AXA Real Estate Investment Managers has launched the Tokyo Office Property Fund (TOP) focusing on core/core plus properties in the Japanese capital.
AXA Real Estate Investment Managers has launched the Tokyo Office Property Fund (TOP) focusing on core/core plus properties in the Japanese capital.
AXA Real Estate will act as the fund manager of TOP while asset management of the property portfolio will be undertaken by Sumitomo Mitsui Trust Real Estate Investment Management, a wholly owned subsidiary of banking group Sumitomo Mitsui Trust Bank. The fund aims to achieve returns in excess of 10% IRR after up to 50% leverage with expected annual cash-on-cash yield of at least 5% when fully invested.
In parallel, SuMi Trust, has also launched a fund - Tokyo Office Real Estate Investment Fund (TOREIF) - with capital raised from Japanese domestic institutional investors. This fund will seek to co-invest with TOP, although it is not obliged to do so and opportunities will be assessed on a case-by-case basis. Together, the vehicles would have total equity of ¥10 bn (EUR 100 mln) following the first closings.
'We believe that TOP offers investors an opportunity to build up an allocation of stable, mid-sized office assets via a five-year, closed-end core/core-plus focused fund providing diversification benefits, low volatility and steady income stream with potential for capital appreciation through investing at the bottom of the cycle,' the company said in a statement.
The Tokyo office market has been undergoing a significant price correction since the onset of the global financial crisis with rents declining as much as 40%. 'Our conviction is that it is close to reaching the bottom of the current cycle,' AXA Real Estate added.
TOP will seek to acquire mid-sized office assets in individual lot sizes of between ¥3 bn and ¥10 bn located in Tokyo’s five central wards (Chiyoda, Chuo, Minato, Shinjuku and Shibuya) and four adjacent wards (Shinagawa, Koto, Bunkyo and Toshima).