Hi, everybody. My name is Scott Callon from Ichigo. I'm the Chairman here. Thank you so much for joining us today. I'm kicking off with a presentation that's in front of all of us, FY 2023 second first half corporate presentation. I'm joined by Tet Fujita, who is our Lead Independent Director, and also by Dan Morisaku, who is a senior member of our finance organization and the Head of our Global IR. Thank you everyone for joining. We're really grateful for your time. Let's jump through it. I'll go to the first page, which is page 8. It's kind of the key items of the quarter. Look, it was a good quarter. We don't run the firm on a quarter-by-quarter basis.
You know, everything you do over the long term is built off of the success you have in the short, medium term. It was, you know, it went, first quarter was light. We had fully expected to get all of it back in this quarter, and that's exactly what happened. Look, it's an incredibly difficult time in the world right now. There's enormous geopolitical risk, of course, primarily focused at this point in Europe. Global interest rates have gone up very dramatically with inflation that hasn't been experienced for decades. The yen has appreciated very substantially due to the interest rate gaps that have emerged between the yen.
Japan continues to have kind of a very low inflation environment. BOJ does not face the inflation risks that other central banks are experiencing. To give you some sense of that, I mean, top line inflation here is running at 3%. In other countries, running at eight, 10, 13. Core inflation, the Japanese call it core core, but it's really core inflation the way it's described in the rest of the world, which is inflation ex fresh foods and energy prices. The most recent print had a 1% handle on it. BOJ continued to focus on maintaining growth and frankly hitting its long desired 2% inflation target, which is still below despite everything that's happening in the world. Despite all that, we're fine.
I mean, this is a business that is rooted in the economics of Japanese real estate and sustainable energy. None of those, you know, It's a domestic business. The macro environment changes in terms of geopolitical risk are not hitting us here in Japan. The global rate increases are not hitting us here. Yen, where the yen is not particularly relevant to where we run our business. Things are going actually very well. Second point is, you know, Japan reopened literally this week. On the eleventh, we threw open the doors finally to the world, that you can come to Japan. You should. It's fabulous, continues to be fabulous.
It's the same clean, friendly, delicious country that it was two years ago before we went into our COVID hiding period. The yen is literally 30% cheaper, and we have not experienced any inflation really to speak of. It's extraordinarily affordable. It's a wonderful place and you know, you might consider coming. The reopening of course is very important to us for part of our business. We have about a quarter of our assets in hotels. Pre-COVID, that was a great business. In COVID, it was a terrible business. We are reemerging from that. It's mostly RevPAR, so that's revenue per available room. There's a definition of it on the bottom of the page.
It's up 85% year-on-year, so it is really a V-shaped recovery. Having said that, we should be aware that we're still down very substantially from pre-COVID. We're still down nearly 37%. Kind of really what happened is COVID, we're running at 100. At the bottom, we go down to literally 10%-20%. We've bounced up to around 60%. It's a way of saying there's a lot more to come in terms of the recovery. Not only Japan reopened to the world on Tuesday of this week, it also began its Go To Travel program. All of us living here, to the extent that we have three vaccinations, it's actually a condition of being in the program, and Japan is highly vaccinated.
It does mean that almost the entire country is gonna be able to take it. That's this program. You get kind of like, you know, $40-$50 a night subsidy to go use hotels. Japan is open to the world. Japan is also open and has direct subsidies to tourism, which is, and quite frankly, about helping all the people who are in the businesses that have suffered, you know, devastation during the COVID period. It's also in a sense a way of saying thank you to Japanese people. You can actually go out and enjoy yourself after two years of having robust kind of social distancing to try and protect the nation and everybody in the communities.
Anyway, hotels are recovering, and that's fantastic for us. We have a robust cash generation, and it's funding both growth investments and share buybacks. We expect to buy about JPY 45 billion of assets this year. I used to use 100 yen to the dollar because it was convenient because the yen was banging around 100 yen. That's no longer. It's no longer a. Call it $450 million. Actually, where the yen is right now, call it more like $300 million. That's up 50% year-on-year. We did JPY 30 billion of acquisitions last year. We expect to do JPY 45 billion this year. Share buybacks, we did JPY 1.5 billion last year.
