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The 3rd JREIT index, 2nd for the TSE was launched yesterday by Nikko AM.  The previous on the TSE was by Nomura AM and first to list was on the NYSE by Northern Trust.

The JREITs at a huge discount even in comparison to the US and UK REIT market indices:

`For the past year, the Japanese REIT market is down 49%, according to AME Global REIT Indexes, which is an even larger drop than markets in which the subprime credit crisis had a direct influence on performance (34% in U.S.; 33% in the U.K.).   Within the JREIT sector, residential reits are down much further.`

We feel that the strategy of many fundamentally solid JREITs may move toward stock buy-backs and the government has laid way for more of this temporarily.  Hopefully if this happens the market will recognize the risks are lower than presumed and some of these stocks have been crazily undervalued in comparison with the well-performing underlying assets.

One might assume that the JREIT index launches were aiming to catch the bottom of the sector, although this has proven wrong.   The fact that Japanese AM firms are moving to do the same as Northern Trust, and at this juncture, may indicate a sentiment that the sector cannot go down much further.

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