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Japanese listed REITs stepping out for oversea investment

Wednesday, 11th May, 2016

On April 25, 2016, AEON REIT, which is sponsored by AEON –  one of the biggest retailers that earn the highest operating revenue in Japan – announced its second foreign investment to a shopping mall asset in Malaysia for approximately 55 million USD. Although AEON REIT’s first overseas investment was made earlier in 2013 also in Malaysia, it was considerably very small proportion, thus this investment should be considered as J-REITs’ first real shot to overseas investment .  AEON REIT is going forward in investment strategies – overseas investment – and in fact, it is the first Japanese REITs group to make an overseas investment.

AEON REITs (AUM : 2.3 billion USD as of April.25) has been focusing on the development of large-scale facilities – shopping malls –  for their investment including their activities abroad. Its target allocation for oversea asset is 15% and planning to further expand the overseas investment.

In fact, other Japanese REITs groups are also preparing to invest overseas. Even if the uncertainty lies in how much they could invest overseas compared to AEON REIT, J-REITs has large potential by looking at the market size of J-REITs: 53 J-REITs and its total market cap of 11.5 trillion JPY (Approx. 100 billion USD) by the end of Feb. 2016.

The gradual movement of the J-REITs pushing towards overseas investment is due to Japan’s negative interest rate policy, and expensive real estate price in Japan. Furthermore, regulatory changes that was made by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) made more friendly to J-REITs to invest in overseas properties.

Seeing that Japanese public pensions and financial institutions are starting to invest overseas real estate, it is likely that the J-REITs to follow this trend.

It is expected that most of overseas real estate investments will be done by the local asset managers in overseas market. This is because the managers of J-REITs are inexperienced with overseas real estate investments.

Asterisk Realty & Placement Agency sees the growth of this outbound investment trend that we are supporting both, J-REITs managers and overseas asset managers, to continue encouraging foreign investment.

 

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For further details about this newsletter and our services, please contact: Yukihiko Ito (yuki@asteriskrealty.jp) / Yokaze (yokaze@asteriskrealty.jp)

To view our past newsletters, please visit our website : https://japanplacementagent.com/en/

About Asterisk Realty & Placement Agency

Asterisk is a private fund placement agency for global alternative in Japan. Through our unique and extensive network of Japanese investors, we support global fund managers in accessing Japanese and Asian institutional investors (pensions, financial institutions, real estate developers, other business companies, etc.).

We provide access and strategies for overseas fund managers to bridge the gap between them and Japanese investors.

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Telephone: 03-3263-9909

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