Orix JREIT Buys $185M Tokyo Office Stake

Orix JREIT has agreed to pay JPY 29.4 billion ($185 million) for a half-stake in Toyosu Prime Square, a Tokyo office block. The seller is a vehicle controlled by Fuyo General Lease, while Global One REIT will retain the remaining half.

The trust is also paying JPY 10.6 billion to acquire Daiwa House REIT’s half of the Naha Shin-Toshin Center Building in Okinawa, increasing its ownership to 100 percent. This interest will transfer in five equal 10 percent tranches from 31 August 2026 to 31 August 2028.

Orix JREIT’s manager stated the acquisitions were made to enhance unitholder value due to the properties’ future upside potential.

Toyosu Prime Square Details

Completed in 2010, Toyosu Prime Square offers 32,282 square metres of leasable space within a 41,741 square metre office, retail and parking complex. It is a three-minute walk from Toyosu station on the Tokyo Metro Yurakucho and Yurikamome lines.

The purchase price equates to JPY 1.82 million ($11,500) per square metre of leasable area attributable to Orix JREIT’s stake. The deal implies an appraisal net operating income yield of 3.7 percent and a yield after depreciation of 3.3 percent, representing a 1.2 percent discount to a July valuation of JPY 29.75 billion.

The 24-tenant building was fully occupied at the end of June, up from 86.3 percent occupancy two years prior. Global One REIT acquired its half-interest from Fuyo General Lease for JPY 21 billion in April 2019, making Orix JREIT’s current price 40 percent higher than that earlier transaction.

The Toyosu transaction is scheduled to close on 30 September using new borrowings and cash on hand.

Okinawa Complex Terms

The Naha Shin-Toshin Center Building, completed in 2011, spans 34,180 square metres across 19 above-ground floors and a basement, containing office, retail and hotel space. Orix JREIT previously paid JPY 10 billion for its half in 2019 and expects sole ownership to reduce operating costs and allow more flexible leasing.

The new interest carries a 4.9 percent appraisal NOI yield. Daiwa House REIT, which acquired its share for JPY 7.6 billion, anticipates a JPY 3.9 billion gain from the JPY 10.6 billion disposal.

Daiwa House REIT’s manager noted the 15-year-old property is nearing a point requiring capital expenditure and operations decisions, prompting co-owners to centralise management under Orix JREIT.

On the same day, Daiwa House REIT agreed to buy the Mimaru Tokyo Ikebukuro hotel from Fuyo General Lease for JPY 11.5 billion, while selling the D Project Inuyama Building B in Aichi for JPY 2.5 billion and the Hapias Kaita retail land in Hiroshima for JPY 1.6 billion.

Daiwa House REIT’s manager said the disposals align with its growth strategy to pursue higher rents and build a more inflation-resistant portfolio.

Portfolio Impact

Orix JREIT’s recent activity follows its JPY 22.5 billion purchase of the 304-key Holiday Inn Express Osaka City Centre Midosuji from EQT in October, which valued the hotel at JPY 74 million per room and delivered a 4.6 percent appraisal NOI yield.

Earlier in 2025, the trust bought Hotel Universal Port Vita near Universal Studios Japan from its sponsor for JPY 35 billion, while selling an ageing Tokyo office and retail property to Orix for a combined JPY 18 billion.

Upon completion of all announced transactions, Orix JREIT will hold 123 properties valued at JPY 838 billion ($5.3 billion) by acquisition price. Offices will make up 52.3 percent of the portfolio and hotels 18 percent.

Daiwa House REIT is also expanding its hospitality footprint, having agreed in October to buy the 280-key Daiwa Roynet Hotel Nishi-Shinjuku from Fuyo General Lease for JPY 10.2 billion. The 2018-built property was purchased at an 18 percent discount to appraisal value and a 5.3 percent NOI yield.

Its recent expansion includes the JPY 30 billion acquisition of DPL Urayasu III from its sponsor in March 2024. This five-storey Greater Tokyo logistics facility spans 60,846 square metres and was bought at a 3.5 percent cap rate.

After the August 2028 completion of the current deals, Daiwa House REIT’s portfolio is expected to total 231 properties with a combined acquisition value of JPY 920.6 billion ($5.8 billion). Logistics will represent 51.2 percent of the portfolio, followed by rental residential at 26.6 percent.