Manulife-Kenedix JV Buys 9 Japan Multi-Family Assets for $160M

A joint venture of Canada’s Manulife Investment Management and Tokyo-based Kenedix has acquired a nine-asset multi-family portfolio in Japan for JPY 23 billion ($160 million).

Located in the Greater Tokyo and Osaka areas, the properties have an average age of less than a year and comprise 564 rental units across 29,000 square metres (312,153 square feet) of gross floor area, the partners said Tuesday in a release. The JV completed the purchase of eight of the properties in July and expects to close on the ninth asset in early 2025. The seller wasn’t identified.

The latest buy brings the joint venture’s portfolio to 1,200 units across 19 properties, mostly in Tokyo, since the $170 million enterprise was launched in 2022 with nine seed assets. The portfolio has maintained an average occupancy rate exceeding 95 percent, according to the partners.

“This acquisition further strengthens Manulife’s investment capabilities, in partnership with Kenedix, to source, underwrite, execute and actively manage high-quality real estate investments in the Japan multi-family market,” said Fumihito Ogasawara, senior director for Asia real estate investments and asset management at the Toronto-based financial giant. “It also underscores our long-term commitment to the resilient and growing sector, which we believe will continue to deliver stable, good risk-adjusted returns for our investors.”

Collaboration to Continue

Manulife and Kenedix gave no specifics regarding the nine most recent additions to the portfolio, saying only that they offer residents convenient access to railway stations and neighbourhood amenities.

“We have strong conviction in the multi-family sector in Japan as it fully aligns with our investment strategy in the Asia Pacific region,” said Kenny Lam, chief investment officer and head of transactions for APAC real estate at Manulife Investment Management. “We look forward to collaborating with Kenedix in further opportunities across various asset classes.”

Manulife has also invested in Japan’s rental residential sector through a joint venture with Abu Dhabi’s Mubadala Investment Company and US private equity shop Proprium Capital Partners. The trio set up the partnership last year with a goal to assemble a portfolio worth up to $600 million.

The JV with Mubadala and Proprium is seeded with existing properties in Tokyo and Osaka and aims to acquire more assets with the assistance of locally based Samurai Capital.

As of March, Manulife Investment Management’s real estate portfolio spanned 85 million square feet of office, industrial, retail and multi-family space across Canada, the US and Asia Pacific.

Rent Growth Attractive

Rising rents in Tokyo and Osaka are expected to contribute to high profitability and improving returns on multi-family investments, said Soushi Ikeda, managing director and head of strategic investment at Kenedix.

“We believe that the expansion of the scale of the JV, which is regarded as one of the key projects in our core real estate strategy, will further ensure the development of our business,” Ikeda said.

Kenedix also serves as asset manager for its Tokyo Multifamily Partnership with US investment giant Nuveen and Dutch pension fund manager Bouwinvest. The partnership had a portfolio of 35 properties and 1,940 homes with a gross asset value of $810 million as of late 2020.

The multi-family sector in Tokyo saw just under $1 billion in transactions in the second quarter of 2024, according to MSCI’s latest Asia Pacific Capital Trends report.

Japan’s overall multi-family market has cooled moderately from its 2022 peak, with yields failing to expand in response to the Bank of Japan’s monetary tightening, the data provider said Tuesday.