BentallGreenOak Raises $100M From Michigan Pensions for Japan Fund

A Japan-focused BentallGreenOak fund has secured a $100 million commitment from the pension system in Michigan, pulling off a rare feat as many US state retirement plans slow their pledges to Asia Pacific real estate vehicles.

BentallGreenOak Asia (USD) IV excludes mainland China and India and concentrates on Japan’s office, logistics, residential and hospitality sectors, according to meeting minutes released by the State of Michigan Investment Board.

The commitment to the closed-end vehicle was made during the first quarter of 2024, said the SMIB, which oversees the State of Michigan Retirement System. US-based BentallGreenOak, a real estate unit of Canadian insurer Sun Life, had raised $759.1 million in capital as of January for the 2022-vintage fund, per a disclosure to the US Securities and Exchange Commission at the time.

“The team continues to assemble portfolios in both traditional and non-traditional real estate sectors that we believe will become institutional property types, providing the potential for above market appreciation and total returns,” the SMIB said. BentallGreenOak representatives declined to comment on the fundraising milestone.

Deal Drought

Michigan’s Japan bet comes amid a recent drought in commitments by US pension funds to private real estate strategies targeting APAC, with few publicly announced deals to equal the Minnesota State Board of Investment’s $100 million contribution to Angelo Gordon’s latest Asia real estate fund — a commitment that got the nod way back in last year’s first quarter.

For real estate funds targeting APAC, 64 vehicles reached a final closing in 2023 to raise $13.6 billion in total, down sharply from 116 vehicles and $35.6 billion in 2022, according to data provider Realfin.

The State of Michigan Retirement System’s real estate portfolio exceeds $8.9 billion in market value, with infrastructure investments bringing the total to more than $9.8 billion. The pension plan previously backed BentallGreenOak funds targeting European real estate and US cold storage.

Miami-based BentallGreenOak managed $82 billion in assets as of March and has invested at least JPY 700 billion ($4.4 billion) in Japan over the years.

The fund manager snapped up Tokyo’s Avex Building, the headquarters of entertainment conglomerate Avex Group, for JPY 72 billion at the end of 2020 and acquired the Rihga Royal Hotel Osaka for an undisclosed price believed to be at least JPY 50 billion in early 2023.

Still on Top

Investment in income-generating real estate in Japan during the first quarter of 2024 fell 15 percent year-on-year to $9.1 billion, but that figure was still strong enough to lead all APAC markets, according to MSCI Real Assets.

Among APAC metro areas, Tokyo maintained its top position with more than $5 billion transacted in the first quarter, MSCI said.

Major deals in the city during the period included two office disposals: Gaw Capital’s $592 million sale of the Aoyama Building to Taisei Corporation (as part of a three-asset portfolio transaction) and Sekisui House REIT’s offloading of Garden City Gotenyama in Shinagawa ward to an undisclosed buyer later identified as BentallGreenOak for $405.6 million.

The past month saw the announcement of two logistics vehicles targeting Asia’s second-largest economy. Singapore’s Mapletree closed on its second Japan logistics development fund with a goal of $710 million in AUM, while Fosun Hive Capital Management launched a cold chain JV with sister firm Idera Capital Management and plans to deploy $100 million in the first phase.