Good afternoon, everyone. I am Kijima, Executive Manager of Investor Relations at Mitsui Fudosan. I will present in detail the first half results for the fiscal year ending March 2027. Similar to last time, I will use the financial results and business highlights presentation dated November 6, which is available on our website. As usual, I will begin with the results highlights on slide three of the presentation. As indicated in the blue box on the upper part of the page and the figures in the table, first half fiscal 2026 operating revenue, business income, ordinary income, and profit attributable to owners of parent for the period declined year-on-year, reflecting the high base for comparison in the absence of gains on property sales posted in first half fiscal 2025.
Please note the year-on-year declines are due to the significant impact of a heavy concentration of property sales in the first half of the previous fiscal year, in which we achieved record highs for revenue, business income, and net profit. Nonetheless, first half fiscal 2026 revenue, business income, and net profit were very high, second only to the record highs set in the previous fiscal year. Looking at the breakdown of business income by segment, both leasing and facility operations segments reported record highs for first half. Leasing posted business income of JPY 99.5 billion, up JPY 10.9 billion year-on-year, for a progress rate of 55.3% versus the full-year forecast of JPY 180 billion, supported by factors such as revenue and profit growth at the office business in Japan and overseas, and GMV growth at domestic and overseas retail facilities.
While the property sales segment reported profits on the partial disposal of our ownership stake in fixed asset YAESU CORE, business income declined JPY 27.5 billion year-on-year to JPY 96.7 billion, reflecting the high base for comparison due to gains on property disposals in first half fiscal 2025. Relative to the full-year target of JPY 210 billion, the progress rate was 46.1%. As shown in the box on the lower left, as of the end of September, the contract rate for new domestic condominium sales relative to this fiscal year's projected sales of 2,350 units was 93%, while the contract rate for planned disposals in the property sales to investors business was around 90%. We are making very good progress toward the high full-year business income target of JPY 210 billion for the segment as a whole.
For the management segment, while there was growth in the number of property management contracts, an increase in both the number of transactions and average unit transaction prices in the retail brokerage Rehouse business, there was a high base for comparison reflecting the impact of the one-off management fee recorded in the first half of the previous fiscal year. Segment business income was JPY 38.3 billion, down JPY 0.2 billion, and the progress rate relative to the full-year forecast of JPY 75 billion was 51.1%. Finally, on facility operations, business income rose JPY 0.7 billion year-on-year to JPY 24 billion on the back of higher ADRs at domestic and overseas hotels and improved revenue and profit at Tokyo Dome. The progress rate versus the full-year target of JPY 45 billion was 53.5%. We also made progress on the disposal of strategic equity holdings.
The cumulative reduction since the formulation of the &INNOVATION 2030 plan was 50% as of the end of Q2, achieving the medium-term plan target. As a result of the above, the progress rates relative to the record highs we project for the full year were 50% and 48.8% for business income and profit attributable to owners of parent, respectively. We are making steady progress toward achieving our forecast. With regard to shareholder returns, the interim dividend per share has been set at JPY 18.5 per share in line with our initial guidance. We have also decided to implement an additional share repurchase program of JPY 20 billion. Related to the buyback, in combination with the JPY 40 billion program already completed, this brings total buybacks for the fiscal year to JPY 60 billion. Our total payout ratio for fiscal 2026 is projected to be 56%.
I will now explain the results in detail. Please turn to page 63 of the financial results and business highlights presentation. I will start with the profit and loss statement. First half fiscal 2026 operating revenue was JPY 1, 215.4 billion, down JPY 137.9 billion, or 10.2% year-on-year. As noted earlier, there was a high base for comparison owing to a heavy concentration of property disposals in the first half of the previous fiscal year. Business income, which is the combination of operating income and gains and losses on equity method investments and the disposal of fixed assets, was JPY 224.7 billion, down JPY 21.6 billion or 8.8% year-on-year. Ordinary income was JPY 137 billion, down JPY 46.5 billion or 25.3% year-on-year. Profit attributable to owners of parent for the period was JPY 139.1 billion, down JPY 12.9 billion or 8.5% year-on-year.
Next, before covering the details of the segment results, I will discuss the major items below the line. I will begin with non-operating income. Equity in net income or loss of affiliated companies fell JPY 0.7 billion year-on-year to JPY 0.4 billion. While we made progress on profit recognition on sales of residential properties in Asia, this was offset by factors such as an increase in expenses related primarily to the completion of rental residential properties in the U.S. Net interest expense was JPY 38.5 billion, up JPY 1.5 billion year-on-year. This is mainly the result of progress on domestic investments and the impact of rising interest rates in Japan, which boosted the interest burden on yen-denominated debt.
