I'm Scott Callon, Chairman of Ichigo. Thank you very much, everyone, for joining us today. We are speaking off of the FY25-2, so the February 2025 Full-Year Corporate Presentation, which we put on our website. I am joined by Ted Fujita, who is our Lead Independent Director, and by Dan Morisaku, who is a Senior Member of Finance Team and the Global Head of IR for us. So again thank you very much for joining. Let's jump into it. We had a good year. It is a extraordinary time in the world right now, with a lot of uncertainty, and that the business is extraordinarily profitable. In many ways, it's one of the best operating environments we've experienced, and I'll talk to that. Driven by inflation in real estate and our ability to deliver higher-value real estate at a lower cost, it makes us very competitive.
And also means our balance sheet assets have become far more valuable because of real estate inflation. So looking at the top line, All- in OP, up 17% year on year. Cash EPS up 12%. We had record cash earnings, record stock earnings. Full earnings are also up. We ended up delivering an ROE of 14.1%. A cash ROE, as you know, we're very focused on cash, but 18%. Big driver is hotel business, which was extraordinarily profitable and then devastating during COVID and has become extraordinarily profitable again. So the hotel and hotel Asset Management cash earnings are up 38% year on year. We grew our Asset Management AUM 12% year on year to JPY 385 billion, and the cash generation is is super strong. So we do not have to make choices about do we want to finance growth activity.
Again, we have a very capital-efficient, low-cash-required foreign real estate business, so we can do asset acquisitions, and we can do share buybacks, and we can do dividend increases. And so we' ve done all of those. So we bought back 3.3% of shares outstanding in the year that we are talking about today. We are in the midst of another new buyback right now. Asset acquisitions, where they jumped over up 9% year on year. We bumped our dividend 17% year on year, bumped it again. DOE is 4.1%. We will increase our dividend 10% in the new year. We are buying back our stock because we think it is very, very cheap. So looking at what' s happening with stock earnings, and this is a core element of the business model, we have and we are structurally profitable.
We have stock earnings, so those are contractually based earnings that are run at 210% of our fixed expenses. We have stock earnings, so there's a flow, stock and flow hybrid business model, stock earnings for 59% of our total earnings contribution over the last year. We have introduced more detailed, expanded segment reporting. We we we think it's important to be a company that people can understand. We need to deliver high-quality growth, and high-quality growth includes transparency. So we've done is we've broken out the Sustainable Real Estate segment into three segments: Sustainable Real Estate. We'll carry on keeping the the ongoing office and retail and logistics assets in it. We have a higher turnover, highly capital-efficient business. We're primarily focused on residential, which is its owners, which we're breaking out. And we've done some breakout over time, as you know, but we're doing more of that.
And we're spinning out hotels as a segment just because it's an area we continue to—it's similar to Sustainable Real Estate. We do a lot of work to increase the value of hotels, but it's an area which has a different kind of economics to it, a different different kind of flows to it. We think it's helpful for all of you to know how the hotel segment is operating as an independent segment. So again, as I just touched on it, OP All-I n OP was up 70%. Cash EPS is up 12%. We don't pick and choose our favorite KPIs, meaning you can say, "Hey, look, our OP was up 26%. Our net income was up 25%.
EPS is up 30%. Those are all true, but the best way to understand us is our all-in operating profit and our cash EPS, and that's what those two look like on a year-on-year basis. Looking at the segment earning details, at this point, it's pretty obvious we have built a portfolio of businesses that are diversified, which all take advantage of our core capabilities in adding value to real estate. And that includes Clean Energy, which is a business which we went into because we thought there was an opportunity to do some interesting things that are good for the world and good for our shareholders in in in solar and wind power. As you can see, Asset Management, All-In OP, up 75%. Sustainable Real Estate's up 46%. Ichigo Owners in the headers down 39%. Hotel's up 35%. Clean energy's down 11%. These things are—they're moving.
