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Mitsubishi Estate Co., Japan’s biggest property developer by market value, said it will set up a real estate fund in the U.S. this year and seek takeovers overseas to counter declining demand at home.

“We cannot just sit back and be satisfied with what we’ve built over the years at home as demand will probably remain weak and competition will increase,” Chief Executive Officer Keiji Kimura said in a recent interview in Tokyo. “We believe this is a good time to start building up our global platform.”

His plans come as commercial property sales in Manhattan, the biggest and most expensive U.S. office market, tripled in value in the first quarter from a year earlier. Office vacancies in Tokyo are at a record high and commercial land prices declined to the lowest in at least 36 years.

The firm may initially invest in about two buildings on the East Coast through its Rockefeller Group Investment Management unit, said Kimura, 63. He declined to elaborate on the size of the fund. Mitsubishi Estate is also in talks with several real estate asset management firms in the U.S. and Europe for possible takeovers and alliances, Kimura said.

The firm aims to increase operating profit from overseas business to about 20 percent of the firm’s total, from 7 percent last year, he said.

“The U.S. real estate market is very transparent,” said Masahiro Mochizuki, a real estate analyst at Credit Suisse Securities (Japan) Ltd. in Tokyo. “It’s a good move for the company to seek expansion in that market rather than some of the Asian markets that are less so.”

At home, Mitsubishi Estate, the biggest landlord in Tokyo’s Marunouchi central business district, is planning to start its first private real estate investment trust, allowing it to securitize property investments, Kimura said.

In February, Nomura Real Estate Asset Management Co. announced plans to start a private REIT, Nomura Real Estate Private REIT, nine years after Japan opened the REIT market to developing securities pioneered by the U.S. in the 1960s.

“Private REITs are good vehicles in a way that it doesn’t get affected by the market prices,” Kimura said. “We’re starting to see some interest from pension funds to invest in real estate, so this could be a good offering.”

Mitsubishi Estate’s net income dropped 74 percent to ¥11.9 billion in the year that ended March 31 as the firm wrote down losses on projects in Tokyo. It forecasts profit to jump more than fivefold to ¥63 billion.

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