Texas-based Daiwa House USA Holdings, a subsidiary of Japan-based Daiwa House, has made its first platform investment in the U.S. multifamily sector with a 35% minority stake in leading developer Alliance Residential.
Daiwa House, a global real estate investment, development, construction, and management company, has been active in the United States with a primary focus on residential construction in the “smile zone,” which connects the economically strong areas on the East Coast, the Sun Belt, and the West Coast. It has made previous investments in home builders Stanley Martin Homes on the East Coast, CastleRock Communities in the South, and Trumark Cos. on the West Coast. It also began its rental housing business in 2011 with the acquisition of a 42-unit project in California. In addition, it has developed large-scale properties in Texas and the Washington, D.C., suburbs, comprising 5,675 units in 17 developments.
According to Daiwa House, as part of its seventh Medium-Term Management Plan, the company is developing community-based businesses overseas with the goal of achieving net sales of 1 trillion yen and operating income of 100 billion yen.
Alliance Residential’s footprint aligns with Daiwa House’s focus, covering 39 metros in 16 states primarily in the smile zone. Since its founding in 2000, it has developed and built over 115,000 multifamily units—from its flagship Broadstone luxury assets to its Prose attainable housing Holden senior living brands.
For 2024, the Scottsdale, Arizona-based company ranked No. 29 on the National Multifamily Housing Council’s Top 50 Owners list, with over 35,000 units; and No. 6 on the Top 25 Developers list and No. 8 on the Top 25 Builders list, starting 4,628 units last year. The company anticipates further expansion, targeting the development of 115 communities with approximately 30,000 units from 2025 to 2028.
“We are honored that Daiwa House chose Alliance Residential for their first residential rental real estate platform. We believe this meaningfully adds to our balance sheet capability, provides Alliance Residential additional reach into global capital markets, and creates a solid foundation for our long-term success,” said chairman and CEO Jay Hiemenz. “Preserving our entrepreneurial culture and retaining the competitive advantages that have made us so successful, including local execution and alignment, were key considerations in our discussions, and of paramount importance to both Alliance Residential and Daiwa House. This investment not only allows us to continue this proven strategy, but to also become more evergreen through new growth capital.”
According to Alliance Residential, no significant changes to its business model or operations are anticipated. The senior management team will remain unchanged, except for chairman and CEO Bruce Ward, who has transitioned to chairman emeritus. The board will include Hiemenz; Nick Chapman, chief operating officer-West; Brian Austin, chief operating officer-East; and chief financial officer Bob Weston, with representation from Daiwa House.
“Having spent significant time in Japan and the U.S. with Daiwa House’s executive team and their U.S. partners, I have been impressed with their core competencies in constructing residential real estate,” added Heimenz. “The company was founded 70 years ago building quality housing with an efficient and replicable model, which evolved into an impressive use of building technology and supply chain management, which is very much aligned with Alliance’s approach and methods. Equally like-minded is their mission statement with an intent to enhance social good by improving customers’ lives and the communities in which they operate.”
Dentons US served as legal counsel and Jefferies and SMBC Nikko as financial advisers for Alliance Residential.
Japanese companies have been active in the U.S. housing market in recent years. At the end of 2023, Sumitomo Forestry America, a housing and wood products subsidiary of Tokyo-based Sumitomo Forestry Co., completed its acquisition of multifamily developer JPI. Sekisui House started 2024 with the massive acquisition of public home builder M.D.C. Holdings, and Misawa Homes acquired 51% of Utah-based Visionary Homes in July. In addition, Daiwa House-backed Stanley Martin and CastleRock Communities as well as Sumitomo Forestry-backed DRB Group made acquisitions this year to expand their footprints.
