Invesco, Alyssa Buy 15 Japanese Apartment Assets in Latest Multi-Family Bet

Japanese rental residential assets continue to be a favourite theme for global investors in Asia Pacific with Invesco Real Estate and Tokyo-based Alyssa Partners today announcing completion of a purchase of a 15-property apartment portfolio.

The acquisition from a major Japanese developer gives the partners a total of 1,258 units in the cities of Tokyo, Osaka, Nagoya and Fukuoka, according to a joint statement by the two companies. Both parties declined to provide financial details on the transaction, however, market sources indicate to Mingtiandi that the portfolio changed hands for around JPY 30 billion ($203 million).

“This multifamily property portfolio is a unique investment that aligns squarely with our Asia Pacific core strategy and broad objective to deliver the most compelling and best performing opportunities to our investors, said Ian Schilling, head of core funds for Asia Pacific at Invesco Real Estate. The acquisition is understood to mark Invesco’s first major commitment to Japan’s multi-family sector.

With increasing urbanisation and high housing prices driving more Asian citizens to rent homes for longer, investment in multi-family assets grew 12 percent on an annual basis during the first nine months of 2023 to reach $5 billion, according to a recent study by JLL, which tracked much of the acquisition surge to the Japanese market.

Fully Let in Under a Year

Spanning some 42,200 square metres (454,237 square feet), the properties are less than one year old and are nearly fully let, with the partners saying that the properties are all within ten minutes or less walking distance from light rail stations.

“This investment continues our focus to diversify into key segments such as residential assets across developed markets in the region, especially in Japan where we see sustainable demand for quality assets in established urban centers,” Schilling added.

Alyssa Partners, led by managing partner and chief executive Chedli Boujellabia, sourced the properties and executed the acquisition, while also investing in a minority stake and acting as asset manager.

“We are very pleased to include Invesco Real Estate, one of the leading global real estate investment firms amongst our capital partners in Japan where we continue to have strong convictions about the residential rental market,” Boujellabia said. “This latest portfolio acquisition demonstrates Alyssa Partners’ ability to source, execute and manage large scale investments alongside major institutional investors.”

Invesco Real Estate, which managed $3.8 billion in assets in Japan as of March 2021, including a Tokyo-listed office REIT, has been rebalancing its portfolio in the region, as more investors turn to the downturn-resistant returns available from a multi-family sector which has outperformed traditional mainstays like offices in recent years.

Just last month Invesco sold Majestar City Tower B, an office building in Seoul’s Gangnam business district, for KRW 520 billion ($386.5 million).

“In Japan, the core multifamily universe will continue to expand over the next decade with investors targeting large metropolitan areas, including Tokyo, Osaka and Nagoya,” JLL said last month in a statement accompanying its release of a report covering investment activity in Asia’s multi-family sector.

Deals Continue

Invesco’s investment in the apartment portfolio fits into a trend of global investors increasing their holdings of Japanese multi-family properties as the country continues to boast Asia Pacific’s largest rental residential sector.

In September Singapore’s City Developments Ltd acquired a portfolio of 25 apartment buildings in Tokyo from North American giant BentallGreenOak for JPY 35 billion ($230 million), making its biggest investment yet in the country’s rental housing market.

That CDL deal was announced the same day that entrepreneur Sachin Doshi’s Weave Living announced that it had acquired its first Japanese assets with the purchase of a nine-apartment Tokyo portfolio.

In June, Abu Dhabi’s Mubadala Investment Company, which manages 276 billion in assets worldwide according to its website, made its own debut in Japan’s residential market in a joint venture with Canadian giant Manulife and US private equity shop Proprium Capital Partners.

The JV is seeded with existing apartment buildings in Tokyo and Osaka and aims to add more assets on the way to a JPY 80 billion target portfolio.

Established by Boujellabia in 2012, Alyssa Partners has made apartment investments a focus of its activity in Asia’s second-largest economy, including having teamed up with investors including Blackstone, PGIM Real Estate, Frasers Hospitality, AXA Investment Managers and Hong Kong’s Arch Capital for multi-family deals in the country.