Global One Real Estate Investment (8958) Q2 2023 earnings summary

Executive summary

• 39th-period DPU was ¥2,860, up 17.9% YoY, supported by Otemachi sale gains and reserve treatment; portfolio occupancy was 96.3% at March-end.

• Portfolio expanded to 12 properties; management targets ordinary DPU of at least ¥2,400 after Otemachi gains end.

Financial highlights

• Revenue rose 17.1% to ¥6,664m, operating profit rose 24.7% to ¥3,341m, ordinary profit rose 27.5% to ¥2,924m and net income rose 27.5% to ¥2,923m.

• Otemachi First Square’s partial transfer generated a ¥888m sale gain; property-related expenses rose ¥235m YoY, including higher utilities and repairs, while property-related profit declined ¥150m.

• DPU was ¥2,860 versus ¥2,426 in the prior period; sale gains and reserve treatment supported the increase, partly offset by dilution from additional units.

• Operating profit and net income were ¥76m and ¥69m below forecast, respectively, mainly due to higher utility charges and other property costs; DPU matched forecast at ¥2,860.

• Net income per unit was ¥2,935 versus ¥2,415 in the prior six-month period; total dividend was ¥2,925m and payout ratio was 100.0%.

Outlook and guidance

• 40th-period forecasts: revenue ¥7,252m, operating profit ¥3,740m, ordinary profit ¥3,311m, net income ¥3,310m and DPU ¥3,038.

• 41st-period forecasts: revenue ¥7,216m, operating profit ¥3,796m, ordinary profit ¥3,361m, net income ¥3,360m and DPU ¥2,959; ¥334m, equivalent to 10% of net income, is reserved internally.

• Forecasts include Otemachi transfer gains of ¥1,108m in September 2023 and ¥1,096m in March 2024; assumptions include transferring 30% of Otemachi in each period.

• Growth reflects the second Otemachi transfer, full-period Sapporo contribution and Nagoya acquisition in the 40th period, followed by full-period Nagoya contribution and rental growth in the 41st.