As a diversified portfolio, we'll do in a different way. And yet you get, as an outcome, a plus 17% across the totality because it's just a robust set of businesses. You know owners came in. It will come it will come up this next year. I won't go on. We've got a lot of information for you today. We have a very long deck, as always. Look, we believe in providing more information rather than less, so I won't drown you in detail, hopefully. But the bottom line is the business is all doing well. There's some volatility within the businesses, and yet it's a super, super robust operating environment. Therefore, we were able to deliver the results of this year and and and continue growth into the next year.
So just going through some of the characteristics of the businesses, as I said, it is a stock and flow earnings model, record cash earnings up 15% year on year. And the stock earnings are secure and have become more secure. As we diversified our portfolio, you have, as I say, these diversification effects, which are positive. And and and we have got you know strength across the board, I would say, with the exception of clean energy. I will touch on that later. That is a business we should have grown more. I promised you that we will be super transparent about what we think we have done well and what we have done less well. And we expect to create an opportunity at this point in battery storage there. Buy but this set of businesses are performing very, very well.
We have better our earnings, which is to say the balance sheet, as we provide in in in kind of our accounting financials, does not show these unrealized gains, which are third-party appraisals, and they continue to grow over time. We actually think there's a lot more growth from last year into this year, and yet the bump in in the the appraisals only went from 72.5% to 73.1%. We actually think the appraisals are behind, which happens quite a bit. And the down market, they're behind. In the up market, they're behind. What its just touched upon earlier is that real estate inflation has been extraordinary. Construction inflation, I mean. And as a result, your existing assets have become far more valuable, and that's actually not reflected here. So that's interesting.
We think the appraisals will catch up over time, and we'll demonstrate that through the earnings that we generate off of our assets. We do think this is an important pairing to the previous slide because what it shows is systematically we outperform what the appraisers think we're going to deliver. Meaning in the last year, we we actually generated actual gains on sales at 1.5%, what the third-party appraisal would have would have suggested. It's a way of saying that probably the end of year of the firm at this point looks at something looks like something 0.6%, 0.7%, given that we substantially—when you start when you throw in both the third-party appraisal, unrealized gains, and kind of a modest multiple on top of that to reflect the fact that we always outperform. Our economic operating cash flow systematically exceeds net income, meaning our cash-based profitability is higher than accounting profitability.
You can see this year was it's dropped to 1.3x. There's a little bit going on here where you have—we've got some receivables that are going to come in the next period. And therefore, even though we have profits that were reported, the cash is not showing up until in the next few months. But we continue to robustly outperform, and we'll do so on economic operating cash flow relative to net income. Interest rates have gone up. That's the most important thing we see here. We've got, as of last year, all-in interest rate was 89 basis points. It's gone up to 142, so that's an increase of 50 basis points, 53 to be exact. You should know that we're substantially hedged, so the actual increase on our borrowing costs looks about half to be half of that. About half of—we've got hedges on about half of our book.
But but rates have gone up. That is, you know one of the things I say about Japan, if you allow me to to to go to this point, is that investing in Japan, people—it's not that people have their facts wrong, it's that they have the wrong facts. And one of the things that's happened, I think, with real estate pricing for listed shares, and including our shares, is people have correctly understood that interest rates going up is bad for real estate owners like us. So they've got that one right. I mean, that just turns out to be the wrong fact. The most important thing is this 50 basis point move is totally inconsequential relative to this huge opportunity created by having real estate inflation. And so as you know, generalized inflation in Japan has been about 3% over the last couple of years.
Real estate inflation is probably going 3x that, more like 10% a year. There's a huge shortage of labor. It's skilled labor. It has not been able to substitute for last five years. You probably have 50%-70% construction cost inflation. The implication of that is, for the first time in decades, unlike you know like every other country on the planet, you actually have inflation driving up replacement value, meaning that brand new buildings have to come on at rents that are 30%-40% higher in order to justify building them. And it means that we, as existing owners of real estate, can raise our rents. It's an extraordinary, extraordinary positive situation and is effectively brand new to the Japanese real estate industry over the last couple of years. And that is the single most crucial fact, which is gonna continue to drive profitability.
