Daiwa Office Investment (8976) Q2 2025 earnings summary

Executive summary

• 39th FP ended May 2025 with revenue of ¥15,208m, net income of ¥6,949m, DPU of ¥6,920, period-end occupancy of 98.1% and NAV per unit of ¥409,172.

• Strategy prioritizes EPU-led DPU growth, selective asset replacement, buybacks and investment in higher-growth assets; EPU target is ¥7,130 for the 44th FP ending November 2027.

• Portfolio comprised 59 properties with ¥468.3bn acquisition value; 80.8% of acquisition value was in Tokyo’s five central wards.

Financial highlights

• Operating revenue was ¥15,208m, operating income ¥7,921m, ordinary income ¥6,950m and net income ¥6,949m; net income declined 3.0% period over period.

• Rent revenue was ¥14,256m versus ¥13,993m; property-sale gain was ¥928m versus ¥1,204m, and interest expense increased ¥192m to ¥835m.

• EPS was ¥7,348, FFO per unit ¥8,384 and AFFO per unit ¥7,219; DPU remained ¥6,920, with ¥6,526m distributed and ¥423m retained in the reduction-entry reserve.

• Results exceeded January forecasts by ¥110m in revenue and ¥63m in net income; occupancy was 98.1% versus 97.9% forecast.

Outlook and guidance

• 40th-FP forecast: revenue ¥15,108m, operating income ¥7,703m, net income ¥6,536m and DPU ¥7,000; 41st-FP forecast: revenue ¥14,850m, operating income ¥7,738m, net income ¥6,460m and DPU ¥7,000.

• DPU forecasts include reserve reversals of ¥70 and ¥150 per unit for the 40th and 41st FPs, respectively; forecast occupancy is 98.4% and 98.0%, and annualized NOI yields are 4.7% and 4.9%.

• Forecasts assume divestment of the final 30% interest in Daiwa Tsukishima in November 2025, reducing properties to 58 and generating an expected ¥400m sale gain in the 40th FP.

• EPU target of ¥7,130 for the 44th FP represents ¥712 growth from 39th-FP results; planned drivers include internal growth and a buyback, partly offset by higher base rates.