TH Real Estate has set up a venture with Kenedix and Dutch real estate investor Bouwinvest as a cornerstone investor, to invest up to $1bn (€852.5m) into multifamily assets in Japan’s capital city.
TH Real Estate said the Tokyo multifamily vehicle, known as ERES APAC III, has raised $200m at first close.
The amount raised includes capital sourced from two institutional investors, including Bouwinvest’s $90m contribution, in addition to TH Real Estate’s parent company - TIAA.
A second close is expected later this year, with a target capital raise of an additional $275m. The venture expects to invest up to $1bn in Tokyo multifamily.
TH Real Estate said the new vehicle is buying six assets in Central Tokyo for $180m. Listed real estate manager Kenedix will act as the local asset manager in Japan for the seed portfolio.
The assets include 272 studios, 185 one-beds and 59 two-bed units.
Shu Watanabe, the director of capital transactions in Asia at TH Real Estate, said: “With Japan’s economy expected to expand above-trend over the next five years, this partnership is an exciting opportunity to capitalise on a stable and diversified income from the exposure to an alternative asset class, which has seen substantial growth and an increased investor appetite across Asia Pacific.
“This partnership leverages both our global relationship with capital partners and, locally in Japan, with one of the leading players in this space. We look forward to developing this partnership as part of our broader commitment to growth in Asia Pacific.”
TH Real Estate entered the Japanese market in 2016, with the acquisition of a multi-use asset in Ginza, Tokyo.
Soushi Ikeda, a managing director and head of strategic investment department at Kenedix, said: “We are experiencing a strong increase in demand from both domestic and overseas investors with long-term, core investment strategies, seeking to invest into Japanese real estate.”
In order to accommodate such investor demands, Kenedix is now strategically focusing on sourcing and arranging core investment opportunities, Ikeda said.
“This partnership with TH Real Estate marks our entry into the multifamily investment space on behalf of core, overseas institutional investors representing a welcome diversification of our business model. We look forward to future opportunities such as these.”
Tjarko Edzes, The Asia-Pacific director at Bouwinvest Real Estate Investors, said: “Bouwinvest is embarking on a major global expansion programme and expects to invest €1.5bn in new equity in international markets over the next few years, raising the proportion of these assets to around 40% of our total portfolio, with the remainder in our core Dutch funds.
”This investment will be an important component of our Asia Pacific growth strategy, as we believe the Tokyo multifamily sector provides solid fundamentals and attractive risk-adjusted returns.”
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