J-REIT restructuring to begin soon

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.

Time to move into the J-REIT Market is NOW

from Seeking Alpha, click link for entire article: Japan’s J-REIT Market to Get a $10.5 Billion Bailout

`While talking about it since March, the Japanese government (specifically, the Financial Services Agency and the Land Ministry) appears to be in the final stages of pumping over $10 billion into the J-REIT market and removing impediments to consolidation in the industry. The market-weighted average yield has recently been as high as 7%, but investors remained leery because of balance sheet and liquidity risk.`   Here`s their JREIT performance graph demonstrating the recent stabilization.

Banks can not very well avoid refinancing JREIT debt now with all of the government back up and regulator pressure.  This and the Lonestar pricing of New City has put a floor on the market – and likely an indicator of a bottom for the J-REIT sector.

It is `officially` time to get into the J-REIT market.