Sumitomo Realty Net Income Drops on Higher Vacancy Rate

Sumitomo Realty & Development Co., Japan’s third-biggest developer, said full-year net income declined 3.3 percent, missing its own forecast as vacancy rates climbed to the highest in at least six years.

Net income fell to 50.9 billion yen ($627 million) in the 12 months ended March 31 from 52.7 billion yen a year earlier, the company said in a statement through the Tokyo Stock Exchange today. The company had predicted 53 billion yen of profit for the past year. Sales gained 3.5 percent to 744.8 billion yen from 719.6 billion yen.

Leasing profit, which accounts for more than half of the total, fell last year after the developer’s vacancy rate rose to the highest since at least 2005. Sumitomo Realty forecast a 2.2 percent gain in its net income for the current business year, defying lower profit expectations after the nation’s record earthquake on March 11 from rivals Mitsui Fudosan Co. and Mitsubishi Estate Co., Japan’s two largest developers.

Tokyo-based Sumitomo Realty forecast net income for the year ending March 31, 2012, to reach 52 billion yen on sales of 710 trillion yen.

Sumitomo Realty’s shares declined 2.6 percent to 1,697 yen at the 3 p.m. close of trading on the Tokyo Stock Exchange, the biggest retreat since April 15. They dropped 15 percent since the March 11 temblor.

The vacancy rate of Sumitomo Realty’s building portfolio peaked at 9 percent in the second quarter, the highest in at least six years, and stood at 8.2 percent as of March 31.

The developer sold a total of 4,841 apartments, houses and residential land, 15 percent more than last year, the company said.

To contact the reporters on this story: Kathleen Chu in Tokyo at Kchu2@bloomberg.net; Katsuyo Kuwako in Tokyo at kkuwako@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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