Mori Hills REIT Investment Corporation
Results of the 27th Fiscal Period ended January 31, 2020
Presentation Material
March 13, 2020

TSE Code： 3234
https://www.mori-hills-reit.co.jp/en/(Asset Manager) Mori Building Investment Management Co., Ltd.
https://www.morifund.co.jp/en/

Disclaimer

This document has been prepared by Mori Hills REIT Investment Corporation (“MHR”) for informational
purposes only and should not be construed as an offer of any transactions or the solicitation of an offer
of any transactions. MHR is a publicly-offered real estate investment corporation (J-REIT) investing inreal estate and related assets the prices of which may fluctuate. Unitholders of MHR may suffer loss
when unit prices decline due to fluctuation of real estate value and profitability, aggravation of financial
status of MHR and other reasons.
Please make investment decisions at your own discretion and responsibility, and contact securities
company when purchasing investment units of MHR.
This document’s content includes forward-looking statements about business performance; however,no guarantees are implied concerning future business performance. Although the data and opinions
contained in this document are derived from what we believe are reliable and accurate sources, we do
not guarantee their accuracy or completeness. The contents contained herein may change or cease toexist without prior notice. Regardless of the purpose, any reproduction and/or use of this document inany shape or form without the prior written consent from MHR is prohibited.
This document contains charts, data, etc. that were prepared by Mori Building Investment
Management Co., Ltd. (hereafter, the “Asset Manager”) based on charts, data, indicators, etc. releasedby third parties. Furthermore, this document includes statements based on analyses, judgments, andother observations concerning such matters by the asset manager as of the date of preparation.
Asset Management Company : Mori Building Investment Management Co., Ltd.
(Registered as a financial instruments business, Kanto Local Finance Bureau registration no. 408
Member of The Investment Trusts Association, Japan)

1

Contents

1. Executive summary
2. Investment highlights

3

4

Unit price performance5

Financial results

6

Dividends per unit growth record

7

Continuous growth through “positive cycle”

8Increase in appraisal NAV per unit

9

Forecasts

10

Highest Property Portfolio among all J-REITs

11

External growth

22Internal growth25

Financial management

29

MHR’s representative property

31

3. Operation highlights

35

Factors that led to changes in dividends per unit
from the previous fiscal period

36

Change in assets under management

37

Change in unrealized capital gain/loss

38

Appraisal value

39

Change in the rent and occupancy rates

40

Tenant status by month and major tenants

41

Financial overview (As of January 31, 2020)

42

Debt status (As of January 31, 2020)

43

Unitholders breakdown (As of January 31, 2020)

44

4. Business environment recognition &MHR’s policy/strategy

45

Business environment recognition

46

MHR’s policy/strategy

47

Market-related information

49

5. Appendix

55

2

1. Executive summary
Financialsummary

Operating revenue: 9,631 million yen, operating income: 6,026 million yen,

27th period

net income: 5,406 million yen Increased revenue and income period-over-period(Jan. 2020)

DPU: 2,883 yen (+1.2% from 26th period) Increasing for 19 consecutive fiscal periods
DPU increased by +2.2% over previous year, continuing steady rate of growth
NAV per unit increased by +8.2% over previous year, increasing steadily

External
growthPossible to acquire premium properties in central Tokyo without a competitive bidding process
by utilizing the abundant sponsor pipeline
Further improvement in asset value of MHR’s properties are expected due to development bysponsor in surrounding area

Internal
growthOccupancy ratio continued to be strong, office 100% and residential 96.2%.
Steady internal growth due to rent revision and replacement
Office rent gap ratio decreased from △6.5% in 26th period to △6.2% in 27th period

Financialmanagement

Maintained the target level by book value basis LTV 45.7%, appraisal value basis LTV 38.2%,
remaining duration of debt 4.6 years
Fixed interest rate ratio at the end of the period was 88.2%

3

2. Investment highlights

42-1 Unit price performance(yen)

200,000
PublicOffering inMar. 2013

190,000

PublicOffering in
Sep. 2013

PublicOffering in
Aug. 2014

PublicOffering inFeb. 2016

PublicOffering in
Aug. 2018180,000
170,000
160,000
150,000
140,000
130,000

Mori Hills REIT

120,000
110,000
100,000

TSE REIT Index

90,00080,00070,00060,00050,00040,00030,000Sep. 14,2010Marketvalue

9thJan. 31,
2011

10th

Jul. 31,2011

41.9 bn yen(Sep. 14, 2010)

11th

Jan. 31,
2012

12th

13th

Jul. 31, Jan. 31,
2013
2012

14th

Jul. 31,
2013

15th

Jan. 31,
2014

16th

Jul. 31,
2014

17th

Jan. 31,
2015

18th

Jul. 31,
2015

19th

20th

Jan. 31, Jul. 31,
2016
2016

21st

Jan. 31,
2017

22nd

Jul. 31,
2017

23rd

24th

Jan. 31, Jul. 31,
2018
2018

25th

26th

27th

Jan. 31, Jul. 31, Jan. 31,
2019
2020
2019

340.6 bn yen(Jan. 31, 2020)(Note 1) Unless otherwise stated in this document, all amounts are rounded down below the unit and all fractions and areas are rounded up below the decimal point.
(Note 2) TSE REIT Index is adjusted as of the 8th period result announcement (Sep. 14, 2010) and shows the relative performance vs. MHR’s unit price performance.

52-2 Financial results
26th period

27th period

27th period

Jul. 31, 2019

Jan. 31, 2020

Jan. 31, 2020

ActualActualDifference

Forecasted

Operating Highlights (million yen)
Operating revenue

9,561

9,631

+ 69

9,616

Rent revenues

9,323

9,377

+ 53

9,362

237

253

+ 15

253

3,589

3,605

+ 15

3,630

3,225

3,224

3,270

364

380

△1

+ 16

359

5,971

6,026

+ 54

5,986

1

1

0

627

619

Ordinary inc ome

5,346

5,407

△0

+ 61

5,365

- Property taxes for properties acquired in24th and 25th period- Property management fee- Property taxes for existing properties- Utilities- Maintenance and repairs

Net income

5,344

5,406

+ 61

5,364

・Non-operating expenses (△7 mn yen)

Total dividends

5,343

5,405

+ 61

5,362

1,874,960

1,874,960－

1,874,960

2,850

2,883

+ 33

2,860

Profit on real estate rental

6,336

6,407

+ 70

6,345

Depreciation

1,057

1,034

1,036

NOI

7,394

7,441

NOI yield

3.8%

3.8%

△ 23

390,690

390,690－

390,690

Other operating revenues

Operating expenses
Expenses related to properties
SG&A

Operating inc ome
Non-operating inc ome
Non-operating expenses

△7

621

Increase/decrease factor (26th – 27th)・Operating revenue (+69 mn yen)
- Rent revision of land (Laforet Harajuku)- Office operating revenue (Pass-through)- Utilities and other revenue

・Operating expenses (+15 mn yen)

- Interest expenses, etc.

DPU
Total units outstanding (units)
DPU (yen)

Other Indices (million yen)

Acquisition price(weighted average based on the numberof operating days during the period) (Note)

+ 47

7,382

△ 0.0PT

3.7%

+25
+21
+19

+31
+21
+15
+10
△56
△6

Increase/decrease factor for 27th period(Forecasted - Actual)・Operating income (+40 mn yen)
- Office (Pass-through)+41(Note) If properties are acquired during the period, the acquisition price is the weighted average based on the number of operating days.

62-3 Dividends per unit growth record(yen/unit)

3,000

Increase over previous year: +2.2%
2,822
2,800

19 consecutive
fiscal period increase

2,850

2,890 2,900
2,883 (forecast)(forecast)

2,753

Longest among
all J-REITs

2,659
2,567

2,600

2,606 2,610

2,502(119.2% increase in 9.5 years)
2,367

2,400
2,303

2,200

2,151
2,019

2,000
1,910
1,833
1,800

1,724 1,740
1,670
1,589

1,600

1,400
1,315

1,200

8th
9th
10th
11th
12th
13th
14th
15th
16th
17th
18th
19th
20th
21st
22nd
23rd
24th
25th
26th
27th
28th
29th
period period period period period period period period period period period period period period period period period period period period period period
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
2010
2011
2011
2012
2012
2013
2013
2014
2014
2015
2015
2016
2016
2017
2017
2018
2018
2019
2019
2020
2020
2021
※ Implemented a 5-for-1 investment unit split effective on February 1, 2014. Actual dividends per unit was divided by 5 for the periods before the split of investment units in the graph.

72-4 Continuous growth through "positive cycle”
Continuous growth of “Dividends and NAV per unit” through “positive cycle”- Public offering at premium level + New acquisition at discount to appraisal value + High-grade properties in central Tokyo page
7

Dividends per unitpage9

NAV per unit

19 consecutive fiscal period increase

18 consecutive fiscal period increase

Increase over previous year: +2.2%

Increase over previous year: +8.2%(119.2% increase in 9.5 years)(132.1% increase in 9 years)

PBR

Impliedcap rate

1.7x

2.8%

[Most recent NOI yield at acquisition]

Continuous
growth through“positive cycle”

NAV per unit

1.2x

[Factors for NAV increase]

Toranomon
Hills

3.4%

1. Public offering at premium level

Holland Hills

4.3%

2. New acquisition at discount to appraisal
valueContinuous growth driven by external
growth, financial cost reduction andinternal growth

3. Increased unrealized capital gain on
properties(Note) Financial indicators on this page are calculated based on the figures as of the end of the 27th fiscal period (January 31, 2020).

8

2-5 Increase in appraisal NAV per unit
(yen/unit)
150,000

Increase over previous year: +8.2%

140,000

145,583

137,697

18 consecutive
fiscal period increase

134,550130,000
124,618(132.1% increase in 9 years)
120,000

117,627
112,546 112,811

114,893

110,000
101,957

104,064

99,665100,000

90,00086,941

88,82681,99278,02780,00078,43472,73570,00062,73164,85660,00050,0009th
periodJan.2011

10th
11th
12th
13th
14th
15th
16th
17th
18th
19th
20th
21st
22nd
23rd
24th
25th
26th
27th
periodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodJul. 2011 Jan. 2012 Jul. 2012 Jan. 2013 Jul. 2013 Jan. 2014 Jul. 2014 Jan. 2015 Jul. 2015 Jan. 2016 Jul. 2016 Jan. 2017 Jul. 2017 Jan. 2018 Jul. 2018 Jan. 2019 Jul. 2019 Jan. 2020

※ Implemented a 5-for-1 investment unit split effective on February 1, 2014. Actual dividends per unit was divided by 5 for the periods before the split of investment units in the graph.

92-6 Forecasts
27th period

28th period

29th period

Jan. 31, 2020

Jul. 31, 2020

Jan. 31, 2021

ActualForecast

Difference

Forecast

△9

9,645

Operating Highlights (million yen)
Operating revenue

9,631

9,621

Rent revenues

9,377

9,386

253

235

3,605

Increase/decrease factor (27th – 28th)

+9

9,389
256

3,606

△ 18

+0

3,615

3,224

3,265

+ 41

3,297

380

340

317

6,026

6,015

△ 40

6,029

1

1

+0

1

619

596

△ 10

591

Ordinary inc ome

5,407

5,420

+ 12

5,439

Net income

5,406

5,419

△ 22

+ 12

5,437

Total dividends

5,405

5,418

+ 13

5,437

1,874,960

1,874,960－

1,874,960

2,883

2,890

+7

2,900

Profit on real estate rental

6,407

6,356

6,347

・Operating revenue (+23 mn yen)
- Utilities and other revenue

Depreciation

1,034

1,044

+ 10

1,041

・Operating expenses (+9 mn yen)

NOI

7,441

7,400

△ 51

7,389

NOI yield

3.8%

3.8%

△ 40

0.0PT

3.8%

390,690

390,690－

390,690

Other operating revenues

Operating expenses
Expenses related to properties
SG&A

Operating inc ome
Non-operating inc ome
Non-operating expenses

・Operating revenue (△9 mn yen)

- Full period contribution of rent revision ofland (Laforet Harajuku)- Cancellation penalty- Utilities and other revenue

・Operating expenses (△1 mn yen)
- Property management fee- Property taxes for existing properties- Other operating expenses- Utilities

+12
+11
△30

+17
+15
△21
△16

・Non-operating expenses (△22 mn yen)
- Interest expenses, etc.

△22

DPU
Total units outstanding (units)
DPU (yen)

Other Indices (million yen)

Acquisition price(weighted average based on the numberof operating days during the period)

Increase/decrease factor (28th – 29th)- Utilities- Property taxes for existing properties- Leasing fee- Asset management fee- Maintenance and repairs

+31
+18
+15
+14
△26
△11

10

2-7 Highest quality property portfolio among all J-REITs
Investment strategy based on long-term perspective(1) Responding to demographics
Responding to the declining population andchange of working style(2) Responding to economic
trends and disasters
Responding to tenant demand during
economic downturns and to disasters(3) Addressing aging assets
Responding to asset value decline
due to aging

Investment in central Tokyo“Global large corporate cluster”
x “IT and venture company cluster”

Investing in high-quality assets
Property with excellent facilities, earthquake
resistance and environmental performance

Creating added value
Area management, peripheral development
and renovation

Location

Qualityof assetsValuecreation112-8 (1) Location
Highest property percentage in Central Tokyo among J-REITs

Tokyo’s Five
Central Wards
and their vicinity

Tokyo’s ThreeCentral Wards

87.5%

100%

(Note) The ratios represent proportion of acquisition price to total acquisition price.

Estimated population in central Tokyo
Area

Population in2015

Estimated
population in
2045

Change3 central wards
in Tokyo

442,000

594,000+34.3%

5 central wards
in Tokyo

1,000,000

1,175,000+17.5%

Tokyo

13,515,000

13,606,000

+0.7%

Osaka

8,839,000

7,335,000

Aic hi

7,483,000

6,899,000△ 17.0%127,094,000

106,421,000

Nationwide△ 7.8%△ 16.3%(Source) Prepared by the Asset Manager based on the “Regional Population Projections forJapan (estimated in 2018)” by the National Institute of Population and Social
Security Research.

122-9 (1) Location
Focusing investment in premium area

Overlapping zone of global large corporate withIT and venture companies in central Tokyo

1. Global large corporate cluster in central Tokyo×
2. IT and venture company cluster in central
Tokyo

Large corporate headquarters in central Tokyo(c ompany)

Foreign company

Domestic company

22
20
18

17

16

16

14
12

10

10

8

8

8

6

5

3

3

Hamamatsucho

4

Kyobashi4

Shiodome

5

Akasaka5

4
2
Shinjuku

Shinagawa

Toranomon

Nihonbashi

Roppongi

OtemachiMarunouchi

Roppongi
Roppongi
Akasaka
Akasaka
Toranomon
Toranomon

0(Source) "Large corporation" refers to the top 100 domestic companies and the top 30
foreign companies based on market capitalization. Prepared by the AssetManager based on market capitalization data as of July 31, 2019 by Refinitiv
and publicly available information for the headquarters’ locations.

