LaSalle Investment Management on Monday announced that it had acquired nine new residential properties for its largest domestic fund in Japan, as it adds beds to the previously shed-dominated vehicle.
Without naming a seller, the fund management affiliate of Jones Lang LaSalle said that its LaSalle Japan Property Fund had paid JPY 35 billion ($321 million) to purchase the Greater Tokyo area multi-family residential properties, as well as a warehouse facility in Osaka.
The acquisition expands the fund’s assets under management by nearly 29 percent to $1.44 billion and gives the venture, which was launched in 2019, substantial footholds in each of the industry’s two hottest asset classes.
The 10-property deal brings the open-ended private fund’s portfolio to 16 assets as LaSalle focuses on pandemic-proof strategies for the core vehicle.
“These are attractive, well-located quality assets that diversify the portfolio and will provide a steady income,” said Keith Fujii, head of Asia Pacific at LaSalle Investment Management. “In Tokyo, despite the pandemic, we are seeing relatively stable wages and tight labour markets, which will continue to support the multi-family sector. In the logistics sector, positive real estate fundamentals, continued e-commerce penetration and our ability to execute successfully are the reasons why we find this sector desirable.”
Despite the ongoing COVID-19 crisis, the equity offering to acquire the new assets was buoyed by a strong appetite for investment in domestic real estate from a wide range of domestic investors, LaSalle said in a Friday release.
Fujii’s team tapped institutional investors, banks, pension funds and operating companies for the fund raise, including major lenders in Japan, as demand exceeded the expected offering amount needed to fund the purchase.
Targeting Core Assets
LaSalle Japan Property Fund was launched in November 2019 with six seed assets purchased for JPY 105 billion, including the Shoplist Logistics Centre in Sagamihara, Kanagawa prefecture.
From the onset LaSalle has included office, industrial, retail and multi-family opportunities in the strategy, with the fund manager identifying Tokyo, Osaka, Nagoya and Fukuoka as target geographies in which to deploy capital.
The 16 properties now included in the portfolio were selected through a research and strategy framework, focusing on the themes of demographics, technology, urbanisation and environmental change.
“We believe that logistics facilities and residential housing in major metropolitan areas will continue to generate stable income despite the market uncertainties brought about by the pandemic,” said Ryota Morioka, fund manager at LaSalle Investment Management. “In light of the increasing global demand for investment, LaSalle continues to view Japan as a promising investment market, and will keep driving to maximise investor profits by building a diversified portfolio of high-quality, stable core assets.”
The creation of LaSalle Japan Property Fund followed the launch of the publicly traded LaSalle Logiport REIT in 2016. The REIT’s portfolio has since expanded to include 18 logistics properties (13 in Tokyo and five in Osaka) with a total acquisition value of JPY 317.8 billion, led by a 40 percent stake in Japan’s largest logistics facility, Logiport Kawasaki Bay.
Beds and Sheds Revisited
Logistics and multi-family investments in Asia Pacific bucked the broader losing trend in 2020, up 29 percent and 26 percent from the year before, according to JLL’s Capital Tracker report released last month. The two asset classes made up nearly 30 percent of total volume in the region, while hotel, retail and office transactions fell more than 25 percent year-on-year.
In Japan, logistics and multi-family investment volume accounted for about half of all transactions last year, JLL said.
During last year’s fourth quarter, overall real estate transactions in Japan surged 37 percent from prior-quarter levels to lead Asia Pacific.