US pension giant TIAA plans $1b investment in Japan real estate

Mount Fuji and buildings in the Shinjuku district are reflected on a table at an observation deck in Tokyo, Japan. Photographer: Kiyoshi Ota/Bloomberg

U.S. pension giant TIAA is setting its sights on Japanese real estate, betting Abenomics has the economy well placed to grow in coming years.

The near 100-year-old firm, known for offering retirement products to teachers, plans to invest about $1 billion in retail and logistic sites in Tokyo and Osaka, Shusaku Watanabe, director of capital transactions for Asia Pacific at its property unit TH Real Estate, said in an interview on Monday.

TIAA, which oversees $938 billion, joins a growing list of international investors snapping up Japan properties on expectations Prime Minister Shinzo Abe’s reforms will boost economic growth. M&G Real Estate, the property investment arm of London-based Prudential Plc last month said it’s looking for offices, logistic centers and apartment buildings in Tokyo, while U.S.-based PGIM Real Estate has acquired $1 billion of assets in Japan in the past year.

“For the global markets that we’re looking at, the story in Japan, particularly in Tokyo, looks really interesting,” Harry Tan, head of research for Asia Pacific at TH Real Estate, said in the interview. “The economy is in a sweet spot and will continue to remain well supported in the next three to four years.”

The unit made its first investment in October with the $82 million acquisition of an office and retail building in the Ginza shopping district.

Total Japanese property transactions jumped 16 percent in the first quarter from a year earlier to $11.1 billion, according to Jones Lang LaSalle.

Tokyo offices offer one of the highest returns among major global cities, yielding an average 4.4 percent in the first quarter; higher than Manhattan, London, Hong Kong and Sydney, according to Real Capital Analytics.

TH Real Estate plans to buy non-discretionary stores such as supermarkets and drugstores, as well as movie theaters, Watanabe said. It’s staying away from high street luxury retail locations because of the sector’s volatility, he said.

The unit, which holds $99 billion of property, wants to increase its allocation to Asia, which accounts for just 2 percent of its global portfolio with about $1 billion invested in each of Australia and China, Watanabe said.

“Asia overall is still under-allocated,” he said. “So we need to increase in Asia overall, especially in Japan.”

Also Read: Canada’s CPPIB commits $375m in PAG Japan real estate fund

Japan: TH Real Estate acquires Ginza office building in $82m deal

Bloomberg

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.