The involvement of organized crime in Japanese real estate is a risk that investors should be aware of, said agencies rating the first securitization backed by distressed properties in Japan.
The presence of local criminal gangsters, or yakuza, in real estate deals is not new to foreign investors of Japanese distressed assets. The issue first gained attention last year, as foreign investors realized that some of the bad loans they were buying from Japanese financial institutions were collateralized by property linked to the yakuza. In the most serious incident, the Tokyo house of an executive of Cargill was burnt down, allegedly by the Yakuza. Cargill, a U.S. company, had been among the most active buyers of distressed real estate loans.