Tokyo Tatemono : Summary of Telephone Conference on Business Results for the 1st Quarter of FY202372KB

Summary of Telephone Conference on Business Results for the 1st Quarter of FY2023 May 11, 2023

○Consolidated Statement of Income for the 1st quarter of FY2023

• In Q1 of the current fiscal year, operating revenues decreased, and business profit increased, mainly as a result of a decrease in sales and gross profit from the sale of properties to investors and an increase in sales and gross profit from condominiums for sale.
• Operating revenue was JPY118.3 billion, a decrease of JPY3.2 billion YoY, 29% of the full-year forecast. Operating profit was JPY27.2 billion, an increase of JPY1.7 billion YoY, 41% of the full-year forecast, and business profit was JPY28.1 billion, an increase of JPY2.7 billion YoY, 40% of the full-year forecast.
• Non-operatingincome was JPY2.2 billion, an increase of JPY0.5 billion YoY, mainly due to equity in earnings of affiliates in overseas businesses. Non-operating expenses were JPY2 billion, unchanged YoY, ordinary profit was JPY27.4 billion, up JPY2.3 billion YoY, and quarterly net income attributable to owners of the parent was JPY17.7 billion, up JPY0.5 billion YoY.

○Consolidated Balance Sheet for the 1st quarter of FY2023

• Total assets were JPY1,812.3 billion, up JPY92.2 billion from the end of the previous period; interest-bearing debt was JPY994.5 billion, up JPY4.7 billion; and net assets were JPY469.7 billion, up JPY12.9 billion.
• The equity ratio is 25.3%, the D/E ratio was 2.2 times, and the net D/E ratio was 1.8 times.

○Commercial Properties Business

• In Q1 of the current fiscal year, operating revenue was JPY34.4 billion, a decrease of JPY23.2 billion YoY, and operating profit and business profit were JPY10.1 billion, a decrease of JPY6.9 billion YoY, mainly due to a decrease in sales and gross profit from the property sales to investors.
• With regard to property sales to investors, two properties were sold, generating JPY5.7 billion in operating revenues and JPY2.2 billion in gains on sales.
• Average rent and occupancy rate as of the end of March remained high, at JPY31,087 per tsubo and 95.8%, respectively.
• Regarding the acquisition of properties for sale to investors, we have decided to acquire three new projects in logistics properties this fiscal year, expanding our stock to JPY380 billion on a total investment basis.

○Residential Business

• In Q1 of the current fiscal year, operating revenue was JPY63.8 billion, an increase of JPY20.4 billion from the previous year. Operating profit and business profit were JPY17.8 billion, an increase of JPY10.1 billion from the previous year, mainly due to an increase in sales and gross profit from condominiums for sale, despite a decrease in sales and gross profit from the property sales to investors.
• As for property sales to investors, one leasing condominium property, operating revenue of JPY1.9 billion and gain on sale of JPY0.4 billion were recorded.
• The number of condominiums posted for sale remained strong at 548 units and a gross profit margin of 37.2% was recorded. Completion inventory decreased by 19 units from the end of the previous period to 156 units. Sales of condominiums for sale continue to be favorable, with 80% of the 1,060 units planned for the full year under contract at the end of Q1.
• The land bank has increased by approximately 100 units since the end of the previous fiscal year, bringing the total to approximately 8,000 units, including 1,060 units to be recorded this fiscal year.
• Regarding efforts on property sales to investors, we sold one leasing condominium this fiscal year, and have secured a stock of approximately JPY65 billion on a total investment basis.

○Asset service Business

• In Q1 of the current fiscal year, operating revenue was JPY14.2 billion, a decrease of JPY1.5 billion YoY, and operating profit and business profit were JPY1.6 billion, down JPY1.5 billion YoY, due to a decrease in sales and gross profit from property sales to investors in asset solutions, which handles a value-add business, despite increased revenue from the parking business.
• For the sale of properties in asset solutions, operating revenue of JPY5.4 billion and gain on sale of JPY0.9 billion were recorded.
• In the parking business, operating revenue was JPY5.6 billion, an increase of JPY0.6 billion YoY.
• Although the number of managed parking spaces decreased by 1,012 spaces from the end of the previous fiscal year to 79,045, we see growth opportunities in the parking business over the medium to long term, and we intend to continue strengthening this business.

○Other

• In Q1 of the current fiscal year, due to increased sales of leisure facilities and equity in earnings of affiliates in the overseas business, operating revenue increased JPY1 billion YoY to JPY5.8 billion, operating profit increased JPY0.2 billion YoY to JPY0.5 billion, and business profit increased JPY1.2 billion YoY to JPY1.2 billion.
• In April, Tokyo Realty Investment Management, Inc., which is entrusted with asset management of Japan Prime Realty Investment Corporation, became a wholly owned subsidiary. In June, we plan to transfer shares of Tokyo Tatemono Kids Co., Ltd, an operating subsidiary engaged in the childcare business. Although the impact of each of these changes on our business performance is minor, we will continue to optimize our business portfolio and further enhance our corporate value, as stated in our medium- term business plan.