On March 28th, Sojitz Corporation (TSX:2768) announced that they signed an agreement with Goldman Sachs five days prior which commits to a new joint venture (JV) that will target second hand apartment building purchases for renovation to then be sold to institutional investors. 

The JV will be 25 percent owned by Sojitz who will run the real estate acquisition, reno and sale of the assets with Goldman owning 75 percent of the JV providing the capital for the initiative. 

According to the release, “Sojitz aims to contribute to the revitalization of Japan’s residential rental market by forming a strong partnership with Goldman Sachs. The partnership will leverage both Sojitz New Urban Development’s (hereinafter “SNUD”, a wholly owned subsidiary of Sojitz) extensive industry networks, deep insight in residential market, expertise in improving asset value via renovation for aged properties, and Goldman Sachs’ capability to bring in necessary capital.” 

The release continues, “Through the partnership, Sojitz and Goldman Sachs target to acquire $300 million of assets in FY2022, and then $400- 500 million annually thereafter.”

Sojitz touted Japan’s very low borrowing costs as well as the strong resilience of the residential sector throughout the pandemic as key factors for the initiative. 

According to Nikkei Asia, “Sojitz seeks a revival of its real estate business with the Goldman tie-up. Before the trading house's 2004 creation through the merger of Nichimen and Nissho Iwai, both predecessors were leading real estate developers focused on condominiums. But Sojitz scaled back its presence in the property market after the bursting of Japan's asset-price bubble and the global financial crisis.” 

SNUD is scheduled to begin operations in the summer of 2022 pending the completion of necessary regulatory approvals. 

Further Reading

Sojitz and Goldman Sachs “SNUD” JV press release (March, 2022)