The Trump tariffs and this entire chaotic situation we're in, it has not changed the reality that there is a massive bid for assets because it's very hard to build brand new assets at competitive prices, and everyone has come to understand this in the Japanese real estate space. And so everyone's trying to buy existing assets. We both own existing assets, as you know, we don't tear buildings down. We take existing assets and put in very low amounts of CapEx to make them better. And so we're super, super competitive in this environment. And we' re doing ESG financing, and it continues to be a great way for us to drive attractive financing terms. Japan believes in caring for the world. It believes in ESG. The financial institutions believe in this. We believe in it.
Climate change is real, and the activities of the firm are not only good for shareholders, they're good for the planet. And this has been and continues to be a real positive for us. About a quarter of our financing at this point is ESG-linked in some way. We are selective on acquisitions and sales, have been for forever. As you can see, we have a a a pretty balanced this year in terms of acquisitions and sales. We we we bought a little bit more on Ichigo Owners that will go out the door in the next couple of months. And so it' s just kind of consistent across the board that we are active in our key assets, our office, retail, residential, and hotels. Pretty balanced across all of them, with office having grown at this point to 31% of our total assets under management because office has become relatively more attractive.
There was a period of time where people thought Japan was not going back to work. They're wrong. They are. The office rents are going up. It' s been a very interesting and powerful asset class, as is hotels, except the difference with hotels is they reprice daily. And so we manage ourselves to effectively 25% of assets for hotels and no more than that. And that' s exactly what the hotels are right now. This hotel continues to be a super, super high-performing asset class for us. We're good at it. It is a harder asset to operate well and continues to drive higher than average profitability as it should. This breaks down the assets and acquisitions and sales across these three categories. And again, they are pretty balanced across the board. Sorry, I promised I would not take us into the weeds.
I think I'm probably talking too long, so I'll go quicker rather than shorter. This breaks us out over a slightly more extended period for Ichigo Owners, which again focuses on super prime, brand new residential real estate, overwhelmingly in Tokyo. And that's a business this is a high turnover business, super capital efficient. We actually we we specify what we want built, what we actually don't do to develop ourselves. So it's kind of a fabulous model, if you can put it that way, and works really, really well. This is what owners Ichigo Owners OP looks like, dropped in the last year, the year we just ended. It was basically a push out of of some sale activity into this year, and we'll we'll hit this number. I mean, we could do more.
I mean, the truth of the matter is we have a lot of flexibility as to which assets we sell when. We want to grow as fast as we can for all of you in a sensible way. And and Owners certainly is continuing on a growth path. One of the things we've been doing is is resident tokens. So these are security tokens. We've actually pulled in our forecast for this business. And it' s it's mostly linked because it is both a financial asset and it is a real estate asset. And you know there is a bunch of stuff going on in the world. I think we've all noticed this. Every day we wake up and see what's happened. And so you know it is it is sold primarily through security brokers. A whole bunch of stuff is going with the stock market. Again I think you've noticed this.
We actually had JPY 100 billion, as we thought what was going to be our AUM forecast for this, if we pulled it down. It appears to be on the margin that we probably want to sell these assets that are going into security tokens into other markets. As I said, there is a significant, massive ongoing bid for physical real estate. But we' ll see. You know as I say, we pulled this number down, and we' ll see kind of where we end up doing what we end up doing. We are just going to say, the core capability of the firm is adding value to real estate. And then we take that real estate and we sell it. We optimize kind of the gains for all of your shareholders by deciding which distribution channel and which buyers are are the appropriate place to place the asset.
So the fact that we built out a broad set of sales channels is really powerful in terms of maximizing value for all of you. P ointed to this on the on the first summary slide, 38% growth year on year in hotel and hotel Asset Management cash earnings. RevPAR is going up, continued to go up in the Q1 of this year. So January to March, we are up about 15% over last year, ONE5. The inbound has not ended. The yen is kind of at JPY 143.
That is not super different from JPY 150 in the grand order of things. The yen was, as you know, a couple of years ago at JPY 100. Japan is fantastic. It' s safe. It' s secure. It' s welcoming. So there nothing has changed in terms of inbound activity at this point. And and it continues to be a very robust asset class for us. We have a hotel operator, ONE5.
