Japan’s Chikyoren hires Invesco as RE manager

The Japanese ‘big four’ public pension plan continues its external manager selection with the appointment of Invesco Asset Management as its second international real estate manager.

The $185 billion Pension Fund Association for Local Government Officials, known as Chikyoren, has selected Invesco Asset Management as its second manager for overseas real estate.

The pension manager issued initial requests for proposals (RFPs) for external managers to provide it with investments opportunities in both domestic and international alternative assets in July 2015. It made its first overseas manager selection last July when it hired UBS Asset Management.

Chikyoren had been faster at naming domestic fund managers. Resona Bank was the first hire in March 2016 for domestic real estate investments. Nomura Asset Management was brought on board in June 2016 and Daiwa Fund Consulting in September 2016 to also invest in domestic real estate on its behalf.

In its RFP, Chikyoren did not disclose what proportion of its assets would be dedicated to real estate, but it is understood that it will allocate up to 5 percent for alternative assets, including 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.

Chikyoren’s far bigger contemporary, the $1.3 trillion Government Pension Investment Fund (GPIF) and another of the 'big four' pension managers, the $63 billion Federation of National Public Service Personnel Mutual Aid Associations, both have signalled their intent to invest in real estate by putting out RFPs too.

Yet, the wait goes on for Japanese public pensions to make headway in to global private real estate. GPIF gave its strongest signal that it was set to dip its toe into the property markets back in March, when it hired former Mitsui Fudosan managing director Hideto Yamada as its first head of real estate.

A month later, GPIF launched its first-ever call for applications from private equity, real estate and infrastructure fund managers as it looked to build its alternatives allocation. A source close to GPIF told PERE that some applicants have made it past the first round and are moving forward with structuring and negotiating commercial terms.

However, holding up the process for these Japanese giants to invest in global real estate are rules which do not permit public pension funds to invest directly into real estate.

Japanese legal sources told PERE that negotiations with the Ministry of Health Labour and Welfare, which supervises the pensions, to allow for more investment freedom for Japanese pensions remain ongoing, and have no finite deadline.