Mitsubishi Estate Co., the nation’s largest developer by market value, plans to expand a property fund that targets pension investors to help boost its asset-management business.
The company aims to increase the size of an open-ended fund, or private real estate investment trust, to as much as ¥500 billion from about ¥30 billion within the next 10 years, said Tetsuji Arimori, president of Mitsubishi Jisho Investment Advisors Inc., the Tokyo-based asset management unit of Mitsubishi Estate. The asset manager will buy properties from its parent and other real estate owners, he said.
“Our main business strategy is to concentrate on growth of our open-ended fund,” Arimori in a recent interview in Tokyo. “The size of such kind of growth is very much possible.”
The fund was set up in March as part of the company’s long-term goal to more than double the total assets under management to ¥5 trillion by 2020. Mitsubishi Estate is betting on the need for Japanese pensions to lift their property holdings, which now make up only 1 percent of their $2.46 trillion investments. That compares with 12 percent in Australia and 6 percent in the U.K., according to a report by UBS Global Asset Management.
Japanese pension funds plan to invest in a greater variety of assets after two decades of slumping returns at home and as the nation’s population ages. Thirty-one percent of 135 retirement funds plan to increase alternative investments such as real estate from this fiscal year starting April 1, according to a JPMorgan Asset Management (Japan) Ltd. survey in May.
Mitsubishi Estate was the second firm in Japan to create an open-ended property fund. Nomura Real Estate Holding Inc. set up a ¥20 billion fund in November and plans to double its assets to ¥40 billion by the end of March 2012, the company said.
Mitsubishi Estate’s fund has a debt-to-equity ratio of 35 percent to 45 percent.
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