J-REIT update: recovery pushed back on rising rates

Research evidence excerpt

J-REIT update: recovery pushed back on rising rates

1 July 2026

Mizuho Securities Equity Research REIT / JREIT

Industry Overview

Lowering our end-FY26 TSE REIT Index estimate from 2,100 to 1,950

Senior Analyst: REITs continued to fall and underperformed equities in June

Yosuke Ohata The TSE REIT Index finished June at 1,805.16, down 0.2% from end-May and

+81 3 6202 8506 underperforming TOPIX (which rose 0.9%) by 1.2ppt. On a weighted-average

yosuke.ohata@mizuho-sc.com basis, the 41 REITs under our coverage traded at a 5.1% dividend yield, a

15.9% discount to NAV, and an implied cap rate of 4.5% at end-June basedAnalyst:

on our FY26 estimates.Riena Shimizu

+81 3 6202 8819 Lowering our TSE REIT Index forecast given rising long-termriena.shimizu@mizuho-sc.com

interest rates

The REIT market was rangebound in June after being under increasing

downward pressure since mid-April due to an accelerated rise in long-term

interest rates. On 16 June, the BoJ raised the policy rate, and there was a

limited rebound driven by a belief that negatives were exhausted. At end-June,

the TSE REIT Index was slightly above 1,800, the lower end of our forecast

range.

We lower our end-FY26 TSE REIT Index estimate from 2,100 to 1,950. This

estimate of 1,950 equates to a P/NAV of 0.91x and a dividend yield of 4.7%.

The cut largely reflects a hike to our long-term interest rate assumption from

2.25% to 2.75%. We previously expected the TSE REIT Index to recover to a

P/NAV of 1.0x at the end of this fiscal year, but now expect this to happen in

FY27 or later due to rising interest rates.

The upper end of our expected range is 2,150, which equates to a P/NAV of

roughly 1.0x. To reach this, we believe there needs to be an increase in share