Mitsubishi Estate Co., Japan’s second-biggest developer, said full-year profit fell 12 percent because of declining rental income and a drop in apartment sales. Shares retreated to a three-month low.
Net income decreased to ¥56.5 billion in the year that ended March 31 from ¥64.2 billion a year earlier, the company said Monday. Sales gained 2.5 percent to ¥1.01 trillion from ¥988.4 billion.
The company said it expects profit to drop 12 percent this business year to ¥50 billion. Sales will decline to ¥927 billion in the current fiscal year, the firm said. The operating profit for its office leasing and sales business is expected to slip 13 percent next year.
Mitsubishi Estate and its competitors are facing record high vacancy rates in Tokyo at a time when the supply of office space is expected to reach a nine-year high. Tokyo’s office vacancy rate rose to a record high of 9.23 percent in January, according to Miki Shoji Co. New supply will gain 42 percent this year, the highest since 2003, according to a survey by Mori Trust Co., a Tokyo-based developer.
Operating profit, or sales minus operating costs, rose 3 percent to ¥146 billion in the company’s sales and office leasing businesses, reflecting the sale of Akasaka Park Building in central Tokyo, the company said.
Mitsubishi Estate sold the building in November for ¥60.8 billion to Japan Real Estate Investment Corp.