TOKYO, July 5 Shinsei Bank Ltd plans to debut Japan's first real estate investment trust (REIT) dedicated to building healthcare and housing facilities for the elderly next year to meet growing demand from the world's fastest ageing population.
The REIT would initially purchase assets worth 100 billion yen ($1 billion), Shinsei Bank President Shigeki Toma told Reuters, adding that the amount could double or triple within a few years.
"Finally, the REIT has come within sight and if things go smoothly, I think we can do this around next year," Toma said.
Some analysts said the Shinsei REIT would diversify investors' portfolios in a sector dominated by residential and commercial property trusts.
But they warned that healthcare assets were difficult to evaluate and that finding reliable facility operators would be a challenge.
"The biggest challenge for healthcare finance is that they need money from day-one but debt is paid back over the span of 15 to 20 years," Toma said. "So, we had to come up with securitisation."
Mid-sized Shinsei bank, 21 percent owned by U.S. private equity group J.C. Flowers, has been holding talks about the REIT with the government for three years.
In March, a government-backed panel recommended launching healthcare REITs to help finance the construction of elderly care facilities, a development likely to hasten regulatory approvals for the Shinsei trust.
Elderly facilities are among the holdings of some Japanese-listed REITs such as Invincible Investment Corp as well as Singapore-listed Parkway Life Real Estate Investment Trust, but the Shinsei REIT would be the first in Japan to completely focus on this sector.
Japan's population is expected to fall by 30 percent to below 90 million by 2060, with two out of every five people aged 65 or older, according to government forecasts. Longer life expectancy and limited living space are expected to increase the demand for nursing homes as more Japanese choose to put their parents into specialist care. ($1 = 99.6950 Japanese yen) (Additional reporting by Taro Fuse; Editing by Miral Fahmy)