Texas builder breaks ground on first community with Japanese firm

Amid the growing presence of Japanese capital in American homebuilding, Osaka-based Hankyu Hanshin Properties Corp. (HHP), a leading Japanese developer, recently expanded its operations in the United States via a joint venture with Dallas-based Bridge Tower Homes.

The two parties announced a joint venture in January, and earlier this month, they broke ground on the joint venture’s (JV) inaugural development, a 97-lot community in Corinth, TX, a suburb of Dallas.

HHP already had a multifamily footprint in the United States, but the deal with Bridge Tower marked the company’s first-ever single-family residential venture in the states. The partnership will cover multiple projects and will focus on for-sale communities throughout the state of Texas.

“Japanese real estate companies tend to bring patient, long-term capital, which is exactly what development and homebuilding require. They’re not looking for a quick exit, which makes them natural partners for Bridge Tower, where we’re focused on building our platform rather than turning deals,” Jackson Su, co-managing partner at Bridge Tower Group, told The Builder’s Daily.

HHP’s parent company, Hankyu Hanshin Holdings, has a market cap of more than $7 billion, with a focus on residential, commercial and hospitality properties. Elsewhere, the company has international operations in Vietnam, Thailand, Indonesia, the Philippines, Malaysia, Singapore, Australia and Canada.

Like many Japanese developers, HHP has increasingly expanded internationally, including into the United States, as population growth domestically dips. Japan’s population peaked around 2010 and has steadily dropped in the years since.

This trend, combined with lower borrowing costs in Japan, has led to a significant uptick in investment in the American homebuilding market. After Sumitomo Forestry announced a $4.5 billion deal to acquire Tri Pointe Homes in February, Japanese firms now control an estimated six percent of new home construction in the United States.

“Japan’s domestic real estate market is facing real headwinds: declining population, slowing housing starts and flattening economic growth. For major firms with capital to deploy, looking internationally is a necessity. The U.S. Sun Belt is a natural place to deploy capital. Population growth, household formation, and sustained housing demand are fundamentals that simply don’t exist at scale in Japan right now,” Su explained.

For HHP, their JV with Bridge Tower Homes partners them with a well-established builder that has operated in Texas since 2013.

“We’re vertically integrated. The full residential life cycle, from entitlement, development, construction and sales, goes through Bridge Tower homes. We can control quality, timeline and cost end-to-end. For any international partner entering a new market, this reduces execution risk significantly,” Su explained.

Currently, Bridge Tower Group, the parent company of Bridge Tower Homes, in conjunction with its subsidiary Westfield Homes, delivers a mixture of for-sale and build-to-rent communities.

The JV will bring an infusion of capital that will enable the builder to leverage HHP’s scale to grow its operations in its core markets of Dallas, San Antonio and Houston. According to Su, Bridge Tower delivers about 400 homes a year, but they have the ability to triple that capacity now that HHP is on board as a capital partner.