Mitsubishi firm launches $336m Japanese data centres fund

A subsidiary of the powerful Japanese conglomerate, Mitsubishi Corporation, has launched a ¥25.8 billion (€230 million: $336 million) property fund aimed at buying data centres.

Diamond Realty Management has seeded the fund with three properties, it disclosed today, while the finance for the vehicle has come from one single Japanese lender thus far, which provided a non-recourse loan, it said.

Diamond is hoping that by seeding the new fund that will entice institutional investors to commit their capital. The seed investments are two properties the Greater Tokyo area and one in Sapporo, Hokkaido, the island to the north of the capital.  

Each of the properties have long-term lease contracts in place and, according to the statement, reliable emergency power supply and state-of-the-art quake-resistant systems. Such emphasis on these characteristics has come following the March 11 earthquake and subsequent tsunami which led to world’s worst nuclear accident in a generation.

Diamond has been operating since 2004 and has launched six funds to date for both domestic and overseas limited partners. Mitsubishi created the firm as a way of tapping the private capital markets for real estate investment vehicles. Its creation followed Mitsubishi Corporation's success in building up its publicly-traded J-REIT management platform, Mitsubishi Corp UBS Realty, which is the asset manager of two J-REITs. Japan Retail Fund, the first J-REIT focused on the retail sector, was listed on the Tokyo Stock Exchange in March 2002, and Industrial & Infrastructure Fund, which focuses on both industrial and infrastructure properties, was listed in October 2007. 

Referring again to the devastating March quake and to the wider financial crisis, Diamond said the Japanese real estate investment market had started to show signs of recovery. It linked potential investors’ need for stable cash-flow generative assets with the data centre fund it is marketing.