The J-REIT related debt refinancing issue, a big portion scheduled for September term-end debt issues, is now being addressed openly by the government and major players of the real estate arena in the form of a J-REIT support fund.

Original Yomiuri report here (Japanese, includes restructuring support note).

We will see in the coming weeks a detailed plan for for this fund to underwrite not only rolling over of J-REIT debt, but perhaps more importantly also the recovery of the J-REITs in general by supporting much needed restructuring of the industry.  If this is successful it will be a leading indicator for the Japan real estate industry in general to move back into more viable, liquid territory.

There are now a plethora of discussions going on behind closed doors at these highly regulated J-REITs, and it seems  this will likely produce the first of a series of mergers and other restructuring deals, much sooner than expected – EVEN DURING THIS QUARTER -  in this space that will create new efficiencies and further support for the market.  Indeed, restructuring may be a condition to receive the financing to be offered by the government-led consortium.

If J-REITs start coming back into the market as buyers toward the 3rd and 4th quarters this year, we will see a much desired and needed quicker recovery on the investable hard asset market side.

Nikkei announced Daiwa Securities is taking over 100% the Davinci Select reit advisor and buying 13% of its managed JREIT DA Office Investment Corp (8976) at 190K/share. Daiwa plans to use its strong credit to work through refinancing issues and the synergies created to grow related income streams. This will take some pressure off DaVinci, looks like the market has already noticed though.

http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSBNG46369120090616

Expect more deals soon.