The TSE REIT index keeps rising
The TSE REIT index rose 1.3% in the week spanning 1 to 8 February. However, it underperformed TOPIX and the TSE Real Estate stock index, by 1.9ppt and 0.3ppt, respectively. As of 8 February, the total market cap of all listed J-REITs was ¥3.1trn, the weighted average distribution yield 6.0% (based on company forecasts), the FFO multiple 11.3x, and the NAV multiple 0.81x (based on previous term results).

Office and diversified REITs strong; BoJ's first purchases of J-REITs in 2012
By asset class, office and diversified REITs performed well, posting a 1.6% increase. Residential rose 0.7%. As retail, logistics and hotel were also up, all the asset classes rose during the week. On 7 February, the Bank of Japan (BoJ) purchased ¥1.3bn of J-REITs for the first time in 2012. The BoJ's cumulative purchases since December 2010 are ¥67.8bn. It has ¥42.2bn left for J-REIT acquisitions.

Solid earnings at major real estate companies
Both Mitsui Fudosan (8801; ¥1,287; Buy) and Mitsubishi Estate (8802; ¥1,258; Buy) announced solid 3Q earnings on 3 February. Mitsubishi Estate raised its full-year guidance. We expect stable earnings for the real estate sector. We forecast OP at the five major companies we cover will rise 7.0% YoY in FY12 and 7.3% in FY13.

Eoin Treacy's view The TSE REIT Index has featured in the monthly tables of fundamental statistics for global indices on a number of occasions. This has mostly been because of its competitive yield which is currently 6.06%. The Index trended consistently lower for most of 2011 and lost momentum from early December. It appears to be in the process of forming a base and a sustained move below 820 would be required to question medium-term scope for some additional upside.