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DREAM raises first US fund

The Japanese firm is planning a series of fundraises for US real estate, including a mezzanine debt fund.

Diamond Realty Management has set up its first US-focused fund with capital from Japanese institutional investors, the firm said earlier this month.

DREAM, a Tokyo-based private real estate investment firm owned by Mitsubishi Corporation, raised $51 million from Japanese institutional investors for the DREAM US Fund, according to the statement. On behalf of the fund, the firm plans to be a minority investor in multifamily and logistics development projects undertaken by DREAM’s sister company, US-based real estate developer Diamond Realty Investment.

The firm is planning a fund series, starting with its first DREAM US fund, and will launch one development-focused vehicle annually, Takashi Tsuji, the firm’s chief executive, told PERE. Because of strong existing Japanese investor demand, the firm is also planning a US-focused real estate mezzanine debt fund.

With the $51 million in fund equity, DREAM will invest in two multifamily developments in Texas and Colorado and a California logistics development, with a total cost of $250 million. The fund has a four-year life, with exits anticipated when the projects have reached completion and leasing reaches stabilized occupancy levels.

“Mitsubishi Corporation, our parent company, has extensive experiences and track records in US real estate developments, especially in multifamily and logistics,” Tsuji said. “We see stable and growing demand in multifamily and logistics sectors, and combined with higher liquidity, we believe these are the kinds of recession-proof investments that are appealing especially for Japanese institutions.”

The firm launched the fund in March after Japanese investors expressed interest in deploying capital overseas.

“We felt that Japanese investors’ interests toward US real estate investments are really rising,” Tsuji said. “I think we may be the first Japanese local asset manager to launch an exclusive US fund for Japanese institutional investors.”

Last year, the firm raised ¥20 billion (€160 million; $175 million) in equity for Dream Mezzanine Debt Fund IV, a Japanese mezzanine real estate debt fund, PERE previously reported. The vehicle, which closed in March 2016, will be deployed in mezzanine debts collateralized by logistics development projects in Japan.

DREAM manages about $4.3 billion in assets, Tsuji said.