Bouwinvest, TIAA Boost Nuveen Japan Housing Fund to $100M First Closing

Nuveen Real Estate has achieved a $100 million first closing of its Japan Alternatives Living strategy, which will focus on stabilised senior housing assets and also consider investments in the student accommodation, single family and co-living sectors.

Having recruited Dutch fund manager Bouwinvest and its parent firm TIAA as co-investors, Nuveen Real Estate has aligned the strategy with demographic trends in Japan, where the proportion of senior citizens in the population is expected to reach 35 percent by 2040, the company said Monday in a release.

The Chicago-based fund manager will look for assets across Greater Tokyo, Osaka and Nagoya, with senior housing to make up the majority of invested capital.

“This strategy provides investors with exposure to senior housing markets in the world’s largest metropolitan area by GDP and population, where the proportion of senior citizens relative to the population is bigger than any other country,” said Louise Kavanagh, chief investment officer and head of Asia Pacific for Nuveen Real Estate.

Policy Opening

The Japanese government owns more than half of the country’s senior housing stock and is seeking to boost supply from the private sector, Nuveen said. The policy presents an opportunity for institutional investors, which own 5 percent of the $80 billion senior housing market in Japan, with more than half of their assets in J-REITs.

Nuveen Real Estate manages more than $25 billion in housing sector assets globally, including $1 billion in multi-family assets in Japan across 52 properties and 3,183 units, predominantly in Tokyo. The firm picked up a set of three multi-family properties in Osaka a few months ago on behalf of its $2 billion Asia Pacific Cities Fund, which focuses on core assets in “future-proof cities”.

In a mid-year outlook titled “From Pain to Gain”, Nuveen’s global investment committee noted the attractiveness of for-rent housing as an asset class after the cost to own increased dramatically in the first half of this year.

“We are focused on defensive areas of the market backed by strong structural trends, such as rental housing and senior living in the US, student housing in Europe and Australia and discount outlet malls in China,” said Carly Tripp, global chief investment officer and head of investments for Nuveen Real Estate.

Rental Remains Hot

International capital has continued to flow into Japan’s rental residential market as fund managers seek resilient assets amid the volatile global investing environment.

In June, Singapore-based private equity firm Q Investment Partners announced the launch of a Japan-focused multi-family fund and joint venture with Alyssa Partners after acquiring a seed portfolio of three stabilised assets with a combined value of $40 million. The seed properties consist of two rental apartment buildings in Nagoya and another in Osaka with a total of 207 units at 90 percent occupancy.

In late May, Alyssa revealed that it had joined forces with private equity giant Blackstone to acquire a portfolio of 19 multi-family assets across Tokyo, Osaka, Nagoya and Fukuoka. Sources familiar with the transaction said the portfolio traded at a value in excess of JPY 20 billion ($157 million).

That same month, Hong Kong’s Gaw Capital acquired a portfolio of 32 multi-family assets in Japan on behalf of a separate account belonging to the Qatar Investment Authority.