Friday, July 29, 2005

Mizuho's Real Estate Arm To Set Up REIT with Sekisui, Morgan Stanley

July 29, 2005
Kowa Real Estate To Enter REIT Ops With Sekisui, Others

TOKYO (Nikkei)--Kowa Real Estate Co. said Thursday that it will jointly enter real estate investment trust (REIT) operations with Dai-ichi Mutual Life Insurance Co., Sekisui House Ltd. and Morgan Stanley Properties Japan KK. Kowa Real Estate is an affiliate of the Mizuho Financial Group Inc.
The firms aim to acquire office buildings and other properties through a joint asset management company and list an investment corporation sometime in the first half of fiscal 2006.
Each partner is to take a stake in a Kowa Real Estate asset management subsidiary by purchasing a private placement of shares on Friday. The partners plan to contribute real estate that they own in addition to acquiring properties from others.
When the investment corporation goes public, it plans to own 10 or more buildings with total assets of 100 billion yen. This is to be expanded to 300 billion yen eventually.
After the investment corporation boosts its capital, Kowa Real Estate expects to hold a 40% stake, while Dai-ichi Mutual will own 20% interest, Sekisui House a 15% stake and the Morgan Stanley unit will have a 5% share. Interests of 5% are to be held by four others.

(The Nihon Keizai Shimbun Friday morning edition)

Copyright 2005 Nihon Keizai Shimbun, Inc. All rights reserved.

Tokyo Office Market Update: Rents for Smaller Buildings see Bottom; Overall Rise Predicted in 2007

2005/07/29, , 日本経済新聞 朝刊, 31ページ, 有, 1216文字


2005/07/29, , 日経産業新聞, 19ページ, , 528文字


Wednesday, July 27, 2005

J-REITs Show Signs Of Overheating

July 27, 2005
REIT Funds Show Signs Of Overheating

TOKYO (Nikkei)--Prices have spiked for such popular investment vehicles as mutual funds with stakes in real estate investment trusts, and the market is exhibiting signs of overheating.
The balance of assets managed in REIT funds, which debuted in 2003, surpassed 1 trillion yen in July. Investors have been drawn to the high returns of such funds. Some 300 billion yen of the total is invested in domestic REITs, representing more than 10% of their market capitalizations.
The Tokyo Stock Exchange's REIT index was at the 1,400 level at the beginning of the year, but has marked record highs since March. At one point this month, the index rose to nearly 1,700.
"The inflow of retail-segment funds via investment trusts is buoying the REIT market," according to Takashi Ishizawa, chief real estate analyst at Mizuho Securities Co.
But with returns falling to the lower half of the 3% range, Ishizawa says that the upside is limited.

(The Nihon Keizai Shimbun Wednesday morning edition

Real Estate Developers Rushing To Meet Growing Investor Demand

Wednesday, July 27, 2005
Real Estate Developers Rushing To Meet Growing Investor Demand

TOKYO (Nikkei)--Midsize real estate developers are accelerating their efforts to grab larger shares of the growing market for wealthy individual investors and real estate investment trusts (REITs).
Dix Kuroki Co. seeks to boost sales of condominiums in fiscal 2005 by 40% from the preceding quarter. Those condos will be marketed to investors.
The Fukuoka-based developer aims to sell 1,400 units in 30 buildings during the current fiscal year. About 40% will be sold to individual investors and 60% to investment funds.
Although most of the condos are being built in Fukuoka and Tokyo, the company will open its first sites in Osaka this fiscal year and in Nagoya the following year.
Zephyr Co., which also develops condos, is expanding to include such commercial facilities as a shopping mall. It has begun a 20 billion yen project to build a large shopping mall in Kashiwa, Chiba Prefecture. The shopping center will be sold to funds after its scheduled completion next spring.
Driving those efforts is the fact that large supermarket chains are launching stores using funds obtained from REITs.
Building a commercial facility involves larger investments and returns than developing a condo and is therefore more attractive to Zephyr.
Since last year, a flurry of REITs and privately offered investment funds have been established. There also has also been a noticeable trend in which wealthy individuals are buying entire condo buildings.

(The Nikkei Financial Daily Wednesday edition)

Friday, July 22, 2005

Goldman Sachs, Soros May Sell Shares in Japan Hotels

Goldman Sachs, Soros May Sell Shares in Japan Hotels

July 22 (Bloomberg) -- Goldman Sachs Group Inc., the third- largest U.S. investment bank, and financier George Soros may sell shares in hotel properties they own in Japan, taking advantage of rising tourist arrivals and higher land prices.
Overseas investors are increasing investments in Japan's hotels, resorts and golf courses, betting they can improve management and lift returns as the world's second-largest economy recovers. Hotel transactions more than doubled in 2004 from a year earlier, bringing in non-Japanese owners with more funds to refurbish the properties, according to Jones Lang Lasalle.
``Not many hotels under the ownership of Japanese companies have been renovated because of their weak finances,'' said Yasokazu Terada, a Tokyo-based senior vice-president at Jones Lang Lasalle Hotels. ``Management hasn't always been efficient.''
Foreign companies started buying hotels and other leisure- related assets in Japan as the economy emerged from four recessions since 1991. New York-based Goldman invested $6.4 billion in Japan real estate since 1997, including 78 golf courses.
The number of tourists visiting Japan rose almost 18 percent in 2004 from a year earlier to 6.14 million and commercial land prices in the nation's six biggest cities gained for the first time in more than 14 years in the six months ended March 31.
The market value of Japan's real estate investment trusts has risen more than nine-fold to 2.4 trillion yen ($21.3 billion) since the first REIT was publicly traded in 2001. The Tokyo Stock Exchange REIT Index set a record July 11 and has gained 62 percent since it was set up in 2003, exceeding a 51 percent advance in the benchmark Topix Index.
None of the existing REITS offer just hotel assets to investors, focusing mainly on office space and apartments.


