Patrizia Buys 14 Tokyo Residential Buildings for GIC-Backed Japan Fund

German fund manager Patrizia announced on Wednesday that it has purchased a Japan residential portfolio on behalf of a global institutional investor, as Asia’s second largest economy continues to be the top target for fund managers. 

The purchase of the set of 14 properties gives the Patrizia-managed vehicle approximately 800 apartment units and five retail units, predominantly located in Tokyo’s central 23 Wards, with one property in nearby Yokohama. 

“This acquisition is a significant step forward for our Japan business and a clear reflection of our confidence in Tokyo’s residential market,” Patrizia representative director and head of Japan, Masami Takizawa said in a statement. “The portfolio aligns perfectly with our core-plus/value-add strategy and benefits from the structural tailwinds driving demand in Japan’s urban centres.”

Market sources familiar with the transaction indicated that the 2022-vintage Patrizia fund which acquired the properties is invested by Singapore’s GIC, giving the sovereign fund its second major Japan residential acquisition in recent weeks, after its purchase of 30 properties from Rava Partners’ Samty Holdings in a deal announced on Tuesday.

Recently Built, Fully Leased

Patrizia describes the portfolio as having an average building age of just over three years and occupancy of more than 97 percent. Lease levels across the portfolio are said to be around 10 percent below market rates, presenting the potential to enhance yield through rental increases in line with the fund’s core-plus strategy.

The Augsburg-based firm had launched its Japan fund in late 2022 as a €1 billion (then $1.03 billion) multi-family focused venture. The fund was initially seeded with four apartment buildings in the country’s top two cities worth a combined JPY 7.5 billion (€52 million), Patrizia representatives told Mingtiandi at the time, with the goal of deploying capital into core-plus and value-add multi-family opportunities in Tokyo and other major urban centres in the country. 

Describing the deal announced on Wednesday as one of its most significant single investments in Japan to date, Patrizia pointed to the acquisition as a key step toward goal of doubling assets under management in the country over the next two years as it moves beyond the residential market.

“Looking ahead, we are actively seeking the next opportunity to acquire high-quality assets in key urban locations across Japan where we can leverage our local expertise to drive value through asset optimisation and proactive management,” Takizawa said. “In addition to the living sector, we are now committed to diversifying and accelerating our investments in value-add commercial real estate across Japan, capitalising on market opportunities beyond residential.”

Fresh Leadership

In the same announcement, Patrizia said that it is expanding its team in Tokyo with former PGIM executive Yutaka Yukizawa having joining as head of transactions for Japan during June. 

Now responsible for directing the Patrizia’s investment strategy in Japan, during his nearly three decades in real estate, Yukizawa has held positions at Nomura Real Estate Development and Morgan Stanley Securities Japan as well as with PGIM’s real estate team in the country.

Yukizawa signed up for the Patrizia role after former PGIM Real Estate vice president for transactions Jun Akase joined the company in September last year as a director.

Patrizia’s Takizawa became the company’s sole head of Japan in June this year when former co-head, Thomas Hirschvogel left after more than eight years with the fund manager. Takizawa had been promoted from head of capital markets for Japan at Patrizia to co-head in April of last year.