September 10, 2024Supplementary Information for the Report on Consolidated Financial Results for the Three Months Ended June 30, 2024

Book value

Unrealized gains

Net debt-to-equity ratio

Equity ratio

Sep 10, 2024 at 2:03 AM UTC · Issued by Heiwa Real Estate Co., Ltd.

Supplementary Information for the Report on Consolidated Financial Results for the Three Months Ended June 30, 2024

July 31, 2024

Highlights During the Three Months Ended June 30, 2024

During the period under review, net sales and operating profit decreased year on year mainly because of lower gains on sales of properties, which totaled about 93% of the amount posted in the same period of the previous fiscal year. The gains on sales of properties accounted for about 18% of the forecast amount for the full fiscal year, however, this result was in line with plans and, therefore, the Company expects to make steady progress toward the final forecast amount.
In June 2024, the Company concluded a capital and business alliance agreement with Taisei Corporation, and a collaborative agreement with Taisei Corporation and Mitsubishi Estate Co., Ltd., related to the capital and business alliance.
The Company repurchased its own shares worth about ¥9.0 billion in June 2024. The Company forecasts earnings per share (EPS) of ¥251.56 for the fiscal year ending March 31, 2025, and plans to increase the annual dividend per share from ¥120 to ¥126.

Comparison of results and forecasts

for gains on sales of properties

Fiscal year ended	Fiscal year ending
March 31, 2024	March 31, 2025

Percentage of result to quarterly forecast

100%

108%

ー

100%

Forecast

Result

Forecast

Result

Consolidated Financial Results for the Three Months Ended June 30, 2024

Results were in line with the Company's forecast for the full fiscal year.
Net sales, operating profit, and ordinary profit were down compared with the same period of the previous fiscal year mainly due to decreased sales of properties in the Building Business.
Profit attributable to owners of parent also decreased compared with the same period of the previous fiscal year due to the reason described above as well as decreased sell-offs of investment securities, which reflected lower amounts of cross-shareholdings.

			Three months	Three months			Full-year forecast	Progress against
					for the fiscal year
	(Millions of yen)	ended June 30,	ended June 30,	Year on year	Year on year (%)	full-year forecast*
	ending March 31,
			2023	2024			(%)
					2025*

	Net sales	15,028	10,579	-4,449	-29.6	41,600	25.4

		Building Business	14,412	9,879	-4,532	-31.5	37,600	26.3

		Asset Management Business	615	699	83	13.6	4,000	17.5

	Operating profit	6,447	2,961	-3,485	-54.1	12,300	24.1

		Building Business	6,756	3,159	-3,596	-53.2	12,100	26.1

		Asset Management Business	214	315	100	47.1	2,200	14.3

		Intersegment eliminations	(523)	(513)	9	-	(2,000)	-

	Ordinary profit	6,211	2,739	-3,471	-55.9	10,700	25.6

	Extraordinary income	1,197	-	-1,197	-100.0	-	-

	Extraordinary losses	2	4	2	108.2	-	-

	Profit attributable to owners of parent	5,001	2,093	-2,908	-58.2	8,500	24.6

	Earnings per share (EPS) (Yen)	139.76	59.82	-79.94	-57.2	251.56	23.8

*1 Announced on April 30, 2024

							© HEIWA REAL ESTATE Co., Ltd.	3

Consolidated Financial Results by Segment for the Three Months Ended June 30, 2024

Year-on-year differences in segment results ■ Building Business

		Three months	Three months		Year on year

(Millions of yen)	ended June 30,	ended June 30,	Year on year	Main reasons for year-on-year differences in results
(%)
		2023	2024

Net sales	14,412	9,879	-4,532	-31.5	● Leasing revenue
The increase in leasing revenue mainly reflected contributions from the Mercure Tokyo
						Hibiya building, which opened in the previous fiscal year, and the ORSUS Shin-Osaka

	Leasing revenue	6,546	6,828	282	4.3	and ORSUS Togoshi Ginza buildings, which were built and acquired in the previous fiscal
						year, as well as to success in filling vacant building space and raising leasing amounts.
	Revenue from sales of properties					• Operations of the Mercure Tokyo Hibiya building contributed about ¥0.4 billion to leasing revenue.
	7,555	2,665	-4,890	-64.7	• Increased periodic revenues from acquired and newly built properties contributed about ¥0.1 billion to
	leasing revenue.
						• Filling of vacant space along with increases in leasing amounts are expected to contribute about ¥0.1
						billion to leasing revenue.
	Other	311	386	74	23.8	Note: The vacancy rate for the Group as a whole was 2.69% as of June 30, 2024.
	• Departures of tenants from buildings scheduled for demolition due to redevelopment projects are
						expected to reduce leasing revenue by about ¥0.2 billion.
						• Reduced periodic revenues resulting from sales of properties are expected to reduce leasing revenue
Operating profit	6,756	3,159	-3,596	-53.2	by about ¥0.1 billion.
● Revenue from sales of properties
						The decrease in sales of properties reflected a decrease in sales of inventories. (An
	Gains on sales of properties	4,482	828	-3,654	-81.5	office building in Osaka's Kitahama district and two office buildings in Sapporo were sold
						during the period under review.)
■ Asset Management Business

		Three months	Three months		Year on year
(Millions of yen)	ended June 30,	ended June 30,	Year on year	Main reasons for year-on-year differences in results
(%)
		2023	2024

Net sales	615	699	83	13.6

	Asset management revenue	426	489	62	14.7	 Asset management revenue and brokerage commissions remained
	Brokerage commissions	188	209	20	11.0	stable.


