TOKYO -- Nikkei Inc. will start calculating and publishing two new Japan REIT indexes on July 20. The "Nikkei ESG-REIT Index" will incorporate ESG factors on broad J-REIT performances, while the "Nikkei High Yield REIT Index" will comprise of higher-yield J-REITs.
The Nikkei ESG-REIT Index has been developed as investors are more interested in incorporating ESG, or environmental, social and corporate governance, factors into their real estate investments. The constituents of the index have been chosen broadly from the Tokyo-listed REITs. The market capitalization weights, meanwhile, are adjusted by the ESG evaluation, so that highly evaluated REITs have increased weight in the index based on their market capitalizations.
The ESG evaluation will use the rating by GRESB, a Netherlands-headquartered evaluation organization founded by major European pension groups that provides ESG assessments of real estate funds including REITs.
Investors have also shown interest in investments producing stable higher income-gains. As the number of REITs in the market increases in Japan, dividend yield levels are increasingly varied. Therefore, Nikkei selected 35 high-yields REITs out of the 63 REITs listed on the Tokyo Stock Exchange for the Nikkei High Yield REIT Index.
For both indexes, Nikkei will conduct an annual review of components. The Nikkei ESG-REIT Index will be reviewed at the end of November, while the Nikkei High Yield REIT Index will be reviewed at the end of May.
(Nikkei)
