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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-ninth fiscal period which ended January 31, 2021.

In the twenty-ninth fiscal period, the Japanese economy saw lasting improvement centered on consumer spending due to the effects of various policies as more economic activities resumed after the lifting of the state of emergency, but it again started to weaken from the end of the year when COVID-19 spread once more.

In such an economic environment, the vacancy rate in the rental office building market continued to rise against the backdrop of the spread of remote work triggered by the pandemic and the weakening business sentiment, and these conditions also resulted in stagnant growth in rent levels.
As for the luxury rental housing market, occupancy rates and rent levels remained solid, driven by the ongoing stable demand for quality housing in central Tokyo amid new supply remaining at a certain level. In terms of the real estate trading market, transaction prices continued to be high due to the increase in transactions centered on large properties backed by the ongoing favorable fund-raising environment and investors inside and outside of Japan showing no change in their investment appetite.

In the twenty-ninth 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-ninth fiscal period, was comprised of 11 properties under management with a total leasable area of 178,845.68m2. MHR has already invested 402,910 million yen (based on the acquisition price) into this portfolio. The occupancy rate at the end of the twenty-ninth fiscal period was 98.8%.
The asset management activities described above resulted in MHR recording in the twenty-ninth fiscal period 9,820 million yen in operating revenue, 6,173 million yen in operating income, 5,576 million yen in ordinary income, 5,575 million yen in net income and 2,909 yen in dividend per unit in the twenty-ninth period.

MHR acquired an additional part of Toranomon Hills Mori Tower (acquisition price: 12,220 million yen) on September 1, 2020. MHR plans to acquire further additional parts of Toranomon Hills Mori Tower (acquisition price: 7,870 million yen) on August 2, 2021.
These acquisitions are expected to enhance the portfolio size and increase dividends. As a result, MHR declared dividends per unit of 2,910 yen for the thirty fiscal period ending July 31, 2021.

MHR will continue to seek maximization of unitholder value by maintaining and increasing dividends continuously while retaining stability of earnings through fixed-rent master leases alongside actively pursuing external growth utilizing the property pipeline of Mori Building Group.

I would like to ask for your continued support.