We've announced JPY 4.5 billion for this year, so that's a 3x year-on-year. This reflects a very robust recovery in our businesses and the stock price is banging around at JPY 300. We think it's an almost good value. We have the ability to finance growth and ongoing buybacks. What we think is, again, good value in terms of the stock. Turning to page nine. It shows what's happening across our earnings versus costs, our stock earnings. These are effectively fixed, kind of baked-in earnings, run at about 200% over fixed expenses. On the right-hand side, you can see what's happening in the three different business segments: Sustainable Real Estate, SRE, Asset Management, Clean Energy.
The Sustainable Real Estate business is really important. It's actually off year-over-year. That's mostly because of vacancies in Odaiba, our big office asset, which we're actually re-tenanting, so that we expect that to rebound. Over a multi-year period, it's taken a very big hit in terms of the earnings off of hotels, so we expect to see that rebounding. It's down 8% year-over-year. We thought it was gonna be worse. We're actually outperforming the plan, and we see kind of a robust recovery in front of us. Asset Management is off. That's kind of one-off stuff. We expect to see growth in this going forward.
In Clean Energy, it's kind of bang on solid because it's just really about our ability to produce clean energy and to bring in new plants online. Turning to the next page. We have started all in disclosure. I'm not gonna go into details on this. It's a way to try to give you more transparency on the value creation that we have in our Sustainable Real Estate business. The next page 11. All in OP, so operating profit is up about 50% year-on-year. Cash EPS is up 24%. You know, our accounting earnings vary substantially underreport. Total economic earnings or cash earnings are a much better proxy for that. As you can see, our cash EPS is 1 point...
Year to date in the first half is 1.7 times our accounting EPS. It's a way of saying if you take the bottom of the range for our forecast for this year and the data services too, so if you go to a Bloomberg or, you know, a Yahoo or whatever in Japan. By the way, Yahoo, you know, in Japan is absolutely huge. More like kinda Yahoo in the United States in 2003. You know, anyway, if you go to Bloomberg, you go to Yahoo, you go to QUICK, you go to these various data services, they'll show us using the EPS number of 14, the bottom of the range, and that puts us at 22 times earnings.
If you actually use cash EPS, which is actually a better indicator of the firm, and I'm not trying to position us. It'd be nice to kind of look at the EPS number, which has doubled year-on-year, and go, "Wow, we doubled," and we have. Cash EPS is a much better proxy. Look at kind of +24%. It's where we are in terms of total return to the shareholders. If you use the cash EPS number, then it puts us kind of somewhere in the middle of the range, and you do the math of 30. We're actually at 10x earnings.
It's why we think the shares are, you know, very undervalued relative to what we see, and what we see in terms of forward activity, and particularly with the reopening that is very positive for us. Next page shows breakdown within the various segments. Staying on all-in operating profit, Asset Management is down 12% year-on-year. That's one-off, relates to a one-off increase because of some office asset sales. I'll talk later about the office re-buying assets, so that will come back.
The hotel REIT is much smaller, but it kinda gives you some sense, and you can see on the right-hand side of the page. It's the asset management revenues on the hotel REIT are up 40% year-over-year, and that's kind of gives you some sense of what the rebound is looking like. Sustainable Real Estate is double year-over-year. That's primarily led by what's happening in the multi-asset part of the business. Ichigo Owners is gonna book a lot of money, revenues and earnings in Q3, so we'll report back. Those transactions that are to close, we'll report that in Q3. Clean Energy is kind of bouncing around kind of as it is.