It continues to grow. It's hotel rooms under operation. Okay, I'll try to be shorter. Next wext page. We've we buy and improve assets. So there's a hotel. We're now doing a full-scale hotel renewal in Utsunomiya, which is slightly north of Tokyo. As you know, we've introduced The Knot series, which is our boutique hotel brand that has been fabulously successful. Two examples we have on the page are The Knot Yokohama and The Knot Tokyo Shinjuku. We buy we do very substantial CapEx to make these assets much, much better. In terms of guest comfort and functionality, and the result is is significant improvement in NOI. And actually, the kind of value creation outperforms that because what you get is you get not only an increase in profitability, you get a much better asset, which deserves a lower cap rate, meaning a higher a higher multiple to it.
So a significant increase in value growth that that you know helps explain why we continue to be active in this area. And so se are going to introduce a Knot in Utsunomiya. We' ll also do one in Osaka and Fukuoka. So The Knot brand continues to grow. And this is an example of of some of our activity in the office space in terms of adding value to assets. To give you some sense of this, we added we added what about 20% increase in terms of CapEx on top of acquisition price. So 20% CapEx investment and 90% increase in NOI. These numbers really work, folks. Trade Pia Odaiba. This is the fabulous ex-Sojitz, so the big trading company headquarters building, which was fabulous and then got absolutely crushed during COVID. And and it was on the Olympic venue. The tenants that came in for that, and they all vacated.
And so this became, unfortunately, a problem asset and is back to being the fabulous asset it is. For better fo r worse, and it's both, we are massively outperforming everyone else in the area. So we are up to 88% tenancy. We see a path of getting back to 97%. We have done what we do. We work really, really hard for our tenants. The expansion by existing tenants, over half of the new lease-ups are by existing tenants. It tells you, I mean, they'r e they're talking with their feet. They are really satisfied with what is done with the building.
We have made it more beautiful. We made it more open. We made it more flexible. We have events for the tenants. It' s it's it's a really, really good outcome. And I wanna say, for better for worse, I mean, we are at 90% heading towards 100 in terms of our accuracy.
Buildings around, some of them are, they're running at 50 and 60. And so it tells you how much better we are doing this. And it also tells you that we do expect to monetize the asset, that we're going to have to be very, very clear for the buyer as to what we've done and why it's so much better and why this has effectively become a trophy asset in its own sense, kind of destination asset in the area because it is so much better. The the and the alternative is we do more in the area. We'll look at that. We would prefer to sell this, move on, and possibly buy a building next door and do the exact same thing. You can look at the very top picture, and you can see the fabulous, you see Tokyo Tower on the right side. I mean, the views are fantastic.
I mean, it's a fantastic location, spectacular views. I mean, I say fantastic location. It's slightly outside of the center of Tokyo, but has really good access, really good transport access, and it's absolutely beautiful. So anyway, we've done very well with it. And when I say fantastic location, that's all about cost performance because our rents are about half the rents in central Tokyo. So tt's a very good cost performance. All right, I'll move on. Sorry, I talked a lot. Again, Asset Management, this is another example of us diversifying and taking our core capabilities and asset value add and doing the new things. So the resident tokens and security tokens is an example of how we can grow assets under management. We bought a private REIT company, and we're growing that. This is an area we continue to grow.
Harder to grow the listed J-REITs because we only grow them if it's good for the J-REIT shareholders. And the shares are clearly undervalued relative to what is described, extraordinary positive real estate market, but a lot of nervousness in the markets about how interest rate increases will affect things. But the more fundamental issue is, as I said, the replacement costs replacement costs have'n t gone up. As a result, we think the shares are undervalued, and that does not call for us to do kind of new issuances and growing Ichigo Hotel or Ichigo Offices i nstead. What we've done is we've done capital recycling in a way that serves our shareholders. Clean energy, unfortunately, has not grown as much as we should have grown it. And so we' ve done a hard think about what we need to do, what we could do more there.
