A 47-unit apartment building in Azabudai has been sold for 3.288 billion Yen (approx. US$24 million), 49% above its recent appraised value. This results in a net yield somewhere in the 2.2% range. Advance Residence Investment Corporation, a REIT operated by Itochu Corporation, will transfer the trust beneficiary interests to the undisclosed domestic buyer in July and August of this year.

Residia Azabudai was built in 2006. It has 47 apartments, 46 of which are small and compact type in size. As of March 2023, the 45 of the 47 apartments were leased, with a 95.7% occupancy rate. The building sits on 378.20 sqm of land, of which approximately 69 sqm falls within a road widening plan that has yet to be officially confirmed. The building has a lettable floor area of 1,732 sqm. The sale price per square meter works out to just 1.9 million Yen (approx. US$1,295/sq.ft), a price much lower than the 6 ~ 8 million Yen/sqm price tag for the condo units in the new Azabudai Hills project across the street.

The property is located within a block that has formed a redevelopment committee, implying that this building and its neighbors are likely to be demolished and rebuilt into a single, larger building at some point in the future. The property’s long-term stable income stream would likely be impacted in this case.

The REIT also sold Residia Sakae in Nagoya. It was operating at an NOI of 4.4% based on its original acquisition price which is below the REIT’s average NOI of 5.9% on other buildings held in the Nagoya area.

Source: Advance Residence Investment Corporation News Release, April 27, 2023.