Securing earnings from the operating investment business and managing risk

「Against this economic backdrop, during the interim period, the Group sold part of its rental real estate holdings while working to identify investment projects expected to be more profitable than its real estate investment business, including corporate investments and M&A, lending, and renewable energy.」

「In light of the recent upward trend in real estate prices and interest rates, the company worked to secure revenue, profit and cash flow and reduce interest-bearing debt through the sale of 6 rental properties. It limited the acquisition of rental real estate to 1 property and conducted equity financing to secure investment funds. It also worked to develop and strengthen investment fields and projects expected to be more profitable than its real estate investment business, which targets a net yield of 5%, including lending secured by shares, real estate and accounts receivable, and project investments in renewable energy.」

「Against this economic backdrop, during the interim period, the Group sold 3 rental properties while proceeding with preparations to sell rental properties held in order to secure gains on sales from the third quarter onward. It worked to generate stable earnings through the acquisition and sale of rental real estate, identify companies and projects with strong growth potential and social value, and secure the future potential and profitability of its investment business through capital and business alliances.」

「During the fiscal year, the company secured revenue and profit through the sale of 6 rental properties, while actively acquiring rental real estate to strengthen stable medium- to long-term earnings capacity while maintaining an annual rental income base of ¥1 billion. It acquired a total of 9 properties, including office buildings in central Tokyo, for an acquisition price of ¥5,371 million.」

「The company newly acquired 7 rental properties with a total tax-exclusive acquisition price of ¥4,480 million, securing an annual rental income base of ¥1.1 billion. In parallel, it sold 1 rental property while proceeding with preparations to sell rental properties currently held.」

「Against this economic backdrop, during the first quarter, the Group newly acquired 6 rental properties with a total tax-exclusive acquisition price of ¥3,720 million, securing an annual rental income base of ¥1.1 billion. In parallel, it proceeded with preparations to sell rental properties held in order to secure gains on sales from the second quarter onward.」

「In the first quarter, rental income from rental real estate acquired in the previous fiscal year and investment income from domestic and overseas companies contributed to revenue of ¥255 million, up 65.3% year on year. The 4 rental properties acquired during the first quarter are expected to contribute to earnings from the second quarter onward, but expenses of ¥84 million related to the acquisitions were recorded, resulting in segment profit of ¥16 million, down 46.5% year on year.」

「During the fiscal year, the acquisition of 7 rental properties increased stable rental income, the principal source of revenue for this business segment. The sale of 2 rental properties secured revenue of ¥1,460 million, but acquisition-related expenses, including real estate acquisition tax, kept segment profit to ¥182 million.」

「The partial sale of income-producing real estate and hotel properties held by the company resulted in revenue of ¥3,731 million, up 79.4% year on year, and segment profit of ¥604 million, up 1.7%, representing higher revenue and profit.」

「Although some income-producing real estate was sold in the second quarter, the partial sale of additional income-producing real estate and the sale of hotel properties held by the company in the third quarter resulted in revenue of ¥2,763 million, up 19.6% year on year, and segment profit of ¥456 million, down 12.4%.」

「In addition, following the partial sale of income-producing real estate, revenue was ¥1,069 million, down 35.6% year on year, and segment profit was ¥241 million, down 49.3%.」

「In the first quarter, the Group newly acquired rental real estate, proceeded with preparations to sell some of its income-producing real estate holdings, worked to secure new sources of revenue through business alliances, and advanced cost reductions and other measures to improve profitability at each location in the operations business.」

「In the third quarter, rental income from income-producing real estate, the main source of revenue for this business segment, remained stable without being affected by COVID-19. In addition, investment income from domestic and overseas companies and the partial sale of income-producing real estate contributed, resulting in revenue of ¥2,311 million, up 313.4% year on year, and segment profit of ¥520 million, up 136.6%, and higher revenue and profit.」

「In the second quarter, in addition to rental real estate income, which had generated stable earnings for some time without being affected by COVID-19, investment income from domestic and overseas companies and the partial sale of income-producing real estate contributed to substantial increases in revenue and profit. Revenue was ¥1,661 million, up 341.7% year on year, and segment profit was ¥476 million, up 282.0%.」

「In the first quarter, in addition to rental real estate income, which had generated stable earnings for some time without being affected by COVID-19, investment income from domestic and overseas companies made a substantial contribution. Compared with the same period of the previous year, revenue rose 480.0% to ¥1,065 million and segment profit rose 547.2% to ¥381 million, resulting in substantial increases in revenue and profit.」

「Compared with the same period of the previous year, the company recorded ¥646 million in rental income from its principal owned real estate and ¥270 million in real estate investment income, while investment income from domestic and overseas companies amounted to only ¥43 million. As a result, revenue was ¥998 million, down 27.2% year on year, and segment profit was ¥499 million, up 28.0%.」

