UPDATE: Allianz Real Estate and Ivanhoe Cambridge launch up to US$2B Japan Multi-Family Fund

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This item was originally published on Wednesday, 22 December 2021 at 18:53 SGT; it has since been updated to include an additional comment from Rushabh Desai, Asia Pacific CEO of Allianz Real Estate.

Allianz Real Estate has tied up with Ivanhoe Cambridge to launch Singapore-based closed-end fund Allianz Real Estate Asia-Pacific Japan Multi-Family Fund I (AREAP JMF 1), with an investment capacity of around US$2 billion in gross asset value, the companies said in a press release Wednesday.

The fund, which will invest in multi-family residential assets in Japan’s top-tier cities, has received commitments of US$250 million each from Ivanhoe Cambridge, the real estate subsidiary of Caisse de Dépôt et placement du Québec (CDPQ) and Allianz group companies, the statement said.

Commitments for the fund are expected to total US$750 million within a few weeks, but the equity may rise to US$1 billion depending on the pace of capital deployment, the statement said.

Rushabh Desai, Asia Pacific CEO of Allianz Real Estate, said the combined expertise with Ivanhoe Cambridge will put the fund on a good footing to build a high-quality diversified portfolio of Japanese residential assets.

“The Japan multi-family residential sector has displayed resilience throughout the Covid-19 pandemic and continues to be a high-conviction asset class, offering stable cash flows and attractive stabilized yield spreads to investors,” Desai said in the statement.

When asked if Allianz Real Estate would be divesting its Japanese multi-family residential portfolio into the fund, Desai told Shenton Wire via email, “this is a new venture looking at fresh opportunities going forward.”

George Agethen, senior vice-president at Ivanhoe Cambridge, added the fund would allow his firm to enter an attractive sector boosted by robust urbanization trends and limited net supply, while diversifying its portfolio in Japan and the Asia-Pacific.

The fund’s strategy is to acquire mainly newly completed, well-located assets in Tokyo, Osaka, Nagoya and Fukuoka, and then lease-up and stabilize the assets for long-term holdings, the statement said. ESG will be a strong focus for investments, targeting the use of renewable energy, green certification, energy efficiency standards and community initiatives, the statement said.

Allianz Real Estate will act as the investment manager and general partner for the fund, the statement said.

Allianz Real Estate’s Japan multi-family investment portfolio has around 6,000 units across 134 assets currently, with a gross asset value of US$1.7 billion, the statement said.

Ivanhoe Cambridge has a real estate exposure of around C$6 billion in its key markets of China, India, Australia, Singapore and Japan.

Caisse de Dépôt et placement du Québec (CDPQ) is an institutional investment group with around C$390 billion in assets, which it manages on behalf of pension plans and public and parapublic insurance plans.