Everybody, thanks so much for joining. I'm Scott Callon, Chairman of Ichigo. I'm joined by Dan Morisaku, who is a senior member of finance team and the Head of Global IR for us. We are doing something brand new. We just did a Japanese earnings call. We were wearing our suit and our tie for the global call. We decided, we think, to join the globe in recognizing how incredibly hot it is everywhere in the world right now. Forgive us if that's okay. We've gone casual to reflect the fact that we're in the middle of July. I'm talking off of what's in front of you, which is FY 2027/2, the February 2027 Q1 corporate presentation. Let's jump into it. We've got a slightly different format today. We tried to simplify it. Hopefully, that's helpful for you. If you have any feedback, we of course, welcome it. Please feel free to come back to us on it. The summary is, look, we're off to a strong start. It's not surprising the real estate market continues to be very strong. The Japanese market, real estate market for decades has had a compelling advantage of being very low cost of financing, low interest rates, but with no inflation and therefore no ability to raise rents. It's changed in the most profound and powerful ways that rents are going up, it's made real estate a more attractive asset class. It's flowing through in our business, both because we have a balance sheet in which the value of our assets is going up, and second, because what's driving this is inflation, construction inflation in particular. As you know, our business model, which is value add, is very durable with respect to inflation. We spend very little amount of money on CapEx, we are advantaged in the operating environment. To the extent this is secular, that we have inflation in Japan, we're going to be advantaged on a permanent basis. Business profit is up 45% year-on-year, net income up 24%, EPS up 32%. Of course, EPS is growing faster than net income because we think our shares are extraordinarily cheap. They're trading sub-10x PE, something like 7.4x cash PE. They're as compelling as they've ever been. We bought about 10% of our shares, more than 10% of shares outstanding in the last two years. We think the shares are compelling value for all of you, our shareholders, and we're putting our money where our mouth is. Cash EPS is up 70% year-on-year. Stock earnings says increase in Ichigo Owners' assets, which is true, but the whole point is stock earnings are relatively stable, they're not going to move around very much. They're up a tiny bit. Earnings are up a bunch on sales of value-add retail asset in a real estate subsidiary, which was primarily office and residential assets. Highlights are we're trying to, I'll talk about this later, continue to innovate on behalf of our tenants, and therefore for our investors, because ultimately the value of a real estate asset is its ability to serve tenants well, and our investors and our shareholders by serving our tenants. We're doing some stuff with respect to innovating in the office space. We continue to innovate in the hotel space with our hotel brand, THE KNOT, and we completed a JPY 10 billion share buyback, as I said earlier. The bottom of the page shows the full year forecast. We're well on track to meeting it and beating it. Just touched on the key issues there. You should see we're on track for record profits this year again. We think this is secular. I think it's our job to have record profits every year. We have your funds as shareholders. We should be deploying those funds in a more powerful way on a consistent basis year after year. We're on track for another year of record profits. Again, I expect that will continue. Cash earnings are more than two times accounting earnings because we focus on long-term cash flows. This is not a company that is super focused on doing it on the accounting side that does not have powerful value for shareholders, and we think it's ultimately rooted in generating cash flows for shareholders. There's a bunch of material that I'll go through relatively quickly. It's meant to give you transparency on how we're running the business. This will be an example of it. You can see we have a diversified portfolio. The record forecast for this year in business profit, it's got a number of drivers to it, the most important being SRE, so the sustainable real estate business and Ichigo Owners. I labeled this, for the first time, we called this section KPIs. It's meant to give you some sense of key performance indicators, not in a narrow sense, but in a broad sense, and the things that we focus on to deliver enduring value for you as shareholders. One of them is structural profitability. A KPI there is we want our stock earnings to be well above our fixed expenses to make us structurally profitable, and we are. Currently running at about 200%. 196% is the kind of the relative fixed earnings, which is stock relative to fixed expenses. You can see on the right side in the upper pie graph. Is it a pie? It's a circle. You can see that it's the stock earnings are relatively diversified. You can also see in Q1 that almost all the flow earnings came out of a sustainable real estate business, and that will change during the course of this year. Stock earnings. Another element of the business is we want to have both stock and flow. The stock earnings is contractual. The flow is also very durable. You can have a business like a convenience store or a supermarket, and it's all flow earnings, but every day you're creating value for your customers, and they're coming to the stores. By no means is this a situation where the stock earnings are really valuable and the flow earnings should have a low multiple on them. The source of our flow earnings is that we add value to assets in a systematic way and generate value for tenants, and therefore generate value for investors and owners of those assets when we onsell them. We have diversity, and