Sekisui House REIT Picking Up Tokyo Apartments, Office Tower for $77M

Sekisui House REIT has made its biggest splash of 2023, with the TSE-listed trust having announced the acquisition of three Tokyo rental residential assets and an office building in the capital’s Shinjuku district for a total of JPY 11 billion ($77 million).

The REIT completed the acquisition of Shinjuku Hirose Building in a JPY 5 billion deal with a local special purpose company, SHR said Thursday in a stock filing. The assets “will be acquired with the aim of enhancing the office building portfolio and residence portfolio and further strengthening the earnings base”, the trust’s manager said.

The same document revealed that the trust has agreed to purchase apartment buildings in Ota, Koto and Kita wards for JPY 6 billion from a local developer, with the transaction expected to be finalised by March 2024.

The quartet of acquisitions is the Sekisui-backed REIT’s largest set of purchases since it acquired the Etsy Maison Noborito apartment complex in Greater Tokyo for JPY 490 million in September.

Shinjuku Prize

SHR’s most expensive single-asset purchase in this week’s barrage of buys is the Shinjuku Hirose Building, which is located a 15-minute drive from the Meiji Jingu Shinto shrine. Completed in 1985, the 10-storey asset offers 3,120 square metres (33,583 square feet) of office and retail space.

With the office tower located within a five-minute walk of the Yotsuya-sanchome Japan rail station and seven minutes from Shinjuku-gyoemmae subway station, the REIT’s manager pointed to connectivity as key to the property’s appeal.

The seller of the office complex is G10 Japan 4 TMK, a vehicle established by undisclosed investors in 2021, according to local corporate data provider SalesNow DB.

The trio of apartments, which the trust has agreed to obtain from developer Tokyo Nissho Estem, remained unoccupied as of the end of October, due to one asset being under construction and the other two being newly built.

“However, leasing activities will begin promptly after today, and SHR aims to achieve early profitability by promoting occupancy in the spring of 2024, which is known as the busy season for the domestic rental housing market,” the REIT’s manager said.

The largest of the three apartment projects is Esty Maison Omori, a 93-unit property in Ota ward, which is scheduled for completion next month with 2,457 square metres of residential space.

Deals Continue

Sekisui House REIT is buying the batch of assets just under three months after agreeing to purchase an apartment block in the Kanagawa prefecture city of Kawasaki, south of Tokyo. In that September transaction the trust agreed to pay JPY 490 million to acquire Liberte Noborito, a building near the Noborito rail station in Tama district from an undisclosed seller, with the name to be changed to Esty Maison Noborito following closing of the deal.

In August, the REIT agreed to sell Sha Maison Stage Kanazawa Nishiizumi, a residential asset in Ishikawa prefecture’s Kanazawa city to an unnamed buyer for JPY 1.1 billion, noting that the 16-year-old structure was likely to face a decline in profitability unless large-scale repairs were undertaken.

In March, the trust purchased a 6.8 percent stake in Ningyocho PREX on Nihombashi Horidome-cho in Tokyo’s Chuo ward for JPY 220 million. Completed in 2021, the 10-storey commercial building offers 4,786 square metres of office and retail space.