JAPAN Retail Fund Investment Corp, a commercial property trust, will ease off on acquisitions to focus on improving the quality of its assets as Japan's consumer confidence nears a five-year low and borrowing costs rise.

"We will pursue better quality for the entire portfolio rather than expansion," said Yuichi Hiromoto, executive director of Japan Retail, set up in March 2002 by Mitsubishi Corp, Japan's largest trading firm, and UBS AG, Europe's largest bank by assets. "We will enhance revenue per-share by conducting internal growth strategy."

Consumer confidence has dropped as prices grow faster than paychecks. That's crimping earnings at retailers, including Aeon Co, Japan's biggest supermarket operator, whose profit fell for the first time in a decade in the year to March 31. The company said on April 7 it may close as many as 100 stores in Japan.

"Given the downward trend of consumption in general, we have to stick with very steady, long-term leasing contracts with major retail players," Hiromoto told Bloomberg News.

Japan Retail shares gained 7.2 percent in the past three months, compared with a 3-percent decline in the Tokyo Stock Exchange REIT Index.

Global real estate financing has evaporated as defaults by United States home owners saddled banks and securities firms with US$290 billion of losses and asset writedowns.

Mitsubishi UFJ Financial Group Inc, Japan's biggest bank, reduced property loans by 7.7 percent from a year earlier as of September 30. Regulators have sought to prevent a bubble like the one that burst in 1991, leading to 15 years of falling land values.

Commercial banks have become more cautious and started to charge more from borrowers, Hiromoto said. Japanese banks have increased the interest margins on loans by as much as 0.2 percentage point.