Japan’s Government Pension Investment Fund, the world’s largest pension, has made its second direct real estate fund investment with a sizable commitment to Brookfield’s latest flagship opportunistic vehicle.
GPIF committed $500 million to Brookfield Strategic Real Estate Partners V, according to an update from the investor. GPIF did not give further details on the commitment.
Launched in February 2023, BSREP V has a fundraising target of $15 billion, making it the largest real estate fund currently in the market, according to PERE data. Other investors in the fund include the US pensions Pennsylvania Public School Employees’ Retirement System, Minnesota State Board of Investment and South Carolina Retirement System.
Having started its direct real estate fund investment within the past year, the investor has now committed $500 million each to the top two private real estate managers in the PERE 100 ranking. The investment in Brookfield’s fund comes after the pension disclosed its first direct real estate fund mandate to Blackstone’s flagship real estate fund Blackstone Real Estate Partners X, according to a PERE report earlier this year. BREP X was closed on $30.4 billion in April 2023.
Prior to making direct investment in private real estate funds, GPIF had invested in the asset class via a “multi-manager strategy” since 2017. Under the strategy, the pension has invested in three funds of funds managers for real estate: Mitsubishi UFJ Trust Bank, CBRE Investment Management and LaSalle Investment Management.
As of March 2023, the pension’s domestic real estate investments and overseas property investments generated IRRs of 7.29 percent denominated in yen since 2017 and 6.22 percent in US dollars since 2018, respectively, according to its latest annual report.
The investor has dialed up its direct investments into private real estate despite the lack of a head of real estate executive since April this year. Following the departure of former boss Hideto Yamada, PERE reported the pension was actively seeking a replacement for the role and has made the hiring a “top priority” among its recruitment activities, according to a LinkedIn post by Yoshitaka Todoroki, managing director at GPIF’s private market investment department and head of private equity and infrastructure. Todoroki currently has the dual roles of managing director of private market investment and acting head of real estate.
“Against the backdrop, we are trying to increase our investment exposure to private market assets that are supposed to generate attractive investment returns in the long run,” Todoroki said in the LinkedIn post.
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