MUFG to launch 100 billion yen Japan real estate fund

Mitsubishi UFJ Financial Group (MUFG) plans to launch a 100 billion yen (S$870 million) fund to invest in Japanese real estate, an executive at the country’s largest banking group told Reuters.

The new fund, reported by Reuters for the first time, is the latest in a run of Japanese property fund launches this year as real estate prices climb and the central bank looks to hike interest rates further from still ultra-low levels.

“In a world with interest rates, investors’ expectations of returns are rising,” said Naokatsu Uchida, president of Mitsubishi UFJ Real Estate Asset Management, which is launching the fund.

The fund will be the unit’s second-largest and will target underperforming assets, seeking to improve their attractiveness.

It will focus on mid-sized offices, residential properties and hotels in Tokyo, Osaka and Nagoya, Uchida said.

About 30 billion yen in equity would be raised from institutional investors such as life insurers, banks and companies, with the rest financed by debt, he said, adding that marketing has begun and feedback from investors has been positive.

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The fund is separate from a property fund announced in April by MUFG with Mitsubishi UFJ Trust and Banking that is targeting an investment of 100 billion yen in real estate in three years.

Other recent fund plans include an announcement by insurer Dai-ichi Life and trading house Marubeni in July that they will launch a 400 billion yen fund targeting domestic real estate.

Financial services firm Orix in February announced a 100 billion yen real estate fund. Morgan Stanley is also raising about 100 billion yen in equity for a Japan real estate fund, Reuters reported earlier this year.

Mitsubishi UFJ’s real estate asset management arm had more than 500 billion yen in assets under management at the end of August and aims to expand that to one trillion yen by the fiscal year ending March 2030.

It has doubled its headcount in the last two years and aims to increase staff to 90 from 70 currently. REUTERS