``REITs are a potential positive exit opportunity for us,'' Michael Nigitsch, Tokyo-based president of Ishin Hotels Group Co., said in an interview on July 20. Ishin is a venture between a real estate company set up by billionaire George Soros and Westmont Hospitality Group, a closely held U.S. hotel operator.
Goldman obtained a license for its property trust management company, Japan Hotel and Resort Co., from the Financial Service Agency in June, a precursor to selling shares in a property trust.
``There's absolutely no doubt you'll see very soon the first player come to the market,'' Nigitsch said. ``If it's successful, it will help further transactions in the hotel market.''
Goldman may hire Daiwa Securities SMBC Co. to raise about 40 billion yen later this year by selling shares in a property trust that will hold four hotels in Japan, bankers familiar with the plan said. Goldman's spokesman in Tokyo, Yoshihide Nakagawa, declined to comment.

Daiei Inc.

Daiei Inc., a Japanese retailer undergoing a government-led bailout, sold four hotels to Goldman for 45.4 billion yen in 2003, including the 509-room Shin-Urayasu Oriental Hotel in Chiba Prefecture, which abuts Tokyo. Goldman owns nine hotels in Japan.
Ishin acquired 14 hotels in Japan since it started operations in 2001. Starwood Capital Group LLC, a U.S. real estate fund, and Morgan Stanley jointly invested in Tokyo's Westin Hotel and a hotel operating company purchased from local brewer Sapporo Holdings Ltd. in 2004.
The number of hotel transactions announced in 2004 rose to 72, more than double the previous year, according to research by Jones Lang Lasalle. The number of rooms sold was 14,508 in 2004, 64 percent more than a year earlier.
Japan's economy grew at an annual 4.9 percent in the first quarter, the fastest pace in a year, and business confidence rose for the first time in three quarters, adding to optimism the nation's economy will sustain a recovery.
Creative Renovation Group Japan Inc., a hotel consulting company based in Tokyo and 4 other companies jointly set up an investment management company in 2004 to manage a trust which invests in business hotels. The trust may be listed on the Tokyo Stock Exchange later this year, according to Creative Renovation's Web site.

To contact the reporter on this story:
Mariko Yasu in Tokyo at

Last Updated: July 21, 2005 21:43 EDT

Tuesday, July 19, 2005

REIT Procurements In Japan Double To $3.1bn In 1st Half of 2005

Tuesday, July 19, 2005

REIT Procurements In Japan Double To $3.1bn In 1st Half

TOKYO (Nikkei)--Procurements by publicly traded domestic real estate investment trusts nearly doubled to 3.1 billion dollars for the first half of 2005, according to figures compiled by U.S. market survey firm Thomson Financial Services.
Both the diversification in products and an increase in new listings helped to boost the balance from 1.63 billion dollars in the 2004 first half. Fund procurement initiatives undertaken by domestic REITs doubled on the year to 10. For example, Japan Real Estate Investment Corp. (8952)in April secured 653 million dollars through a public offering of new shares.
Among the newly listed REITs are Fukuoka REIT Corp. (8968) which focuses on properties in the Kyushu region, and Japan Logistics Fund Inc. (8967), specialist in distribution and warehousing facilities.

(The Nikkei Financial Daily Tuesday edition)

Monday, July 18, 2005

Boomers nearing retirement offer huge market potential

July 18, 2005
Boomers nearing retirement offer huge market potential

Businesses from leisure firms to financial institutions design products for older customers

