Activia Properties (3279) Q2 2023 earnings summary

Executive summary

• FP23 revenue was ¥17,482 million, profit ¥8,843 million and distributions ¥9,875 per unit; period-end occupancy reached 97.0%.

• Leasing progress lifted office occupancy above forecast, while retail and hotel recovery continued; asset replacements and unit repurchases supported portfolio quality and DPU.

Financial highlights

• Revenue rose 8.1% YoY to ¥17,482 million; operating profit rose 10.2% to ¥9,826 million and profit rose 12.7% to ¥8,843 million.

• Leasing business revenue was ¥13,969 million; real estate leasing business profit was ¥8,897 million, down from ¥9,314 million, as leasing expenses increased to ¥6,197 million.

• Real estate sales generated ¥2,388.8 million in gains, including ¥1,102.5 million from Tokyu Plaza Ginza (Land) and ¥1,286.4 million from a 29% interest in Luogo Shiodome.

• FP23 DPU was ¥9,875, ¥525 above forecast; internal reserve reached ¥1.077 billion, ¥748 million above forecast.

• Operating cash flow was ¥48,684 million, investing cash outflow ¥45,271 million and financing cash outflow ¥4,247 million; ending cash and equivalents were ¥21,351 million.

Outlook and guidance

• Forecast distributions are ¥9,300 per unit for the periods ending November 30, 2023 and May 31, 2024; forecast revenue is ¥17,260 million and ¥15,071 million, respectively.

• The November 2023 forecast includes an expected ¥2,261 million gain on the Luogo Shiodome sale; planned LTV is ~47% at both forecast period-ends.

• NOI is expected to bottom in FP24 and improve as occupancy rises; the office occupancy strategy targets 97–98% in FP24.

• FP24–FP25 forecasts include further electricity expense increases, with forecast electricity P&L deficits of ¥241 million and ¥268 million, respectively.