Japan Excellent Investment Corporation, a Tokyo-listed office REIT, has agreed to sell two office buildings and part of a third site since its June book close, including a Sapporo building sold to Kajima Construction for ¥4.8bn and an Odaiba tower sold for ¥10.7bn to an undisclosed domestic buyer. The disposals follow a half year in which the fund's debt-service coverage ratio, a measure of how comfortably earnings before interest and depreciation cover interest payments, fell to 8.8 times from 10.0 times the previous half-year, down from 13.2 times in the period that ended in December 2021.
For the six months to June 30, Japan Excellent reported operating revenue of ¥11.6bn, roughly flat versus the previous half-year, and net income of ¥4.4bn, a modest increase. It resolved to distribute ¥3,070 per unit, a payout ratio of 90.1% of per-unit net income, and held occupancy at 98.1% across its 33 buildings, down 0.2 percentage points from December. The portfolio's total acquisition cost stood at ¥297.4bn.
During the period the fund finished selling the remainder of the JEI Hamamatsucho Building in January, signed a sale of BIZCORE Akasaka-mitsuke in February, bought Aqua Town Naya-bashi the same month, and added to its stake in Akasaka Intercity AIR in March.
Three more disposals followed the June close. On August 21, Japan Excellent signed a trust-beneficiary-interest sale of the Daiba Garden City Building in Minato Ward for ¥10.7bn, delivery due September 30, to a domestic special-purpose company it says has not consented to disclosure of its identity. The same day it agreed to sell the Sapporo Otemachi Building to Kajima Construction for ¥4.8bn, delivery set for January 28, 2027, and to sell part of the land under its Urawa SH Building to the City of Saitama for ¥60mn, delivery due after demolition work by March 26, 2027.
| Property | Price | Buyer | Delivery |
|---|---|---|---|
| Daiba Garden City Building (Minato Ward) | ¥10.7bn | Undisclosed domestic special-purpose company | Sept. 30, 2026 |
| Sapporo Otemachi Building | ¥4.8bn | Kajima Construction | Jan. 28, 2027 |
| Urawa SH Building (partial land) | ¥60mn | City of Saitama | By Mar. 26, 2027 (after demolition) |
On the financing side, Japan Excellent raised ¥21.6bn during the half-year: ¥3.5bn and ¥5bn in short-term borrowing tied to acquisitions, a ¥10.1bn refinancing of a maturing long-term loan at a fixed rate averaging 3.5 years, and a ¥3bn five-year green bond issued in May. It used the green-bond proceeds to prepay a ¥3bn short-term loan ahead of schedule.
On July 31, after the period closed, it also repaid two Mizuho Bank loans early, ¥2bn and ¥3bn, funded in part by the BIZCORE Akasaka-mitsuke sale proceeds.
The activity pushed leverage higher: total-asset LTV rose to 45.5% from 43.8% a half-year earlier, within the REIT's 35%-to-50% target band but above its recent range, while average debt maturity shortened by 0.3 years to 3.9 years. Rating agency JCR rates the REIT's long-term issuer credit at AA- with a stable outlook. The filing attributes the tighter rate backdrop to the Bank of Japan's gradual policy-rate increases, even as it describes Tokyo's office leasing market as firm and says it is working to raise rents on newly re-let space and negotiate higher rates with existing tenants.