Competition is heating up to get a piece of a potentially lucrative emerging market, created by Japanese baby boomers who are now approaching retirement age.
The total amount of retirement benefits the boomers are entitled to during the 2007-09 period may reach 50 trillion yen ($450 billion). Targeting this newly rich age bracket, financial institutions have started setting up new funds and offering new consulting services.
The hobby market for male boomers, including travel, education and entertainment, could jump 70% from the current level in and after 2007, when this cohort begins reaching retirement age, according to a Nikkei Marketing Journal estimate.
The boomers, defined as those born between 1947 and 1949, have been the most influential group of consumers for the past half-century. Their population is 6.76 million, or 20% more than the preceding age group and 26% more than the following. The boomers as a whole have become quite well-off, and their demand for consumption is strong, more robust than that of the age group 10 years senior.
According to an estimate by Dai-ichi Life Research Institute, boomers hold total financial assets worth 130 trillion yen, or nearly 10% of the nation's overall assets. "The group has a stronger propensity to consume than those in their 60s," said Takuma Hashimoto, an economist at the research entity.
H.I.S. Co., whose growth has been fueled by budget travel packages appealing primarily to the young, last month opened a specialized outlet called Ginza Vivalet in central Tokyo. The shop offers only tours that use business- or first-class seating on airplanes, and the staff arranges ocean cruises, transcontinental railway trips, stays at upscale hotels and other high-end packages targeting affluent older customers.
Just a five-minute walk from Ginza Vivalet is Royal Road Ginza, a high-end travel shop run by JTB Corp., Japan's leading travel agent. About 90% of the customers are in their 50s, and sales are projected to climb 15% year on year to 4 billion yen in the current fiscal year through March. The outlook is even more bullish for fiscal 2007, when sales are forecast to jump 20% as boomers begin to retire en masse.
"The first thing I will do with my retirement allowance is take my wife on an overseas trip to thank her for everything she has done for me," said Tatsuo Miyazaki, 57, a company employee in Tokyo whose only overseas trips have been for business.
When asked in the Nikkei survey to name the post-retirement activities they most look forward to, more than half of male boomers list domestic travel and about 40% cite overseas trips. Their fondness for intellectually stimulating, high-value-added trips makes this generation of men an especially lucrative target for the travel industry.

Staying fit

Many male boomers, especially those who already enjoy sports, are eager spend more time and money on staying active after they retire. The Nikkei survey shows that they plan to budget an average 252,000 yen per year on outdoor sports, up 80% from the current level, and 180,000 yen on exercise activities. The size of the hobby-related market created by 3.35 million male boomers is estimated to reach 5 trillion yen after 2007, up 70% from the current level.
Sports-equipment maker Descente Ltd. last fall opened the 42-hectare (100-acre) Whole Earth Forest in Nozawaonsen-mura in mountainous Nagano Prefecture, where the land is left virtually untouched to preserve the natural state of the woods. Forest camps are intended to foster more lovers of the outdoors, particularly among boomers.
Fitness club operators are also hopeful that retiring boomers will bolster their businesses. "Retired baby boomers will help boost the number of our members," said an official of Central Sports Co. The major fitness club chain plans to set up spacious facilities called Central Wellness Clubs that will focus on exercise programs for older Japanese and also offer education classes, opening them at a pace of three to five a year.
Megalos Plusia Tachikawa, a fitness club opened in April by Megalos Co., an affiliate of Nomura Real Estate Development Co., also hopes to attract more members in their 50s by offering a system under which physicians and instructors jointly draw up individual exercise plans for each member who signs up for the premium service.

Cultural curiosity

Berlitz Japan Inc. has seen one of its language courses gain popularity among boomers. This spring, Berlitz added six more classes in the Lifelong Learning course, which targets people 50 or older, bringing the total to 25.
The classes are taught at a slower pace and take more time reviewing lessons, which has appealed to older people who were interested in learning English but hesitant to attend an ordinary language school for fear that they might not be able to follow the pace.
An official at a pottery school operated by Shogakukan Production Co. said more than 40% of the students at a class in Tokyo's Ginza district are men around 60. "Only a fraction stop attending after signing up, and most stay here for a long time," an employee said.

Intellectual interests

Men of this generation have a broad range of intellectual interests. Those in their 50s or older make up 60% of another class offered by Shogakukan Production that concentrates on reading documents from the Edo era.
The boomers were famously dubbed the dankai no sedai (cluster generation) by Taichi Sakaiya, former minister of state for economic planning, in a 1976 book of the same title. He wrote, "The expansion represents an extremely unusual demographic trend, which usually show gradual changes. Therefore, the group has had a significant impact on the economy and society."
Sakaiya recently commented, "The group is important as consumers, and after retirement they can spend at their own will, freed from their obligation as corporate employees."

Japan's emerging property boom

Japan's emerging property boom
by Darrel Whitten, Whit Consulting, the JapanInvestor, July 18, 2005

While global strategists, economists and investors fret about a housing “bubble” in the US, Japan is just emerging from a 14-year bear market in property.
According to the national land survey, prices in central Tokyo in 2004 eased up 0.9%, for the first rise in 17 years. Signs that the luxury and commercial property markets are turning positive is the strongest evidence yet that the balance sheet deflation in Japan is essentially over.
The establishment of the J-REIT market in 2001 was the beginning of the turnaround, and was soon followed by a growing wave of foreign real estate investment funds seeking distressed property and uncommon yields.
Now that balance sheets have been cleaned up, Japan’s major banks as well as the regional banks that once virtually ignored the housing loan segment are now looking to housing loans as a source of new loan growth. Consequently given historically low interest rates and real estate investment yields of 4%‾5%, such properties are attractive as financial products and are drawing increasing numbers of high net worth individual investors. But TJI strongly believes the emerging property boom in Japan--while a growing tide that is likely to last for the next decade or longer--will not lift all boats because of increasing polarization.
TJI believes that the value of property that does not add value will continue to deteriorate going forward. Moreover, given the general reflation that is beginning to gain momentum in Japan, it is not likely that this recovery will be a temporary phenomenon. Rather it is likely to be a trend that remains in place for the next decade or more. Thus the key words for Japanese property going forward are the three “L’s” (location, location, location), plus community power and social level.
Investors can capitalize on this secular recovery through J-REITs, private real estate funds, new real estate entrepreneurs, and finally, conventional real estate companies. Currently, TJI prefers J-REITs and smaller cap real estate entrepreneurs.