13

2-10 (1) Location
Head office location of IPO companies (2019)

IT firms located in Minato ward(Companies)

20
17
15

14
12

10
6

6

5
3
0

Minat
o
Minatoward

Shibuyaward

Chiyoda
ward

Chuo
ward

Shinjuku
ward

Shinagawa
ward

Apple
Facebook
Microsoft
Tencent
Cisco Systems
Netflix
Softbank
NVIDIA
Baidu
Expedia
Nexon

m3
Oracle Japan
SBI Holdings
Mercari
GREE
HEROZ
Bengo4.com
NHN JAPAN
UUUM
RPA Holdings
ZIGExN

Monex Group
OpenDoor
UzabaseMoney Forward
ValueCommerce
istyleAirTrip
EnigmoGunosyKLabkaonavi(Note) Prepared by the Asset Manager based on the disclosed data etc. as of July 31, 2019.

(Source) Prepared by the Asset Manager based on the Securities Registration
Statement (at the time of IPO) of companies newly listed in Japanese Market(TOKYO PRO Market excluded) from January to December 2019 those head
offices are located in Tokyo.

Venture capitalists located in Minato ward
NVCC
SBI Investment
JAFCO
WiL
NTT DOCOMO Ventures
Incubate Fund
STRIVE
Eight Roads Ventures Japan
Infinity Ventures

B Dash Ventures
Itochu Technology Ventures
Sony Innovation Fund
Dentsu Innovation Partners
Hakuhodo DY Ventures
TBS Innovation Partners
Fuji Startup Ventures
ORIX Capital
Monex Ventures(Note) Prepared by the Asset Manager based on the disclosed data etc. as of July 31, 2019.

Consideration of work style change
Change in required officespace- Space to promote interaction- Enhanced facilities with excellent
environment- Corporate cluster that promotes
growthExpansion of satellite offices
Increase in remote work

Need for truly “high-grade
properties in central Tokyo”
rises further

Need for truly “high-grade
properties in central Tokyo”
remains unchanged14

2-11 (2) Quality of assets
High-grade properties with extensive facilities＜Overview and facilities of representative properties＞
Property nameGross floor
area

Access fromthe nearest
stationNumber ofshops &
restaurants

Roppongi Hills

Connected to758,203㎡- Roppongi
Station

215-

Toranomon Hills(After total
project completion)

ARK Hills

Atago Green Hills

Connected to793,585㎡- Toranomon
Hills Station
2-minute walkfrom Roppongi
310,979㎡1-chome
Station3-minute walk
151,106㎡- from Onarimon
Station

Hotel
(spa)

Mori Art Museum
Tokyo C ity View
(NAGO MI SPA AND FITNESS)TOHO C inemas

Grand Hyatt Tokyo

Not fixed Andaz Tokyo(approx. 8,000
tsubo)

Cultural facility
Observatory(AO SP A AND CLUB)ANA InterContinental
56- (THANN SANC TUAR Y-

Suntory Hall

Conference

ShareofficeResidential

Green
coverage ofthe site

Academyhills
Ropponngi Hills
Club

〇

〇

28.5%

Toranomon Hills
Forum

〇

〇

30.3%

ARK Hills Club

〇

〇

43.2%

〇

〇

51.7%

SP A AKASAKA)

21-

-

-

-

(Source) Prepared by the Asset Manager based on disclosed materials as of July 31, 2019.
(Note 1) Describes the outline of the entire areas and facilities including properties owned by MHR.
(Note 2) “Connected” under the “Access from the nearest station” describes the possible direct connection by concourse etc..

152-12 (2) Quality of assets
Earthquake-resistant feature

Lowest portfolio
PML of all listed
J-REITs

0.93%

Environmental performance

Ratio of GB certified
properties in portfolio

Best among
all J-REITs

93.2%
In highest Ratings
70.5%※ PML refers to the probable maximum loss ratio expected to result from an earthquake.
A smaller figure indicates superiority in earthquake-resistance.

PML

Earthquakeresistant feature

Roppongi Hills Mori Tower

0.59%

Seismic damping

ARK Mori Building

0.78%

Seismic damping

0.73%

Seismic damping

1.56%

Seismic damping

Toranomon Hills Mori Tower

0.50%

Seismic damping

Holland Hills Mori Tower

0.85%

Seismic damping

Akasaka Tameike Tower

1.79%

Seismic damping

2.35%

Seismic damping

2.34%

Seismic damping

5.94%

－

2.20%

－

2.20%

－

Property nameKoraku Mori Building
ARK Hills South Tower

MORI Tower
Atago Green Hills

Forest Tower

Type

OfficeOffice(Partly
residential)

Plaza
Roppongi First Plaza
Roppongi View Tower

Highest quality
among all J-REITs

Residential※ In acquisition price base by excluding Laforet Harajuku (Land)

CASBEE for Existing Buildings: Rank S

Roppongi Hills
Mori Tower

ARK Mori
Building

Atago Green Hills Toranomon Hills(MORI Tower)
Mori Tower

CASBEE for Existing Buildings: Rank A

Akasaka Tameike
Tower

Koraku Mori
Building

Holland Hills
Mori Tower

DBJ Green Building
Certification: Four stars

ARK Hills
South Tower16

2-13 (3) Value creation
Developments around MHR’s properties

Shintora-Dori CORE (Completed Sep. 2018)(Toranomon Hills area)
Toranomon Hills
Mori Tower
Opened Jun. 2014

Toranomon Hills
Residential Tower

Projected completion Jan. 2021

Toranomon Hills Station Tower

Toranomon Hills
Business Tower(Tentative name)
Projected completion Jul. 2023

Completion Jan. 2020

Total area: approx. 7.5ha
Total floor area: approx. 800,000㎡

Toranomon Hills Station of
Hibiya subway line
Projected to open June 6, 2020

Office space: approx. 300,000㎡
Residential units: approx. 720
Retail space: approx. 26,000㎡
Green space: approx. 15,000㎡

Mixed use Tower located at the center of future
grand boulevard in Tokyo
A 15-story mixed use tower with commercial facilities with a total
rental floor area of approximately 10,000m²“THE CORE KITCHEN/SPACE” cafe located on the 1st floor whichfaces the Shintora–Dori creates a new community with on site
“Community Manager” and the event space attracts diverse people
to exchange and disseminate new ideas.
Incubation offices with shared lounges and meeting rooms arelocated on the 3rd floor and start-ups expanding into Japan fromoverseas and venture companies have moved in.

17

2-14 (3) Value creation
Toranomon Hills Business Tower (Completion Jan. 2020)
An international-standard, large-scale officebuilding with an innovation center
Business Tower is a 36-story office tower, featuring
international-standard, large-scale office space ofapproximately 96,000m², and retail facility area ofapproximately 7,600m².
The tower is directly connected to the new Toranomon
Hills station on the Hibiya subway line as well as theexisting Toranomon station on the Ginza subway. A bus
terminal is located on the first floor to function as a“Gateway to Tokyo” via various bus lines including the
BRT (Bus Rapid Transit) connecting city center andwaterfront areas, and via airport limousine buses.
Offices occupy 32 floors from the 5th floor to the 36th
floor with the standard rentable floor area of 3,000 m2.
Refreshment corners are provided in the common area
on each floor aimed at promoting communication.

<Retail>
From the first basement floor to
the 3rd floor, commercial
spaces with a total of 58
restaurants and stores will
support global lifestyles.
The 3rd floor will house
Toranomon Yokocho,
a landmark dining facility
featuring offerings from famous
stores from all over Tokyo.

<Innovation center>On the 4th floor will be a large
membership-based incubation
center “ARCH,” which wasestablished especially to support
large enterprises' internal businessreforms and new business creation.
It boasts around 3,800 m2 of office
work space and aims to become abase for Japan's unique innovation
ecosystem.

18

2-15 (3) Value creation
Development around MHR’s properties (Toranomon-Azabudai Project: projected completion Mar. 2023)
The future version of “Hills” boasts anastonishing scale and impact
Large central square of approx. 6,000m² is set in the center ofthe city and various city functions such as offices, residences,hotel, an international school, retail facilities and cultural
facilities will be tightly integrated.
Total floor area will be 860,400m², with 213,900m² of officespace, approx. 1,400 residential units. Approx. 20,000 office
workers and 25-30 million people per year are expected to visit.
The main tower will soar 64 stories and 330m in height. Officesin the main tower, the West Tower and Podium Building willencourage free and creative work.

“Modern Urban Village”, a city-within-a-city full of greenery andconnects people
The core concept of the “Toranomon-Azabudai Project” is a “Modern Urban Village,”a unique neighborhood that will combine the sophistication of a megalopolis with theintimacy of a small village. It will be a completely new city like no other in the world.
It will cover an area of approx. 8.1 ha and will feature extensive greenery totaling
approx. 2.4 ha including a 6,000m² central square.

19

2-16 (3) Value creation
Creating community and innovation through the Area Management by sponsor

Toranomon Hills Area
Partnership withworld's largest
innovation center

Thursday Gathering(Toranomon Hills Mori Tower)

Events“OUR PARKS”“Thursday Gathering” by

Various events such as “Our

Cambridge Innovation Center

Parks” are held in the open

promotes exchanges between

spaces, Oval Plaza and Atrium,

entrepreneurs, investors,

where a vast lawn spreads out.

business managers of large

It creates a third place forcompanies and students tocommunity and activates the

support the creation of newarea of Toranomon.

innovations.

ELLE Cinema Night(Toranomon Hills Mori Tower)

Collaboration with
Royal College of Art

Design Academy(Shintora-Dori CORE)

Enjoy the charm ofJapanese Market"Design Academy" in

Dining facility “Touring stand”

collaboration with the Royalis installed on the road for theCollege of Art, provides

first time in Tokyo. There are

educational programs to spursales of gourmet cuisine using

creation of new industries withseasonal ingredients froman environmental focus andaround Japan and various

world-class learning andinteracting opportunities.

Traveling stand(Shintora-Dori)workshops to experience
community activities.

20

2-17 (3) Value creation
Creating community and innovation through the Area Management by sponsor
Roppongi Hills Area

ARK Hills Area
Workplace where
venture capitalgathers“KaleidWorks” consists of an

Tokyo-based art festival

office area where independent“Roppongi Art Night”

venture capitalists

integrates the art and the cityrepresenting Japan are locatedto improve the cultural image

and a lounge area. People whoof Roppongi and create awant to innovate in a wide

pioneering model of urban

range of fields can interact on
KaleidWorks(ARK Mori Building)

Art Festival
representingTokyo

common grounds in sharedspaces.

(c) Roppongi Art Night Execution Committee

development in Tokyo.

Roppongi Art Night(Roppongi Mori Tower)

Atago Green Hills Area
Support creationof next-generation
business model

Co-creation
platform
HAB-YU platform"Ignition Lab MIRAI" is an

HAB-YU, operated jointly with
the Fujitsu Group, is a platform

interactive space jointly

for co-creation. It aims tooperated with Silicon Valley

create new value by bringing

based VC, WiL. Innovators

together the issues, ideas andfrom a variety of large

technologies from people

companies gather to create"Human", region "Area", andHAB-YU platform(ARK Hills South Tower)

company "Business" (= HAB)
and forging ties (“yu”) among

and operationalize new
Ignition Lab MIRAI(Atago Green Hills (Mori Tower))business models.

them in a variety of ways.

21

2-18 External growthBusiness environment
recognition

Closely watching the acquisition price level as property acquisitioncompetitions are overheatedExternal growth policy

Proceed with external growth utilizing sponsors’ abundant property
pipeline(Note) Please refer to “Section 4. Businessenvironment recognition and MHR's
policy/strategy” for details.

Change in rent and vacancy rate of office buildings (Tokyo’s five central wards)
(%)

200

8.9% 9.0% 8.7%

140

9.0

8.1%

180
160

10.0
⇒ Estimate

7.3%
145

7.0

149

5.5%

(Source)“Autumn 2019 Office Rent Forecast in Tokyo,

4.7%

2.6%

Vacancy rate

6.0 Prepared by the Asset Manager based on the
4.0%

3.6%

120
100

Rent index

8.0

114
100
92

80

92

99

95

104

109

3.1%

120

125

128

128

128

2.6% 2.6% 2.8%

114

127

125

124

3.3% 3.3% 3.1%

1.9% 1.8%

5.0 Osaka and Nagoya (2019-2025)” by the OfficeMarket Trends Research Committee

4.0 (Japan Real Estate Institute and Miki Shoji Co.,
3.0 Ltd.).
2.0 (Note)

The rent index targets large and medium

1.0 buildings (standard floor area of 100 tsubo ormore) in Tokyo’s five central wards. The rent

0.0 index is rebased to 100 as of 2010.

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Change in return on real estate investment

(%)

4.9

Mori Building’s extensive property
pipeline

4.6
4.3

4.3%

4.2%

4.2%

3.5%

3.7
3.4

Cap rate of class A
office buildings(Marunouchi and Otemachi)

Number of properties under(as of the end of March)(as of April 1, 2019)

2.0 trillion yen

4.0%
4.0

Total assets:management: 96 buildings

3.5%
3.2%
3.0%

3.1

MHR has “preferential negotiation rights”

2.8
05

07

09

11

13

15

17

19

(Source) Prepared by the Asset Manager based on “The Japanese Real
Estate Investor Survey” by the Japan Real Estate Institute.
(Note) Figures reflect the time of survey as of April each year.

22

2-19 External growth
Trend in assets under management (based on acquisition price)(billion yen)

450
400

Growth utilizing
sponsor’s pipeline

350

339

300

281

390

390
billion yen

25th
Jan.
2019

27th
Jan.
2020

352

293

252

250
200
150
100

142

142

1st
Jan.
2007

3rd
Jan.
2008

201

201

5th
Jan.
2009

7th
Jan.
2010

211

211

210

9th
Jan.
2011

11th
Jan.
2012

13th
Jan.
2013

15th
Jan.
2014

17th
Jan.
2015

19th
Jan.
2016

21st
Jan.
2017

23rd
Jan.
2018

Acquired premium properties in central Tokyo lower than appraisal values(Acquired as of September 3, 2018)
Toranomon Hills
Mori Tower

Holland Hills
Mori Tower

Acquisition price 26,070 million yen

Acquisition price 4,570 million yen

Appraisal value

28,830 million yen

Appraisal value

5,260 million yen

Location

Minato-ku, Tokyo

Location

Minato-ku, Tokyo

Toranomon
Hills Mori
Tower

Holland Hills
Mori Tower

Discount ofacquisition priceto appraisal
value (Note 2)△ 9.6%△13.2%△4.4%

Building age

4.3 years

13.6 years

21.3 years

PML

0.50%

0.85%

5.18%

Recent officeacquisition bylisted REITs(Note 1)

(Note 1) Average based on information of acquisitions disclosed (41 properties excluding acquisitions at IPO) from January
to July 2018.
(Note 2) Discount of acquisition price to appraisal value = (Acquisition price – appraisal value) / appraisal value23

2-20 External growthMori Building Group’s involvement

MHR (Note 1)
In Operation(注4)

MB Group (Note 2)(注5)

Planning / Under Construction(Source) Prepared by the Asset Manager based on Mori Building’s “Mori Building Handy Map Mori Building Map/Home Route Support Map 2020.”(Note 1) Some of the properties have been partially acquired and held by MHR.
(Note 2) Properties are developed, owned, managed and planned for development by Mori Building Group, and there are no properties currently anticipated to be acquired by MHR.

24

2-21 Internal growth(Note) Please refer to “Section 4. Businessenvironment recognition and MHR's
policy/strategy” for details.

