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Nomura Real Estate to buy UK property fund manager

Clients hunt for returns overseas with Japan's market expected to shrink

Nomura Real Estate Holdings plans to offer more property funds in the U.K. as well as North America and Asia.   © Reuters

TOKYO -- Nomura Real Estate Holdings will buy Britain's Lothbury Investment Management to meet Japanese institutional investors' needs for foreign property funds, as the country's real estate market is expected to shrink along with its dwindling population.

The acquisition will be Nomura Real Estate's first overseas. Although no price has been made public, Nomura is expected to receive 75% of the company's shares from management for more than 5 billion yen ($44.6 million). Both sides have already agreed to the deal, and Nomura could make Lothbury a consolidated subsidiary as soon as September, pending a review by U.K. regulators.

Lothbury was managing 2 billion pounds ($2.64 billion) in funds as of September 2017 for more than 110 institutional investors such as the government state pension fund and insurers. The company invests in commercial facilities, office buildings, logistics centers and other property in Britain.

After the purchase, the companies will introduce each other's clients and consider such other projects as joint real estate development.

Nomura Real Estate manages such funds as real estate investment trusts through a subsidiary, Nomura Real Estate Asset Management. It plans to strengthen its overseas property fund operations through more acquisitions and joint ventures in North America and Asia.

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