Please visit and log in to download the full report.

Friday, July 15, 2005

Threat Of Condo Glut Prompts Firms To Build Single-Family Homes; Condo Groups Boost Purchases Of Housing Loan Corp Bonds

July 15, 2005
Threat Of Condo Glut Prompts Firms To Build Single-Family Homes

TOKYO (Nikkei)--Midsize property developers, which mainly build apartments and condominiums, have begun constructing single-family houses in suburbs amid concern that an oversupply of condos might develop in urban areas.
Leopalace21 Corp. (8848) and Hoosiers Corp. (8907) entered the market for single-family homes this year, with Takara Leben Co. (8897) re-entering it after a 10-year absence.
Leopalace21 plans to sell 300 single-family houses in Saitama and Chiba prefectures neighboring Tokyo and elsewhere. "We see a good business opportunity because the children of baby boomers, now in their 30s, prefer to own their own houses," said a Leopalace21 official. The company intends to market single-family homes nationwide in the future.
Hoosiers said it will put 38 single-family units on sale in Kashiwa, Chiba Prefecture.
Takara Leben sold 37 units in Kawagoe, Saitama and plans to market 40-50 more by March, projecting sales of just under 2 billion yen.
More than 80,000 condo units came on the market annually in the Tokyo metropolitan area over the six years through fiscal 2004, so homebuilders are concerned about a possible glut.
They are also shifting their focus to single-family houses partly because higher land prices in urban areas, the preferred locations for condo construction, are eroding their earnings.
(The Nihon Keizai Shimbun Friday evening edition)

July 15, 2005
Condo Groups Boost Purchases Of Housing Loan Corp Bonds

TOKYO (Nikkei)--Condominium associations increased their purchases of bonds issued by the government-affiliated Housing Loan Corp. by 160% in fiscal 2004 to a little more than 44 billion yen.
The associations raised their investment in the bonds apparently in response to the cap introduced this April to limit government protection of bank deposits to 10 million yen per account, financial sources said.
The minimum purchase unit of Housing Loan Corp. bonds is 500,000 yen. They mature in 10 years and carry interest of 0.629% this fiscal year. Their principal is guaranteed by the corporation.
The number of condo associations that purchased the bonds jumped 36% to 1,969, with purchases per group averaging 44.7 units, or about 22.35 million yen.
The Housing Loan Corp. intends to float 45 billion yen worth of bonds in fiscal 2005, about the same as last year.
(The Nihon Keizai Shimbun Friday morning edition)

Japanese banks fuel renewed property boom

Japanese banks fuel property boom
July 15, 2005 - The Standard

Tokyo's real estate market hums as Japanese banks, eager to expand their loan portfolios, pour ever more cash into property. This is no flashback to the country's doomed 1980s asset bubble: It's happening now.
New lending by Japanese banks to real estate developers rose 15 percent to 8.18 trillion yen (HK$570.96 billion) in the business year to March 31, Bank of Japan data show, even as the volume of new loans for capital investment of all kinds fell by nearly 3 percent.
``It's like a mini-bubble, it's true,'' an executive at a major Japanese real estate firm said, describing the exuberance with which Japanese banks have returned to property finance, lured by bottoming land prices and new demand from commercial and residential builders.
But there are crucial differences between banks' real estate lending today and the speculative frenzy of nearly two decades ago, which left Japan's economy paralyzed and banks saddled with billions of dollars in soured loans.
``Banks have changed the way they lend, the way they manage risk,'' said Jason Rogers, chief credit analyst at Barclays Capital in Tokyo.
A key innovation is the expansion of non-recourse lending, which limits collateral to a single building or project, protecting the borrower's other assets and limiting the size of loans.
Repayment plans rely on rents and other cash flow, rather than expected land-price rises. Banks are also more careful to share risks with developers, typically funding 60-65 percent of a project with loans and leaving builders to pay for the rest through equity.
The rise in property finance reflects banks' return to health, analysts say. Bad loans at Japan's leading banks fell to less than 4 percent of total lending last financial year, in line with their global peers, from more than 8 percent in 2002. Epitomizing the turnaround is Mitsui Trust Holdings, Japan's seventh-biggest bank and one of the biggest property lenders with close to one trillion yen in outstanding real estate loans.
The bank, one of the hardest hit by the bad-debt crisis, posted an 85 percent rise in annual net profit for 2004/05 and forecast further gains. Growth in real estate lending has fed a string of new office towers reshaping Tokyo's skyline.
In a sign of renewed demand for property, commercial land values in Tokyo's five most developed wards rose in 2004 for the first time in 14 years. At the same time, mortgage rates have fallen, dropping below 2 percent in some cases for a 10-year loan, enhancing the appeal to residential buyers.
Still, while new non-recourse real estate loans topped four trillion yen last year, that amounted to just 1.5 percent of Japan's domestic lending, said Yoshinobu Yamada, a bank analyst at Merrill Lynch.
``Experiences during the bubble era have given many people the impression that real estate lending equals high risk,'' he said. But banks' more diverse loan portfolios and other advances in risk management mean there is little chance of a return to bubble-style recklessness, he said.
Instead, he and others familiar with the industry say the biggest risk for banks is that a rising supply of loans could squeeze margins and erode profitability.
Foreign banks that led the return to property finance in Japan in the late 1990s enjoyed sizeable lending premiums, but these have fallen sharply as Japanese banks have joined the fray.
Premiums on real estate loans compared with benchmark interbank lending rates have fallen by a third to half since 2000, a property executive said, and in some cases banks are lending at rates below what the actual lending risk demands. ``With the entry of the Japanese banks, the spreads really started to get squeezed,'' the executive said. ``They're being squeezed every day.''REUTERS