This is a business we really believe in. And we think what's gonna happen here is likely to be, I mean, we're looking at the green biomass and the non-FIT solar power, but those are not huge drivers of the business at this point. We think battery storage entry has become very interesting. The economics with the extraordinary pricing that is coming out of China now for batteries, and Japan is open to imports from China, has made the economics of battery storage in Japan very powerful. And so you should expect to see an entry from us in this area. And and and we'll start small as we normally do, but we think this could scale quite rapidly. So that' s an interesting new area that we're going to explore to try to do more in this area. We are active in buying back our stock.
As I said, we think it is the the markets have underappreciated. And then when we show up with earnings like this, and we will have more earnings to come, and when we put out a forecast, we expect to beat the forecast this year, when people see the robust kind of underlying earnings trend, our expectation is that the market will begin to appreciate that real estate is actually a very good place to be in Japan right now, and particularly what we do, which is not from the ground development, which is a really, really hard business to be in. If you are trying to do greenfield right now with how high construction costs are, that is a real wind at your face for a lot of classic Japanese real estate players, but that is not what we do. We do value add. We take existing assets we make them better.
It is a very strong operating environment for us. As a result, we have had significant appetite and continue to have significant appetite to buy in our stock. It drives EPS as a long-term driver of value. We think it is to buy your stock for less than intrinsic value. We think it is a good way to allocate shareholder capital. And we' ve bumped our dividend, and we will continue to do so. We have a progressive dividend policy, which means we maintain or raise our dividend. We have a shareholder return KPI of DOE of more than 4% as we grow value, and we end up with a growing dividend. We have this, a page that exists for years. We do have a very interesting J.League shareholder program. We are a top sponsor of the J.League. The tickets go to our shareholders, not to us.
So there is a lot of work we do on sustainability, and we continue to do it. We have been we continue to be recognized, increasingly recognized for our efforts in the area, and that includes CDP recognition this year for both climate change and water security. We completed our renewable energy transition to 100%. We our our CO2 reduction activity through our own clean energy power plant production is over eight times our CO2 emissions. We are we are we are dramatically, relentlessly, and ever-increasingly climate positive. And this shows a breakdown. Let me turn to the forecast. So we expect to be up all in OP this year, 14%. Cash EPS up 10%. Again, these are numbers we want to beat. ROE is flat. ROE and cash ROE are flat. Those are numbers we also want to increase, and we will see if we can increase them this year also.
Again, we have a portfolio, and so the portfolio is going to have some different movements in it. The one thing you should see is the Asset Management forecast. We do n't put in any expectation of performance fees. So by definition, if you have performance fees in the previous year, you are going to have a downward. I mean, we expect our base fees to go up, but since we have n't modeled anything in terms of performance fees for the forecast, the year-on-year projects to be down. We expect to see substantial growth in Sustainable Real Estate, substantial growth in Ichigo Owners. Hotel kind of blew the doors off this last year. We expect that to come in. Clean energy, unfortunately, we think will be down. This is primarily in large-scale maintenance project.
We also kind of thought we were going to have some growth that would that would offset that maintenance downtime effect, but in fact, there have been power purchase suspensions that continue, so we're not going to get that growth. So so it' s down on the maintenance, and unfortunately, we're not getting the growth we had expected to offset that. Again, we expect record high cash earnings. The next page shows we expect to have record stock earnings also. I think that's it. That's right. Thank you so much for joining us. It's again, it's a very interesting time. The world is deeply uncertain. We are aware, of course, of the uncertainty. We're managing ourselves. We're a company that survived the global financial crisis. We understand what it takes. We manage our balance sheet. We manage our earnings streams. We manage our value add to make sure we are robust.
If the wheels fall off, we are fully prepared to use it as an extraordinary opportunity. As an example of that, to grow value for our shareholders, as you know, we substantially increased our hedges, our interest rate hedges over the last week. There was a day when the market completely fell out of bed when everyone was deservedly panicking about what was going on in the world. Interest rates came at a ton and used an opportunity to lock in five-year interest rate hedges at really, really good levels for all of you. So we will continue to be optimistic and work to deliver value for all of you based on kind of our structure underpinning of a very robust balance sheet and a very robust earnings stream based on our value add. All right, I think we're done. Thank you so much, everybody. We appreciate your time.
Have a good day and evening.