Several months ago, a guy who is representing middle eastern investors asked me,”Are there any opportunities of project finance, as we can finance a project, our interest rate is three percent, quite cheep!”
“Listen, unfortunately, no one would borrow money from you, as nowadays, Japanese interest rates are quite cheep, 1-2 percent maximum, even below one percent can be found quite often.”
“Really?? It’s impossible…”
“Yes, it’s true. Please do your research, therefore, many non-Japanese investors have come to Japan to benefit from low interstate environment. Their cash on cash return would be attractive by the leverage.”
At that time, I did not tell that guy, there is a far cheap finance opportunity in Japan.
Once before, I had a talk with my Japanese friend, who is a French interpreter and well familiar with French social and economic conditions. We discussed about islands’ mentality. She said,
”Yuko san, you know, Marta island, during the War, many solders from that island devoted their lives for France. Therefore, the French government has had some burden to them. We have found a sort of social and economic measurements to support that local economy.”
“Well, that’s exactly the same to Okinawa, during the war as well as the end of Meiji era, Okinawa people devoted their lives to Japan. Therefore, Japan has allocated annual 3 billion budget to develop Okinawa’s social infrastructure and principle industries. Taking into account the increasing tensions between Japan and China, I don’t believe that Japanese government will decrease this fund towards Okinawa…”
“Yes, it’s true. Generally speaking, a country or the central government has been in weaker position in terms of their bargaining power regarding island issues. This has been affecting the financial aid towards those isolated regions. That has influenced both positively and negatively in transforming the society of that island.”
It was a quite interesting discussion and eventually I referred the fund arranged by Japanese government to encourage Okinawa’s economic growth.
“ We could never compete with them.”
The head of the real estate finance team of Stella Bank said. Stella Bank was used to be a regional commercial bank based in greater Tokyo area and after the Lehman clash, an Asian financial institution acquired its equity and changed their name to Stella Bank. They have a team specialized in hospitality asset finance and they have been active in financing resort facilities. They said, Okinawa government fund has been providing the most favorable conditions to local companies. Say, 70 percent LTV, below one percent interest rate, the amortization will start far after the completion with small amount. All those information has been clear but hardly known to investors not only to Japanese but also to non-Japanese.