Copyright 2005, The Standard, Sing Tao Newspaper Group and Global China Group. All rights reserved. No content may be redistributed or republished, either electronically or in print, without express written consent of The Standard.

Thursday, July 14, 2005

Real Estate Funds Vie For Bldgs Under Development

July 14, 2005
Real Estate Funds Vie For Bldgs Under Development

TOKYO (Nikkei)--Privately placed real estate funds are stepping up their investment in properties under development as competition for promising real estate, especially in central Tokyo, intensifies.
In the trendy Harajuku district of Tokyo, construction of a 23-story commercial/office building began recently. The building, whose value when completed is estimated at 60 billion yen, is a premium property that would be a prime target for a large real estate investment trust (REIT).
But the building has been bought by DaVinci Advisors KK (4314), a major operator of privately placed real estate funds whose contributors are mostly institutions and companies. It may be the biggest-ever investment in an uncompleted property by a real estate fund.
DaVinci sank 50 billion yen in different properties under development in the first half of the current fiscal year through December, nearly double the amount last year.
But it is not the only operator of real estate funds that is increasing investment in uncompleted properties. Pacific Management Corp. also plans to put 110 billion yen in such real estate in the business term ending Nov. 30, 17 times the level in the previous year.
Behind the move lies an influx of money from pension plans and other domestic institutional investors into real estate funds, whose main contributors were overseas investors until recently.
DaVinci's new fund, whose investment list includes the Harajuku building, has seen half of its 100 billion yen in outside capital coming from domestic institutions, and 24 billion yen of that has been contributed by six pension plans.
Their aggressive investment has boosted the fund's total assets to 400 billion yen, compared with the 300 billion yen or so initially targeted, said sources close to the matter.
Japanese corporate pension plans manage a staggering 40 trillion yen in assets. Their active investment in real estate funds has led to a fierce race for properties among the funds, including REITs, thereby boosting real estate prices.
As a result, returns on existing buildings are falling, with even a select building in a prime Tokyo location yielding 4-5%, compared with about 6% two years ago.
A new building, which poses a higher investment risk, such as whether it can attract enough tenants, usually generates a better return. "Investment return on a new building is 1.0 to 1.5 percentage points higher than on an existing property," said Ryosuke Honma, president of Kennedy-Wilson Japan (4321), one of DaVinci's rivals.
DaVinci "wants to resell the Harajuku building for around 75 billion yen," said President Osamu Kaneko.
Real estate investment firms strive to limit their investment risk in uncompleted buildings. Kennedy-Wilson, which bought a shopping mall building in Shibuya, Tokyo, in April for 10 billion yen, has asked the builder many times to change the design of the structure so customers can be smoothly guided to visit each floor.
Still, investment in property under development is much riskier than that in a completed project for which performance can be more accurately gauged based on its past track record.
Most of the uncompleted buildings in which real estate fund operators are now investing will open in 2006 through 2007. At that time, however, there may be an office supply glut as baby boomers began to retire and a large number of buildings are completed simultaneously.
"The funds need to give investors a reasonable explanation about the extent to which uncompleted properties could lose their value in the worst case," said Junji Inoue, a senior consultant at STB Research Institute Co.

-- Translated from an article written by Tadayoshi Ichimaru, Nikkei staff writer.
(The Nikkei Financial Daily Thursday edition)

Wednesday, July 13, 2005

Re-plus, Able Join Hands In REIT Business

July 13, 2005
Re-plus, Able Join Hands In REIT Business

TOKYO (Nikkei)--Real estate fund operator Re-plus Inc. (8936) has teamed up with Able Inc. (8872), the country's largest broker of rental condominiums, in the real estate investment trust business.
Re-plus, which plans to create a REIT that will invest exclusively in rental housing, expects Able to introduce apartments and condos for the trust and help boost the occupancy rates of properties included in it, company sources said.
The two companies also have equity ties, with Able buying 30 million yen in shares of a 150 million yen issuance by the REIT management subsidiary of Re-plus.
Re-plus currently operates a private real estate fund that invests equally in three types of condos: those for families in the center of big cities, units for families in the suburbs of big cities and studios in big cities.
The firm plans to include these condos in the REIT, which it aims to list early next year when the trust is expected to have assets of around 70 billion yen.

