Mitsui Fudosan Retail Fund Investment (8964) Q2 2024 earnings summary

Executive summary

• 39th-period (Jul–Dec 2023) revenue was ¥11,032m, operating income ¥6,010m and net income ¥5,703m, all lower YoY.

• Distribution was ¥10,549/unit, ¥49 above forecast and ¥560 below the prior period; total distributions were ¥5,707m.

• Portfolio expanded to 40 properties with ¥364.1bn acquisition value and 100.0% occupancy at Dec. 31, 2023.

Financial highlights

• Revenue declined 4.3% YoY, operating income 6.3%, and ordinary and net income 7.2%; net income per unit was ¥10,542 versus ¥11,360.

• NOI fell ¥262m to ¥8,654m; property leasing operating income decreased ¥270m to ¥6,751m, partly reflecting the Higashi-Yamato sale and lower other rent revenue.

• Operating expenses were ¥5,022m, including ¥4,281m of rent-business expenses; reserve for reduction entry increased to ¥177m from ¥41m.

Outlook and guidance

• Jun. 2024 forecast: revenue ¥11,555m, operating income ¥6,122m, net income ¥5,770m and distribution ¥10,670/unit.

• Dec. 2024 forecast: revenue ¥11,511m, operating income ¥6,130m, net income ¥5,758m and distribution ¥10,690/unit.

• Forecast distributions include reserve reversals of ¥3m for Jun. and ¥26m for Dec.; no excess-earnings distributions are anticipated. Shinsaibashi redevelopment is projected to raise annual NOI from ¥320m to ¥1,430m from 2028, with ~¥1,000/unit distribution impact versus the 39th period.