Goldman Sachs Sets Up $300M Japan Multi-Family Residential JV

Investment banking giant Goldman Sachs has teamed with a local partner to acquire $300 million worth of rental residential properties in Japan during 2022 and up to $500 million annually thereafter.

The joint venture between Goldman Sachs Asset Management and Tokyo-based conglomerate Sojitz will seek value-add opportunities by combining the Sojitz New Urban Development unit’s expertise in renovating aged properties with Goldman’s financial resources, Sojitz said Monday in a release.

In the JV, which has been capitalised with an initial $15 million, the alternative investment arm of Manhattan-based Goldman will hold a 75 percent stake and Sojitz the remaining 25 percent. The partners aim to become key players in Japan’s residential sector, which continues to attract global fund managers with its robust demand, low borrowing costs and dependable yields.

The new venture brings the fund management division of Goldman Sachs into a sector that has already become a favourite of some of the world’s largest institutional investors, with M&G Real Estate, Singapore’s Ascott REIT, Hines and AEW all having made major acquisitions in the country’s multifamily sector this year.

Doubling Asia Investment

Goldman Sachs Asset Management has more than $400 billion in assets under management in alternative asset classes like real estate, infrastructure and private equity. The new joint venture is scheduled to commence operations in mid-2022, subject to the completion of regulatory approvals.

Goldman announced last November that it would invest at least $30 billion in Asian alternative assets over the next five years as part of a revamp of its operations, with co-head of Asia alternative investing Stephanie Hui telling Bloomberg that the bank would double its investment in the continent to about $60 billion.

The asset management division has ploughed $16 billion into more than 1,800 real estate assets in Japan over the last 25 years, and the unit has AUM in excess of $5 billion in the country.

Elsewhere in Asia, Goldman Sachs Asset Management tapped into the red-hot logistics sector last July by forming a $488 million China warehouse joint venture with Warburg Pincus-backed New Ease.

The deal came after New Ease had established a JV with UK fund manager Actis and a $600 million tie-up with JP Morgan Asset Management in 2020, as well as a partnership with Canadian pension fund manager QuadReal earlier in 2021.

Global Players Swoop In

Goldman Sachs is one of several institutional investors ramping up activity in Asia this year, with Japan’s real estate market a particular area of focus.

In February, UK investment management firm Schroders established a Japan property investment operation under the leadership of former JP Morgan Asset Management executive Keisuke Kusano.

Earlier this month, Canadian giant Manulife announced the formation of a JPY 19.8 billion ($170 million) joint venture with Tokyo-based Kenedix to acquire multifamily assets in Japan’s major cities. The JV is seeded with a portfolio of nine properties spanning more than 250,000 square feet (23,226 square metres) of net lettable area.

Then in mid-March, US private equity giant KKR said it had agreed to buy a Japanese REIT manager held jointly by Mitsubishi Corporation and UBS Asset Management for $2 billion in a balance sheet transaction using no client funds. The manager, MC-UBSR, oversees a pair of Tokyo-listed trusts with a combined $15 billion in assets under management.

The deal deepens KKR’s presence in Japan and expands its global real estate business to $55 billion in assets under management, the Manhattan-based firm said.