October 18, 2012
Diamond Realty Management Inc.
Mitsubishi Corporation’s Subsidiary Launches a JPY 31.7billion Open-End Real Estate Fund
Mitsubishi Corporation (hereafter, MC), and its fully-owned subsidiary Diamond Realty Management Inc. (hereafter, DREAM), jointly announce the establishment of an open-end real estate fund* that will play a pivotal role in the expansion of the companies’ private equity real estate business. The fund, officially known as the DREAM Private REIT (hereafter DPR), will initially consist of three real estate assets with a combined size of approximately JPY 31.7 bil (USD 402mil).
The market for open-end real estate funds, products that possess different characteristics from J-REITs and closed-end funds, has been showing steady growth. DPR distinguishes itself from its developer-sponsored predecessors with its ability to utilize the strength and network of MC, one of Japan’s premiere general trading companies. The properties acquired and developed by MC may serve as potential assets for DPR, whose size is expected to reach JPY 150 bil (USD 1.90 bil) in three years and JPY 250 bil (USD 3.17 bil) in five years.
Drawing upon MC’s expertise in trading, finance, real estate development and asset management, DPR is the first private REIT in Japan to focus on the retail and the logistics sectors. Across asset types, it is DPR’s policy to acquire well-located properties that are occupied by highly credible tenants and generate stable income streams.
As such, this alternative financial product is geared towards pension funds or institutional investors that seek stability with a long-term investment horizon. Furthermore, for Japanese pension funds that thus far have only demonstrated a slight interest in real estate, DPR presents a new investment opportunity that promises stable returns.
DREAM, the asset manager of DPR, was founded in 2004 and has since established several closed-end funds with equity investments from both foreign and domestic institutional investors. Earlier this year in September, DREAM successfully formed its second closed-end logistics fund, increasing its AUM to JPY 550 bill (USD 7.0 bil). In Japan, DREAM is the largest real estate asset manager sponsored by a general trading company.
MC identifies private equity real estate as one of the most important business activities within its Industrial Finance, Logistics & Development Group. MC and DREAM will strive to provide investors with topnotch opportunities and contribute to the growth of real estate securitization in Japan.
*open-end real estate fund:
Also known as a private real estate investment trust, or private REIT, this type of financial product is different from the closed-end funds in the sense that there is no end to the fund term. Furthermore, since it is not listed, the value of investment is not as influenced by the fluctuations of the capital markets.
[Summary of DPR]
Name: DREAM Private REIT
Investment Targets: Retail, Logistics, Office, and Residential assets mainly in Greater Tokyo
Date of Establishment: October 16, 2012
Initial Asset Size: JPY 31.7 bil (USD 402mil)
Investors: Japanese institutional investors, pension funds, etc.
[Summary of Diamond Realty Management Inc.]
Nature of Business: Private Real Estate Asset Manager
Date of Establishment: October, 2004
Capital: JPY 300 mil (USD 3.80 mil)
Shareholder: Mitsubishi Corporation (100%)
President & CEO: Naoshi Ogikubo
Asset Type Managed: Logistics, Retail, Residential, Industrial, Office, Mezzanine Debt, Overseas
AUM: approximately JPY 550 bil (USD 7.0 bil)
Please note that this press release is for informational purposes only.
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