Financial Highlights

Financial Highlights
[Accounting standards: Japanese GAAP]

Overview of Operating Results

FY2023 Third Quarter (First Nine Months)

Analysis of Operating Results

The Group’s business performance during the first nine months ended December 31, 2023, owing to strong performance in sales of assets and the real estate sales agent business against the backdrop of a strong real estate market, strong performance in the hotel business due to the recovery in demand in Japan and overseas, etc., showed increases both in revenues and profit with ¥717.8 billion in operating revenue (up 11.9% from the same period of the previous fiscal year), ¥75.4 billion in operating profit (up 21.5%), ¥68.0 billion in ordinary profit (up 24.7%), and ¥45.5 billion in profit attributable to owners of parent (up 47.0%).
The progress in the first nine months ended December 31, 2023 relative to the full-year forecasts was 64.1% for operating revenue and 65.5% for operating profit. However, the business conditions are favorable and the Group is making steady progress toward achieving the full-year forecasts.

Urban Development

In our Urban Development business, we recorded ¥206.9 billion in operating revenue (up 15.5% from the same period of the previous fiscal year) and ¥29.7 billion in operating profit (up 17.7%).
Overall, the segment saw increases in revenues and profit. Despite a decrease in revenues due to a decrease in the number of condominium units sold in Condominiums, and lost lease revenues due to sales of assets in Leasing (Office buildings) in the previous fiscal year, the segment achieved an increase in revenues mainly due to the contribution to full-year results by KUDAN-KAIKAN TERRACE (Chiyoda-ku, Tokyo) that opened in October 2022, and an increase in the sales of assets in Other (excluding lease in office and commercial facility business) and Other (excluding condominiums in residential business), in the breakdown of operating revenue below.
In the office building market, despite concerns about factors such as a shrinking demand for office buildings due to the diversification of working styles such as telework, leasing activity particularly in the Shibuya area, where a large proportion of the Company’s owned properties are located, was robust. Although the vacancy rate (office buildings and commercial facilities) as of December 31, 2023 temporarily rose to 5.7%, this was due to tenants who will move in one after the other from now into Shibuya Sakura Stage (Shibuya-ku, Tokyo), which was newly completed in November 2023. Leasing for offices in Shibuya Sakura Stage is progressing steadily and the contract rate has reached approximately 95%. If Shibuya Sakura Stage is excluded, the vacancy rate (office buildings and commercial facilities) was maintained at a low level of 1.2%
Sales of condominium units continued to show an underlying strength of demand and proceeded strongly. Regarding condominiums during the first nine months ended December 31, 2023, in addition to the recording of BRANZ Shin-Sapporo (Sapporo-shi, Hokkaido) as newly completed and delivered property, sales of completed inventories have been progressing. The ratio of contracted amount for sale to the planned sales amount for the full year for condominiums grew from 82% at the beginning of the fiscal year to 102% (up 0 percentage points from the same period of the previous fiscal year).

Strategic Investment

In our Strategic Investment business, we recorded ¥63.1 billion in operating revenue (up 33.6% from the same period of the previous fiscal year) and ¥7.7 billion in operating profit (down 36.6%).
The segment saw an increase in revenues but a decrease in profit. Although the segment achieved an increase in sales of assets of logistics facilities in Infrastructure & Industry, there was a fallback in sales of equity in Overseas business, in the breakdown of operating revenue below.
The renewable energy business is expanding steadily as the number of facilities in operation increased as planned. Total rated capacity after all the facilities in Japan are put into operation (before taking our equity into account) is 1,760 MW.

Property Management & Operation

In our Property Management & Operation business, we recorded ¥261.0 billion in operating revenue (up 8.6% from the same period of the previous fiscal year) and ¥15.6 billion in operating profit (up 156.8%).
Overall, the segment saw increases in revenues and profit. The segment achieved an increase in revenues mainly due to an increase in construction of buildings in Property Management and an increase in revenue in Wellness mainly due to strong performances in the hotel business supported by a recovery in demand in Japan and overseas, in the breakdown of operating revenue below.

Real Estate Agents

In our Real Estate Agents business, we recorded ¥208.4 billion in operating revenue (up 10.5% from the same period of the previous fiscal year) and ¥28.9 billion in operating profit (up 16.7%).
Overall, the segment saw increases in revenues and profit. The main factors for this increase in revenues were an increase in the transaction amounts along with strong activity in the real estate transaction market in the Real Estate Sales Agents business, and an increase in sales of development projects in Real Estate Sales in the breakdown of operating revenue below.