A little bit of weather effect, that minus 1%, but there's nothing happening there other than it's kind of just running forward. Turning towards the business model and our sustainability focus. Page 14 shows what we look like. As you can see on the box that's to the immediate left of the forecast, you can see the first half. If you double the stock earnings, which is the navy blue, that comes to about JPY 15 billion. We don't expect to get to JPY 15 billion 'cause actually, the second half, we have fewer earnings coming off of our Clean Energy business 'cause we go into winter, and you just have kind of less production in that business. It's significant enough and is a big driver of stock earnings for us.
We're well above what we're seeing in terms of the forecast on stock earnings. We'll have a very productive Q3, and we expect to have a productive Q4 also, and we'll drive our full earnings up pretty substantially through the year. Page 15 shows the proxy into what's happening with the stock earnings. I'll go pretty quickly through this. This is material we provide on an ongoing basis, so you can track us. It is a fundamental of the firm that we have. As I pointed out in the previous page, both stock and full earnings, and we have a breakdown and some diversification across our stock earnings, as you can see on this page. Page 16.
One of the things that's important about our business is we effectively have embedded forward earnings. We have an earnings bank that for future periods, because what happens is we have and this is overwhelmingly in our Sustainable Real Estate business, we add value to our assets, and, you know, that value is real. The third-party appraisers will look at our assets, and they will assign unrealized gains. From an accounting perspective, you don't show any value creation until you do an asset sale. It's, you know, to me, it goes to be building all these earnings into the future. Page 17 shows actually that those estimates by the third-party appraisers of what our embedded unrealized gains are are way too small.
Year to date, we've done 1.7x, so we've transacted at 70% higher profitability than the appraisal value the third party appraisers would suggest we would have. Generally, as you can see on the page, we're doing about 2x or more, based on what our pipeline has right now. We think we'll get to 2x also this year. This 1.7x will go up. At the current moment, based on transactions that are expected to grow, we're 2.1x. Next page shows cash generation. We're not about accounting earnings. We're about delivering maximum cash out of the business on behalf of shareholders.
In general, as you can see, we also generate economic operating cash flow about twice our net income. Page 19 goes to the point I made earlier on the extraordinary instability and I think the right word would be chaos in global kind of interest rate markets. It's completely irrelevant to us. We are funding at 89 basis points last year. We're funding at 89 basis points now. We continue to borrow as much as we need and so we're borrowing at 89 basis points for ten-year loans. It continues to be, you know, an extraordinary wonderful place to be a borrower in Japan. We're taking advantage of that on behalf of all of you, our shareholders.
I would point out that there is one, probably new driver of demand for Japanese real estate that comes based on this difference. You know, for years, Japan was the one place in the world where you could borrow at 100 basis points and buy assets, you know, at 500 basis points. You would just get a 400 basis points carry, and not doing anything. I mean, just as long as your asset didn't erode in value, and you didn't have this absolute plunge in your NOI, you would win. Japan was an extraordinary powerful value market.
During the period that we went through of kind of global zero-ish interest rates, Japan lost its uniqueness, because it's like, well, I mean, it's not quite the same as Japan, but you know, you could borrow new asset for 300 basis points, and fund assets that cap rates of 300, 400 basis points. You could get a positive carry in the United States. In the last six months, that has completely disappeared. You know, you were funding at 300 basis points for a 300 basis cap rate asset. Suddenly, you're now funding at 700, and you're deep underwater. The cap rate may have gone up a little bit, but not enough.
What's happened is globally, Japan has once again become a unique source of safety and stability in the returns available for real estate assets. Japan has just reopened. We expect, and we're seeing this, that there is gonna be a fairly substantial increase in demand for Japanese assets. There's one element that is distinct to what I just described to you that is also driving asset demand, real estate asset demand from global investors, and that's people taking a view on the yen. You know, who are like, "The yen's at 145. We think that's really good value," and they're buying a lot of Japanese real estate for that reason. That's a completely separate phenomenon.
