With activity in the rest of Asia unusually quiet this past week, Japan continued to be the major hub of securitization in the region. In an interesting move, U.S. insurer American International Group has aligned itself with property developer Urban Corp. for real estate development projects in Tokyo and Osaka.

Over the next two years, AIG will provide around 100 billion ($914 million) to finance construction of condo developments, office buildings, commercial facilities and hotels - all to be built by Urban - as well as the acquisition of properties in Japan's two biggest cities.

The two companies will establish an SPV to finance construction costs, issuing bonds backed by rental and sales income generated by the properties. For their first project, AIG and Urban have bought a building for 10 billion in Osaka, and are rumored to be in talks to purchase a property in Tokyo worth 2 billion.

AIG is not the first U.S. company to exploit opportunities in Japan's real estate sector, which is slowly rebounding after years of deflation massively reduced property value. Last month, LaSalle Investment Management joined forces with Tokyo Tatemono to buy 19 properties from Japan Tobacco (see ASR 5/16/05), the first stage in its plan to invest 100 billion in Japanese real estate in 2005.

(c) 2005 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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