Brookfield Enters Japan Rental Housing Market with $627M Portfolio Buy from JP Morgan

Canada's Brookfield has made its entry into Japan's multi-family sector with the acquisition of a 50-property rental apartment portfolio in the country's four main metropolitan markets.

The portfolio, which includes 3,700 units, was sold by investment banking giant JP Morgan for more than JPY 100 billion ($627 million). This transaction is Japan's largest residential property transaction this year and one of only five on record to exceed JPY 100 billion.

Brookfield's head of Japan real estate, Ikushin Tsuchida, stated that the multi-family sector in Japan is "one of Japan's most compelling real estate sectors, underpinned by long-term urbanisation, resilient housing demand and constrained new supply."

The acquired portfolio spans Greater Tokyo, Greater Osaka, Nagoya, and Fukuoka, providing Brookfield with immediate scale in a sector that complements its multi-family and broader living investments across North America, Europe, and Australia.

The buildings are 96 percent occupied and have an average age of less than four years, with most comprising recently completed properties in well-connected urban locations. The collection includes apartments under the upscale S-Residence brand and is weighted towards compact units serving single-person households.

The rental backdrop supports Brookfield's investment case, with average monthly rents for apartments of 30 square meters or less in Tokyo's 23 wards rising 12.4 percent year-on-year to JPY 114,242 in June, marking a 25th consecutive monthly record.

### Urban Demand

Brookfield's purchase ranks behind Blackstone's JPY 300 billion acquisition of 221 rental apartment buildings from China's Anbang Insurance in 2020. The US private equity giant was buying back a portfolio it had sold to the insurer three years earlier for JPY 260 billion.

Rival Warburg Pincus has also expanded in Japan's living sector, acquiring Lone Star's 16,192-room Tokyo Beta shared-housing portfolio last year. The Manhattan-based firm followed up in June with a JPY 190 billion tender offer for student housing operator JSB, which manages more than 2,700 properties across Japan.

### Capital Engine

Brookfield Corporation reported second-quarter distributable earnings before realisations of $1.4 billion, up 14 percent from a year earlier and 15 percent on a per-share basis. Total distributable earnings rose 12 percent to $1.6 billion, while consolidated net income fell 33 percent to $703 million.

| Distributable Earnings | Q2 2023 | Q2 2022 | | --- | --- | --- | | Total | $1.6 billion | $1.43 billion | | Per Share | $1.4 billion | $1.22 billion | | Consolidated Net Income | $703 million | $1.05 billion |

At Brookfield Asset Management, the group's fund management arm, fee-related earnings jumped 20 percent to $808 million as fee-bearing capital grew 19 percent to $672 billion. Distributable earnings climbed 15 percent to $707 million and net income more than doubled to $1.2 billion.

Brookfield raised a quarterly record $77 billion, bringing first-half fundraising to $98 billion, while investing $21 billion and monetising $11 billion of assets. Its real estate strategies raised $4.3 billion and deployed $5.2 billion during the period, with deals including the take-private of Australia's National Storage with GIC.

The group completed $10 billion in real estate disposals during the first half, including the £750 million ($1 billion) sale of One Churchill Place in London's Canary Wharf to Barclays, and ended June with a record $210 billion of deployable capital as it accelerates investment across housing and other real asset sectors.