Tokio Marine establishes first global FoF for Japanese LPs

The real estate investment management business of the Tokyo-based insurance giant has mandated The Townsend Group to advise it on investments in open-ended funds in the world’s core real estate markets.

Tokio Marine Property Investment Management (TMPIM), the real estate investment management business of Japanese insurance giant Tokio Marine, has launched an open-ended global real estate fund of funds, solely for Japanese institutional investors.

The firm announced it had launched the Tokio Marine Global Core Property Fund with an initial investment from one of Tokio Marine’s subsidiaries, Tokio Marine and Nichido Fire Insurance, and one “well-established Japanese pension fund thatwanted to obtain non-domestic real estate exposure.” TMPIM declined to divulge how much equity the pair had committed to the vehicle, but PERE understands it was approximately $50 million between them. Within two years, the fund is expected to grow to $200 million in size.

The fund – believed to be the first of its kind – is to be used for investments primarily in open-ended real estate funds in developed countries ex-Japan. It is understood an initial investment in Australia already has been completed and that TMPIM is close to securing further investments in the US and the UK.

The Townsend Group has been mandated to advise it on fund selection within each region and will be selecting from more than 700 funds “regularly covered in the firm’s database.” The fund is anticipated to generate a return of between 6 percent and 8 percent from its investments.

TMPIM said: “The fund employs a core strategy and seeks to deliver, over the mid- to long-term, regular dividends and modest capital appreciation in line with returns commensurate from this part of the market.” The fund will allow investors to commit capital and redeem capital on a quarterly basis.

Commitments by Japanese institutions to private real estate funds investing in real estate and investing globally have to date been relatively rare. Shinji Kawano, head of overseas investment at TMPIM, said: “Many Japanese investors, particularly pension funds, historically have expressed interest in investing in low risk, non-domestic real estate so as to achieve diversification but have found it difficult to obtain either appropriate information or prospective opportunities. Where they had, they then were put off by the administrative and tax consequences that overseas investment brings.”

Kawano added: “The Tokio Marine Core Property Fund is designed to overcome these issues and provide these investors with easy access to appropriate opportunities, but in an administrative-friendly structure.”

Tokio Marine Property Investment Management was established in 2003. The firm has 40 staff and, in 2011, held ¥204.3 billion (€1.63 billion; $2.18 billion) in assets under management.