Ivanhoé Cambridge, the real estate arm of Canadian pension fund Caisse de dépôt et placement du Québec, is expanding its exposure to Japan via a $750 million venture with Allianz Real Estate and an undisclosed sovereign wealth fund.
The C$60.4 billion ($47.1 billion; €41.6 billion) investor will be gaining exposure to the multifamily sector via a core-plus strategy in four major cities in Japan. This will come by way of a fund created by the German insurer that is called Allianz Real Estate Asia-Pacific Japan Multi-Family Fund I.
Montreal-based Ivanhoé Cambridge has been eyeing an increase in exposure to the country for three to four years, senior vice-president of Asia-Pacific George Agethen told PERE. The investor has just under 15 percent of its approximately C$7 billion portfolio in the region dedicated to Japan. Most of that exposure has come via multi-country funds with heavy weightings to the country.
“We are a bit light [in Japan] hence the expansion strategy,” Agethen said.
The move fits into a wider strategic push for the investor to double its exposure to APAC in the short- to medium-term, PERE previous reporting. To help the effort, the investor relocated Agethen to Singapore from Hong Kong earlier this year and is expecting to open an office in Sydney and expand its Shanghai-based team next year.
Allianz’s core-plus vehicle is expected to have an eventual investment capacity of between $1.8 billion and $2 billion, including debt, after deploying the initial $750 million of equity raised equally from the three investment partners, Allianz Asia-Pacific chief executive officer Rushabh Desai told PERE. Allianz will invest in newly developed multifamily properties in Tokyo, Osaka, Nagoya and Fukuoka.
The specific focus is centered around key trends in the Japanese market, including a common desire to be close to public transport, grocery stores and other amenities, as well as living alone. The type of units that lease well are studio or one-bedroom apartments versus larger luxury apartments, Rushabh said. Allianz has one deal in its pipeline which it is hoping to close next year, he added.
This partnership is a first for Allianz and Ivanhoé Cambridge in Asia, having worked together earlier this year on the redevelopment of Stonecutter Court, an office building in London. The investor typically seeks specific strategies when deploying in Asian markets, Agethen said. It previously partnered with Hong Kong-based manager PAG on a logistics venture also in Japan at the start of 2021 and on a midyear life sciences partnership in India with specialist Lighthouse Canton.
“What you’ll find in Asia is we like country specific, sector specific ventures,” Agethen said. “When we identify the market and the opportunity, we like that bit more direct exposure control.”
Most of Ivanhoé Cambridge’s Asian-Pacific exposure is in the industrial, residential, life sciences and office sectors in Japan, Australia, China and India. Part of the investor’s strategy moving forward in the region is to invest more in developed Asia, Agethen said. “We have a decent exposure in developing Asia,” he said. “Thematically, we are focused on the new economy and the drivers of the new economy.”