Mitsui Fudosan Aktie

Good afternoon, everyone. I am Kijima, Executive Manager of Investor Relations at Mitsui Fudosan. I will present in detail the full year results for the fiscal year ended March 2026. Similar to last time, I will use the financial results and business highlights presentation dated May 13, which is available on our website.

As usual, I will begin with the results highlights on Slide 3 of the presentation. As indicated in the blue box on the upper part of the page and the figures in the table, in fiscal 2025, we achieved year-on-year growth for each of operating revenue, operating income, business income, ordinary income and profit attributable to owners of the parent exceeded our forecast for the full year and also set record highs for all levels of earnings.

As shown in the box on the lower right, the resulting full year EPS was JPY 101 for an EPS CAGR of 13.4% from the fiscal 2023 EPS forecast of JPY 78.5. The ROE for fiscal 2025 was 8.7%. Mitsui Fudosan achieved its fiscal 2026 goals for ROE, business income and net profit under the group long-term vision, & INNOVATION 2030 1 year ahead of plan.

Our forecast for fiscal 2026, as shown in the lower part of the blue box and the figures in the table are operating revenue of JPY 2.8 trillion, business income of JPY 450 billion and profit attributable to owners of the parent of JPY 285 billion. We project record high earnings in fiscal 2026.

Our forecast represent the 15th consecutive year of record highs for operating revenue, the third consecutive year for business income and the fifth consecutive year for net profit. Returning to the box on the lower right, as a consequence of these forecasts, we project a 3-year CAGR of 10.3% for growth metric EPS growth.

We are expecting to significantly exceed the fiscal 2026 CAGR target of 8% EPS growth and project an ROE of more than 8.5%. For strategic equity holdings, relative to our target of a 50% reduction over the 3-year period from the end of fiscal 2023, we have achieved a reduction of around 40% as of the end of fiscal 2025. We now aim to achieve a cumulative reduction of more than 50% as of the end of fiscal 2026.

With regard to shareholder returns, please turn to Page 4. Based on the overshoot of our net profit forecast and reflecting the dividend policy set out in & INNOVATION 2030 for a dividend payout ratio of around 35%, we have raised our annual DPS guidance for fiscal 2025 from the JPY 34, as announced on November 7 to JPY 35, up JPY 1. This represents a JPY 4 increase from the JPY 31 of the previous fiscal year.

Combined with the share buyback program of JPY 57 billion announced on November 7, this will bring the total payout ratio for fiscal 2025 to 54.9% of profit attributable to owners of parent. The JPY 57 billion share buyback program was completed on March 9. With regard to the treasury shares we acquired, the Board of Directors has resolved to retire the shares on May 29.

Our DPS guidance for fiscal 2026 based on a payout ratio of 35% and our net profit forecast of JPY 285 billion is for an annual dividend of JPY 37, up JPY 2 from fiscal 2025. In addition to this, for shareholder returns in fiscal 2026, we have also decided today to implement a JPY 40 billion share buyback program. We note that subject to conditions such as share price, cash and progress toward achieving our KPIs, we are open to considering further share buybacks over the course of the fiscal year.

I will now explain the results in detail. Please turn to Page 65 of the financial results and business highlights presentation. I will start with the profit and loss statement. Fiscal 2025 operating revenue was JPY 2,709.7 billion, up JPY 84.3 billion or 3.2% year-on-year. Business income, which is the combination of operating income and gains and losses on equity method investments and the disposal of fixed assets was JPY 445.1 billion, up JPY 46.4 billion or 11.6% year-on-year.

Ordinary income was JPY 313.3 billion, up JPY 23 billion or 7.9% year-on-year. Profit attributable to owners of parent was JPY 278.6 billion, up JPY 29.8 billion or 12% year-on-year. Progress relative to full year guidance is shown on the right in the table entitled Achievement rate. We revised up our earnings forecast twice in fiscal 2025, but relative to the upwardly revised forecast, we exceeded our projections at each level from operating revenue down to net profit.

Next, before covering the details of the segment results, please return to the table on the left. I will discuss the major items below the line. I will begin with nonoperating income. We incurred a loss of JPY 4.3 billion in equity in net income or loss of affiliated companies, a JPY 1.8 billion year-on-year widening of losses. This is mainly the result of increased expenses such as depreciation and other expenses related to U.S. rental properties that were completed in the fiscal year under review or the previous fiscal year.

Net interest expense was JPY 73.4 billion, an improvement of JPY 5.8 billion versus the previous fiscal year. While there was an increase in net yen-denominated interest expense on the back of rising interest rates in Japan, net foreign currency-denominated interest expense declined, mainly reflecting the impact of rate cuts in the U.S. and other factors.

Other nonoperating income was a loss of JPY 6.6 billion, a JPY 5.9 billion year-on-year widening of losses. This reflects the impact of a decline in dividends received and an increase in losses on the retirement of tangible assets. As a result, overall nonoperating income was a negative JPY 84.4 billion, a JPY 1.9 billion deterioration year-on-year.

Next, for extraordinary gains and losses, please refer to the box on the upper right entitled Extraordinary Income. We posted JPY 51.7 billion in extraordinary gains from the disposal of tangible assets. This is in line with the policy set out in the long-term vision & INNOVATION 2030 of not distinguishing between tangible assets and real property for sale when considering disposals.

We generated profits on the sale of the Otemachi Building Nagoya Station Front Building and the former Hibiya U-1 Building. We also generated profits on the sale of investment securities of JPY 51.6 billion, in line with the policy set out in & INNOVATION 2030 to reduce holdings of investment securities.

We generated profits on the sale of a portion of our equity holdings. Under extraordinary losses, we incurred JPY 19.7 billion in impairment losses. As explained at the time of second quarter results, this is related to a loss at LaLaport BBCC, a retail facility in Kuala Lumpur, Malaysia.

As previously disclosed, there is a JV partner for LaLaport BBCC. The partner will bear their share of the loss in line with their stake. As such, the impact on Mitsui Fudosan's net profit will only be for our share, which is around JPY 8 billion or roughly half of the JPY 17 billion LaLaport BBCC impairment loss.

Please return to the table on the left. As shown on the fourth line from the bottom, corporate tax was JPY 125.1 billion. Net losses attributable to noncontrolling interest shown in the second row from the bottom of the table was a positive JPY 6.8 billion. The figure is a significant positive, reflecting the portion of impairment losses attributable to noncontrolling interest for LaLaport BBCC as just discussed.

Please turn to the next page. I will now cover the segment results in detail. First, the Leasing segment, as shown on Slide 67 of the presentation. Reflecting growth in revenues and profits from offices in Japan and overseas, such as Tokyo Midtown Yaesu and 50 Hudson Yards in New York, fiscal 2025 operating revenue was JPY 936.6 billion, and operating income was JPY 181.5 billion, up JPY 64.2 billion and JPY 5 billion year-on-year, respectively.

Equity in net income or loss of affiliated companies was a negative JPY 4.5 billion, a year-on-year decline of JPY 4.5 billion, reflecting the impact of depreciation expenses on U.S. rental properties, which were completed in the fiscal year under review and the previous fiscal year.

As a result, business income was JPY 177 billion, up JPY 0.5 billion year-on-year. The office vacancy rate is shown in the box in the middle of the page. Mitsui Fudosan's non-consolidated metropolitan area office vacancy rate as of the end of March remains at a low 1.6%.

Next is the Property Sales segment. Please turn to Page 68. As shown at the very top of the page, fiscal 2025 operating revenue for property sales as a whole was JPY 729.2 billion, and business income was JPY 193.1 billion. This represents a JPY 28.7 billion year-on-year decline in operating revenue, but a JPY 26.1 billion year-on-year increase in profits.

Looking at the subsegments, for property sales to domestic individuals, operating revenue was JPY 439.3 billion and operating income was JPY 112 billion on the back of handovers for Mita Garden Hills, Park City Takadanobaba and others. This represents a JPY 25.7 billion year-on-year increase in operating revenues and a JPY 15.5 billion year-on-year increase in operating income.

We show the number of reported units in the middle of the page. The combined total of condominiums and detached housing units was 3,154, down 956 units year-on-year. However, the average price per unit for the combination of condominium and detached housing units hit a record high of JPY 139.3 million.

Near-term selling conditions remain strong and unchanged. We show completed inventory on the lower part of the page. As you can see, fiscal 2025 completed inventory as of the end of March 2026 was 36 units for condominiums and 10 units for detached housing for a combination of 46 units.

Inventory remains at historically low levels. Also, while not indicated on the slide, the OPM for domestic residential property sales was 25.5%. Next is property sales to investors and overseas individuals. Please return to the top of the page. Operating revenue was JPY 289.9 billion, down JPY 54.5 billion year-on-year.

Business income for the subsegment was JPY 81.1 billion, the combination of operating income of JPY 31.4 billion and the sum of equity method investment profits and gains on the sale of fixed assets at JPY 49.6 billion. On a year-on-year basis, subsegment operating income for property sales to investors fell JPY 14.9 billion year-on-year, but was offset by a JPY 25.4 billion year-on-year increase in equity method investment gains and gains on the disposal of fixed assets. In total, business income rose JPY 10.5 billion year-on-year.

