The multi-family portfolio spans Greater Tokyo and three other key metro areas of Japan (Getty Images)
Canada’s Brookfield on Monday announced its acquisition of 50 rental apartment properties across Japan’s four main metropolitan markets, marking the alternative asset manager’s entry into the country’s multi-family sector.
Market sources identified investment banking giant JP Morgan as the seller, while Nikkei Asia reported that the portfolio traded for more than JPY 100 billion ($627 million). The 3,700-unit purchase is Japan’s largest residential property transaction this year and one of only five on record to exceed JPY 100 billion, according to CBRE data cited by the newspaper.
“Multi-family is one of Japan’s most compelling real estate sectors, underpinned by long-term urbanisation, resilient housing demand and constrained new supply,” Brookfield head of Japan real estate Ikushin Tsuchida said in a release.
The housing bet extends a campaign under which Brookfield has pledged to invest more than $10 billion in Japan over five years. The firm agreed in February to buy Dentsu Group’s Tokyo headquarters for a market-indicated JPY 300 billion after acquiring a 30 percent stake in the Meguro Gajoen commercial complex in a deal valuing the asset at JPY 160 billion.
Urban Demand
The residential portfolio spans Greater Tokyo, Greater Osaka, Nagoya and Fukuoka, giving Brookfield immediate scale in a sector that complements its multi-family and broader living investments across North America, Europe and Australia, including the Journal Student Living platform.
Brookfield head of Japan real estate Ikushin Tsuchida (Image: Brookfield)
The buildings are 96 percent occupied and have an average age of less than four years, with most comprising recently completed properties in well-connected urban locations, Brookfield said. The collection includes apartments under developer Samty’s upscale S-Residence brand and is weighted towards compact units serving single-person households, according to Nikkei.
The rental backdrop supports Brookfield’s investment case. Average monthly rents for apartments of 30 square metres (323 square feet) or less in Tokyo’s 23 wards rose 12.4 percent year-on-year to JPY 114,242 in June, marking a 25th consecutive monthly record, while Fukuoka posted a 15.9 percent increase, AtHome data cited by Nikkei showed.
Brookfield’s purchase ranks behind Blackstone’s JPY 300 billion acquisition of 221 rental apartment buildings from China’s Anbang Insurance in 2020. The US private equity giant was buying back a portfolio it had sold to the insurer three years earlier for JPY 260 billion.
Rival Warburg Pincus has likewise expanded in Japan’s living sector, acquiring Lone Star’s 16,192-room Tokyo Beta shared-housing portfolio last year. The Manhattan-based firm followed up in June with a JPY 190 billion tender offer for student housing operator JSB, which manages more than 2,700 properties across Japan.
Capital Engine
Brookfield Corporation last week reported second-quarter distributable earnings before realisations of $1.4 billion, up 14 percent from a year earlier and 15 percent on a per-share basis. Total distributable earnings rose 12 percent to $1.6 billion, while consolidated net income fell 33 percent to $703 million.
At Brookfield Asset Management, the group’s fund management arm, fee-related earnings jumped 20 percent to $808 million as fee-bearing capital grew 19 percent to $672 billion. Distributable earnings climbed 15 percent to $707 million and net income more than doubled to $1.2 billion.
The manager raised a quarterly record $77 billion, bringing first-half fundraising to $98 billion, while investing $21 billion and monetising $11 billion of assets. Its real estate strategies raised $4.3 billion and deployed $5.2 billion during the period, including acquisitions in manufactured housing and outdoor industrial storage.
Brookfield’s directly held real estate also maintained firm operating metrics, completing 6 million square feet (557,000 square metres) of office and retail leasing at office rents averaging 19 percent above expiring levels. Its super-core and core-plus portfolios finished June at more than 95 percent occupancy.
The group completed $10 billion in real estate disposals during the first half, including the £750 million ($1 billion) sale of One Churchill Place in London’s Canary Wharf to Barclays, and ended June with a record $210 billion of deployable capital as it accelerates investment across housing and other real asset sectors.