The one that I just described is kind of structural and everywhere. You know, real estate has gotten really hard all over the world except for Japan. I mean, it just continues to be an extraordinary place to be a real estate investor. Page 20 shows ongoing progress on our part in kind of being who we are. We care about the world and every choice we make about trying to move the world forward. And so we are increasingly recognized as being best in class in terms of our ESG principles and our ESG activities, and that and it's a good thing. Financial institutions increasingly care about that, and it gives us access to capital on preferred terms.
Next page, 21, speaks directly to one of the essential elements of our sustainability focus. We are robustly climate positive. We have, through our sustainable energy business, which is solar energy and wind energy, we generate two and a half times the CO2 reduction in terms of our emissions. As you can see on the right-hand side of the bar graph you have in front of you, the light blue is our CO2 emissions. We expect those to go down fairly substantially as we increase the conversion kind of our office our real estate activity to renewable energy sources. Page 22 shows our progress on that. At this point, 60% across the group has been converted to renewable energy. Give you a breakdown on that.
I'm gonna say it's 21%, I think is the number. Either 21% or 23% is the cut over for ICH. I mean, meaning this company, Ichigo, which we call internally ICH. 100% of Ichigo Office REIT has cut over and 33% of Ichigo Hotel REIT has cut over. This is something that is gonna happen, and it's gonna accelerate over the next few years. This is important. I mean, global climate change is real. The impacts on people all over the world are real.
Actions being taken by us and everybody across the world, including, I'm sure you on the call, are really gonna make a difference for the future. Turning to more into details on what's happened in terms of core business, page 24 shows our buy and sell activity. You know, I kind of already touched on that. You know, things are strong. We are increasing acquisitions to reflect our ability to sell with strength at very high prices. You can see the gross profit margin for the first half was 29% versus sale price. Perhaps more relevant in telling you kind of, it's GPM is 41% against book value. Next page shows Ichigo Owners activity over a multi-year period.
That is a business, which, as you know, or for those of you who have followed this for a long time, and many of you have, and we're grateful to you for that, is a super kind of prime, brand-new, residential real estate focused in Tokyo, great locations. There's a little bit of stuff outside of Tokyo, but also in super prime locations. Because Japan has done such a good job of defending wage incomes and incomes across the board during COVID, residential real estate continues to be a little bit like a bond here. It's a bond that actually offers a return other than kind of 20 basis points on the ten-year JGB.
There is extraordinary demand for residential real estate, and that's what Ichigo Owners specializes in, and it continues to be a business that we target at least a 10% gross margin on a hold period of generally something that looks like seven to eight months. When you include the ability to borrow kind of 80% LTV against this, you run the ROE numbers even at a 10% margin, and we're talking kind of like something about it's like 50%. In actuality, we're generating margins that look like the mid-teens GPM. It's business that both is an extraordinarily positive business for us, one. Two, those gross margins are actually lower than much of what our competitors, we're providing better value to investors.
Three, that probably explains why there's just an extraordinary amount of demand for the assets that we're generating in this business. Next page shows some of the business model implications of what we're doing for owners. You know, one way of thinking about it is your ability to buy well is directly linked to the ability to sell well. We thought of this business originally as primarily gonna be, we're gonna serve kind of cash-rich individuals and corporations. It turned out that actually there was this huge demand from institutional investors to have kind of, you know, take kind of 15 residential assets, each of them $10 million, and buy a $150 million portfolio was something very attractive to institutions. That became the bulk of our activity.
We continue to do some direct sales activity to cash-rich corporations and individuals. The ability to broaden out and have a diversified and stronger kind of set of channels for selling out of this business is important to us. We started a new co-ownership business, meaning by co-ownership, we mean kind of small lot you can own kind of at $10,000 a shot, kind of real estate that gives you direct ownership. Unlike a REIT, you can get the tax advantages from that from the ownership, the same thing that we do with the way we run our business in order to have the tax shield from depreciation activity. Building out the sales channel for that is important to us.
