Tokaido REIT Investment Corporation held its FY2026 H1 earnings briefing and indicated that distributions would fall by ¥203 to ¥3,027 per unit due to the impact of higher interest rates despite increased revenue. It also explained its distribution policy, which assumes three additional rate hikes in the 11th and 12th fiscal periods.
Tokaido REIT Investment Corporation held its earnings briefing for the 10th fiscal period, the fiscal year ended July 2026. External growth through the fourth public offering increased its asset scale to ¥74.74 billion, approximately 2.5 times the level at its IPO. Operating revenue and operating income achieved double-digit growth, while the growth in ordinary income and net income remained in the single digits due to the impact of higher interest rates.
NOI for the 10th fiscal period increased year on year, but growth in ordinary income was restrained by lower occupancy, higher leasing costs, and the impact of fixed asset and city planning taxes. Executive Officer Kato explained that distributions per unit were expected to decline by ¥203 from ¥3,230 to ¥3,027, while NOI was below forecast and non-operating expenses had also increased relative to the forecast.
Rent revisions and period-end occupancy remained at high levels, and the company is pursuing operational improvements, including the recovery of occupancy at Centrair Logistics Center. Newly acquired properties include SHIGA Biwako Residence and KOKO HOTEL Shizuoka. From 2026 onward, the company aims to strengthen cash flow by using higher rents and fixed-rent contracts.
For the 11th fiscal period, the fiscal year ending January 2027, and the 12th fiscal period, the fiscal year ending July 2027, distributions are forecast at ¥3,027 and ¥2,885, respectively, assuming a total of three additional rate hikes. The company indicated that it would maintain and improve its ratio of inflation-resistant assets while factoring in improved NOI yields and gains on property sales.