The planned Mizuho Financial Group will team up with real estate giant Mitsui Fudosan Co. in securitizing their real estate holdings, officials close to the deal said Thursday.
The banking group -- which will be formed by the merger of Dai-Ichi Kangyo Bank, Fuji Bank and Industrial Bank of Japan -- will embark with Mitsui Fudosan on a real estate investment trust business to cash in on the annulment of a domestic law banning REITs later this year, they said.
A REIT is an investment trust in which a portfolio of securitized real estate products is managed to earn income from rent and capital gains. Investors buy beneficiaries' certificates entitling them to a share of the trust's expected income.
REITs earn rental income from office buildings, condominiums, hotels and other properties, or pocket capital gains when properties are sold.
Asahi Mutual Life Insurance Co., Yasuda Mutual Life Insurance Co. and Fukoku Mutual Life Insurance Co., all of which have close business ties with one of the three banks in the group, are expected to join the alliance involving Mitsui Fudosan, they said.
Japan is expected to end its ban on REITs later this year by amending a law governing the activities of investment trusts.
The combined value of real estate assets to be jointly managed by the REIT project is expected to top 1 trillion yen, they said.