that's another element of our business. We have a portfolio of businesses, and it moves around a little bit. It gives us broader diversification. I have to tell you, though, we're not a real estate conglomerate. There's a core element in everything that we do, which is value add, and we express that value add through a number of different asset classes and business models. We have a very strong financial position that expresses itself, and we work to achieve that. That expresses itself both in us wanting to have overwhelming long-term loans. Systematically over time, we manage to be about 90% of our loans being long-term. Also, we reduce interest rate risk by hedging our loans. Currently, fixed rate loans are about 56% of the portfolio, a weighted average interest rate of 1.53%. You can see the interest rate has gone up substantially over the last couple of years, which is to say it's gone off of an incredibly low basis from 100 basis points to 153 basis points. Given that inflation is running at 3% and construction inflation is running between 5% and 10%, this is still extraordinarily low-cost funding in order to take advantage of the market opportunity that is in front of us. Again, we're trying to provide some perspective on the drivers of the business and how they express themselves. This is what the full-year forecast looks like. The sustainable real estate business continues to be our major driver, and we have significant contributions from our Owners and from the hotel elements of the business. We'd like to grow clean energy and asset management more. On the right side, you can see the assets. About half of our assets are owned and on balance sheet, overwhelmingly real estate. As you can see in the bottom of the page, asset management also has a substantial number of assets that we invest in and manage on behalf of our investor clients. In terms of acquisition and sale activity, net acquisitions in the first quarter, that is not what the year is going to look like. To be clear, in a sense, the acquisitions of JPY 34 billion kind of overestimate the actual acquisition activity, which is to say Ichigo Owners were taking in assets that we had agreed with the developer to buy generally kind of 18- 24 months ago. Those are not new purses activity in the office space. Most of this is coming on, and I'll talk about it, the brand new THE VILLAGE SAPPORO asset, which is a couple of years old. In terms of actually brand-new acquisition activity, it's on the order of something that looks really like JPY 3 billion, like tiny. We expect this year to take down the balance sheet. I've been saying this for a while. We've had stuff coming in, so the balance sheet has been growing, and the balance sheet is going down, folks. It's getting smaller. It reflects our view that we want to manage the balance sheet. We want to be capital efficient. There's a lot of risk out in the world right now that continues to be a phenomenal sellers market. We have ongoing capabilities and value add that we can express in highly capital-efficient ways. We don't need this size of balance sheet, so the balance sheet is going down. Anyway, for the first quarter, we added some balance sheet growth, but that will change from the second quarter onward. This is what the timeframe, this is what acquisitions and sales look like over time. Been some balance sheet growth, but relatively balanced. We are going to take it down. From here, and order of magnitude, it is not as if we are going to halve the balance sheet in the next kind of 18 months. Continues to be very productive. Business is productive, but the balance sheet shrinkage is going to occur. To go into the segment earnings, again, we have our portfolio, and it moves around quite a bit. You can see asset management is down quite a bit. Hotel is down. Sustainable Real Estate is up a ton. Clean energy is up a bit. That results in a totality of being up 45% in terms of business profit in the first quarter. Sorry, I jumped ahead. On SRE, Sustainable Real Estate, this is a business where we buy assets and improve them. It is overwhelmingly focused on office and retail, although we have done some increased activity in logistics. Not a lot happening on the stock side. As I said earlier, this is stable earnings. The balance sheet is not moving around, so you would not expect it to be moving that much. I think the most important thing to point out is we continue to do very, very well in the leasing activity with our biggest asset, which is Tradepia Odaiba. As you know, that is currently in the sale process. We would expect to generate some substantial returns on gains on sale this year. The flow earnings up a ton. Look, this is quarter-to-quarter, we did less in Q1 last year. We did more in Q1 this year. We sold an asset in Fukuoka that we did very well on, and we sold a real estate subsidiary that we also did very well in terms of our activity, which was primarily, as I said earlier, residential and office. We continue to seek to innovate on behalf of tenants. We think it is an insight, but we prefer to think of the world in terms of hypotheses. Do not have a view, have a hypothesis. Test it against the reality, and the evidence, as it emerges, if it disproves your hypothesis, then adjust your hypothesis. One of the thoughts that we have is that WeWork, and this goes back over time, was genuinely a breakthrough in high aesthetic office and in creating communities. What WeWork is shared offices. Most of the world is not working in shared offices. When they are office environment, they are in private offices. Yet there was something very valuable, we think, in having an actual community. The Village is our office offer that is community-based. Literally, it is called a village. This is in Japan, so the words we use are in Japanese. There is a village mayor in each building who is an Ichigo employee, who works to support the needs of the village members who