There has been plenty of activity in Japan thus far in 2005, to keep market participants happy. Last week saw the launch of an RMBS from UFJ Bank, synthetic arbitrage CDO put together by Daiwa Securities, equipment-lease deal by Showa Leasing Co. and the latest CLO for small and medium sized companies by government agency JASME.

One of the more interesting offerings came from the construction conglomerate Kajima Corp. The company established a private real estate trust, into which it transferred the rights of four commercial buildings from its portfolio. Kajima then raised *30 billion ($286.1 million) from the facility by issuing trust certificates backed by rental income generated on the properties.

The five-year transaction is expected to yield returns of between 7% and 8% per year, and attracted interest from insurance companies, banks and pension funds. Kajima will use the proceeds for urban redevelopment projects.

With economic recovery still in its early stages in Japan, many real estate companies are in the process of securitizing large parts of their portfolios, the idea being it is better to run lean operations in case the bad times return. Kajima still owns around 70 buildings, so is likely to use the fund again in 2005 to transfer more assets.

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

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