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Message from the Management

Message from the Management

Executive Director Hideyuki Isobe

Hideyuki Isobe
Executive Director,
Mori Hills REIT
Investment Corporation

All of us at Mori Hills REIT Investment Corporation (“MHR”) wish to extend our deep appreciation to our unitholders for your continuous support of MHR. I am pleased to report on MHR’s performance for the twenty-second fiscal period which ended July 31, 2017.

In the twenty-second fiscal period, the Japanese economy continued to moderately recover, despite some weakness seen in personal consumption, backed by the steady corporate earnings along with favorable employment and income environments resulting from a pickup in exports amid the discontinuance of overseas economic slowdown in addition to the movements towards a weaker yen and higher stock prices following the outcome of the U.S. presidential election.

Within this economic environment, the rental office building market experienced continued improvement in supply-demand balance due to the ongoing demand for expansion and relocation driven by the strong employment situation, and also due to the limited supply of large-scale buildings in central Tokyo. In the luxury rental housing market, occupancy rates and rent levels remained solid, backed by steady demand for quality housing in central Tokyo even though the volume of new supply increased. In the real estate trading market, transaction amounts remained at a high level as large transactions took place in the bay areas of Tokyo and Yokohama against the backdrop of strong investment appetite from investors at home and abroad.

In the twenty-second fiscal period, MHR strove to maintain and enhance tenant satisfaction through measures such as efficient and systematic operational management and maintenance and repair of properties in its portfolio by better understanding tenant needs. Moreover, MHR maintained and enhanced occupancy rates and rents by proactively launching leasing activities targeting new and existing tenants while foreseeing trends in rental market conditions.
MHR’s real estate portfolio, as of the end of the twenty-second fiscal period, was comprised of 9 properties under management with a total leasable area of 152,325.40m2. MHR has already invested 338,150 million yen (based on the acquisition price) into this portfolio. The occupancy rate at the end of the twenty-second fiscal period was 97.2%.
The asset management activities described above resulted in MHR recording in the twenty-second fiscal period 8,491 million yen in operating revenue, 5,395 million yen in operating income, 4,756 million yen in ordinary income and 4,755 million yen in net income and 2,610 yen in dividend per unit in the twenty-second period.

Also, MHR plans to acquire a part of Toranomon Hills Mori Tower (acquisition price: 5,070 million yen) and a part of Holland Hills Mori Tower (acquisition price: 2,430 million yen) additionally on March 1, 2018.
These acquisitions are expected to enhance the portfolio size and increase dividends. As a result, MHR declared dividends per unit of 2,640 yen for the twenty-third fiscal period ending January 31, 2018.

In addition, MHR will continue to seek to maximize unitholder value through pursuit of further improvements in profitability and stability while retaining the portfolio image of having Premium Properties in central Tokyo as its core, by progressively achieving steady internal growth with a close watch on rental market trends while actively pursuing external growth utilizing Mori Building Groups’ property pipeline.

I would like to ask for your continued support.