Mori Hills REIT Investment Corporation
Results of the 32nd Fiscal Period ended July 31, 2022
Presentation Material
September 14, 2022

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

34

3. Operation highlights

41

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

42

Change in assets under management

43

Change in unrealized capital gain/loss

44

Appraisal value

45

Change in the rent and occupancy rates

46

Unit price performance5

Financial results

6

Dividends per unit growth record

7

Medium- to long-term
disposition and acquisition policy (model)

8

Tenant status by month and major tenants

47

Increase in appraisal NAV per unit

9

Financial overview (as of July 31, 2022)

48

Forecasts

10

Unitholders breakdown (as of July 31, 2022)

49

Portfolio of premium properties in central Tokyo

11

External growth

22Internal growth25

Financial management

29

Business environment recognition

51

Sustainability initiatives

31

MHR’s policy/strategy

52

TCFD summary

33

Market-related information

54

MHR’s representative property

37

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

5. Appendix

50

60

2

1. Executive summary
Financialsummary
32nd period(Jul. 2022)

Operating revenue: 11,197 million yen, operating income: 6,985 million yen,
net income: 6,443 million yen Increased revenue and income period-over-period
DPU: 3,030 yen (+3.5% from 31st period) Increasing for 24 consecutive fiscal periods
NAV per unit: 164,448 yen (+5.0% from 31st period) Increasing for 23 consecutive fiscal periods
Disposed of a 7% ownership interest in Laforet Harajuku (Land) (of the 1,347 million yen from gain on
disposition, 636 million yen was reserved for reduction entry). Revised the level of asset management fee andutilized the funds for promotion of ESG and reinforcement of staffing matters.

External
growthWhile disposing of Laforet Harajuku (Land) over the medium to long term, new acquisitions will be madeconcurrently to further improve DPU.
Premium properties in central Tokyo have maintained high occupancy rates despite the expansion of
remote working during the COVID-19 pandemic and are expected to continuously demonstrate competitive
advantages.

Internal
growthEven as office vacancy rates rise in central Tokyo, MHR’s office occupancy rate for the 32nd period
maintained a high level of 98.2% due in part to the excellent location and quality of the properties.
Although the occupancy rates and rents for several pass-through-type offices have weakened,
these properties account for only a small portion of the entire portfolio and thus the impact was minimal.
The residential occupancy rate for the 32nd period was 97.1%, a significant improvement from 94.8% in
the previous period.

Financialmanagement

As of the end of the 32nd period, MHR maintained the target level by book-value-basis LTV: 46.6%,
appraisal-value-basis LTV: 36.6%, and remaining duration of debt: 4.5 years. MHR also maintained acredit rating (JCR) of AA (stable).
The fund procurement environment has not changed despite the COVID-19 pandemic.

3

2. Investment highlights

42-1 Unit price performance(yen)

200,000
Public Offeringin Mar. and Sep.
2013

190,000

PublicOffering inFeb. 2016

PublicOffering in
Aug. 2014

PublicOffering in
Aug. 2018

PublicOffering in
Aug. 2020

180,000
170,000
160,000
150,000
140,000
130,000

Mori Hills REIT

120,000
110,000
100,000
90,000TSE REIT Index

80,00070,00060,00050,00040,00030,000

9th

10th

11th

12th

13th

14th

15th

16th

17th

18th

19th

20th

21st

22nd

23rd

24th

25th

26th

27th

28th

29th

30th

31st

32nd

Sep. 14, Jan. 31, Jul. 31, Jan. 31, Jul. 31, Jan. 31, Jul. 31, Jan. 31, Jul. 31, Jan. 31, Jul. 31, Jan. 31, Jul. 31, Jan. 31, Jul. 31, Jan. 31, Jul. 31, Jan. 31, Jul. 31, Jan. 31, Jul. 31, Jan. 31, Jul. 31, Jan. 31, Jul. 31,
2012
2014
2010
2011
2012
2013
2015
2016
2017
2011
2013
2015
2016
2017
2018
2022
2014
2019
2018
2019
2020
2020
2021
2021
2022

