Diamond Realty Management, a Tokyo-based private real estate investment firm owned by Mitsubishi Corporation, has raised ¥20 billion (€160 million; $175 million) in equity for a Japanese mezzanine real estate debt fund.
The capital raised for Dream Mezzanine Debt Fund IV, the fourth in the series of debt funds launched by Diamond Realty, will be specifically deployed in mezzanine debts collateralized by logistics development projects in Japan.
Most of the capital was raised by 15 domestic Japanese institutional investors, including corporate pension funds, financial institutions, corporations and education institutions.
In a statement announcing the fund launch, Diamond Realty said investing in development projects rather than completed projects would help the firm to offer attractive return opportunities under the current competitive domestic real estate finance market.
“On the ground the LTV ratio of each asset is under 50 to 70 percent and its LTC ratio is under 60 to 75 percent, the expected return is higher than the average dividend yield of J-REITs and private REITs while the risk of principal loss is limited,” said the statement.
The first vehicle in the mezzanine debt fund series raised ¥10.8 billion in October 2011, according to PERE’s Research & Analytics division. The firm introduced development projects in the investment thesis of the third mezzanine debt fund that came to market in March 2014 with a $150 million fundraising target.