Business environment
recognition

Central Tokyo office rents forecast to continue moderate rise, butclose attention to be paid to demand trends

Internal growth policy

Maintain stability of cash flow through fixed rent master leases, whileachieving rent increase revision with pass-through type leases

Trend in occupancy rates
(%)

99.5%

100

99.7%

Trend in asking rent
99.9%

100%

170

98.4%
96.7%

95

95.7%

97.9%

160

97.7%
96.8%

96.3%

96.2%

Shibuya・Dogenzaka

Areas with concentration of IT firms
such as Minato-ku and Shibuya-ku
have outperformed

150

Roppongi・
Azabu

140
Toranomon・
Shimbashi

130

90

5 central
wards

120

Office (total)

85

110

Residential (total)
Office (pass-through)

100

90

80
22nd
July 2017

23rd
January 201824th
July 2018

25th
January 2019

26th
July 2019

27th
January 2020

2011

2012

2013

2014

2015

2016

2017

2018

2019

(Source) Prepared by the Asset Manager based on “Office Market Report” by Sanko
Estate Co., Ltd.
(Note) The average of asking rent (including common area revenue) that targets
a large scale building with a standard floor area of 200 tsubo or more is
rebased to 100 as of 2011.

25

2-22 Internal growth
Result of rent revision and tenant replacement (pass-through type)
Rent revision rate (Office)Net impact of rent revisions accumulated since 22nd period(%)(Monthly rent basis)+21.8 mn yen(million yen)

+10

+22
+20

+7.1%

+6.9%

4.9

Residential+18+16.7 mn yen

Office+15.4 mn yen

+16

+5

+14

+4.2%

+12

+2.1%

+1.5%

3.1
2.7

2.3

16.8

+6

0
24th
Jul. 2018

4.2
3.7

+8

※ Average of all contracts subject to revision
23rd
Jan. 2018+11.9 mn yen+10.7 mn yen

+10

+2.5%

22nd
Jul. 2017+13.0 mn yen

25thJan. 201926th
Jul. 201927th
Jan. 2020

Rent revision rate (Residential)

9.9

8.4

9.1

22nd
Jul. 2017

23rd
Jan. 2018

+4

11.7

12.5

+2
+0

(%)

+10

24th
Jul. 2018

25th
Jan. 201926th
Jul. 201927th
Jan. 2020

Net impact on increase/decrease of tenant replacement(Monthly rent basis)(million yen)

+6.7%
+5.5%

+5.4%

+5.9%

+6.0%

+5.3%

12.0
11.0
10.0
9.0

+5

+12.0%

8.0
7.0
6.0
4.0
3.0

23rd
Jan. 201824th
Jul. 2018

25th
Jan. 2019+17.7%+13.4%

26th
Jul. 201927th
Jan. 2020

23.0
18.0
13.0

Influence ofhigh-rent
tenantmove out

8.0
3.0
Old tenant-2.0

New tenant

2.0

0
22nd
Jul. 2017※ Average of
all contracts
with replacement

△5.2%

5.0

※ Average of all contracts subject to revision(Residential)(Office)-7.0
26th
Jul. 201927th
Jan. 2020

26th
Jul. 201927th
Jan. 202026

2-23 Internal growth
Comparison with office market rent (pass-through type)
Rent gap (Total monthly rent)

Rent gap by revision (Total monthly rent)(million yen)(million yen)
120

400

120

Above market rent
(over +5%)

100

Above market rent

300

(under +5%)

88

80

58

60

200

Below market rent

48

40

27

21

100

20

0

0
26th
Jul. 201927th
Jan. 2020

28th
Jul. 2020

29th
Jan. 2021

30thJul. 2021

31stJan. 2022

32nd
Jul. 2022

33rd
Jan. 2023
or afterRate of rent gap

△6.5%

△6.2%

This indicates that contracts have
not reached market rent levels
and have room for upside(Note 1) Market rent is based on the report by CBRE K.K.
(Note 2) Rent gap = Total tenants’ rent ÷ “Total market rent” – 1(Note 3) Figures reflect move outs of end tenants confirmed as of January 31, 2020

Occupancy rate remained at high level due to vigorous
office demand
Rents have increased steadily in the area where MHR’s
properties are located and rent revisions haveprogressively increasedRent gap of MHR’s properties shrank 0.3% period-overperiod and MHR continues to promote internal growth27

2-24 Internal growth
Overview of fixed rent master lease
Ratio of fixed rent master lease

Concept of contract expiration

Fixedrent
64.4%

Realize accumulated
rent upside bytransition to passthrough type

Steadyoutlook onrental market
conditions

End tenant’s
rent is highUncertain
outlook onrental market
conditions

End tenant’s
rent is highContinue fixed typeML with rent increase(B)

End tenant’s
rent is samelevel

Continue fixed type
ML at same rent

(C)

Contract expiration
is high in 1Q of 2021

React to any future
economic trend

(A)

(A)
(B)

Economic trend

(C)

2019

2013

2021

Monthly rent by contract expiration
Property nameRoppongi Hills Mori Tower(10 floors)

ARK Mori Building(8 floors + DHC)

Atago Green Hills(approx. 32.9% of entire
property)
Toranomon Hills Mori Tower(approx. 6.9% of entire
property)
Total

Total monthly% of portfolio
rent
total rent
(mn yen)

490.5

225.2

31.1%

14.3%

Breakdownof property

Leased floor
area
(㎡)

Payer ofmanagement
associated fee

Monthly rent by contract expiration (mn yen)
2020

2021

2022

2023 or after

Expiration of
the leaseagreement

23rd & 24th

8,993.45

－

114.6

－

－

Jul. 2021

19th & 22nd

8,609.47

－

－

－

95.0

Sep. 2023

20th

3,879.19

－

－

－

42.8

Jul. 2024

28th

4,460.13

49.2

－

－

－

Sep. 2020

MHR

25th

4,156.66

－

45.8

－

－

Jan. 2021

26th, 27th & 29th

12,942.64

－

142.9

－

－

Mar. 2021

13th/12th & 22nd

7,952.55

－

77.9

－

－

Jan. 2021

23rd & 25th

5,742.95

－

55.5

－

－

Jan. 2021

MHR

4th, 15th & 24th

7,680.52

－

73.8

－

－

Jan. 2021

DHC

3,212.41

Master lessee

－

－

－

17.9

Mar. 2023

168.7

10.7%

Office, residential &retail29,667.58

Master lessee

－

－

168.7

－

Apr. 2022

129.2

8.2%

Part of 28th to
35th floors

12,209.08

MHR

－

－

129.2

－

Jul. 2022

1,013.8

64.4%

49.2

510.7

297.9

155.8

(4.9%)(50.4%)(29.4%)(15.4%)

28

2-25 Financial management
Business environment
recognition

Interest rates are expected to remain low considering monetary
policies and assuming rise over the medium to long term

Financial management
policyMove to lower interest rates targeting mid 40% range LTV (book value
basis) and 4 years or longer average remaining duration of debt

Reduction in LTV(Note) Please refer to “Section 4. Businessenvironment recognition and MHR's
policy/strategy” for details.

Overview of debt financing

(%)

60.0

57.4%

End of 26th
periodLTV (appraisal value basis)

LTV (book value basis)
53.7%

55.0

Debt Balance

50.0
49.3%

48.8%

45.0

45.7%

42.3%

42.1%

41.9%

35.0

Jan.
2011

Jul.
2011

Jan.
2012

・・・

Jan.
2016

Jul.
2016

Jan.
2017

Jul.
2017

Jan.
2018

Jul.
2018

Jan.
2019

Jul.
2019

(Note 2)

Jul. 31, 2019

Jan. 31, 2020

179,222 mn yen

179,222 mn yen

45.7%

45.7%

39.4%

38.2%

4.4 years

4.6 years(Note 1) LTV (book value basis) is calculated as [Interest bearing debt
/Total assets].
(Note 2) LTV (appraisal value basis) is calculated as [Interest-bearing
debt/Appraisal value based total assets (Total assets + Total
appraisal value - Total book value)].

Jan.
2020

Long-term debt ratio/
Fixed rate ratio

Reduction in average interest rate(including borrowing expenses)

(%)
2.25

38.2%

18th 19th 20th
21st 22nd 23rd 24th 25th 26th 27th
period period period period period period period period period period
Jul.
2015

LTV (book value basis)

LTV (appraisal value basis)

39.4%
9th
10th 11th
period period period

45.7%

Avg. remaining duration

43.2%

40.0

44.7%

44.5%

44.1%

(Note 1)

46.4%

End of 27th
period＜Long-term debt ratio＞＜Fixed rate ratio＞

2.1%

2.0%

2.00
1.75
1.50
1.25

1.1%

1.00

0.8%

0.76%

0.75

0.71%

Long-term

Fixed

100%

88.2%

0.69% 0.68%

0.50
0.25

Jan.
2011

Jul.
2011

Jan.
2012

・・・

9th
10th 11th
period period period

18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th
period period period period period period period period period period
Jul.
2015

Jan.
2016

Jul.
2016

Jan.
2017

Jul.
2017

Jan.
2018

Jul.
2018

Jan.
2019

Jul.
2019

Jan.
2020

(Note) Total interest-bearing debt cost is calculated as [(interest expenses + interest
expenses on investment corporation bonds + borrowing expenses + amortizationof investment corporation bond issuance costs) ×365 ÷operating days during
each period ÷average interest-bearing debt balance during each period].

29

2-26 Financial management
Extension in remaining duration of debt

Rating(years)

5.5
5.0
4.4

4.5
4.0

4.5

4.2
3.8

3.7

4.0

4.3

4.4

Japan Credit Rating (JCR)

4.6

Long-term issuer rating:

3.7

3.5

AA (Stable)

3.0
2.5
2.0
1.5

1.5

1.2

1.4

・・・

1.0
9th
10th
11th
period period period
Jan.
Jul.
Jan.
2011 2011
2012

・・・

18th
19th
20th
21st
22nd 23rd
24th
25th
26th
27th
period period period period period period period period period period
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
2019 20202015 20162016 20172017 20182018 2019

Overview of maturity (As of January 31, 2020)(billion yen)

20
Long-term loans

Investment corporation bonds

15

10
7
6
5
5

3.5

0

6.5

12.5
9.5

9.2

11.2

8.2

8.3

2

2

7.6

6

2

6.8
7.1

9.7

4.9
4

1.5

8.6

8.6

9.2
3.5

2

3.9

2.7

28th
29th
30th
31st 32nd 33rd 34th
35th
36th
37th
38th
39th
40th
41st 42nd 43rd 44th
45th
46th
47th
48th
period period period period period period period period period period period period period period period period period period period period period
Jul.

Average 2020
interest 0.7%
rate

Jan.
2021

Jul.
2021

Jan.
2022

Jul.
2022

Jan.
2023

Jul.
2023

Jan.
2024

0.7%

0.8%

0.9%

0.7%

0.5%

0.6% 0.7%

Jul.
2024

Jan.
2025

Jul.
2025

Jan.
2026

Jul.
2026

Jan.
2027

Jul.
2027

Jan.
2028

Jul.
2028

Jan.
2029

Jul.
2029

Jan.
2030

Jul.
2030

30

2-27 MHR’s representative property (1) Roppongi Hills

Roppongi Hills Mori Tower
Since its opening in 2003 as Japan’s largest ever urban

Roppongi
Hills

redevelopment at about 11.6 hectares, more than 40 million

OfficeRoppongi Hills Mori Tower

people have visited Roppongi Hills each year from all over

Roppongi Hills Mori Tower is the main tower of Roppongi Hills and is 54 floors above

the world. As this community has matured, Roppongi Hills

ground and 238 meters high and has established itself as a landmark of Tokyo. Offices

has only multiplied its global magnetic attraction. Japan real

located from the 8th floor to the 48th floor boast floor plates of about 1,360 tsubo

estate development had been limited by an economic(about 4,500m²), among the largest floor areas of skyscrapers in Japan. It is a state-of-perspective until Mori Building revolutionized the concept by

the-art office building with an ultra high-speed network, outstanding earthquake

creating a community where humanity, culture, interaction

resistance performance and thorough security.

and vision toward the next era is born.

31

Residence

Roppongi Hills Residence

In Roppongi Hills where international cultural is fosteredand people come to interact, Mori Building designed
these residences with the comfort of the people as a toppriority, to provide the template for a “new life
overflowing with affluence and warmth”.

RetailShops and Restaurants

Retail facilities are comprised of more than 200 “onlyone” shops and restaurants divided into four areas withdifferent concepts. There are many shops on the lower
floors of the buildings and on the street so visitors canenjoy shopping, eating and drinking while walking
around the open spaces that are full of greenery.

Hotel

Grand Hyatt Tokyo

Grand Hyatt Tokyo offers a dynamic city space featuring
10 highly distinctive restaurants and bars, 387
guestrooms designed for the highest level of relaxation,
16 banquet facilities and much more. The wide range ofCinemaTOHO Cinemas Roppongi Hills

One of the top cinema complexes in Japan, TOHO offers ninemovie screens, a variety of daily show times and facilities

facilities inside the hotel and in Roppongi Hills enable
guests to enjoy leisurely time at the hotel to the fullest
extent.

with unprecedented comfort and functions. These theaters
ushered in a whole new culture of movie going in Roppongi.

Stable Supply of Power from the Independent Power Station
Roppongi Hills uses its own energy plant (a specially designated power

MuseumMori Art Museum“The world’s nearest art museum to the sky”, the museum
collaborates with a network of highly respected internationalart museums to create a space to appreciate the world’s top
modern art. It is open until 10 pm during exhibitions towelcome visitors after work or dinner.

supply business facility) to supply electrical power to the area. Because thisplant uses city gas (medium pressure gas) as the fuel, it is not affected bypower restrictions on the use of electricity and is able to provide an extremely
stable supply of electricity. The use of a power supply with triple redundantsafety allows the building to construct a power supply system with highreliability.

32

2-28 MHR’s representative property (2) Toranomon Hills

Toranomon Hills Mori Tower
Toranomon
Hills

Toranomon Hills is located in the “Special Zone for Asian
Headquarters” where Tokyo Metropolitan Government seeks toattract foreign companies. This building is Tokyo’s new landmark
and consists of Japan’s first Andaz hotel “Andaz Tokyo”, highspecification offices, a high class residential area with outstanding
views where hotel services are available, international-standard
conference facilities and commercial facilities to supports various
urban functions, along with an open space of about 6,000m².

OfficeToranomon Hills Mori Tower

Offices occupy the 6th to the 35th floors of “Toranomon Hills Mori Tower”, a super highrise tower with 52 floors rising 247 meters above ground with a gross floor area of
30,000 tsubo. Standard rent floors’ average size are about 1,000 tsubo (about 3,300m²)
with a ceiling height of 2.8 meters and they provide flexible and comfortable workspaces
without pillars. Six transit stations and 11 lines are nearby and provide access to Haneda
Airport which makes this building an optimal global business base.

33

Residence

Toranomon Hills Residence

Pleasing views of central Tokyo such as Tokyo Tower,
Rainbow Bridge, Tokyo Sky Tree and the open green
space of the Imperial Palace can be viewed fromresidences located on the 37th to 46th floors. Hotelservices in cooperation with Andaz Tokyo are available.

