Nippon Building Fund (8951) H1 2024 earnings summary

Executive summary

• Achieved total operating revenue of ¥50,254 million in 1H 2024, up 6.1% year-over-year, with net income rising 19.6% to ¥23,344 million.

• Distribution per unit increased 13.8% to ¥13,082, reflecting higher earnings and tax reserve adjustments.

• Occupancy rate remained high at 97.8–98.0%, with strong tenant demand and stable rental income.

• Announced a five-for-one unit split effective October 1, 2024, to enhance liquidity and investor accessibility.

• Major asset transactions included acquisitions in key Tokyo locations and dispositions of GranTokyo South Tower, Panasonic Tokyo Shiodome Bldg., and scheduled sales of Tsukuba Mitsui Bldg. and NBF Toranomon Bldg.

Financial highlights

• Operating income rose 18.7% to ¥24,643 million; ordinary income and net income both increased 19.6%.

• Net income per unit was ¥13,724, up from ¥11,471 in the previous period.

• NAV per unit increased to ¥607,556, and market cap reached ¥957.6 billion.

• LTV improved to 42.4%, with 88.4% of interest-bearing debt at fixed rates.

• Cash flow from operating activities was ¥72,113 million, with cash and cash equivalents at period-end of ¥17,903 million.

Outlook and guidance

• Forecasts for 2H 2024 and 1H 2025 project stable DPU of ¥2,400 (post-split), with occupancy rates expected to remain in the 98% range.

• Operating revenues forecasted at ¥50,568 million and ¥45,640 million, with net income of ¥22,084 million and ¥17,880 million for the next two periods.

• Portfolio expected to decrease to 67 properties due to scheduled dispositions.

• Rental revenues are expected to continue recovering, supported by positive rent revisions and tenant replacements.

• Continued use of retained earnings and gains on property transfers to support distributions.