Next, the Management segment. Please turn to Page 69. As shown at the top of the page, the overall Management segment reported fiscal 2025 operating revenue of JPY 511.4 billion and business income of JPY 80.8 billion. This is a JPY 25.1 billion increase in operating revenue and a JPY 9.2 billion increase in business profits from the previous fiscal year.

I will now discuss conditions for the individual subsegments. Property Management operating revenue was JPY 376.3 billion, while business income was JPY 44.3 billion. This represents year-on-year increases of JPY 14.9 billion and JPY 5.8 billion, respectively. The key factors were an increase in revenue at the car sharing business and higher management fees reflecting GMV growth at retail facilities.

Next is the Brokerage and Asset Management subsegment. Operating revenue was JPY 135.1 billion and business income was JPY 36.5 billion. This represents year-on-year increases of JPY 10.2 billion and JPY 3.3 billion, respectively. The main driver was an increase in project management fees.

Next is the Facility Operations segment. Please turn to Page 70. The overall Facilities Operations segment reported fiscal 2025 operating revenue of JPY 244.1 billion and business income of JPY 46.3 billion. This represents year-on-year increases of JPY 20 billion and JPY 7.7 billion, respectively.

We cover the key factors in the comment section on the left. The year-on-year gains are due to rising ADRs and occupancy rates for the Hotel and Resorts business and usage fee hikes at Tokyo Dome. Looking at the individual subsegments, the Hotel and Resorts business reported operating revenue of JPY 177.5 billion, up JPY 15.4 billion year-on-year.

The Sports and Entertainment business, which consists primarily of Tokyo Dome City, posted operating revenue of JPY 66.5 billion, up JPY 4.6 billion year-on-year. As you can see, both subsegments reported year-on-year top line growth.

Next is the Other segment. Please turn to Page 71. Overall, the Other segment reported fiscal 2025 operating revenue of JPY 288.2 billion and business income of JPY 10.1 billion. The improved margin at the new construction under consignment business at Mitsui Home and large-scale orders for the Lifestyle business at Mitsui Designtec drove the year-on-year improvement of JPY 3.6 billion each to operating revenue and business income.

Next, for reference, we show the figures for the overseas business. Please turn to Page 72. Overall combined overseas business income for fiscal 2025 was JPY 31.3 billion, up JPY 4 billion year-on-year. Within the overseas business, leasing saw improved profitability from offices as a result of progress on tenants moving into 50 Hudson Yards and other properties.

However, this was offset by an increase in expenses such as depreciation on U.S. rental properties, which were completed in the period under review and the previous fiscal year. As a result, while operating revenue grew JPY 16.4 billion, business income fell JPY 0.9 billion year-on-year.

In the Property Sales segment, we made progress on disposals of U.S. West Coast rental residential properties for an increase of JPY 14.8 billion in operating revenues. However, while we incurred losses of JPY 8.5 billion related to the sale of U.S. West Coast rental residential properties and the valuation of U.S. West Coast rental residential properties and residential properties for sale in China at the lower of cost or market, progress in profit recognition for the residential property sales in APAC contributed to narrowing the loss by JPY 4.8 billion year-on-year.

The combination of management and other segments reported a JPY 0.8 billion improvement in revenue and a JPY 0.1 billion increase in profits. Next, I will cover the balance sheet. Please turn to Page 73. At the bottom of the page on the left, total assets as of the end of fiscal 2025 were JPY 10,103.4 billion, up JPY 243.6 billion from the end of the previous fiscal year, mainly as a result of factors such as progress on investments and the rise in share prices.

As indicated below the table, the impact of moves in foreign currency rates was JPY 39.2 billion. As shown on the lower right of the table, the D/E ratio as of the end of fiscal 2025 was 1.41x and the equity ratio was 32.4%. I will now discuss the major components of change such as cost recovery. Please turn to Page 74.

As shown in the table on the upper left entitled Real Property for Sale, the outstanding balance was JPY 2,603 billion, up JPY 102.3 billion from the end of the previous fiscal year. Looking at the table below, new investments were JPY 644.4 billion. Cost recovery was JPY 520.3 billion and other, which includes the impact of ForEx was a negative JPY 21.8 billion.

Next, on the lower left, the outstanding balance of tangible and intangible assets was JPY 4,679.1 billion, down JPY 28.3 billion from the end of the previous fiscal year. As shown in the table below, there were new investments of JPY 246.3 billion, including construction investments for projects such as the renovation of LaLaport Tokyo-Bay North Wing, while depreciation was JPY 150.9 billion. And under other, there was a reduction of JPY 123.7 billion related to the sale of the former Hibiya U-1 Building and Otemachi Building Nagoya Station Front Building, as noted in the comment section on the right and the impact of ForEx.

Combining all of the above, the total outstanding balance fell a net JPY 28.3 billion compared to the end of the previous fiscal year. On the liability side, please see the table on the upper right. As of the end of fiscal 2025, outstanding interest-bearing debt was JPY 4,632.5 billion, up JPY 216.4 billion from the end of the previous fiscal year. This was primarily due to progress on investments in Japan and overseas and the impact of ForEx.

As it is the end of the fiscal year, we also revalued our rental properties, marking them to market. Please turn to Page 75. As you can see in the table on the upper part of the page, market value as of the end of fiscal 2025 was JPY 7,714.6 billion, making the gap to book value or the unrealized gains JPY 3,985.1 billion, up JPY 299.5 billion from the end of the previous fiscal year.

The increase was mainly the result of the new inclusion of a number of properties such as the Nihonbashi 1-Chome Central District Project, which has now been renamed Tokyo Midtown Nihonbashi and [Portside Yokohama] in properties that are marked to market.

There was also an impact from increases in rent revenues from existing offices and retail facilities. Next, I will explain in detail our forecast for the fiscal year ending March 2027. Please turn to Page 78. Our forecast for fiscal 2026 business income is JPY 450 billion, up JPY 4.8 billion from fiscal 2025. We also project a JPY 6.3 billion year-on-year increase in profit attributable to owners of parent to JPY 285 billion.

As indicated in the comments section in the box on the right, we have taken into account factors such as increases in office rents in Japan and overseas, increased leasing profits on the back of higher GMVs at retail facilities in Japan and overseas and expected growth in property sales, including the impact of an acceleration of total asset turnover, including both tangible assets and real property for sale.

Operating revenue, business income, ordinary income and profit attributable to owners of parent are all expected to hit record highs. I will now elaborate on the segment breakdown. First, for the Leasing segment, while we expect an increase in expenses on the back of the completion of domestic office properties and U.S. rental properties, we have also factored in increases in domestic office rents and growth in leasing profits as a result of GMV growth at domestic and overseas retail facilities.

We guide for operating revenue of JPY 970 billion and business income of JPY 180 billion, both rising year-on-year. We project Mitsui Fudosan's nonconsolidated metropolitan area office vacancy rate as of the end of fiscal 2026 to be in the 1% plus range. We expect vacancy rates to remain low.

For the Property Sales segment, while there is a high base for comparison in the property sales to domestic individual subsegment relative to the fiscal 2025's high level of central-urban, high-end large-scale properties, factoring in an acceleration of asset turnover in property sales to investors, including both real property for sale and tangible assets, we project overall property sales operating revenue of JPY 740 billion and business income of JPY 210 billion, both up year-on-year.

With regard to property sales to domestic individuals, please see the box on the left on Page 79. We expect to report 2,700 units, the combined total of condominium and detached housing units and are guiding for an OPM of 21% similar to the margins of more than 20% that we generated in fiscal '24 and '25.

While not shown on the page, relative to the 2,350 condominium units we expect to report, the contract rate is already at 75%. In addition, we have 24,600 units in our land bank, mainly focused on central urban large-scale redevelopment projects. We believe we can continue to stably generate profits over the medium to long term.

Next is the property sales to investors subsegment. While being mindful of maintaining a favorable balance between stable and sustainable leasing profits and property sales profits by generating added value through the disposal of real property for sale and tangible assets, we project operating revenue of JPY 430 billion and business income of JPY 145 billion, with both significantly higher year-on-year.

While not indicated on the slide, the progress rate on contracts which underpin this profit forecast is already above 50% as of the beginning of the fiscal year, which should give you a high degree of confidence in our ability to achieve our target.

Next, please turn to Page 78 for the Management segment. As a result of the absence of the one-off management fees reported in fiscal 2025, we are projecting operating revenues of JPY 510 billion and business income of JPY 75 billion, both down year-on-year.

However, our stated annual profit target for the Management segment under & INNOVATION 2030 is JPY 70 billion. Our fiscal 2026 forecast represents the third consecutive year that we expect to exceed this level. For the Facilities Operations segment, while we expect further revenue and profit growth in the Hotel and Resorts business given strong demand, taking into account an increase in expenses on the completion of new large-scale projects, we are guiding for overall segment operating revenue of JPY 260 billion and business income of JPY 45 billion. This level is unchanged from the fiscal 2025 level.

