Nomura Securities has set up a new subsidiary in Tokyo dedicated to the securitization of commercial real estate.
The subsidiary, tentatively called Nomura Capital Investment, will originate non-recourse loans backed by commercial real estate and then securitize them for sale in the domestic market, said Kotaro Higuchi, deputy manager of structured finance at Nomura Securities.
"We will originate a loan and keep it on our balance sheet until we can securitize and sell it as a bond. That will allow us to recoup our capital so we can originate more loans," he explained.
The new firm will apply to the Japanese market the business operations of Nomura Asset Capital Corporation, a U.S. subsidiary which closed shop after Nomura incurred heavy losses in the global financial crisis last fall.
Out of the half-dozen CMBS transactions originated in Japan so far, Nomura has arranged two private deals, with a third now in the pipeline.
"The main difference in the new business going forward is that we will commit up to 100 billion ($932 million) of our own capital," Higuchi said. And unlike the U.S. securitization business, the new firm will be solely focused on the domestic market, since it can draw upon Nomura's existing client base and strong distribution network in Japan, he added.
Nomura's subsidiary is the first such unit established by a Japanese financial institution. However, it joins a number of foreign firms already active in the business of providing non-recourse financing for real estate investment in Japan. Those firms include Nikko Salomon Smith Barney and GMAC Commercial Mortgage Corp.
