Japan REIT, property shares down on penalty call

Wed Feb 14, 2007 10:40pm EST

TOKYO Feb 15 (Reuters) - Shares of Japanese property investment companies plunged on Thursday after the securities watchdog called for administrative penalties on DaVinci Select, which manages assets for REIT fund DA Office Investment Corp (8976.T).

The real estate investment trust (REIT) market has drawn a large number of yield-hungry investors and has booked strong performances.

DA Office Investment Corp. was swamped with sell orders coming in at 800,000 yen, down 11 percent from Wednesday's close. The REIT index .TREIT was down 1.4 percent, compared with a 0.5 percent gain in the Nikkei share average.

KK DaVinci Advisors 4314.OJ, DaVinci Select's parent company, was glutted with sell orders and its rivals were also down. Kenedix Inc. (4321.T) dropped 5.4 percent and Creed Corp. 8888.T tumbled 5.1 percent.

The Securities and Exchange Surveillance Commission (SESC) said on Wednesday that DaVinci Select did not provide proper documents when purchasing properties and as a result, it acquired real estate that was improperly appraised. The SESC recommended that the Financial Services Agency impose penalties on DaVinci Select.

The move follows another incident last year when regulators called for disciplinary action against the managers of Orix JReit (8954.T) and its parent company, sending the REIT market lower.

Goldman Sachs analyst Sachiko Okada said in a report on Thursday that this could affect the overall REIT market.

"Evidence of deficient procedures could affect market confidence and have a not insignificant impact on the overall JREIT market, which to date has remained strong," she said.

((Reporting by Eriko Amaha, editing by Malcolm Whittaker; Reuters messaging: eriko.amaha.reuters.com@reuters.net; +81-3-3432-8969)) Keywords: DAVINCI SHARE/

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