Japan
Japan is one of the world's largest rental markets, with Tokyo and Osaka among the most significant renter populations globally, underpinned by sustained urbanization and structural household formation trends that we expect to persist. The asset class has demonstrated remarkable resilience, delivering stable cash flows and high occupancy through multiple cycles, including the pandemic, supported by a lease culture that inherently protects landlord interests.
While the Bank of Japan's rate normalization has drawn attention, cap rate spreads over government bonds remain compelling, inflation is driving long-hoped rent growth, and financing conditions remain broadly supportive, though realizing that opportunity requires genuine local presence and deep market relationships. We see a meaningful value-add runway through our sourcing relationships, under-rented assets and development, with deal structuring available to manage risk.
The U.S.
The U.S. rental housing market is in recovery mode, which triggers our conviction in the upcoming opportunity, on par with where we stood on Europe in 2024 and 2025. Fundamentals are beginning to stabilize, though the path forward remains uneven across markets. That unevenness matters. At this point in the cycle, outcomes are driven less by broad exposure and more by market selection, basis, and execution. Capital positioned where fundamentals are improving, at pricing that still reflects last year's headlines, is better situated to deliver durable NOI and value growth. A few principles guide our approach today:
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