Presentation Material
January 2025
42nd Fiscal Period
Six months ended November 2024
Securities Code: 8960https://www.united-reit.co.jp/
Table of Contents
Presentation Material | ||||
Basic Policies of the Medium-Term Growth Strategy | p.3 | |||
Policies on Distribution (Business Forecast) | p.7 | |||
Financial Results | '24/11 (42 | nd | ) FP | p.8 | |
DPU Composition | p.9 | |||
Asset Replacement | p.11 | |||
Internal Growth | Hotels | p.12 | ||
Office buildings | p.14 | |||
Retail properties | p.15 | |||
Residential properties | p.16 | |||
Financial Management | p.17 | |||
ESG Initiatives | p.18 |
Appendix | ||
United Urban Investment Corporation (UUR) | p.23 | |
Structure of United Urban and Management System at Asset Management Company | p.24 | |
Collaboration with Marubeni Group | p.25 | |
Mid-term Initiatives | p.26 | |
Portfolio Summary | Track Record of External Growth | p.28 |
Overview | p.29 | |
Occupancy Rate | p.30 | |
Yield | p.31 | |
Distribution / NAV per Unit | p.32 | |
Book Value / Appraisal Value | p.33 | |
Overview of Unitholders | p.34 | |
Financial Indices | p.35 | |
Financial Results | p.36 | |
Business Forecast | p.37 | |
External Growth | Acquisition | p.38 |
Development Project | p.44 | |
Internal Growth | Hotels | p.45 |
Office buildings | p.46 | |
Retail properties | p.48 | |
Financial Standing | p.49 | |
Policy of Retained Earnings Utilization | p.50 | |
ESG Initiatives | p.51 | |
Property Income and Occupancy | p.63 | |
Appraisal Value | p.68 | |
Properties | p.72 | |
2
Policies of the Medium-Term Growth Strategy (2025-2027)
Aim for DPU over ¥8,000 and Sustained Increase in NAV through Active Distribution
per annum
- Accelerate asset replacements over the next 3 years; focus on improving portfolio quality and return gains on sale
- Increase profit in inflationary environment by raising rents at existing properties and managing efficiently
- Maintain strong financial base; determine cash allocation, given the real estate and financial market conditions as well as the status of the acquisition pipeline
Asset Replacement
- Sell off assets* on a scale of about 10% between 2025 and 2027
- Increase portfolio profit; replace assets to lower portfolio's building age
- Return gains on sale to unitholders
- As of the end of '24/11 (42nd) FP: ¥703 Bn
Annual DPU
(Distribution per unit)
¥8,000+
Sustained Increase
in NAV
Profit Increase
- Increase annual rent revenues by 3-5%
- Raise rents at existing properties through hands-on management
- Cover cost increases through efficient operations
Cash Allocation
⚫ Property acquisitions ⚫ Acquisition of own investment units ⚫ Early repayment of borrowings
3
Policies of the Medium-Term Growth Strategy｜Asset Replacement
Asset Replacements for Higher DPU and Portfolio Profit
- Replace about 10% of assets over the next 3 years to seek higher portfolio profit and to return gains on sale
- Decide how to allocate proceeds from dispositions, i.e. acquiring properties, own investment units, etc. from the viewpoint of increasing DPU
- Leverage the acquisition pipeline to expand portfolio profit, aiming for annual DPU of more than ¥8,000
2024 | 2025 | 2026 | 2027 | ||||
41st FP | 42nd FP | 43rd FP | 44th FP | 48th FP | |||
May | November | May | November | November |
Annual DPU ¥8,000＋
Annual DPU ¥7,500 | ⚫ Increase profit through | ⚫ Return gains on | ⚫ Acquisition of |
asset replacements | sale to unitholders | own investment units |
Dispositions Approx. ¥60 - 90 Bn
(Approx. ¥20 - 30 Bn/year)
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- Properties for which future profit is a concern due to changes in the market
- Older properties that may not contribute anticipated increase in earnings
- Properties with unrealized gains and for which future profit increase appears unlikely to materialize
Acquisition Pipeline under Consideration
Total investment amount | Hotels | ||
Approx. ¥80 Bn | |||
2 properties | |||
Building age | |||
Approx. 14 years | Retail | Others | |
4 properties | 5 properties | ||
Estimated NOI yield | |||
4.9% | (Tokyo Metropolitan Area, Osaka Area, | ||
(After depreciation | 4.1%) | ||
Nagoya Area and Others) |
4
Policies of the Medium-Term Growth Strategy｜Revenue Growth
Please also see p.26-27 of Appendix.
