Allianz Real Estate has marked its first major entry into Japan’s residential market with the acquisition of a €1.1bn portfolio from Blackstone.
Blackstone acquired the portfolio in 2015 and, as reported in July this year, the US private equity firm had put the portfolio of 82 apartment blocks up for sale.
Allianz Real Estate, acting on behalf of several Allianz companies, said it agreed to buy the portfolio, which comprises 4,600 units with 160,000sqm of net rentable area.
Most of the assets are located in Tokyo, Osaka, Nagoya and Fukuoka, and the portfolio is 97% leased.
Rushabh Desai, Asia-Pacific CEO of Allianz Real Estate, told IPE Real Assets: “This will be our first direct investment, but we already have exposure to multifamily in this region through our indirect commingled fund investments.
“The key attraction of the Japanese residential market is its resilience. High occupancy, tenant stickiness, and limited new net supply in major cities are other positive aspects.”
Desai said the acquisition was through a competitive bidding process that had attracted other institutional investors seeking exposure to one of the highest stabilised yield spreads in the world.
“Like everyone else we participated in the bid process,” he said. “Of course, price is an important consideration, but we now also have an impeccable reputation of executing complex transactions.
“Japan is the world’s third-largest multifamily residential market, with strong urbanisation trends coupled with limited net supply in the four major cities. Japan is the most established residential market in this region.”
Desai said he also saw the multifamily sector emerging in Australia and China. “Our immediate focus is Japan, but in future we may look at the other markets,” he said.
At the end of June this year, residential assets accounted for €9.8bn of Allianz Real Estate‘s €67.1bn global portfolio, and its exposure to Asia-Pacific was €3.6bn.
François Trausch, CEO of Allianz Real Estate, told IPE Real Assets that the company was aiming to manage €100bn of investments by 2024.
The company has recently begun to move into third-party fund management and it is envisaged that 10% of the €100bn could be managed on behalf of non-Allianz investors.
