Real Estate Finance
We provide financial support for the acquisition, development, and securitization of real estate, and J-REIT financial funding.
We support our customers with real estate non-recourse loans, in which the principal and interest are repaid exclusively from the cash flows originating from the underlying asset (commercial, non-commercial real estates etc.).
We provide comprehensive banking and financial services to support the acquisition, development, and securitization of real estate, and J-REIT financial funding.
Financial support for the acquisition, development, and securitization of real estate
We provide non-recourse loans to special-purpose companies (SPCs) which help protect a corporation's assets from the bankruptcy of an affiliated entity.
- Typical use of SPC
1.To acquire or develop the real estate
2.To transfer the real estate to SPC by the owner ("originator")
- Basic Structure
In one of the most common structures in Japan, the originator entrusts the real estate to a trust bank. The trust beneficiary interest is then transferred to an SPC.
1.Such a transfer is deemed to have an effect similar to a direct sale from the originator to an SPC.
2.The SPC uses a non-recourse loan or loans to acquire/develop the real estate (trust property).
- Objective and benefits
1.Using non-recourse loans limits various acquisition risk or development risk.
2.The originator is able to remove the underlying assets from its balance sheet and may repay debts by using the funds received to improve its financial standing (such as net worth ratio, etc.).
Support for J-REIT financial fundings
- J-REIT profile
After the enforcement of the Law Relating to Investment Trusts and Investment corporations in November 2000, the first investment corporation was listed on the J-REIT section of the Tokyo Stock Exchange in September 2001. Since then J-REIT has been growing steadily.
From the establishment of the J-REIT, we provide various banking and financial services to support new listings, and acquisition activities, etc.
- Basic Structure
Investment corporations acquire real estate and trust beneficiary interests (in real estate) through pooled funds collected from institutional and private investors. The rest is financed by loans or bonds.
Our main activities in real estate finance
1.Provide non-recourse loans, loan arrangements, and agency activities.
2.Provide integrated financial services for the real estate sector, combining various functions of the MUFG group companies.