Shinsei Bank Ltd. Set to Bet Newly Formed REIT on Health Care Lending for Aging Japanese Population

Japan-based Shinsei Bank Ltd. is reportedly set on creating a brand new real estate investment trust that would focus all of its attention on a niche market.

Tokyo—Japan-based Shinsei Bank Ltd. is reportedly set on creating a brand new real estate investment trust that would focus all of its attention on a niche market. The financial entity is intent on building its new REIT on the backdrop of the aging Japanese population. According to demographic forecasts, in just two years’ time Japan will have no less than a quarter of its inhabitants over the age of 65, Bloomberg.com reports. The investment body will focus on health care properties and providing lending for organizations in charge of senior housing development and nursing homes.

Shinsei Bank reportedly has plans to kick start the trust’s activity with an initial capital of 100 billion yen, or around $1.25 billion. According to the lender’s general manager of the health-care finance division, Takashi Fujimura, this market was chosen on the basis of growth opportunity. Health-care assets are not overdeveloped, and in this particular context offer the possibility of doubling their values. In fact, Shinsei predicts that in order to match the current demand for senior housing and nursing homes, the current, $3 billion market will most likely double its value, reaching the $6 billion mark by 2017.

Japan is also set to see a surge in demand for nursing homes, as figures from the Japanese Ministry of Healthcare, Labor and Welfare indicate an uptick in the number of people using nursing homes from last year’s 920,000 to 1.15 million in 2015. Furthermore, 2009 saw a troubling amount of applicants wait for nursing home beds, as a number representing 23 percent out of the total 421,000 requests had to be put on stand-by.

With costs for 100 units of senior housing currently set around the 2 billion yen mark, the newly formed REIT will have some room to maneuver in this growing niche market.

A large stake in the bank is currently owned by J. Christopher Flowers, a billionaire investor currently focused on financial services. The investor currently chairs NY-based J.C. Flowers & Co., a private equity investment firm managing two private equity funds that total around $8 billion.