Next, for the Other segment, we project overall segment operating revenue of JPY 320 billion and business income largely unchanged year-on-year of JPY 10 billion. Next, on the net interest burden, reflecting progress on investments in Japan and overseas and the impact of rising interest rates in yen, we project an increase of JPY 11.5 billion versus fiscal 2025 to JPY 85 billion.

Finally, on extraordinary income, on the back of expected gains on disposals of tangible assets and investment securities, we project extraordinary income of JPY 105 billion, up JPY 21.3 billion year-on-year. In summary, we project fiscal 2026 operating revenue of JPY 2.8 trillion, up JPY 90.2 billion, business income of JPY 450 billion, up JPY 4.8 billion.

Ordinary income of JPY 315 billion, up JPY 1.6 billion and profit attributable to owners of parent of JPY 285 billion, up JPY 6.3 billion. For each of operating revenue, business income, ordinary income and profit attributable to owners of parent, the projections represent record highs.

With regard to the effect of the conflict in the Middle East, we have seen no impact in the near term. As such, it is not factored into our forecast, but the plan does incorporate a certain level of buffer. Obviously, the magnitude of the impact will depend on how long the conflict persists and its severity. But given we have multiple profit-generating capabilities, we don't feel there is a need to be overly concerned about our ability to achieve our targets.

I will skip a discussion of shareholder returns since I have already touched upon it at the beginning of the call. Next, I would like to return to Page 79 to discuss investments and cost recovery again using the table on the right. Investments in tangible and intangible assets in fiscal 2026 are projected to be JPY 300 billion, primarily focused on domestic development investments.

For real property for sale in fiscal 2026, we are guiding for investments of JPY 790 billion, but cost recovery of JPY 610 billion. Based on this, we project interest-bearing debt as of the end of fiscal 2026 to be JPY 4.8 trillion. Finally, on cash allocation, please turn to Page 18. Our cumulative track record for fiscal 2024 and 2025 is shown on the table on the right. Of the projected cash inflow, cumulative asset turnover proceeds for the 2 years of fiscal 2024 and fiscal 2025 were JPY 1.240 trillion. Compared to the cost recovery amount for the 3 years up to fiscal 2023, our target of cumulative cost recovery of JPY 2 trillion represents a 1.4x increase.

Relative to the fiscal 2026 target, we are tracking largely in line, having achieved 60% of the target to this point. In addition to real property for sale, we have also made progress on cost recovery, including disposals of tangible assets and investment securities.

Backed by growth in business income in each of the segments, the basic cash flow from operating activities over the last 2 years we have generated is around JPY 1 trillion. Our initial assumption was that this level of basic cash flow from operating activities would be achieved over a 3-year period.

With regard to cash outflow, we are making steady progress in winning promising investment projects with the combined total of growth investments and strategic investments at around JPY 1.970 trillion or 80% of our target. On shareholder returns, the combined total of dividends and share buybacks is approximately JPY 320 billion, roughly 80% of our target.

As a result, both cash inflows and outflows stand at around JPY 2.2 trillion for a progress rate of roughly 2/3 versus our planned targets. Currently, the impact of the Middle East conflict has led to highly volatile financial and economic markets, but the near-term fundamentals for our core business, real estate, particularly the Japanese real estate market are firm.

We believe Mitsui Fudosan is making solid progress on enhancing its ability to generate profits. The group as a whole remains firmly committed to achieving the forecast we have disclosed for this fiscal year while closely monitoring the financial and real estate market conditions in Japan and overseas. This completes my presentation.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good afternoon, everyone. I am Kijima, Executive Manager of Investor Relations at Mitsui Fudosan.

I will present in detail the full year results for the fiscal year ended March 2026. Similar to last time, I will use the financial results and business highlights presentation dated May 13, which is available on our website.

As usual, I will begin with the results highlights on Slide 3 of the presentation. As indicated in the blue box on the upper part of the page and the figures in the table, in fiscal 2025, we achieved year-on-year growth for each of operating revenue, operating income, business income, ordinary income and profit attributable to owners of the parent exceeded our forecast for the full year and also set record highs for all levels of earnings.

As shown in the box on the lower right, the resulting full year EPS was JPY 101 for an EPS CAGR of 13.4% from the fiscal 2023 EPS forecast of JPY 78.5.

The ROE for fiscal 2025 was 8.7%.

Mitsui Fudosan achieved its fiscal 2026 goals for ROE, business income and net profit under the group long-term vision & INNOVATION 2030, 1 year ahead of plan.

Our forecast for fiscal 2026, as shown in the lower part of the blue box and the figures in the table are operating revenue of JPY 2.8 trillion, business income of JPY 450 billion and profit attributable to owners of the parent of JPY 285 billion. We project record high earnings in fiscal 2026, our forecast represents the 15th consecutive year of record highs for operating revenue, the third consecutive year for business income and the fifth consecutive year for net profit.

Returning to the box on the lower right. As a consequence of these forecasts, we project a 3-year CAGR of 10.3% for growth metric EPS growth. We are expecting to significantly exceed the fiscal 2026 CAGR target of 8% EPS growth and project an ROE of more than 8.5%.

For strategic equity holdings relative to our target of a 50% reduction over the 3-year period from the end of fiscal 2023, we have achieved a reduction of around 40% as of the end of fiscal 2025. We now aim to achieve a cumulative reduction of more than 50% as of the end of fiscal 2026.

With regard to shareholder returns, please turn to Page 4. Based on the overshoot of our net profit forecast and reflecting the dividend policy set out in & INNOVATION 2030 for a dividend payout ratio of around 35%, we have raised our annual DPS guidance for fiscal 2025 from the JPY 34 as announced on November 7 to JPY 35, up JPY 1. This represents a JPY 4 increase from the JPY 31 of the previous fiscal year.

Combined with the share buyback program of JPY 57 billion announced on November 7, this will bring the total payout ratio for fiscal 2025 to 54.9% of profit attributable to owners of parent. The JPY 57 billion share buyback program was completed on March 9.

With regard to the treasury shares we acquired, the Board of Directors has resolved to retire the shares on May 29.

Our DPS guidance for fiscal 2026, based on a payout ratio of 35% and our net profit forecast of JPY 285 billion, is for an annual dividend of JPY 37, up JPY 2 from fiscal 2025.

In addition to this, for shareholder returns in fiscal 2026, we have also decided today to implement a JPY 40 billion share buyback program.

We note that subject to conditions such as share price, cash and progress toward achieving our KPIs, we are open to considering further share buybacks over the course of the fiscal year.

I will now explain the results in detail. Please turn to Page 65 of the financial results and business highlights presentation. I will start with the profit and loss statement. Fiscal 2025 operating revenue was JPY 2,797 billion, up JPY 84.3 billion or 3.2% year-on-year.

Business income, which is the combination of operating income and gains and losses on equity method investments and the disposal of fixed assets was JPY 445.1 billion, up JPY 46.4 billion or 11.6% year-on-year.

Ordinary income was JPY 313.3 billion, up JPY 23 billion or 7.9% year-on-year.

Profit attributable to owners of parent was JPY 278.6 billion, up JPY 29.8 billion or 12% year-on-year.

Progress relative to full year guidance is shown on the right in the table entitled Achievement Rate. We revised up our earnings forecast twice in fiscal 2025, but relative to the upwardly revised forecast, we exceeded our projections at each level from operating revenue down to net profit.

Next, before covering the details of the segment results, please return to the table on the left. I will discuss the major items below the line. I will begin with nonoperating income. We incurred a loss of JPY 4.3 billion in equity in net income or loss of affiliated companies, a JPY 1.8 billion year-on-year widening of losses. This is mainly the result of increased expenses such as depreciation and other expenses related to U.S. rental properties that were completed in the fiscal year under review or the previous fiscal year.

Net interest expense was JPY 73.4 billion, an improvement of JPY 5.8 billion versus the previous fiscal year.

While there was an increase in net yen-denominated interest expense on the back of rising interest rates in Japan, net foreign currency denominated interest expense declined, mainly reflecting the impact of rate cuts in the U.S. and other factors.

Other nonoperating income was a loss of JPY 6.6 billion, a JPY 5.9 billion year-on-year widening of losses. This reflects the impact of a decline in dividends received and an increase in losses on the retirement of tangible assets. As a result, overall nonoperating income was a negative JPY 84.4 billion, a JPY 1.9 billion deterioration year-on-year.

Next, for extraordinary gains and losses, please refer to the box on the upper right entitled Extraordinary Income. We posted JPY 51.7 billion in extraordinary gains from the disposal of tangible assets. This is in line with the policy set out in the long-term vision & INNOVATION 2030 of not distinguishing between tangible assets and real property for sale when considering disposals. We generated profits on the sale of the Otemachi Building Nagoya station front building and the former Hibiya U-1 building.

We also generated profits on the sale of investment securities of JPY 51.6 billion, in line with the policy set out in & INNOVATION 2030 to reduce holdings of investment securities. We generated profits on the sale of a portion of our equity holdings.

