Japan’s second-biggest real estate investment trust is weighing a plan to raise tens of billions of yen in new capital to buy office buildings in high-rent districts, signaling new interest in the nation’s reviving real estate market.

Japan Real Estate Investment, which is sponsored by property developer Mitsubishi Estate, aims to increase capital "as soon as possible” through an equity offering, Naoyuki Inoue, Chief Executive Officer of the REIT’s management company, Japan Real Estate Asset Management, said in an interview on Sept. 12. He said the company has started scouting out office properties to buy but didn’t disclose the exact amount of the equity sale.

The plan comes as the Tokyo Stock Exchange REIT Index hit its highest close in more than two years on Tuesday, after the sector reversed a downtrend ending last year. The sector has risen 17% this year, outperforming the benchmark Topix gain of 13%.

The resurgence reflects a recovery in Japan’s office leasing market. Rents in Tokyo’s main business districts have risen 6.6% from their November 2023 bottom, according to office leasing broker Miki Shoji.

Inoue said that, because of the down market, the trust hasn’t been able to issue new capital since April 2023, when it secured around ¥20 billion ($135.7 million) in equity financing.

"Until now, we have focused solely on internal growth by enhancing the profitability of existing properties. But now, we are finally in a place where we can pursue external growth by raising capital and investing in properties,” Inoue said.

The firm is targeting office buildings near train stations in the Greater Tokyo area and large regional cities to bolster its portfolio of 77 properties as of June, including several properties in the heart of Tokyo’s Otemachi financial district.

Public fund raising by J-REITs dropped to ¥259.8 billion in 2024, the lowest in 12 years, according to the Association for Real Estate Securitization. So far only ¥29.6 billion in funding has been raised in the first eight months of this year.

In July, rival Nippon Building Fund Inc. raised about ¥18 billion in its first capital increase since 2022.