Nomura Real Estate Holdings,Inc. Q4 FY2025 earnings call

Long-Term Vision and Strategic Positioning

• The company defines its current stage as a "transition period for value creation", building on the 2030 Vision launched in 2022 to evolve from a traditional real estate developer to a "Life & Time Developer".
• All financial targets set three years prior have been achieved, driven by consistent growth across domestic and international operations from meeting customer needs.
• The company revised its planning structure moving forward, splitting long-term strategy into a separate long-term management policy and a rolling 3-year business plan to better adapt to fast-changing market conditions while maintaining consistent long-term direction.
• Long-term financial guidelines through 2030 are set as: ROA of 5% or higher, ROE of 10% or higher, average annual business profit growth of 8%, equity ratio of ~30%, total payout ratio of 40-50%, and a minimum annual dividend payout of 4% of equity (DOE).
• The company's flagship "Mori o Tsunagu (Connecting Forests) Tokyo Project" is highlighted as a core long-term initiative.

3-Year Business Plan (FY2026 March - FY2028 March) Core Framework

• The core goal is to expand business volume across the group, achieve sustainable growth, maintain balanced balance sheet management, and balance high profit growth with high capital efficiency.
• Core businesses are defined as large-scale residential condominiums (one of Japan's largest by volume) and office properties; the company will strengthen its market position through improved product planning and service capabilities. Five priority growth areas are targeted for accelerated investment.
• The plan sets an average annual business profit growth target of 8%, with a target of 160 billion yen in business profit for FY2028 March, exceeding the prior plan's target of 140 billion yen or higher.
• Total planned investment over the 3-year period is 2.05 trillion yen, with increased investment allocated to growth sectors. Total planned capital recovery from asset sales is 1.7 trillion yen, driven by increased sales of income-producing properties and portfolio optimization, balancing long-term growth opportunity building with near-term steady profit growth.

Core and Priority Growth Initiatives

• Core Business Position Building: For condominiums, the company will maintain annual delivery volumes of 3,500 to 4,000 units (top-tier in Japan) and target gross profit margins similar to the past three years, expanding into high-end luxury condominiums in central Tokyo and urban detached homes. For offices, the company will combine diverse assets (such as shared office H1T and small serviced office H1O) with the NOMURA WORK-LIFE PLUS tenant support service to improve customer satisfaction, and expand development of high-function lab offices to support R&D activity across diverse industries.
• Priority Area 1: Targeted Investment in Growth Sectors: 100 billion yen planned for rental and senior housing, expanding product lines to include co-living residences and compact/high-end senior housing options. 100 billion yen planned for hotels, leveraging inbound demand growth, with investment in new hotel types alongside the company's directly operated brands and UDS' third-party managed brands. 300 billion yen planned for logistics facilities, with investments across multiple regions and expanded value-added services such as automated multi-story warehouse operations.
• Priority Area 2: Bringing in Investor Capital for Development and Rental Businesses: The company will pursue co-investment with investors to expand business opportunities and improve asset efficiency. It will expand development of properties to meet demand from new investor segments (overseas investors, high-net-worth individuals) alongside its existing investor base, leveraging the company's established rental value chain.
• Priority Area 3: Strengthening Intra-Group and Nomura Group Collaboration: The company will move its headquarters to BLUE FRONT SHIBAURA in August 2025 to improve cross-group collaboration and team performance. It will also deepen collaboration with the broader Nomura Group, focused on residential sales, real estate brokerage, and private fund management.
• Priority Area 4: Strengthening Initiatives for Future Overseas Profit Growth: The company will leverage its domestic product planning and improvement capabilities to deliver high value-added projects across markets, expanding in fast-growing Asian economies (Vietnam, the Philippines) and developed markets (U.S., U.K.) to achieve stable profit growth.
• Priority Area 5: Accelerate Growth via Strategic M&A: 100 billion yen allocated for strategic M&A over the 3-year period to pursue growth beyond the boundaries of existing businesses.

