AXA IM Alts Buys Pair of Osaka Residential Assets From PGIM for $94M

Japan continues to provide a target-rich environment for the real estate fund management division of AXA Investment Managers, which announced early today that it has paid JPY 10.6 billion ($94 million) for a pair of Osaka residential assets to mark its fourth investment in the country this year.

AXA IM Alts, which acquired the pair of properties on behalf of clients from the Japanese division of US fund manager PGIM Real Estate, positioned the 346-home deal as a bet on the prospects of Japan’s second city after a series of acquisitions in Tokyo and other Japanese urban hubs.

“The acquisition of this portfolio presents an exciting opportunity to capitalise on both Osaka’s continued population and economic growth, which have been driving the residential market,” said Laurent Jacquemin, head of Asia-Pacific at AXA IM Alts. “Both of these well-connected assets have a strong track record of high occupancy and appeal to the city’s thriving community of professionals and young families.”

The investment aligns with AXA IM’s overarching belief in residential opportunities worldwide, with the company having built a €23 billion ($26.6 billion) portfolio of housing bets globally, including more than $1.2 billion in Japanese apartment acquisitions since mid-2020.

Demographic Boost

The first property, known as Zeus Nishi Umeda, is in Osaka’s affluent Nishi Umeda district and contains 214 apartments with a total lettable area of 10,000 square metres (107,639 square feet). The second, called Serenite Esaka, is a three-minute walk from Esaka station, the city’s northernmost subway stop, and comprises 132 units spread across 4,000 square metres of space.

The neighbourhood of Nishi Umeda, just 1 kilometre (0.6 miles) from Osaka’s central business district, has easy access to the thriving retail hub of Shinsaibashi and the key commercial districts of Umeda, Honmachi and Yodoyabashi. Esaka station, meanwhile, offers direct access to Osaka’s main commercial  hubs and a connection to a bullet train station with national rail links, making the area popular with travellers.

Trailing only Tokyo and Yokohama in population, Osaka has the second-highest GDP of any Japanese city at JPY 39 trillion and boasts residential occupancy levels of over 90 percent, AXA IM Alts said. The latest deal forms part of the firm’s wider long-term strategy to invest in residential asset classes supported by strong demographic drivers.

Ambitious infrastructure projects such as a new subway line are in the pipeline and likely to support the city’s economic growth in the years to come.

“AXA IM Alts has made a number of acquisitions in Japan in the past year, taking our total real assets AUM in the country to JPY 337 billion,” Jacquemin said. “Our recent investment activity in Japan is testament to its residential market’s dynamism and its potential to deliver strong returns for our clients.”

Investment management firm Alyssa Partners advised on the acquisition of both assets, notching its third deal with AXA in Japan since the two firms joined forces for an office redevelopment project in Tokyo’s Roppongi area in 2018.

Rising Sun Focus

The deal announced today continues a string of purchases by AXA IM Alts in Asia’s second-biggest economy across multiple real estate categories.

Just last month, the firm announced its acquisition of a newly built mixed-use property in a central Tokyo tech hub for €41 million ($48 million). The two-building property at 2-22 Ohashi Meguro-ku in the Ikejiri Ohashi submarket at the fringe of Shibuya was sold by local real estate firms Raysum and Tokyo Tatemono.

AXA IM Alts revealed in May that it would pay JPY 4.2 billion ($38.6 million) for 282 rental units in the city of Sendai. Before that northern excursion, the fund manager had scooped up a JPY 70 billion ($669 million) Tokyo apartment portfolio late last year and made a pair of acquisitions in the city of Nagoya in mid-2020: an apartment complex in Nakamura ward for JPY 20 billion ($186 million) and a 10-storey residential tower in Chikusa ward for an undisclosed sum.

AXA IM Alts has €163 billion in assets under management, including €78 billion in primarily private real estate, €74 billion in private debt and alternative credit, and €11 billion in infrastructure, private equity and hedge funds.