RetailShops and Restaurants

With the concept of "Communication Hub", restaurants
are designed to provide international cuisine that satisfy
customers from Japan and overseas. Various people suchas office workers, conference attendees and hotel guests
gather in this space uniquely designed to facilitatecommunication.

Hotel

Andaz Tokyo

Hyatt’s boutique lifestyle hotel "Andaz Tokyo" isJapan's first Andaz. Andaz means "personal style" in
Hindi. The hotel values the individuality of the area andincorporates the charm of the land into design and its’service.

Evolving as an International Urban Center and a Global
Business Hub
Upon completion of Toranomon Hills Business Tower, Toranomon Hills
Residential Tower and the currently planned Toranomon Hills Station Tower(Tentative name), the total area of the Toranomon Hills complex including
Toranomon Hills Mori Tower will reach about 7.5 hectares and about
800,000m2 of the total floor space. The area will evolve into a true
"international unban center and a global business hub" with integratedfunctions such as international standard offices, residences, hotels, retailfacilities and transportation infrastructure.

34

3. Operation highlights

35Factors that led to changes in dividends per unit
3-1 from the previous fiscal period
26th period

28th period (Jul. 2020) Forecast

27th period (Jan. 2020)(yen/unit)

2,950

Dividends per unit

2,890
yen/unit

2,883
yen/unit

2,900＋4(forecast)

＋22

2,850
yen/unit
2,850

△27

＋38
△9

＋12

2,800

2,750

OthersNOIchange ofexisting
properties

NOI
change ofexisting
properties

Financingcosts
decrease

Major factors behind change in NOI from existing properties:＋ Decrease in maintenance and repairs＋ Rent revision of land (Laforet Harajuku)＋ Rent revenue of office (Pass-through)＋ Decrease in depreciation－ Property taxes for properties acquired in 24th and 25th period recorded
as expense (equivalent to 3 months)－ Increase in property management fee

Financingcosts
decrease

OthersMajor factors behind change in NOI from existing properties:
+30
+14
+12
+12
△18
△12

＋ Full period contribution of rent revision of land (Laforet Harajuku)－ Increase in property management fee－ Increase in property taxes for existing properties－ Utilities and other revenue (net)－ Increase in maintenance and repairs－ Increase in depreciation

+7
△9
△8
△7
△5
△5

(Note) Factors that led to change are arrived at by dividing the change from the previous fiscal period by 1,874,960 units and indicated as an approximate figure in yen.

36

3-2 Change in assets under management(billion yen)

390

400

billion yen

Existing properties

352
350

339

360

338

293

300

281
252
250

201
200

159
150

142

・・・

100

50

0
1st
period
Jan.
2007

2nd
period
Jul.
2007

3rd
period
Jan.
2008

4th
period
Jul.
2008

5th
period
Jan.
2009

・・・

16th
period
Jul.
2014

17th
period
Jan.
2015

18th
period
Jul.
2015

19th
period
Jan.
2016

20th
period
Jul.
2016

21st
period
Jan.
2017

22nd
period
Jul.
2017

23rd
period
Jan.
2018

24th
period
Jul.
2018

25th
period
Jan.
2019

26th
period
Jul.
2019

27th
period
Jan.
2020

37

3-3 Change in unrealized capital gain/loss(billion yen)

(%)

100

50
Unrealized capital gain/loss

Unrealized capital gain/loss ratio

90
77

80

bn yen

40

70
62
60

30

50
20.4%

20.2%
40
28

30

20

20

16.5%

8.2%

10

11
10

0

0

△10
△20

△14.9%△30△40

Unrealized capital gain/loss = Period end appraisal value – Period end book value
Unrealized capital gain/loss ratio = Unrealized capital gain/loss / Period end book value

△31

1st
period
Jan.
2007

2nd
period
Jul.
2007

3rd
period
Jan.
2008

4th
period
Jul.
2008

5th
period
Jan.
2009

6th
period
Jul.
2009

7th
period
Jan.
2010

8th
period
Jul.
2010

9th
period
Jan.
2011

10th
period
Jul.
2011

・・・

18th
period
Jul.
2015

19th
period
Jan.
2016

20th
period
Jul.
2016

21st
period
Jan.
2017

22nd
period
Jul.
2017

23rd
period
Jan.
2018

24th
period
Jul.
2018

25th
period
Jan.
2019

26th
period
Jul.
2019

27th
period
Jan.
2020

△10

△20

38

3-4 Appraisal value(million yen)
As of end of 26th period
July. 31, 2019
Principal
use

Property
name

PropertyNo.

Acquisition
price

Book
value

(A)
Appraisal
value(Note 1)

OfficeAs of end of 27th period
Jan. 31, 2020

Yield (Direct
capitalization
method)(B)
Appraisal
value(Note 1)

Yield (Direct
capitalization
method)Discount
rate
(DCF)

Terminal
yield
(DCF)

Difference(B)－(A)

Difference(B)/(A)－1

Unrealized
capital gain(B)-book
value

Roppongi Hills
Mori Tower

O-0

115,380

111,723

143,300

3.0%

148,100

2.9%

2.6%

3.1%

4,800

3.3%

36,376

ARK Mori Building

O-1

62,48061,51861,8003.3%

63,700

3.2%

2.9%

3.4%

1,900

3.1%

2,181

Koraku Mori Building

O-4

27,20024,70825,4003.5%

26,200

3.4%

3.0%

3.7%

800

3.1%

1,491

Akasaka Tameike Tower

O-6

43,93041,62932,8003.3%

34,100

3.2%

2.9%

3.4%

1,300

4.0%

Atago Green Hills

O-7

42,09040,25845,7003.5%

46,900

3.4%

2.9%

3.6%

1,200

2.6%

△ 7,529

ARK Hills South Tower

O-8

19,15018,74824,7003.1%

25,100

3.0%

2.8%

3.2%

400

1.6%

6,351

Toranomon Hills
Mori Tower

O-9

36,21035,973

43,2002.7%

44,800

2.6%

2.3%

2.8%

1,600

3.7%

8,826

Holland Hills Mori Tower

O-10

16,33016,261

20,7003.3%

21,700

3.2%

2.8%

3.4%

1,000

4.8%

5,438

362,770

350,822397,600－

410,600－－－

13,0003.3%

59,777

Sub total

6,641

Roppongi First Plaza

R-3

2,100

2,235

2,440

4.0%

2,530

3.9%

3.7%

4.1%

90

3.7%

294

ResidenRoppongi View Tower
tial

R-4

4,000

4,094

3,010

4.1%

3,200

4.0%

3.8%

4.2%

190

6.3%

6,100

6,329

5,450

－

5,730

－

－

－

280

5.1%

△ 894

21,82022,07439,9003.9%

40,400

－

3.8%

－

500

1.3%

18,325

21,82022,07439,900－40,400

－

－

－

500

1.3%

18,325

390,690379,226

442,950－

456,730－－－

13,7803.1%

77,503Sub total
Laforet Harajuku (Land)
Retail (Note 2)andothers
Sub total
Total

S-1

△ 599

(Note 1) “Appraisal values” at the end of each fiscal period are based on the Ordinance Concerning Calculation of Investment Corporations, asset valuation methods and standards defined in the
Articles of Incorporation of the Company and rules defined by the Investment Trust Association. Figures in the property appraisal reports created by Japan Real Estate Institute areindicated for properties other than ARK Hills South Tower and figures in the property appraisal report created by Daiwa Real Estate Appraisal Co., Ltd. are indicated for ARK Hills South
Tower, respectively.
(Note 2) For Laforet Harajuku (Land), value in the “Yield (Direct capitalization method)” column for the 26th period shows the discount rate used in the DCF analysis.

393-5 Changes in the rent and occupancy rates(yen/tsubo)(%)

40,000100

35,00095

30,00090

25,00085

20,00080

15,00075

10,000

70

5,000

65

0

20th period
Jul. 2016(actual)21st period
Jan. 2017(actual)22nd period
Jul. 2017(actual)23rd period
Jan. 2018(actual)24th period
Jul. 2018(actual)25th period
Jan. 2019(actual)26th period
Jul. 2019(actual)27th period
Jan. 2020(actual)28th period
Jul. 2020(forecast)

29th period
Jan. 2021(forecast)

Office rent (yen/tsubo)

30,306

31,281

31,06930,642

30,62930,84230,92431,02031,13531,226

Residential rent (yen/tsubo)

14,75015,272

15,27814,85815,09515,302

15,49815,69815,703

15,634

Office occupancy

98.8%

98.2%

95.7%

98.4%

99.5%

99.7%

99.9%

100%

99.7%

99.4%

Residential occupancy

97.4%

97.3%

96.7%

96.3%

97.9%

97.7%

96.8%

96.2%

95.8%

96.5%

Retail occupancy

100%

99.2%

99.7%

100%

100%

100%

99.2%

98.8%

98.8%

98.8%

60

(Note) The above rents and occupancy rates indicate the average rent and the average occupancy rate during relevant fiscal periods.

40

3-6 Tenant status by month and major tenants
Office: Rent and occupancy rate

Residential: Rent and occupancy rate(yen/tsubo)

(%)
100

40,00035,000(yen/tsubo)
25,000(%)
100

20,00030,00090

25,00090

15,00020,00015,00080

10,00010,000

80

5,000

5,000
0

Aug.
2019

Sep.

Oct.

Nov.

Dec.

Jan.
2020

Rent (yen/tsubo)

31,00031,00231,00631,00831,05731,047

Occupancy rate

100%

100%

100%

100%

99.9%

100%

Top 5 tenants
Leased space(N ote 1 )Ratio

Mori Building Co., Ltd.

Roppongi Hills Mori Tower
ARK Mori Building
Koraku Mori Building
Atago Green Hills
ARK Hills South Tower
Toranomon Hills Mori Tow er

109,845.73 ㎡

63.4%

Mylan Seiyaku Ltd.

Holland Hills Mori Tow er

3,458.53 ㎡

2.0%

Mitsubishi UFJ Research andConsulting Co.,Ltd.

Holland Hills Mori Tow er

3,352.77 ㎡

1.9%Showa Leasing Co., Ltd.

Koraku Mori Building

2,683.90 ㎡

1.5%Mori Building Ryutsu
System Co., Ltd.

Laforet Harajuku (Land)2,565.06 ㎡

1.5%

121,905.99 ㎡

70.3%

Total of top 5 tenants

0

Aug.
2019

Sep.

Oct.

Nov.

Dec.

Jan.
2020

Rent (yen/tsubo)

15,603

15,603

15,76315,704

15,74815,766

Occupancy rate

96.2%

96.6%

96.4%

96.2%

96.0%

95.6%

70

Tenant Contribution by Industry
Type-Office
Property name

End tenants

70(Note 1) Leased space is the lease area stated in the lease contract with the end tenant.
It is multiplied by the relevant percentage of ownership for each properties.
(Note 2) This indicates the figures as of January 31, 2020.

Others23.4%

Law firms,
etc.
11.4%

Information
andcommunication
35.2%

Financial
institution / Manufacturing
insurance
15.4%
14.6%

(Note 1) As for fixed rent master lease, ratios are based on monthly rents of tenants who are
actually using the floor areas as of January 31, 2020.
It is multiplied by the relevant percentage of ownership for each property.
(Note 2) Business types are classified by the Asset Manager.

41

3-7 Financial overview (As of January 31, 2020)
Long-term debt ratio/Fixed rate ratio＜Long-term debt ratio＞＜Fixed rate ratio＞

Long-term
100%

Fixed
88.2%

Major financial indicator
End of 21st period
Jan. 31, 2017
Debt balance

End of 26th period
Jul. 31, 2019

End of 27th period
Jan. 31, 2020

179,222 mn yen

179,222 mn yen

Long-term loan

157,222 mn yen

157,222 mn yen

Investment corporation bonds

22,000 mn yen

22,000 mn yen

LTV (Book value basis) (Note 1)

45.7%

45.7%

LTV (Appraisal value basis) (Note 2)

39.4%

38.2%

DSCR (Note 3)

15.4x

15.5x

4.4 years

4.6 years

0.50%

0.49%

Avg. remaining duration
Weighted avg. interest rate

Outstanding balances(Note 1) LTV (Book value basis) is calculated as [Interest bearing debt/Total assets].
(Note 2) LTV (Appraisal value basis) is calculated as [Interest-bearing debt/Appraisal value
based total assets (Total assets ＋Total appraisal value－Total book value)].
(Note 3) DSCR is calculated as [Net income before interest expenses +Depreciation/
Interest expenses].

Lenders

BalanceRatio

MUFG Bank, Ltd.

42,296 mn yen

26.9%

Mizuho Bank, Ltd.

28,498 mn yen

18.1%

Sumitomo Mitsui Banking Corporation

23,025 mn yen

14.6%

Sumitomo Mitsui Trust Bank, Limited

20,923 mn yen

13.3%

The Bank of Fukuoka

7,300 mn yen

4.6%

The Norinc hukin Bank

7,000 mn yen

4.5%

Resona Bank, Limited.

6,430 mn yen

4.1%

Development Bank of Japan Inc .

5,950 mn yen

3.8%

Shinsei Bank, Limited

4,700 mn yen

3.0%

Mizuho Trust & Banking Co., Ltd.

3,800 mn yen

2.4%

The Nishi-Nippon City Bank, Ltd.

2,300 mn yen

1.5%

Aozora Bank, Ltd.

1,000 mn yen

0.6%

The Hiroshima Bank, Ltd.

1,000 mn yen

0.6%

Oita Bank Co. Ltd.

1,000 mn yen

0.6%

Shinkin Central Bank

1,000 mn yen

0.6%

The Chugoku Bank, Limited.

1,000 mn yen

0.6%

Total borrowings

157,222 mn yen

100%

Investment corporation bonds

22,000 mn yen

Total interest-bearing debt

179,222 mn yen

423-8 Debt status (As of January 31, 2020)
Debt
LenderMizuho Bank, Ltd., MUFG Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd., MUFG Bank, Ltd. Sumitomo Mitsui Banking
Corporation Sumitomo Mitsui Trust Bank, Limited Resona
Bank, Limited.
Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd.
Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd.
Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited
Development Bank of Japan Inc.
Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd.
Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd.
Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited
Mizuho Bank, Ltd., MUFG Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd.
Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd.
MUFG Bank, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Trust
Bank, Limited Shinsei Bank, Limited
Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd.
The Norinchukin Bank, Resona Bank, Limited.
Shinsei Bank, Limited, Mizuho Trust & Banking Co., Ltd.
The Hiroshima Bank, Ltd.
Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd.
Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited
The Bank of Fukuoka, Development Bank of Japan, Inc.
Aozora Bank, Ltd.
MUFG Bank, Ltd., Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Shinkin Central Bank
The Norinchukin Bank
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
The Bank of Fukuoka
Resona Bank, Limited.
Sumitomo Mitsui Trust Bank, Limited
Mizuho Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.
Oita Bank Co. Ltd.
The Norinchukin Bank
The Nishi-Nippon City Bank, Ltd.
The Bank of Fukuoka
Resona Bank, Limited.
Mizuho Trust & Banking Co., Ltd.
Shinsei Bank, Limited
The Nishi-Nippon City Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
Development Bank of Japan Inc.
MUFG Bank, Ltd.
Mizuho Bank, Ltd.