are tenants. We have these offices that have genuine communities in them, and we think that is something that is valuable. We have a hypothesis that all of us yearn for a community. I'm pretty sure a lot of you who are listening to this are in offices where you go up and down elevators, and you don't know anybody, and you don't talk to anybody, and you don't want them to talk to you, perhaps. I don't know. For folks who want to have a genuine community in their office, this is something that we are providing. Again, we think the insight/hypothesis is communities are not just for shared offices, they're actually for private offices. In order to have a community, of course, you need to have shared spaces. You have shared lounges, you have shared interest areas, you have cafes, you have all these things where the community get together, and we do events. Meet The Neighbors! is what we're calling these events in which we bring together. That's the general framework for The Village offer. Specifically in this Osaka office, we renovated an existing office, which we had bought from a single tenant. It was a corporate tenant which is using the building for itself. They moved out, so the entire building became empty. We actually set it up entirely as ready-to-move-in offices. The concept there is that everything is pre-fitted, so the tenant doesn't have to worry about anything. Move-in costs and move-out costs, which are enormously expensive in Japan. They don't have to figure about trying to get contractors and run contractors in a very difficult environment in terms of getting contract help. We do it all for them. We provide this for them. You get a rent uplift for it because you're creating value. The leasing is going on at about a 70% premium to what a classic, you have to pay for everything yourself and do everything yourself and don't have the flexibility. This is, of course, it's a very powerful offer. It's not just in the case of THE VILLAGE OSAKA. It's not just a community offer, it's also a ready-to-move-in office offer for the entire building. We also opened up THE VILLAGE SAPPORO this year. In this case, WeWork in the first floor. It is the first WeWork in Hokkaido. Sapporo, of course, is in the northern island of Hokkaido. Again, working with them to develop a community throughout the entire building itself. This is, again, focused on not just having a cold slab of steel and glass, but an actual, genuine community within the building that can interact with each other and support each other and be human beings and community participants together. Hotel business is down in the first quarter. We expect the full year to be up. THE KNOT, that's our boutique hotel offer. Again, the insight/hypothesis there was that. We have six of THE KNOTs, and we'll talk about a little bit later. We're working on our seventh one. The idea was Japan has super high-class hotels that are really expensive, just like everywhere in the world. They have all these budget hotels. There wasn't something in the category of $ 100, $200 per night that was nice. We thought there was a gap that could be filled. THE KNOTs all share a common characteristic of being very local. Also having, Japanese care about this, and people who come to Japan care about this, having outstanding restaurants. You can go there and eat super well, and also stay there. We'll talk a little bit later, but THE KNOT Tokyo and Hiroshima are doing very well. We launched, and I'll talk about this later, KNOTs in Utsunomiya and Fukuoka. We'll get a full year contribution, things are going fine. You should know that we have incorporated no floor earnings in our forecast for this year for hotels. We don't expect to sell any hotels. If that changes, then we'll, of course, get some upside there. RevPAR is down about 10%. It's actually not, we think, the Iran war, the surcharges, and all this sort of thing. This is showing up primarily in decreased Chinese arrivals. There still are tensions between Japan and China. Chinese arrivals were just released a few minutes ago, down over 50% year-on-year. Also some slowdown associated to the ending of the demand for the Osaka Expo. Particularly, we're seeing Osaka and Kyoto being down about 20% year-on-year. Tokyo and Hiroshima, both KNOTs doing well. We're up 10%, but when you put it all together, you have about a 10% drop in RevPAR. These are the two, the KNOTs that we just launched. I spoke to both of them already. Again, it is really more about the taking existing assets, improving their aesthetics, the food, the culture of the building, if I can put that, and incorporating them in the community. Making far better functionality, bringing them to best in class across both the hard and soft elements of functionality and customer and guest comfort. We've got six now. We're working on the seventh, which is in Osaka. The economics have proven to be very, very powerful, this is why we want to do more in this space. Ichigo Owners did very little in the quarter. It looks like their floor earnings are up a ton. They are, because this is basically a one-year turnover business, you sell the assets and then you get new ones. The fact that we held off on some Ichigo Owners sales last year, and they're going to happen this year, meant that our stock earnings, so those are the rental income off these assets, went up a whole bunch. The Owners' activity is going to accelerate from the second quarter. At the heart, Owners is about serving tenants. It is a, what we call a fabless model, meaning we do the design, but the development and construction is done by outsourced developers. It has super high capital efficiency. We've gotten to be really, really good at understanding. The target market is prime residential areas in Tokyo. Understanding what the requirements are. We have developers build to our specifications. We lease them up, we turn over in about a year, these fully leased-up assets in great