Cordea Savills in $100m first close for Japan fund

The real estate investment management business of the London-headquartered property services firm Savills has reached a first close for a maiden vehicle focused on offices in Tokyo.

Cordea Savills, the real estate investment management business of the London-headquartered property services firm Savills, has raised close to $100 million in the first close of the Greater Office Tokyo Fund.

The firm further announced that the Singapore-based real estate investment firm, Straits Real Estate, will be the key sponsor for the fund. Straits has committed $40 million in the first close, with possibility of committing further capital in subsequent closes. The remaining LPs in the fund are all understood to be Asian investors as well, including private banks, family offices and institutional investors.

The Greater Office Tokyo Fund is a yen-denominated, closed-ended real estate fund launched with a fundraising target of around $250 million in October 2014. The capital raised via the fund is expected to be invested via a value-added structure. While the fund will be majorly invested within Tokyo, it is understood that as much as 30 percent could be deployed in other regional cities.

During the fund’s launch, PERE had reported that the firm’s targeted IRRs, net from the fund’s costs, are expected to be between 13 percent and 15 percent.

“We are pleased to be able to work with Cordea Savills on their unique strategy in Japan, centered on special situations, which we believe is ideal, given the realities of sourcing deals in the Japanese real estate market today. This particular investment approach is a much sought after strategy in Japan, but access to it is generally limited due to the insular nature of the market. With a healthy pipeline of projects, we see this as an ideal platform to enter the Japan market and achieve our targeting risk-adjusted returns,” said Desmond Tang, chief executive officer of Straits Real Estate.

The fund is the firm’s debut vehicle in the region, being run by Tom Silecchia and Tadaaki Kurozumi, who previously led Merchant Capital, a Tokyo-based real estate investment management firm. In 2013, Cordea Savills acquired Merchant Capital as part of plans to expand its operations in Asia.

“My co-head, Tom Silecchia, and I have been active in this market since the early 90s and have cultivated our expertise and network in accessing a pipeline of projects with value-adding potential in Japan,” Kurozumi said in a statement announcing the first close. “Tokyo is seeing unprecedented interest from international investors as the result of Abenomics and the upcoming Tokyo Olympics, both of which seem to be having a positive effect on real estate pricing. We are well placed to capitalize on this trend.”

In a major feat for the firm earlier this year, Cordea Savills agreed the acquisition of the Europe and Asia-focused real estate investment manager SEB Asset Management for €21.5 million. With the transaction, the firm has been catapulted into becoming one of the world’s biggest real estate investment management businesses with more than €17 billion of assets under management across the two regions.