Manulife and Kenedix Launch $170M Japan Multi-Family JV With 9 Seed Assets

Canada’s Manulife Investment Management and Tokyo-based Kenedix have agreed to form a JPY 19.8 billion ($170 million) joint venture to acquire multi-family assets in Japan’s major cities.

The JV will be seeded with a portfolio of nine properties, including four already acquired, the partners said Friday in a release. The seed portfolio consists of rental apartments spanning more than 250,000 square feet (23,226 square metres) of net lettable area, and the venture is targeting a pipeline of additional assets to be purchased soon.

“The multi-family sector continues to be a favourable asset type to us globally, especially in Japan given its resilient nature and strong growth potential,” said Kenny Lam, senior managing director and head of Asia real estate investments at Manulife. “The acquisition fits well with our long-term investment strategy for the Asia Pacific market.”

The deal with fund manager Kenedix marks Manulife’s first stand-alone multi-family investment in Japan after competitors AXA Investment Managers and Allianz Real Estate have been steadily building up rental residential portfolios in Asia’s second-largest economy. Last December, Allianz — which had already established $1.7 billion in Japanese rental housing assets — announced a $2 billion co-investment strategy with Ivanhoe Cambridge targeting the sector.

Tokyo-Heavy Portfolio

Manulife and Kenedix gave no details about specific assets in the seed portfolio, saying only that five properties are located in Tokyo’s 23 wards and the rest are spread across the greater Tokyo area, Osaka and Nagoya.

“All are high-quality stabilised assets with convenient access to railway stations and nearby neighbourhood amenities,” the partners said.

Soushi Ikeda, managing director and head of strategic investment at Kenedix, described the seed portfolio as a balanced mix of single, compact and family units providing stable cash flows amid the COVID-19 pandemic.

“We are very pleased to establish the partnership with Manulife on their first investment in the Japan multi-family sector,” Ikeda said. “In recent years, our business in this strategy has been growing steadily and we look forward to expanding more in this sector.”

Kenedix serves as the 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.

Following last year’s privatisation and buyout, Kenedix is a 70:30 joint venture of Japan’s Sumitomo Mitsui Finance and Leasing and Singapore-based ARA Asset Management (now part of ESR).

Insurer Hunts Asian Properties

The launch of the Japan venture brings Manulife’s real estate portfolio in Asia Pacific to 580,000 square feet and is the latest of a series of recent moves expanding its property in Asia, and globally, including announcing last month that it had hired former DWS executive Marc Feliciano as global head of real estate for private markets.

The insurer in February announced its acquisition of a Vietnam warehouse project under a joint venture with ARA subsidiary Logos. Upon completion, the distribution centre near Ho Chi Minh City will span 116,000 square metres (1,248,614 square feet) of modern logistics space with a value of more than $80 million.

Earlier that same month, Manulife said it would acquire a significant minority equity position in Hong Kong-based Arch Capital Management, a private equity firm focused on APAC real estate.

Once the deal gains regulatory approval, it will combine Arch Capital’s experience in opportunistic and value-add strategies with Manulife’s $2.9 billion in core and core-plus assets across the region to create a partnership managing more than $5 billion in assets across 12 Asian markets.