Diamond closes ¥10.2bn mezz fund

The property subsidiary of Japanese powerhouse Mitsubishi Corporation has identified a need for gap financing in both refinancing and new transactions and aims to meet that need with its seventh fund.

Diamond Realty Management, the property subsidiary of Japanese powerhouse Mitsubishi Corporation, has raised ¥10.2 billion (€95 million; $130 million) for a Japan-focused, real estate mezzanine finance fund.

The firm announced today the closing of the closed-ended fund, which has been backed by “major financial institutions, local institutional investors and pension funds”.

The fund was pre-seeded with four mezzanine loans made to the owners of an undisclosed residential property portfolio, retail buildings and a shopping mall, all of which are in Tokyo or the wider Tokyo metropolitan area. Each of the assets benefits from “stable performance and cash flow,” Diamond said.

The firm said in its statement that it believed the Japanese real estate market was “showing signs of recovery” after March’s devastating earthquake and that it had identified a need for mezzanine finance to fill gaps between senior debt and equity in both refinancing and new transactions.

“[Diamond] will continue to provide mezzanine financing by managing risks with the Mitsubishi Corporation’s group support and to provide a comfortable return to the mezzanine fund investors.” the firm said.

The fund is the seventh to be closed by Diamond since the platform’s formation in 2004. It follows the launch of a ¥25.8 billion (then €230 million; $336 million) property fund aimed at buying data centres, back in August. In total, Diamond has more than ¥ 340 billion of assets under management.