Japan Post Insurance Anchors Star Asia’s JPY 30 Billion Domestic Property Fund
Star Asia Group has launched its first private fund for domestic capital, the Star Asia Japan Property Fund No 1, holding JPY 30 billion in Tokyo residential properties. Japan Post Insurance is the anchor investor, marking a shift by the insurer towards domestic real estate as it doubles down on inf
Star Asia Group has won support from Japan Post Insurance for its first private fund set up for domestic capital, as the investment manager rolls out a new vehicle holding JPY 30 billion (S$190 million) in residential properties centred on Tokyo’s 23 wards.
Japan Post Insurance is participating in Star Asia Japan Property Fund, which comprises 17 recently built properties, according to a Japanese-language release by Star Asia on Thursday, with the insurer investing alongside other institutional equity partners. The vehicle opens a domestic institutional fundraising channel for the nearly two-decade-old investment manager. “We will work to build long-term partnerships with domestic institutional investors and expand our private fund business,” Star Asia said.
For this initial domestic venture, Japan Post Insurance represents an anchor investor with 15.8 million customers and which held JPY 58.3 trillion in total assets at the end of June. The insurer said in a three-year plan unveiled in May that it intends to shift its alternative investments from overseas holdings towards domestic assets such as Japanese real estate.
Star Asia is pitching the fund on rising rents, saying it is targeting increases as Japan moves out of deflation and as populations grow in the neighbourhoods around its buildings. The new fund aligns with ongoing investor enthusiasm for Japanese residential assets, with rental housing accounting for 21 per cent of a record JPY 5.73 trillion in property trades in the country during the first nine months of the year, according to JLL.
Formally named Star Asia Japan Property Fund No 1, the vehicle was set up on 30 September with group company Star Asia Asset Advisors acting as asset manager. The fund gives Star Asia a vehicle focused on rental housing alongside its Tokyo-listed REIT Star Asia Investment Corporation, where rental residential accounts for 12.7 per cent by value of its 78 assets.
Japan Post Insurance’s backing for the Star Asia fund comes as the life insurer allocates more capital for property investment. Toru Onishi, who became president in June, told the Nikkei in an interview published in August that the insurer would double the property fund it runs through its joint venture with Mitsui & Co to JPY 400 billion, from around JPY 200 billion. Real estate is “highly resistant to inflation, and also a useful asset for responding to the capital regulations that have recently come into effect,” Onishi said, referring to the economic value-based solvency rules introduced for Japanese insurers at the end of March.
Founded in 2007 and led by co-founders Taro Masuyama and Malcolm F MacLean IV, Star Asia had JPY 930.6 billion (S$5.9 billion) in assets under management at the end of June, having invested more than JPY 1.43 trillion since its launch. Most of that capital has come from overseas investors, including major US university endowments, foundations, sovereign wealth funds and pension funds.
