Mitsubishi Estate continues to profit despite all the negative talk about Japan’s economy

Sometimes you just have to wonder about Japan and all the horror stories about a severe recession, enormous debt and social welfare obligations that cannot be met and negative interest rates but here is a success story concerning Mitsubishi Estate which had a profit of US$1.55 billion this past fiscal year. Mitsubishi was hiding behind the Rockefeller name during the 1990s when they bought the Rockefeller Center in New York. Mitsubishi Estate is one of Mitsubishi’s core group companies.
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Source: Nikkei Asian Review

April 14, 2016

Mitsubishi Estate seen building on profit in fiscal 2016

TOKYO — Japanese property developer Mitsubishi Estate will likely see group operating profit jump about 10% to roughly 170 billion yen ($1.55 billion) this fiscal year on a decline in office vacancies and higher rents.

The figure could approach the 178 billion yen record from fiscal 2007. Sales in the fiscal year ending next March are expected to edge up to just over 1 trillion yen.

The vacancy rate at offices owned by Mitsubishi Estate has apparently dropped nearly 1 percentage point since the end of 2015 to the mid-2% range as many tenants expand staffing. Spaces in Tokyo’s Marunouchi area, the company’s main turf, are almost completely filled.

Rents are also rising gradually on growing office demand. The company is raising its rates by 5-10% in Marunouchi, and has begun imposing hikes on large-scale tenants as well.

Mitsubishi Estate also completed several office buildings in fiscal 2015, which will continue to boost its finances this fiscal year. The Dai Nagoya Building in front of Nagoya’s main train station was finished last October. And the Otemon Tower JX Building in Tokyo’s Chiyoda Ward, which was completed in November and counts oil distributor JX group and the Nishimura & Asahi law firm among its tenants, has been fully occupied since its opening.

The company will likely not suffer much fallout from closing the Nippon Building, also in Chiyoda Ward, which happened in March as part

The Otemon Tower JX Building was completed last November.

of a redevelopment project, since the building had generated very little profit even when it was in operation.

Mitsubishi Estate is also expected to complete several large, high-end condominiums this fiscal year, such as the Parkhouse Gran Minami-Aoyama in Tokyo’s Minato Ward and an addition to the Parkhouse Harumi Towers in Chuo Ward. The company will likely see strong business in outlet malls and other commercial facilities as well on the growing ranks of foreign tourists visiting Japan.

Mitsubishi Estate’s operating profit likely remained flat in fiscal 2015 at just over 155 billion yen, in line with company projections.

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