Pacifica Turns School Into Solar Plant in Japan for 10% Return

Pacifica Capital K.K., a Japanese real estate asset manager, has acquired land to develop a solar project that will generate return of as much as 10 percent, said Chief Executive Officer Seth Sulkin.

A special purpose company established by Pacifica bought 47,239 square meters (508,476 square feet) of land that previously housed a high school from the local government in Ibaraki prefecture, north of Tokyo, for 100 million yen ($1 million) yesterday, Sulkin said. The project is scheduled for completion in August 2014 and can generate as much as 2.9 megawatts, according to a company statement today.

Pacifica is trying to take advantage of unused properties in Japan as schools are forced to merge because of a declining birthrate. Investments in offices in Japan have an annual yield of 4.7 percent and distribution centers return 5.4 percent, according to Investment Property Databank Ltd.

“We are trying to help local communities that are suffering from falling population by finding creative ways to re-use facilities that are no longer needed for their original purpose,” said Sulkin in a telephone interview in Tokyo today. The solar plant’s “return is much higher than what traditional real estate can achieve and the stability of income is far better than real estate.”

The Ministry of Economy, Trade and Industry sets the price at which utilities have to buy electricity from independent power producers at a level that allows a 6 percent return over 20 years, according to the ministry’s website.

About 20 percent of residential areas in Japan will become ghost towns -- devoid of population -- by 2050, according to a land ministry forecast.

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