PAG unit links with Aviva for Japanese real estate fund - report

According to The Nikkei, the fund will target commercial properties in Tokyo, and $120 million has already been raised by European investors. It has targeted a $250 million close by next spring, and anticipates that, with the help of bank debt, the fund will be able to invest up to $500 million in Japanese real estate.

The news comes one week after a Reuters report found that Tokyo properties are materializing as a key target for overseas investors in the coming year because the asset class has showed continued resilience in the months after the March 11 earthquake and tsunami.

The report added that property borrowing costs are typically 1-2%, juxtaposed to Tokyo real estate yields of 4-6%. That margin is said to be one of the widest in the developed world.

AVCJ previously reported that real estate investors typically generate stable cash flow from tenants, but are struggling with re-financing problems. In August, Japan's property market was seen to be undergoing a revival, with rental prices rising and the average vacancy rate for an office building in one of Tokyo's seven major business areas dropping to 7.71%, the Mitsubishi Real Estate Services announced at the time.

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• Topics
• North Asia
• Real estate
• PAG
• Japan
• Real estate
• Joint Venture