「In the third quarter, rental income from income-producing real estate, the main source of revenue for this business segment, remained stable without being affected by COVID-19. As a result, compared with the same period of the previous year, revenue was ¥559 million, down 24.0% year on year, and segment profit was ¥220 million, down 18.4%, as rental income of ¥490 million from the company’s principal owned real estate remained stable while investment income from domestic and overseas companies amounted to only ¥42 million, resulting in lower revenue and profit.」

「As a result, compared with the previous year, rental income of ¥332 million from owned properties and ¥31 million in investment income from domestic and overseas companies made significant contributions to revenue. Revenue was ¥376 million, up 10.8% year on year, and segment profit was ¥124 million, up 5.5%, representing higher revenue and higher profit.」

「During the first quarter, without being affected by COVID-19, investment recoveries of ¥53 million from domestic and overseas companies made a significant contribution to earnings. Revenue was ¥183 million, up 10.4% year on year, while segment profit was ¥58 million, down 5.1%.」

「During the fiscal year, the Group acquired 1 income-producing property for ¥357 million. In addition, income of ¥342 million from real estate investments and ¥351 million from investments in domestic and overseas companies contributed to results. Revenue was ¥1,370 million, up 74.5% year on year, and segment profit was ¥390 million, up 64.8%.」

「During the third quarter, although there were no new rental property acquisitions, income from investments in domestic and overseas companies contributed to revenue of ¥736 million, up 24.3% year on year, and segment profit of ¥269 million, up 48.6%.」

「During the second quarter, income from investments in overseas companies was recorded and 1 income-producing property was acquired for ¥357 million. However, there was no major investment recovery, and revenue declined 1.1% year on year to ¥339 million.」

「During the first quarter, revenue declined 1.8% year on year to ¥166 million because there were no major investment recoveries and no new rental property acquisitions.」

「During the fiscal year, the Group acquired 4 income-producing properties for ¥1,569 million, capitalizing on favorable conditions in the real estate market. In addition, investment in the industrial waste treatment business made in August of the current fiscal year contributed to earnings. As a result, revenue was ¥785 million, up 53.8% year on year, and segment profit was ¥236 million, up 185.3%.」

「During the third quarter, the Group acquired 4 income-producing properties for ¥1,004 million, capitalizing on favorable conditions in the real estate market. In addition, investment in the industrial waste treatment business made in August of the current fiscal year contributed to earnings. As a result, revenue was ¥592 million, up 69.4% year on year, and segment profit was ¥181 million, up 844.0%.」

「During the second quarter, assets increased following the acquisition of 8 income-producing properties for ¥3,728 million, capitalizing on favorable conditions in the real estate market. As a result of the significant strengthening of earnings capacity, revenue was ¥343 million, up 69.9% year on year, and segment profit was ¥104 million, up 206.2%.」

「During the first quarter, income-producing properties increased by 7 properties and ¥3,903 million from the previous year, significantly strengthening earnings capacity. Revenue was ¥169 million, up 87.6% year on year, and segment profit was ¥51 million, up 303.9%.」

「During the fiscal year, the full-year effect of the 4 income-producing apartment buildings acquired in the previous consolidated fiscal year, together with rental income from the 6 income-producing apartment buildings and R Hotel Inn Kitakyushu Airport acquired during the fiscal year, contributed to revenue, which increased 1.8% year on year to ¥510 million.」

「During the third quarter, rental income from the 4 income-producing apartment buildings acquired in the previous consolidated fiscal year, the 6 income-producing apartment buildings acquired during the third quarter, and R Hotel Inn Kitakyushu Airport contributed to revenue, which increased 30.2% year on year to ¥349 million, steadily strengthening the earnings base.」

「During the second quarter, the Group acquired 2 income-producing apartment buildings in Chuo Ward, Osaka, and Naka Ward, Nagoya, and recognized ¥29 million in acquisition costs. Segment profit was ¥34 million, down ¥10 million, or 24.2%, year on year.」

「During the first quarter, rental income from the 4 income-producing apartment buildings acquired in the previous fiscal year contributed to revenue, which increased 14.1% year on year to ¥90 million. The property in Chuo Ward, Osaka, acquired during the first quarter, is expected to contribute to earnings from the second quarter onward, but acquisition costs of ¥15 million were recognized in the first quarter, resulting in segment profit of ¥12 million, down 23.6% year on year.」

「During the fiscal year, the Group acquired 4 rental apartment buildings in Sakyo Ward, Kyoto; Tennoji Ward, Osaka; Chuo Ward, Sapporo; and Nishi Ward, Sapporo, to strengthen its medium- to long-term earnings structure, contributing to increases in revenue and segment profit.」

「During the third quarter, rental income increased following the acquisition of 3 rental apartment buildings in Sakyo Ward, Kyoto; Tennoji Ward, Osaka; and Chuo Ward, Sapporo. Revenue was ¥268 million, up 7.3% year on year, while the burden of the acquisition costs resulted in segment profit of ¥78 million, down 3.3% year on year, representing higher revenue but lower profit.」

「Securing earnings and appropriately managing risk in the merchant banking business」