Marketvalue

41.9 bn yen(Sep. 14, 2010)

293.1 bn yen(Jul. 31, 2022)(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
The 32nd period saw increased revenue and income compared with the 31st period, realizing increased DPU for
the twenty-fourth consecutive fiscal period
Disposed of a 7% ownership interest in Laforet Harajuku (Land) (of the 1,347 million yen from gain on disposition, 636 million yen was reserved for
reduction entry). Revised the level of asset management fee and utilized the funds for promotion of ESG and reinforcement of staffing matters.
NAV per unit increased for the twenty-third consecutive period due to the increase in the appraisal values of owned properties (increase of 11.6%
over the past year).
31st period

32nd period

32nd period

Jan. 31, 2022

Jul. 31, 2022

Jul. 31, 2022

ActualActualDifference

Forecasted

Operating Highlights (million yen)

Increase/decrease factor (31st – 32nd)
・Operating revenue (+1,376 mn yen)
- Gain on disposition part of LF Harajuku (32nd period) +1,347- Residential Rent (pass-through)+20- Office Rent (pass-through)+13- Parking revenue+4- Rent on disposition part of LF Harajuku (32nd period)△7- Utilities and other revenue△2

Operating revenue

9,820

11,197+ 1,376

11,178Rent revenues

9,626

9,652

+ 25

9,633

194

197

+2

197

－

1,347

+ 1,347

1,347

3,735

4,212

+ 476

4,183

・Operating expenses (+476 mn yen)

3,401

3,448

+ 46

3,441

333

763

+ 430

741

6,085

6,985

+ 899

6,995

1

4

+3

0

Other operating revenues
Gain on sales of real estate properties

Operating expenses

571

545

Ordinary income

5,514

6,443

+ 929

6,448

Net income

5,513

6,443

△ 26

- Asset management fee- Other operating expenses- Property management fee- Property taxes- Depreciation- Utilities- Property taxes for property acquired in 31st period- Maintenance and repairs

+ 929

6,447

・Non-operating expenses (△26 mn yen)

Reserve for reduction entry

－

636

+ 636

638

Reversal of reserve for reduction entry

95

－

－

5,609

5,806

△ 95

+ 197

5,806

1,916,330

1,916,330－

1,916,330

2,927

3,030

+ 103

3,030

NOI

7,498

7,489

3.6%

3.7%

△8

7,482

NOI yield

0.1PT

3.7%

410,737

410,518△ 218

410,518

Expenses related to properties
SG&A

Operating income
Non-operating income
Non-operating expenses

Total dividends

DPU
Total units outstanding (units)
DPU (yen)548(weighted average based on the number ofoperating days during the period) (Note)- Interest expenses, etc.

△26

Increase/decrease factor for 32nd period(Forecasted - Actual)

Other Indices (million yen)

Acquisition price

+411
+20
+16
+14
+9
+7
+7
△12

・Operating income (△10 mn yen)
- Residential Rent (pass-through)- Office Rent (pass-through)- Maintenance and repairs- Depreciation- Asset management fee- Utilities and other revenue (net)- Property management fee(Note) If properties are acquired during the period, the acquisition price is the weighted average based on the number of operating days.