We announced recently a brokerage relationship with OMAS Ison networks to do that. It's a way of saying we're continuing to build out not only our kind of core capability in acquiring real estate. We buy super prime residential empty, and we lease it ourselves, and we do it really quickly. We can do it really quickly because we buy assets in the Tokyo Bay Area that we know. This is a business we know really, really well and can underwrite really well. The ability to sell this in all sorts of channels is important and interesting to us. You'll see more developments in terms of our channels as we go forward. This is, you know, this is something that's a real growth driver for us.
Turning to page 27. This gives you some sense of something we're doing that is primarily on an ESG focus, but it also has, you know, direct implications for us growing kind of our brand and also a potential new source of income for us. We've actually taken control of a public-private partnership in Yokosuka, which is right next to Tokyo. We've taken an old port owned by the city of Yokosuka that they were gonna tear down and turn into, I don't know, apartments or something like that. You know, our suggestion was, and this is what we do, our Sustainable Real Estate business, you know, we are violently against the idea that you should just be tearing down old buildings.
You know, this. It is profoundly bad for the world. It's wasteful of resources. It's wasteful of money. At the core of our business is we take existing assets and reposition them, and we make some into something. That was the idea. It was an old warehouse that was gonna be torn down. No, no, let's not do that. Let's keep it. Let's keep kind of its essentialness, its integrity as that kind of an asset and turn it into something new. We are repositioning it. When I said it was a warehouse, and they had a tiny bit of kind of, you know, wholesale kind of retail going on in there and turning it into something that's actually brand new and really interesting. We are targeting 1 million visitors a year.
We opened this month. The next page shows kind of what the positioning on it. It is focused on local food and agriculture. Miura Peninsula runs up into kind of Yokohama and is next to Tokyo. We think it's really exciting, really interesting. It helps kind of develop another kind of business model for us. We have been and are, we're asset owners, we're asset managers. The business model in this case is effectively a content kind of provider or coordinator, a master lease operator, for a public entity, because the land and the asset continues to be owned by the city of Yokosuka, and I think it's very interesting.
Page 29 shows our three public vehicles, Ichigo Office REIT, Ichigo Hotel REIT, and our Ichigo Green Infrastructure Fund. Particularly the hotel REIT has suffered during the COVID period, as you can imagine. Even having said that, it's running a dividend yield of over 2% in a country where none of the bonds effectively pay nothing. It tells you how robust the performance of that REIT has been, despite kind of everything that's gone on in the downturn. The next page describes kind of activity we're doing to support acquisitions by both the office and the hotel REIT. We do think there's gonna be growth in both of these REITs, and that growth will be positive for the REIT shareholders, and we expect to be positive.
You know, ultimately, the sponsor of these REITs, we do earn asset management income off the REITs, so it will be positive for all of us as shareholders in this entity also. Page 31 shows activity in the clean energy business, which is slowing down in our classic kind of FIT feed-in tariff part of the business. As you can see, we're bringing three new plants online this year. Two of them are already online. So it's really kind of what's more interesting. We have a little bit of pipeline, which you can see in the royal blue on the upper right-hand side. But these are kind of the feed-in tariff business in solar and wind.
We have kind of a couple things that are going on because we fully intend to grow this. I mean, look, what's gone so horribly wrong in the world with the Russian invasion of Ukraine, you know, is, you know, obviously it's a, it's a humanitarian disaster and a crime. It is also something that has impacted everybody globally through the kind of transmission mechanism of kind of enormous increases in energy costs and strategic insecurity linked to those, you know, to the region. Doing everything we can to move off of fossil fuels, to move off of imported fuels, and to move off of reliance upon dictatorial regimes is just clearly very important for the world, and that includes Japan. Everything we're doing here is important.
We have two kind of major initiatives. One we've talked about before. We have a green biomass initiative, and it's local and it's green, which is, you know, we can go through this and educate everyone too. There are elements of biomass that are emphatically not green. We will not do that. Anyways, it's genuinely green and local biomass that we expect to. We have kind of five or six plants in the pipeline. You know, it probably in the next kind of year, we'll begin activity in this area. Total investment will be something around about 15% relative to the existing kind of set of assets we have.
