J-REIT Market IR

Date Posted: April 10, 2014

J-REIT Market to Exceed Total Market Value of 7 Trillion Yen

J-REIT stands for Japan Real Estate Investment Trust. The first J-REITs were listed on the Tokyo Stock Exchange on September 10, 2001. The first two listed J-REITs were Nippon Building Fund Inc. and Japan Real Estate Corporation, backed by Mitsui Fudosan Co., Ltd. and Mitsubishi Estate Co., Ltd. respectively. The market grew rapidly to over 30 J-REITs in its first few years but suffered a downturn with J-REITs merging and being taken over following the Global Financial Crisis. There are currently 44 listed J-REITs, and total market value has grown to over 7 trillion yen. However, the total market value of nearly half of all J-REITs remains less than 100 billion yen (as of the end of March 2014).

Active, High Quality J-REIT IR

The 44 J-REITs individually can be judged as being more proactive than listed firms with regards to IR activities. J-REITs often hold press conferences to announce their financial results and every one holds financial briefings for analysts and travel to domestic investors to explain their performance. PowerPoint presentations are carefully prepared with detailed figures, management policies and explanations of strategies implemented over the past six months. Materials in the form of press releases, presentations and semi-annual reports are uploaded in a timely manner to their websites. The quality and extensiveness of the disclosure stands out related to the average level of Japanese firms.

English Disclosure and Overseas IR by J-REITs

Many J-REITs also disclose their performance in English and operate English websites. Though the level of English disclosure differs depending on the J-REIT, most provide English versions of their press releases and presentation materials. There is also an increasing number of J-REITs preparing semi-annual reports in English. Presently the task facing J-REITs is how to improve the timeliness of disclosure in English as it is often several days or weeks behind the Japanese. There are exceptions to this, however, and those J-REITs should be lauded for their efforts. One possible reason for J-REITs setting the standard for English disclosure in Japan is the high attention that foreign investors or analysts pay to J-REITs. Many J-REITs are included in funds or funds and market indices and the level of foreign investor unit ownership tends to be in the double digits.

The proactive nature of English disclosure among the J-REITs exposes them to frequent calls and e-mail inquiries from potential and existing international investors. The asset managers of J-REITs often travel abroad on roadshows to meet investors and promote the J-REITs they manage (J-REITs, contrary to the U.S. system, are externally managed). J-REITs despite the limited size of asset manager staffing set a positive example for how English IR activities should evolve at listed Japanese firms.

SGIM Shinichiro Miura

Translated and edited by Transpacific Enterprises