Shinsei Bank Ltd., the Japanese lender partly owned by J. Christopher Flowers, plans to set up a health care real estate investment trust to capture growth in one of the world’s fastest-aging nations.
The bank seeks to start the REIT with about ¥100 billion in two years, said Takashi Fujimura, general manager of the health care finance division at Shinsei. The bank may be able to list a REIT as early as 2014, once the government establishes guidelines to allow the REIT listings, he said.
One in every four people in Japan will be older than 65 years in 2014, according to data compiled by Bloomberg. The bank plans to provide lending for nursing homes and senior housing in Japan to match the rising demand as it expects the nation’s health care market to double in size to ¥6 trillion in five years, said Fujimura.
“There is no other asset types that offer double growth in volume,” said Fujimura. “Health care assets are scarce from the start. It offers a tremendous growth opportunity.”
About 23 percent of 421,000 applicants had to wait for the availability of a bed in public nursing homes in 2009, according to the latest data available from the Ministry of Health, Labor and Welfare. The number of people using nursing homes is estimated to increase by a quarter to 1.15 million in 2015 from 920,000 in 2011, according to data from the Cabinet Office.
The government is preparing to allow the listing of REITs in a bid to encourage more supply of such facilities amid Japan’s aging population, the land ministry said. The government in September set up a committee to discuss details to allow the listing of health care REITs. Shinsei is a member of the committee representing the financial sector.
Shinsei plans to invest in a company that operates health care REITs as a way to get into the market and will also provide lending to the REITs, Fujimura said. It costs about ¥1 billion to ¥2 billion to build 50- to 100-room senior housing, he said.
“Building senior housing facilities needs a lot of capital and it would be impossible for the local owners to finance such projects,” said Fujimura.
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