Gaw Capital Buys 32 Japanese Residential Assets on Behalf of Qatari Fund

Gaw Capital Partners has added to the flow of international investments into Japan’s residential sector with the Hong Kong private equity shop announcing on Tuesday that it has acquired a portfolio of multi-family assets in the country on behalf of a separate account belonging to the Qatar Investment Authority (QIA).

The majority of the apartment buildings, which span 68,432 square metres (736,595 square feet) in total, are located in Tokyo, with the Hong Kong private equity shop pointing to the assets as the start of a larger initiative in Japan’s rental residential industry.

“We are delighted to have the opportunity to partner with QIA to create this multi-family portfolio, and will further acquire high-quality residential assets across major cities in Japan,” said Christina Gaw, managing principal and global head of capital markets, as well as co-chair of alternative investments at Gaw Capital. She added that, “We look forward to exploring further opportunities across various property sectors and generate favorable returns for this partnership.”

Gaw latest foray into Japan’s build-to-rent sector was announced just one day after Blackstone funded an acquisition of 19 multi-family assets across four cities in Japan, with fund managers AEW, Allianz Real Estate, AXA Investment Managers, Goldman Sachs, and Manulife IM having already invested in the sector this year.

Sticking to the Centre

The seed portfolio which Gaw has acquired on behalf of QIA is focused on Japan’s largest cities, with 21 of the 31 properties located in Tokyo, another five in the commercial hub of Osaka and three in Nagoya. The set also includes one property each in the cities of Kyoto, Yokohama and Sapporo.

Images of the assets provided indicate that the portfolio was assembled from two separate sets of properties branded as Gramercy and CREAL respectively. The Gramercy set includes the Gramercy Ebisu, Kyobashi and Nipponbashi in Tokyo, as well as the 1995-vintage Gramercy Sapporo.

The CREAL assets include the CREAL Ueno and Monzennakacho in Tokyo, as well as the co-branded Hmlet CREAL Koenji and Hmlet CREAL Nakanoshinbashi.

While further particulars of the assets were not provided, in its statement Gaw indicated that the average walking distance from the properties to the nearest train or metro station is approximately six minutes.

In explaining the rationale for the acquisition, Gaw pointed to some of the characteristics which have made Japanese multi-family residential assets favourites of international institutions in recent years, with that interest level surging as the pandemic has undermined returns from traditional mainstays such as office and retail.

“Japan’s residential rents have historically displayed stronger resilience in an unfavorable market environment compared to other asset classes and the occupancy rates have remained resilient during the pandemic,” Gaw said in its statement. The firm also pointed to Japan’s ongoing urbanisation and the liquidity of income-earning residential assets throughout the pandemic as part of the rationale for the acquisition.

Residential Revs Up

With an estimated $445 billion in assets under management, QIA is making the investment as some of the world’s largest institutions compete to acquire assets in Asia Pacific’s largest rental housing market.

The Blackstone commitment announced yesterday involved a total of 1,075 housing units spanning 32,600 square metres which it purchased together with regional asset manager Alyssa Partners. That deal came after Blackstone in March this year had sold a portfolio of 30 Japanese rental residential assets to M&G Real Estate for JPY 49.2 billion ($424.3 million).

Also in March, Goldman Sachs, which has been ramping up its asset management business in Asia Pacific, set up a joint venture with Tokyo-based conglomerate Sojitz to acquire $300 million in Japanese rental residential properties this year. The US investment bank said at the time that it intends to commit $500 million per year annually to the strategy starting from 2023.

During that same month, Manulife Investment Management, a division of the Canadian insurance titan launched a $170 million joint venture with Tokyo-based Kenedix targetting the build-to-rent sector.

Earlier this month, AXA IM Alts said that it had spent JPY 6.9 billion to add a pair of Tokyo rental residential assets to its portfolio in the country, with the French firm having been one of the most frequent shoppers in Japan’s apartment market in recent years.

Boston-based AEW has also been active in Japan’s apartment market in 2022, making a pair of acquisitions – one each in April and January – totalling just over 1,000 units. And in January of 2022, Allianz Real Estate announced that it was purchasing 12 newly built Tokyo residential assets for $90 million on behalf of a multi-family fund which it had established with Canada’s Ivanhoe Cambridge.

Japanese Fashion

For Gaw, the multi-family acquisition is its second major Japanese deal this year after the firm in April announced its purchase of a building in western Tokyo which it will add to an existing data centre project in the city.

During 2021 the firm had backed Invesco’s $3 billion privatisation of its Invesco Office J-REIT, which was announced in January of this year.

Gaw had entered Japan in 2014 through its investment in Hyatt Regency Osaka, which it sold in 2016 for $153 million in the second-largest hotel deal in the city that year. Since that time it has acquired a portfolio of commercial and hotel properties in the country.