Japan Post Bank’s real estate portfolio in five charts

Japan Post Bank continued to dial up its real estate investment activity as the investor expanded its strategic investment portfolio.

The investor’s real estate assets under management increased from ￥1 trillion ($6.7 billion; €6.2 billion) in March 2020 to ￥4 trillion in September 2023. Meanwhile, the institution’s strategic investments bucket, which also includes its real estate holdings, also climbed from ￥3.3 trillion to ￥11.2 trillion over the same period, according to documents from the investor’s latest investor meeting in November 2023. Its strategic investment portfolio also comprises private equity funds, direct lending funds and infrastructure debt funds.

Holding steady at 35.7 percent as of September 2023, Japan Post’s allocation to real estate remained between 30 percent and 40 percent of its strategic investment portfolio from March 2020 to September 2023. The asset class generated an IRR of 9.7 percent as of September 2023, beating its original 5 percent target.

The organization had invested 31 percent and 69 percent of its real estate portfolio in equity and debt, respectively, as of September 2023. However, Japan Post has posted relatively higher net realized gains through its equity investments. The bank invested ￥2.8 trillion and ￥1.3 trillion in real estate debt and equity, respectively, as of September 2023, with the former generating a net realized gain of ￥3 billion and the latter generating ￥6 billion.

With its real estate investments, Japan Post is looking for stable rental revenue and capital gains over the long term, preferring private real estate strategies focusing on investing in well-occupied properties located in developed economies. The biggest exposures in its real estate portfolio are in the US in terms of geography and beds and sheds in terms of sector.

The investor “tactically” dialed up its investment pace in its financial year ended March 31, 2022 to potentially benefit from the price recovery following the covid-19 market correction, according to the investor meeting documents. Since then, the organization’s investment pace has slowed down and is expected to drop to ￥0.36 trillion in its financial year ended March 2024.