The Washington Independent
The Washington Independent
J-Reits bulk up for Olympics

J-Reits bulk up for Olympics

December 27, 2020 | Ismaeel Delgado
finance

Table of Contents

  • Reit financing
  • The deal could also risk both firms being downgraded to junk status, as well as being costly.

In the expectation that property prices will shoot up ahead of the 2020 Tokyo Olympics, Japanese real estate investment trusts are rushing to collect equity funding to buy properties.

In just the first two months of this year, Japan's REITs earned a combined ¥172bn (US$1.55bn) by marketable follow-ups, compared to ¥147bn in the same time last year, according to Refinitiv results.

The majority of REITs worked in a fiscal year ending in February, making it a common period of the year to collect funds for the acquisition of properties.

But this year, many expect real estate sector growth to be unparalleled as investors brace for next summer's Olympics in Tokyo. "Many businesses have recently seen this as the last chance to purchase assets at or below the yield level of their current portfolio. "And to do so, they need to raise capital from either debt finance or equity finance," said the ECM banker.

The banker noted that "Shareholders would not want to see transactions occurring later when companies may have to buy assets that yield below their current levels or when share prices are trading below their asset value."

According to data from the Land Institute of Japan, a private research institute, property prices already skyrocketed last year to an average of ¥860,000 per square meter for new condos in the greater Tokyo region.

Before the collapse of Japan's asset bubble, the price peaked at ¥930,000 in 1990. "With property prices so high, many J-REITs have struggled this year to find quality assets to buy," another ECM banker said. "The ones that are still active in buying are fairly sizeable REITs that enjoy the support of strong sponsors in searching for assets."

However, the busy financing schedule does not generate much competition because investors in real estate funds are very particular buyers, the individuals said.

For instance, Japan Hotel REIT and Mitsui Fudosan Logistics Park, which last month both sealed follow-on offers, operate in different types of properties. The former focuses on Japan-wide hotels and the latter on logistics facilities.

Reit financing

Two other REITs, Nomura Real Estate Master Fund and Daiwa House REIT Investment priced their worldwide offerings last week, collecting a combined ¥66.2 billion. By selling 214,760 units at ¥150,223, the Nomura REIT earned ¥32.3bn.

After deducting an estimated dividend of ¥ 3,111, the price reflects a 2 percent discount to the February 18 close of ¥ 156,400, compared to a discount range of 2 percent-4.5 percent.

With over 70 percent of the deal allocated to long-only and real estate funds, the books were about 10 times covered, an individual would obtain government approval in theory just five weeks later.

REC recommends that holders of its dollar bonds be charged to forfeit the right to redeem them after a change of control has taken place and to amend the terms.

It intends to pay the principal amount of US$15 per US$1,000 to holders of its US$400m 3.068 percent notes due 2020; US$5 per US$1,000 of its US$700m 5.25 percent notes due 2023; US$50 per US$1,000 of its US$450m 3.875 percent notes due 2027; and US$30 per US$1,000 of its US$300m 4.625 percent notes due 2028. By IFR's estimates,

if every bondholder consented to the changes, REC would need to pay them US$41m in cash. What REC offers to pay for it is not steep. It is in line with the price of the market,' a banker named by REC said.

Bonds are selling at cash rates as low as 96-98, which means that REC has to convince investors not to pay a high premium because, in the case of a change of ownership, REC's MTN program states that bonds can be repurchased at 100% of face value plus accrued interest.

The deal could also risk both firms being downgraded to junk status, as well as being costly.

Moody's placed the Baa3 issuer ratings of PFC and REC on review for a downgrade when the acquisition was announced in December, while S&P placed the BBB- long-term issuer rating of PFC on credit watch with negative consequences.

PFC and REC BBB-both Fitch prices. Moody's said that it was waiting to see if PFC would have to make an offer to REC minority investors and how much it would end up costing.

The solicitation agents are Barclays, Citigroup, HSBC, and Standard Chartered. The deadline for the consent fee is March 1 and the voting deadline is March 8.

