Housing Japan, a Tokyo-based real estate brokerage, has launched a new business with view to raising private equity real estate funds.
The firm has launched HJ Asset Management, initially to perform asset management duties for the deals that Housing Japan brokers. However, over time, it will be expected to raise third-party capital and become a principal investor in its right.
It is unclear at this early stage just how large HJ Asset Management expects to become over the medium to long term. However, early estimates by Taro Squires, who will lead the business, have it growing to $1 billion of assets under management over the next three years.
Squires was formerly the head of the real estate investment department at Goldman Sachs Asset Management Japan, where he was in charge of setting up the firm's private REIT in the country. He has been joined at the helm by Takenori Takahara, previously a senior manager in real estate securities firm Agility Asset Advisers’ asset management division.
Housing Japan was founded in 2000 and since then has built up a large network of high net-worth individuals looking to invest in Japanese real estate, particularly from Asia, Squires told PERE. However, though Housing Japan would broker the deals, it always has had to outsource the asset management. He said that was “a business opportunity that was passing them by.”
Squires said while there are plenty of firms that service institutional investors in Japan, very few that cater to high net-worth individuals. That demand has only grown since Abenomics was introduced, he added. “These investors are looking to find a manager that doesn’t have too large of a scale for their equity commitments,” he said.
For the next 18 to 24 months, however, HJ Asset Management will be focused on building a track record with individual deals, and hopes to close its first deal in Q1 2014. Then, in time, Squires said there would be an opportunity to raise a fund from high net-worth individuals.
Squires expected that about 80 percent of HJ’s investments would be in Tokyo, and most in income yielding assets. It would invest predominantly in offices but residential and retail assets could follow.
The vast majority of the firm’s investments are expected to cost $30 million to $60 million each, but some could be larger. The firm’s target over the next three years, he added, is to grow to $1 billion assets under management.