Japan property firm folds, hit by subprime

By Yoko Kubota

TOKYO, March 21 (Reuters) - A Japanese property investor has filed for court protection from creditors, the first listed company in Japan to collapse from tighter lending in the wake of the U.S. subprime crisis.

Reicof Co Ltd 8941.OJ said it had failed with debt of 42.6 billion yen ($430 million) as investments in hotels went sour.

"Financial and real estate markets have deteriorated in the wake of the subprime crisis and we were not able to sell properties or secure loans as expected," Masaki Nogami, a Reicof lawyer, said at a news conference on Friday.

Japanese banks are getting cold feet on property, analysts say, only giving 60-70 percent of a building's value compared to 80-90 percent a couple of years ago.

Industry officials also say investors are pulling back from Japanese properties as they eye better opportunities in the United States and Europe to pick up distressed assets.

Japanese real estate stocks .IRLTY.T have been halved in value since mid-2007, also hit by troubles in the residential sector after tighter building codes were introduced.

Credit Suisse analyst Yoji Otani said many real estate firms had already revised down their earnings outlooks and more failures may be yet to come.

"Many real estate investment funds were struggling even before the the subprime crisis, and the tighter lending conditions are delivering the final blow," he said.

"It's surfacing now and it will expand."

The Osaka Securities Exchange said it would delist the firm from the bourse's Hercules startup market on April 21.

The company said it is in touch with three potential sponsors and that an announcement will be made within 10 days.

Shares of Reicof ended at 18,500 yen, down by its daily limit of 3,000 yen. (Additional reporting by Yumi Horie, editing by Edwina Gibbs)