Alyssa Partners, Dai-Ichi Life Buy $140M in Japanese Rental Apartments

After acquiring Japanese properties with some of the largest investors from Europe and North America, investment manager Alyssa Partners has teamed up with Japan’s third largest insurer to buy a portfolio of Japanese rental apartments with market sources indicating the price of the transaction at JPY 20 billion ($140.4 million).

Alyssa Partners, which has managed more acquisitions of Japanese apartments this year than any other company, acquired 12 stabilised properties across the cities of Tokyo, Osaka, Nagoya and Kobe on behalf of Dai-ichi Life Insurance, according to an announcement today by the Tokyo-based firm.

The deal is Alyssa’s first investment on behalf of a Japanese partner, with the company’s leadership pointing to the transaction as an endorsement of its track record in the market.

“We are very proud to have closed our first acquisition on behalf of a major Japanese institutional investor of the caliber of Dai-ichi Life,” said Alyssa chief executive and managing partner Chedli Boujellabia. “This latest portfolio acquisition is positioning Alyssa Partners as one of the most active investors in Japanese multifamily and takes our total residential portfolio to JPY 100 billion across 78 properties and circa 4,000 apartment units across the major Japanese metropolitan cities.”

Stabilised Portfolio

Alyssa, which first set up shop in 2012, acquired the set of properties from separate sellers in two transactions, the second of which closed on Friday.

The portfolio includes 770 homes spanning over 31,000 square metres (33,3681 square feet) of floor space. The properties average less than 2.5 years in age and are all within 10 minutes’ walking distance of subway or Japan Rail stations, according to the statement.

Across Asia Pacific multi-family residential has been the only major property sector to record growth in transaction volumes this year, with investors purchasing $8.7 billion in rental housing during the first three quarters of 2023, up 1 percent from the same period last year, according to MSCI Real Assets.

In Asia Pacific, Japan ranks as the largest multi-family market with over 22 percent of households renting their homes, according to government statistics.

“We continue to see strong tenants demand for well-located properties as well as real rental growth making multifamily assets in Japan the most sought-after asset class from a risk adjusted return and liquidity perspective,” Alyssa’s Boujellabia said

Japanese Beds Favoured

Dai-Ichi Life, which managed over JPY 35 trillion ($246 billion) in assets globally as of 30 September, is the latest in a series of global institutions to work with Alyssa as Japanese apartments continue to gain favour as an asset class.

Japanese apartments accounted for 41 percent of multifamily investment transactions in Asia Pacific during the first half of 2023, with $1.64 billion going into the sector, according to JLL.

Less than one month ago Invesco Real Estate and Alyssa Partners announced completion of a purchase of a 15-property portfolio of Japanese apartments at a price of around JPY 30 billion.

That deal for properties in Tokyo, Osaka, Nagoya and Fukuoka came after Alyssa had previously worked with Blackstone, PGIM Real Estate, Frasers Hospitality, AXA Investment Managers and Hong Kong’s Arch Capital to acquire rental residential assets in Japan. Of the company’s JPY 135 billion in assets under management, approximately JPY 100 billion are in the multi-family sector, according to a company representative.

Earlier this month, Japan Metropolitan Fund Investment Corporation, a Tokyo-listed real estate investment trust managed by KKR made its eighth acquisition of Japanese apartments in 2023, nearly doubling its holdings in the sector.

In November, UK-based Schroders Real Estate tied up with Hong Kong’s Dash Living to enter Japan’s rental residential market with the purchase of a 49-key asset in Tokyo.

During May, Frasers Hospitality teamed up with Alyssa to acquire a 124-unit apartment block in Osaka after the alternative investment division of AXA Investment Management paid $459 million to acquire 33 Japanese apartment buildings in a deal covered by Mingtiandi in February of this year.