TOKYO Goldman Sachs (GS.N) has secured three properties in Tokyo for 25 billion yen ($313 million) as its asset management unit prepares to set up a private real estate investment trust (REIT), Shigeki Kiritani, the president of Goldman Sachs Asset Management (GSAM), told Reuters.
The private REIT, which will be the first set up by a foreign financial institution in Japan when it is launched next month, will start with 13 billion yen ($162.6 million) in cash, equivalent to about half the combined value of the three properties, Kiritani said in an interview.
It aims eventually to increase its assets to about 300 billion yen and to generate a yield of about 4 to 5 percent, he added.
Several large Japanese property companies have also launched private REITs, which are less influenced by the volatile stock market than publicly listed REITs but offer an alternative for investors unhappy with low Japanese government bond yields. The key 10-year JGB yield is languishing at 0.8 percent.
Japanese developers Mitsubishi Estate (8802.T) and Nomura Real Estate Holdings 3231. have already set up private REITs and Kiritani expected more asset management firms to follow suit.
Kiritani said his company was banking on the new private REIT being seen as an attractive alternative for Japanese institutional investors heavily weighted in JGBs.
"We will be so-called core investors, who would buy properties with our steady cash flow. This strategy would match Japanese institutional investors' desire for long-term stable yields," he said.
Kiritani said GSAM's assets under management in Japan account for about 10 percent of its global total, which its website put at $714.60 billion as of March.
($1 = 79.9500 Japanese yen)
(Additional reporting by Chikafumi Hodo and Michiko Iwasaki; Editing by Edmund Klamann)