In other words, about 15% growth internally is what we see as kind of an immediate kind of short-term runway on that, and we would expect to do more over time. That's not on the page right now. But that we see that as a growth opportunity. Actually bigger than that is moving into non-FIT, so non-feed-in tariff solar. Our current target is, as you can see on the page, we have 143 MW of current operating plants. It's all under the FIT regime. Current target is to do about 100 MW . It's our short-term medium mid-term target, I should call it. Anyway, we'd like to do a lot more than that.
Anyway, at the moment we're gonna go for 100. It seems like a round number and big enough to be interesting. With it, we expect that about 40 MW is visible at this point as a pipeline that we expect to deliver. Meaning kind of the conversations are well underway with providers of land for us to operate on that land and provide. This will be solar. The next big element of it is solar power has become enormously competitive globally, and that includes Japan. We don't need to rely upon a government program to have highly competitive solar power prices.
It doesn't require us to have the current kind of high levels of fossil fuel prices for us to continue being competitive. This is a business, you know. The phrase that's used is grid parity, where renewable energy becomes able to stand on its own feet without any help from government. We have reached that point, and that's a good thing. We expect to build a fairly large solar business that will have many of the characteristics of the FIT business, meaning that we expect in many cases have long-term contracts with purchasers who want to own solar and want the security of solar.
One of the things that is increasingly the case is a recognition of the extraordinary volatility in energy prices that's linked to geopolitical risk. The ability to know that the sun is not gonna change based on what's happening in Europe or Taiwan for that matter is actually what matters. It's actually really important to a lot of purchasers. Next page shows activity in terms of share buybacks. This is the sixth year in a row that we've bought back stock. As I said earlier, this year we're executing 3x of what we did last year. Finally, page 33 is a reminder that we have a J.League shareholder program, which is pretty innovative in the way we're trying to take advantage. We're sponsored with the J.League.
We've actually put in place two consulting contracts with J.League teams. We think there's gonna be an opportunity to do things that are interesting in this space in terms of content, the effective use of real estate. The branding kind of value is very significant. If you watch the J.League games on TV on a very regular basis, you see this huge Ichigo kind of banner show up, which is great. There's branding value, there is ongoing commercial value to the business.
The other thing is, generally what happens with sponsors is you get all these tickets because you're a sponsor, and kind of people giving tickets away to, I don't know, their employees or, I don't know, the CEO, you know, takes his or her relatives. But in our case, we think these tickets belong to our shareholders. So we have a program where we're giving away our tickets to our shareholders, not only of this company, but of our REITs and our solar power producers. Thank you for your patience in listening. I know I spoke quickly. There's a lot to talk about. I kind of stumbled on words, my apologies for that. I'll try to speak English better. And I'm now ready for a question and answer or any comments or any and all feedback.
We're grateful to have you on the call with us. Let's see. Greg, you have raised your hand. Can you? Are you able to talk?
Yes.
Are you-
Can you hear me, Scott?
Yeah. Thank you, Greg.
Yes. Hi. Thank you very much for the presentation. My question would be on the, a follow-up on the hotel business. As you mentioned, Scott, about 25% of the portfolio is in hotels.
Yeah.
My understanding was that you were looking, you know, for the situation to improve, to perhaps sell some of those hotels.
Yeah. Yeah.
I've seen that at the same time you actually bought two hotels. Can you maybe develop a little bit on that, on the portfolio rebalance? What's the plan and any particular kind of fine-tuning on that? Thank you.
Yeah. One of the things that we are increasingly doing is we're looking hard at how we grow our Asset Management business. Without putting too fine a point, but you know, it's not necessarily the case that when we take and very explicitly in the case of offices and hotels under our balance sheet, that we expect to hold them. That is kind of. Look, we think the Asset Management business is an important business. I mean, Japan can't fund the future without higher returns. There is significant social value for being an asset manager who is truly a fiduciary in terms of the operations and the success delivered to shareholders.
