Japan Prime Realty Investment Corporation (8955)’s financial results demonstrate solid DPU trend. Progress in leasing of existing properties and asset reshuffle made contribution against adverse impact of energy price inflation.

Japan Prime Realty Investment Corporation (8955)’s financial results demonstrate solid DPU trend. Progress in leasing of existing properties and asset reshuffle made contribution against adverse impact of energy price inflation.

◎Financial Highlights
・Operating revenues marked 18.35 billion yen (+0.6% period-on-period) with operating profit 9.34 billion yen (+8.3％PoP).
・Distribution per unit (DPU) recorded 7,800 yen.
・DPU for June 2022 FP exceeded guidance and recorded historical high driven by increase in rental income, etc.
・NAV per unit for June 2022 FP increased for 19 consecutive FPs and marked record high value due to increase in unrealized gains, etc.
・Public offering was conducted in January 2022 for asset reshuffle.
＜Guidance＞
・December 2022: Operating revenues18.47 billion yen; operating profit 9.39billion yen
・DPU guidance: 7,750 yen.
・Guidance remains unchanged at 7,750 yen from previous forecast. Increase in rental income is expected to make up for deterioration in utilities expenses.
・DPU level will be sustained by return of capital gains and drawdown of internal reserves in December 2022 and June 2023 FPs.
・June 2023: Operating revenues17.02 billion yen; operating profit 8.13 billion yen
・DPU guidance: 7,600 yen.
・Increase in rent and common charges are expected while impact of capital gains and rental income will be stripped.
・7,600 yen will be ensured by drawdown of internal reserves.

◎Review of operation and growth strategy
▽Growth strategy
・Accelerated external growth, effective asset reshuffles and strategic utilization of capital gains/retained earnings will foster DPU/NAV growth and sustainable unitholder value enhancement.
▽Internal growth strategy
・Flexible leasing strategy that matches the needs of the market will sustain and further improve high occupancy rate versus the market.
・Heed must be paid to COVID-19 trend, energy price inflation and massive new office supply scheduled in central Tokyo area in 2023.
▽External growth strategy
・Sponsor pipeline will be fully leveraged for well-balanced asset acquisitions. While focusing on office properties in Tokyo, prime assets in key regional cities will also be in scope.
・Assets reshuffle will continue in the aim of portfolio quality improvement.
・Hotel acquisitions will be considered based upon prudent view on demand recovery, etc.
▽Financial strategy
・LTV will be controlled conservatively.
・Debt will be managed in view of financial soundness.
・Attention will be paid to trend in monetary policies and interest rate.
▽Sustainability
・New 2030 target has been devised (Coverage ratio of over 80% on the environmental certification acquisition: 4 stars/Rank A or higher)
・Internal and external parties are in concert to promote 2030 strategic objectives and materiality.
・CO2 emission net zero by 2050 is targeted to help realize de-carbonized society.
▽DPU strategy
・Interim target of 7,600 yen en route to medium-term goal has been set to be achieved in approximately 2 years.
・Internal reserves will be leveraged to secure 7,600 yen as a new floor until reaching the interim goal.