Daiwa Office Investment (8976) Q2 2024 earnings summary

Executive summary

• 37th FP revenue was ¥13,570 million, operating income ¥6,871 million and net income ¥6,214 million; DPU was ¥13,700 and period-end occupancy was 97.0%.

• Priorities included rent growth, selective acquisitions and asset replacement; the portfolio comprised 59 properties with acquisition prices totaling ¥468,886 million.

Financial highlights

• Revenue declined 0.6% YoY; operating income rose 1.8% to ¥6,871 million and net income rose 0.4% to ¥6,214 million.

• DPU remained ¥13,700 on the pre-split basis, including a ¥707 per-unit reserve reversal; distributions totaled ¥6,552 million, including a ¥338 million reserve reversal.

• FFO per unit increased to ¥16,805 from ¥16,685 and AFFO per unit to ¥14,788 from ¥14,605.

• Operating cash flow was ¥8,202 million, investing cash outflow ¥9,128 million and financing cash inflow ¥28,826 million; period-end cash and equivalents were ¥28,827 million.

Outlook and guidance

• 38th FP forecast: revenue ¥15,146 million, operating income ¥7,945 million, net income ¥7,149 million and post-split DPU ¥6,850.

• 39th FP forecast: revenue ¥15,055 million, operating income ¥7,849 million, net income ¥6,973 million and post-split DPU ¥6,850.

• Daiwa Tsukishima sale gains of ¥1,203 million and ¥926 million are included in the 38th and 39th FP forecasts; planned reserves are ¥597 million and ¥420 million, respectively.

• Period-end occupancy forecasts are 97.1% and 97.2%; annualized NOI yield forecasts are 4.4% and 4.5% for the 38th and 39th FPs, respectively.

• Guidance assumes rent increases at existing properties and Daiwa Akihabara's contribution; the buyback is expected to support DPU in the November 2024 and May 2025 periods.