Germany's iii-investments seals first deal in Tokyo

German real estate company iii-investments has carried out its first transaction in Asia with the acquisition of a residential portfolio in Tokyo on behalf of a German pension fund.

The portfolio comprises 225 flats spread across four core properties in central locations of Tokyo and Yokohama. The investment volume equates to EUR 53 mln.

iii-investments formed a partnership in October 2012 with Japanese real estate company Kenzo Capital Corporation and the property arm of German banking group Metzler to acquire Japanese real estate on behalf of German institutional investors.

iii-investment is seeking properties across a range of segments and a target volume in the triple-digit-million-range.

The company has been preparing its entry into the Japanese market for over two years. 'As a reaction to the present market situation in Germany and the European markets we have been searching for alternative investment locations and analyzed the Japanese and South-Korean markets, in particular,' said Reinhard Mattern, managing director of iii-investments.

The main advantage, he said, was the higher returns offered in the Japanese market. 'Presently, core residential properties in Germany offer cash-on-cash yields between 3. 25% and 4,25% whereas in Japan we will generate a return of about 7% after financing, tax, costs and currency hedging.'

iii-investments is part of UniCredit, giving it access to the banking group's network in 22 European countries. The company manages total assets of EUR 4.4 bn, of which institutional investors accounting for 90% of the overall volume.

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