Hulic Reit Investment Corporation (TSE: 3295) told the Tokyo Stock Exchange on September 25 that it has decided to borrow ¥21.2bn to help pay for a property swap announced the same day. The loans come from Mizuho Bank and MUFG Bank and will cover part of the acquisition cost, including a cash balance owed to the REIT's own sponsor, Hulic Co.
A sponsor-driven asset swap
The borrowing is intended to help fund a related-party exchange under which Hulic Reit will give up three ageing Tokyo properties: the Hulic Kojimachi Building, to be sold for ¥13.3bn against a ¥12.6bn book value; the Hulic Shibuya 1-chome Building, ¥6.5bn against ¥5.0bn; and the Trust Garden Yoga no Mori nursing home, ¥7.5bn against ¥5.1bn. In return, it will take a 24.99% co-ownership stake in QUARTZ SHINSAIBASHI, a 28-storey retail, hotel and office tower in Osaka completed in February 2026 and directly connected to Shinsaibashi Station, for ¥29.5bn. The tower already counts BVLGARI, CHAUMET and DIESEL among its street-facing shops on floors 1 to 3, with CARTIER and FENDI due to open, and houses the Gate Hotel Osaka by HULIC. Separately, the REIT has agreed to buy the Eastnet Building, an office property in Koto-ku, Tokyo, for ¥19.1bn, also from Hulic Co., with both deals scheduled to close on September 30. Hulic Co. owns the REIT's asset manager and holds 14.50% of Hulic Reit's own units, so the transaction needed board approval under the Investment Trusts and Investment Corporations Act. The ¥2.2bn balance owed to Hulic Co. for the property exchange is scheduled to be settled with cash on hand and the new borrowings on the same date.
The financing
| Lender | Amount | Spread over 1-month yen TIBOR | Maturity |
|---|---|---|---|
| Mizuho Bank (short-term) | ¥5.0bn | +0.20% | Aug 31, 2027 |
| Mizuho Bank (long-term) | ¥5.0bn | +0.25% | Feb 29, 2028 |
| Mizuho Bank (long-term) | ¥5.0bn | +0.25% | Aug 31, 2028 |
| MUFG Bank (short-term) | ¥6.2bn | +0.20% | Sep 30, 2027 |
The four loans are unsecured and unguaranteed, repayable in a single bullet payment at maturity, with interest reset monthly against one-month Japanese yen TIBOR. Once executed, the loans would take Hulic Reit's short-term borrowings from ¥4.6bn to ¥15.8bn, and total interest-bearing debt, including outstanding investment corporation bonds, from ¥195.1bn to ¥216.3bn, according to the filing's before-and-after comparison.
Forecasts, not results
Hulic Reit's own supplementary material projects that the combined asset reshuffle, covering both the exchange and the separate Eastnet Building purchase, will lift net operating income before depreciation by ¥423mn per period, a 4.7% increase, and add roughly ¥5.7bn to unrealized gains, translating into a projected ¥4,005 rise in net asset value per unit. The exchange alone is expected to book a ¥199mn gain. Those are the asset manager's own estimates, not booked results. In its exchange filing, the REIT said the transactions' effect on its already-published earnings forecast for the six months to February 2027 is minor and does not require a revision.