Nomura Real Estate Posts 5.6% Rise in Nine-Month Profit on Strong Operating Revenue

Nomura Real Estate Holdings posted a 5.6 percent year-on-year profit rise to JPY 43.2 billion ($290 million) for the nine months to December as the Japanese developer’s operating revenue jumped 22.7 percent to JPY 518.3 billion.

During the period, which corresponds to the first three quarters of Nomura’s fiscal year, operating revenue in residential development grew 45 percent year-on-year to JPY 238 billion as housing sales increased and gross margins improved, the company said in a stock filing.

Nomura sold 2,659 homes from April to December, an increase of 340 units compared with the prior-year period, against a planned 4,300 for the full fiscal year. The Tokyo metropolitan area accounted for 1,938 units sold, up 20.6 percent year-on-year.

“The contract progress rate was 99.8 percent as of the end of this third quarter against the projected operating revenue of housing sales for this fiscal year,” Nomura said.

Commercial Segment Solid

In the commercial real estate segment, Nomura reported operating revenue of JPY 165.7 billion, up 11.6 percent year-on-year, while property management raked in JPY 76.5 billion (up 4.1 percent) and property brokerage took in JPY 35.3 billion (up 3.2 percent).

Operating revenue in investment management totalled JPY 11.1 billion, climbing 6.3 percent year-on-year. Assets under management reached JPY 92 billion at the end of the fiscal third quarter.

The balance sheet’s total assets rose 2.9 percent to JPY 2.17 trillion during the period from 31 March to 31 December on increases in investment securities and in-progress construction projects. Total liabilities advanced 2.6 percent to JPY 1.49 trillion.

For the full fiscal year, Nomura forecasts an attributable profit of JPY 65 billion, up 0.7 percent, on operating revenue of JPY 750 billion, up 14.5 percent.

December Dealmaking

Nomura in late December struck a deal to acquire hotel operator Urban Design System from Odakyu Electric Railway for an expected JPY 18 billion ($126 million). The transaction is due to close in April and give Nomura sole control over UDS, which manages 1,855 rooms in 16 properties across Japan and China including locations in Tokyo, Sapporo, Kyoto and Beijing.

Also in December, the company’s sponsored Nomura Real Estate Master Fund announced the JPY 2.3 billion ($16 million) acquisition of the Mimaru Suites Tokyo Asakusa hotel, betting on demand for accommodation from international visitors to Japan’s capital.

Earlier that same month, Nomura revealed plans to invest in two condo projects in eastern Thailand through a joint venture with local developer Origin Nationwide. The two projects in Bangsaen, about one hour’s drive north of the resort city of Pattaya, mark Nomura’s first step into the nation’s Eastern Economic Corridor special zone.