AXA IM Alts Buys Portfolio of 15 Japanese Nursing Homes for $163M

AXA IM Alts has acquired a portfolio of 15 Japanese nursing homes for €156 million ($163.7 million), becoming the latest global investor to bet on senior living assets in the country with Asia’s oldest population.

The portfolio totals over 800 beds in Tokyo, Osaka and Aichi, with 14 of the 15 properties having been constructed after 2013, the French fund manager said Monday in a release. The facilities are let to five operators and carry a weighted unexpired average lease term of 19 years.

The alternative investment arm of AXA Investment Managers provided no details about specific properties or the identity of the seller, saying only that the transaction was its first in the sector in Japan and was made on behalf of AXA IM Alts clients.

“This is a rare opportunity to acquire a modern and diversified portfolio of care home assets with an attractive trading history, in a fast-growing but still highly fragmented use class,” said Laurent Jacquemin, head of Asia Pacific real assets at AXA IM Alts. “Establishing long-term relationships with leading operators will allow us to quickly scale our platform, in a sector we view as highly defensive and benefiting from the tailwinds of compelling long-term demand-supply dynamics.”

Shortage of Stock

The Japanese care home sector is characterised by a shortage of good-quality stock, even as the number of citizens 65 and older is forecast to grow by 20 percent over the next 20 years, AXA IM said, citing government statistics.

In September, a pair of Singapore-listed trusts announced their own plans to capitalise on the booming segment, with Parkway Life REIT revealing deals to buy two nursing homes in the Greater Tokyo Area and three in Hokkaido for a total of JPY 5.44 billion (now $40 million), and First REIT agreeing to buy a pair of nursing homes — one each in Aichi and Kanagawa prefectures — for a total of JPY 2.58 billion.

The surge in investment is aligned with growing interest in Japan’s senior living sector, with US-based Nuveen Real Estate also betting on the market this year.

In July, Nuveen reached a $100 million first closing of its Japan Alternatives Living strategy, backed by parent group TIAA and Dutch fund manager Bouwinvest. Chicago-based Nuveen will look for assets across Greater Tokyo, Osaka and Nagoya, with senior housing to make up the majority of invested capital.

Happy Hunting Ground

The latest transaction marks AXA IM Alts’ fourth acquisition in Japan this year, taking the business’s assets under management in the country to JPY 511 billion ($3.8 billion).

In September, the firm revealed that it had picked up 29 multi-family residential properties and four student accommodation assets in two separate transactions totalling €423 million ($418 million).

The 1,482-unit multi-family portfolio is spread across high-density neighbourhoods within Greater Tokyo and Osaka, while the student housing assets comprise 539 studio apartments near universities in Greater Tokyo.

Those acquisitions followed the purchase of a pair of rental residential properties in Tokyo for $54 million in a deal announced in May.