locations to investors. The investors run the gamut from cash-rich individuals and corporations, which was the original concept, but it's turned out that this has become a very institutional market where we do a lot of bulk activity into big institutional investors who want access to this very durable and high return, and with now residential rents going up, increasingly higher return asset type. As you know, we've been selling this also into security token space. The whole point is, if you're going to make great investment products in real estate, because that is one goal, we need to serve the investors who are buying these assets. The first thing you need to do is you need to tenaciously serve tenants. You need to have the best assets for tenants, that gives you opportunity to have the best assets for investors. As a management, business profit is down 51% year-over-year. Actually, we know, at this point, that floor earnings were down 92% because we had these large floor earnings on performance fees on asset sales in both Ichigo Office REIT, we had some fees off of private funds last year. We actually now know that there's been some REIT activity by our REITs, our listed REITs, there will be performance fees coming in. We now know. We never put into our floor earning forecast anything, because these are decisions being made by the REITs, not by us. We now know that this activity has occurred. We will be getting the fees, we will come in, I think it's going to be something like JPY +1 billion on cash earnings at this point and JPY + 0.7 billion on business profits. We're actually closing in on last year at this point, we may actually go above it. These numbers are getting better, we already have visibility on that. We have a diversified portfolio, as I said earlier, of both asset classes and vehicles. They run the gamut from listed REITs to private REITs to private funds and our digital token business. Clean energy is up 15%. Not a lot happened in terms of the portfolio. Stock earnings were up, that drives business profit up 15%. This is a business that has not grown, to my frustration and to our generalized frustration. We have spent some time reflecting on that and what we need to do, we try to be savvy and not take inappropriate risk in a pretty dramatically changing operating environment with the end of the FIT, Feed-In Tariff structure that gave enormous structural stability to earnings, to a fairly dramatic changing environment. We don't strap on risk. These are heavy upfront investments without having high visibility on future earnings. That's one of the strengths of real estate. As we know, you have visibility on earnings. It is one of the strengths of our clean energy business, we want to have that also. The one area that we made a new commitment on that we think qualifies is we have a battery storage business that was just launched that has pretty powerful economics. We think they're NOI 13%, 14%, something like that. This is an area that we have begun to grow and will be a growth driver in this business. I'll just touch briefly on shareholder returns. As I said earlier, we bought back over the last two years over 10% of our shares. We think they're a compelling value, this has been good and accretive for our shareholders. We have also moved on a dividend. We took the dividend up 35% this year, raising our DOE, dividend on equity ratio, from 4% to 5%. On the sustainability side, global warming is real. It is a fundamental element of our business to address that. We are climate positive. Our CO2 reduction efforts are 9x our CO2 emissions. We are 100% renewable electricity across all of our operations, so we've achieved the RE100. We are a double A-list company, one of the very few. There are only less than 1% of companies in the world that qualify for that in both climate change and water security. Being sustainable as a company is fundamentally important to us and to all of our stakeholders. At this point, no questions. We're going to bring this to a close after another pause, which is hopefully not Oh, wait a minute, there's a question. Okay. This is why we needed to wait. Can you hear me? Yeah. Thank you, Greg. Yes. Hi, Scott. Thanks for your time. One quick question I have is, you mentioned on the battery business, stationary storage battery business. The extension seems to be mostly after 2031. Obviously, as you understand, in Japan, it's become a bit more of a priority. Why not be bigger sooner, like 2029 onward, as opposed to JPY 14 billion after 2031? Oh, just to be clear, we've probably written that poorly. That secondary pipeline is 2029 to 2031 pipeline. Oh, I see. Okay. Understood. It's in an earlier process of due diligence just to determine its economics and attractiveness. That is 2029 to 2031. Understood. Another quick question I would have is regarding the TSE free float. Obviously, you guys have been buying back shares as you pointed out. Yep. Which means you are getting it pretty close to the, I don't know if you're aware, the borderline limit for free float adjusted market cap vis-à-vis the TSE guidelines. You're above that, but things can change. What are you guys thinking about on that front? We still have room to buy back shares. Do you know what our exact free [crosstalk] float number is right now? We need to have at least a 35% free float. I think we're probably at like 45% or high 40s or something like that. The way the TSE calculates is actually different. Maybe I would suggest you get in touch with them, because from their rules, your free float weight is 25% for them. We are familiar with the rules. It's just that Scott Callon doesn't have the exact number for me. Okay. Is that it? Okay. Greg, the answer is we're currently at 60%. We have 5% more that we could own before we'd have to. Understood. That means that you have a market cap problem in the sense that, if you are giddy-giddy on the free float and then your market