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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 thirtieth fiscal period which ended July 31, 2021.

In the thirtieth fiscal period, the Japanese economy saw ongoing weakness in consumer spending as the impact of COVID-19 continued, but improvements were seen centering on the manufacturing sector as exports to places with high vaccination rates, such as Europe, the US and China, grew.

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 as well as by the strengthened cost-cutting trend of companies, 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 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 thirtieth 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, the Company 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 thirtieth fiscal period, was comprised of 11 properties under management with a total leasable area of 178,832.97m². The Company has already invested 402,910 million yen (based on the acquisition price) into this portfolio. The occupancy rate at the end of the thirtieth fiscal period was 97.6%.

The asset management activities described above resulted in MHR recording in the thirtieth fiscal period 9,841 million yen in operating revenue, 6,157 million yen in operating income, 5,583 million yen in ordinary income, 5,582 million yen in net income and 2,913 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. MHR declared dividends per unit of 2,910 yen for the thirty-first fiscal period ending January 31, 2022.

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.