TOKYO, July 23 (Reuters) - Mitsubishi Estate Co’s credit rating has been lowered by one notch to A2 by Moody’s Investors Service, on concern that Japan’s largest developer by market value is less likely to reduce debt after announcing plans to increase investment.
Mitsubishi Estate in May said it would spend as much as 900 billion yen ($8.9 billion) through 2016 to develop properties in Japan including in Tokyo’s Marunouchi district, which commands the highest office rent in the country.
The announcement came at a time of recovery in the property market. Land prices in Tokyo, Osaka and Nagoya - Japan’s three largest metropolitan areas - rose for the first time in six years last year spurred by investment, according to a government survey.
Improving market conditions prompted Moody’s to apply a stable outlook to Mitsubishi Estate’s long-term senior unsecured debt, the credit-rating firm said on Wednesday in a statement detailing the rating cut.
The higher the credit rating, the easier and cheaper it is for a company to borrow money.
Mitsubishi Estate is not alone in increasing investment in an improving property market.
Mitsui Fudosan Co, Japan’s second-largest property developer, sold new shares last month to raise more than $3 billion for office development in Tokyo.
Privately held Mori Building Co also plans to spend about 1 trillion yen over the next 10 years on developments in Tokyo.
$1 = 101.4000 Japanese Yen Reporting by Junko Fujita; Editing by Christopher Cushing