Under extraordinary losses, we incurred JPY 19.7 billion in impairment losses. As explained at the time of second quarter results, this is related to a loss at LaLaport BBCC, a retail facility in Kuala Lumpur, Malaysia.

As previously disclosed, there is a JV partner for LaLaport BBCC. The partner will bear their share of the loss in line with their stake. As such, the impact on Mitsui Fudosan's net profit will only be for our share, which is around JPY 8 billion or roughly half of the JPY 17 billion LaLaport BBCC impairment loss.

Please return to the table on the left. As shown on the fourth line from the bottom, corporate tax was JPY 125.1 billion.

Net losses attributable to noncontrolling interest shown in the second row from the bottom of the table was a positive JPY 6.8 billion. The figure is a significant positive, reflecting the portion of impairment losses attributable to noncontrolling interest for LaLaport BBCC, as just discussed.

Please turn to the next page. I will now cover the segment results in detail. First, the Leasing segment, as shown on Slide 67 of the presentation. Reflecting growth in revenues and profits from offices in Japan and overseas, such as Tokyo Midtown Yaesu and 50 Hudson Yards in New York, fiscal 2025 operating revenue was JPY 936.6 billion and operating income was JPY 181.5 billion, up JPY 64.2 billion and JPY 5 billion year-on-year, respectively.

Equity in net income or loss of affiliated companies was a negative JPY 4.5 billion, a year-on-year decline of JPY 4.5 billion, reflecting the impact of depreciation expenses on U.S. rental properties, which were completed in the fiscal year under review in the previous fiscal year. As a result, business income was JPY 177 billion, up JPY 0.5 billion year-on-year.

The office vacancy rate is shown in the box in the middle of the page.

Mitsui Fudosan's nonconsolidated metropolitan area office vacancy rate as of the end of March remains at a low 1.6%.

Next is the Property Sales segment. Please turn to Page 68. As shown at the very top of the page, fiscal 2025 operating revenue for property sales as a whole was JPY 729.2 billion, and business income was JPY 193.1 billion. This represents a JPY 28.7 billion year-on-year decline in operating revenues but a JPY 26.1 billion year-on-year increase in profits.

Looking at the subsegments. For property sales to domestic individuals, operating revenue was JPY 439.3 billion, and operating income was JPY 112 billion on the back of handovers for Mita Garden Hills, Park City Takadanobaba and others. This represents a JPY 25.7 billion year-on-year increase in operating revenues and a JPY 15.5 billion year-on-year increase in operating income.

We show the number of reported units in the middle of the page.

The combined total of condominiums and detached housing units was 3,154, down 956 units year-on-year. However, the average price per unit for the combination of condominium and detached housing units hit a record high of JPY 139.3 million.

Near-term selling conditions remain strong and unchanged. We show completed inventory on the lower part of the page. As you can see, fiscal 2025 completed inventory as of the end of March 2026 was 36 units for condominiums and 10 units for detached housing for a combination of 46 units.

Inventory remains at historically low levels.

Also, while not indicated on the slide, the OPM for domestic residential property sales was 25.5%.

Next is property sales to investors and overseas individuals. Please return to the top of the page. Operating revenue was JPY 289.9 billion, down JPY 54.5 billion year-on-year. Business income for the subsegment was JPY 81.1 billion, the combination of operating income of JPY 31.4 billion and the sum of equity method investment profits and gains on the sale of fixed assets at JPY 49.6 billion.

On a year-on-year basis, subsegment operating income for property sales to investors fell JPY 14.9 billion year-on-year but was offset by a JPY 25.4 billion year-on-year increase in equity method investment gains and gains on the disposal of fixed assets.

In total, business income rose JPY 10.5 billion year-on-year.

Next, the Management segment. Please turn to Page 69. As shown at the top of the page, the overall management segment reported fiscal 2025 operating revenue of JPY 511.4 billion and business income of JPY 80.8 billion. This is a JPY 25.1 billion increase in operating revenue and a JPY 9.2 billion increase in business profits from the previous fiscal year.

I will now discuss conditions for the individual subsegment. Property Management operating revenue was JPY 376.3 billion while business income was JPY 44.3 billion. This represents year-on-year increases of JPY 14.9 billion and JPY 5.8 billion, respectively. The key factors were an increase in revenue at the car sharing business and higher management fees reflecting GMV growth at retail facilities.

Next is the Brokerage and Asset Management subsegment. Operating revenue was JPY 135.1 billion and business income was JPY 36.5 billion. This represents year-on-year increases of JPY 10.2 billion and JPY 3.3 billion, respectively. The main driver was an increase in project management fees.

Next is the facility operations segment. Please turn to Page 70. The overall Facilities Operations segment reported fiscal 2025 operating revenue of JPY 244.1 billion and business income of JPY 46.3 billion. This represents year-on-year increases of JPY 20 billion and JPY 7.7 billion, respectively. We cover the key factors in the comment section on the left. The year-on-year gains are due to rising ADRs and occupancy rates for the hotel and resorts business and usage fee hikes at Tokyo Dome.

Looking at the individual subsegments, the Hotel & Resorts business reported operating revenue of JPY 177.5 billion, up JPY 15.4 billion year-on-year. The sports and entertainment business, which consists primarily of Tokyo Dome City, posted operating revenue of JPY 66.5 billion, up JPY 4.6 billion year-on-year. As you can see, both subsegments reported year-on-year top line growth.

Next is the other segment. Please turn to Page 71. Overall, the Other segment reported fiscal 2025 operating revenue of JPY 288.2 billion and business income of JPY 10.1 billion. The improved margin at the new construction under consignment business at Mitsui Home and large-scale orders for the Lifestyle business at Mitsui Designtec drove the year-on-year improvement of JPY 3.6 billion each to operating revenue and business income.

Next, for reference, we show the figures for the overseas business. Please turn to Page 72. Overall combined overseas business income for fiscal 2025 was JPY 31.3 billion, up JPY 4 billion year-on-year. Within the overseas business, leasing saw improved profitability from offices as a result of progress on tenants moving into 50 Hudson Yards and other properties. However, this was offset by an increase in expenses such as depreciation on U.S. rental properties, which were completed in the period under review in the previous fiscal year. As a result, while operating revenue grew JPY 16.4 billion, business income fell JPY 0.9 billion year-on-year.

In the Property Sales segment, we made progress on disposals of U.S. West Coast rental residential properties for an increase of JPY 14.8 billion in operating revenues. However, while we incurred losses of JPY 8.5 billion related to the sale of U.S. West Coast rental residential properties and the valuation of U.S. West Coast rental residential properties and residential properties for sale in China at the lower of cost or market, progress in profit recognition for the residential property sales in APAC contributed to narrowing the loss by JPY 4.8 billion year-on-year.

The combination of management and other segment reported a JPY 0.8 billion improvement in revenues and a JPY 0.1 billion increase in profit.

Next, I will cover the balance sheet. Please turn to Page 73. At the bottom of the page on the left, total assets as of the end of fiscal 2025 were JPY 10,103.4 billion up JPY 243.6 billion from the end of the previous fiscal year, mainly as a result of factors such as progress on investments and the rise in share prices.

As indicated below the table, the impact of moves in foreign currency rates was JPY 39.2 billion.

As shown on the lower right of the table, the D/E ratio as of the end of fiscal 2025 was 1.41x and the equity ratio was 32.4%.

I will now discuss the major components of change such as cost recovery. Please turn to Page 74. As shown in the table on the upper left, entitled Real Property for Sale, the outstanding balance was JPY 2,603 billion, up JPY 102.3 billion from the end of the previous fiscal year.

Looking at the table below, new investments were JPY 644.4 billion, cost recovery was JPY 520.3 billion and other, which includes the impact of ForEx was a negative JPY 21.8 billion.

Next, on the lower left, the outstanding balance of tangible and intangible assets was JPY 4,679 billion, down JPY 28.3 billion from the end of the previous fiscal year. As shown in the table below, there were new investments of JPY 246.3 billion, including construction investments for projects, such as the renovation of LaLaport Tokyo Bay North Wing while depreciation was JPY 150.9 billion. And under other, there was a reduction of JPY 123.7 billion, related to the sale of the former Hibiya U-1 Building and Otemachi Building Nagoya station front building as noted in the comment section on the right and the impact of ForEx.

Combining all of the above, the total outstanding balance fell a net JPY 28.3 billion compared to the end of the previous fiscal year.

On the liability side, please see the table on the upper right.

As of the end of fiscal 2025, outstanding interest-bearing debt was JPY 4,632.5 billion, up JPY 216.4 billion from the end of the previous fiscal year. This was primarily due to progress on investments in Japan and overseas and the impact of ForEx.

As it is the end of the fiscal year, we also revalued our rental properties, marking them to market.

