Nomura REIT to Sell Eight Residential Properties for $73M, Add Newer Assets

Tokyo-listed Nomura Real Estate Master Fund has agreed to sell eight residential properties across Japan’s main Honshu island for a total of JPY 10.8 billion ($73 million).

The REIT sponsored by Nomura Real Estate Development is offloading the set of ageing assets at a 35 percent premium to their combined book value of JPY 8 billion, according to a stock filing. The undisclosed buyer is a non-related domestic company, the trust’s manager said.

The disposal comes after Master Fund announced plans earlier this month to acquire a pair of 2022-completed Tokyo apartment blocks for a total of JPY 4.9 billion, citing a desire to add assets with greater competitiveness and less upkeep.

“The fund has continuously replaced assets as an external growth strategy mainly by acquiring sponsor-developed properties and selling properties where there are concerns about their future competitive advantage,” the manager said.

Out With the Old

The top asset by book value of the eight to be divested is Prime Urban Izumi, a 15-storey apartment building in Nagoya. Located in the city’s central Higashi ward, the 2008-vintage property is valued at JPY 3.1 billion and was acquired by Master Fund in 2011 for JPY 3.8 billion.

Also being transferred is Prime Urban Meguro Mita, a 2008-era low-rise apartment block in Tokyo’s Meguro ward. Acquired by the REIT in 2016 for JPY 1.06 billion, the asset’s current book value is JPY 1.1 billion.

The rest of the set includes another Meguro asset, four in Chiba prefecture’s Ichikawa city and one in Miyagi prefecture’s Sendai, combining for a book value of JPY 3.8 billion.

The REIT is scheduled to close the sale of the eight properties on 28 March and complete the acquisition of the two Tokyo buildings, Proud Flat Asakusa Tresage and Proud Flat Nippori, on 25 March. After the transactions, the trust’s portfolio will comprise assets with a total acquisition value of nearly JPY 1.1 trillion ($7.4 billion).

Shifting Themes

Master Fund’s latest moves in the residential segment come after the REIT loaded up on hospitality assets during the last two years in a bid to reap gains from Japan’s tourism recovery.

Last September, the trust acquired a 261-room Hokkaido hotel from Japanese builder Daiwa House Industry for JPY 6.3 billion. The REIT picked up La’gent Stay Hakodate Ekimae in Japan’s northernmost main island at a 26 percent discount to the independent appraisal value.

Five months earlier, the REIT had completed its JPY 2.3 billion purchase of Mimaru Suites Tokyo Asakusa, a long-stay hotel in central Tokyo’s Taito ward, from Daiwa House. That deal followed Master Fund’s JPY 3.2 billion acquisition of the Hotel Wing International Premium Kyoto-Sanjo in the country’s ancient capital in September 2023.