Cargill's Minnetonka investment subsidiary, CarVal Investors, is planning a $500 million Japanese real estate fund to buy distressed properties and underperforming loans in the wake of Japan's March earthquake.
Corporate bankruptcies in Japan increased last month, and many attribute it to the financial aftermath of the earthquake and tsunami. But even before the earthquake, Tokyo property values had been declining sharply for two years, leading to expectations that distressed property assets would become available at fire-sale prices.
Cargill has committed $200 million to the fund, which would focus on commercial mortgage-backed securities and loans that can't be refinanced, CarVal representatives said. The Japanese real estate market is ripe for this type of investment, CarVal said.
"The level of distress that hit Japan post-2008 in the real estate sector was as severe -- if not more so -- than what hit the U.S.," said Tim Clark, CarVal's CIO of Real Estate. "Since 2008, the Japanese property market has faced debt refinancing issues and there have been persistent capital vacuums."
Following the March earthquake, the real estate market was essentially frozen for six to eight weeks, but that problem has abated somewhat, Clark said. "Today, there are still volumes of assets which financial institutions need to purge from their balance sheets."
CarVal Investors has been investing in Tokyo since the mid-1990s, said spokeswoman Anna Lovely.
CarVal Investors, founded by Cargill in 1987, manages commercial credit and real estate investments and has 275 employees worldwide. It currently has $11 billion in assets under management.
Steve Alexander • 612-673-4553