Balance(mn yen)Rate ofinterest

Borrowingdate

Maturity
date

2,022

0.40%

2014/5/30

2020/5/31

5,000

0.38%

2014/8/1

2020/5/31

6,000

0.62%

2014/11/28

2020/11/30

6,500

0.75%

2014/11/28

2021/11/30

1,700

0.80%

2015/3/27

2023/3/27

6,500

0.57%

2015/5/29

2021/5/31

6,500

0.70%

2015/5/29

2022/5/31

6,000

0.49%

2015/8/31

2021/8/31

2,500

0.65%

2015/9/16

2023/8/31

3,200

0.50%

2015/11/30

2022/11/30

6,300

0.62%

2015/11/30

2023/11/30

7,500

0.33%

2016/3/31

2023/3/31

7,100

0.41%

2016/3/31

2024/3/31

7,200

0.50%

2016/3/31

2025/3/31

1,000
500
1,100
1,000
500
500
2,000
1,100
500
1,000
600
1,000
500
500
1,500
500
500
2,650
2,600
750
4,700
2,700

0.18%
0.37%
0.47%
0.52%
0.52%
0.61%
0.48%
0.58%
0.58%
0.23%
0.49%
0.49%
0.47%
0.47%
0.47%
0.54%
0.54%
0.55%
0.58%
0.64%
0.41%
0.60%

2016/3/31
2017/8/1
2017/8/1
2017/8/1
2017/8/1
2017/8/1
2017/8/1
2017/8/1
2017/8/1
2017/11/30
2017/11/30
2017/11/30
2018/2/28
2018/2/28
2018/2/28
2018/2/28
2018/2/28
2018/2/28
2018/2/28
2018/2/28
2018/2/28
2018/2/28

2022/9/30
2024/7/31
2025/7/31
2026/7/31
2026/7/31
2027/7/31
2028/7/31
2029/7/31
2029/7/31
2022/11/30
2024/11/30
2024/11/30
2025/8/31
2025/8/31
2025/8/31
2025/8/31
2025/8/31
2026/2/28
2027/2/28
2027/2/28
2027/8/31
2030/2/28

LenderMizuho Bank, Ltd.
The Nishi-Nippon City Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Mizuho Bank, Ltd.
The Bank of Fukuoka
The Norinchukin Bank
Shinsei Bank, Limited
Mizuho Trust & Banking Co., Ltd.
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
Development Bank of Japan Inc.
MUFG Bank, Ltd.
Resona Bank, Limited.
Mizuho Bank, Ltd.
The Bank of Fukuoka
The Norinchukin Bank
Sumitomo Mitsui Banking Corporation
MUFG Bank, Ltd.
Mizuho Bank, Ltd.
Mizuho Bank, Ltd.
The Chugoku Bank, Limited.
Resona Bank, Limited.
Sumitomo Mitsui Trust Bank, Limited
The Norinchukin BankMUFG Bank, Ltd.
Mizuho Bank, Ltd.
Shinsei Bank, Limited
Sumitomo Mitsui Banking Corporation
The Bank of Fukuoka
Development Bank of Japan Inc.

Total

Balance(mn yen)Rate ofinterest

Borrowingdate

Maturity
date

3,000
800
2,400
3,000
1,300
1,300
1,300
1,300
3,600
1,400
500
5,000
1,300
1,400
2,000
3,000
1,144
3,904
1,952
1,000
1,000
2,500
1,000
600
2,200
1,100
900
1,600
2,000
2,000

0.19%
0.26%
0.33%
0.43%
0.38%
0.43%
0.52%
0.47%
0.56%
0.67%
0.67%
0.43%
0.48%
0.42%
0.17%
0.27%
0.40%
0.29%
0.42%
0.20%
0.22%
0.32%
0.22%
0.29%
0.22%
0.29%
0.37%
0.41%
0.27%
0.42%

2018/5/23
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2019/5/31
2019/5/31
2019/5/31
2019/5/31
2019/5/31
2019/8/30
2019/8/30
2019/8/30
2019/11/29
2019/11/29
2019/11/29
2019/11/29
2019/11/29
2019/11/29
2019/11/29
2019/11/29

2022/5/23
2022/8/31
2023/8/31
2024/8/31
2024/8/31
2024/8/31
2025/8/31
2025/8/31
2026/8/31
2027/8/31
2027/8/31
2028/2/29
2028/8/31
2029/8/31
2026/5/31
2026/5/31
2027/11/30
2028/11/30
2029/5/31
2025/8/31
2026/8/31
2029/8/31
2024/11/30
2026/5/31
2026/11/30
2027/5/31
2027/11/30
2028/5/31
2028/11/30
2028/11/30

157,222(Note) The interest rates above are the interest rates actually fixed following the conclusion of aninterest swap agreement.

Investment corporation bonds
Bond
9th Series Unsecured Corporation Bond (7 years)
11th Series Unsecured Corporation Bond (7 years)
12th Series Unsecured Corporation Bond (10 years)
13th Series Unsecured Corporation Bond (5 years)
14th Series Unsecured Corporation Bond (10 years)
15th Series Unsecured Corporation Bond (5 years)
16th Series Unsecured Corporation Bond (10 years)
17th Series Unsecured Corporation Bond (10 years)
18th Series Unsecured Corporation Bond (10 years)
19th Series Unsecured Corporation Bond (10 years)

Total

AmountRate of(mn yen) Interest
2,000 1.26%
2,000 0.69%
2,000 0.87%
3,000 0.32%
2,000 0.82%
3,500 0.38%
1,500 0.89%
2,000 0.34%
2,000 0.49%
2,000 0.50%

Payment
date
2013/5/24
2014/2/24
2014/11/27
2015/5/26
2015/5/26
2015/11/26
2015/11/26
2016/8/30
2017/1/31
2017/6/30

Maturity
date
2020/5/22
2021/2/24
2024/11/27
2020/5/26
2025/5/26
2020/11/26
2025/11/26
2026/8/28
2027/1/29
2027/6/30

22,00043

3-9 Unitholders breakdown (As of January 31, 2020)
Unitholders breakdown

End of 27th period＜Number of unitholders＞
Other domestic
Financialcorporations
institutions
1.6%
Foreign(Incl. securities
corporations
companies)
and individuals
1.5%
2.1%

＜Number of investment units＞

Foreigncorporations
and individuals
17.7%

Individuals
5.8%

Other
domestic
corporations
17.1%

Individuals
94.8%

End of 26th period

Top 10 unitholders

Other domestic
Financialcorporations
institutions
1.5%
Foreign(Incl. securities
corporations
companies)
and individuals
1.4%
1.9%

Financial
institutions(Incl. securities
companies)
59.4%

Foreigncorporations
and individuals
17.8%(Investment
trust 35.2%)

Individuals
6.3%

Other
domestic
corporations
17.1%

Individuals
95.2%

Financial
institutions(Incl. securities
companies)
58.8%

Name

Rank

Number of units
held

Ratio

1

Japan Trustee Services Bank, Ltd.
(Trust account)403,21021.5%

2Mori Building Co., Ltd.

281,272

15.0%

3

The Master Trust Bank of Japan, Ltd.
(Trust account)

260,263

13.9%

4

The Nomura Trust & Banking Co., Ltd.
(Investment trust account)

78,819

4.2%

5

Trust & Custody Services Bank, Ltd.
(Securities investment trust account)

53,904

2.9%

6

STATE STREET BANK WEST CLIENT - TREATY
505234

22,268

1.2%

7JAPAN SECURITIES FINANCE CO., LTD.

20,395

1.1%

8

Trust & Custody Services Bank, Ltd.
(Money trust taxable account)

18,995

1.0%

9Shikoku Railway Company

16,6200.9%

10Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

15,7590.8%

1,171,505

62.5%

Total of top 10 unitholders(Investment
trust 34.7%)

44

4. Business environment recognition & MHR’s policy/strategy

454-1 Business environment recognition
Real estate market / Lending attitude
Low vacancy rates and gradual increase of rents of officebuildings in central Tokyo is ongoing.
(Forecast of Office Market Trends Research Committee for Tokyo’s five
central wards)

Vacancy rate (forecast): 2.6% in 2020 → 2.6% in 2021
Rent index (forecast): 128 in 2020 → 128 in 2021
Although cap rates remain at historically low levels,
the rate of decrease seems more moderate.
(Japan Real Estate Institute’s “The Japanese Real Estate Investor Survey”)

Class A buildings in Marunouchi
Cap rate: 3.0% in Apr. 2019 → 3.0% in Oct. 2019
Lending attitude toward the real estate industry continues tobe highly positive.

Rents of office buildings in central Tokyo are expected tocontinue moderate rise for the time being, but the rate ofincrease may gradually become moderate depending on
business sentiment.
Cap rates remain at low levels and sufficient attention isrequired for acquisition pricing.

Interest rate trends / Macro environmentLong-term interest rates remain low due to the monetaryeasing policy and the core CPI rate of increase is at a low level.
10-year bond rates: △0.155% (February 28, 2020)
Core CPI: +0.8% (January 2020)
In the December 2019 preliminary business conditions
composite index, the leading index was at 91.6 (+0.8 PT increase
from previous month) and the coincident index was at 94.1 (△0.6 PT
decrease from previous month). Trend continues to weaken,
especially as the leading indicators have deteriorated.
Statistical surveys show that there continues to be an issue ofwage increases.
Investors across the world have become more interested in
ESG and the amount of funds directed to companies with high
ESG evaluation is on the rise.

Global business sentiment is showing signs of decline,
attention should be paid to future trends.
The interest rate level is expected to remain low for a while,
but it is necessary to assume an interest rate rise in themedium to long term.
Inflow of funds to companies with high ESG ratings is
expected to increase further in the future.

Continues to “MHR’s policy/strategy” on the next page46

4-2 MHR’s policy/strategy

MHR’s Medium- to Long-Term Vision

The best portfolio
quality

The highest ESG
assessment

Dividend-driven
Management

By focusing on premium
properties in central Tokyo
developed by the sponsor
while acquiring selectproperties from third
properties at opportune
timing, MHR seeks to expand
and diversify the portfolio
while maintaining high quality.

By making positive socialand environmental
contributions, MHR will
position itself to benefit tofrom the long-term trend offunds flowing into companies
with high ESG ratings andbuild competitiveness as aninvestment corporation.

By aiming for a continuous
improvement of dividends
and NAV per unit, anddeveloping the culture,policies and systems
necessary to realize thevision, MHR will continue tofoster the trust of unitholders.

Optimal REIT investment47

4-3 MHR’s policy/strategy
External
growthpolicyTarget premium properties in Central Tokyo and aim for annual external growth of approximately 30 billion yen
by best utilizing sponsors’ pipeline. (Set target yield at the mid 3% range or higher for NOI-based yield andaround 3.0% or higher for after-depreciation-based yield.)
By acquiring select properties from third properties at opportune timing while focusing on premium properties incentral Tokyo developed by the sponsor, MHR seeks to expand and diversify the portfolio while maintaining highquality.
Focus on portfolio size expansion in order to further enhance stability and liquidity as an investment corporation
while also considering disposition depending on conditions.

Internal
growthpolicySteadily achieve the revision of pass-through type properties with rent increases.
As to the fixed rent master leases, make the most appropriate judgement comprehensively taking into accountvarious situations upon contract renewal.
Properly implement office property repairs as necessary and conduct value-enhancement renovation for residential
properties if such is judged to be cost-effective (there are no office properties that require large-scale renewal interms of building age or competitiveness).

Financialmanagement
policySet the current LTV level (book value basis: in the mid 40% range; appraisal value basis: in the upper 30%
range) as the target in order to secure property acquisition capacity while maintaining a durable position for timesof economic slowdown.
Target average remaining duration of debt of 4 years or longer, and gradually increase the fixed rate ratio at theappropriate timing.
Seek to raise ROA by utilizing free cash for property acquisition rather than reserving it more than necessary.

ESG policy

Contribute to the improvement of various social and environmental issues by positioning ESG initiatives as anintegral part of management policy, and steadily implement them in actual management operations leading to
improved ESG ratings and stronger competitiveness.
Implement proactive information disclosure through publication of ESG reports organizing various policies andefforts.

48

4-4 Market-related information (1)Change in rent and vacancy rate of office buildings (Tokyo’s five central wards)
(%)

200
8.1%

180

160

10.0

8.9% 9.0% 8.7%

9.0

⇒ Estimate

8.0

7.3%

7.0

6.1%
145

149

5.5%

4.2%

140

6.0
4.0%
3.6%

124

3.1%

4.7%

120
109

100

2.9%

114

2.6%

101

100
92

80

92

95

99

104

109

120

125

114

128

128

2.6% 2.6%

128

5.0
127

125

124

3.3% 3.3% 3.1%
2.8%

1.9% 1.8%

4.0
3.0
2.0
1.0

Rent index
Vacancy rate
(Source)
Prepared by the Asset Manager based on the“Autumn 2019 Office Rent Forecast in Tokyo,
Osaka and Nagoya (2019-2025)” by the OfficeMarket Trends Research Committee(Japan Real Estate Institute and Miki Shoji Co.,
Ltd.).
(Note)The rent index targets large and medium
buildings (standard floor area of 100 tsubo ormore) in Tokyo’s five central wards. The rent
index is rebased to 100 as of 2010.

0.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

New supply of office buildings (Tokyo’s five central wards)(thousand tsubo)

700⇒ Estimate

600
500

540

530
478

473

460

400

361

343
294

300
221

265

245

220

254

260

250

239

(Source)
Prepared by the Asset Manager based on the“Autumn 2019 Office Rent Forecast in Tokyo,
Osaka and Nagoya (2019-2025)” by
the Office Market Trends Research Committee(Japan Real Estate Institute and Miki Shoji
Co., Ltd.).

170

200
100
0
2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

49

4-5 Market-related information (2)Change in rents and vacancy rates of luxury housing (Minato ward)(yen/tsubo)
24,000(%)

14.0

22,000

12.0

Minato ward’s averagevacancy rate over past
10 years: 7.8%

20,00010.0

18,0008.0
5.4%

16,000

5.1%

12,00010,000

03

04

05

06

07

08

09

10

11

12

13

14

15

16

17

19,2404.0

19,05014,000

6.0

18

19
1H

2.0
0.0

Avg. rents of Minato ward
Avg. vacancy rates of Minato ward
(Source)
Prepared by the Asset Manager based on Ken Real
Estate Investment Advisors’ “Ken Residential
Market Report” included in real estate appraisal
reports by Japan Real Estate Institute regarding
properties held by MHR.
(Note)
Data is based on rental housing with monthly rentof 300,000 yen or more or exclusive floor area of
30 tsubo or more.
“Avg. rents of Minato ward” is the contracted rent
including the management fee.
In the case of years, “Avg. vacancy rates of
Minato ward” is the average of the relevant year’s
January to March, April to June, July to September
and October to December figures, and “Avg. rentsof Minato ward” is the annual average.

Change in number of foreign residents in Minato ward
(people)24,000No. of foreigners registered under the
Ministry of Justice

Method for foreigner
registration was revised in2012 impacting head count

22,000The population of the Basic Resident Register(Source)
Prepared by the Asset Manager based on “Numberof registered foreign residents” prepared by
Statistics Division Bureau of General Affairs of Tokyo.

