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Mitsubishi Estate Posts First Profit Increase in Three Years

Mitsubishi Estate Co., Japan’s biggest developer by market value, said full-year earnings rose for the first time in three years as profit margins at its residential business improved and office rents recovered.

Net income gained 41 percent to 64.3 billion yen ($631 million) for the year ended March 31 from a year earlier, the Tokyo-based company said in a statement to the stock exchange today. Sales rose 16 percent to 1.1 trillion yen.

Japanese developers are benefiting from a recovery in commercial property rents. Monthly average rents for grade-A office buildings in Tokyo’s central business districts rose to 25,003 yen per tsubo, the highest level since the third quarter of 2012, according to a report by DTZ Research. A tsubo, a standard measure of property area in Japan, is 3.3 square meters or 35.5 square feet.

Mitsubishi Estate’s rents for office, retail space and warehouses on average rose for two consecutive quarters in the period ended March 31, the company said on its website.

Mitsubishi Estate shares reversed an earlier advance after the company forecast profit for the year ending March 2015 will drop 6.7 percent to 60 billion yen. The outlook compares with the 63.8 billion yen mean estimate of 19 analysts surveyed by Bloomberg.

Sales for the year will increase 0.3 percent to 1.1 trillion yen, said the owner of about 30 buildings in Marunouchi, Japan’s most expensive business district.

Residential profit surged to 27.8 billion yen in the year ended March 31, according to the statement. Operating profit for the developer’s office building business rose 0.4 percent to 108.2 billion yen last fiscal year, it said.

The shares fell 0.3 percent to 2,409 yen in Tokyo. They have declined 23 percent this year.

Mitsubishi Estate had two straight years of profit declines after reporting net income of 64.2 billion yen in the year ended March 2011.

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