Japan property stocks jump on Zecs capital injection

TOKYO, Aug 25 (Reuters) - Shares of midsize Japanese property firms jumped on Monday after real estate company Zecs Co (8913.T) said it would receive a capital injection from an investment fund.

The news sparked hopes that such inflows might help the beaten-down sector, which has been suffering from banks' reluctance to lend money and falling land prices, fund managers said.

Zecs shares were flooded with buy orders at 8,160 yen as of 0330 GMT, up 14 percent from Friday's close, after the firm said it would sell about 1.5 billion yen ($13.6 million) worth of its preferred shares to Japanese fund J-Will Partners by the end of this month.

"It's probably about time investors come to property firms through actions like capital injections, with the mid- to long-term view that their shares have plunged too far and may have nearly bottomed," said Hitoshi Yamamoto, chief executive officer of Fortis Asset Management Japan.

"Still, a rebound (in property shares) won't happen overnight and financial institutions are not likely to change their stance."

A string of Japanese real estate firms have folded in recent months as banks rein in lending to small and medium-sized developers seen at risk as the world's No.2 economy appears on the brink of recession.

In the latest case, developer Urban Corp 8868.T failed in the biggest collapse of a listed Japanese company in six years, and fanned fears others might follow.

Urban's collapse followed the recent failures of midsize developers Suruga Corp and Zephyr Co 8882.T.

On Monday, the Tokyo Stock Exchange's real estate sector index .IRLTY.T, which has lost more than 22 percent so far this year, rose 2.7 percent.

The Tokyo bourse's REIT index .TREIT, which has tumbled about 34 percent so far, added 2.1 percent.

The benchmark Nikkei share index .N225 was up 2 percent.

Among similar stocks, apartment developer Joint Co (8874.T) shot up 15.9 percent to 262 yen, while Creed Corp 8888.T surged 15.6 percent to 117,900 yen.

In a consolidation move, apartment developers Azel 1872.T and Gro-Bels (3528.T) said last week they have reached a basic agreement to merge in January to better compete amid high construction materials prices and sluggish demand.

Azel shares jumped 4.8 percent to 66 yen and Gro-Bels gained 3.8 percent to 55 yen. (Reporting by Aiko Hayashi; Editing by Chris Gallagher)