Increase Profit by Lifting Rents through Hands-on Management and Replacing Assets
- Grow revenues by 3-5%annually at existing properties with raising rents in office buildings and hotels as a growth driver
- Given the inflationary environment, pursue various leasing methods across the portfolio for higher occupancy and rent
- Also utilize asset replacements (effects of new acquisitions) to increase portfolio profit
- Rent Revenues (Rent & CAM fees) Properties under management since '23/5 (39th) FP
¥41,753 Mn | ¥44,338 Mn | ¥46,320 Mn |
+6.3% y-o-y | +6.2% y-o-y | +4.5% y-o-y |
(+5.4%) | (+3.9%) | (+2.3%) |
41st & 42nd FP
¥10,023 Mn |
(y-o-y) |
(¥ Mn)
50,000
(Figures in parenthesis exclude newly acquired properties.)
Hotels | +9.2% +¥840 Mn |
Asset replacement (Newly acquired properties)
40,000
Others (Including logistics facilities)
- Stronger performance at variable rent hotels drives growth in revenues of hotel portfolio.
¥13,341 Mn |
(y-o-y) |
30,000 | Retail | ||
properties | |||
20,000 | Residential | ||
properties | |||
Office buildings | |||
10,000 | |||
Hotels | |||
0 | |||
39・40FP | 41・42FP | 43・44FP | |
('22/12-'23/11) | ('23/12-'24/11) | ('24/12-'25/11) | |
Forecast |
45・46FP
('25/12-'26/11)
Office | +3.4% +¥438 Mn |
- Pull up rents by leveraging high occupancy and continue driving higher profit.
¥4,332 Mn | |
(y-o-y) | |
Others | +5.5% +¥225 Mn |
- Keep high occupancy through hands-on management and raise rents by taking advantage of market conditions.
5
Policies of the Medium-Term Growth Strategy｜Cash Allocation
Conduct Strategic Allocations of Cash on Hand by Prioritizing Capital Efficiency
- Acquire own investment units if the P/NAV remains in the low 0.8x range
- Acquire properties with an eye to portfolio yield and implied cap rate
- Repay borrowings, taking account of the due of borrowings, LTV level, etc.
2024/11 (42nd FP) | ||||||
◼ Acquisition of Own Investment Units | ||||||
Total | Approx. ¥5 Bn | Effect | +¥47 | |||
Decided to acquire own investment units of over 1% of market cap*1 with cash | Acquisition | on DPU | ||||
on hand by considering the price level of investment units | Amount | (Approx. ¥3.1 Bn / Approx. ¥1.9 Bn)*2 | (Expected) | (+¥29 / +¥18)*2 | ||
(¥/unit) | *1 At the time acquisition of own investment units: ¥420.4 Bn | *2 Figures in parenthesis: left for 42nd FP; right for 43rd FP) | ||||
145,000 | ||||||
Price of investment units that would yield a P/NAV of 0.85 times | 42nd FP | 43rd FP | ||||
(Reference: ¥143,711) | ||||||
140,000 |
135,000 | Investment units at a P/NAV of 0.8 times | Announcement of the acquisition | End of own | |||||||||||||||
(Reference: ¥135,258) | of own investment units: | investment unit acquisition: | ||||||||||||||||
November 1 | December 11 | |||||||||||||||||
130,000 | ||||||||||||||||||
9/27 | 10/4 | 10/11 | 10/18 | 10/25 | 11/1 | 11/8 | 11/15 | 11/22 | 11/29 | 12/6 | 12/13 | 12/20 | 12/27 | 1/3 | 1/10 | 1/17 |
acquisition ← suspended →
- Early Repayment of Borrowings
Allocated part of the proceeds*3 from the transfer of Kawasaki Toshiba Building to early repayment from the standpoint of capital efficiency; reduced the LTV and the burden of interest payments
Borrowing | Floating-rate | LTV | Interest Payment | ||
¥3 Bn Repayment due | Nov. 2024 | ||||
Amount | -0.2% | -¥4 Mn | |||
Early repayment | Jul. | 2024 | |||
＊3 UUR sold Kawasaki Toshiba Building at ¥19.0 Bn as of June 28, 2024. Of the proceeds of ¥17.7 Bn from the sale, in which distribution (gain on sale ¥0.97 Bn) and transfer expenses (¥0.36 Bn), totaling ¥1.3 Bn, is deducted from the disposition price, ¥14.7 Bn has been allocated toward the ¥21 Bn cost of acquiring Osaka Bay Tower on September 2, 2024 (additional acquisition). For details, please refer to p.7 of PRESENTATION MATERIAL FOR THE FORTY-FIRST FISCAL PERIOD ENDED MAY 30, 2024.
