IDERA plans JPY6bn follow-on to Sparinvest JV

The Japanese real estate firm is expected to make the second fund a club-like pooled structure with more than double the purchasing power.

IDERA Capital Management, a Tokyo-based boutique real estate asset and fund management firm, is launching a follow-on investment vehicle to its joint venture with Danish multi-manager, Sparinvest Property Investors, for residential investments in Japan outside of Tokyo, PERE can reveal.

The firm is understood to be planning to structure the second collaboration between the two firms, called JURIC II, as a blind-pool fund that is open to other investors. It is understood that the firm is close to having two investors commit to the fund, and is expecting a capital raising of as much as JPY6 billion (€43 million; $58 million). In all, it is expected that up to four investors will commit funds.

IDERA is understood to be expecting a first close on JURIC II in February on around $40 million. The fund has a hard cap of $100 million, but the firm is not expected to target more than $60 million altogether and is not planning to market the fund widely.

IDERA raised $20 million from Sparinvest in a joint venture in March of last year, giving the firm approximately $60 million of purchasing power, including debt. IDERA had originally intended to increase the JV to have $100 million in purchasing power, but when other investors started expressing interest in the platform, IDERA chose to pursue a follow-on fund that brought in other investors instead. 

The JV’s resources have been deployed into a portfolio valued at JPY6 billion, and the follow-on club structure is expected to garner a portfolio of two to three times the value. The follow-on fund is expected to follow the strategy of its predecessor, which is focused on completed residential properties in major Japanese cities excluding Tokyo. The firm hopes to capitalize on the valuation spread between the capital city and the country’s other markets, a strategy which could return to investors a mid-teens IRR, according to the firm’s previous announcements.

Meanwhile, IDERA is also understood to have put fundraising for its JPY30 billion Nadeshiko Tokyo Office-Focus Fund on hold. The fund was launched in Q2 2012 but IDERA is thought to have had a change of heart with regard its strategy.

IDERA was formed in 2012 through a merger between Atlas Partners Japan and MK Capital Management Corporation. Including its management business and funds, IDERA has a total of JPY200 billion assets under management.