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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 thirty-first fiscal period which ended January 31, 2022.

In the thirty-first fiscal period, the Japanese economy showed signs of recovery centered on consumer spending as economic activity resumed after the state of emergency was lifted. However, the Japanese economy started to weaken once more since the end of the year when COVID-19 spread again.

In such an economic environment, the vacancy rate in the rental office market saw a lull in its rise due in part to the fact that floor space reductions have already progressed to a certain level because of the spread of remote work triggered by the pandemic. Concurrently, rent levels maintained their sluggish conditions given the weak demand for office expansions, reflecting uncertainty about the future. 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 and the transaction amount continued to stay at a high level backed by the ongoing favorable fund-raising environment and investors inside and outside of Japan showing no change in their investment appetite.

In the thirty-first 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 thirty-first fiscal period, was comprised of 11 properties under management with a total leasable area of 181,518.93m². MHR has already invested 410,780 million yen (based on the acquisition price) into this portfolio. The occupancy rate at the end of the thirty-first fiscal period was 97.4%.

The asset management activities described above resulted in MHR recording in the thirty-first fiscal period 9,820 million yen in operating revenue, 6,085 million yen in operating income, 5,514 million yen in ordinary income, 5,513 million yen in net income and 2,927 yen in dividend per unit.

MHR acquired an additional part of Toranomon Hills Mori Tower (acquisition price: 7,870 million yen) on August 2, 2021. This acquisition is expected to enhance the portfolio size and increase dividends. For the thirty-second fiscal period ending July 31, 2022, dividends per unit is expected to be 3,030 yen, reflecting the impact of the split transfer of Laforet Harajuku (Land).

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.