Alyssa Partners Buys 13 Japan Apartment Buildings in $190M Tie-Up With Global Investor

Tokyo-based investment manager Alyssa Partners has acquired a portfolio of 13 apartment buildings in Japan under a partnership with an undisclosed global institutional investor.

Located in established residential areas of Tokyo, Osaka and Kobe, the multi-family properties have an average age of less than one year and a total gross area of 27,000 square metres (290,626 square feet), Alyssa said Thursday in a release. Market sources familiar with the transaction indicated that the portfolio was acquired for close to JPY 30 billion ($190 million).

The portfolio comprises 767 apartment units at properties located less than seven minutes by foot on average from subway or JR railway stations, according to Alyssa, which is led by managing partner, CEO and co-CIO Chedli Boujellabia. The seller was described as a major Japanese developer.

“We are very grateful to our new capital partner for their trust and support during the acquisition process,” Boujellabia said. “We continue to have strong convictions about the multi-family market in Japan supported by continuing rental growth and attractive financing conditions.”

$1B Resi Portfolio

The latest buy brings Alyssa’s residential portfolio to 116 properties and more than 5,000 apartment units across major Japanese cities with a value in excess of JPY 160 billion ($1 billion).

In April, Alyssa and Hong Kong fund manager Gaw Capital Partners announced their acquisition of 29 Tokyo apartment buildings, with the estimated JPY 40 billion purchase of 835 homes representing the country’s largest trade of rental residential assets in 2024.

Last December, Alyssa teamed up with Japanese insurer Dai-Ichi Life to acquire a portfolio of 12 rental apartment buildings across the cities of Tokyo, Osaka, Nagoya and Kobe for JPY 20 billion.

That deal was revealed less than a month after the company, together with Invesco Real Estate, announced their joint acquisition of 15 apartment houses in Tokyo, Osaka, Nagoya and Fukuoka with a total of 1,258 units for JPY 30 billion.

With $367 million in acquisitions of Japanese residential properties last year, Alyssa ranked second only to AXA Investment Managers among buyers of apartments in Japan for 2023, with the French giant having picked up $456 million in rental homes.

Fundamentals Still Sound

Speaking at Mingtiandi’s inaugural Tokyo Forum last month, Boujellabia said Alyssa planned to maintain its focus on the living sectors while also exploring new opportunities in logistics and data centres.

While Japan is one of the only markets in the world where interest rates are on the rise, borrowing costs remain low and investors can earn spreads of at least three percentage points on residential cap rates, according to the Alyssa CEO.

“Ultimately, from an investor’s perspective, (Japan) is still the only market where there’s at least 2 to 2.5, sometimes 3 percentage points difference between what you’re paying in cap rate and what you’re borrowing at,” Boujellabia told the audience at the Mandarin Oriental Tokyo. “In any other developed market, you buy at a 4 percent cap rate, you borrow at 4 percent to 5 percent. We don’t have that in Japan.”

He pointed to strong returns in the residential sector attracting an increasing number of domestic investors, including banks, pension funds and insurers, with residential assets yielding better cap rates than office properties in some cases.