U.S. pension giant sinks $1 billion into Japanese real estate market



 JUN 15, 2017


[The Japan Times] 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 nearly 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 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 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. TH Real Estate plans to buy nondiscretionary 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 underallocated,” he said. “So we need to increase in Asia overall, especially in Japan.”

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