Nomura Real Estate Master Fund Inc. will merge with two other Nomura REITs to create the biggest real estate investment trust in Japan with 900 billion yen ($7.3 billion) of assets.
The master fund will merge with Nomura Real Estate Office Fund Inc. and Nomura Real Estate Residential Fund Inc. on Oct. 1, the trusts said in a statement on Wednesday. The unit holders of the master fund will get one share in the merged company for each share held, while unit holders of the office fund get 3.6 shares and residential fund holders get 4.45 shares for each share owned.
The trusts said that competition for assets has intensified in recent years with new entrants in the market and they want to merge to ensure future growth and financial stability as they expand the size of their assets.
The Tokyo Stock Exchange REIT Index, which fell 17 percent this year, gained more than 25 percent every year in the three years to the end of 2014. The Bank of Japan has been buying Japanese REITs since 2010 to support the market.
“Because of the size of the new REIT, they will definitely be influential in the REIT market in terms of asset acquisitions,” said Roko Izawa, a Tokyo-based analyst at Standard & Poor’s. “The merger will strengthen the credit profile of the REITs and it’s a positive development for the market because it may be a good showcase for others to follow.”
The REITs will retain the name of Nomura Real Estate Master Fund and plan to list a new trust on Oct. 2. The three current REITs will be delisted on Sept. 28.