M&G Real Estate has acquired two properties in Japan and one in Australia as it looks to build long term sustainable income and further diversify its core Asia real estate portfolio.
The three properties have a combined market value of over USD200 million.
M&G’s core Asia real estate strategy is overseen by fund manager Erle Spratt. Investors include institutions from the Americas, Asia, the UK and other parts of Europe.
The strategy uses top-down market level signals to acquire investments selected according to asset-specific criteria. The three properties - F Parc Tenjin in Fukuoka, Sakurabashi IM Building in Osaka, and 628 Bourke Street in Melbourne - complement existing exposures in M&G’s Asian real estate portfolio.
Spratt says: “These acquisitions add distinct value to our Asia Pacific property portfolio as we continue to diversify risk and build upon the attractive investment performance this strategy has achieved on a one and three year basis. F Parc Tenjin is an extremely well located residential asset offering stable long-term income and Sakurabashi IM Building is a shorter-term growth investment that we expect to benefit from improving Osaka office market fundamentals.
“Whilst we usually hold assets based on the long term fundamentals, we have the flexibility to take a tactical view where we see an opportunity to take advantage of shorter term market trends. We are constructing a portfolio in Japan comprising two-thirds income-oriented assets and one-third growth investments to deliver attractive income and capital growth from our Japanese portfolio. We see a healthy pipeline of opportunities to invest in Japan that fit this strategy.”
Katsuhiro Ishikawa, managing director, M&G Real Estate Japan, says: “Both F Parc Tenjin and Sakurabashi IM Building are high quality properties with high occupancy rates and sound trading histories. But we’re also exploiting a shift in the macroeconomic environment in Japan.
“Ahead of market expectations, Osaka has entered a recovery phase in terms of rental rates and transaction volumes. We’ve made a valuable early entry into the recovery of this economically important Japanese city with the acquisition of Sakurabashi IM Building. The asset will benefit from active asset management to optimise its income and its value.
“Fukuoka is one of the few cities in Japan that has experienced constant population growth and it has become the major beneficiary of the consolidation of business activities in the Kyushu region in Western Japan. Demand for housing in the city is anticipated to be on a sustainable growth path, which plays well to our long-term investment strategy.”