UBS AM and APG join to target Japanese residential market

UBS Asset Management’s (UBS-AM) Real Estate & Private Markets (REPM) business and APG Asset Management have set up a new property investment venture to target residential properties in Japan.

The Japanese multi-family real estate investment club will receive $175m (€153.6m) from the €485bn Dutch pension fund manager APG. UBS-AM will act as fund and asset manager for the venture, while APG will act as the key strategic partner for the strategy.

“The club aims to take advantage of strong underlying fundamentals in select Japanese residential submarkets, where strong population growth, shrinking household sizes, low home ownership and widespread non-institutional ownership present attractive opportunities to create value,” the partners said.

The club will undertake a primarily build-to-core investment strategy with some allocation to the re-positioning of income-producing operating assets, it said.

Thomas Wels, the head of real estate and private markets at UBS Asset Management, said: “Growing investor appetite for longer-term stable income-driven returns in the Asia Pacific region has driven us to diversify our offering by creating this multi-family strategy, which was possible thanks to our new partnership with APG, one of the world’s most highly regarded real estate investors.”

Graham Mackie, the head of real estate Asia Pacific at UBS-AM REPM, said: “Our collaboration with APG allows us to target a sector that is well placed for further institutionalisation and provide a healthy development margin for the benefit of our clients.

“The low volatility of income in this asset class and attractive income profile, paired with strong fundamentals make this Club an attractive opportunity for additional like-minded institutional investors.”

Patrick Kanters, a managing director and global head of real assets for APG, said: “This investment is consistent with APG’s strategy to selectively target sectors that are in early stages of becoming institutional in Asia Pacific but provide superior risk-adjusted returns potential.

“The partnership with UBS-AM marks the next step in our strategy of investing in quality residential properties in Tokyo and Osaka.”

Graeme Torre, a managing director and head of private real estate, Asia Pacific, said: “We saw the proposition of partnering with a first class fiduciary such as UBS-AM and their Japanese network as a compelling one.

“Approaching the Japanese multi-family sector through a build to core strategy allows us to achieve strong yields on cost and ensure that the assets that are built meet the latest occupier and environmental requirements.”