Please turn to Page 75. As you can see in the table on the upper part of the page, market value as of the end of fiscal 2025 was JPY 7,714.6 billion, making the GAAP to book value or the unrealized gains JPY 3,985.1 billion, up JPY 299.5 billion from the end of the previous fiscal year. The increase was mainly the result of the new inclusion of a number of properties such as the Nihonbashi 1-Chome Central District project, which has now been renamed Tokyo Midtown Nihonbashi and Tressa Yokohama in properties that are mark-to-market. There was also an impact from increases in rent revenues from existing offices and retail facilities.

Next, I will explain in detail our forecast for the fiscal year ending March 2027. Please turn to Page 78. Our forecast for fiscal 2026 business income is JPY 450 billion, up JPY 4.8 billion from fiscal 2025. We also project a JPY 6.3 billion year-on-year increase in profit attributable to owners of parent to JPY 285 billion.

As indicated in the comments section in the box on the right, we have taken into account factors such as increases in office rents in Japan and overseas, increased leasing profits on the back of higher GMVs at retail facilities in Japan and overseas, and expected growth in property sales, including the impact of an acceleration of total asset turnover, including both tangible assets and real property for sale.

Operating revenue, business income, ordinary income and profit attributable to owners of parent are all expected to hit record highs.

I will now elaborate on the segment breakdown. First, for the Leasing segment, while we expect an increase in expenses on the back of the completion of domestic office properties and U.S. rental properties, we have also factored in increases in domestic office rents and growth in leasing profits as a result of GMV growth at domestic and overseas retail facilities. We guide for operating revenue of JPY 970 billion and business income of JPY 180 billion, both rising year-on-year. We project Mitsui Fudosan's nonconsolidated metropolitan area office vacancy rate as of the end of fiscal 2026 to be in the 1%-plus range. We expect vacancy rates to remain low.

For the Property Sales segment, while there is a high base for comparison in the property sales to domestic individual subsegment relative to the fiscal 2025 high level of central urban, high-end large-scale properties. Factoring in an acceleration of asset turnover in property sales to investors including both real property for sale intangible assets, we project overall property sales operating revenue of JPY 740 billion and business income of JPY 210 billion, both up year-on-year.

With regard to property sales to domestic individuals, please see the box on the left on Page 79. We expect to report 2,700 units, the combined total of condominium and detached housing units and are guiding for an OPM of 21%, similar to the margins of more than 20% that we generated in fiscal '24 and '25.

While not shown on the page relative to the 2,350 condominium units we expect to report, the contract rate is already at 75%.

In addition, we have 24,600 units in our land bank, mainly focused on central urban large-scale redevelopment projects. We believe we can continue to stably generate profits over the medium to long term.

Next is the Property Sales to Investors subsegment. While being mindful of maintaining a favorable balance between stable and sustainable leasing profits and property sales profits by generating added value through the disposal of real property for sale and tangible assets, we project operating revenue of JPY 430 billion and business income of JPY 145 billion, was both significantly higher year-on-year.

While not indicated on the slide, the progress rate on contracts which underpin this profit forecast is already above 50% as of the beginning of the fiscal year, which should give you a high degree of confidence in our ability to achieve our target.

Next, please turn to Page 78 for the Management segment. As a result of the absence of the one-off management fees reported in fiscal 2025, we are projecting operating revenues of JPY 510 billion and business income of JPY 75 billion, both down year-on-year. However, our stated annual profit target for the Management segment under & INNOVATION 2030 is JPY 70 billion. Our fiscal 2026 forecast represents the third consecutive year that we expect to exceed this level.

For the Facilities Operations segment, while we expect further revenue and profit growth in the hotel and resorts business given strong demand, taking into account an increase in expenses on the completion of new large-scale projects, we are guiding for overall segment operating revenue of JPY 260 billion and business income of JPY 45 billion. This level is unchanged from the fiscal 2025 level.

Next, for the Other segment, we project overall segment operating revenue of JPY 320 billion, and business income largely unchanged year-on-year of JPY 10 billion.

Next, on the net interest burden, reflecting progress on investments in Japan and overseas and the impact of rising interest rates in yen, we project an increase of JPY 11.5 billion versus fiscal 2025 to JPY 85 billion.

Finally, on extraordinary income on the back of expected gains on disposals of tangible assets and investment securities, we project extraordinary income of JPY 105 billion, up JPY 21.3 billion year-on-year.

In summary, we project fiscal 2026 operating revenue of JPY 2.8 trillion, up JPY 90.2 billion, business income of JPY 450 billion, up JPY 4.8 billion, ordinary income of JPY 315 billion, up JPY 1.6 billion and profit attributable to owners of parent of JPY 285 billion, up JPY 6.3 billion. For each of operating revenue, business income, ordinary income and profit attributable to owners of parent, the projections represent record highs.

With regard to the effect of the conflict in the Middle East, we have seen no impact in the near term. As such, it is not factored into our forecast, but the plan does incorporate a certain level of buffer.

Obviously, the magnitude of the impact will depend on how long the conflict persists and its severity, but given we have multiple profit-generating capabilities, we don't feel there is a need to be overly concerned about our ability to achieve our targets.

I will skip a discussion of shareholder returns since I have already touched upon it at the beginning of the call.

Next, I would like to return to Page 79 to discuss investments and cost recovery again using the table on the right. Investments in tangible and intangible assets in fiscal 2026 are projected to be JPY 300 billion, primarily focused on domestic development investments. For real property for sale in fiscal 2026, we are guiding for investments of JPY 790 billion, but cost recovery of JPY 610 billion. Based on this, we project interest-bearing debt as of the end of fiscal 2026 to be JPY 4.8 trillion.

Finally, on cash allocation, please turn to Page 18. Our cumulative track record for fiscal 2024 and 2025 is shown on the table on the right. Of the projected cash inflow, cumulative asset turnover proceeds for the 2 years of fiscal 2024 and fiscal 2025 were JPY 1,240 billion. Compared to the cost recovery amount for the 3 years up to fiscal 2023, our target of cumulative cost recovery of JPY 2 trillion represents a 1.4x increase.

Relative to the fiscal 2026 target, we are tracking largely in line having achieved 60% of the target to this point.

In addition to real property for sale, we have also made progress on cost recovery, including disposals of tangible assets and investment securities.

Backed by growth in business income in each of the segments, the basic cash flow from operating activities over the last 2 years we have generated is around JPY 1 trillion. Our initial assumption was that this level of basic cash flow from operating activities would be achieved over a 3-year period.

With regard to cash outflow, we are making steady progress in winning promising investment projects with the combined total of growth investments and strategic investments at around JPY 1,970 billion or 80% of our target.

On shareholder returns, the combined total of dividends and share buybacks is approximately JPY 320 billion, roughly 80% of our target. As a result, both cash inflows and outflows stand at around JPY 2.2 trillion for a progress rate of roughly 2/3 versus our plan targets.

Currently, the impact of the Middle East conflict has led to highly volatile financial and economic markets, but the near-term fundamentals for our core business, real estate, particularly the Japanese real estate market are firm. We believe Mitsui Fudosan is making solid progress on enhancing its ability to generate profits.

The group as a whole remains firmly committed to achieving the forecast we have disclosed for this fiscal year while closely monitoring the financial and real estate market conditions in Japan and overseas.

This completes my presentation.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good afternoon, everyone. I am Kijima, Executive Manager of Investor Relations at Mitsui Fudosan. I will present in detail the third quarter results for the Mitsui Fudosan Group for the fiscal year ending March 2026. As usual, I will use the financial results and business highlights materials dated February 6, which are available on our IR website. I will begin, as always, with the key takeaways. Please turn to Page 3.

First, the 9-month cumulative results for the third quarter of fiscal 2025. We reported year-on-year increases in operating revenue, operating income, business income, ordinary income and profit attributable to owners of parent and also hit new record highs for each. In addition, business income for each of the 4 core segments also reached new record highs in third quarter.

Next, based on the strong performances of the Property Sales to Investors business and the Management segment, we have revised up our full year forecast. Operating income has been revised up by JPY 10 billion from JPY 385 billion to JPY 395 billion. Business income has been revised up by JPY 10 billion from JPY 430 billion to JPY 440 billion. Ordinary income has been revised up by JPY 10 billion from JPY 295 billion to JPY 305 billion and profit attributable to owners of parent was revised up by JPY 5 billion from JPY 265 billion to JPY 270 billion.

As a result, we project full year operating revenue, operating income, business income, ordinary profit and net profit to achieve new record highs. As well, we now expect to achieve the fiscal 2026 targets of business income of JPY 440 billion and net profit of JPY 270 billion set out in our long-term vision and Innovation 2030 1 year earlier than initially projected.

With regard to the projected new record highs, the forecast represents the 14th consecutive year of new record highs for operating revenue, the second consecutive year for business income and the fourth consecutive year for each of operating income, ordinary income and net income.

With regard to the JPY 45 billion share repurchase program resolved by the Board in February 2025, the full amount of acquisitions were completed last year on November 27. The Board has resolved at this time to cancel the acquired shares on February 27. I will now explain the results in detail using the financial results and business highlights as usual.

