Mitsubishi UFJ Financial Group Inc. has securitized tens of billions of yen worth of loans to real estate investment trusts and sold them to pension funds, the Nikkei reported Aug. 14.
Mitsubishi UFJ sold the securitized debt to several pension funds with a redemption period of five years. The move comes as Japan's government aims to enlarge the ¥20 trillion REIT market to ¥30 trillion by 2020, with expansion coming largely from pension fund absorption of REIT securities.
Japan's ultra-low interest rates are causing pension funds to seek alternatives to traditional investment targets such as stocks and bonds.
According to the Nikkei, major Japanese banks represent 70% of financing to Japan's REIT sector. By getting REIT loans off balance sheets through securitization, banks can free up reserves for more REIT financing and stimulate further expansion of the industry.
As of Aug. 13, US$1 was equivalent to ¥106.41.