Shareholder Return

• For FY2025 March, the annual dividend per share (post-stock split) is 34.00 yen, with a payout ratio of 39.2% and total payout ratio of 45.9%. For FY2026 March, the company plans an annual dividend of 36.00 yen, a 41.2% payout ratio, marking the 14th consecutive year of dividend increases.

For the full year ended March 2025, Nomura Real Estate Holdings reported consolidated revenue of 757.6 billion yen, operating business profit of 125.1 billion yen, and net income attributable to parent shareholders of 74.8 billion yen, all of which were all-time highs. Business profit grew 11.4 billion yen (10.1%) year-over-year, while net income grew 6.6 billion yen (9.8%) year-over-year.

• Residential Segment: Revenue grew driven by rising average condominium prices and contributions from newly consolidated UDS Co.'s hotel business. The condominium segment delivered a gross profit margin of 26.9%. During the period, the segment secured approximately 2,000 residential units of land, equivalent to 450 billion yen in future revenue, with land acquisition for projects planned through FY2028 March nearly complete. For rental residential development, the segment acquired 7 new properties with a total investment of 18.8 billion yen, bringing its total development pipeline to 36 properties valued at 115.8 billion yen. Revenue contribution % was not explicitly disclosed for individual segments in the provided transcript.
• Urban Development Segment: Revenue and profit decreased year-over-year, as the company intentionally reduced gain on sale of income-generating real estate due to already strong full-year group performance. Despite the sales reduction, the segment acquired 12 new parcels, focused on logistics facilities, totaling 264 billion yen, bringing its total income-producing property pipeline to over 1 trillion yen. After updating vacancy rate calculation methodology to exclude properties that have not been stabilized for 12 months post-completion, the overall average vacancy rate for the segment's held-for-rent portfolio dropped 0.7 percentage points to 3.9% from three months prior. Leasable floor area increased substantially following the completion of BLUE FRONT SHIBAURA TOWER N, strengthening the segment's rental portfolio. Revenue contribution % was not explicitly disclosed.
• Overseas Segment: Both revenue and business profit grew, driven by higher delivery volumes of condominiums in Vietnam. During the period, the segment secured new participation in rental residential projects in Seattle, U.S. and London, U.K., increasing its total project pipeline by 50 billion yen to 760 billion yen in total project value. Revenue contribution % was not explicitly disclosed.
• Brokerage & CRE Segment: Business profit grew driven by higher transaction volumes for sales brokerage.

• FY2026 March (Next Fiscal Year): The company forecasts all-time high results, with consolidated revenue of 940 billion yen, business profit of 135 billion yen, and net income attributable to parent shareholders of 75 billion yen. Growth is driven by strong residential condominium performance and expected increases in income-property sales across the residential and urban development segments. The company expects potential temporary costs and losses related to pre-construction demolition for the BLUE FRONT SHIBAURA TOWER N project. The residential condominium segment is expected to deliver a gross profit margin in the mid-20% range. The dividend forecast marks the 14th consecutive year of dividend increases.
• 3-Year Plan (FY2026 - FY2028 March): The company maintains an 8% average annual business profit growth target, with an upward revision to the FY2028 March business profit target from the prior plan's 140 billion yen or higher to 160 billion yen. The company expects to increase annual income-property sales from the past 3-year average of 30-35 billion yen in gross profit to a higher level over the next 3 years.
• Long-Term Guidance (through 2030): The company maintains guidance for ROA of 5%+, ROE of 10%+, average annual business profit growth of 8%, 30% equity ratio, 40-50% total payout ratio, and 4% minimum annual DOE.

• The company notes that the broader business environment has growing uncertainty and opacity, requiring proactive management adaptation to changing market conditions, shifting customer needs and values, and evolving macroeconomic conditions.
• The company expects potential temporary costs and losses in FY2026 March related to pre-construction demolition work for the BLUE FRONT SHIBAURA TOWER N project.

No question and answer section was included in the provided transcript.