In an offbeat transaction reflecting the increasing range of cash flows being securitized in Japan, a major carpark operator announced plans to launch the country's first parking lot-backed transaction.

Park24 Co. said it is studying a plan to raise roughly 2.3 billion ($19 million) through securitizing a parking lot now being built across from Kawasaki, a major train station in Tokyo. The 10-story structure will hold up to 300 cars upon completion in February 2000 and, even with an occupancy rate of roughly 30%, the firm expects 300 million in annual revenue, according to the Japanese media.

If structured as a commercial mortgage-backed securitization in which the parking lot and machines were sold to an SPV, which would issue securities backed by cashflows from the property such a transaction would be feasible, said Yu-Tsung Chang, director of structured finance ratings at Standard & Poor's in Tokyo. Likely default rates would be low, as people would have to pay parking fees to get their cars out, and cash flows would be relatively stable on a monthly basis, he said.

Yet such a deal would not come without potential pitfalls. "Since this is not an existing parking space,

historical data would be the problem. The obvious question is whether the parking lot can really attract the cars as originally expected, and without data it is very difficult to gauge," he pointed out. And since it is a low-barrier business, competitors could easily set up nearby parking spaces and cut into the firm's cash flows, he added. VC

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