Sekisui House Selling Seattle Apartment Complex to Japan REIT for $328M

Fresh off becoming America’s fifth-largest homebuilder, Japanese developer Sekisui House is selling a Seattle luxury apartment complex to the company’s sponsored REIT for $328 million.

The Ivey on Boren comprises 406 rental units in the heart of Washington state’s biggest city, Tokyo-listed Sekisui House REIT said Tuesday in a release. The transaction was scheduled to close on Wednesday.

The 2022-vintage project is the $3 billion trust’s top asset by acquisition price and the portfolio’s sole property outside of Japan. Sekisui House, which last month completed its $4.95 billion acquisition of Denver-based MDC Holdings to create the No.5 US homebuilder, is also cultivating a rental residential business in the world’s largest economy.

“By incorporating US residences into its existing core assets of domestic residences, SHR believes that it will be able to achieve both ‘stable growth’ in Japan and ‘proactive growth’ in the US, thereby contributing to maximising unitholder value,” the REIT’s manager said.

Rent Guarantee

For the 44-storey tower at 2019 Boren Avenue in downtown Seattle, Sekisui House REIT expects a 3.7 percent dividend yield, with the sponsor guaranteeing a minimum monthly rent of $1,625 per unit for two years.

The Seattle housing market’s average monthly rent runs at $1,943, above the US average of $1,655, and local rents rose 41.3 percent during the period from 2014 to 2023, the trust’s manager said.

The Ivey on Boren stands within a 20-minute walk of attractions like the Space Needle and Pike Place Market and offers access to the headquarters of e-commerce titan Amazon and other major tech firms, according to the manager, with demand expected to come mainly from affluent singles and couples with dual income and no children.

The REIT will finance the acquisition in part using the proceeds of asset disposals, including the JPY 70 billion ($530 million) sale of the Gotenyama SH Building in Tokyo’s Shinagawa ward.

Eyes Overseas

Sekisui House is one of multiple Japanese developers expanding their US holdings. In January, Daiwa House Group announced a deal to acquire single-family homebuilder The Jones Company of Tennessee, coming on the heels of the Osaka-based firm’s purchase of California-based detached housing specialist JP Holdings in October.

In September, Sumitomo Forestry acquired 90 percent of the equity in Texas-based multi-family developer JPI Group for $158 million. In November, the wood-construction expert said it was teaming up with California-based Fairfield Residential in a $144 million joint venture to develop a 400-unit rental residential building in the suburbs of Washington DC.

Elsewhere, Sekisui House picked up a residential site on Sydney’s north shore from CIFI for A$110 million ($72 million), The Australian reported in February, as Chinese developers flee that market.