Jumping forward to Slide 64 of the materials, I will begin with the profit and loss statement. Third quarter 9-month operating revenue was JPY 1,981.8 billion, up JPY 305 billion or 18.2% year-on-year. Business income, which is the combination of operating income and gains and losses on equity method investments and the disposal of fixed assets was JPY 355.4 billion, up JPY 130.2 billion or 57.8% year-on-year. Ordinary income was JPY 247.5 billion, up JPY 74.5 billion or 43.1% year-on-year. Profit attributable to owners of parent was JPY 219.8 billion, up JPY 75.8 billion or 52.7% year-on-year.

Progress relative to our full year guidance is shown on the right in the table entitled Progress Rate. Relative to the upwardly revised forecast, third quarter operating revenue stood at 73.4%, business income at 80.8%, ordinary income at 81.2% and profit attributable to owners of parent at 81.4%. As you can see, we are making steady progress toward achieving the full year forecast.

Next, before covering the details of the segment results, please return to the table on the left. I will discuss the major items below the line. First, under nonoperating income, third quarter equity and net income or loss of affiliated companies was JPY 1.2 billion, a decline of JPY 3.7 billion (sic) [ 3.5 billion] year-on-year. This is mainly the result of an increase in expenses such as depreciation for U.S. rental properties completed in the previous and current fiscal year. Net interest expense in third quarter fell JPY 4.7 billion year-on-year to JPY 55.1 billion. While there was an increase in the net interest burden denominated in yen, reflecting the impact of rising interest rates in Japan, the foreign currency-denominated net interest burden fell, primarily the result of rate cuts in the U.S. Under other nonoperating income, the impact of dividends received was offset by losses on the retirement of fixed assets related to rebuilding projects for a net loss of JPY 1.1 billion. As a consequence, overall 9-month nonoperating income declined JPY 7.4 billion year-on-year to minus JPY 55.1 billion.

Next, for extraordinary gains and losses, please refer to the box on the upper right entitled Extraordinary Income. As shown here, we posted JPY 51.6 billion in 9-month extraordinary gains on the sale of tangible assets, in line with the policy set out in the long-term vision & Innovation 2030 of not distinguishing between fixed assets and real property for sales when considering asset sales. We generated profits on the sale of the Otemachi Building, Nagoya Station Front, and the former Hibiya U-1 Building. We also generated JPY 45.3 billion in extraordinary gains on the sale of investment securities. This is in line with our & Innovation 2030 policy related to holdings of investment securities. We are continuing to sell down some of our equity holdings on an ongoing basis.

Under extraordinary losses, we incurred JPY 16.8 billion in impairment losses. As explained at the time of first half results, this is related to Lalaport BBCC, a retail facility in Kuala Lumpur, Malaysia. As we have a joint venture partner for this project, there are losses that are attributable to the partner in line with their share. An amount that is roughly half of the impairment loss of JPY 16.8 billion has been reflected under net loss attributable to noncontrolling shareholders as shown on the second line from the bottom of the table on the left. Overall, the resulting impact on our net profit is around JPY 8 billion.

Next, I will cover the segment results in detail. I will start with the Leasing segment. Please see Slide 66. As shown at the top of the page, third quarter operating revenue was JPY 695.9 billion and business income was JPY 136.3 billion. This represents year-on-year increases of JPY 53.2 billion and JPY 4.7 billion, respectively. We discussed conditions for the Leasing segment in the comment section on the left. The segment as a whole reported year-on-year increases in revenues and profits in third quarter as a result of growth in office revenues and profits, driven by domestic and overseas properties such as Tokyo Midtown Yaesu and 50 Hudson Yards in New York. The office vacancy rate is shown in the box in the middle of the page. As of the end of December, Mitsui Fudosan's nonconsolidated metropolitan area office vacancy rate remained at a low level of 1.5%, reflecting the impact of corporate tenant replacement. We assume a vacancy rate in the mid-1% range at the end of this fiscal year.

Next is the Property Sales segment. Please turn to Slide 67. As shown at the top of the page, operating revenue for property sales as a whole in third quarter was JPY 520.2 billion, and business income was JPY 162.1 billion, up year-on-year by JPY 215.1 billion and JPY 110.6 billion, respectively. Looking at the subsegments. For property sales to domestic individuals, operating revenue was JPY 367.2 billion and operating income was JPY 102.6 billion, up JPY 145.4 billion and JPY 58.8 billion year-on-year, respectively. The key driver was progress on handovers for properties such as Mita Garden Hills and Park City Takadanobaba, as shown in the comment section on the left.

The contract rate for domestic condominiums as of the end of December relative to this fiscal year's total projected units of 2,800 now stands at 98%. We show the number of reported units in the middle of the page. The combined total of condominiums and detached housing units was 2,373, down 27 units year-on-year. However, the average price per unit for condominium and detached housing units was very high at over JPY 150 million. Near-term selling conditions remain strong and unchanged. We show completed inventory on the lower part of the page. As you can see, completed inventory as of the end of third quarter was 37 units for condominiums and 24 for detached housing for a scanned total of just 61 units. Inventory levels remain extremely low.

Next is Property Sales to Investors and Overseas Individuals. Please return to the top of the page. Operating revenue was JPY 153 billion, up JPY 69.7 billion year-on-year. Business income for the subsegment was JPY 59.5 billion, the combination of operating income of JPY 6.5 billion and combined gains on equity method investments and fixed asset sales of JPY 53 billion. Business income was up JPY 51.8 billion year-on-year. In addition to the sale of fixed assets, Otemachi Building Nagoya Station Front and the former Hibiya U-1 Building, we also completed the sale of 2 MFLP properties. While not shown on the materials, all contracts for sales of property sales to investors expected to complete during the current financial year were signed as of the end of December.

Next is the Management segment. Please turn to Slide 68. Please look at the top row of the table. For the Management segment as a whole, third quarter operating revenue was JPY 374 billion and business income was JPY 58.9 billion, up JPY 18.4 billion and JPY 7.9 billion year-on-year, respectively.

I will now discuss conditions for the individual subsegments. I will start with Property Management. Subsegment operating revenue was JPY 276.9 billion, and business income was JPY 31.5 billion, up JPY 8.5 billion and JPY 2.7 billion year-on-year, respectively. The key factors were an increase in users at the car sharing business and the impact of measures such as a hike in parking charges at the Repark, car park leasing business.

Next is the Brokerage and Asset Management subsegment. Operating revenue was JPY 97.1 billion, and business income was JPY 27.3 billion, up JPY 9.9 billion and JPY 5.1 billion year-on-year, respectively. The main driver was an increase in project management fees.

Next is the Facilities Operations segment. Please turn to Slide 69. The overall Facility Operations segment reported third quarter operating revenues of JPY 184.6 billion and business income of JPY 38.2 billion, up JPY 15.5 billion and JPY 6.4 billion year-on-year, respectively. We cover the key factors in the comment section on the left. The year-on-year gains are due to rising ADRs and occupancy rates for the hotel and resorts business and usage fee hikes at Tokyo Dome. Looking at the individual subsegments, the Hotel and Resorts business reported operating revenue of JPY 135.5 billion, up JPY 12.2 billion year-on-year. The Sports and Entertainment business, which consists primarily of Tokyo Dome City, generated operating revenues of JPY 49.1 billion, up JPY 3.3 billion year-on-year. As you can see, both subsegments reported year-on-year top line growth.

Next is the Other segment. Please turn to Page 70. Overall, the Other segment reported third quarter operating revenue of JPY 206.9 billion and business income of JPY 6.2 billion. Reflecting the impact of factors such as a large-scale order in the Lifestyle business of Mitsui Designtec, revenues and profits grew JPY 2.5 billion and JPY 1.5 billion year-on-year, respectively.

Next, for reference, we show figures for the overseas business. Please turn to Page 71. Overall combined overseas business income for third quarter was JPY 27.9 billion, up JPY 7.3 billion year-on-year. Please note, there is a 3-month lag in reporting overseas income. The figures for third quarter reflect the results of the overseas business for the period from January to September 2025. Within the overseas business, Leasing reported an JPY 11.4 billion year-on-year increase in revenues, but a JPY 0.2 billion year-on-year decline in profits. Revenues grew on the back of factors such as the increase in office revenues and profits from properties such as 50 Hudson Yards, but profits dipped on a rise in expenses such as depreciation on U.S. rental properties completed in the previous and current fiscal year.

In the Property Sales segment, revenues grew JPY 75.9 billion year-on-year on progress, on sales of U.S. West Coast rental residential properties. However, we incurred a JPY 1.6 billion loss in business income owing to losses related to the sale of U.S. West Coast rental residential properties, although this represents a JPY 7.7 billion year-on-year narrowing of losses. The combination of the management and other segments reported a JPY 0.5 billion year-on-year increase in revenue and a JPY 0.1 billion year-on-year dip in profits.

