“Real Property Securitisation” is a phrase that is widely used to describe the process of transforming direct ownership of real property, such as land and buildings, into indirect ownership through the investment in marketable securities, while preserving for the investor the benefits of income and revenues generated from the operation and sale of such real property. “Real-property-securitised products” are the securities that represent ownership interests in real property which investors receive in real property securitisation.

Real property securitisation, compared to direct investment in real property, has the following characteristics:

1. Liquidity (conversion to cash) is enhanced, since the interest which investors hold is in the form of negotiable securities;
2. Securitisation is a structure under which a series of small funds can be collected from multiple investors resulting in a large overall investment. Direct property investment, which generally requires more substantial funds, can be made by collecting smaller funds and pooling them;
3. Since management of the subject properties is delegated to experts, investors do not have to be involved in property management. Under the “Asset Investment Scheme” not only property management of the subject properties but also the decision making regarding the actual investment in individual properties is commissioned to corporations that have expertise in these areas. As a result, it is much easier for individual investors, even with little experience in property investment and management, to participate in these investments;
4. By delegating property management to experts and by making use of financial techniques to structure the securitisation, risks should be decreased to some degree; and
5. Some of the above benefits are off-set by the costs, expenses and fees associated with the establishment of real-property-securitised products. Returns from securitised products, compared with direct investment in real property under the same conditions, will be lower as risks are decreased.

Real property securitisation, compared to direct investment in real property, has the following characteristics:

1. Liquidity (conversion to cash) is enhanced, since the interest which investors hold is in the form of negotiable securities;
2. Securitisation is a structure under which a series of small funds can be collected from multiple investors resulting in a large overall investment. Direct property investment, which generally requires more substantial funds, can be made by collecting smaller funds and pooling them;
3. Since management of the subject properties is delegated to experts, investors do not have to be involved in property management. Under the “Asset Investment Scheme” not only property management of the subject properties but also the decision making regarding the actual investment in individual properties is commissioned to corporations that have expertise in these areas. As a result, it is much easier for individual investors, even with little experience in property investment and management, to participate in these investments;
4. By delegating property management to experts and by making use of financial techniques to structure the securitisation, risks should be decreased to some degree; and
5. Some of the above benefits are off-set by the costs, expenses and fees associated with the establishment of real-property-securitised products. Returns from securitised products, compared with direct investment in real property under the same conditions, will be lower as risks are decreased.