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Asset Financing (Real Estate)

About Asset Financing (Real Estate)

Asset finance (real estate) is a financing approach in which cash flows generated from assets owned by the company can be used as a source of funds for dividend payments and loan repayment. This approach consists of securitized finance, to improve capital efficiency via the sale of leased real estate to a special purpose company, and development finance, to maintain the soundness of the client's financial health (balance sheets) by developing idle assets at the SPC and turning them into revenue-generating properties.

The benefit for customers includes the diversification of financing methods, improvement of financial structure by making off–balance sheet arrangements for target real estate, and separation of real estate price volatility risks.

DBJ provides unique services, including arrangement of financing that utilizes networks with leading investors and financial institutions in Japan and abroad; development of optimal financing schemes that correspond to projects; and, leveraging our position of impartiality, achievement both of reconciliation of disparate interests among related parties and of optimal risk allocation.

Scheme

Type of Operation | Liquidization Financing

Example 1: After selling owned real estate that a customer is using to a special-purpose company, conclude new rental agreements and continue using the property in this manner.
Example 2: After selling owned real estate that a customer is using to a special-purpose company, conclude new rental agreements and continue using the property in this manner.

The diagram provides an overview of how the real estate market, special purpose companies (SPCs), and the financial and capital markets interact. It shows the property operation phase, in which tenants occupy the property under lease arrangements and pay rent, and the property acquisition phase, in which the SPC acquires the property from the originator and pays the purchase price. It also explains how financial institutions, investors, and other market participants provide funding to the SPC that holds the real estate in the form of senior debt, mezzanine financing, and equity capital. The diagram provides an overview of how the real estate market, special purpose companies (SPCs), and the financial and capital markets interact. It shows the property operation phase, in which tenants occupy the property under lease arrangements and pay rent, and the property acquisition phase, in which the SPC acquires the property from the originator and pays the purchase price. It also explains how financial institutions, investors, and other market participants provide funding to the SPC that holds the real estate in the form of senior debt, mezzanine financing, and equity capital.

Type of Operation | Development Financing

Example: Use investor financing to develop idle owned real estate into income property.

The diagram illustrates the real estate market, SPCs, and the financial and capital markets. It explains the progress from land acquisition and construction start to completion and leasing, together with the relationships with tenants, construction contractors, and the land seller. It also shows funding provided to the project entity by financial institutions and other lenders through senior debt and mezzanine financing, and by investors and other market participants through equity capital. After the project enters the stabilized operation phase, the diagram outlines the review of the capital structure and the potential sale of the property to an external buyer. The diagram illustrates the real estate market, SPCs, and the financial and capital markets. It explains the progress from land acquisition and construction start to completion and leasing, together with the relationships with tenants, construction contractors, and the land seller. It also shows funding provided to the project entity by financial institutions and other lenders through senior debt and mezzanine financing, and by investors and other market participants through equity capital. After the project enters the stabilized operation phase, the diagram outlines the review of the capital structure and the potential sale of the property to an external buyer.

Case examples for Asset Financing (Real Estate)

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