Japanese 'big four' pension names first overseas RE manager

Japanese public pension plan, Chikyoren, has hired UBS Asset Management to invest in overseas real estate after releasing an RFP last July.

The $185 billion Pension Fund Association for Local Government Officials has selected UBS Asset Management as its first manager of overseas real estate.

The pension manager, known as Chikyoren, issued requests for proposals (RFPs) for external managers to provide it with investments opportunities in both domestic and international alternative assets last July.

In so doing, it is following in the footsteps of its far bigger contemporary, the Government Pension Investment Fund (GPIF) which put out an RFP in 2014, and before other 'big four' pension manager, the Federation of National Public Service Personnel Mutual Aid Associations, which signalled its intent to invest in real estate back in October.

Back in March, Chikyoren made its first manager selection, hiring Japanese bank Resona Bank, to make domestic real estate investments on its behalf. Then last month it selected Nomura Asset Management as another domestic real estate fund manager.

For its first foray into overseas real estate investing, Chikyoren has chosen UBS, which has established a business platform in Japan. It is assumed this played an important factor for their first selections, according to Yukihiko Ito, managing director at Asterisk, a placement agent based in Tokyo

“This first step by Chikyoren has significant influence to other Japanese investors especially pensions, regional banks, credit unions who are relatively conservative in real estate. This also encourages major institutional investors to invest more in overseas real estate,” Ito said.

“This can be the trigger as the first overseas real estate investment by the Japanese public pension groups.”

In its RFP, Chikyoren did not disclose what proportion of its assets would be dedicated to real estate, but Ito said Chikyoren is following GPIF`s basic asset allocation model, that means maximum 5 percent for alternative assets (real estate, infrastructure, and private equity).

The investor has also not disclosed which types of strategies it is considering, but it is understood it is just looking at core, long-term, income driven strategies.