Japanese real estate stocks climbed yesterday as investors expect that the central bank’s plan to purchase assets including real estate investment trusts (REIT) would help drive the industry’s recovery.
Additional consolidation in the nation’s 3 trillion yen (US$36 billion) REIT market is also expected once the Bank of Japan (BOJ) pours capital into selective REITs that are financially stable.
REITs, businesses that pool investor funds to acquire property, have lost nearly two-thirds of their value since its peak in May 2007, making it more difficult for them to raise money to acquire properties for growth.
However, the plan of BOJ to establish a 5 trillion yen fund for the acquisition of several assets including REITs and reducing benchmark interest rates, has created “extremely positive” support to Japanese REITs, said Daisuke Seki, chief executive of REIT consultancy IB Research and Consulting.
“REITs are seeing an increasingly positive business environment because fund-raising is becoming easier and now, investors are assured that the government will be pumping money into the (REIT) market,” said Mr. Seki.
The move of the Bank of Japan could also speed up acquisitions and mergers in the Japanese REIT market if the bank is seen targeting REITS with better financial health or bigger assets.
Mitsubishi Estate shares climbed 4.2 percent, while the sub-index of the property sector surged 4.2 percent.
Among REITs, Japan Real Estate Investment was up 6.4 percent, Nippon Building Fund Inc rose 5.2 percent, while Japan Prime Realty Investment Corp gained 1.2 percent.