20,000(Note 1)
“Number of foreign residents” was the number offoreigners registered under the Ministry of Justiceuntil 2012. However, as the foreigner registration
system was abolished based on revision of the law,
the figure is the population of the Basic Resident
Register. Therefore, the data may not be consistent.

18,00020,31416,00014,000
03

04

05

06

07

08

09

10

11

12

13

14

15

16

17

18

19

(Note 2)
Number of foreign residents as of January 1 of eachyear is used for the year-based figures.

20
01

50

4-6 Market-related information (3)Change in return on real estate investment
(%)
6.5
6.0%

Cap rate of class
A office buildings(Marunouchi and Otemachi)

5.9%
5.6%

5.5%

5.3%

5.5
5.0%
5.0

5.3%
5.0%

4.8%

4.5%

4.5%

4.5
4.0%
4.0
3.5

6.0%

6.0%

6.0

4.5%

4.5%

4.5%
4.0%

4.2% 4.2%

4.0%

4.2%

4.2%

3.8%

4.5%

4.5%

3.5%
3.7%

3.5%

3.5%

3.5%

3.5%
3.3%

3.0

3.2%

3.0%

3.0%

Oct.
2018

Oct.
2019

2.5
Oct.
2005

Oct.
2006

Oct.
2007

Oct.
2008

Expected cap rate of class
A office buildings(Marunouchi and Otemachi)
Expected cap rate of high-end
multifamily residences (high-rise)

3.7%

4.0%

3.8%
3.5%

4.7%

4.2%

4.0%
3.8%

4.9%

Oct.
2009

Oct.
2010

Oct.
2011

Oct.
2012

Oct.
2013

Oct.
2014

Oct.
2015

Change in real estate transaction amount

Oct.
2016

Oct.
2017

(Source)
Prepared by the Asset Manager based on“The Japanese Real Estate Investor Survey” by theJapan Real Estate Institute.

Lending attitude DI (Real estate industry)(billion yen)

+ 25

6,000

+ 20
+ 15

5,000

+ 10

4,000

+5

3,000

△5

+0
△ 10
△ 15

2,000

△ 20

1,000

△ 25

0
FY
04

FY
05

FY
06

FY
07

FY
08

FY
09

FY
10

FY
11

FY
12

FY
13

FY
14

FY
15

FY
16

FY
17

FY
18

1H
19

(Source) Prepared by the Asset Manager based on the “Real Estate Transaction Survey”(Estimated amount of domestic real estate transactions publicized by listedcompanies) by the Urban Research Institute.

△ 30
△ 35

Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar.
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19(Source) Prepared by the Asset Manager based on “National Short-Term Economic
Survey on Enterprises in Japan” by the Bank of Japan. Difference between
the proportion of firms feeling the lending attitude to be accommodative
less firms feeling the lending attitude to be restrictive.

51

4-7 Market-related information (4)Change in 10-year bond interest rates
(%)

1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
△ 0.1
△ 0.2
△ 0.3

△ 0.4
Jan.
2013

(Source)
Prepared by the Asset Manager based on
Refinitiv.

Jul.

Jan.
2014

Jul.

Jan.
2015

Jul.

Jan.
2016

Jul.

Jan.
2017

Jul.

Jan.
2018

Jul.

Jan.
2019

Jul.

Jan.
2020

Change in core CPI (Year-on-year comparison)
(%)

+ 2.0

Based on figures excluding thedirect effects of theconsumption tax rate increase

+ 1.5

+ 1.0

(Source)
Prepared by the Asset Manager based on“Consumer Price Index” by Statistic Bureau,
Ministry of Internal Affairs and Communicationsand “Economic Statistics Monthly” by the Bankof Japan.

+ 0.5

+ 0.0

(Note)
Figures from April 2014 to April 2015 arederived on “the basis of excluding the direct
impact of the consumption tax rate increase”(Bank of Japan’s “Economic Statistics Monthly”).

△ 0.5
△ 1.0

Jan.
2013

Jul.

Jan.
2014

Jul.

Jan.
2015

Jul.

Jan.
2016

Jul.

Jan.
2017

Jul.

Jan.
2018

Jul.

Jan.
2019

Jul.

Jan.
2020

52

4-8 Market-related information (5)Business conditions composite index
110
108
106
104
102

Leading index

100

Coincident index

98(Source)
Prepared by the Asset Manager based on the“Business Conditions Composite Index” by
the Cabinet Office.

96
94
92

(Note)The index is rebased to 100 as of 2015.

90
Jan.
2013

Jul.

Jan.
2014

Jul.

Jan.
2015

Jul.

Jan.
2016

Jul.

Jan.
2017

Jul.

Jan.
2018

Jul.

Jan.
2019

Jul.

Jan.
2020

Money stock (M3: year-on-year comparison)
(%)

+3.8
+3.6
+3.4
+3.2
+3.0
+2.8
+2.6
+2.4
+2.2
(Source)
Prepared by the Asset Manager based on“Money Stock Statistics” by the Bank of Japan.

+2.0
+1.8
Jan.
2013

Jul.

Jan.
2014

Jul.

Jan.
2015

Jul.

Jan.
2016

Jul.

Jan.
2017

Jul.

Jan.
2018

Jul.

Jan.
2019

Jul.

Jan.
2020

53

4-9 Market-related information (6)Total cash earnings (Year-on-year comparison)
(%)

+ 4.0
+ 3.0
+ 2.0
+ 1.0
+ 0.0
Nominal

△ 1.0

Real

△ 2.0

(Source)
Prepared by the Asset Manager based on“Monthly Labour Survey (establishments with 5
or more employees)” by the Ministry of Health,Labour and Welfare.

△ 3.0
△ 4.0
△ 5.0

Jan.
2013

Jul.

Jan.
2014

Jul.

Jan.
2015

Jul.

Jan.
2016

Jul.

Jan.
2017

Jul.

Jan.
2018

Jul.

Jan.
2019

Jul.

Jan.
2020

Consumer confidence survey
54
52
50
48
46
44

Employment

42

Consumer confidence index

40

Income growth38(Source)
Prepared by the Asset Manager based on“Consumer Confidence Survey” by the Cabinet
Office.

36
34
Jan.
2013

Jul.

Jan.
2014

Jul.

Jan.
2015

Jul.

Jan.
2016

Jul.

Jan.
2017

Jul.

Jan.
2018

Jul.

Jan.
2019

Jul.

Jan.
2020

54

5. Appendix

55

5-1 Financial highlights
Indices

26th period
Period ended Jul. 31, 201927th period
Period ended Jan. 31, 2020

Net income

5,344 mn yen

5,406 mn yen

Depreciation and amortization

1,058 mn yen

1,034 mn yen

CAPEX

635 mn yen

149 mn yen

Total assets

392,256 mn yen

392,217 mn yen

Total net assets

195,336 mn yen

195,459 mn yen

Calculation formula

Total net assets/unit (BPS)

104,181 yen

104,247 yen Total net assets/Total units outstanding

Unit price (as of end of each period)

160,300 yen

181,700 yen

1,874,960 units

1,874,960 units

5,343 mn yen

5,405 mn yen

Dividends/unit

2,850 yen

2,883 yen

Dividend yield

3.6%

Total units outstanding
Total dividends

FFO

6,402 mn yen

3.1% Dividends per unit (annualized)/Unit price as of end of period
6,440 mn yen Net inc ome + Depreciation and amortization - Gain or loss on sales of real estate properties

FFO/unit

3,414 yen

3,435 yen FFO/Total units outstanding

Annualized

6,886 yen

6,814 yen Based on a period of 365 days

23.3x

26.7x Unit price as of end of period/FFO per unit (annualized)

PER

FFO multiple

27.9x

31.8x Unit price as of end of period/Net inc ome per unit (average during the periods, annualized)

PBR

1.5x

1.7x Unit price as of end of period/Net assets per unit

ROA

1.4%

1.4% Ordinary income/Average of total assets during the period

2.7%

2.7% Based on a period of 365 days

2.7%

2.8% Net inc ome/Average of total net assets during the period

5.5%

5.5% Based on a period of 365 days

Annualized
ROE
Annualized
NAV
NAV/unit
NAV multiple

258,176 mn yen
137,697 yen
1.2x

272,963 mn yen Total net assets + Total appraisal value - Total book value - Total liabilities
145,583 yen
1.2x Unit price as of end of period/NAV per unit

Interest-bearing debt

179,222 mn yen

LTV (book value basis)

45.7%

45.7% Interest-bearing debt/Total assets

LTV (appraisal value basis)

39.4%

38.2% Interest-bearing debt/(Total assets + Total appraisal value - Total book value)

Operating days

181 days

179,222 mn yen

184 days56

5-2 Balance sheet(thousand yen)(thousand yen)

26th period

27th period

26th period

27th period

Period ended Jul. 31, 2019

Period ended Jan. 31, 2020

Period ended Jul. 31, 2019

Period ended Jan. 31, 2020

30,265,364

23,586,464

5,000,000

8,500,000

22,922,000

13,022,000

2,343,364

2,064,464

166,654,327

173,171,584

17,000,000

13,500,000

134,300,000

144,200,000

14,570,283

14,727,643

784,044743,940

196,919,691

196,758,048

196,121,658

196,184,506

AssetsLiabilities

Current assets

11,021,912

11,875,571

C ash and deposits

3,923,970

5,646,194

C ash and deposits in trust

6,295,543

5,461,338

802,398

768,037

381,133,241

380,257,896

349,458,688

348,575,213

30,651,335

30,650,962

Other

Noncurrent assets
Property, plant and equipment
Intangible assets
Investments and other assets

Deferred assets
Total assets

1,023,217

1,031,720

101,365

84,503392,256,519

392,217,971

Current liabilities
C urrent portion of investment
corporation bonds
C urrent portion of long-termloans payable
Other

Noncurrent liabilities
Investment corporation bonds
Long-term loans payable
Lease and guarantee depositedin trust
Other

Total liabilities
Net assets
Unitholders' equity
Unitholders' capital,net
Total surplus(Note)

190,285,734(Note)

189,991,366

5,835,924

6,193,140

291,944

291,9445,543,979

5,901,196△ 784,831

Total net assets△ 784,831△ 724,583

195,336,827

195,459,922

Total liabilities and net assets

392,256,519

392,217,971

Voluntary retained earnings
Unappropriated retained
earnings

Valuation and translation
adjustments

Deferred gains or losses onhedges△ 724,583(Note) Figure after deducting allowance for temporary difference adjustments.

57

5-3 Income statement(thousand yen)

26th period

27th period

Period ended Jul. 31, 2019

Period ended Jan. 31, 2020

Operating revenue

9,561,876

9,631,462

Rent revenues

9,323,944

9,377,544

237,931

253,9173,589,931

3,605,057

3,225,332

3,224,074

Asset management fee

260,906

266,704

Direc tors' compensation

4,200

4,200

Asset custody fee

9,863

9,806

Other operating revenues
Operating expenses
Expenses related to properties

Administrative service fees

19,861

18,799Other operating expenses

69,767

81,473

5,971,944

6,026,404

1,985

1,079

Interest income

58

44

Gain on forfeiture of unclaimed dividends

979

1,035

Other

947

－

627,646

619,654

Interest expenses

375,336

377,420

Interest expenses on investment corporation bonds

68,55567,755

Operating inc ome
Non-operating inc ome

Non-operating expenses

10,193

9,909

164,678

155,732

Amortization of investment unit issuanc e c ost

6,952

6,952

Other

1,930

1,885

Ordinary inc ome

5,346,284

5,407,830

Inc ome before income taxes

5,346,284

5,407,830

Net inc ome

5,344,831

5,406,483

Unappropriated retained earnings

5,543,979

5,901,196

Am ortization of inve stm e nt corporation bonds issuance cost

Borrowing expenses

OfficeResidential
RetailLand
Other rent revenue

Parking revenue
Utilities and other revenue
Cancellation penalty

Property management fees
Property taxes
Utilities
Maintenance and repairs
Insurance premium
Custodian fees
Depreciation
Rent expenses
Other lease business expenses

7,852,808
780,882
82,874655,000
5,979

57,844
194,906
1,166

1,104,176
705,466
152,625
60,70017,503
6,703
1,034,455
127,661
14,78158

5-4 Statement of cash flows/Retained earnings
Statement of cash flows

Net cash provided by (used in) operating ac tivities(thousand yen)(thousand yen)

26th period

27th period

26th period

27th period

Period ended Jul. 31, 2019

Period ended Jan. 31, 2020

Period ended Jul. 31, 2019

Period ended Jan. 31, 2020

Net c ash provided by (used in) financ ing activities

7,147,955

6,240,351

Income before income taxes

5,346,284

5,407,830

Proceeds from long-term loans payable

Depreciation and amortization

1,058,120

1,034,455

Repayments of long-term loans payable

Amortization of investment corporation bonds
issuance c ost

10,193

9,909

Amortization of investment unit issuanc e cost

6,952

6,952

Interest income

△ 58

△ 44

Interest expenses△ 979

443,892△ 1,035

Dec rease (inc rease) in ac counts receivable279,706

40,505

Increase (dec rease) in ac counts payable

421,879

Increase (dec rease) in ac crued expenses

15,761△ 237,457

Increase (dec rease) in advances received△ 4,105

Gain on forfeiture of unclaimed dividends

Dec rease (inc rease) in prepaid expenses
Other, net△ 20,520
41,479SubtotalInterest income rec eived
Interest expenses paid
Income taxes paid

7,598,606

445,175

7,564

Ⅱ Addition of dividends in exc ess of earnings

44△ 449,279△ 445,198△ 1,452△ 15,900,000△ 5,289,514△ 5,341,870

11,806,152

10,219,514

10,219,514

11,107,533△ 3,000,000△ 1,586,638

Purc hase of property, plant and equipment in
trust
Repayments of lease and guarantee depositedin trust
Proc eeds from lease and guarantee deposited intrust△ 445,080△ 10,461△ 620,364△ 205,905

241,984

221,677△ 66,699△ 26,233－

888,019(yen)
26th period

27th period

Period ended Jul. 31, 2019

Period ended Jan. 31, 2020

5,543,979,968

5,901,196,611

294,368,720－

294,368,720－－

60,247,403－

60,247,403

5,343,636,000

5,405,509,680

2,850

2,883

5,049,267,280

5,405,509,680

2,693

2,883

294,368,720

－

157

－

494,712,688

435,439,528

Allowanc e for temporary difference
adjustments
Ⅲ Capitalization
Reversal of allowance for temporary
differenc e adjustments
Ⅳ Amount of Dividends
Amount of dividends per unit
Dividends of earnings
Dividends of earnings per unit

Net cash provided by (used in) investing ac tivities

15,900,000

Retained earnings
Ⅰ Unappropriated retained earnings

6,686,957△ 12,000,000

Dividends paid

1,697

△ 40,881

12,000,000△ 5,341,870

Net increase (dec rease) in cash and c ash
equivalents
Cash and c ash equivalents at beginning of theperiodCash and c ash equivalents at the end of theperiod12,28558△ 1,430

Redemption of investment c orporation bonds△ 8,289,514

Allowanc e for temporary difference adjustments(Note)

Dividends in exc ess of earnings per unit
(allowanc e for temporary difference
adjustments)
Ⅴ Retained earnings c arried forward(Note) Due to consideration of the impact of the items of deduction from net assets (deferred gains orlosses on hedges).

