BAKU, Azerbaijan, October 30. International rating agency Fitch Ratings has affirmed the Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) of Japan's Mitsui Fudosan Co., Ltd. at 'A', with a Stable Outlook, citing the company's high-quality real estate portfolio, stable rental income and solid financial position.
This was reflected in a publication issued by Fitch Ratings yesterday.
According to Fitch, Mitsui Fudosan's portfolio, valued at 11 trillion yen ($69.8 billion), comprises more than 100 properties, including Grade A and A- offices in central Tokyo, shopping complexes, logistics facilities and hotels. The company's occupancy rate stood at 97.3% at the end of June 2026, while that of its Tokyo offices reached 99.1%. The agency expects strong leasing activity to support further rental growth.
Fitch also highlighted Mitsui Fudosan's leverage and exposure to rising borrowing costs. The company's loan-to-value (LTV) ratio stood at 40% in FYE26, a relatively high level for its rating category. The agency expects it to remain within rating-sensitive thresholds, supported by disciplined financial management, asset disposals and reinvestment of proceeds.
Fitch forecasts that the Bank of Japan's policy rate will rise to 1.5% by the end of 2026 and 2% by the end of 2027. Against this backdrop, the company's recurring EBITDA interest coverage ratio is projected to decline from 5.4x in FYE26 to 4.6x in FYE27 and 4.1x in FYE28, remaining above the agency's negative rating sensitivity threshold of 4.0x through FYE30, the publication said.
Another factor supporting the rating is Mitsui Fudosan's ability to sell completed or mature properties to sponsored real estate investment trusts (REITs), investment funds and institutional investors, and reinvest the proceeds in new projects. Fitch considers this asset-recycling model an important mechanism for managing leverage and financing the company's development pipeline.
At the end of FYE26, Mitsui Fudosan had available liquidity of 712 billion yen ($4.5 billion), comprising 82 billion yen ($520.5 million) in cash, 102 billion yen ($647.5 million) in marketable securities and 528 billion yen ($3.4 billion) in undrawn committed credit facilities. Although this was below its short-term debt of 956 billion yen ($6.1 billion), Fitch noted that additional uncommitted borrowing facilities, together with available liquidity, exceeded short-term obligations.
Long-term debt accounted for 90.8% of corporate debt, while fixed-rate debt represented 81%, excluding non-recourse debt. Bank borrowings constituted 74% of corporate debt, reflecting the company's established access to financing.
Fitch expects Mitsui Fudosan's revenue to grow at low single-digit rates in FYE27-FYE30, with an average EBITDA margin of 20%. Capital expenditure is projected to average 11% of revenue over the same period. The agency also assumes total shareholder returns of 47%, including a dividend payout ratio of 33%, with the remainder allocated to share buybacks.
The rating could come under downward pressure if the recurring EBITDA interest coverage ratio remains below 4.0x or the LTV ratio stays above 40% for a sustained period. Fitch does not expect an upgrade over the next 12-18 months, citing the company's weaker financial structure compared with peers in the 'A' rating category.
Mitsui Fudosan is Japan's largest real estate company by revenue. Its operations include property leasing, development and sales, construction, brokerage, property management and asset management, with leasing remaining its core business.