Operating profit	214	315	100	47.1


						© HEIWA REAL ESTATE Co., Ltd.	4

Consolidated Balance Sheet as of June 30, 2024

The Company's repurchase of 2.4 million shares resulted in lower amounts of cash and deposits, securities, and shareholders' equity. Total assets, liabilities, and net assets each decreased, reflecting a reduction of other liabilities.

		As of	Three months	Year on

(Millions of yen)	March 31,	ended June 30,	Main reasons for year-on-year differences in results
year
		2024	2024

Total assets	405,979	393,643	-12,335
	Current assets	53,257	39,888	-13,368	 Cash and deposits / Securities
					The decreases in cash and deposits as well as securities were mainly due to the

	Cash and deposits / Securities	28,421	16,090	-12,330	Company's repurchase of 2.4 million shares.
	Inventories (including operating investments in capital)	21,766	19,837	-1,928	 Inventories
	Other current assets	3,069	3,959	890	The decrease in inventories mainly resulted from the sell-off of an office building in
	Osaka's Kitahama district and two office buildings in Sapporo.
	Non-current assets	352,341	353,388	1,047	 Property, plant and equipment
					The increase in property, plant and equipment was mainly due to outlays for construction

	Property, plant and equipment	275,522	275,998	475	and renovation work.
	Intangible assets	31,320	31,326	6	 Investments and other assets
	Investments and other assets	45,498	46,064	565	The increase in investments and other assets mainly resulted from the Company's
	acquisition of investment units of HEIWA REAL ESTATE REIT, Inc.
	Deferred assets	381	366	-14
Total liabilities and net assets	405,979	393,643	-12,335
	Total liabilities	280,334	278,760	-1,573	 Interest-bearing liabilities
	The net debt-to-equity ratio of 1.9 as of June 30, 2024, reflected the increase in interest-
	Interest-bearing liabilities	231,323	231,721	397	bearing liabilities.
					 Other liabilities

	Other liabilities	49,010	47,039	-1,971	The decrease in other liabilities was mainly the result of lower amounts of accrued
					consumption taxes and income taxes payable.
	Net assets	125,645	114,883	-10,761
	Shareholders' equity	92,235	81,395	-10,839	 Shareholders' equity
	Valuation difference on available-for-sale securities	17,339	17,386	46
	The decrease in shareholders' equity was mainly due to the Company's repurchase of
					2.4 million shares.
	Deferred gains or losses on hedges	(6)	24	30

	Revaluation reserve for land	16,076	16,076	-

(Note) Interest-bearing liabilities comprised short-term borrowings, current portion of bonds payable, current portion of long-term borrowings, certain other current liabilities, bonds payable, long-term borrowings, and long-term accounts payable-other.

© HEIWA REAL ESTATE Co., Ltd.	5

Key Performance Indicators

					Share price
(Yen)
7,000										5,497	5,774
6,000							5,030	5,287	5,405
					4,673
5,000
				4,120					4,080
		3,456	3,669			3,455	3,955	3,785
4,000		3,022
2,581		2,630	2,820	2,837
	2,377	2,445
3,000	2,313						3,511
2,155				3,190	3,270	3,334
2,000							2,799
				2,050	2,131
1,000	1,648	1,688	1,400	1,574

0

FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE
Mar./14	Mar./15	Mar./16	Mar./17	Mar./18	Mar./19	Mar./20	Mar./21	Mar./22	Mar./23	Mar./24

EPS, ROE, and ROA

(Yen)
280.0											236.7	254.3	236.1	9.0%
240.0									6.5%	189.8	8.0%
						5.8%				7.0%
								7.7%
200.0					5.2%		7.3%	6.9%
		4.7%	4.7%			6.0%
160.0					184.8
						6.3%				5.0%
3.4%	2.9%
120.0		113.2	132.6	158.7					4.0%

												3.0%
80.0	72.7		110.53.3%	3.2%			3.2%	3.1%	3.3%		3.2%
	2.9%	2.8%	2.0%
40.0	2.6%		2.8%
2.8% 62.5												1.0%
0.0														0.0%

FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE
Mar./14	Mar./15	Mar./16	Mar./17	Mar./18	Mar./19	Mar./20	Mar./21	Mar./22	Mar./23	Mar./24

Stock price

Book-value per share (BPS)

