SINGAPORE/ HONG KONG/ JAPAN, 24 January 2024 – M&G Real Estate Asia (M&G) – part of M&G plc’s £74 billion1 Private Markets business, has acquired Frontier Shinjuku Tower, a premium high-rise multi-family property located in Nishi-Shinjuku, Tokyo for approximately JPY 30 billion (USD 201.6 million). This investment is made on behalf of M&G’s Targeted Strategy, which invests in value-add opportunities.
Martin Seol, Head of Targeted Strategy at M&G Real Estate Asia says, “Amidst the evolving landscape post-pandemic and adjustments in the interest rate environment, we are strategically expanding our direct value-add investments to cultivate higher returns for our investors. The acquisition of Frontier Shinjuku Tower exemplifies our commitment to this strategy.”
‘’We are keenly focused on sectors such as residential – including student housing and co-living – along with logistics and hospitality across the Asia Pacific, the United Kingdom and Europe. Leveraging our expert asset management capabilities, we aim to enhance the intrinsic value of our investments, ensuring they not only yield economic benefits but also uphold ESG standards’’, adds Seol.
Asia Pacific’s growing urbanisation and immigration continues to drive demand for rented residential property in key cities, particularly as home price growth has substantially outpaced incomes.2 With residential rents having kept pace or even outperformed inflation, and lower volatility seen in occupancy rates in residential assets during cyclical downturns, this sector presents a long-term and scalable opportunity for investors. This investment additionally represents M&G’s continued expansion in the residential sector in Japan, as part of the firm’s positive position on the Asia Pacific Living sector.
Completed in December 2017, Frontier Shinjuku Tower is a 24 storey building constructed by Japan’s leading residential developer Sekisui House. Situated on a generous 3,062 sqm freehold corner site in Nishi-Shinjuku, within Tokyo CBD, the property features a total net lettable area (NLA) of 14,877 sqm, comprised of 298 residential units and commercial components of mixed retail and office units on the lower floors. It is conveniently located in close proximity to Hatsudai and Shinjuku stations.
M&G plans to invest additional capital to further position Frontier Shinjuku Tower as a high-end multi-family property, and to restructure the commercial components to generate stable income.
Frontier Shinjuku Tower is likely to achieve a CASBEE S (Comprehensive Assessment System for Built Environment Efficiency) rating and currently holds a DBJ Green rating of 4 stars, which is amongst the highest for multi-family properties.
M&G’s acquisition of the Frontier Shinjuku Tower is part of a strategic series of investments in Japan, including a significant stake increase in the ESR Ichikawa Distribution Centre in the Greater Tokyo Bay Area in 2023, and the acquisition of 30 multi-family residential properties from Blackstone for JPY 49.2 billion in 2022, and the Minato Mirai Center Building in Yokohama in 2022, M&G’s largest real estate acquisition in Asia for some JPY 100 billion.
Seiko Ikeda, Head of Japan Real Estate at M&G says, “Japan is an essential pillar in M&G’s investment strategy, and we are relentlessly exploring opportunities that promise substantial value growth. The multi-family residential sector, in particular, is pivotal to our strategic positioning and success in the Japanese market. The addition of the Frontier Shinjuku Tower to our portfolio is a testament to our commitment to capitalising on high-potential assets and building our presence in this key market.”
1 As at 30 June 2023
2 Demographia International Housing Affordability, 2023