Key Takeaways
- • Japan Post Insurance is participating as an anchor investor in Star Asia Japan Property Fund No 1, a JPY 30 billion ($190 million) vehicle holding 17 recently built residential properties centred on Tokyo's 23 wards, according to a Japanese-language Star Asia release.
- • The fund marks Star Asia's first private fund set up for domestic capital, opening a Japanese institutional fundraising channel for the group, which had JPY 930.6 billion ($5.9 billion) in AUM at the end of June.
- • Japan Post Insurance, which held JPY 58.3 trillion in total assets at end-June, plans to raise alternatives to around 5% of total assets by March 2029 (from 3.7%) and shift alternative exposure toward domestic assets such as Japanese real estate.
- • Star Asia is pitching rising rents as Japan exits deflation, while JLL data shows rental housing made up 21% of a record JPY 5.73 trillion in Japanese property trades in the first nine months of the year.
Summary
Star Asia Group has secured backing from Japan Post Insurance, one of Japan's top three insurers, for its first private fund set up for domestic capital. The vehicle, Star Asia Japan Property Fund No 1, was established on 30 September with group company Star Asia Asset Advisors as asset manager. It holds JPY 30 billion ($190 million) in 17 recently built residential properties centred on Tokyo's 23 wards. Other institutional equity partners are also investing alongside the insurer, according to a Japanese-language release by Star Asia.
The fund gives the investment manager, which was founded in 2007 and is led by co-founders Taro Masuyama and Malcolm F MacLean IV, a domestic institutional fundraising channel. Most of Star Asia's JPY 1.43 trillion in capital invested since launch has come from overseas investors, including US university endowments, foundations, sovereign wealth funds and pension funds. The group has deepened domestic ties this year, including a February agreement to sell a 25% economic stake to Mizuho Leasing for JPY 30 billion.
Star Asia is pitching the fund on rising rents, arguing that rents will increase as Japan moves out of deflation and as populations grow around its buildings. Rental housing accounted for 21% of a record JPY 5.73 trillion in Japanese property trades during the first nine months of the year, according to JLL. The fund also complements the Tokyo-listed REIT Star Asia Investment Corporation, where rental residential represents 12.7% by value of its 78 assets.
The backing reflects Japan Post Insurance's broader push into property. Its president and CEO, Onishi Toru, told the Nikkei in August that the insurer would double its property fund run through a joint venture with Mitsui & Co to JPY 400 billion from around JPY 200 billion, calling real estate "highly resistant to inflation" and useful for meeting economic value-based solvency rules introduced in March. The insurer's medium-term plan targets an investment spread above JPY 290 billion in the year to March 2029, up from JPY 203.5 billion. In June it also backed DMRE Fund 4, a JPY 23 billion vehicle managed by Marubeni Asset Management targeting rental housing in Greater Tokyo, Kansai and Chubu.
Japanese institutions are also committing more capital to domestic property funds run by outside managers. The Government Pension Investment Fund committed JPY 10 billion ($63.4 million) in March to a Japan fund overseen by Hong Kong-based Phoenix Property Investors, after backing Japan strategies run by BentallGreenOak and Morgan Stanley last year.
The fund gives the investment manager, which was founded in 2007 and is led by co-founders Taro Masuyama and Malcolm F MacLean IV, a domestic institutional fundraising channel. Most of Star Asia's JPY 1.43 trillion in capital invested since launch has come from overseas investors, including US university endowments, foundations, sovereign wealth funds and pension funds. The group has deepened domestic ties this year, including a February agreement to sell a 25% economic stake to Mizuho Leasing for JPY 30 billion.
Star Asia is pitching the fund on rising rents, arguing that rents will increase as Japan moves out of deflation and as populations grow around its buildings. Rental housing accounted for 21% of a record JPY 5.73 trillion in Japanese property trades during the first nine months of the year, according to JLL. The fund also complements the Tokyo-listed REIT Star Asia Investment Corporation, where rental residential represents 12.7% by value of its 78 assets.
The backing reflects Japan Post Insurance's broader push into property. Its president and CEO, Onishi Toru, told the Nikkei in August that the insurer would double its property fund run through a joint venture with Mitsui & Co to JPY 400 billion from around JPY 200 billion, calling real estate "highly resistant to inflation" and useful for meeting economic value-based solvency rules introduced in March. The insurer's medium-term plan targets an investment spread above JPY 290 billion in the year to March 2029, up from JPY 203.5 billion. In June it also backed DMRE Fund 4, a JPY 23 billion vehicle managed by Marubeni Asset Management targeting rental housing in Greater Tokyo, Kansai and Chubu.
Japanese institutions are also committing more capital to domestic property funds run by outside managers. The Government Pension Investment Fund committed JPY 10 billion ($63.4 million) in March to a Japan fund overseen by Hong Kong-based Phoenix Property Investors, after backing Japan strategies run by BentallGreenOak and Morgan Stanley last year.
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