Net asset value (NAV) per share

EPS

ROE

ROA

Market value of assets for leasing and other purposes

Indicators of financial discipline

(Billions of yen)
500
							376.8	388.9	420.1	421.2

400						339.5	363.5
				316.3
	268.7	286.4	289.6		112.4	112.2	111.5	116.7

300	244.2	85.6	103.3	119.4
41.7	62.0	70.3

	26.4
200

217.8	227.0	224.4	219.2	230.6	236.2	244.0	264.4	276.7	308.6	304.4
100


0
14.3期	15.3期	16.3期	17.3期	18.3期	19.3期	20.3期	21.3期	22.3期	23.3期	24.3期

(Times)
2.5											40.0%
2.0		31.0%	32.3%	33.3%	34.9%	32.5%	31.6%	31.1%	31.7%		30.9%
29.0%					30.0%

											30.0%
1.5	1.7	1.6	1.5			1.6		1.6		1.7	1.6
		1.4		1.5	1.5
			1.4


1.0											20.0%
	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE
	Mar./14	Mar./15	Mar./16	Mar./17	Mar./18	Mar./19	Mar./20	Mar./21	Mar./22	Mar./23	Mar./24

Note: Net asset value per share is calculated as (net assets + after-tax unrealized gains on assets for leasing and other purposes) ÷ number of shares issued excluding treasury stock

© HEIWA REAL ESTATE Co., Ltd.	6

Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2025

Net sales are forecast to decrease year on year mainly as a result of lower sales of inventories in the Building Business.
Operating profit and ordinary profit are forecast to decrease year on year mainly due to lower gains on sales of properties.
Profit attributable to owners of parent is forecast to increase year on year because the amount of income taxes will be adjusted downward as a result of deferred tax assets.

(Millions of yen)	Fiscal year ended	Fiscal year ending	Year on year	Year on year (%)

March 31, 2024	March 31, 2025 (Forecast)*1
Net sales	44,433	41,600	-2,833	-6.4

	Building Business	40,544	37,600	-2,944	-7.3

	Asset Management Business	3,888	4,000	111	2.9

Operating profit	13,022	12,300	-722	-5.5

	Building Business	12,639	12,100	-539	-4.3

	Asset Management Business	2,197	2,200	2	0.1

	Intersegment eliminations	(1,814)	(2,000)	-185	-

Ordinary profit	11,463	10,700	-763	-6.7

Profit attributable to owners of parent	8,450	8,500	49	0.6

EPS (Yen)	236.13	251.56	15.43	6.5

*1 Announced on April 30, 2024

					© HEIWA REAL ESTATE Co., Ltd.	7

Forecast of Consolidated Financial Results by Segment for the Fiscal Year Ending March 31, 2025

Year-on-year differences in segment results ■ Building Business

		Fiscal year	Fiscal year

		ending March	Year on	Year on year
(Millions of yen)	ended March		Main reasons for year-on-year differences in results
31, 2025	year	(%)
		31, 2024
		(Forecast)

Net sales	40,544	37,600	-2,944	-7.3		 Leasing revenue
	Leasing revenue is forecast to increase on the back of contributions from properties
							acquired in the previous fiscal year, full fiscal year operations of a new hotel building, and
	Leasing revenue	26,382	27,000	617	2.3
		the filling of vacant space.
							• Full fiscal year operations of the new hotel building are expected to contribute about ¥1.4 billion to
	Revenue from sales of properties	12,780	9,200	-3,580	-28.0		leasing revenue.
		• Filling of vacant space along with increases in leasing amounts are expected to contribute about
							¥0.4 billion to leasing revenue.
	Other	1,382	1,400	17	1.3
		• Contributions from newly acquired properties are expected to boost leasing revenue by about ¥0.3
							billion.
Operating profit	12,639	12,100	-539	-4.3		• Departures of tenants from buildings scheduled for demolition due to redevelopment projects are
	expected to reduce leasing revenue by about ¥1.3 billion.
							• Reduced periodic revenues resulting from sales of properties are expected to reduce leasing
	Gains on sales of properties	4,808	4,500	-308	-6.4		revenue by about ¥0.2 billion.
		 Revenue from sales of properties
							Revenue from sales of properties is forecast to decrease due to lower sales of inventories.
■ Asset Management Business

(Millions of yen)

Fiscal year

ended March

31, 2024

Fiscal year

ending March

31, 2025

(Forecast)

Year on year

(%)

Main reasons for year-on-year differences in results

Net sales	3,888	4,000	111

Asset management revenue	2,565	2,600	34
Brokerage commissions	1,322	1,400	77

Operating profit	2,197	2,200	2

2.9

1.3

5.8

0.1

Asset management revenue and brokerage commissions remained stable.

© HEIWA REAL ESTATE Co., Ltd.	8

Disclaimer

This document is not intended to solicit investment. Users of this document are requested to use their own judgment when making final decisions about investing.
Information other than historical facts presented in this document are forward-looking statements that were formulated according to certain assumptions and were based on judgments by the Company's management in light of currently available information as of July 31, 2024. Therefore, these statements may differ significantly from results announced in the future due to a variety of factors. The Company assumes no responsibility for any losses resulting from the use of this document.
The Company might revise the forward-looking statements contained in this document based on new information or future events, however, this document will not be updated.

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