James Packer’s Challenger Financial Services has jumped on the acquisitive trail for Japanese assets after entering into a joint venture with Kenedix, a publicly listed Japanese-based real estate management and investment advisory company with a market capitalisation over $A2 billion.
Challenger said the joint venture will provide the group with a Tokyo-based platform from which to acquire and manage Japanese property assets for a range of product and balance sheet opportunities through its Asset Management division.
The Challenger’s team will be headed by joint managing directors of property Bevan Towning and Trent Alston. Towning was previously the head of property for the CFS Gandel Retail Trust and Alston was head of wholesale property funds at Colonial First State Property.
Challenger is now the seventh Australian LPT looking to or has established a platform in Japan.
It all started in April last year when Babcock & Brown Japan Property Trust paved the way for Australian LPTs to invest in Japan. Rubicon Asset Management recently listed the Rubicon Japan Trust.
The likes of Valad Property Group, Mariner Financial, Galileo Funds Management and Macquarie Goodman also have plans for the region.
Leading analysts Property Investment Research’s head of research John Welch said he was not surprised at the amount of noise being made by Australian LPTs looking to enter Japan.
“The Japanese market is far more attractive at the moment compared to Europe. Where Japan is one market, Europe is a number of countries with a number of regulatory regimes,”
“And the time for United States is over – falling yields and rising interest rates are making the market unattractive. We have probably witness the wrap up of that market last year.
“Japan is the new focus. The country’s economy appears to have come out of recession, interest rates are low and Japan’s commercial property market provides better yield spread,” he added.
However, Welch said in the big scheme of things, there are only eight LPTs out of 60 looking into the region.
“It may look like Australians are going into Japan buying everything but the Japan’s commercial property market is at least six times the size of Australia and only 3.5% of property assets are securitised on the stockmarket.
“Australians are currently buying up B-Grade assets, there are some A-Grade properties,” he added.
Welch said he is surprised that not many wholesale funds are looking to make the move into Japan as they did in the US. However, he added, Japan’s market is not as transparent compared to Australia and it all comes down to finding a local partner.
Meanwhile, Welch said Challenger’s move could potential spin off assets into listed and wholesale entities.
“If Challenger does spin off unlisted entities, it will appeal to wholesale investors rather than the Babcock & Brown trust, where the yields are low and fees are high,” he concluded.
In October, Challenger teamed up with Heitman, one of the largest REIT management firms in the US and Europe.
Heitman will work in conjunction with Challenger’s co-heads of real estate securities, John Longo and John White, to create a global real estate investment product.
By Nelson Yap
