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Dai-Ichi Life Offloads Japanese Apartments and Nursing Home to REIT

Dai-Ichi Life’s Real Estate Investment Trust (REIT) is acquiring Sompo Care La Vie Re Yachiyo in Chiba prefecture.

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

Recently, Dai-ichi Life Realty announced that DL Life Partner REIT, a trust sponsored by Dai-Ichi Life Insurance, has completed the acquisition of the nursing home in Chiba prefecture and apartment buildings located in key Japanese cities such as Tokyo, Nagoya, and Osaka.

The trust is acquiring these residential assets from three entities supported by Dai-Ichi Life, including the company itself, its residential development subsidiary Sohgo Housing, and a separate fund backed by the insurer. In a statement on its website, Dai-ichi Life Realty, the trust’s manager, highlighted the acquisitions as meeting the increasing demand from investors for income-generating residential assets.

The REIT, which was established in March 2020, focuses on real estate investments aimed at enhancing people’s quality of life, particularly in the housing sector. The trust’s targeted rental housing and quality-of-life enhancement assets have been well-received by domestic institutional investors, including pension funds, as stable asset classes.

The latest residential acquisition by the trust follows its collaboration with investment manager Alyssa Partners for JPY 20 billion about six weeks ago.

Diversifying Portfolio with Care Facilities

Expanding beyond traditional residential properties, DL Life Partner REIT has acquired Sompo Care La Vie Re Yachiyo, a 70-unit nursing home in Chiba prefecture, located to the east of Tokyo. This four-storey building is conveniently situated approximately an 11-minute walk from Yachiyo Chuo Station on the Toyo High-Speed Line.

In addition, the REIT has also purchased a 10-storey apartment building in Nagoya, catering to tenants requiring less assistance. This 55-unit rental residential asset, located 15 minutes’ drive from Nagoya Castle, spans 2,496 square meters (26,871 square feet) by gross floor area.

Dai-Ichi Life’s president and chief executive, Toshiaki Sumino, has showcased 30 square meter units in the 2017-built property, available for JPY 62,000 per month. The apartment is conveniently located within a three-minute walk from Sako railway station and approximately 20 minutes’ walk from Nagoya station.

DL Life Partner REIT has acquired these two assets, along with three other apartment buildings in Tokyo and Osaka, from Sohgo Housing. Additionally, the trust has obtained nine rental residential properties from Dai-Ichi Life and two more from a fund supported by the insurer.

Following these transactions, the REIT now possesses 85 properties encompassing residential assets, healthcare facilities, daycare centers, and other facilities, acquired for a total of JPY 132 billion.

The acquisitions by Dai-ichi Life Realty come shortly after Dai-Ichi Life’s move towards 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 collaborating with local institutional investors, including Japan’s Government Pension Investment Fund. In a recent disclosure, the world’s largest pension fund revealed its significant stake in Dai-Ichi Life Holdings, amounting to JPY 240 billion worth of stock in the insurer as of March last year.

Institutional Interest in Japanese Apartments

DL Life Partner REIT’s recent acquisitions align with the trend of institutional investors acquiring Japanese rental apartments in the market.

In January, Orix REIT finalized acquisitions totaling JPY 12.6 billion, which included the purchase of Cross Residence Takadanobaba in Shinjuku for JPY 8.4 billion.

Similarly, M&G Real Estate announced the acquisition of properties in Tokyo from LaSalle Investment Management for JPY 30 billion, equivalent to JPY 9.8 million per square meter.

During December, TSE-listed Samty Residential Investment Corporation completed acquisitions worth JPY 3.1 billion, following City Developments Limited’s purchase from North American fund manager BentallGreenOak for JPY 35 billion.

Across the Asia Pacific region, the multi-family sector witnessed an increase in deals last year, with investors acquiring $11.9 billion worth of income-earning rental housing properties in 2023, marking a 5% rise from 2022, as reported by MSCI Real Assets.