M&G splashes out US$200 million on APAC properties

10 June 2014   Category: News, Asia, Australia, Hong Kong, Japan, Korea, Singapore, United Kingdom   By Derek Au

M&G Real Estate, the investment firm with US$30 billion in AUM, has acquired three major properties in Asia-Pacific at a cost of $200 million.

London-based M&G said that it had bought the two properties in Japan and one in Australia to build long-term sustainable income and achieve regional diversification.

The acquisitions in Japan are the 18-storey F Parc Tenjin residential in Fukuoka and the 16-storey office block Sakurabashi IM Building in Osaka. The Australian property, 628 Bourke Street in Melbourne’s central business district, comprises a seven-storey podium and nine-storey tower whose tenants include multi-national, listed companies and government-related entities.

“These acquisitions add distinct value to our Asia-Pacific property portfolio as we continue to diversify risk and build upon the attractive investment performance this strategy has achieved on a one and three year basis. F Parc Tenjin is an extremely well-located residential asset offering stable long-term income and Sakurabashi IM Building is a shorter-term growth investment that we expect to benefit from improving Osaka office market fundamentals,” commented fund manager Erle Spratt, who manages M&G’s core Asia real estate strategy.

“Whilst we usually hold assets based on the long-term fundamentals, we have the flexibility to take a tactical view where we see an opportunity to take advantage of shorter-term market trends. We are constructing a portfolio in Japan comprising two-thirds income-oriented assets and one-third growth investments to deliver attractive income and capital growth from our Japanese portfolio. We see a healthy pipeline of opportunities to invest in Japan that fit this strategy,” he added.

There have been recent signs of a strong recovery in Japan’s commercial property sector. According to a report from NLI Research Institute, office vacancy rates have decreased in Tokyo due to corporations expanding, while the rents of Tokyo grade-A commercial real estate have picked up strongly. Office vacancy rates in other major cities including Osaka and Fukuoka also improved in the first quarter this year.

Commenting on the two Japanese acquisitions, Katsuhiro Ishikawa, managing director at M&G Real Estate Japan, said: “Both F Parc Tenjin and Sakurabashi IM Building are high-quality properties with high occupancy rates and sound trading histories. But we’re also exploiting a shift in the macroeconomic environment in Japan.” 

M&G has offices in Singapore, Seoul and Tokyo dedicated to real estate in the Asia-Pacific region. As of the end of March, the Singapore office was responsible for $2 billion in assets. In addition to Japan and Australia, M&G also holds real estate properties in Hong Kong, Singapore and South Korea.