Allianz Buying Tokyo Apartment Portfolio for $160M

Allianz Real Estate announced today that it has agreed to spend $160 million to add to its portfolio of Japanese apartments on behalf of its APREAP Core 1 Fund.

The property investment unit of the European insurance giant is acquiring 18 newly built apartment buildings in Tokyo, yielding some 380 units as Allianz Real Estate brings its total investments on Japanese multifamily assets to nearly $1.6 billion in the past ten months.

The acquisition, which covers 12,240 square metres (131,750 square feet) of space comes less than three months after Allianz Real Estate established a permanent presence in Tokyo led by former Lonestar executive Masayuki Kato.

Keeping with a Core Strategy

“Continued strong performance of our existing multi-family residential portfolio in Japan has validated our conviction about the resiliency of the asset class”, said Rushabh Desai, Asia Pacific CEO of Allianz Real Estate. “Having boots on the ground in Tokyo has further enhanced our sourcing and asset management capabilities.”

All assets in the portfolio are located within Tokyo’s 23 wards and are within 10 minutes from a subway station, the company said. The company did not name the seller of the properties, which it is acquiring for the equivalent of $13,072 per square metre.

Allianz characterised the acquisition as being in line with its AREAP Core I strategy of building a diversified portfolio of stabilized income producing assets across Asia Pacific, after the investment firm ramped up its real estate assets under management in the region to €5.5 billion (then $6.1 billion) by the end of last year.

In a report issued last month, international property consultancy Savills found that, despite a lockdown due to the Covid-19 pandemic, Tokyo apartment occupancy held at 96.4 percent in the second quarter of 2020, slipping just 1.5 percentage points from the previous three month period.

Third Investment in 10 Months

Today’s transaction comes just three months after Allianz Real Estate agreed to spend €110 million acquiring 11 newly developed rental apartment properties in Tokyo, from a similarly undisclosed seller.

That transaction added 275 rental housing units covering some 8,400 square metres to the company’s Japanese residential portfolio after Allianz Real Estate had entered the country’s apartment market with a €1.1 billion purchase of a Blackstone portfolio in October last year.

Over half of that 160,000 square metre portfolio is located in Tokyo’s 23 wards, with the remainder of the 82 freehold properties located in Osaka, Nagoya and Fukuoka.

With Tokyo’s population having pushed past 14 million during the second quarter of this year, the city has become a magnet for young Japanese professionals, with five of the metro area’s outer submarkets reporting rental increases during the period, despite the lockdown, according to Savills.