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JPMorgan downgraded Nippon Building Fund Incorporation (8951:JP) (OTC:NBFJF) from Overweight to Neutral on Monday, while lowering its price target to JPY131,500.00 from JPY135,800.00.
The downgrade comes as Nippon Building Fund’s stock has "substantially outperformed" the TSE REIT Index since the beginning of 2024, according to JPMorgan. The outperformance has been driven by expectations for improvement in the office market as companies resume office work and increase hiring.
JPMorgan noted that Nippon Building Fund’s dividend yield remains relatively low at 3.7% within its J-REIT coverage, based on the June 16 investment unit price and estimated distributions for the periods ending June 2025 through December 2025.
The firm acknowledged some potential for distribution growth based on Nippon Building Fund’s updated dividend policy and possibilities for portfolio property replacement and realization of unrealized gains.
Despite these positive factors, JPMorgan sees "relatively limited upside potential" for the stock, prompting the rating downgrade and reduced price target.
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