How South Tokyo Data Centres Could Boost Rental Income and Capital Growth

Japan Real Estate

Japan Properties

04 Dec, 2020 –

AXA Investment Managers has added its first data centre to its growing portfolio of Japanese real estate assets as the division of French insurer AXA announced that it has completed its purchase of a Tokyo area facility today. The real assets division of the Paris-based firm paid approximately JPY 22 billion ($210 million) to purchase the 20,000 square metre (215,278 square foot) server facility, which it says is among the Japanese capital’s largest data centres.

“This acquisition offered the rare opportunity to purchase a large scale and high quality, strategically located data centre in a market suffering from a chronic lack of supply, with just two other centres offering over 10,000 square metres of space in the district,” Laurent Jacquemin, head of Asia Pacific at AXA IM – Real Assets said in a statement. In the same announcement, the AXA revealed its recent acquisition of a JPY 70 billion ($669 million) Tokyo apartment portfolio, to add to its growing set of Japanese multi-family assets.

Diving into Data Centres

AXA-IM’s new server facility, which is capable of hosting 2,560 server racks, is located in Koto Ward of South Tokyo, an area which has become a hub for data centre assets. The structure is located around 7 kilometres (4.3 miles) south of Tokyo’s main financial districts, with US data centre giants Colt and Equinix also operating data centres in Koto Ward, as well as telecom operators NTT and China Telecom. “The investment aligns well with our global strategy to invest in institutional quality long-term assets with income underpinned by structural changes to society, such as those within the digital infrastructure sector, where demand for data storage in particular has been further exacerbated by the widespread adoption of remote working and expanding e-commerce penetration as a result of the global pandemic,” Jacquemin added.

With its Tokyo data centre acquisition, AXA IM brings its holdings in the Internet asset class to more than $1.2 billion globally. In July 2018 AXA IM had bought out the DATA4 European data centre platform by purchasing Colony Capital’s 63 percent stake in the 15-asset portfolio. Before the buyout, AXA had held a 37 percent slice of DATA4. In May of this year Danish pension fund PFA had purchased 20 percent of DATA4 from AXA for €200 million ($241 million).

Expanding Apartment Portfolio

AXA’s Tokyo apartment acquisition is the finance firm’s third major investment in Japanese multifamily assets in Japan this year, after a pair of earlier acquisitions in the city of Nagoya. Both of the firm’s Nagoya deals were revealed in July as the AXA opened the month with the JPY 20 billion purchase of a complex in Nakamura ward. Just two weeks later, the investment manager followed up by acquiring a 10-storey residential tower in Chikusa Ward for an undisclosed sum.

“We have made strong progress in growing our data centres, logistics and residential for rent platforms, in supply constrained markets with strong demand fundamentals across both Asia Pacific and our other geographies,” Jacquemin said. “We believe that these sectors are well positioned to experience rental growth and increase in capital values in the long term, allowing us to generate stable income on behalf of our clients.”

In early 2019 AXA had teamed up with Asia warehouse giant ESR and an unnamed sovereign fund to set up a $1 billion real estate joint venture targeting core logistics opportunities in Japan. That JV was seeded with a set of six assets spread across Tokyo and Osaka. Earlier this year that same venture paid $368 million to acquire a Tokyo area warehouse leased by Amazon. Later in 2019 the firm paid JPY 4.6 billion to purchase a Hiroshima hotel from a joint venture between GreenOak Investment Management and Red Planet Hotels.

(Source – Mingtiandi, Pic – Data Center / “Kevin McGrath“)

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