JINUSHI Co.,Ltd. Q2 FY2025 earnings call

• Core Growth Strategy

  • Following the 2022 name change to Jinushi Co., Ltd., the company pursues three core growth priorities: diversification of tenant industries, expansion of operating regions, and promotion of land sale-and-leaseback proposals.
  • Broad industry and macro shifts have created favorable tailwinds for accelerated purchases: Tokyo Stock Exchange reform pushing for capital cost-conscious management, investor demand for corporate real estate (CRE) strategy reviews, and rising construction costs that have led many developers to abandon projects and sell vacant development land.

• Recent Key Successful Transactions

  • Tank Terminal Land: Acquired storage tank terminal land from a KKR Group portfolio company via a sale-and-leaseback structure, which allowed the seller to raise capital for growth while preserving ongoing operations. The company aims to expand partnership with KKR and other PE funds to source additional deals.
  • Aeon Mall Hineno: Structured a three-party agreement where Aeon Retail acquired the building and Jinushi acquired the land, addressing the listed seller's goal of raising capital for redistribution while meeting the tenant's ongoing operational needs. The company notes Aeon Group has many expiring leases and expects similar future opportunities.

• Strategic Partnerships

  • Announced a formal business alliance with Kukureb Advisors, a firm with strong CRE expertise. The partnership's primary goal is to expand deal sourcing, particularly to grow industrial land acquisition (factories, data centers) alongside the company's existing core commercial development business.

The call does not break out separate financial performance for distinct product segments. Only consolidated financial results are reported: Q2 2025 consolidated revenue is 39.8 billion yen, operating profit is 4.0 billion yen, ordinary profit is 3.1 billion yen, net income is 2.7 billion yen. As of Q2 end, total consolidated assets are 115.4 billion yen, real estate held for sale has a balance of 63.8 billion yen, and the equity ratio is 40.1%. Cumulative purchases through Q2 are 28.5 billion yen; with a 41.4 billion yen purchase in July alone, cumulative purchases reached 70 billion yen by July, exceeding the full-year target of 70 billion yen.

• Full-year 2025 net income guidance is maintained at 6.1 billion yen, with management targeting a new all-time record profit above this initial guidance.
  • The full-year purchase target has already been exceeded at 70 billion yen as of July, and management now targets annual purchases of over 100 billion yen going forward, and expects this pace to accelerate further after hitting the 100 billion yen milestone as new successful deals drive more inbound inquiries.
  • Jinushi REIT is targeting long-term asset growth to 500 billion yen in the near term, and 1 trillion yen eventually, though annual acquisitions of 100 billion yen by the REIT are not realistic at present.
  • Management confirms a policy of targeting dividend increases alongside profit growth, and will consider raising dividends once sustained profit growth is delivered.
  • The company expects to increase its holding of real estate for sale as purchase activity accelerates in the near term.

• While the company has secured 60 billion yen in bridge financing commitments from lease companies, with up to 100 billion yen available including additional providers, Jinushi REIT's immediate ability to scale to 100 billion yen in annual acquisitions is currently constrained, requiring the company to develop new acquisition and exit structures to support accelerating purchase growth.
  • Quarters can see significant purchase volume volatility due to the large size and long closing timelines of individual land deals.
  • Sale-and-leaseback deals generally have lower profit margins than the company's traditional new development business, which may create downward pressure on overall margins as this segment grows.

Q: Is July's sharp purchase acceleration due to one-off timing luck, or does it reflect a permanent increase in the company's deal sourcing capacity? Will sale-and-leaseback lead the 100 billion yen annual purchase target? / A: While some deal closings were merely delayed from earlier quarters to July by seller-side issues, the acceleration reflects that the company's multi-year growth strategy is finally translating to consistent results. There is currently no capacity pressure on the sales team, and the company can handle more than 100 billion yen in annual purchases if deal flow holds. The company will grow both new development and sale-and-leaseback, with sale-and-leaseback as the primary growing segment aligned with current market tailwinds.

Q: Given broader private REIT market stress and uncertain interest rates, how strong is investor demand for Jinushi REIT, and how will you stabilize exit volumes? / A: Jinushi REIT has a unique product: land-only, long-term stable low-volatility cash flows with minimal monitoring requirements, a 10-year track record, which becomes more attractive amid rising interest rates. The company expects to grow the investor base, particularly increasing penetration of pension investors, and the REIT is currently preparing a new capital increase that has already drawn strong investor interest.

Q: Can Jinushi REIT scale to 100 billion yen in annual acquisitions to match the parent's new purchase target? / A: While 100 billion yen annual acquisitions is the long-term goal, it is not currently realistic. There is a strict firewall between Jinushi Co., Ltd. and the REIT's asset manager, which will make its own conservative decisions. However, the investor base is steadily growing, particularly via new pension capital, so fundraising capacity will continue to improve incrementally, and the company's unique land-only product will hold its competitive edge even as overall costs rise.

Q: What allowed the company to win multiple large deals in July, and what is its competitive advantage against other bidders? / A: Many large deals come from targeted, long-standing relationship building, like the KKR terminal deal which was a closed negotiation. Beyond price, the company's core advantage is its status as a dedicated land-only firm that does not compete on development, which gives sellers certainty of closing and stability for their ongoing operations. This specialized, trusted positioning leads to increasing direct inbound inquiries from sellers that do not want to sell to competing developers.