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-sixth fiscal period which ended July 31, 2024.

In the thirty-sixth fiscal period, the Japanese economy remained strong due to a pickup in consumer spending and capital investment, as well as being underpinned by the increase in inbound tourism demand, despite the ongoing impact of price hikes and labor shortages.

In such an economic environment, in the rental office market, vacancy rates are improving against the backdrop of the steady corporate performance and favorable employment situation, and rent levels also remained strong. As for the luxury rental housing market, occupancy rates and rent levels remained solid driven by ongoing stable demand for quality housing in central Tokyo. In terms of the real estate trading market, although property acquisition activities by foreign companies remained stagnant, the transaction amount remained at a high level thanks to the active portfolio asset replacement activity of J-REITs. Transaction prices also remained at a high level.

In the thirty-sixth 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-sixth fiscal period, was comprised of 11 properties under management with a total leasable area of 180,572.82m². MHR has already invested 403,143 million yen (based on the acquisition price) into this portfolio. The occupancy rate at the end of the thirty-sixth fiscal period was 99.1%.

The asset management activities described above resulted in MHR recording in the thirty-sixth fiscal period 11,173 million yen in operating revenue, 6,879 million yen in operating income, 6,344 million yen in ordinary income and 6,343 million yen in net income and 3,310 yen in dividend per unit. MHR disposed of a part of Laforet Harajuku (Land) (disposition price: 2,968 million yen) on July 1, 2024. A 1,418 million yen was realized on the disposition.

In addition, MHR plans to dispose of a further part of Laforet Harajuku (Land) (disposition price: 2,968 million yen) on November 29, 2024. For the thirty-seventh fiscal period ending January 31, 2025, dividends per unit is expected to be 3,080 yen. 

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 the Mori Building Group. 

I would like to ask for your continued support.