• Strong Q4 execution validates capital recycling strategy; ¥37.9bn in unrealized gains underpin FY12/26 earnings visibility – Loadstar's decision to delay real estate monetization until Q4 proved prescient, with the Company actively monetizing at favorable valuation against an improving Tokyo CRE backdrop. Looking ahead, we believe Loadstar is well positioned to accelerate capital deployment in FY12/26, with the Company signaling acquisition volumes above FY12/25's ¥34.9bn and a trajectory toward its FY12/27 target of ¥150bn in portfolio book value. The ¥37.9bn in unrealized valuation gains not yet reflected in the ¥92.5bn real estate portfolio provides substantial earnings visibility, especially considering the improving market environment for offices, as the Company continues to recycle capital. With office space vacancy in Tokyo’s 5 central wards tightening to 2.14% in December, we see a favorable setup for both capital recycling and portfolio leasing revenue growth in FY12/26.
