With the partnership of Sakura Bank Co., Ltd., Sakura Security Co., Ltd.,
Tokyo Maritime Fire Insurance Co., Ltd., Mitsui Fudosan Co., Ltd. has erected a securitization scheme for the condominium development fund.
-- Not only the condominium business will have access to the direct financing, but also it enhances the non-asset business by harnessing the companies' portfolio.
February 24, 2000
Mitsui Fudosan Co., Ltd.
Mitsui Fudosan with the partnership of Sakura Bank, Sakura Security and Tokyo Maritime Fire Insurance has exploited a special purpose company (named Millennium Residential SPC) in accordance with the SPC law, and has erected a securitization scheme to recruit development fund for developing condominiums.
With this scheme, Mitsui Fudosan will raise funds by transferring the common ownership equity, of lands and/or buildings, of developing condominiums (8 buildings) to SPC. The SPC will issue the specified bonds (Aaa: 9.5 billion yen, Aa2: 1 billion yen, no rating: approximately 1.2 billion yen, total of 11.7 billion yen *) and pay the sold amount (approximately 11 billion yen) to Mitsui Fudosan. The SPC and we, Mitsui Fudosan will sell those condominiums as the joint venders. SPC will use the amount received from purchasers as the capital to appropriate for redemption and interest payment of the specified corporate bonds. The specified corporate bonds are scheduled to be issued on March 2000. Sakura Security will distribute the issued bonds to institutional investors, and Sakura Bank will manage them as the management company of the corporate bonds.
(* Preliminary ratings are given to the bonds listed with ratings by Moody's Investors Service.)
As for this specified corporate bonds, we have secured measures to complement the credibility guaranteed by Tokyo Maritime Fire Insurance for the liabilities of property at the time of transaction from Mitsui Fudosan to SPC. Although the bond purchasing investors bear the marketing risk from condominium sales, the notable feature of these bonds are the high ratings, including triple As, of eligible investment being grated due to the past experiences and performances of Mitsui Fudosan in its condominium businesses.
There has been precedents of securitization of the leasing assets, mainly of office buildings, however, this is the first time attempt in Japan to exploit SPC law on the developing real estate, by pooling condominiums while still in developing stage and merchandising them for investments. This opened a way for direct financing in the condominium business, and it is very significant in particular as to create investing opportunities of developing real estates for Japanese real-estate securitization market.
For the corporations considering disposal of holding estates for betterment of financial constitution, exploiting this scheme in partnership with Mitsui Fudosan will not only enables them to sell lands to SPC and collect funds in short period of time, but also gives an advantage to harness merchandising planning and sales ability of Mitsui Fudosan in its condominium businesses, which gives opportunities to profit from the condominium development, otherwise not available just by disposing property for condominium developments.
This also gives new business opportunities for Mitsui Fudosan, which goes along side with our promoting policy of expanding and enhancing "non-asset businesses". Our aim is to gain new profits through the condominium businesses with lessened financial burdens and more efficiency, to maximize the wealth of knowledge that we have obtained in the past.
Mitsui Fudosan has been taking positive steps to address securitization of the real estate, since the establishment of the Real Estate Securitization Unit in 1999. We will continue to develop this new field, which blends the fields of real estate and financing by harnessing the knowledge and experiences of the real estate professions.
* Mitsui Fudosan, a joint vendor with SPC, will take all liabilities and obligations of SPC after the delivery of condominiums, such as with maintenance warranties and services.
List of Properties for Securitization and the Schedule
|Name of Property
| February 2000
|Ohmiya Taisei Project
|Issuance of corporate bond
|October 2001(scheduled redemption:June 2001)