Dai-Ichi Life Sells Japanese Apartments, Nursing Home to Private REIT for $150M

Japanese rental residential properties continue to be a preferred play among investors, with a private REIT sponsored by Japan’s third largest insurer this month purchasing 15 apartment buildings and a nursing home in Asia’s second largest economy for JPY 22.3 billion ($150 million).

Dai-ichi Life Realty disclosed to investors this past week that DL Life Partner REIT, a trust sponsored by Dai-Ichi Life Insurance has acquired the nursing home in Chiba prefecture, with the apartment buildings located across major Japanese cities including Tokyo, Nagoya and Osaka.

The trust is buying the residential assets from a trio of entities backed by Dai-Ichi Life, including from the company itself, from its residential development subsidiary Sohgo Housing and a separate fund backed by the insurer. In a statement on its website, Dai-ichi Life Realty, which manages the trust, positioned the acquisitions as in line with growing demand among its investors for income-earning residential assets.

“This REIT began operations in March 2020, focusing on real estate investments to contribute to the improvement of people’s quality of life, primarily centred around housing, which forms the foundation of daily life,” the trust’s manager said in the statement. “The rental housing and quality-of-life enhancement assets targeted by the trust have received favourable responses from domestic institutional investors, including pension funds, as stable asset classes.”

The trust’s latest residential acquisition comes around six weeks after Dai-Ichi Life teamed up with investment manager Alyssa Partners to buy 12 multi-family assets across Tokyo, Osaka, Nagoya and Kobe for JPY 20 billion.

Homes for All Ages

Moving beyond the mainstream residential sector, DL Life Partner REIT acquired Sompo Care La Vie Re Yachiyo, a 70-unit nursing home in Chiba prefecture, east of Tokyo. The four-storey building is around 11 minutes’ walk from the Yachiyo Chuo Station on the Toyo High-Speed Line.

For tenants needing a bit less help, DL Life Partner REIT bought up Frencia Noie Meieki, a 10-storey apartment building in Nagoya. Located 15 minutes’ drive from Nagoya Castle, the 55-unit rental residential asset measures 2,496 square metres (26,871 square feet) by gross floor area.

Local property listings website Limited Nagoya shows 30 square metre units in the 2017-vintage building available for JPY 62,000 per month, with the property located within less than three minutes’ walk of the Sako railway station and around 20 minutes’ walk from Nagoya station.

DL Life Partner REIT acquired the two assets, along with three other apartment buildings in Tokyo and Osaka, from Sohgo Housing, according to a local news report. The trust also picked up nine rental residential properties from Dai-Ichi Life and another two from a fund backed by the insurer.

Following the transaction, the REIT owns 85 properties spanning residential assets, healthcare facilities and daycare centres, among other facilities, which it acquired for a total of JPY 132 billion.

The acquisitions by Dai-ichi Life Realty come more than a month after Dai-Ichi Life, which had JPY 35 trillion in assets under management as of 30 September, launched a separate private REIT for non-residential assets. Dai-ichi Life Diversified REIT commenced operations on 10 January with JPY 32 billion of office and logistics assets under management.

Dai-Ichi Life has a history of partnering with local institutional investors, including Japan’s Government Pension Investment Fund. In a July financial disclosure, the world’s largest pension fund revealed that it held JPY 240 billion worth of stock in Dai-Ichi Life Holdings in March of last year, or around 9.6 percent of the insurer at the time.

Red-Hot Apartments

DL Life Partner REIT’s set of acquisitions aligns with a wave of institutional acquisitions of Japanese rental apartments in recent months.

In January, Orix REIT agreed to buy three Tokyo multi-family properties for JPY 12.6 billion, including picking up the Cross Residence Takadanobaba in Shinjuku for JPY 8.4 billion.

Also last month, M&G Real Estate announced that it had purchased the Frontier Shinjuku Tower in Tokyo from LaSalle Investment Management for JPY 30 billion, or JPY 9.8 million per square metre.

During December, TSE-listed Samty Residential Investment Corporation said that it had acquired four apartments in Nagoya, Sapporo, Kagawa, and Yokohama for JPY 3.1 billion, after Singapore’s City Developments Limited agreed in September to purchase 25 Tokyo apartment buildings from North American fund manager BentallGreenOak for.JPY 35 billion

Multi-family was the only sector to see an uptick in deals across Asia Pacific last year, with investors acquiring $11.9 billion worth of income-earning rental housing properties across the region in 2023 – up 5 percent from 2022, according to MSCI Real Assets.