(The Nikkei Financial Daily Wednesday edition)

Tokyo's Suburbs Set for Population Slide - Govt. Report

2005/07/13, , 日本経済新聞 朝刊, 5ページ, 有, 1259文字

〓〓  人口の上段は2000―10年、下段は2010―20年。65歳以上人口は2000―20年  〓〓
都心からの時間  人口  65歳以上人口  主な都市
東京23区  2.0%増1.0%減  1.5倍  
45分未満  6.4%増0.9%増  2倍  東京都武蔵野市、川崎市
45−60分  5.6%増2.1%増  2.07倍  東京都立川市、さいたま市
60−75分  3.4%増0.04%減  2.08倍  東京都多摩市、神奈川県厚木市
75分以上  0.6%増2.0%減  2.05倍  東京都八王子市、千葉県成田市
通勤圏外  0.2%減3.4%減  1.56倍  東京都奥多摩町、茨城県つくば市

Tuesday, July 12, 2005

Trinity Investments' Japanese Asset Management Arm Takes On Local Partners

Tuesday, July 12, 2005

Zecs, Kyokuto Securities To Get Into Real Estate Asset Mgt

TOKYO (Nikkei)--Real estate firm Zecs Co. (8913) and Kyokuto Securities Co. (8706) plan to enter the real estate asset management business.
The firms intend to take a stake in an asset management subsidiary of U.S. real estate investment fund Trinity Investment Trust LLC. The partners will develop a business for researching properties for investment and managing real estate investment trusts (REITs) and other such investments, hoping to list it in the future.
Zecs and Kyokuto will invest 400 million yen in Tozai Asset Management Co. through the purchase of new shares. Following the cash injection, Zecs will hold a 30% stake, Kyokuto will have a 10% interest, and Trinity's share will be diluted to 51% from more than 80%.
The companies will dispatch one executive each to Tozai Asset. Besides REITs, the asset management firm will also be involved in the formation of privately held real estate funds. Tozai Asset's staff will be increased from the current 15 to 25 this year.
Zecs is a developer of health care facilities for the elderly and housing with nursing care services.

(The Nikkei Financial Daily Tuesday edition)

Trinity had previously formed an asset management subsidiary called Tozai Asset Management, and owns 44% of aTokyo-listeed REIT, United Urban Investment Corporation.

Prospect's 35 Billion Yen Real Estate Investment Trust to Debut

Prospect's 35 Billion Yen Real Estate Investment Trust to Debut

July 12, 2005 (Bloomberg)
Prospect Residential Investment Corp.'s 35 billion yen ($313 million) real estate investment trust begins trading in Tokyo today, seeking to tap a revival of investor confidence in the nation's property market.
Shares in Prospect Residential Investment will be offered on the Tokyo Stock Exchange at 480,000 yen each, Curtis Freeze, president of Prospect Asset Management Co., said in an interview yesterday. Prospect Residential is a wholly owned subsidiary of KK Prospect, which invests in 30 Japanese condominiums.
Freeze began buying into Tokyo properties three years ago, at a time when Japan was mired in its third recession in a decade following the collapse of the country's ``bubble economy'' in 1989. An index tracking the nation's 16 property trusts, or REITs, reached a record high yesterday.
``What people have seen is that some REITs have doubled since they started,'' said Freeze, 43. ``What people don't realize is that they can actually double again.''
Nikko Citigroup Ltd. and Morgan Stanley Japan Ltd. are managing the offering.
The Tokyo Stock Exchange REIT Index has gained 68 percent since it was started in April 2003. The rise exceeds the 50 percent advance in the Topix index during the same period.
Japan opened up the REITs market in September 2001, with Nippon Building Fund Inc. and Japan Real Estate Investment Corp. Japan is playing catch-up in developing the market for REITs, pioneered by the U.S. in the 1960s.
The market value of Japanese REITs has surged to 2.34 trillion yen from 260 billion yen when they first began.

REITs derive most of their profit from rental income, paying out the majority of it as dividends. While investors receive a yield that is competitive with bonds, they can also benefit as the value of the underlying properties rises. Prospect's REIT plans to offer an annualized yield of about 2 percent in the first six months, to take account of the costs of setting up and listing the fund on the exchange, Freeze said. The yield will rise to about 3.4 percent in the second half, he said. Benchmark 10-year Japanese government bonds yield about 1.2 percent.
Real estate funds and property developers have snapped up properties in Japan, betting that a recovery in the world's second- largest economy will stem a 13-year slide in land prices.
Tokyo office vacancies fell in May to their lowest level since March 2002, according to Miki Shoji Co., a privately held office brokerage company. Commercial land prices in the six biggest cities rose during the six months ended in March, the first increase in more than 14 years, according to the Japan Real Estate Institute's report released in May.
``No one believed me back then'' that Japan's property prices will pick up, said Freeze, a New Yorker who arrived in Japan more than 20 years ago as a Mormon missionary. ``It is only the beginning.''