6
Policies on Distribution (Business Forecast)
Over ¥8,000 Annual DPU with Asset Replacement and Revenue Increase at Existing Properties
- Annual DPU since the 41st FP has risen from ¥6,600 to ¥7,566 (up 14.6% y-o-y)
- Focus on profit increase through asset replacements, return of gains on sale, and further revenues from existing properties
- Maintain annual DPU of more than ¥8,000 based on the policies of the medium-term growth strategy
- Annual DPU
39・40FP | 41・42FP | 43・44FP |
('22/12-'23/11) | ('23/12-'24/11) | ('24/12-'25/11) |
Annual DPU
¥6,600
40FP
¥3,371
39FP
¥3,229
¥7,566
42FP
¥3,937
41FP
¥3,629
¥8,000+
Effects of asset replacements Utilization of internal reserves
44FP
Forecast
¥3,650
43FP
Forecast
¥4,000
7
Financial Results | '24/11 (42nd) FP
Continue DPU Growth Momentum by Improving Portfolio Quality
- Gain ¥0.97 Bn on the disposition of Kawasaki Toshiba Building; lower building age for the portfolio
- Acquire 3 properties (¥24 Bn) contributing to DPU growth at the start of the 42nd FP
- Expand profit from rental activities owing to improved performance at hotels and increased revenues by pulling up rents at office buildings and other properties
- Acquire own investment units (approx. ¥3.1 Bn)*1 and lift up DPU by ¥29
- Achieve 8.5% growth from the previous 41st FP to DPU ¥3,937
< > | ■ Retail properties ■ Office buildings ■ Hotels | |||||
NOI Yields*4 | Building | Capital | ||||
Age*5 | Gain/Loss | |||||
Distribution per Unit | ||||||
¥3,937 | ■ OSAKA BAY TOWER | (¥21.1 Bn) | 4.4% | 28 years | - | |
Acquisition | ¥24.06 Bn | |||||
Of which the acquisition of own | (Additional acquisition) | |||||
investment units accounts for +¥29 | ■ IIDABASHI PLANO | (¥0.38 Bn) | ||||
(Additional acquisition) | ||||||
From '24/5 (41st) FP*2 | ■ Randor Hotel Hiroshima Prestige (¥2.58 Bn) | |||||
¥19.0 Bn | 8.1% | 38 years | ¥0.97 Bn | |||
+308円 (+8.5%) | Disposition | |||||
■ Kawasaki Toshiba Building | (-1.9%) | |||||
<> | ||||||
From Initial Forecast*3 | Profit from Rental Activities | Adjusted NOI Yield | Occupancy Rate | |||
+107円 (+2.8%) | ¥15.3 Bn | 5.2% | 99.2% | |||
+0.82 Bn | -0.2%pt | +0.3%pt | ||||
From 41st FP | From 41st FP | From 41st FP | ||||
*1 | For details, please see p.6. | |||||
*2 DPU in '24/5 (41st) FP: ¥3,629 | ||||||
*3 Projected DPU announced on July 19, 2024: ¥3,830 | ||||||
*4 | Acquired properties: weighted average of estimated NOI under stabilized operation based on acquisition price. Disposed property: weighted average of actual NOI in the fiscal period immediately prior to disposition based on the disposition | |||||
price. Number in parenthesis represent estimates under an assumption that a full-re-tenanting is to be executed in a certain period after a single tenant leaves, followed by a renovation work is done in Kawasaki Toshiba Building. |
*5 Weighted average based on the acquisition price (as of November 30, 2024). | 8 |
DPU Composition｜'24/11 (42nd) FP | Please also see p.36 of Appendix. |
Continue DPU Growth through Asset Replacements
- Record high DPU ¥3,937 (up 8.5% from 41st FP) with income from the tenant leaving Kawasaki Toshiba Building
and acquisition of own investment units | (cancellation fees, restoration income) |
- Capital gain ¥0.97 Bn from the disposition of Kawasaki Toshiba Building is equally distributed in 3 FPs incl. 42nd FP
- Properties newly acquired in 43rd and 44th FPs also contributes to DPU growth
DPU: Dividend per Unit
(¥ per unit)
3,629
IncreaseDecrease
+104 | 208 | |||
+313 | +104 | Retained | (distributed in the 43rd and 44th FPs) | |
