$2.8 Trillion Japanese Pension Fund Close To First Overseas Real Estate Investment

Japan Post Is One Of The World's Largest Pension Funds.

One of Japan’s largest pension funds is considering making its first investments in overseas real estate, by buying into a large, low-risk property fund.

Japan Post Holdings is in talks to buy a stake in the £2.8B Royal London U.K. Real Estate Fund, according to Estates Gazette.

Japan Post has assets of $2.8 trillion, and is one of many Japanese pension funds looking to diversify beyond domestic property. Others include the $1.4 trillion Government Pension Investment Funds, which has been looking for a fund manager to advise it on an overseas investment drive.

The investment in the U.K. fund would see Japan Post buy units from existing holders looking to exit the fund. It would buy around £100M at a yield of around 5%, Estates Gazette said. The fund’s manager, Royal London Asset Management, undertook a roadshow in Asia looking for new investors. The investment could increase over time.

Japanese investors are famously cautious, as evidenced by the processes being run by GPIF and Japan Post, which have been ongoing for more than two years.

But even a small investment of 1% of the total assets under management of both pension schemes in global real estate would represent an additional $40B of investment capital in the global real estate system.

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