After forming a partnership with a Japanese real estate manager in 2017, Patrizia Immobilien has now acquired the firm in the latest milestone in its global expansion.
The Augsburg, Germany-based real estate investment manager has purchased the business of Kenzo Capital Corporation, a Tokyo-based real estate advisory and asset management firm, as well as the fund management and placement business of its affiliate Kenzo Japan Real Estate. Terms of the deal were not disclosed.
Kenzo marks the first Asian acquisition for Patrizia, following a European buying spree in 2017 that began with Copenhagen-based real estate fund of funds investment manager Sparinvest Property Investors in October of that year, followed by Frankfurt-based real estate investment firm Triuva a month later and finally, London-based fund manager Rockspring that December.
The Kenzo business will now be rebranded as Patrizia Japan. The firm’s nine-strong team, which will stay on with Patrizia and retain their existing roles, will report to chief strategy officer of funds Robert Gilchrist. Additionally, two Kenzo executives, founder Leonard Meyer zu Brickwedde and chief of legal and compliance Osamu Hashimoto, will become directors of Patrizia Japan. Another senior member of the Kenzo team is chief investment officer Takehiko Uehara, who will serve in a similar role as CIO of Patrizia Japan.
Patrizia’s acquisition of Kenzo follows the formation of a partnership between the two firms in August 2017 to raise a Japanese residential fund targeting €500 million in assets under management, which is expected to reach €200 million in size by the end of the first quarter. Under that relationship, which marked the German manager’s entry into Japan, Patrizia provided fund administration services for the vehicle while Kenzo acted as asset manager for the fund. Just a month after the partnership was announced, PERE reported that Patrizia, which is led by chief executive Wolfgang Egger, was planning the takeover of a Japanese real estate investment manager within the following eight months.
As it turns out, Patrizia had been in talks exclusively with Kenzo in its search for a platform to acquire in Japan. “It was an off-market deal,” Patrizia CIO Anne Kavanagh said in an interview with PERE. “We’ve been in discussions with them for some time on what we were looking for, what they were looking for and whether it would work.”
Kavanagh highlighted the complementary goals of both firms in striking the deal. “Kenzo has got deep relationships with Japanese institutional investors,” she said. “Many of those investors are looking to expand their investment activities to Europe. The management team was looking for an experienced management partner to service those investors.” Indeed, Patrizia has raised approximately €3 billion in equity over the past few years from Asian investors across various products.
While Japan is one of the world’s largest sources of outbound capital flows for real estate, it is also the world’s second-largest core investment market for property, Kavanagh added. “It’s grown significantly as an institutional investment market over the last 18 years, and I think it’s a market that presents growth opportunities for Patrizia’s investors, which are also looking to diversify their investments into Asia. It’s a very natural evolution for Patrizia in terms of our business growth.”
While the Patrizia-Kenzo partnership was forged less than a year and a half ago, the relationship between the two firms goes back much further, as the companies’ founders have known each other for more than a decade, Kavanaugh noted: “It’s been a slow dating process. And now we’ve gotten married.”
Patrizia currently manages €40 billion in real assets and now has 24 offices globally, including client relationship hubs in Japan, Hong Kong, South Korea, Australia, and the US, as well as across Europe.