Gain on sale | earnings | |||
-51 | ||||
+104 | -31 | |||
+203 |
Profit from | ||||||||||||||||||||||
+122 | -69 | rental business | ||||||||||||||||||||
Rent & CAM fees | -25 | Sales admin | -8 | |||||||||||||||||||
Disposition | Tax and public dues | -8 | ||||||||||||||||||||
Non-operating | -22 | |||||||||||||||||||||
Fuchu Building (Land) | -1 | Repairs and | +28 | profit & loss | ||||||||||||||||||
maintenance | ||||||||||||||||||||||
41st FP | (Interest expense | -27) | ||||||||||||||||||||
Plussing Wave | -68 | |||||||||||||||||||||
Cancellation fees | -15 | |||||||||||||||||||||
Enoshima | ||||||||||||||||||||||
Restoration income | -22 | |||||||||||||||||||||
Acquisition | ||||||||||||||||||||||
Others | -9 | |||||||||||||||||||||
Toranomon Hills Business Tower | +12 | |||||||||||||||||||||
41st FP | ||||||||||||||||||||||
OSAKA BAY TOWER | +13 | |||||||||||||||||||||
(10% additional acquisition) | ||||||||||||||||||||||
Retail properties | -32 | |||||||||||||||||||||
Randor Hotel Hiroshima Prestige | +20 | |||||||||||||||||||||
42nd FP | Office buildings | +16 | ||||||||||||||||||||
OSAKA BAY TOWER | +78 | |||||||||||||||||||||
(80% additional acquisition) | Hotels | -10 | ||||||||||||||||||||
3,937
29
Effect of
acquisition
of own
investment
units
41FP | Profit from | Net profit of | Net profit of | Net profit of | Sales admin. | 42FP |
('24/5) | new acquisitions | dispositions | Kawasaki Toshiba | existing | expense, | ('24/11) |
Results | Building | properties | Non-operating | Results | ||
profit & loss, etc. |
Note: Total figures shown may be different from the arithmetic total figures due to rounding off. | 9 |
DPU Composition｜'25/5 (43rd) FP & '25/11 (44th) FP | Please also see p.37 of Appendix. |
Annual DPU Boosted by Effects of Asset Replacements and Improved Revenue
- 43rd FP: DPU ¥4,000 with gain on sale of Joy Park Izumigaoka (JPI) and more revenues of hotels and retail facilities
- 44th FP: DPU ¥3,650 due to elimination of the gain of JPI and other factors incl. timing of receipt of hotel variable rents
DPU: Dividend per Unit
(¥ per unit)
3,937 +78
IncreaseDecrease
-387 | +222 | -56 | |||||||||
+188 | |||||||||||
Sales admin | -11 | ||||||||||
Rent & CAM fees | +247 | Non-operating | -44 | ||||||||
profit & loss | |||||||||||
Repairs and maintenance | -44 | ||||||||||
(interest expense | -27) | ||||||||||
Depreciation | ＋36 | ||||||||||
Others | -18 | ||||||||||
Retail properties | +29 |
Office buildings | +4 |
Hotels | +184 |
4,000
18
Effect of
acquisition
of own
investment
units
+20 -191
-99
-80
3,650
Sales admin | +7 | |||
Rent & CAM fees | -156 | Non-operating | -87 | |
profit & loss | ||||
Tax and public dues | -58 | (interest expense | -70) | |
Repairs and maintenance | +92 | |||
Depreciation | +14 | |||
Others | +9 | |||
Retail properties | -18 | |||
Office buildings | -51 | |||
Hotels | -86 |
42FP | Profit from | Net profit of | Net profit of | Net profit of | Sales admin. | 43FP | Profit from | Net profit of | Net profit of | Sales admin. | 44FP |
('24/11) | new acquisitions | Kawasaki | dispositions | existing | expense, | ('25/5) | new acquisitions | dispositions | existing | expense, | ('25/11) |
Results | Toshiba Bldg. | incl. gain on sale | properties | Non-operating | Forecast | incl. gain on sale | properties | Non-operating | Forecast | ||
excld. gain on | profit & loss, | profit & loss, | |||||||||
sale | etc. | etc. |
Note: Total figures shown may be different from the arithmetic total figures due to rounding off. | 10 |