Singapore-based real estate firm Mapletree Investments has held first closes on two Japanese property vehicles totaling JPY108 billion (€778 million; $1.1 billion), already exceeding the final targets for both funds, PERE can reveal.
Both funds were launched approximately a year ago, and represent the Temasek-owned developer-cum-fund manager’s first two private equity real estate funds in Japan. Mapletree first set up its Japan office in 2007, and has been contemplating the possibility of raising funds for the country since late 2010.
The first fund is an office fund that will focus on stable, income-producing assets on the fringe of Tokyo’s central business district and the greater Tokyo area, but not the CBD itself, it is understood. The vehicle, called MJOF, attracted JPY57 billion of commitments from both domestic and international investors, comfortably above its original JPY40 billion target. It is seeking core to core-plus returns.
The second fund is a development fund for logistics assets in the country, primarily built-to-suit facilities. Dubbed MJLD, it was originally targeting JPY44 billion, but managed to attract JPY51 billion of capital commitments in total. Its return expectations are more value-added given its development risk.
These are only first closings, and Mapletree is still planning to hold a final closing for MJOF in 12 months, during which time it is open to raising more capital, according to PERE sources. The MJLD fund, however, will not be taking further commitments.
Both funds also presented investors with seed assets, just as Mapletree's record $1.4 billion China fund did last year. MJOF had four assets worth more than JPY16 billion. MJLD also held one development project as a seed. Both vehicles are closed-ended with fund lives of less than 10 years. It is understood that the firm drew both domestic and international investors for both funds, while about 35 percent of the investors were new to Mapletree and 65 percent had invested with Mapletree in its other funds in the region.
In its annual report, Mapletree cited “strong demand in consumer-related industries such as IT and e-commerce” as a cause of Japan’s recent rental growth, and the firm is expecting the country’s limited supply to continue driving rents up. In logistics, rental increase this year is expected to be “driven by demand from the e-commerce, apparel and pharmaceuticals sectors,” the report said.
Mapletree is the latest fund manager to bet on Japan’s recovery. Other firms that have drawn capital for Japan-focused vehicles recently include domestic conglomerate Sumitomo Corporation, which hauled more than JPY25 billion for a logistics fund; Australian logistics developer Goodman Group, which increased its development joint venture with the Abu Dhabi Investment Council to $800 million in February; and Secured Capital’s record $1.5 billion fundraise for its fifth opportunistic fund.