The Amendment to the Real Estate Syndication Act and Its Impact on Real Estate Securitization Transactions in Japan

April 02, 2014


  1. Introduction

This alert gives a general overview of the 2013 amendment to the Real Estate Syndication Act (aka Real Estate Specified Joint Enterprise Act) (Law No. 77, 1994) and the related cabinet and administrative orders issued by the government (collectively referred to as the “RSA”) and the impact of such amendment on real estate securitization transactions in Japan.

Historically, the structures typically used in real estate securitizations in order to achieve bankruptcy remoteness were the TMK (tokutei mokuteki kaisha) structure, based on the Act on Securitization of Assets, in which the TMK holds either real estate or beneficial interests in a trust that owns real estate (“RE Beneficial Interests”), and the GK-TK structure in which a tokumei kumiai investor invests in a godo kaisha corporate entity that holds RE Beneficial Interests.

Under the RSA after amendment (the “Amended RSA”), an additional bankruptcy-remote real estate securitization structure was created, permitting the use of the GK-TK structure to hold real estate directly. This should provide a broader menu from which to choose in structuring real estate transactions and facilitate the development of this area in Japan. The Amended RSA became effective on December 20, 2013.

  1. What is the Real Estate Syndication Act (RSA)?

In general, a person who engages in “real estate syndication” that falls within the descriptions of (1) or (2) below is required under the RSA to receive permission from the Ministry of Land, Infrastructure, Transport and Tourism (the “MLIT”), or, as the case may be, a prefectural governor having jurisdiction (an “RSA Permission”).

(1) The business of entering into “real estate syndication contracts” (such as tokumei kumai contracts) (“RS Contracts”) to engage in real estate transactions and distributing the proceeds or profits thereof to investors; and

(2) The business of acting as an agent or broker in connection with the entering into of RS Contracts.

  1. Background to the Amendment to the RSA and Outline of the Amended RSA

Under the RSA prior to its amendment, it was not in practice possible for special purpose companies (SPCs) to obtain RSA Permission because of the strict requirements therefore. As a result, an SPC could not be used in a GK-TK structure investing in real estate except in very limited cases. Under the Amended RSA, an SPC that meets the following four criteria can engage in “special business”, a new business category under the Amended RSA, without any RSA Permission but with only a filing with the MLIT. (An SPC that has made the appropriate filing is called a “Special Business Operator”.)

(1) A corporation (SPC) must be engaged exclusively in the business of “real estate syndication” (described in Paragraph 2(1) above).

(2) The SPC must retain Real Estate Syndication Operators holding a Type 3 operator license (a “Type 3 Operator”) and a Type 4 operator license (a “Type 4 Operator”) and outsource the businesses relating to real estate transactions and solicitation in respect of RS Contracts, respectively, to such operators.

(3) The investors in the SPC must be “Special Investors” (“Special Investors” include banks, trust banks, Real Estate Syndication Operators, real estate brokers/dealers, real estate investment advisors, and “professional investors” under the Financial Instruments and Exchange Act (the “FIEA”); “professional investors” include foreign corporations).

(4) Other conditions to protect investors set forth in the applicable ministerial ordinance must be satisfied.

Under the Amended RSA, new business classifications were created: “Type 3 Business” is the business of engaging in real estate transactions, and “Type 4 Business” is the business of engaging in solicitations to enter into RS Contracts, in each case at the request of a Special Business Operator. To engage in Type 3 Business as a Type 3 Operator and to engage in Type 4 Business as a Type 4 Operator, permission from the MLIT is required in each case.

  1. Treatment of TK Interests in “Special Business”

It is anticipated that many investments in “special business” will use tokumei kumiai (TK) structures. Along with the amendment to the RSA, the FIEA was also amended and TK investments in a “special business” are now treated as Type II Securities under the FIEA. Accordingly, the Type 4 Operator that is retained by the Special Business Operator and engages in Type 4 Business (including solicitations to enter into RS Contracts relating to such TK investments) for and on behalf of the Special Business Operator must also be registered as a “Type II Financial Instruments and Exchange Business Operator” under the FIEA.

  1. Impact on Real Estate Securitization Transactions

The “special business” structure under the Amended RSA is anticipated to be used in transactions involving large-scale repair projects for seismic retrofitting and the development of nursing homes, as traditional bankruptcy-remote real estate securitization structures are not suited for such types of transactions. In addition, the new structure should be more attractive for use in:

  • transactions involving small- and mid-sized properties that were difficult to be securitized by the TMK structure or the traditional GK-TK structure because of cost, time or complexity issues; and
  • renovation and rehabilitation of facilities that are not eligible for securitization using the GK-TK structure because of trust bank policies.


  1. はじめに




  1. 不動産特定共同事業法(不特法)とは


① 匿名組合契約などの不動産特定共同事業契約を締結し、投資家から集めた出資等を利用して不動産取引(不動産の売買、交換又は賃貸借)を行い、その収益や利益を投資家に分配する事業

② 不動産特定共同事業契約の締結の代理又は媒介をする事業

  1. 不特法改正の背景と改正の概要


(i)  不動産特定共同事業(上記2①に掲げるもの)を専ら行うことを目的とする法人(SPC)が行うこと

(ii)  特例事業者(SPC)は、不動産取引に係る業務を、第三号事業を行う不動産特定共同事業者に委託し、不動産特定共同事業契約の締結の勧誘の業務を、第四号事業を行う不動産特定共同事業者に委託すること

(iii) 不動産投資の専門知識と経験を有すると認められる者(以下「特例投資家」といいます。)を相手方又は投資家とすること


(iv)  第三号事業者に対する上記(ii)の委託契約において、再委託の禁止、業務・財産状況に関する書類の備置・閲覧及び当該状況の説明義務を規定すること


  1. 特例事業における匿名組合出資持分の有価証券化


  1. 不動産証券化ビジネスへの影響



If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:


This article was originally published by Bingham McCutchen LLP.