Press Release
January 6, 2007
Nihon Keizai Shimbun (The Nikkei), January 6, 2007
Enhancing Value in Kyushu's Markets
Nihon Keizai Shimbun (The Nikkei), January 6, 2007
Enhancing Value in Kyushu's Markets
Investment companies established, real estate development promoted in Fukuoka: boosting value in Kyushu markets on the heels of the former Daiei business
Masatoshi Matsuo worked for a U.S. securities company prior to bidding on Daiei's former business in Fukuoka, and before listing his real estate investment fund (REIT), the first such regionally exclusive operation in the country, on the stock market. Having established an investment company in Fukuoka, he is currently engaged in real estate development in Kyushu. Explaining his position, he comments, "if capital procurement opportunities for local developers grow, the Kyushu region will be even more attractive as an investment destination."
While working at Mitsui Fudosan Co., Ltd. in 1993, he studied real estate finance at the Wharton School of the University of Pennsylvania. After working for a period with Mitsui Fudosan America Inc., he joined Lehman Brothers Holdings Inc. in 1999. "Before methods for the securitization of real estate were popularized in Japan, real estate finance was simply a question of whether or not to provide funds at all. The concept of quantitatively measuring risk was a true case of The Egg of Columbus" says Mr. Matsuo.
"The Japanese real estate market of the time was a big mess. Even Mitsui Fudosan, which is really hot now, hardly approved any new large-scale investments. One of our foreign business partners invited me saying that they were going to invest ¥100 billion in Japan, and that they needed somebody who could speak English and was well-versed in finance. I had learned securitization during my four and a half years with Lehman Brothers and it was my feeling that I could get by for five or ten years after that no matter where I went, because though the Japanese market was massive, there was almost no one engaged in securitization. There was trouble in the U.S. with bad debts around 1992-1993, and many of the people involved came to Japan during that time. They were already envisioning the Japanese real estate market three years down the road, and foreign owned companies were always trying to outbid each other for the purchase and sale of bad debts."
During this time, he travelled extensively to Fukuoka on business related to a bid for the former Daiei's business in Fukuoka and came to know Mr. Kazuhiko Enomoto of Fukuoka Jisho Co., Ltd., Fukuoka City, who asked Mr. Matsuo to establish Fukuoka REIT. "I thought that a baseball field was infrastructure, and as such that it wouldn't turn a profit. I drew up a plan in 2003 stipulating that Lehman Brothers would provide 90% of the capital and the local region 10%. Though the deal was not to be, I was later invited by Mr. Enomoto, who connected me with the local business establishment and local government, to join Fukuoka Realty (Fukuoka City), which operated Fukuoka REIT. Though I took a drop in salary, Mr. Enomoto convinced me that I would be helping the local area, and it would be a springboard from which I could advance my career."
"Mr. Enomoto was concerned that investors might not be interested in Fukuoka REIT due to the fact that it invested only in Kyushu, but I was confident because I could understand the needs of Tokyo investors. Judging from the fact that Fukuoka Jisho held negotiations for the sale of the commercial facilities Canal City Hakata (located in Fukuoka City) with the Government Investment Corporation of Singapore (GIC), Mr. Enomoto may have had his doubts about the success of Fukuoka REIT," says Mr. Matsuo. Still, Fukuoka REIT was subsequently listed on the stock market and, subsequently acquiring successive assets from Fukuoka Jisho and other sources. The company's total assets increased to some ¥100 billion. Mr. Matsuo then launched Genkai Capital Management Co., Ltd., an investment company of Fukuoka City. The company engages in real estate development, primarily in the Kyushu region.
"Because REIT was only involved with conservative investments, our next step was to create a private fund of some ¥20 billion that could engage in higher-risk deals. We assist real estate companies based in the prefectures of Kyushu with a view to making them our partners, and we consider investing in them as well. By carrying our more investment in regional cities, we are working to bolster the value of Kyushu's real estate markets."
Masatoshi Matsuo worked for a U.S. securities company prior to bidding on Daiei's former business in Fukuoka, and before listing his real estate investment fund (REIT), the first such regionally exclusive operation in the country, on the stock market. Having established an investment company in Fukuoka, he is currently engaged in real estate development in Kyushu. Explaining his position, he comments, "if capital procurement opportunities for local developers grow, the Kyushu region will be even more attractive as an investment destination."
While working at Mitsui Fudosan Co., Ltd. in 1993, he studied real estate finance at the Wharton School of the University of Pennsylvania. After working for a period with Mitsui Fudosan America Inc., he joined Lehman Brothers Holdings Inc. in 1999. "Before methods for the securitization of real estate were popularized in Japan, real estate finance was simply a question of whether or not to provide funds at all. The concept of quantitatively measuring risk was a true case of The Egg of Columbus" says Mr. Matsuo.
"The Japanese real estate market of the time was a big mess. Even Mitsui Fudosan, which is really hot now, hardly approved any new large-scale investments. One of our foreign business partners invited me saying that they were going to invest ¥100 billion in Japan, and that they needed somebody who could speak English and was well-versed in finance. I had learned securitization during my four and a half years with Lehman Brothers and it was my feeling that I could get by for five or ten years after that no matter where I went, because though the Japanese market was massive, there was almost no one engaged in securitization. There was trouble in the U.S. with bad debts around 1992-1993, and many of the people involved came to Japan during that time. They were already envisioning the Japanese real estate market three years down the road, and foreign owned companies were always trying to outbid each other for the purchase and sale of bad debts."
During this time, he travelled extensively to Fukuoka on business related to a bid for the former Daiei's business in Fukuoka and came to know Mr. Kazuhiko Enomoto of Fukuoka Jisho Co., Ltd., Fukuoka City, who asked Mr. Matsuo to establish Fukuoka REIT. "I thought that a baseball field was infrastructure, and as such that it wouldn't turn a profit. I drew up a plan in 2003 stipulating that Lehman Brothers would provide 90% of the capital and the local region 10%. Though the deal was not to be, I was later invited by Mr. Enomoto, who connected me with the local business establishment and local government, to join Fukuoka Realty (Fukuoka City), which operated Fukuoka REIT. Though I took a drop in salary, Mr. Enomoto convinced me that I would be helping the local area, and it would be a springboard from which I could advance my career."
"Mr. Enomoto was concerned that investors might not be interested in Fukuoka REIT due to the fact that it invested only in Kyushu, but I was confident because I could understand the needs of Tokyo investors. Judging from the fact that Fukuoka Jisho held negotiations for the sale of the commercial facilities Canal City Hakata (located in Fukuoka City) with the Government Investment Corporation of Singapore (GIC), Mr. Enomoto may have had his doubts about the success of Fukuoka REIT," says Mr. Matsuo. Still, Fukuoka REIT was subsequently listed on the stock market and, subsequently acquiring successive assets from Fukuoka Jisho and other sources. The company's total assets increased to some ¥100 billion. Mr. Matsuo then launched Genkai Capital Management Co., Ltd., an investment company of Fukuoka City. The company engages in real estate development, primarily in the Kyushu region.
"Because REIT was only involved with conservative investments, our next step was to create a private fund of some ¥20 billion that could engage in higher-risk deals. We assist real estate companies based in the prefectures of Kyushu with a view to making them our partners, and we consider investing in them as well. By carrying our more investment in regional cities, we are working to bolster the value of Kyushu's real estate markets."
