Valuation Review: Reassessing Office Business and ROE/Shareholder Returns

Research evidence excerpt

Valuation Review: Reassessing Office Business and ROE/Shareholder Returns

Idea

June 29, 2026 07:23 AM GMT

Morgan Stanley MUFG Securities Co., Ltd.+MReal Estate | Japan Toshiyuki Anegawa

Equity Analyst

Valuation Review: Reassessing Toshiyuki.Anegawa@morganstanleymufg.com +81 3 6836-8914

Office Business and ROE/

Shareholder Returns Real Estate

Japan

We revise our valuation methodology and cut PTs given share Industry View In-Line

price declines fueled by higher interest rates, but our ratings are What’s Changed

Sumitomo Realty & Dev.

unchanged based on solid fundamentals. Office rent hikes and (8830.T) From To

Price Target ¥6,150 ¥4,400

better ROE/shareholder returns still key to share price recovery.

Mitsubishi Estate (8802.T) From To

Price Target ¥6,350 ¥5,000

Key Takeaways

Mitsui Fudosan (8801.T) From To

Remain OW on the 3 major real estate stocks and EW on 4 second-tier names Price Target ¥2,500 ¥1,950

Positive case: Rerating of office rent hikes outpacing interest rate & construction Nomura Real Estate Holdings

(3231.T) From To

cost growth, helping to normalize valuations. Firms boost shareholder returns Price Target ¥1,050 ¥1,000

Risk case: Sharply higher interest rates bring entrenched view of interest rates (r) Tokyu Fudosan Holdings

exceeding economic growth (g), delaying rerating. Shareholder returns disappoint (3289.T) From To

Price Target ¥1,600 ¥1,450

Key changes: RoNAV x total payout ratio continues to show explanatory power for Hulic (3003.T) From To

Price Target ¥2,000 ¥1,800

P/NAV, so while we fine-tune our valuation framework, we still apply a P/NAV-based

approach. However, to reflect rise in capital costs from higher interest rates, we trim Tokyo Tatemono (8804.T) From To

Price Target ¥4,650 ¥3,550