London-based Nuveen Real Estate announced today that it had teamed up with Japanese asset manager Kenedix to purchase seven Tokyo apartment blocks for $224 million, according to a joint announcement by the companies.
The purchase of the multifamily assets in the Japanese capital adds to an existing strategy established by the investment manager’s with Holland’s Bouwinvest and brings the partnership’s Tokyo portfolio to 22 properties with a gross asset value of $642 million.
The transaction is the latest in a series of investments by international institutions in the last several months targetting Japan’s multifamily sector, with major names such as Allianz Insurance, Greystar and Aberdeen Standard Investments all venturing into the market segment since mid-2019.
Aiming for Tokyo’s Core Districts
“We first identified the investment opportunities in the Tokyo multifamily sector in 2017 and formed our partnership with Bouwinvest and Kenedix,” Shu Wantanabe, Director of Capital Transactions for Asia at Nuveen Real Estate said. “The sector has provided our investors the opportunity to tap into strong secular fundamentals and growth, adding resilience to their portfolios in a late cycle market.”
For its latest set of assets, the fund selected a group of apartment projects in the central Tokyo wards of Shinjuku-ku, Shinagawa-ku, Taito-ku and Sumida-ku which provide a total of 428 units. The partners characterise the newly acquired properties as targetting middle to upper middle-market tenants.
In May 2018 the partnership had invested $180 million to acquire an initial set of six assets in central Tokyo. Kenedix, which is based in the city, will act as asset manager for the newly acquired assets as it does for the existing portfolio.
“Working with an on-the-ground operator is fundamental to building out our portfolio,” Nuveen’s Wantanabe added. “Kenedix’s local reach has allowed us to source off-market deals and development projects due to their longstanding relationship with developers in the city.”
Bouwinvest Backs Tokyo Strategy
In the same notice which unveiled their portfolio expansion, the partnership also announced some fresh capital for the multifamily vehicle, which was first established in May 2018 with property fund manager Bouwinvest as a cornerstone investor.
After raising $200 million for the 2018 first close, the partners have now grown that total to $284 million through the support of Bouwinvest, which manages more than €12.1 billion ($13.4 billion) in real estate funds globally, along with Nuveen’s parent company TIAA and an unnamed third institutional investor.
“Bouwinvest focuses on strong urban locations and we expect demand for residential rental properties in the region will continue to increase as demand from the rising middle class outstrips supply,” Tjarko Edzes, Director for AsiaPacific Investments at Bouwinvest said in explaining the company’s rationale for backing the Tokyo multifamily strategy.
Global Institutions Chase Japanese Apartments
The announcement by Nuveen, Kenedix and Bouwinvest comes just under a month after Greystar Real Estate Partners named Akira Kosugi as its new head of Japan, as the US multifamily giant prepares to invest around $200 million for its first acquisition in the country.
Allianz Real Estate, the property investment division of the European insurance firm made its own bet on Japanese apartments in October of last year when it agreed to buy a portfolio of Japanese multifamily assets from Blackstone for €1.1 billion (then $1.2 billion).
Like Nuveen, Aberdeen Standard chose to set up its Japanese residential platform with a local partner, with the UK-based firm announcing in June last year that it would be working with Sumitomo Mitsui Trust Bank to invest in multifamily properties across Asia Pacific with a focus on Japan.