Japan Prime Realty (8955)’s distribution per unit (DPU) recorded 7,600 yen for the 45th financial period, flat compared to the previous FP. Net profit increased substantially as a result of Nakano asset acquisition.

Japan Prime Realty (8955)’s distribution per unit (DPU) recorded 7,600 yen for the 45th financial period, flat compared to the previous FP. Net profit increased substantially as a result of Nakano asset acquisition.

◎Financial Highlights
Rental revenue is expected to pick up from the June 2025 FP due to progress in leasing of properties such as MS Shibaura.
Adjusted EPU increased largely upon acquisition of Nakano Central Park East.
With shift in focus on the distribution strategy, DPU guidance is 7,700 yen for the December 2024 FP and historical high of 7,800 yen for the June 2025 FP.

◎Review of operation and growth strategy
・Distribution strategy revised
New strategy has shifted focus from stability with 7,600 yen floor-setting to DPU growth on the back of office market recovery and strong property transaction market.
Rent increase, external growth, use of capital gains will drive DPU growth at the annual rate of around 2% starting from 7,600 yen.
▽Internal growth strategy
・Occupancy
Occupancy trend remains high.
・Leasing of MS Shibaura Building
Flexible leasing strategy and enhanced asset competitiveness by major renovations took effect.
Leasing made progress by capturing relocation needs from neighboring areas.
・Rent
Most tenants renewed leases without decrease in rent. Ratio of rent hike increased both on revision and tenant turnover.
Positive rent revision was achieved in growing number of areas.
・Efforts for rent increase
JPR’s portfolio has competitive edges adding to the improvement of the market environment.
Rent increase will be requested broadly across tenants in an aim for early rent growth.
・Retail assets
High occupancy trend sustained.
▽External growth strategy
・Asset acquisitions will be accelerated capitalizing on sponsor pipeline.
Asset expansion of JPR gains speed backed by the medium-term plan of the sponsor Tokyo Tatemono.
AUM has reached over 500 billion yen.
・Strategic asset replacements
Strategic asset reshuffles drive the quality of the portfolio, actualize unrealized gains and generate free cash.
・New asset acquisition
【Nakano Central Park East (53.0% interest)】
The high-spec building is located in front of Nakano Station, a promising redevelopment area. JPR acquired this asset by way of sponsor support.
▽Financial strategy
・Financial position
Long and fixed rate financing will remain key to focus on stability. Long and floating debt will also be considered.
・Diversified lender formation as of August 16, 2024
Lenders consisting of 43 financial institutions and investment corporation bonds diversify debt financing. Debts are financed on a bilateral basis with all the lenders.
Sustainability finance is utilized actively, accounting for 31% of the interesting-bearing debts.
▽Sustainability
・Track record
Sustainability endeavors have been promoted over a long term.
JPR rolls out various measures and engages with diverse stakeholders.
・External assessments and initiatives
JPR will endeavor to receive enhanced external assessments as well as to sign and endorse sustainability initiatives.
・Environment
Target ratio for waste recycle has been set in order to lessen environmental impact. Strategy for renewal energy procurement has been considered.
While heeding on financial impact, JPR shifted to a phase to accelerate initiatives for GHG emission reduction.
GHG emission has been reduced on track for the 2030 target.
JPR pursues reduction in the use of energy and water by promoting energy-saving construction and cooperation between property managers, building managers and tenants.
Quantitative analysis on climate change risk and opportunities in the 2030 and 2050 time horizon was recalculated and disclosed.
Future strategy is scheduled to be discussed based on financial impact.
・Social and Governance
JPR is going to engage in initiatives to be chosen by tenants while addressing changes in the needs of tenants.

◎Results and guidance
・June 2024 FP results (compared to the previous FP)
Actual distribution per unit: 7,600 yen (±0 yen）
Net profit increased substantially as a result of the Nakano asset acquisition.
・June 2024 FP results (compared to guidance)
Actual distribution per unit 7,600 yen (±0 yen）
Rental income increased as a result of progress in leasing.
・Guidance for December 2024 FP (compared to June 2024 FP actual)
DPU guidance: 7,700 yen (+100 yen)
Net profit will level off due to full contribution of the Nakano asset and temporary income such as cost of restoration.
Use of retained earnings for DPU growth is expected.
・Guidance for June 2025 FP (compared to guidance for December 2024 FP)
Guidance for DPU: historical high of 7,800 yen (+100 yen)
Recovery in rent income is expected driven by progress in leasing of assets such as MS Shibaura.