Investor Relations

Leasing

Basic Growth Strategy

Continuing new investment to build a platform for growth, by further increasing the portfolio´s portion of prime properties that are "central, new and large"

Overview of the Fiscal Year

The Tokyo office building market, where more than 90% of our leasing portfolio is concentrated, experienced continued strong new demand from relocations and floor space expansions while vacancy rates remained low and rents for renewed leases continued on an upward trend.
Reflecting such an environment, the segment recorded revenue and profit growth for the March 2017 fiscal year based on improved vacancy rates and higher rents as well as full-year contribution from new buildings completed during the previous fiscal year, including Tokyo Nihombashi Tower, Sumitomo Fudosan Mita Building and Sumitomo Fudosan Shinjuku Garden Tower. The segment´s revenue from operations and operating income both reached record-high levels for the second consecutive year.
The vacancy rate for existing buildings improved slightly from 4.7% to 4.5% during the fiscal year, and tenant acquisition for new buildings is on a good track, including Sumitomo Fudosan Roppongi Grand Tower and Sumitomo Fudosan Azabujuban Building.

* 1 tsubo = 3.3 m²

Outlook

We are aiming for record-high revenue from operations and operating income in the March 2018 fiscal year, based on an improved earnings structure from existing buildings and full-year contributions from the buildings completed during the year under review, such as Sumitomo Fudosan Roppongi Grand Tower, Sumitomo Fudosan Azabujuban Building and Sumitomo Fudosan Shimbashi Building.
As a result, we are projecting a 3.7% increase in revenue from operations, to ¥350.0 billion, with a 9.3% rise in operating income, to ¥138.0 billion.

Our Leasing Portfolio (As of March 31, 2017)

In the Tokyo CBD (Central Business District)*, where buildings that meet the three conditions for prime properties—central, new and large—are in strong demand, our competitive portfolio will provide a strong foundation for us to utilize our strengths—development of high-value-added office buildings, tenant leasing and property management. We will utilize that foundation to maximize the earnings potential of our office building operations and build a strong base for the achievement of sustainable growth in the years ahead.

* Tokyo CBD (Central Business District): 7 wards, comprising Chiyoda, Minato, Chuo, Shinjuku, Shibuya, Shinagawa and Bunkyo

Major Flagship Buildings

Name Location
(Tokyo CBD)
No. of floors
(above ground/
below ground)
Completion Gross floor
area (m2)
1. Izumi Garden Tower Minato Ward 43 / 4 Oct 2002 204,383
2. Sumitomo Fudosan Roppongi Grand Tower Minato Ward 43 / 2 Oct 2016 202,078
3. Shinjuku Sumitomo Building Shinjuku Ward 52 / 4 Mar 1974 177,467
4. Sumitomo Fudosan Shinjuku Grand Tower Shinjuku Ward 40 / 3 Dec 2011 168,329
5. Sumitomo Fudosan Shinjuku Garden Tower Shinjuku Ward 37 / 2 Mar 2016 143,372
6. Shinjuku Central Park City Shinjuku Ward 44 / 2 Feb 2010 130,362
7. Shinjuku Oak City Shinjuku Ward 38 / 2 Jan 2003 117,575
8. Tokyo Nihombashi Tower Chuo Ward 35 / 4 Apr 2015 105,837
9. Shiodome Sumitomo Building Minato Ward 25 / 3 Jul 2004 99,913
10. Sumitomo Fudosan Mita Twin Building West Minato Ward 43 / 2 Sep 2006 98,338
11. Tokyo Shiodome Building Minato Ward 37 / 4 Jan 2005 95,128
12. Shinjuku NS Building Shinjuku Ward 30 / 3 Sep 1982 75,046
13. Sumitomo Fudosan Shibakoen First Building Minato Ward 35 / 2 Jun 2000 70,381
14. Sumitomo Fudosan Iidabashi First Tower Bunkyo Ward 34 / 3 Apr 2010 68,454
15. Chiyoda First Building West Chiyoda Ward 32 / 2 Jan 2004 61,209
16. Sumitomo Fudosan Shibuya Garden Tower Shibuya Ward 24 / 3 Jun 2012 59,417
17. Sumitomo Fudosan Aobadai Tower Meguro Ward 33 / 3 Aug 2009 55,773
18. Sumitomo Fudosan Iidabashi First Building Bunkyo Ward 14 / 2 Mar 2000 53,322
19. Sumitomo Fudosan Iidabashi Building No.3 Shinjuku Ward 24 / 2 Oct 2002 53,047
20. Sumitomo Fudosan Shibuya First Tower Shibuya Ward 25 / 3 Aug 2010 52,942

Note: Figures for gross floor area indicate the area managed by Sumitomo Realty.

Our Portfolio´s Strengths (As of March 31, 2017)

Sumitomo Realty´s leasing portfolio is highly competitive in terms of the three distinct features of being "central, new and large." Going forward, we will endeavor to maintain and enhance our competitive strengths by focusing on providing high-quality office buildings with these qualities.

Locations in the Tokyo CBD

Our leasing portfolio emphasizes on locations in central Tokyo; 95% of our portfolio is in Tokyo´s 23 wards, and 89% is in the Tokyo CBD (Central Business District)*. Proximity to other office buildings and major train and subway stations is a key condition for a prime property, and having been located in such areas is one of our portfolio´s competitive strengths. In particular, the Tokyo CBD is designed as a district with a high concentration of office buildings, and strong and stable demand is expected in this district going forward. Therefore, we will work to enhance our competitive strengths by continuing to acquire development sites in this district.
* Tokyo CBD (Central Business District): 7 wards, comprising Chiyoda, Minato, Chuo, Shinjuku, Shibuya, Shinagawa and Bunkyo

Brand-new and Recently Constructed Buildings

The average age of the buildings in our portfolio is 16 years, the lowest figure among major Japanese real estate companies, and 63% of them have been completed since 2000. New buildings are capable of generating strong demand by meeting tenants´ needs for facilities and design to name a few, making the relative age of the buildings in a portfolio a key factor affecting the leasing business.
As shown in the table below, our buildings are equipped with the latest facilities and features, and are popular among tenants for their functionality, comfort and safety in the event of a major disaster. 99% of our portfolio meets or exceeds earthquake-resistance standards that took effect in 1981, which are a key yardstick for earthquake safety. Further, approximately 80% of the buildings we own are structured with a seismic isolation system and⁄or a damping system. In recent years, emergency generators that provide electricity in the event of a power outage have also become a feature sought by tenants as a part of their business continuity planning. Thus, emergency generators are installed in about 70% of the buildings we own, which includes all newly completed buildings after 2001.

State−of−the−art Facilities Before 1981 1982−1996 1997 and after
Earthquake protection Previous quake−resistant structure New quake−resistant structure Anti−sway structure
Ceiling height* 2.5 m 2.7 m 2.9−3.3 m
Floor load 300 kg/m² 300−500 kg/m² 500−1,000 kg/m²
Air-conditioning Central air-conditioning system Climate control zones Separate climate control systems
Power capacity 45 VA/m² 60−70 VA/m² 85 VA/m² and over

* Includes raised floors

Large-scale Buildings

Large-scale buildings with gross floor area of at least 10,000 square meters make up 86% of our portfolio. Consolidating multiple offices of a business on one floor helps to facilitate internal communication and reduce space redundancies, making operations more efficient. These types of needs are behind the increased demand in recent years for large-scale buildings with large amounts of floor space per floor. Being able to offer such spaces is definitely one of our strengths.