Other non-operating income, which includes dividends received and other non-operating gains and losses, was -JPY 0.9 billion, a JPY 1.6 billion widening in losses, reflecting the impact of losses on the retirement of tangible assets. As a result, overall non-operating income was a negative JPY 39 billion for a deterioration of JPY 3.8 billion year-on-year. Next, for extraordinary gains and losses, please refer to the box on the upper right entitled Extraordinary Income. We posted JPY 85.9 billion in extraordinary profits in first half fiscal 2026. This is the sum of JPY 48.4 billion in disposal gains from the sale of fixed assets, including a parcel sale of our ownership interest in YAESU CORE, which is located in the Yaesu 2-Chome central district, and JPY 37.4 billion in profits on the sale of investment securities in conjunction with the reduction of strategic equity holdings.
Please turn to the next page. I will now cover the segment results in detail. First, the leasing segment as shown on page 65 of the presentation. As shown at the top of the page, first half fiscal 2026 operating revenue was JPY 487.9 billion and operating income was JPY 105.6 billion. This represents year-on-year increases of JPY 31.6 billion and JPY 16.3 billion, respectively. Major factors contributing to the growth were higher profits from domestic and overseas offices, such as the impact of positive rent reversions in Japan and improved occupancy at 50 Hudson Yards in the U.S. In addition, there were also full-year contributions from retail facilities such as Mitsui Outlet Park Okazaki in Aichi Prefecture and LaLaport TAIPEI NANGANG in Taiwan, which opened last fiscal year, as well as overall GMV growth at domestic existing retail facilities of approximately 6% year-on-year.
At the same time, equity method income was -JPY 6.1 billion, a JPY 5.3 billion year-on-year widening of losses due to increased expenses related to the completion of rental residential properties in the U.S. As such, overall segment business income, the combination of operating income and equity method gains and losses, was JPY 99.5 billion, up JPY 10.9 billion year-on-year. The office vacancy rate is shown in the box in the middle of the page. Mitsui Fudosan's non-consolidated metropolitan area office vacancy rate as of the end of September remained low at 0.8%, reflecting progress on tenants moving in. With regard to the status of office rent reversion negotiations, almost all tenants with leases subject to expiry during the current fiscal year have agreed to higher rents.
At the beginning of the fiscal year, we indicated that we expected to achieve double-digit rent increases this fiscal year, but actual rent reversions have exceeded our initial assumptions. For more details, the Chief Operating Officer of the office building division will be presenting at the analyst briefing on November 10. We would be grateful if you could listen in. Next is the property sales segment. Please turn to page 66. We show the first half results for the property sales segment at the very top of the page. As I alluded to earlier, owing to the high level of unit handovers in first half last fiscal year for central urban, high-end, large-scale residential property Mita Garden Hills, there was a high base for comparison. Operating revenue for the overall segment was JPY 216.1 billion, down JPY 182.6 billion year-on-year.
Business income was JPY 96.7 billion, down JPY 27.5 billion year-on-year. For property sales to domestic individuals, we made progress on handovers for Park City Nakano, THE TOWER AIRZ, THE TOWER BREEZE, as shown in the comment section on the left. Domestic residential property sales were JPY 177.9 billion, and operating income was JPY 42.5 billion. The average price per unit for the combination of condominiums and detached housing, as shown in the middle of the page, was JPY 122.67 million. This is down from last year, but still high in absolute terms. While not shown here, the OPM for the property sales to domestic individuals as a whole for first half fiscal 2026 was a very high 23.9%, backed by sales of central urban high-end properties. Near-term selling conditions remain strong and unchanged. We show completed inventory on the lower part of the page.
As of the end of Q2, completed inventory for the condominiums was 45 units, and for detached housing, 13 units, for a total of 58 units. Completed inventory levels remain low. Next is property sales to investors and overseas individuals. Please return to the top of the page. Operating revenue was JPY 38.1 billion, down JPY 70 billion year-on-year, reflecting the absence of last year's sales of MFLP logistics facilities and other properties. Operating income was JPY 0.5 billion, down JPY 8.5 billion year-on-year. Equity method income was JPY 5.1 billion, up JPY 4.1 billion from profit progress on the sale of residential properties in Asia. Income from the disposal of fixed assets rose JPY 21.9 billion year-on-year to JPY 48.4 billion on contributions from the partial sale of our stake in YAESU CORE and others.
The resulting business income, the combination of the above, was JPY 54.2 billion, up JPY 17.4 billion year-on-year. Next is the management segment. Please turn to page 67. As shown at the top of the page, the overall management segment reported first-half operating revenue of JPY 256.4 billion and business income of JPY 38.3 billion. This represents year-on-year revenue growth of JPY 9.7 billion, but a JPY 0.2 billion year-on-year decline in profits.
By sub-segment, property management reported operating revenue of JPY 191.7 billion and business income of JPY 22.4 billion. This represents year-on-year increases of JPY 9.4 billion and JPY 2.1 billion, respectively. The key factors included the growth of high-margin properties in assets under management at Mitsui Fudosan Building Management. Next, for the brokerage and asset management sub-segment, operating revenue was JPY 64.7 billion and business income was JPY 15.8 billion.