Next, I will cover the balance sheet. Please turn to Page 72. At the bottom of the page on the left, total assets as of the end of third quarter fiscal 2025 were JPY 9,975.6 billion, up JPY 115.8 billion compared to the end of the previous fiscal year, driven primarily by factors such as rising share prices on our holdings of investment securities. As noted separately, changes in foreign exchange rates had a negative impact of JPY 116 billion. The D/E ratio as of the end of third quarter fiscal 2025 was 1.48x and the equity ratio was 32%.

I will now discuss the major components of change, including cost recovery. Please turn to Slide 73. As shown in the table on the upper left, the total outstanding balance of real property for sale was JPY 2,511.1 billion, up JPY 10.4 billion from the end of the previous fiscal year. New investments were JPY 433.9 billion, cost recovery was JPY 378.5 billion and other, which includes elements such as ForEx impact was a negative JPY 44.9 billion. As you can see from the breakdown of these figures, Mitsui Fudosan Residential reported a net increase in cost recovery of JPY 51.6 billion, primarily on progress on handovers of properties such as Mita Garden Hills. Mitsui Fudosan reported a net increase in investments of JPY 109.1 billion.

While we made progress on the sale of properties, this was offset by continued progress on project investments. Mitsui Fudosan America reported a net increase in cost recovery of JPY 105.2 billion on progress in sales of properties and other factors. Mitsui Fudosan U.K. reported a net increase in investments of JPY 46.6 billion due to progress on investments.

Next, looking at the lower left, the outstanding balance of tangible and intangible assets was JPY 4,594.4 billion, down JPY 112.9 billion from the end of the previous fiscal year. New investments were JPY 162 billion due to construction investments for projects such as the renovation of LaLaport Tokyo-Bay North Wing, while depreciation was JPY 111.9 billion. Other, as noted in the comment section on the lower right, declined JPY 163 billion on the impact of the sale of the former Hibiya U-1 Building and the Otemachi Building Nagoya Station Front and changes in ForEx rates. Taking this into account, there was a net overall decline of JPY 112.9 billion relative to the end of the previous fiscal year.

On the liability side, please see the table on the upper right. The outstanding balance of interest-bearing debt as of third quarter fiscal 2025 was JPY 4,727.5 billion, up JPY 311.4 billion compared to the end of the previous fiscal year. This reflects the impact of factors such as progress on domestic and overseas investments, corporate tax payments and the payment of dividends.

Finally, I will discuss the revisions to our full year forecast in more detail. Please turn to Slide 74. First, with regard to operating income and business income, both were ahead of our full year forecast as of first half by more than JPY 10 billion. As such, we revised up our full year operating forecast to JPY 395 billion and our full year business income forecast to JPY 440 billion. I will highlight a number of key points in breaking down the upward revision of JPY 10 billion profit by segment.

First, reflecting the strong situation for contracts in the Property Sales to Investors business, we revised up segment business income by JPY 5 billion, raising our full year forecast from the initial JPY 190 billion to JPY 195 billion. Second, reflecting the strength of the retail brokerage Rehouse business, following the upward revision as of second quarter, we revised up our full year business income forecast by a further JPY 5 billion, raising our full year forecast to JPY 85 billion from our JPY 80 billion forecast as of first half. There are no changes to our projection at the nonoperating level. Our forecast for ordinary income is also revised up by JPY 10 billion to JPY 305 billion.

Reflecting a JPY 5 billion increase in corporate taxes as a result of higher projected profits, we revised up again our full year forecast for profit attributable to owners of parent by JPY 5 billion from our forecast as of second quarter to JPY 270 billion. As a result of the upward revisions, we expect to reach new record highs for each of operating revenue, operating income, business income, ordinary income and profit attributable to owners of parent. Also, as mentioned at the outset, as a consequence of the upward revision, we expect to achieve the fiscal 2026 profit targets set out in the group long-term vision and Innovation 2030, 1 year earlier than initially projected.

Please turn to Page 75. On the lower right, with regard to outstanding interest-bearing debt, reflecting near-term conditions such as ForEx rates, we now project the balance as of fiscal year-end to be JPY 4,700 billion, up JPY 100 billion from our initial projection of JPY 4,600 billion.

Please turn back to Slide 3. Reflecting earnings revisions, we had revised up our guidance for our growth metric, EPS growth from our initial guidance of around 9.6% to around 10.3% at the end of first half. However, factoring in our latest revisions to our earnings forecast, we again revised up our guidance to around 11.5%. With regard to ROE, we reiterate our mid-8% level forecast. While there will be some impact from what happens with share prices, we continue to focus on achieving this target 1 year early. The group as a whole remains firmly committed to achieving our upwardly revised profit targets for this fiscal year as well as the KPIs set out in & Innovation 2030.

This completes my presentation.

Good afternoon, everyone. I am Kijima, Executive Manager of Investor Relations at Mitsui Fudosan. I will explain in detail the Mitsui Fudosan Group's results for the first quarter of the fiscal year ending March 2026. As usual, I will use the financial results and business highlights materials dated August 5, which are available on our website. Let's get started.

From this quarter, we have added a new page with the key takeaways from the overall results at the beginning of the presentation on page three. As I will cover the earnings results as shown in the upper part of the page in detail, I will skip the table on this page and highlight the key takeaways on corporate governance, which are shown below.

A new female Internal Director was appointed at the Ordinary General Meeting of Shareholders. To date, we have had outside directors who were women, but this time, we have added the first female director from within the company. The addition of this individual to the Board will raise the percentage of women on the Board of Directors by 8 percentage points from the previous 15% to 23%, enhancing the diversity of the Board's composition.

In addition, shareholders also approved an amendment to the compensation system. The resolution was to revise the method of providing equity compensation, but at the same time, we also reviewed the calculation formula to ensure its alignment with the major KPIs set out in the group long-term vision & INNOVATION 2030, such as ROE, EPS, net income and business income. The amended formula has been disclosed. Please see pages 54 and 55 for more information on this subject.

I will now begin with an overview of the first quarter fiscal 2025 results. As usual, I will use the financial highlights page. Please turn to Page 4 of the presentation. As shown in the table on the upper part of the page, Mitsui Fudosan's first quarter results for operating revenue, operating income, business income, ordinary income and profit attributable to owners of parent all reached new record highs for the first quarter with year-on-year gains in revenues and all levels of profit. Also, business income for each of the 4 core segments hit new record highs for first quarter as well. We show the progress rate on business income for each segment versus the full year plan on the lower part of the page.

With the Property Sales segment at 65.6%, Leasing at 26.2% and facilities operation at 32%, we are making solid progress. The progress rate for these core segments was above 25%. Relative to our full year forecast, which represent new record highs, progress in first quarter was favorable, resulting in business income at 44.2% and net profit attributable to owners of parent at 47.8%.

I will now explain the results in more detail. Please turn to Page 61 of the presentation. I will start with the consolidated profit and loss statement. First quarter fiscal 2025 operating revenue was JPY 802.3 billion, up JPY 171.9 billion or 27.3% year-on-year. Business income, which is the combination of operating income and gains and losses on the disposal of tangible assets and equity method investments was JPY 187.7 billion, up JPY 82.9 billion or 79.2% year-on-year. Ordinary income was JPY 144 billion, up JPY 53.8 billion or 59.7% year-on-year. Profits attributable to the owners of the parent was JPY 124.2 billion, up JPY 59.2 billion or 91.1% year-on-year.

On the right, we show the progress rate relative to our full year forecast in the box titled Progress Comparison with Full Year Forecast. Operating revenue was 29.7%, business income, 44.2%; ordinary income, 50.5% and profits attributable to owners of parent, 47.8%. These figures should give you a sense for the rapid pace of profit generation this fiscal year.

Next, before commenting on the details of the individual segments, please return to the table on the left. I will touch upon the major items below the line. I will start with nonoperating income and expenses. Equity and net income or loss of affiliated companies fell JPY 2.2 billion year-on-year as a result of increased expenses and other factors owing to opening expenses related to the completion of rental properties in the U.S. in the previous fiscal year. However, the net interest burden fell JPY 0.5 billion year-on-year, chiefly due to the impact of the lowering of rates in the U.S. and U.K. Factoring in declines in dividends received and net other nonoperating income and expenses, overall nonoperating income and expenses declined JPY 4.9 billion year-on-year.

Next, I will discuss extraordinary gains and losses. As shown in the table titled Extraordinary Gains and Losses on the upper right, Mitsui Fudosan posted JPY 7.8 billion in extraordinary profits in first quarter from gains on sales of investment securities. This reflects the policy on strategic equity holdings outlined in the group's long-term vision and Innovation 2030. On an ongoing basis, we are selling down a portion of the equities that we hold. In addition, we also reported JPY 26.4 billion in gains on the sale of tangible assets.

In line with our stated policy under & Innovation 2030 of making no distinction between tangible fixed assets and real property for sale in considering asset sales, we sold properties, including the Otemachi Building Nagoya Station Front. There were no extraordinary losses reported in first quarter.

I will now cover the segment results in more detail. I will start with the Leasing segment. Please turn to Page 63. As shown at the top of the page, first quarter operating revenues were JPY 226 billion and business income JPY 45.7 billion. This represents an JPY 18.9 billion increase in revenue and a JPY 1.2 billion increase in profits year-on-year.

