JAPAN Trends and Developments Contributed by: Hiroshi Niinomi, Koki Hara, Naoto Yamamoto and Atsuo Kyoto, Nishimura & Asahi (Gaikokuho Kyodo Jigyo)
Nishimura & Asahi (Gaikokuho Kyodo Jigyo)
Otemon Tower 1-1-2 Otemachi Chiyoda-ku Tokyo 100-8124 Japan
Tel: +81 3 6250 6200 Fax: +81 3 6250 7200 Email: info@nishimura.com Web: www.nishimura.com
REITs REIT market overview
No initial public offering (IPO) of a listed J-REIT has occurred since 2021. The market value of listed J-REITs has softened and the ratio of REIT market price to REIT net asset value is below 1.0 in many J-REITs. In this environment, J-REITs have been acquiring their own shares more fre - quently to enhance capital efficiency. Takeovers Takeovers of J-REITs, including hostile takeo - vers, are among the key trends in the current REIT market. There were some M&A transac - tions between J-REITs before 2019. Howev - er, they were all friendly mergers conducted through agreements between all relevant parties (including the sponsors). Many were carried out between J-REITs under the same sponsors or affiliated sponsors in an effort to increase their assets under management (AUM), expand the types of their assets and/or streamline their busi - ness. The first REIT M&A transaction where the con - sent from the board of the target REIT had not been obtained was completed in 2020. A minor shareholder called a shareholders’ meeting of the target REIT with the financial bureau’s per -
The REIT market has generally shown steady growth. As of the end of 2024, the total value of real estate held by REITs, including private REITs, had reached approximately JPY30 trillion (on the basis of acquisition price) and the aggre - gate market capitalisation of listed J-REITs was approximately JPY14.3 trillion. The growth of private REITs has played a role in the Japanese REIT market, with private REITs holding properties valued at about JPY7 trillion (based on acquisition price) in December 2024. As of the end of 2024, there were 58 private REITs, ranging from diversified REITs (ie, those diversifying their portfolio in multiple asset types) to sector-specific REITs (eg, focused on residen - tial, hotel or logistic properties). Sponsors from various business fields have initiated private REITs. Railroad companies, electric power and gas companies, financial institutions (includ - ing insurance companies and banks) and other industries are also engaging in the management of REITs or are interested in doing so.
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