Heitman Buys 3 Osaka Apartment Buildings in Japan Multi-Family Expansion

Heitman has completed the purchase of three apartment buildings in Osaka, with the US real estate investment manager expanding its Japanese rental residential portfolio after multi-family transactions in the country surged 57 percent year-on-year in the 12 months through 30 June, according to data provider MSCI Real Assets.

The Chicago-based fund manager acquired the 257-unit portfolio under its global core-plus focused strategy, with Heitman pointing to Japanese multi-family assets as benefiting from strong rental demand and providing a buffer against inflation. Terms of the transaction, as well as the identity of the vendor, were undisclosed.

“Given the resilient demand drivers and cash flows that typically provide strategic shields against inflation, we continue to find compelling opportunity in the Japanese multi-family real estate space,” Gordon Black, senior managing director and portfolio manager of Heitman’s global core plus platform said in a release on Tuesday. “As the economic and commercial center of the Kansai region, we believe Osaka’s economy and rental demand align well with our strategy to pursue multi-family opportunities in key regional markets.”

The investment comes after Heitman entered the Japanese residential market in late 2021 with the acquisition of eight multi-family properties totaling 329 units in Tokyo.

Forward Purchase Deal

Located in the Abeno, Fukushima and Bentencho areas of Osaka City, the properties are all situated within a 10-minute walk of metro or rail stations. Heitman did not name any of its newly acquired assets, which were acquired on a forward-purchase basis, according to market sources who spoke to Mingtiandi.

Heitman, which first announced the purchase in May, pointed to the deal as aligning with the fund manager’s acquisition strategy as well as the firm’s positive outlook on the Japanese property sector on the back of the market’s abundant liquidity and low borrowing costs.

“This transaction aligns with our acquisition strategy, which prioritises top-tier properties,” Tomoo Suzuki, vice president of acquisitions at Heitman said in a May release. “Our focus remains on acquiring attractive assets and we maintain a positive outlook on the Japanese real estate market, driven by its liquidity and appealing interest rates.”

Black added, “Moving forward, as the Japan real estate market continues to exhibit robust potential, we will continue to evaluate opportunities in regional Japanese markets that complement our existing portfolio.”

Heitman managed $48.8 of global assets as of 30 June, of which $39.3 billion were invested in real estate private equity across core, core-plus, value-add, and opportunistic strategies. The investment firm also invests in real estate private debt and public equities and has regional offices in Hong Kong, Tokyo, Seoul and Melbourne.

Japan Multi-Family In Vogue

With $6.3 billion in transactions last year, according to MSCI Real Assets, Japan’s residential sector ranked as Asia Pacific’s top market for multi-family investors on the back of continued population growth in major cities like Tokyo and Osaka.

While Japan’s rental residential sector has been dominated by domestic players, global investors have been playing a larger role this year as the sector’s attractive fundamentals, as well as low borrowing costs and strong liquidity, boost institutional interest in the country’s multi-family assets.

Last month, Goldman Sachs acquired a portfolio of eight rental residential assets totaling over 500 units in Greater Tokyo, just weeks after a joint venture of Canada’s Manulife Investment Management and Tokyo-based Kenedix bought a nine-asset multi-family portfolio located in Greater Tokyo and Osaka.

In April, Tokyo-based Alyssa Partners and Hong Kong private equity firm Gaw Capital Partners acquired a portfolio of 29 Tokyo apartment buildings from a major Japanese conglomerate. Gaw invested in the deal on behalf of separate accounts for the Qatar Investment Authority and other investors, while Alyssa Partners took a minority stake in the transaction.

Earlier this year, a Tokyo-listed REIT sponsored by KKR made its 12th acquisition of rental residential assets in Japan with the purchase of a set of four apartment buildings in the capital city, while the UK-based M&G Real Estate bought the 298-unit Frontier Shinjuku Tower residential complex in Tokyo’s Shinjuku area from LaSalle Investment Management.