cap falls, then you are at risk again with the TSE rules, is my understanding. Yes. The market cap level is super low. That's not the issue. We need to manage to the free float rule. Our thinking on this one is we think the shares are very cheap. They're certainly buyable, and we have room to buy more. At some point, we may have to shift towards bumping the dividend up a bunch, and we'll do that, too. To the extent that the business doesn't require capital, then we pay it out. In the past, we've chosen to bump our dividend, but we've been very focused on using the buyback tool distribute to shareholders. If necessary, we're going to shift the dividend. We're perfectly willing to do that. This business is super productive. It can increase the dividend very substantially without any problem at all. The choice to have kept the dividend relatively low and to use buybacks is because we think the shares are super cheap. We may end up in a world where we think the shares are super cheap and we're restricted on buybacks, we'll just raise the dividend a whole bunch and see what happens to the shares. If I may, with the last question, Scott. You mentioned that you might start to shrink the balance sheet a little bit from Q2. You're also going to have maybe a big lump of cash coming if the Odaiba building sale closes. Yes. You're going to have a lot of cash. Yes. Understood. A lot more cash than usual, I would say. Yeah. Okay. That's correct. Yeah. That's what happens. You use cash in order to build out your balance sheet. When you have to shrink your balance sheet, the cash comes flying back at you. Absolutely. You're right on that, Greg, as always. Thank you very much. No, I'm asking because I think when we spoke maybe a couple of quarters ago. The impression was that even if you sell the Odaiba building, you must still want to reinvest a good chunk of that. I get the impression that the tone has changed a little bit at the margin, maybe. Yeah. Maybe. Which is to say, real estate prices have continued, gone up. The global operating environment is riskier than it was a year ago. In terms of the things that are going on. I don't know that we've changed that much. We try to be as capital efficient as possible and distribute any cash that is not necessary in some way or form back to our shareholders. The business is very cash productive. We did spend a couple of years, I'm going back a little bit further than a year ago, Greg, where we saw we thought inflation coming. Again, this market I touched upon earlier. People in Japan are relatively unfamiliar with the idea that real estate prices go up every year because of inflation. The reason inflation drives higher real estate prices is because new supply has to come in at much higher prices because of inflation. It either cannot economically come in, so new supply is restricted, or it comes at higher prices and gives you the ability, if you have existing assets, to raise rents, because that's what prices are. I'm American, this is something that is classic element of real estate all over the world except for Japan. When we saw this surge in construction costs and took, again, a hypothesis, and we thought it was an insight plus a hypothesis, that it was going to have some durability because it's linked to a fundamental shortage of construction talent. As the number of construction workers in Japan decreases because of aging out of the population, we thought this would be a potential driver of higher real estate prices via higher real estate inflation. Therefore, we increased the balance sheet in anticipation of this. It's played out. Now is the time, we think, to monetize that, and you're going to see us start shrinking the balance sheet. Cash will be generated. Yes, absolutely. Understood. Sorry, one follow-up, if I may. One last one. Sure. Please. On the forecast for sustainable real estate for this year, JPY 18.5 billion, I assume a lot of that year-over-year increase is Odaiba. I assume, as usual, you're conservative in forecasting this. Yes. Which is to say, we always have With flow income, there are two things we're doing as a management team. One is we want to make sure we have multiple paths to achieving the targets. Two, you want to give yourself some flexibility on, okay, in other words, if you sell these three assets, you'll hit your target. Instead, we'll try to sell 12 assets. It's all because it's also about you have a number of assets that are available to be sold. They're going to be kind of idiosyncratic or asset specific or buyer specific situations where there's a better price for one, and sometimes an astonishingly better price. Both in order to maximize profitability for our shareholders and also to hit our targets. We always have over modeled and have extra activity around hitting the target. Yes, the numbers are conservative. Because you've disclosed this in your forecast, to the extent you can answer, I guess, because this is a very large asset compared to your total asset. That means that you are not [crosstalk] It's about 10% of our total assets. It's a big asset. In terms of insider rules, you've already disclosed that to the market, so it doesn't prevent you from announcing buyback during the year? To the extent you can answer. Yeah. We don't know. Okay. Okay. I think the way that the legal issue around this is that we're allowed to talk about activity, and we've been transparent about it. If we were actually in contract or something like that, and I think it's fine just to say that we're currently not in contract, then that would prohibit activity on our part. I see. Okay. Yeah. At some point, if a contract exists, then we'll be restricted on buybacks. Yes, that's the way it works. You're absolutely right. Okay, great. Thank you very much, Scott. Thank you. I think we may be done. All right. Thank you, everybody. Have a good day. We're grateful for the opportunity to work for all you. Thanks. Bye-bye.