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Japan REIT to test market waters after credit woes
Real estate news By Eriko Amaha
Wed Oct 17, 2007 1:25am EDT
Industrial & Infrastructure Fund Investment Corp (3249.T: Quote, Profile, Research) may find its upside potential capped by U.S. subprime-related concerns after it goes public on Thursday in the first Japanese REIT listing in eight months. The new real estate investment trust (REIT) is the first to own infrastructure assets and will serve as a touchstone for the 6-year-old market, which is the world's fifth-largest and is struggling to move up in rank.
Industrial & Infrastructure Fund will be offering 76,000 units in the fund at 480,000 yen apiece, with a greenshoe option to offer a further 4,000 units. It will have initial assets of 66 billion yen ($566 million), 75 percent of which comprises distribution centres, and 25 percent of which is accounted for by one infrastructure facility -- a centre controlling building heating and air-conditioning in a commercial area of Kobe, western Japan.
Most tenants at such facilities have leasing contracts of up to 20 years, compared with two years for regular offices, so the fund may see slow rent growth but steady cash flows. The last REIT listing was in February when Nomura Real Estate Residential Fund (3240.T: Quote, Profile, Research) went public, and the market looks ready for a new offering after an eight-month break.
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