Aberdeen, Sumitomo Form Venture to Invest in Asia Pacific Real Estate

Aberdeen Standard Investments, the investment arm of Standard Life Aberdeen, and Japan’s Sumitomo Mitsui Trust Bank, have formed a joint venture that will invest in residential real estate in Japan and other mature markets in the Asia Pacific region.

Through co-investment and co-management by Aberdeen Standard Investments, and Sumitomo subsidiary Sumitomo Mitsui Trust Real Estate Investment Management, the joint venture will target investments in residential assets such as multi-family, senior housing, student housing, and corporate housing. Financial terms of the deal were not disclosed.

“Over the next decade, cities in the Asian Pacific region are set to experience very strong growth, fuelled by both domestic and foreign immigration to major metropolises, which bode well for housing demand over the medium-term,” Kang Puay Ju, ASI’s head of real estate in Asia Pacific, said in a statement.

The firms said the joint venture would adopt a value-added investment strategy and is looking to acquire newly constructed properties on a forward commitment basis, as well as older residential properties, which have the potential to be renovated, repositioned, or converted. According to Sumitomo, the volume of transactions of existing homes in Japan accounts for a relatively small share of the overall market compared to Western countries. However, the market for the renovation of existing homes is expected to grow and become increasingly active in the future.

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The joint venture’s strategy also hopes to take advantage of the continued trend toward urbanization in Japan and other countries in the region, especially in large cities such as Tokyo and Osaka, as well as the significant rental and yield gaps between new and older buildings.

Environmental, social, and governance (ESG) factors also will be “fully embedded” into the investment process, the companies said, with the goal of supporting sustainable social development through ESG-screened investments in Japan.

Sumitomo Mitsui Trust Bank will make certain equity contributions, while Sumitomo Mitsui Real Estate Investment Management will provide asset management services for the properties located in Japan. The bank, through the operation and management of the joint venture, will contribute to the development and promotion of the residential sales market in Japan.

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Tags: Aberdeen Standard, ESG, Real Estate, Sumitomo Mitsu Trust Bank

Expecting Federal Reserve interest rate cuts soon, hedge fund honcho Paul Tudor Jones says the best investment moves are to go for stocks and gold, and wager against the US dollar.

Billionaire Jones said he didn’t expect the Fed to lower rates this year but has readjusted his timetable due to the escalation of the US-China trade war. “The tariffs are a very material event,” Jones said. “We haven’t had any experience in modern times with them. So you have to readjust the entire outlook.”

The futures market agrees with him on the rate cuts. According to CME Group, there may be as many as three quarter-point reductions in 2019, following four increases last year. The Fed has halted its tightening campaign and indicated that it might loosen policy if the data demand it—meaning economic troubles crop up. Right now, the benchmark federal funds rate ranges from 2.25% to 2.5%.

Until the trade war reignited, “I didn’t think we’d have a first cut in 2019,” Jones told Bloomberg at an investment conference. “I don’t think we would have had that had we not gotten into this tariff battle, and so it has accelerated everything.”

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Jones, whose best investment call was to anticipate the 1987 stock market crash, which tripled his money, is making common-sense recommendations based on his call for lower rates in the near-term.

Lower rates usually are a tonic for stock prices (lower borrowing costs help corporations and stock buyers). They also betoken higher inflation, which tends to drive gold appreciation. And the now-strong dollar should weaken because foreign buyers, especially European ones who have tiny or negative rates, presumably would be less eager to buy US assets, particularly Treasury paper.

Jones also suggested betting on falling interest rates. Vehicles for that, of course, range from interest rate futures to exchange-traded funds.

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Tags: Federal Reserve, Interest Rates, Paul Tudor Jones