Japan's $185 billion Pension Fund Association for Local Government Officials, known as Chikyoren, has selected its first two real estate fund managers after it issued requests for proposals (RFPs) for external managers last year.
In March, Chikyoren made its first manager selection, hiring Japanese bank Resona Bank to make domestic real estate investments on its behalf. The pension plan followed this up last month by hiring Nomura Asset Management to also invest in Japanese real estate.
The investor has not disclosed which types of strategies it is considering, but it is understood it is looking at core, long-term, income driven strategies only at the moment.
Chikyoren was slower off the blocks than its far bigger contemporary, the Government Pension Investment Fund (GPIF), which put out an RFP in 2014, and other fellow 'big four' pension manager, the Federation of National Public Service Personnel Mutual Aid Associations, which signaled its intent to invest in real estate back in October.
However, Chikyoren was the first of the 'big four' to actually hand out any real estate mandates. The last, and smallest of Japan's 'big four' – Mutual Aid Corporation for the Private Schools of Japan – has yet to follow its peers in soliciting fund managers. However, Yukihiko Ito, managing director at Asterisk, a placement agent based in Tokyo, assumed the pension manager will start doing so after seeing results by the other three public pensions.
So far, Chikyoren has only selected fund managers for domestic real estate investing. Market sources believe overseas real estate investment by the 'big four' will be a catalyst for other Japanese public pensions.
Several big moves are expected over the next two years by the public pensions, and this will be an enormous trigger for Japanese investors, sources said. At the moment, these huge investors are just dipping their toes into the sector.
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