 million of direct real estate investments in aged care, retail and offices across Asia Pacific including Japan, Korea and Hong Kong.
The Japan-UK partnership builds on other European interest in the Japanese residential market, with Germany’s Patrizia Immobilien’s acquisition in January this year of Kenzo Capital Corporation, a Tokyo-based real estate advisory and asset management firm that launched a fund in 2017 targetting multi-family properties primarily in Tokyo and Osaka with a total investment goal of €480 million to €550 million euros.