We think we have a very strong track record. Actually, both Ichigo Office REIT and Ichigo Hotel REIT are the only two REITs in Japan that have only performance-based fee income. We think a great strong alignment. You know, again, Japan has not escaped from its zero interest rate period. This is huge demand for a return that we think, going back to the point I made earlier, that we can offer manifestly in offices, and we think in hotels. I mean, hotel, we just had to go into hibernation because of COVID. We've not done much there. What's happening with our hotel portfolio is we are kind of.
I'm not sure how to describe this. I mean, non-core assets. Non-core assets are gonna go out the door. Things that are of interest to us, potentially in terms of, you know, value add, in a Sustainable Real Estate business, and exit into a REIT or a third-party investor are interesting to us. You know, it is ongoing kind of view. The problem with hotels. I mean, the advantage of hotels is the cap rates have pushed them really hard. Increasingly, you know, if you wanna buy a good asset that's an office asset, or a residential asset, you know, the cap rate kinda looks something like a three. It could even go down into twos sets.
There's some ability for us to add value. You can get a cap rate kind of that looks normalized. It could be 5% or 6% or 7%. Recognizing that, COVID has not completely come to an end, and when I say that specifically, I mean because 20%-30% of tourists inbound have been coming from China, and they're not coming at this point. You know, really to get full normalization of the Japanese tourism market, we need to see a reopening of China also. We think there are interesting opportunities there. We capped ourselves at 25% of our portfolio in hotels for a reason. Because hotels reprice daily.
That fundamental kind of risk outlook on hotels, despite, you know, our ability to make very good money there, has not changed. What you're seeing is a little bit of portfolio repositioning. We think we're strengthening the portfolio. We're gonna do two hotel sales this year. They will both be profitable. We'll fully expect to do profitable hotel sales in the future, and it could well also include into our hotel REIT. Greg, did I answer your question?
Yes. Thank you. A separate point, if I could ask, an update on the Tradepia building in Odaiba?
Yeah.
How is that?
Yeah
Going for the vacancy?
You know, I try to be super direct, if that's okay, and so hopefully you're not gonna go screaming from the room. You know, Odaiba's not going particularly well, which is to say vacancy at this point is about 55%. I'm sorry, occupancy about 55%. Odaiba was this, you know, it is a single big asset. It's the only large office we own. Our experience with it has given us kind of every reason to understand why it is that we all, for the most part, do not participate in large office assets. We bought it at a very good price, and it continues to, you know, be valuable, and there's gonna be a way forward, but the office experience that we've had in large office has been terrible.
I mean, just massive vacancy, big exits. It had a very high kind of IT element in its tenant composition. When we went into COVID, we thought that was great because IT companies are very profitable, and they're growing. Then COVID happens, and the IT companies are like, "You know, actually, we don't need to be in this space, and we're giving it back to you." That and kind of all this kind of, you know. It's interesting, but small and medium companies have largely held their real estate, office real estate, in part because they're competing for talent. There's a shortage of talent. Being able to provide more space for employees has been important to them.
Unlike the big companies, which, you know, I guess have a brand, and they don't have to compete for talent the same way we've been giving back much space. Anyway, Odaiba goes from being this, you know, fantastically performing asset similar to our hotel portfolio to being a, you know, terribly performing asset, you know, due to COVID. Then leasing it back up. We thought we were gonna get to 80% occupancy this year. I think at this point that's probably unrealistic. Looks more like 70%. Our small and medium kind of portfolio, which is, you know, every other asset that we own in an office is running at kind of like 95% occupancy. I mean, it's just completely night and day. That 's being tough.
I mentioned on our Q1 call that we're taking a very hard look at how we're repositioning things we can do with it, and we actually had a board meeting today, and we talked about it because, you know, I think we need to do something new and different. New and different is good for the world, and I think we can do something new and different that's good for our shareholders also. Odaiba is the one kind of weak point in everything we're doing. I mean, everything else is kind of firing on all cylinders, but Odaiba is not right now.
