What’s a J-REIT?

A "REIT" is an acronym for Real Estate Investment Trust, in order to distinguish Japanese REITs from others they are called "J-REITs" with "J" representing Japan. A REIT is a financial instrument that is relatively new to Japan; it uses funds invested by investors to purchase real estate properties (office buildings, retail properties, etc.), and distributes profits from rent revenues and other income to investors.



REITs are listed on stock exchanges and traded as investment securities (equivalent to shares of general operating companies). REITs draw attention even from novice investors because they allow for participation in real estate investment with a small amount of money, while remaining easily tradable. Investment in J-REITs is conducted in the form of purchasing the investment securities (equivalent to shares) issued by "investment corporations" that have been established to own and manage real estate properties. Investors invest in real estate through this scheme. The investment corporations allocate most of their profits, obtained by deducting expenses from rent revenues, to deliver distributions (equivalent to dividends in stock investment or equity investment) to investors. This allows REITs to offer investment yields that are attractive for investors.

From the Birth of J-REITs to Now

REITs were born in 1960 in the United States, and expanded rapidly in the 1990s. In Japan, where real estate investment by investment trusts (mutual funds) had been prohibited, revisions to the Act on Investment Trusts and Investment Corporations conducted in 2000 (40 years after the birth of U.S. REITs) enabled the preparation of conditions for the REIT market in Japan, which were finally launched in September 2001.