Hong Kong’s Arch Capital Enters Japan With 25-Asset Tokyo Multi-Family Buy

Arch Capital Management on Tuesday announced the acquisition of 25 multi-family assets in Tokyo for an undisclosed amount, marking the Hong Kong-based company’s first investments in Japan.

The properties, located within the capital’s special wards, are running at near full occupancy and are within a short walk of the nearest train station, managing director Terence Lo said as he broke the news in a LinkedIn post.

“We like the strong fundamentals and defensive nature of the Japan residential market and look forward to expanding the Arch footprint to other key cities within Japan and into other asset classes,” Lo said.

The deal comes after Canada’s Manulife Investment Management last year acquired a significant minority equity position in Arch Capital, which operates as a private equity firm with a focus on Asia Pacific real estate.

New Investment Avenues

Chief executive Richard Yue set up Arch Capital in 2006 after pioneering fund investment in Hong Kong office properties during a career at AIG. The firm specialises in opportunistic, value-add and core/core-plus APAC strategies and has $2.7 billion in assets under management across commingled funds, separate accounts and joint ventures.

Earlier this year, Arch Capital entered the data centre segment with a venture aimed at building a regional digital infrastructure portfolio.

The fund manager teamed with former senior executives from Keppel Corporation’s data centre business to form Digital Halo, which will invest, develop and operate digital infrastructure assets across Southeast and North Asia, starting with a $500 million investment in the Philippines.

Toronto-based Manulife has been rapidly expanding its real estate business in Asia and globally, including with the late-2020 purchase of a large stake in Swire Properties’ Cityplaza One in Hong Kong and the appointment of Christopher Schumacher as global head of real assets for private markets.

Red-Hot Market

Arch Capital’s news comes as more players crowd into Japan’s multi-family arena, with SilkRoad Property Partners announcing in April the acquisition of five multi-family assets in Greater Tokyo as part of $150 million in deals that also bagged a central Tokyo office building. The transactions marked the Singapore-based firm’s first investments in Japan.

Also in April, Singapore’s CapitaLand Investment agreed to buy six rental housing assets in Osaka for $105.9 million, representing the first multi-family acquisitions for the firm’s flagship regional core-plus fund.

In May, Hines announced its acquisition of five multi-family properties in Japan on behalf of its flagship pan-Asian fund, signifying the US developer’s second multi-family transaction for the vehicle after the purchase of 11 multi-family assets late last year.