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Patrizia plots Japanese REIM within 8 months – Exclusive

Following its administrative tie-up with Tokyo-based Kenzo Capital Corporation in August, the German manager is eyeing the establishment of its own management operation in Tokyo in early 2018.

Patrizia Immobilien, the Augsburg-based real estate investment manager, has set its sights on launching a Japan-focused business within the next eight months, PERE has learned.

The firm has already formed a partnership with Kenzo Capital Corporation in August to provide administrative services for the Tokyo-based real estate manager as it raises capital from German institutional investors. Kenzo is targeting between €250 million and €300 million for a vehicle with a focus on residential properties in Japan’s major metropolitan areas.

However, while that setup affords Patrizia an early exposure to Japanese real estate, it is expected to be a prelude to an altogether greater exposure as the firm creates its own real estate investment management capabilities, with a view to ultimately launching and managing its own private real estate funds to buy Japanese assets. The expansion to Japan would be Patrizia’s first foray into non-European markets.

Wolfgang Speckhahn, the firm’s head of strategy and corporate development, told PERE: “As a newcomer in the market, we clearly need time to establish relationships.” Speckhahn said the firm has been evaluating its Japanese entry for about 12 months, adding the platform could have been put in place by the end of the year, but for tax-related reasons, the firm decided on postponing the expansion until next year.

“If one thinks about expansion into Asia, the first market to be covered has to be Japan, as it’s the largest and most mature institutional real estate market in Asia. Therefore, it is a perfect starting point for investment in Asia,” Speckhahn said.

“We are working on a target. It is about establishing relationships first, and this may take longer than many Europeans would expect. I think there’s a window between six to eight months in which we’ll execute this transaction.”

Speckhahn’s comments are likely to alert recruitment specialists active in the private real estate market. In addition to confirming that Patrizia’s real estate investment management business would be located in Tokyo, he predicted the firm would need to have between seven and 10 staff based in the city, including transactions professionals, asset and fund managers and also capital markets-focused professionals for fundraising. “You have to provide the market knowledge on key activities,” he said.

Patrizia already operates in 15 European countries in which it manages almost €20 billion of assets. Investors include insurance companies, pension funds, sovereign wealth funds, savings and cooperative banks.

PERE held an in-depth interview with the firm’s founder Wolfgang Egger in May in which he discussed the firm’s plans to expand globally