According to CBRE (Chiyoda, Tokyo), a major real estate services company, listed real estate investment trusts (REITs) sold 762.5 billion yen in assets in 2024, the highest amount since the start of compilation from 2005. There is a growing trend to use unrealized gains, which have increased due to rising real estate prices, to buy back investment units (equivalent to buying back one’s own shares) and to use for dividends.

The amount of sales in 2024 was 400.6 billion yen more than the previous year, 2.1 times the size. This is significantly higher than the previous record of 487.4 billion yen in 2021.

Categorized by sector of REITs in 2024, offices are expected to increase by 368.8 billion yen to 508.8 billion yen, commercial facilities to remain almost flat at 63.2 billion yen, logistics facilities to increase by 59 billion yen to 91.9 billion yen, residential to increase by 7.9 billion yen to 46.5 billion yen, and hotels to increase by 41.4 billion yen to 43.2 billion yen. In the real estate investment market, overseas investors are actively acquiring offices, which is showing a sign of improvement in both vacancy rates and rents, and listed REITs are on the selling side.

Nippon Building Fund Inc. announced in January 2024 that it would sell part of Gran Tokyo South Tower (Chiyoda, Tokyo) for 41.2 billion yen. Sekisui House Reit, Inc. announced in March 2024 that it would gradually sell three properties, including Garden City Shinagawa Gotenyama (Shinagawa, Tokyo). The total sale price for the three properties is just over 126.8 billion yen.

Regarding the increase in sales, CBRE Associate Director Tomoya Nose points out, “Due to the slump in investment unit prices, the expansion strategy through capital increases is facing headwinds. There has been a strong tendency to use the amount from sales to acquire investment of their own, and to prop up investment unit prices.”

According to Sumitomo Mitsui Trust Research Institute, the unrealized gains on properties held by listed REITs were 5.9173 trillion yen as of the most recent November 2024 period. With rising real estate prices, this has increased by more than 400 billion yen over the past year, reaching an all-time high. The environment remains favorable for listed REITs to make profits on sales.

The asset acquisition amount for listed REITs in 2024 was 1.2159 trillion yen. The “net investment amount,” which is the acquisition amount minus the sales amount, was 453.4 billion yen, the lowest level in 12 years since 2012 (448.2 billion yen). At the time, the REIT market was stagnant after the 2008 Lehman Shock and the 2011 Great East Japan Earthquake. The introduction of unprecedented monetary easing measures in April 2013 created a low interest rate environment, and the REIT market then entered a period of expansion.

Kunihiko Nakano, head of the REIT investment advisory department at Sumitomo Mitsui Trust Research Institute saying, “They have been able to make good use of the increase in unrealized gains.” He added, “To improve market valuations, it is essential not only to sell properties, but also to replace them with properties that will improve the quality of the portfolio in the medium to long term.”