Major trading house Mitsubishi Corp. plans to launch a commercial mortgage-backed securities business in the United States through a joint venture.
The 50-50 venture involves a U.S. subsidiary of the trader and U.S. asset management company Five Mile Capital Partners LLC. The venture will generate at least $1 billion worth of securities backed by commercial real estate mortgages each year, the trading house said Thursday.
The U.S. market for real estate securitization is recovering from the slump that led to the 2008 collapse of U.S. investment bank Lehman Brothers. Mitsubishi decided to dive into the CMBS business in light of strong demand from institutional investors for financial instruments with stable returns. Its U.S. unit, MC Asset Management Holdings LLC, will set up the new firm with Five Mile in June.
The new company will underwrite loans collateralized by commercial real estate, such as warehouses and office buildings, and securitize them for sale via investment trusts to financial institutions and life insurers.
It will begin this autumn with a securitization deal worth up to $300 million.