Daiwa Office Investment (8976) investor relations material

Executive summary

• 41st FP revenue rose 2.8% YoY to ¥16,512m, operating income increased 7.1% to ¥9,204m and net income rose 5.6% to ¥7,916m; occupancy reached 99.1%.

• NAV per unit was ¥418,773; portfolio unrealized gains reached ¥155.4bn, or 32.9% of portfolio value.

Financial highlights

• 41st FP revenue was ¥16,512m, including ¥14,912m in rent revenue and ¥1,493m in property-sale gains; operating expenses were ¥7,308m.

• Operating income was ¥9,204m, ordinary income ¥7,917m and net income ¥7,916m; net income per unit was ¥8,468 versus ¥7,996 in the prior period.

• DPU was ¥7,630, down from ¥8,020 despite higher net income; ¥784m was retained as a reserve for reduction entry, resulting in a 90.1% payout ratio.

• Results exceeded January forecasts: revenue by ¥839m, operating income by ¥793m, net income by ¥744m and DPU by ¥380.

• Operating cash flow was ¥12,172m, investing cash outflow ¥28,270m, financing cash inflow ¥13,803m and period-end cash ¥30,741m.

Outlook and guidance

• 42nd FP forecast: revenue ¥15,779m, operating income ¥8,204m, net income ¥6,515m and DPU ¥7,170, including ¥200 from reserve reversal.

• 43rd FP forecast: revenue ¥15,746m, operating income ¥8,383m, net income ¥6,543m and DPU ¥1,800 after the planned 4-for-1 unit split, equivalent to ¥7,200 pre-split.

• 44th FP DPU target is ¥7,340 pre-split, equivalent to ¥1,835 after the split; internal growth is the main earnings driver despite rate increases and temporary lease cancellations.

• Forecast occupancy is 98.8% for 42nd and 43rd FP; forecast NOI yields are 4.9% and 5.0%, respectively. Forecasts assume no property-sale gains or losses and refinancing of scheduled maturities.