AEW Capital Management has acquired a portfolio of four newly completed residential buildings with a combined 177 units in Greater Tokyo, signalling conviction in multi-family as one of the firm’s key investment themes in Asia.
The assets are located in affluent areas with strong transport networks to central Tokyo and within a short walking distance to neighbourhood amenities, the Boston-based fund manager said last Friday in a release. The portfolio primarily features studio and one-bedroom apartments aimed at young professionals and couples migrating to major cities and seeking convenient locations within Tokyo’s central business district.
Details about the buildings and their acquisition cost weren’t disclosed, but an AEW spokeswoman told Mingtiandi that the properties are in Tokyo’s core ward of Shinjuku, in Sumida and Arakawa wards within the city’s second tier, and in Yokohama’s Naka ward.
“Japan is one of the only markets in Asia Pacific with a large and liquid multi-family residential market,” said Jason Lee, senior portfolio manager and chief investment officer of AEW Asia Pacific. “It is a rare opportunity to acquire a multi-family portfolio of well-located assets in the market and it adds sector diversity to our existing portfolio in the Asia Pacific.”
City Lights Beckon
With its status as an employment and education hub, Tokyo should continue to attract residents from outlying areas once movement is less restricted by COVID-19 policies, said AEW country manager Kiyomasa Matsuda.
“As the expected migration patterns resume, we believe the recovery in leasing demand should follow,” Matsuda said.
The latest Japanese acquisition follows AEW’s purchase last May of a pair of apartment buildings for JPY 5 billion ($45.4 million), representing the fund manager’s first investments in the country. The two-asset portfolio comprised 216 units completed in 2020 and 2021 and located within a short commute of the CBDs in Tokyo and Osaka.
Since that time, AEW has continued to chase residential returns in Asia Pacific. In December it agreed to purchase a Hong Kong hotel for HK$1.65 billion ($210 million) in a joint venture with local developer Crystal Investment, aiming to reposition the 388-room property as a co-living space.
Cash for APAC
Founded in 1981, AEW and its affiliates managed $89.7 billion worth of property and securities worldwide as of last September, when the firm announced the final closing of its fourth Asia Pacific value-add fund with commitments of $1.54 billion, exceeding the original target of $1.2 billion.
Since its formal debut in December 2019, the VIA IV fund has gained 18 limited partners, including investors that committed to VIA III, the predecessor fund that closed at $1.12 billion in 2018.
VIA IV seeks to boost value and drive returns through the repositioning, redevelopment, re-leasing and refurbishment of commercial assets in APAC cities such as Tokyo, Shanghai and Sydney. The fund’s mandate includes acquisitions of logistics, multi-family and office assets.