Domestic whole-building resales drove first-half operating profit; gross margin and repeatability of sales are the focus for the second half

Domestic whole-building income-producing real estate sales generated revenue of ¥23,058 million in the six months ended 30 June 2026, up 124.5% year on year, and gross profit of ¥3,916 million, up 135.9%. Dividing gross profit by revenue gives a gross margin of approximately 17.0%, meaning that gross profit expanded faster than revenue. The first point to confirm at the next earnings release is whether the company’s explanation that its ability to identify attractive acquisitions and its post-acquisition property value-enhancement measures contributed to the result is consistent with the numerical expansion in gross profit.

The figures for domestic whole-building income-producing real estate must be distinguished from those for the income-producing real estate sales business as a reported segment. The segment as a whole generated revenue of ¥26,810 million and operating profit of ¥3,156 million, implying an operating margin of approximately 11.8%. The arithmetic difference from the ¥23,058 million of domestic whole-building resale revenue is ¥3,752 million, but the company has not fully broken this difference down by property type or sales format. It is also important to see how much detail the company discloses in the third quarter on the segment mix, which includes office units, fractionalized real estate products and overseas sales.

On the sourcing side, purchases were ¥35,023 million in the six months ended 30 June 2026, while the balance of income-producing real estate and other assets held for sale or rental income increased to ¥71,782 million. The balance rose by ¥17,196 million from the end of the previous fiscal year, indicating a substantial build-up of assets held for sale. If sales proceed smoothly, these assets will generate revenue and gross profit in the second half, but if sales are delayed, inventories and borrowings will expand at the same time.

At the next earnings release, we will check cumulative revenue and gross profit from domestic whole-building resales, the number and value of properties sold after value-enhancement measures, and the period-end balance of income-producing real estate and other assets. In particular, it will be necessary to confirm whether the first-half gross margin of around 17.0% can be maintained, whether similar profitability can be secured with new asset types, including properties in Kansai and Fukuoka and hotels, and how much of the ¥71,782 million balance consists of assets held for sale and assets held to generate rental income, respectively.