Okay, great. Thank you very much, Scott.
Thank you. We're happy to take any questions. I did get a question in advance, so somebody who couldn't be on the call, so let me address that. The question was, Takara Leben Infrastructure Fund, there was a TOB, so that is a peer. It's a solar power listed fund. It's a peer to Ichigo Green. There was a TOB for it, by its sponsor on September 28th. The TOB runs to at about a 10% premium to the existing share price. At the time, the TOB runs to November 11th, I think it is. The question was, what do you think of the TOB? You know, what do you think of the price?
What do you think of what's in the kind of the effect of the TOB offering memorandum where the sponsor says, "We really need to do this because we're at risk of going kind of negative return in it, in this business. Meaning the costs are gonna be higher than our earnings." There was also a commentary about how kind of restrictions on solar power purchasing within the FIT regime, so the feed-in tariff regime could be very negative for the infrastructure fund, and therefore we think it makes sense for us to take this private. Look, we're in the midst of a TOB, so I would prefer not to make comments on, you know, this is a fantastic TOB.
This is a terrible TOB. I mean, the share prices are trading, it's trading kind of right around, a little bit under, the TOB price, which suggests that there's arbitrage activity going on. At this point, no one has shown up and said, "This is a terrible price. We're gonna pay more, pay more for it." I hope the question will allow me to kind of leave that one as it is. I mean, it seems to be trading fairly normally. With respect to these kind of classic, you know, memorandum things, partly drafted by lawyers, I suppose, and partly to convince shareholders that they could sell it. You know, we've got all these issues with respect to, kind of us going negative earnings and restrictions on power output.
We quite honestly don't see that. I will go directly on that topic. We don't see it. We have our own green Ichigo Green Infrastructure Fund. We have a very large solar power business. Don't see it at all. It's interesting that it's said it right now. I mean, actually, very specifically, this whole thing about power restrictions. If you produce too much solar power, and the grid can't take it, then the government has a right to say, you know, "We can't take the power," and so you have to turn off your solar power. Literally, the number of instances of that has halved in the last couple of years because the EPCOs, the electric power companies, have introduced kind of more flexible and smarter grid mechanisms.
It used to be they couldn't accommodate. You literally turn off power for an hour or 2 hours, you had to turn it off for a day. The number of power restriction actions has plunged. I just talked earlier about kind of this very robust demand for renewable power. The grid is getting smarter in Japan, so we actually would not share the view that was implicit and explicit in the TOB materials saying, you know, we think there's a problem, and we need to take this private. Now, there's one thing that is one other element on these listed infrastructure funds, which is why I don't call them REITs because they're actually not REITs.
REITs have kind of permanent tax-free status and kind of you pass through the income without having to pay corporate tax. The infrastructure funds were set up in Japan with only 20-year tax-free. I don't know, we're about, like, 10 years into this at this point. That tax-free window is getting shorter year after year. That's undoubtedly an element of kind of the infrastructure fund as a vehicle, completely separate from whether solar or wind makes sense in Japan, because they do make sense in Japan. That's a completely separate kind of issue that I'm sure the sponsor was thinking through when they decided they wanted to take this private. That was a question that came in advance. I'm happy to. Now that I've answered that, happy to go to all of you on the phone.
On the phone, on the web, either work. Any and all questions. I'm gonna leave it there, unless there's anything for anybody else. Before I, you know. It's, you're all busy. It's a difficult time in the world. Unless there's anything from anybody else, we'll bring this to a close. Again, thank you very much, all of you, for your time. We're grateful to spend time with you. You know, quite honestly, it's actually reasonably difficult to ask questions on a forum like this. It's not. It's very common for us to take questions for you offline, and we welcome that. Thank you very much for your time today, this evening, this morning, wherever you are in the world.
It's an honor and a privilege to work for all of you. Take care.