To contact the reporter on this story: Tomoko Yamazaki in Tokyo at
Last Updated: July 11, 2005 17:58 EDT

Monday, July 11, 2005

Disparities growing as Japanese real estate sector recovers - Fitch

Disparities growing as Japanese real estate sector recovers - Fitch
07.11.2005, 12:41 AM AFX News Limited

TOKYO (AFX) - Rising property prices in Japan will widen the gulf between the weaker and stronger property developers and investors, as companies with the strongest balance sheets are able to borrow more money to better exploit the growing opportunities, Fitch Ratings said.
In a new report examining the Japanese property market, Fitch says property prices are improving the earnings prospects for the real estate sector.
And that in turn will prompt companies and investors to borrow more against existing assets to take advantage of the market recovery, in a bid to raise returns through greater leverage, says the report entitled 'Growing Disparities in the Recovering Japanese Real Estate Market.'
'Prices of land and properties at prime locations are already on the rise, which require more capital to support the growing volumes and rising prices of property transactions and new development projects,' wrote Satoru Aoyama, Fitch's head of corporate research in Japan.
'Therefore, a real estate company's...ability to raise capital, including both equity and debt, is increasingly important and likely to be a key factor in determining its growth prospects and credit quality going forward,' Aoyama wrote.
Fitch also noted the pace of recovery has varied by area and type of property.
'This uneven pace of recovery is likely to cause greater polarization in the Japanese real estate sector,' it said.
Fitch said rental yields were already declining because property prices are rising faster than rents. But it said investors were still investing because 'real estate investments continue generating higher returns than corporate bonds and government debt.'

Thursday, July 07, 2005

New Bldgs In Central Tokyo, Osaka Fully Rented Before Completion

July 07, 2005
New Bldgs In Central Tokyo, Osaka Fully Rented Before Completion

TOKYO (Nikkei)--Many large buildings under construction in central parts of Tokyo and Osaka have fully rented out their office and other space before being completed.
A major factor behind the robust demand is the ability of manufacturing firms to expand their office space by using funds that have become available since they ended their restructuring efforts.
Another factor is demand from Internet-related businesses seeking to set up offices in urban centers.
Nihombashi Mitsui Tower, a building being constructed by Mitsui Fudosan Co. in Tokyo's Chuo Ward, has already found tenants for all its space prior to its scheduled opening in late July. Toray Industries Inc. (3402)will relocate its head office to the building.
Property management firm Maruito Co. expects the Maruito OBP Building, now under construction in Osaka Business Park, to start operations fully occupied.
A major building owned by Yasuda Real Estate Co. will open in Tokyo's Nihombashi Hamacho district in September, with all its space occupied. Kureha Chemical Industry Co. (4023) will move its head office to the building, accompanied by some of its affiliated firms.
The entire Ginza Mitsui Building, which Mitsui Fudosan will open in Tokyo's Ginza area in August, will be occupied by Ricoh Co. (7752) a major office equipment manufacturer.
New buildings slated to be built in central Tokyo over the next five years are projected to add a total of 740,000 sq. meters of space per year to the commercial rental market, only about 30% of the figure in 2003.
"In 2003, most potential tenants selected an office building only after actually looking at it after completion," said an official at Mori Building Co. Now, however, many firms start to negotiate with property developers one to two years before the buildings are finished because of the growing feeling that new office buildings are likely to be in short supply, industry analysts said.
Fuji Photo Film Co. (4901) and Fuji Xerox Co. have already decided to move into Tokyo Midtown, a commercial complex due to open in 2007 on a former Defense Agency site in the central Tokyo district of Roppongi.
Interest in new buildings in urban centers is also mounting among midsize companies, with some of them opting to rent space in large buildings in order to have all of their administrative sections located on the same floor.

(The Nihon Keizai Shimbun Thursday evening edition)

