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The J-REIT related debt refinancing issue, a big portion scheduled for September term-end debt issues, is now being addressed openly by the government and major players of the real estate arena in the form of a J-REIT support fund.

Original Yomiuri report here (Japanese, includes restructuring support note).

We will see in the coming weeks a detailed plan for for this fund to underwrite not only rolling over of J-REIT debt, but perhaps more importantly also the recovery of the J-REITs in general by supporting much needed restructuring of the industry.  If this is successful it will be a leading indicator for the Japan real estate industry in general to move back into more viable, liquid territory.

There are now a plethora of discussions going on behind closed doors at these highly regulated J-REITs, and it seems  this will likely produce the first of a series of mergers and other restructuring deals, much sooner than expected – EVEN DURING THIS QUARTER –  in this space that will create new efficiencies and further support for the market.  Indeed, restructuring may be a condition to receive the financing to be offered by the government-led consortium.

If J-REITs start coming back into the market as buyers toward the 3rd and 4th quarters this year, we will see a much desired and needed quicker recovery on the investable hard asset market side.

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