Japan Excellent (8987) H2 2025 earnings summary

Executive summary

• Achieved net income of 4,451 million yen, up 18.9% year-over-year, and DPU rose to 3,106 yen, exceeding forecasts.

• Maintained high occupancy rate at 98.9% with strong tenant retention and rent increases.

• Continued portfolio optimization through sale of low-yield properties and acquisition of ARK Hills FRONT TOWER.

• Buyback and cancellation of 31,127 investment units (2.36% of total) worth 4 billion yen improved EPU and NAV per unit.

• Strong ESG initiatives, including a 4-Star GRESB Rating and 87.7% of properties with green building certification.

Financial highlights

• Operating revenue for the 38th period was 11,447 million yen, down 10.2% year-over-year, but operating income and recurring income rose 18.9% to 5,231 million yen and 4,452 million yen, respectively.

• NOI reached 6,670 million yen and EBITDA was 6,839 million yen.

• DPU increased by 336 yen year-over-year to 3,106 yen.

• NAV per unit rose to 170,722 yen (+2,616 yen from previous period); equity ratio at 49.3%.

• LTV (total asset basis) increased to 45.1%.

Outlook and guidance

• DPU forecasted at 3,000 yen for both the 39th and 40th periods, with adjusted EPU expected to remain stable.

• Rental revenue expected to rise in the 39th period due to full-year contribution from ARK Hills FRONT TOWER, but to slow in the 40th period due to temporary occupancy decline.

• Asset sales (JEI浜松町ビル) expected to contribute 560 million yen (Dec 2025) and 694 million yen (Jun 2026) in gains.

• Ongoing focus on 2% average annual EPU growth and portfolio profitability.

• No profit-exceeding distributions planned; payout ratio remains above 90%.