Japan’s REIT industry was officially born on 10 September 2001 — just one day before terrorists flew two planes into the World Trade Center. Looking at the recent performance of Japanese REITs (J-REITs), which were down 52 percent year-to-date as of 31 October 2008, one would think that it’s been destined for hard times since the ill-fated timing of its inception, but that masks the reality of the situation. The J-REIT sector has been bifurcated, with large REITs outperforming the Tokyo Stock Price Index (TOPIX) during the past 24 months, small REITs underperforming, and everything being sold off. In the waves of panic that have spread through the global credit market of late, financial and quasi-financial stocks (such as those of property companies) have been sold off virtually indiscriminately. It is my view that herein lies the best stock-picking opportunities we’ve ever been presented during the illustrious seven-year life of the J-REIT sector.

What drives the per