Japan REIT market firm despite rush

Japan REIT market firm despite rush
Eriko Amaha
The Standard, July 7, 2005

Japan's real estate investment trusts market, already trading at high levels, will likely remain firm despite an expected slew of listings this year as investors seek higher returns, analysts say.
Four REITs are expected to list their shares on the Tokyo Stock Exchange in July, bringing total listed issues to 21.
By the end of the financial year to next March, analysts expect 10 to 15 more funds to go public.
``You'd normally hear oversupply concerns with four listings in a month, but I don't hear anything at all,'' Yasuo Ide, an independent analyst for Ide Financial Real Estate Research.
``It shows underwriters are confident and there is ample money to absorb these listings,'' he added.
The listings come at a time when the 4-year-old J-REITs market is at an all-time high.
Japan's REIT index hit its lifetime intraday high of 1,656.86 Wednesday. It is up 11 percent since the start of the year against a 1.3 percent rise in the benchmark Nikkei average
REITs are publicly traded funds that manage a portfolio of real estate to earn profits for shareholders. They pay their rental income as dividends. Analysts said some Japanese REITs stocks looked overvalued but downside risks are limited thanks to a growing number of yield-hungry investors.
``There are no other instruments that can provide such stable returns,'' said Takashi Ishizawa, an analyst at Mizuho Securities.
Analysts said the average dividend yield for J-REIT stocks is 3-4 percent, against a 1.2 percent yield on the 10-year Japanese government bond and a 1.1 percent average dividend on Nikkei 225 stocks.
Toshihiro Ishijima, an analyst at UFJ Tsubasa Securities, said the market capitalisation of J-REITs is 2.2 trillion yen (HK$152.68 million), compared with 30 trillion yen for the US REIT market, which boasts 170 to 180 listings.
``The Japanese market is still in its infancy and is not at a stage to worry about too much supply,'' he said. The Japanese market is expected to reach 3 trillion yen within a year or two. One analyst said many newcomers are small funds at the time of listing with assets of around 50 billion yen.
He estimated initial and secondary public offerings by listed funds would amount to 300 billion yen in 2005, a limited supply of equity despite strong demand for it.
Prospect Residential Investment Corp, to be listed next Tuesday with an IPO price of 480,000 yen and a deal size of 35.95 billion yen, focuses on rental condominiums in the Tokyo area. It aims for assets of 100 billion yen in three years from an initial 47 billion yen and a 3.44 percent return.
Another IPO stock listing on July 21, Kenedix Realty Investment Corp, has a portfolio of office buildings and rental housing in Tokyo. Its IPO price is expected to be 550,000-580,000 yen and it aims to offer a yield of 4.1-4.28 percent.
Ishizawa of Mizuho Securities said one of the major IPOs this year would be Osaka-based Hankyu Reality Co, which has invested in local commercial buildings including ``Hep Five,'' a landmark shopping complex with a red Ferris Wheel on top.
With the price of some real estate in the Tokyo area rising, analysts said more funds would likely tap regional markets where property prices are lower, or other kinds of property such as nursing homes which are likely to see strong demand due to Japan's graying population.
Japan Logistics Fund, which made a strong debut on the TSE in May, targets warehouses. It first traded at 650,000 yen, 18.2 percent above its IPO price of 550,000 yen. The stock has risen nearly 8 percent since the listing.
Analysts say the biggest risk for J-REIT stocks may be a rise in Japanese interest rates, which would push up the yield on bonds and also jack up REIT funds' borrowing costs to invest in new property.
Nobuaki Kawai, a senior consultant at STB Research Institute, said many REITs have already refinanced loans at a fixed rate. If rents cannot be raised as fast as interest rates climb, bonds may be temporarily more attractive, discouraging buying of REITs.

Copyright 2005, The Standard, Sing Tao Newspaper Group and Global China Group.

Wednesday, July 06, 2005

Goldman Sachs Plans Japan's First Hotel REIT

2005/07/06 Nikkei BP





6月21日、キャナルシティ博多など福岡地域の商業施設を中心に運用する「福岡リート投資法人投資証券」が上場した。商品の多様性は早くも広がりつつある。ホテルREITに続いて、地方の温泉旅館で構成する「湯煙リート」などという変わり種がお目見えするのも、そう遠い日のことではないかもしれない。(馬場 完治)

Japanese CEOs Lead Foreign Real Estate Co's in Tokyo

日本人トップ開発をけん引、AMBブラックパイン 松波秀明
2005/07/06, , 日本経済新聞 夕刊, 4ページ,  , 1195文字

(経済解説部 伊東浩一)

Tuesday, July 05, 2005

Trading Firms, Real Estate Developers Eye Industrial Rental Ops

Tuesday, July 5, 2005

Trading Firms, Real Estate Developers Eye Commercial Rental Ops

TOKYO (Nikkei)--Major trading houses and real estate companies are acquiring or building warehouses and distribution centers for rental purposes in light of increased direct-marketing activity and small-lot deliveries.

Faced with growing online sales and demand for quick deliveries, retailers and manufacturers are seeking responsive distribution networks that suit their needs. Rental facilities are particularly in demand.

In the current fiscal year, Mitsubishi Corp. (8058) plans to purchase five properties, including a distribution center. The acquisitions will be transferred to a real estate investment trust slated for listing in fiscal 2005, enabling the trading company to secure stable rental income.

Shoei Co. (3003) also plans to buy a distribution center in fiscal 2005, in addition to several more properties. In addition to an acquisition in Osaka, the firm is scheduled to purchase properties in the Tohoku and Kanto regions as part of efforts to secure a new source of rental income.

U.S. real estate developer ProLogis has already bought 25 distribution facilities in Japan, valued at about 200 billion yen as of mid-June. It plans to develop about 10 commercial properties in Japan, including distribution centers, boosting total asset value by more than 70 billion yen.

Japan Logistics Fund Inc. (8967) a REIT specializing in distribution facilities, plans to roughly quadruple asset value in three years to 100 billion yen.

(The Nihon Keizai Shimbun Tuesday morning edition)

Monday, July 04, 2005

Retiring boomers still wield economic clout

Retiring boomers still wield economic clout

The 6.9 million baby boomers born in 1947-49 constitute the single largest bulge in Japan's demographic pyramid, making up just over 5% of the total population.
The age bracket is 42% greater than the group of people born in the previous three years of 1944-46 and 24% more than the segment born in the subsequent three years from 1950...

Full Story - Nikkei Weekly

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Sunday, July 03, 2005

Daiei Plans to Sell 106 Properties for 20 bln. yen

Daiei Inc. (8263) has decided to sell an additional 106 pieces of real estate for an estimated 20 billion yen as part of its ongoing restructuring program.The struggling retailer is currently rehabilitating its business under the auspices of the government-affiliated Industrial Revitalization Corp. of Japan.

Full Story- Nikkei

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