In the comment section on the left, we describe recent conditions for the Leasing segment. In first quarter, on the back of revenue and profit growth at domestic and overseas office properties such as Tokyo Midtown Yaesu and 50 Hudson Yards in New York, the overall segment achieved year-on-year increase in both revenues and profits. We show the office vacancy rate in the box in the middle of the page.

On the back of progress on corporate tenants moving in, Mitsui Fudosan's nonconsolidated metropolitan area office vacancy rate as of the end of June was 1.1%, remaining at low levels and largely unchanged from the 1.3% as of the end of fiscal 2024. Our initial fiscal year-end guidance for a vacancy rate of around the 2% level also remains unchanged.

Next is the Property Sales segment. Please turn to Page 64. As shown at the top of the page, for the overall Property Sales segment in first quarter, revenue was JPY 331.7 billion, and business income was JPY 124.7 billion. On a year-on-year basis, revenues and profits rose JPY 140 billion and JPY 76 billion, respectively.

On the subsegments, I will start with property sales to domestic individuals. Operating revenue was JPY 241 billion and operating income was JPY 85.6 billion. This represents year-on-year increases of JPY 75.6 billion and JPY 44.1 billion, respectively. As stated in the comments section on the left, this mainly reflects progress on handovers at properties such as Mita Garden Hills and Park City Takadanobaba.

As of the end of June, the progress rate for contracts relative to the 2,800 new domestic condominium units we expect to report for the full fiscal year has risen to 93.3%. The number of units booked are shown in the middle of the table. The combined units for condominiums and detached housing were 1,150 as of first quarter, down 618 units year-on-year. However, the average unit price for condominiums and detached housing exceeded JPY 200 million, hitting a new record high.

Although not shown on the slide, the OPM for the overall property sales to domestic individual subsegment was 36% in first quarter, well in excess of the full year guidance of 25%. This is the result of a heavy skewing of handovers to high-margin properties in first quarter. We expect the margin to gradually converge on the full year forecast level as the fiscal year progresses.

We note that near-term selling conditions are strong and unchanged. Completed inventory at the end of first quarter, as shown in the table on the lower part of the page, was 30 units for condominiums and 23 units for detached housing for a total of only 53 units. Inventory levels remain at historically low levels.

Next, for the property sales to investors and overseas individual subsegment, which includes gains and losses on both sales of tangible assets and equity method investments, please revert to the top of the page. Operating revenue was JPY 90.6 billion, up JPY 64.3 billion year-on-year. Business income was the combination of JPY 12.1 billion in operating income from property sales to investors and JPY 26.9 billion in combined gains and losses on equity method investments and the sale of tangible assets for a total of JPY 39 billion, representing a JPY 31.9 billion year-on-year increase in profits. This was the result of the sale of 2 MFLP properties in addition to the sale of tangible asset, Otemachi Building Nagoya Station Front.

The contract rate based on profits relative to the full year forecast is at around 80%, a faster than typical pace, but this related to the timing of sales, which is determined through negotiations with each counterparty for each individual property. We will focus on steadily building up profits over the year by solidly advancing handovers.

Next, the Management segment. Please turn to Page 65. Please see the top row of the table. For the Management segment as a whole, first quarter operating revenues were JPY 120.1 billion and business income was JPY 17.4 billion for year-on-year gains of JPY 5 billion and JPY 2.3 billion, respectively.

I will now discuss conditions for the individual subsegments within this segment. First is the Property Management subsegment. Operating revenue was JPY 89 billion and business income JPY 8.8 billion for year-on-year gains of JPY 1.5 billion and JPY 0.1 billion, respectively. The key factors were an increase in users of the car share service and the impact of price hikes for parking in the Repark car park service.

Next is the Brokerage and Asset Management subsegment. Operating revenues were JPY 31 billion and business income was JPY 8.6 billion for year-on-year gains of JPY 3.5 billion and JPY 2.2 billion, respectively. The key factors were increases in large-scale corporate brokerage transactions and higher transaction unit prices in the retail brokerage business.

Next is the Facility Operations segment. Please turn to Page 66. Overall, Facility Operations reported first quarter operating revenues of JPY 62.7 billion and business income of JPY 14.4 billion. This represents a year-on-year improvement of JPY 7 billion in revenues and a JPY 3.1 billion increase in profits. The key factors, as outlined in the comments section on the left, were significant increases in ADRs in the Hotel and Resorts business and the upward revision of usage fees for Tokyo Dome.

Looking at the individual subsegments, operating revenues for Hotels and Resorts were JPY 45 billion, up JPY 5.1 billion year-on-year. The Sports and Entertainment business, consisting primarily of the Tokyo Dome business, generated operating revenue of JPY 17.7 billion, up JPY 1.8 billion year-on-year. As you can see, both subsegments reported year-on-year top line growth.

Next is the Other segment. Please turn to Page 67. Overall, the Other segment reported first quarter operating revenues of JPY 61.5 billion and business income of JPY 50 million. The improved number of reported properties for Mitsui Home's new construction under consignment business boosted revenues by JPY 0.9 billion year-on-year and profits by JPY 0.6 billion.

By nature, revenues and profits for the new construction under consignment business, which accounts for the majority of the other segment, tend to skew heavily to the end of the fiscal year. As such, while reported business income as of first quarter is limited, we expect to see a step-up on profit generation into the second half.

Next, for reference, we show figures for the overseas business. Please turn to Page 68. Overall combined overseas business income for first quarter was JPY 12.5 billion, down JPY 0.3 billion year-on-year. Please note, there is a 3-month lag in reflecting overseas profits. The figures included in first quarter earnings reflect the results of the overseas business for the period of January to March 2025.

Within overseas profits, the Leasing segment reported a JPY 4.8 billion year-on-year increase in operating revenues and a JPY 0.6 billion increase in profits on the back of growth in office revenues and profits from properties such as 50 Hudson Yards.

In the Property Sales segment, while we made progress on selling properties, a high base for comparison on the back of strong profits at Asian equity method affiliates in the previous fiscal year led to a JPY 37.1 billion increase in revenues, but a JPY 1.1 billion decline in profits. The combination of management and other segments reported year-on-year gains of JPY 0.6 billion in revenues and JPY 0.1 billion in profits, supported by improvements in occupancy rates and ADR at the Halekulani Hotel in Hawaii. As a result of the above, first quarter overseas business income accounted for 6.7% of the overall total.

Next, I will talk about the balance sheet. Please turn to Page 69. As shown at the bottom of the page on the left, total assets as of the end of first quarter were JPY 9,749.8 billion, down JPY 109.9 billion versus the end of the previous fiscal year. Of the year-on-year change, changes in ForEx rates accounted for a negative JPY 164.5 billion.

I will now discuss the major components of change such as investment and cost recovery. Please turn to Page 70. As shown in the table on the upper left, the total outstanding balance of real property for sale was JPY 2,377.9 billion, down JPY 122.8 billion from the end of the previous fiscal year. New investments were JPY 132.3 billion, cost recovery was JPY 220.4 billion and other, which includes elements such as ForEx impact was a negative JPY 34.6 billion.

As you can see in the breakdown by company, Mitsui Fudosan Residential achieved a net cost recovery of JPY 85.4 billion, mainly due to progress on sales at properties such as Mita Garden Hills. While Mitsui Fudosan made progress on property sales by selling 2 MFLPs, progress on investments for existing properties resulted in a net increase in investments of JPY 15.7 billion.

Mitsui Fudosan America reported a net increase in cost recovery of JPY 65.1 billion as a result of ForEx impact on the back of a stronger yen. Mitsui Fudosan U.K. reported a net increase in investments of JPY 10 billion on progress on investment projects.

Next, looking at the lower left, the outstanding balance of tangible and intangible assets was JPY 4,616.6 billion, down JPY 90.7 billion versus the previous fiscal year-end. New investments, including construction investments in projects such as Mitsui Outlet Park Kisarazu were JPY 40.9 billion, while depreciation was JPY 36.4 billion. Factoring in the impact of the sale of Otemachi Building Nagoya Station Front and ForEx impact as described in the comment on the lower right, Other declined JPY 95.2 billion, resulting in a net drop in tangible and intangible assets of JPY 90.7 billion relative to the end of the previous fiscal year.

On the liability side, please see the table on the upper right. The outstanding balance of interest-bearing debt as of the end of first quarter was JPY 4,523.9 billion, up JPY 107.8 billion from the end of the previous fiscal year. This reflects the impact of factors such as payments for the acquisition of domestic and overseas properties, construction-related expenditures, corporate taxes and dividends.

Going back to Page 69, as a result of the above, the D/E ratio as of first quarter was 1.41x and the equity ratio was 32.9%, as shown on the lower right.

The Mitsui Fudosan Group as a whole will continue to monitor domestic and overseas financial and real estate market trends while firmly focusing on achieving the business income and net profit targets for this fiscal year and the achievement of the KPIs set out in the & Innovation 2030.

This completes my presentation.