59

5-5 Status of income and expenditures (1)(thousand yen)P rope rty num be r

O -0

O -1

O -4

O -6

P rope rty na m e

R oppongi Hills Mori Tower

ARK Mori Building

Kora k u Mori Building

Aka sa k a Ta m e ik e Towe r

Acquisition price

115,380,000
26th

27th

Jul. 2019

Ja n. 2020

O pe ration da ys

181 days

184 da ys

O ccupancy ra te

100%

100%

Avg. O ccupancy ra te(during pe riod)100%

Num be r of te nants

1

P e riod

R ent re ve nue s

62,480,000
26th

27th

Jul. 2019

Jan. 2020

3 days181 da ys

184 da ys

0.0PT

100%

100%

100%

0.0PT

100%

1

0

1

Diffe re nce

27,200,000
26th

27th

Jul. 2019

Ja n. 2020

3 da ys

181 da ys

184 da ys

0.0P T

99.4%

99.4%

100%

0.0P T

99.6%

99.4%

1

0

22

22

Differe nce

43,930,000
26th

27th

Jul. 2019

Ja n. 2020

3 da ys

181 da ys

184 days

3 da ys

0.0P T

98.0%

96.7%

△ 0.2P T

98.6%

97.6%

△ 1.3P T

141

138

Differe nce

0

Diffe re nce△ 1.0P T△3

2,943,450

2,943,450－

1,351,486

1,351,486－

652,669

654,930

2,261

782,237

783,923

－

－

－

－

－

－

90,364

97,217

6,852

83,09386,4473,354

2,943,450

2,943,450－

1,351,486

1,351,486－

743,033

752,147

9,113

865,330

870,370

5,040

412,351

436,029

23,677

167,795

165,834

68,904

61,679166,546

5,662

247,825

7,174

80,724

83,5062,781

32,90230,716△ 7,224

160,883

240,650△ 1,961

42,33042,282

－

－

－

－

－

－

69,85574,146△ 2,186
4,291

29,67930,929

△ 47

1,250

－

－

－

－

－

－

5,221

9,819

4,597

89,917

34,461

4,083

4,094

11

1,889

1,933

44

1,675

1,679

4

2,084

2,091

△ 55,456

Depre cia tion (1)352,789

326,258

65,771

825

96,01796,318301

140,814141,676

862

377

558

△ 26,531

64,946

O the r e xpe nses

181

2,794

3,322

527

83,954

83,951

10,605

10,853247

1,010,253

1,014,766

4,513

318,150

320,368

2,217

358,532

358,312△3

476,315

428,841

1,933,197

1,928,684

1,033,336

1,031,118

384,501

393,835

9,333

389,015

441,5292,285,986

2,254,942

1,098,282

1,096,890

480,519

490,1539,634

529,829583,205

53,376

Annua lize d NO I

4,609,863

4,473,119△ 31,044△ 2,217△ 47,473

NO I (3) ((1)+(2))△ 4,513△ 219

2,175,896

972,3153,312

1,068,440

1,156,902

88,461

3.9%

3.5%

3.5%

3.6%

0.0P T

2.4%

2.6%

0.2PT

173,176－

47,08636,271

13,642

22,5122,254,942

142,131

1,051,195

1,060,619

9,423

436,850

476,511△ 30,026

109,5032,112,810△ 10,815

43,668

NCF (3)-(4)△ 173,176△ 0.1P T

3.6%

C AP EX (4)△ 0.1P T△ 38,872

969,003

4.0%△ 136,743

2,214,768

Annua lize d NO I/
Acquisition price

420,326

560,693△ 86,990

O the r ope ra tingre ve nue s
Tota l property
opera ting re ve nue
P rope rty
m ana gem e nt
P rope rty ta xe s
(Note 1)

Utilitie s
Ma intena nce a ndre pa irs
Insura nce
prem ium(Note 2)

Tota l property
opera ting ex pe nse s
P rope rty ope ra tingincom e (2)△ 1,392

39,6611,685

752,513140,366(Note 1) For property tax, city planning tax and depreciable assets tax, MHR charges the amount of property taxes assessed and determined applicable to the fiscal period to expenses related to properties. Registeredowners of properties in Japan as of January 1 are responsible for paying property taxes for the calendar year based on assessments by local governments. Therefore, registered owners who sold properties to
MHR were liable for property taxes for the calendar year, including the period from the date of the acquisition by MHR until the end of the year. MHR reimbursed sellers of properties for the equivalent amount ofproperty taxes and included the amount in the acquisition cost of real estate.
(Note 2) “Other expenses” denotes the sum of custodian fees, rent expenses, and other lease business expenses (residential property management costs, and other property-related miscellaneous expenses) in aggregate.

605-6 Status of income and expenditures (2)(thousand yen)P rope rty num be r

O -7

O -8

O -9

O -10

P rope rty na m e

Ata go Gre e n Hills

ARK Hills South Towe r

Toranom on Hills Mori Towe r

Holla nd Hills Mori Towe r

Acquisition price

42,090,000
26th

27th

Jul. 2019

Ja n. 2020

O pe ration da ys

181 days

184 da ys

O ccupancy ra te

100%

Avg. O ccupancy ra te(during pe riod)100%

Num be r of te nants

1

P e riod

R ent re ve nue s

19,150,000
26th

27th

Jul. 2019

Jan. 2020

3 days181 da ys

184 da ys

100%

0.0PT

99.9%

100%

0.0PT

99.1%

1

0

Diffe re nce

36,210,000
26th

27th

Jul. 2019

Ja n. 2020

3 da ys

181 da ys

184 da ys

100%

0.1P T

100%

100%

0.9P T

100%

43

43

0

Differe nce

16,330,000
26th

27th

Jul. 2019

Ja n. 2020

3 da ys

181 da ys

184 days

100%

0.0P T

100%

100%

0.0P T100%

0.0P T

100%

99.7%

1

1

0

24

23

△ 0.3P T

Differe nce

Diffe re nce
3 da ys△1

1,012,320

1,012,320－

480,659

487,104

6,445

775,581775,581－

516,131529,958－－－

31,74633,849

2,103

－

－

－

30,45136,013

5,562

1,012,320

1,012,320－

512,405

520,9538,548

775,581775,581－546,583

565,972

19,389

2,664

2,664

－

48,70949,8201,111

90,37489,286

102,029

104,494

2,464

68,806

68,953

146

34,563

34,798235

33,81859,600△ 1,088
25,782

27,73235,569

7,836

－

－

－

32,09735,934

3,836

－

－

－

8,113

9,203

1,089

－

－

－

3,799

4,419

620

－

－

－

6,925

7,090

165

3,533

3,667

134

1,026

1,030

3

1,267

1,319

52

1,047

1,110

63

181,625

181,821

196

44,22544,219101,038

101,038－

47,30847,35647

43,47744,274

796

2,941

1,494

△6

71

71

209

301,380

1,274

167,362

171,717

4,355

226,569

251,315△0209300,106△ 1,447

24,746

193,366

205,034△0

11,667712,213710,939

345,042

349,236

4,193

549,012524,265

360,938

7,721

893,839892,761

389,268

393,456

4,187

650,050

625,303△ 24,746

353,216

NO I (3) ((1)+(2))△ 1,274

400,524408,294

7,769

Annua lize d NO I

1,802,493

1,770,967

784,989

780,497

1,240,412

809,931

2,243

4.2%

4.1%

4.1%

3.4%

5.0%

0.0PT

31,468

2,167

3,106

939

－

－

－

19,751

5,124

NCF (3)-(4)707,385

861,293△ 154,986△ 0.2P T

4.9%

186,454△ 0.0P T

3.6%

C AP EX (4)△ 0.1P T△ 70,462

807,687

4.3%△ 4,492

1,310,875

Annua lize d NO I/
Acquisition price△ 31,526△ 24,746

153,908

387,101

390,3493,248

650,050

625,303△ 24,746

380,772

403,169△ 14,627

O the r ope ra tingre ve nue s
Tota l property
opera ting re ve nue
P rope rty
m ana gem e nt
P rope rty ta xe s
(Note 1)

Utilitie s
Ma intena nce a ndre pa irs
Insura nce
prem ium
Depre cia tion (1)O the r e xpe nses
(Note 2)

Tota l property
opera ting ex pe nse s
P rope rty ope ra tingincom e (2)△ 1,077

13,82622,39661

5-7 Status of income and expenditures (3)(thousand yen)P rope rty num be r

R -3

R -4

S-1

P rope rty na m e

Roppongi First P la za

R oppongi View Towe r

La fore t Hara juku (La nd)

Acquisition priceP e riod
O pe ration da ys

4,000,000

2,100,000
26th

27th

Jul. 2019

Ja n. 2020

181 days

184 da ys

26th

27th

Jul. 2019

Jan. 2020

3 days181 da ys

184 da ys△ 5.4P T

95.1%
93.9%

△2

21,820,000
26th

27th

Jul. 2019

Ja n. 2020

3 da ys

181 da ys

184 da ys

98.1%

3.0P T

100%

95.0%

1.1P T

100%

87

90

3

842

101,211104,148

Diffe re nce

P ortfolio tota l390,690,000
26th

27th

Jul. 2019

Ja n. 2020

3 da ys

181 da ys

184 days

3 da ys100%

0.0P T

99.4%

99.2%

100%

0.0P T

99.4%

99.3%

△ 0.2P T

1

1

0

359

356

2,937

629,400

655,000

25,6009,323,944

9,377,544△ 1,886－－－

237,931

253,917

15,985

1,051

629,400

655,000

25,6009,561,876

9,631,462

69,585

△ 930

－

－

－

1,082,549

1,104,176

21,627306

78,49282,226

3,733

659,480

705,466

45,986－－－142,229

152,625

10,396－－－

117,152

60,700△ 56,452

Differe nce

Differe nce

Diffe re nce

O ccupancy ra te

87.4%

82.0%

Avg. O ccupancy ra te(during pe riod)

87.8%

87.0%

Num be r of te nants

37

35

78,796

79,639

－

－

－

2,276

390

78,796

79,639842

103,487

104,538

13,165

13,08015,671

14,741

7,718

7,941

△ 85

222

11,73912,046

1,326

1,360

33

1,156

1,050

10,020

3,690

1,268

1,218

230

230

△ 6,330

△ 105

0

343

344

△ 50

0

－

－

－

17,18017,50312,017

12,164147

17,015

17,829

814

－

－

－

1,057,798

1,034,455

3,822

3,821

686

590

－

－

148,941

149,146

42,28947,88147,821

82,226

3,733

3,225,332

3,224,074

37,3496,855

55,60656,717△ 59

78,49230,494△ 6,012△ 95－

48,302△1

1,110

550,907572,774

21,866

6,336,544

6,407,387△ 1,257

NO I (3) ((1)+(2))

42,51249,514

7,002

72,621

74,546

1,925

550,907572,774

21,866

7,394,342

7,441,842

47,500

Annua lize d NO I

85,72898,222

12,493

146,447

147,878

1,431

1,110,946

1,136,209

25,263

14,911,243

14,762,351

Annua lize d NO I/
Acquisition price

4.1%

4.7%

0.6P T

3.7%

3.7%

0.0P T

5.1%

5.2%

0.1P T

3.8%

3.8%△ 148,891

C AP EX (4)

5,840

7,410

1,570

48,03929,783－－－635,687

149,319

NCF (3)-(4)36,671

42,103

5,431

24,582

44,763△ 18,256

550,907572,774

21,866

6,758,654

7,292,523

R ent re ve nue s
O the r ope ra tingre ve nue s
Tota l property
opera ting re ve nue
P rope rty
m ana gem e nt
P rope rty ta xe s
(Note 1)

Utilitie s
Ma intena nce a ndre pa irs
Insura nce
prem ium
Depre cia tion (1)O the r e xpe nses
(Note 2)

Tota l property
opera ting ex pe nse s
P rope rty ope ra tingincom e (2)△ 0.8P T

20,181△ 0.1P T△3

53,599322△ 23,343

204

70,843△ 0.0PT△ 486,368
533,86862

5-8 Unit price performance since IPO
Relative price performance (Since IPO - January 31, 2020)
200

Performance since listing180(At listing vs. January 31, 2020)■ MHR:+21.1%■ TSE REIT Index: +20.6%

160
140
120
100
80
60
40
20
0

Jul. 31,
Nov. 30, Jul. 31,
Jul. 31,
Jul. 31,
2010
2006
2009
2008
2007
(Source) Prepared by the Asset Manager based on Refinitiv.
(Note)
Rebased to 100 as per IPO priceJul. 31,
2011

Jul. 31,
2012

Jul. 31,
2013

Jul. 31,
2014

Jul. 31,
2015

Jul. 31,
2016

Jul. 31,2017

Jul. 31,2018

Jul. 31,2019

Unit price per period-end (Closing price)
Accounting period

Unit price

Accounting period

Unit price

Accounting period

Unit price

1st (January 2007)

1,100,000 yen

11th (January 2012)

252,200 yen

21st (January 2017)

153,500 yen

2nd (July 2007)

1,080,000 yen

12th (July 2012)

330,500 yen

22nd (July 2017)

138,900 yen(Reference)
IPO Price(November 30, 2006)(Split adjusted)

3rd (January 2008)

716,000 yen

13th (January 2013)

485,000 yen

23rd (January 2018)

137,100 yen

4th (July 2008)

465,000 yen

14th (July 2013)

548,000 yen

24th (July 2018)

138,100 yenHigh

5th (January 2009)

265,000 yen

15th (January 2014)

135,900 yen

25th (January 2019)

144,500 yen(May 8, 2007: in trade)

6th (July 2009)

352,000 yen

16th (July 2014)

151,100 yen

26th (July 2019)

160,300 yen

7th (January 2010)

264,900 yen

17th (January 2015)

166,600 yen

27th (January 2020)

181,700 yen

8th (July 2010)

177,300 yen

18th (July 2015)

9th (January 2011)

281,000 yen

10th (July 2011)

258,100 yen

750,000 yen(150,000 yen)

1,460,000 yen(Split adjusted)(292,000 yen)

145,300 yen(August 12, 2010: in trade)

168,200 yen

19th (January 2016)

152,100 yen(Split adjusted)(33,640 yen)

20th (July 2016)

160,500 yen

Low(Note) Implemented a 5-for-1 investment unit split on February 1, 2014 (effective date).

63

5-9 Investment criteria
Investments focusing on Premium Properties for development of urban-type portfolio
Investments focusing on Premium Properties
Among properties that are located in Tokyo’s five central wards and in surrounding areas,
our investments mainly focus on “Premium Properties” that are able to maintain theircompetitiveness going forward based on their quality, size and specification.
Focus onPremium Properties

Premium properties

50% or more

Office building

Premium Properties
Type

Location

Scale

Gross floor area of 10,000㎡ ormore per buildingStandard leasable floor area of
1,000㎡ or more

Officebuildings

Tokyo's five central wards
and their vincity

Residential
properties

Tokyo's five central wards
Gross floor area of 2,000㎡ or
and their vincity
more per building(Primarily in the "three-A" area)〈Office buildings〉〈Residential properties〉〈Retail facilities〉

Office building foc us〈Department stores, downtown shopping centers,
large specialty stores & retail complexes, etc.〉

Flourishing areas of Tokyo's five Gross floor area of 10,000㎡ or
central wards and their vincity
more per-building
Retail facilities

50% or more

Tokyo' five central wards
foc usTokyo's five central
wards and their vincity

50% or more(Tokyo Metropolitan Area:
80% or more)〈Street front luxury brand shops, etc.〉

Exclusive, well-known
retail destinations such as
Ginza area, Aoyama area, andOmotesando area

Gross floor area of 1,000㎡ ormore per building(Note 1)

Tokyo’s five central wards： Minato, Chiyoda, Chuo, Shinjuku and Shibuya ward

(Note 2)Three-A area： Akasaka and Roppongi area, Aoyama and Harajuku area and Azabu and Hiroo area

(Note 3)

Ratios are based on the acquisition prices.

