Star Asia Group co-founder and managing partner Malcolm MacLean
Star Asia Group has won support from a top-three Japanese insurer for its first private fund set up for domestic capital, as the investment manager rolls out a new vehicle holding JPY 30 billion ($190 million) in residential properties centred on Tokyo’s 23 wards.
Japan Post Insurance is participating in Star Asia Japan Property Fund, which comprises 17 recently built properties, according to a Japanese-language release by Star Asia on Thursday, with the insurer investing alongside other institutional equity partners.
The vehicle opens a domestic institutional fundraising channel for the nearly two-decade-old investment manager. “We will work to build long-term partnerships with domestic institutional investors and expand our private fund business,” Star Asia said.
For this initial domestic venture, Japan Post Insurance represents an anchor investor with 15.8 million customers and which held JPY 58.3 trillion in total assets at the end of June. The insurer said in a three-year plan unveiled in May that it intends to shift its alternative investments from overseas holdings towards domestic assets such as Japanese real estate.
Betting on Rents
Star Asia is pitching the fund on rising rents, saying it is targeting increases as Japan moves out of deflation and as populations grow in the neighbourhoods around its buildings. The new fund aligns with ongoing investor enthusiasm for Japanese residential assets, with rental housing accounting for 21 percent of a record JPY 5.73 trillion in property trades in the country during the first nine months of the year, according to JLL.
Japan Post Insurance president and CEO Onishi Toru (Image: Japan Post Insurance)
Formally named Star Asia Japan Property Fund No 1, the vehicle was set up on 30 September with group company Star Asia Asset Advisors acting as asset manager.
The fund gives Star Asia a vehicle focused on rental housing alongside its Tokyo-listed REIT Star Asia Investment Corporation, where rental residential accounts for 12.7 percent by value of its 78 assets.
Star Asia has teamed with a Japanese developer on Tokyo housing before, setting up a private residential fund in 2020, SA Artessimo Residential I, which secured priority rights to buy buildings from Global Link Management, developer of the Artessimo brand of compact investment apartments.
Inflation Hedge
Japan Post Insurance’s backing for the Star Asia fund comes as the life insurer allocates more capital for property investment.
Toru Onishi, who became president in June, told the Nikkei in an interview published in August that the insurer would double the property fund it runs through its joint venture with Mitsui & Co to JPY 400 billion, from around JPY 200 billion.
Real estate is “highly resistant to inflation, and also a useful asset for responding to the capital regulations that have recently come into effect,” Onishi said in the interview, referring to the economic value-based solvency rules introduced for Japanese insurers at the end of March.
The insurer’s medium-term plan calls for alternatives to rise to around five percent of total assets by March 2029, from 3.7 percent at the end of the last financial year. By then, real estate and infrastructure, which the insurer says offer protection against inflation, are to make up about half of its alternatives book, up from 43 percent.
Japan Post Insurance is counting on those holdings for earnings. It targets an investment spread, the margin of its investment income over the returns it guarantees policyholders, of more than JPY 290 billion in the year to March 2029, up from JPY 203.5 billion in the year to March. The insurer told investors at its results briefing in May that its alternative assets remained in a full-scale harvest phase and were expected to contribute to rising income as a pillar of its earnings.
Until this year, Japan Post Insurance had built its property exposure mainly through the Mitsui partnership. That partnership’s dedicated fund had acquired 20 properties across offices, industrial facilities, retail, hotels and housing by April 2025. In June the insurer backed DMRE Fund 4, a JPY 23 billion vehicle managed by Marubeni Asset Management that targets recently built rental housing in Greater Tokyo, Kansai and Chubu. It was the insurer’s first property fund investment structured as a silent partnership, a method it notified regulators it would add in March last year.
Tapping Institutions
Founded in 2007 and led by co-founders Taro Masuyama and Malcolm F MacLean IV, Star Asia had JPY 930.6 billion ($5.9 billion) in assets under management at the end of June, having invested more than JPY 1.43 trillion since its launch. Most of that capital has come from overseas investors, including major US university endowments, foundations, sovereign wealth funds and pension funds.
The group has been deepening its domestic ties this year. In a February agreement, it agreed to sell a 25 percent economic stake to Mizuho Leasing for JPY 30 billion, in an alliance under which the two companies planned to draw on the financier’s resources to set up new funds and expand Star Asia’s listed REIT.
Japanese institutions have also been committing more capital to domestic property funds run by outside managers. The Government Pension Investment Fund committed JPY 10 billion ($63.4 million) in March to a Japan fund overseen by Hong Kong-based Phoenix Property Investors, after backing Japan strategies run by BentallGreenOak and Morgan Stanley last year.
