Tokyu Land Corp. has bulked up on its U.S. apartment buying as concerns grow from foreign investors about high U.S. inflation and increased interest rates.

The Tokyo-based investor acquired four properties across three market areas: Seattle; Denver; and Portland, Oregon. The purchases add 950 units to the 1,462 the firm acquired this year for $440 million.

The buyer did not disclose the purchase prices for its latest acquisitions, but the totals add to the cumulative amount of capital overseas investors have pumped into U.S. real estate this year. Cross-border investors purchased $11 billion more in the first half of this year compared to the first half of last year — $29 billion versus $18 billion, according to CoStar data. That pace of spending appears to be slowing down in the third quarter, though.

The Association of Foreign Investors in Real Estate released its Summer 2022 International Survey Pulse this past week, which found mounting concerns about U.S. commercial real estate. About 80% of surveyed investors reported the effects of inflation and rising interest rates have been worse than they expected and represented the greatest current investment threats.

While inflation, geopolitics, war and rising interest rates are investment threats, overseas institutional investors, who generally have a long-term horizon, are also able to draw opportunities with nearer-term impact, according to Gunnar Branson, CEO of AFIRE.

The early heavy spending this year was fueled by inflation concerns, with foreign investors perceiving U.S. real estate as an inflation hedge, according to a CBRE analysis. The AFIRE survey was underwritten by CBRE and Holland Partner Group.

That inflation was both a stimulus for and concern about U.S. real estate investing is not lost on Branson. Neither is the fact that the Federal Reserve is aggressively raising borrowing rates to fight inflation.

“It's difficult to predict how much and in what directions changes in interest rates will affect various international investment strategies, in part because of all the various central banks’ efforts to control their own currency inflation,” Branson told CoStar News in an email. “Global economic and geopolitical forces are pushing and pulling at the same time. Higher borrowing costs can dampen investments, but they can also push values lower, making new investments more attractive.”

Branson added that foreign investors say they continue to see the U.S. property markets as attractive and “are more optimistic about the U.S. economy than domestic investors are.”

For Tokyu Land, its U.S. investment strategy is centered on adding value to what it perceives as underperforming properties.

“We are developing mainly value-add business and development business that increase value through renovation in rental housing assets that are expected to continue to grow steadily in the future,” the company said in a statement translated from Japanese via Google Translate.

With the new acquisitions, Tokyu plans to renovate the properties with its U.S. partners to improve values, the firm said.

An overview of each new purchase is as follows:

• Park South, 252 units in the Seattle High Line district; U.S. partner: Rise Properties.
• Saddlebrook, 223 units in the Des Moines-Seattle area; U.S. partner: Rise Properties.
• The Hudson, 227 units in the Tigard-Portland area; U.S. joint business partner: Trion Properties
• Summit Riverside Apartments, 248 units in the Littleton-Denver area; U.S. partner: Security Properties.