(Note 4)

Tokyo Metropolitan Area： Tokyo Metropolis, Kanagawa Prefecture, Chiba Prefecture and Saitama Prefecture

Earthquake-resistance foc us

Investment focused on
properties' earthquake
resistance, the safety of thearea, disastercountermeasures, etc.

645-10 Sustainability initiatives
Approach and System of Sustainability
Mori Hills REIT Investment Corporation (MHR) and Mori Building Investment Management Co., Ltd. (MIM) aim to contribute to
the creation and development of cities by providing investment opportunities in high-quality urban assets to investors, as statedin the Basic Policy of MHR and Company Mission of MIM.
MHR and MIM aim to contribute to the realization of a sustainable society and maximization of unitholder value in the medium tolong term by emphasizing ESG (Environment, Social and Governance) and investing in high-quality urban assets while striving
to improve various environmental and social performance levels.

Sustainability Promotion System
Operations connected to sustainability will be promoted primarily by the Sustainability Committee to be established by MIM.
The Chairperson of the Committee shall be the President & CEO while all directors and some administration staff shall comprisethe committeepersons. Various initiatives will be implemented based on the Sustainability Promotion Program which isestablished every fiscal year.
In principle, the Committee shall meet four times a year and shall formulate policies and the Sustainability Promotion Program,monitor progress of programs, deliberate various suggestions from departments, etc. in light of social conditions and theoperating status of MHR. The President & CEO approves the policies and promotion programs, constantly monitors the thoroughpromotion of sustainability, and establishes and maintains a sustainability promotion structure as a responsible party inpromoting sustainability.
Moreover, sustainability-related efforts shall be reported on periodically to the Board of Directors of both MHR and MIM. Each
Board oversees the status of initiatives for important issues related to ESG and the status of compliance and risk management.

Initiatives Throughout the Entire Supply Chain
Promotion of sustainability operations, whether environmental or social, requires initiatives that involve the whole supply chain.
We believe that joint initiatives with various stakeholders of aligned values are necessary.
By actively stimulating interactive communication with stakeholders such as tenants, local residents, property managementcompanies and our sponsor Mori Building that provides the property pipeline, and aligning our values, we aim to contribute to
the realization of a sustainable society.
655-11 Sustainability initiatives: Environment＜Green Building Certification and External
Assessment＞〇 Promotion of Energy-conservation〇 Green Building Certified Properties
Property Name

Type of Assessment

RatingRoppongi Hills Mori Tower

Rank S

ARK Mori Building

Rank SCASBEE for
Existing Buildings

Koraku Mori Building

Rank A

Atago Green Hills MORI Tower

Rank S
DBJ Green Building
Certification

Toranomon Hills Mori Tower
Holland Hills Mori Tower

CASBEE for
Existing Buildings

MHR promotes energy-conservation through initiatives such as
replacement of LED lighting in common areas and repair work of
air-conditioning. MHR also makes active efforts to reduce
environmental loads through proper separation and disposal ofwaste.

(Roppongi View Tower: Renovation of common area with LED lighting)

Rank A

Akasaka Tameike Tower

ARK Hills South Tower＜Reduction of Environmental Loads＞

4 stars
Rank S
Rank S(Certificates Coverage Ratio)
Certified Properties

Portfolio Data

Ratio

In ac quisition pric e343.7 bn yen

368.8 bn yen

93.2%

In leasable floor area

143,592㎡

172,136㎡

83.4%

In number of properties

8 properties

10 properties

80.0%※ Excluding Laforet Harajuku (Land)○ GRESB Real Estate Rating
In the 2019 GRESB Survey, MHR received a“Green Star” rating for the eighthconsecutive year, and received “4 Stars” in
the GRESB Rating.

〇 Collaborating with Tenants

MHR holds an “environmental countermeasure council”
once or twice a year depending on the office building. The council
generates a report on the efforts to improve sustainability andraises awareness for power saving methods.
MHR also promotes environmental initiatives by communicatingwith tenants. MHR provides “WEB cloud services” as a tool tomake tenants’ energy usage visible, and offers helpful measures
for tenants’ energy conservation.
In addition to these efforts, MHR is further deepening
relationships with tenants by introducing “green leases” which
serve to align financial incentives and secure commitments fromboth parties. MHR is gradually expanding this approach since theintroduction of the first green lease in ARK Hills South Tower.

66

5-12 Sustainability initiatives: Social＜Initiatives with Employees＞＜Initiatives with Tenants and Local Communities＞〇 Talent Development〇 Tenant Satisfaction Surveys

MHR conducts “tenant satisfaction surveys” once every two
To cultivate human resources with flexible thinking and highyears in office buildings and once a year in most residential
ethical standards together with a high degree of expertise,properties.
mainly in real estate and finance, MHR introduces essential
The survey content starts with general matters such as
knowledge and skills through on-the-job-training (OJT) andlocation and image to matters related to facilities and other hard
conventional training to improve staff effectiveness, to clarify
aspects as well as soft aspects such as management systems. The
company issues and to constantly improve management
thoughts of the tenants are used as a reference in our property
methods. MHR conducts a semi-annual staff assessment
management.
program - "Personnel Assessment and Feedback" as a corecomponent of our talent development strategy.
〇 Local Communities
MHR also subsidizes the expense for acquiring licenses and
MHR aim to foster a rich environment for the local community
qualifications by public and private organizations necessary
through various communication activities. In MHR’s properties
for work to improve employees' skills as professionals in thesuch as Roppongi Hills and ARK Hills, events and activities arereal estate fund business.
held like the “Hills Marche” and “Hills Machi-Iku Project” inwhich local people can participate.

(Qualifications held by employees as of the end of February 2020)
・ ARES Certified Master: 8
・ Real Estate Appraiser: 2
・ Real Estate Transaction Agent: 8
・ Certified Building Administrator: 2・ Certified Public Accountant: 3
・ Chartered Member of Securities Analysts Association of Japan: 1〇 Employee Stock Ownership Plan (ESOP)MHR established the "ESOP" by aligning interests of MHR’s
investors and MIM’s employees aiming to improve
unitholders' value over the medium to long term, and to
improve welfare benefits for MIM’s employees.

〇 Promoting Women’s Participation＜Initiatives with Investors＞

MHR is aiming for a workplace environment where each
employee can fully demonstrate their individuality andabilities and MHR is working on creating a pleasant working
environment for women. A child-care leave system andflexible working hours are provided and MHR promotes active
use of a short-time work system and paid holidays.

〇 All Japanese Listed Companies'
Website Ranking

Nikko Investor Relations Co., Ltd. announces
a valuation of websites of all listedcompanies by investigating the degree of
information disclosure based on objective
evaluation items from its unique perspective.
MHR’s website has received “Total Ranking:
The Best Site" for the fifth consecutive
years.

67

5-13 Sustainability initiatives: Governance＜Corporate Governance＞＜Compliance＞

MHR shall have at least one executive director and at least two
Compliance Department conducts inspections on legal compliancesupervisory directors (or, at least one more than the number of and confirms consistency with internal rules. MIM confirms whether
the executive directors), and the board of directors shall be
there are any conflict of interest transactions with related parties. In
comprised of the executive directors and supervisory directors.
this way, MIM is striving to ensure comprehensive internal control,
In addition to a general meeting of all unitholders, MHR’s
while also striving to enhance its risk management structure as wellgovernance structure consists of one executive director, two
as its effectiveness.
supervisory directors, the board of directors and an accounting
Furthermore, MIM has a set of internal rules (self-imposed
auditor, and entrusts its operation to the asset management
regulations) which stipulate rules such as its Related Parties
company.
Transaction Guidelines. These Guidelines stipulate matters
MIM is required to perform its business operations in good faithand with due care of a prudent manager for MHR in line with the concerning transactions, etc. with related parties. Through MIM’scompliance with these Guidelines, MIM has established a structure
purpose of the investment management business, andaccordingly performs sincere asset investment and management which ensures that the aforementioned transactions are managed
appropriately and that MIM sufficiently executes the duty of care of apertaining to real estate properties based on an appropriate
compliance structure and internal control structure in order forgood manager and duty of loyalty to MHR.
MHR to gain high trust from the securities market and investors. (Process to counter transactions involving conflicts of interest)(MIM’s organization)

Approved by MHR's Board of Directors

General Meeting of
Shareholders(In case of an acquisition fromany related party)

Corporate Auditor

President & CEO

Investment
Committee

Investment
Dept.

Compliance
Committee

AssetManagement
Dept.

Reject or pass back the proposal

Board of Directors

Deliberation and resolution at MIM's Board of Direc tors (Note)

Deliberation and resolution at the Compliance Committee

Deliberation and resolution at the Investment Committee

Review by the Compliance Officer

Selection of investment grade properties and preparation of an
original proposal by the Investment Department

Financial
Dept.

Administration
Dept.

Compliance
Dept.

(Note) Director who are classified as a related party officer is not able to participate in the resolution
when acquiring asset from a related party.

685-14 Portfolio map (As of January 31, 2020)

MHR (Note 1)
In Operation(注4)

MB Group (Note 2)(注5)

Planning / Under Construction(Source) Prepared by the Asset Manager based on Mori Building’s “Mori Building Handy Map Mori Building Map/Home Route Support Map 2020.”(Note 1) Some of the properties have been partially acquired and held by MHR.
(Note 2) Properties are developed, owned, managed and planned for development by Mori Building Group, and there are no properties currently anticipated to be acquired by MHR.

69

5-15 Portfolio overview (As of January 31, 2020)
Type

Office building
Holland Hills
Mori Tower

AkasakaTameikeTow er

O-9

O-10

O-6

O-7

Premium

Premium

Premium

Premium

Toranomon,
Minato-ku,
Tokyo

Toranomon,
Minato-ku,
TokyoAkasaka,Minato-ku,
TokyoMay. 2014

Jan. 2005

Sep. 2000

Jul. 2001

6 years
6 months

5 years
8 months

15 years
0 month

19 years
4 months

19 aboveground,6 below

20 aboveground,4 below

52 aboveground,5 below

24 aboveground,2 below

approx.
46,154㎡

approx.
53,043㎡

approx.
241,581㎡

approx.
35,076㎡

ARK
Mori Building

O-0

O-1

O-4

O-8

Premium

Premium

Premium

Premium

Premium

Location

Roppongi,
Minato-ku,
TokyoAkasaka,Minato-ku,
Tokyo

Koraku,Bunkyo-ku,
TokyoRoppongi,
Minato-ku,
TokyoCompletion

Apr. 2003

Mar. 2000

Jul. 2013

Building age

16 years
9 months

33 years
10 months

19 years
10 months

Total number offloors54 aboveground,6 below

37 aboveground,4 below

Gross floor area

approx.
442,150㎡

approx.
177,486㎡

Koraku Mori
ARK Hills
Building
South Tow er

Residential

Atago Green Hills

Toranomon
Hills Mori
Tow erRoppongi
Hills
Mori Tow er

Property name

Office building (Partly residential)

MORI Tower Forest Tower

Plaza

RetailRoppongi
First
Plaza

Roppongi
View
Tow erLaforet
Harajuku
Land)

R-3

R-4

S-1

Premium

Photo

Ownership(Note 1)Land

Building

PML (Note 2)
Earthquakeresistant feature(Note 3)Acquisition price(mn yen)Occupancy rate
(Note 4)Mar. 1986
Large-scalerenovation in 2005)

C o- owners hip
C o- owners hip(approx. 1 7 .7 % ) (approx.1 0 .9 % )L eas edCompartmentalizedCompartmentalizedCompartmentalized

ownershipownershipownership(approx. 1 3 .6 % ) (approx. 1 7 .9 % ) (approx. 5 7 .9 % )C o- owners hip(approx. 2 5 % )-Premium

Toranomon,
Minato-ku,
TokyoRoppongi,
Minato-ku, Tokyo

Jingumae,
Shibuya-ku,
Tokyo

Oct. 2001

Jul. 2001

Oct. 1993−

18 years
6 months

18 years
3 months

18 year6 months

26 years 3 months−

25 aboveground,2 below

42 aboveground,2 below

43 aboveground,4 below

2 aboveground,1 below

20 above ground,
1 below−

approx.
46,971㎡

approx.
85,266㎡

approx.
60,815㎡

approx.
2,083㎡

approx.
22,906㎡−

Atago,
Minato-ku, Tokyo

C o- owners hip
C o- owners hip
C o- owners hip(approx. 1 2 .7 % ) (approx. 6 2 .9 % ) (approx. 5 6 .4 % )C o- owners hip

C o- owners hip(approx. 2 5 % )(approx. 6 .9 % )CompartmentalizedCompartmentalized

ownershipownership

C o- owners hip

C o- owners hip

C o- owners hip(approx. 2 8 .8 % )(approx. 4 7 % )(approx. 4 6 % )CompartmentalizedCompartmentalized

ownershipownership

C o- owners hip(approx. 3 2 .9 % )(approx. 4 8 .5 % ) (approx. 6 5 .5 % )O wners hip−(approx. 4 6 .4 % ) (approx. 4 4 .7 % )

0.59%

0.78%

0.73%

1.56%

0.50%

0.85%

1.79%

2.35%

2.34%

5.94%

2.20%

2.20%

−

Seismic
Damping

Seismic
Damping

Seismic
Damping

Seismic
Damping

Seismic
Damping

Seismic
Damping

Seismic
Damping

Seismic
Damping

Seismic
Damping

−

−

−

−

115,380

62,48027,20019,15036,21016,33043,93042,090

2,100

4,000

21,820

100%

100%

99.4%

100%

100%

100%

96.7%

100%

82.0%

98.1%

100%

Average building age
18.9 years (Note 5)

Portfolio PML
0.93% (Note 2)

Total acquisition price390,690 mn yen

705-15 Portfolio overview (Note)(Note 1) “Type of ownership” denotes the type of rights held by MHR or the Trustee. “Ownership” stands for ownership, “Co-ownership” stands for the ownership of beneficiary interests,“Compartmentalized ownership” denotes ownership and the rights for exclusive use in or over parts of a building, and “Leased land” denotes Leasehold land. The land site of Atago
Green Hills includes joint ownership in quasi-undivided interests of leasehold land and easement.
(Note 2) This indicates the figure described in the “Report on evaluation of seismic PML for portfolio” dated June 4, 2018 by Sompo Risk Management & Health Care Inc.
(Note 3) ARK Mori Building adopts “slitwall” as an earthquake-resistant feature.
(Note 4) “Occupancy rate” indicates the figures as of January 31, 2020.
(Note 5) For calculation of the “Average building age” of Atago Green Hills, we have assumed that construction of the building was completed on July 30, 2001.

71