It is assumed that the government intends to complete the acquisition before the Indian financial year ends on 31 March. By May, the government of Prime Minister Narendra Modi faces a general election.

Ismaeel Delgado | Ismaeel Delgado has been working for the Ministry of Information and Communications as a Technical Officer for the past five years. He is an Electronics and Communication Engineer with a Masters in Information and Communication Engineering. He is involved in the review, revision, redesign, and expansion of the required structure, legislation, laws, and technically relevant national planning and program for spectrum management based on ITU radio regulations as a technical officer in the Ministry of Information and Communications' Frequency Management Department.

Related

Everything You Need to Know About Special Purpose Acquisition Company (SPAC)

The writer takes a look at Special Purpose Acquisition, and provides answers to some of the troubling questions raised by people interested in it.

Drive more traffic for your currency exchange website to increase growth

The currency exchange market is constantly evolving so in order to have an edge over your competitors, you must be up-to-date with the latest trends and development in your industry.

Drive more traffic for your currency exchange website to increase growth

Reporter apologizes for Clinton Sex Article

In 1993, reporter David Brock set the stage for the president's current legal problems by revealing Bill Clinton's alleged sexual escapades while he was governor of Arkansas, in a story published in the conservative magazine The American Spectator.

Reporter apologizes for Clinton Sex Article

CBD Vape Cartridges: Ingredients Check! How Beneficial?

Whether you want to quit smoking nicotine or wish to incorporate Cannabidiol in your routine, vaping is the most conventional way to jump right into the world of CBD.

CBD Vape Cartridges: Ingredients Check! How Beneficial?

Business Innovation Technology on Big Data

Just two simple words, Big Data, has created a furore that is spreading across the world, unleashing a dizzying array of opinions in all subjects - from healthcare to marketing needs, from politics to economics. Every day articles and blog posts are written about how to gather, store and use these big datasets.

Business Innovation Technology on Big Data

How To Use CBD Oil To Get All The Health Benefits Of Cannabis (CBD)

CBD has been one of the two molecules that offer the biggest health effects, one of the hundreds in hemp, and is the short term for cannabidiol. Some other thing that gets the people "high," is tetrahydrocannabinol.

How To Use CBD Oil To Get All The Health Benefits Of Cannabis (CBD)

How To Use TikTok For Your Business

Gone are the days of print ads as more social media platforms take the spotlight. We started off this revolution seeing the birth of social media influencers on Instagram and now, we have TikTok overtaking all other social media platforms with its immense growth in users.

How To Use TikTok For Your Business

The Saudi Arabia Monarchy

The Saudi government maintained strict limits on citizens' political rights and civil liberties in 2004, despite taking some steps forward in a slow and quiet process of political reform carefully managed from above by the royal family. The monarchy continued a series of national dialogues on reform and finalized plans for a series of limited municipal elections in certain parts of the country in early 2005, but it implemented few tangible changes directly affecting Saudi citizens' rights.

The Saudi Arabia Monarchy

The Importance of Professional Foundation Repairs in Washington

When your foundation becomes damaged, it is vital that you get it repaired as soon as possible before the problems get any worse. Foundation damage can cause all sorts of issues around your home, and this includes problems that can create safety hazards, cause aesthetic issues, and lower the value of your home.

The Importance of Professional Foundation Repairs in Washington

Things You Wanted to Know About Sofia Hublitz

The American actress Sofia Hublitz is indeed a real personality in the film.

Things You Wanted to Know About Sofia Hublitz

William Jefferson (Bill) Clinton: President of the United States of America

The completion and consolidation of the enlarged European Union, the preservation of peace and security, as well as peaceful and constructive participation in world politics are based on the community of Europe and the United States of America.

William Jefferson (Bill) Clinton: President of the United States of America

© Copyright 2021 The Washington Independent All Rights Reserved

Terms & Privacy | twi.news@washingtonindependent.com