NTT URBAN DEVELOPMENT : Notice of Summary of Presentation and Principal Questions and Answers of Financial Results for the 1st Quarter of FY 2016

Summary of Presentation｜Principal Questions and Answers

Last updated: August 5, 2016

Financial Results for the 1st quarter of FY 2016

Summary of Financial Results

• Operating revenue, operating income, and quarterly net income each showed rise year on year.
• Satisfactory progress was made overall. Operating revenue was 33.2 billion yen (year-on-year change of +6.5 billion yen), operating income was 5.2 billion yen (+1.3 billion yen) and quarterly net income was 2.8 billion yen (+0.6 billion yen).

Offices/Retail Business

• Operating revenue increased slightly while operating income increased from 4.5 billion yen to 5.8 billion yen.
• As for operating revenue of office and retail leasing, although lost revenue owing to sales of properties stood at 1.0 billion yen, revenue from existing properties increased by 0.9 billion yen due to increased revenue from Shinagawa Season Terrace as occupancy improved, cancellation of free rent, etc. In addition, operating revenue from new properties, such as three buildings in Boston, increased by 0.3 billion yen. On the whole, operating revenue increased by 0.2 billion yen.
• Operating income, meanwhile, showed an increase of 1.2 billion yen due to increased income from rentals as the vacancy rate of existing properties improved and to the effects of changing the depreciation method to the straight-line method.
• Vacancy rate is on a downward trend. As of the end of June 2016, it had dropped to 4.2% in the five wards of central Tokyo.

Residential Business

• In residential business, operating revenue increased while operating income decreased.
• Operating revenue of residential property sales increased by 5.2 billion yen year-on-year. Of this amount, the effects of share-outs contributed 4.0 billion yen and the sale of units of Wellith Inage and other properties contributed 1.1 billion yen.
• Operating income decreased mainly due to lost profits from sales of residential rental properties in the previous fiscal year.
• Condominium sales: 87 delivered units and 347 contracts. Sales are somewhat lagging compared with the original plan, but we look to speed up from here on centered about the large-scale condominiums such as Wellith Tsukuba Takezono.

Financial Status

• Net assets decreased by 2.7 billion yen compared with end of March 2016. Of this, decline of 2.4 billion yen in foreign currency translation adjustment came from currency-exchange fair-value adjustments of overseas assets.
• Investments stand at 6.3 billion yen. In this first quarter, investments progressed in Otemachi 2-Chome Area 1st Class Urban Redevelopment Project Building A and Universal City Station Project.
• Interest-bearing debt increased by 5.4 billion yen compared with end of March 2016 due in part to increase in working capital.
• Repayment of high-interest loans progressed with the average interest rate dropping to 0.92%.

Recent Activities

• Underground dismantling and new construction for Shimbashi 1-Chome Project is scheduled for October 2016.
• The contract rate (including prospective tenants) for Shinagawa Season Terrace was about 90%.
• Development of small luxury hotels is progressing at Atami, and Hakone; work at Kashikojima opened on July 15, 2016.
• Shinpukan redevelopment project, a mixed-use development of retail facilities and hotel, is progressing toward start of business in FY2019
• In the project for utilizing the former Kiyomizu elementary school, the plan is to convert the buildings on the site to a hotel and other facilities.
• The Okinawa Seragaki Project is progressing and the start of new-building construction is scheduled for the fall of 2016.
• In Serviced senior housing, project are progressing on Shibuya Honmachi, Fujisawa Kugenumae, etc. Completion of Shibuya Honmachi is scheduled for September 2016.
• All 929 units of Wellith Inage were sold as of May 2016.
• Redevelopment work for 1 King William Street in London is scheduled to be completed in August 2016. Negotiations are under way for occupancy by the NTT Group. At present, the prospective tenant rate is 40%.
• Redevelopment work for 119 West 25th Street in New York is scheduled to be completed in August 2016.
• Global business assets stood at 54.0 billion yen based on market value.
• Studies are progressing on the launch of redevelopment projects on Harajuku, Minami Aoyama, and other sites through negotiations with concerned parties.
• Grand design of the utilization of real estate of the NTT Group is being studied in collaboration with NTT.