Starts Proceed Plans Its Biggest REIT Asset Purchase Since 2008Kathleen Chu and Katsuyo Kuwako
Starts Proceed Investment Co., a Tokyo-based real estate investment trust, plans to acquire about 10 billion yen ($107 million) of apartments as early as May, the most since 2008.
Starts Proceed, the owner of 76 apartments, will add about 12 properties to its portfolio, said Kazuya Hiraide, president of Starts Asset Management Co., which manages the trust. Half of the funding will be from a public offering, while the other half will be from debt, he said.
J-REITs are benefiting from the Bank of Japan’s buying of the trusts since 2010. The Tokyo Stock Exchange REIT Index had its biggest increase last year, gaining 34 percent after a decline of 26 percent in 2011. Public offerings by REITs this year may exceed the 679 billion yen reached in 2007 because of measures introduced by the government to boost the market, said Junichi Tazawa, a REIT analyst at Barclays Plc in Tokyo.
“J-REITs have experienced one full cycle,” said Hiraide in a Feb. 6 interview. “We have now entered the next stage.”
The acquisition will boost Starts Proceed’s portfolio by a quarter to about 50 billion yen, he said.
J-REITs may raise 700 billion yen this year through initial share sales and additional offerings, from 480 billion yen last year, Tazawa of Barclays said.
The BOJ has acquired about 85 percent of the 130 billion yen in J-REITs it plans to buy, according to the bank’s data as of Jan. 18.