This represents operating revenue growth of JPY 0.2 billion year-on-year, but profit declines of JPY 2.3 billion year-on-year. While the number of transactions and average transaction unit value in the retail brokerage business increased, the profit decline was the result of the absence of the one-off management fee received in first half of the previous fiscal year.
Next is the facility operations segment. Please turn to page 68. The overall facility operations segment reported first-half operating revenue of JPY 126.2 billion and business income of JPY 24 billion. This represents year-on-year increases of JPY 6 billion and JPY 0.7 billion, respectively. The key drivers were a 6% year-on-year increase in ADRs, with occupancy at domestic lodging-focused hotels remaining steady at 84%, and higher event-related revenues at Tokyo Dome. Next is the other segment. Please look at the lower half of the page.
Overall, the other segment reported first-half operating revenue of JPY 128.7 billion and business income of JPY 1.5 billion. This represents year-on-year declines of JPY 2.6 billion and JPY 0.4 billion, respectively. The main factor was a decline in the number of reported units in the New Construction under Consignment business. Revenue and profit recognition at the New Construction under Consignment business, which accounts for the majority of the other segment, tends to skew toward the end of the fiscal year. We are assuming profit growth in second half. Next, for reference, we show figures for the overseas business. Please turn to page 69. Overall, combined overseas business income for first half fiscal 2026 was JPY 27.1 billion, up JPY 7.2 billion year-on-year.
Within the overseas business, the leasing business reported a JPY 13.1 billion year-on-year increase in revenue and a JPY 3.2 billion year-on-year increase in profit as a result of increased earnings from U.S. offices on the back of improved occupancy at 50 Hudson Yards in New York, and GMV growth at retail facilities such as LaLaport TAIPEI NANGANG in Taiwan. in the property sales segment, revenue fell JPY 51.7 billion year-on-year on the absence of property sales reported in first half of the previous fiscal year. However, profits increased JPY 3.7 billion, backed by profit progress on sales of residential properties at an Asian equity method affiliate. The combination of management, facility operations, and other reported year-on-year increases in revenue of JPY 1.1 billion and JPY 0.1 billion in business income, driven by higher occupancy and ADRs at the Halekulani Hotel in Hawaii.
As of first half fiscal 2026, overseas business profits accounted for 12.1% of the total. Next, I will cover the balance sheet. Please turn to page 70. At the bottom of the page on the left, total assets as of the end of first half fiscal 2026 were JPY 10, 674.4 billion, up JPY 571 billion versus the end of the previous fiscal year, mainly reflecting property acquisitions in Japan and overseas, and construction expenses. As shown in the notes below the table, the impact of moves in foreign currency rates was JPY 104.5 billion. On the right, outstanding interest-bearing debt rose JPY 409.9 billion from the end of the previous fiscal year to JPY 5,0 42.5 billion, mainly the result of acquisition expenses for domestic and overseas properties and construction expense payments.
Net assets increased JPY 68.9 billion to JPY 3, 453.8 billion from the end of the previous fiscal year. While there was the payment of fiscal year-end dividends and share repurchases, net assets rose on the recognition of period profits. As a result, the first half fiscal 2026 D/E ratio was 1.51 x and the equity ratio was 31.4%. I will now discuss the major components of change, such as cost recovery. Please turn to page 71. As shown in the table on the upper left, total real property for sale was JPY 2, 917.6 billion, up JPY 314.5 billion from the end of the previous fiscal year. The breakdown is shown in the table below. New investments were JPY 455.5 billion, mainly reflecting progress on investments at Mitsui Fudosan and Mitsui Fudosan Residential.
Cost recovery was JPY 140.4 billion, mainly on progress on property sales handovers at Mitsui Fudosan Residential. Other, which includes depreciation and forex impact, was a negative JPY 0.5 billion. Next, on the lower left, we show the balance of tangible and intangible assets at JPY 4 , 856.8 billion, up JPY 177.7 billion from the end of the previous fiscal year. As shown in the table below, there were new investments totaling JPY 246.8 billion as a result of the completion of Tokyo Midtown Nihonbashi and Hotel THE MITSUI Hakone at Mitsui Fudosan. Depreciation was JPY 77.7 billion. Other, which includes forex impact, was up JPY 8.6 billion. As a result, for the first half fiscal 2026 results, the progress rate for business income and net income was 50% and 49%, respectively. We are making steady progress toward our full-year forecasts.
In addition, the contract rate for new domestic condominiums stands at 93%. The contract rate for property sales to investors is already at around 90%. Combined with the positive rent reversions for the office business, GMV growth at the retail facilities, and rising ADRs for hotels, the fundamentals of our business remain strong. Although the operating environment for interest rates and forex remains volatile, the group as a whole remains firmly committed to achieving the business and net income forecast for this fiscal year and the KPIs we have laid out in the &INNOVATION 2030 plan, while closely monitoring the financial and real estate market conditions in Japan and overseas. This completes my presentation.