+11
+7
+4
+4
△20
△10
△6

6

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

3,400

3,200

24 consecutive
fiscal period
increase

3,000(forecast) (forecast)Longest among
all J-REITs

3,030 3,040

2,822

2,800

2,850

2,883 2,898

2,909 2,913

2,927
Gain on Gain on
disposition disposition

2,753

2,567

2,600

2,502
2,367

2,400

2,606 2,610

3,050

410

443

2,659

Gain ondisposition

(371)

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

1,200

Balance ofreserve for
reduction entry(forecast)

1,315

33rd period
1.3 bn yen
34th period
1.9 bn yen

8th
9th
10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 29th 30th 31st 32nd 33rd 34th
period period period period period 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.
Jul.
Jan.
Jul.
Jan.
Jul.
2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 2021 2021 2022 2022 2023 2023

※ 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

Medium- to long-term
2-4 disposition and acquisition policy (model)
32nd period(Jul. 2022)

Medium- to longterm direction

33rd period(Jan. 2023)

NOI yield
2.7%
Yield after depreciation 2.7%
(based on disposition price)

Disposition
Laforet
Harajuku(Land 7%)(2.89 bn yen)

Laforet
Harajuku

Gain on disposition 2.69 bn yen
Dividends
1.51 bn yen
Internal reserve1.17 bn yen(Land 7%)(2.89 bn yen)(Acquisition in 31st period)
Toranomon Hills
Mori Tower(7.87 bn yen)

NOI yield
3.4%
Yield after depreciation 2.9%

B. Participate inredevelopment（minor interest）(※Dividends: 26.1%of the disposition price)

Utilization of special provisions fortaxation in cases of reinvestment ofproceeds from disposition

Acquisition

Medium- tolong-term
disposition in
installments

A. Dispose allinterest

New acquisition
fromthe sponsor
and third parties

Portfolio size
expansion(※Acquisition at
the appraisal value less △20.2%)(34th period: forecast)
443

Gain ondisposition

DPU

3,050
yen

2,607
Excludinggain ondisposition+43
If Toranomon Hills is acquired
under the same terms as theprevious acquisition using thetotal proceeds (5.78 billion yen)from the two dispositions of
LF Harajuku.

Aim forcontinuous
increasein DPU

Push up DPU throughgain on disposition while
promoting growth of DPU
in other ways as well
Aim for increase in NAV
by making up for impact
of dispositions throughexternal growth(acquisition at below
appraisal value)82-5 Increase in appraisal NAV per unit
(yen/unit)

180,000

170,000

164,448

23 consecutive
fiscal period
increase

160,000

Longest among
all J-REITs

156,688

150,000

145,583

146,390

147,182

147,297

137,697

140,000

134,550130,000
124,618

120,000
112,546

110,000
99,665100,000

90,00086,941

117,627
114,893
112,811104,064
101,957

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

10th
period
Jul.
2011

11th
period
Jan.
2012

12th
period
Jul.
2012

13th
period
Jan.
2013

14th
period
Jul.
2013

15th
period
Jan.
2014

16th
period
Jul.
2014

17th
period
Jan.
2015

18th
19th
20th
21st
22nd
23rd
24th
25th
26th
27th
28th
29th
30th
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.
2015
2016
2016
2017
2017
2018
2018
2019
2019
2020
2020
2021
2021

31st
period
Jan.
2022

32nd
periodJul.
2022※ 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
In the 33rd period, DPU is forecast to be 3,040 yen reflecting effect of the property disposition
DPU is forecast to be 3,050 yen in the 34th period reflecting presumption of similar effects of property disposition
In the 33rd period, 7% ownership interest in Laforet Harajuku (Land) will be disposed of, and similar disposition effects are anticipated in the
34th period. While conducting disposition over the medium to long term, new acquisitions will be made concurrently to seek continuous DPU
growth.
The decline in DPU excluding gain on disposition is because new acquisitions with funds from the disposition of Laforet have not yet beenfactored in at this time.
32nd period

33rd period

34th period

Jul. 31, 2022

Jan. 31, 2023

Jul. 31, 2023

ActualForecast

Difference・Operating revenue (△4 mn yen)

Forecast

Operating Highlights (million yen)
Operating revenue

11,197

11,192Rent revenues

9,652

9,626

197

220

1,347

1,345

4,212

Other operating revenues
Gain on sales of real estate properties

Operating expenses
Expenses related to properties
SG&A

Operating income△4

11,166

△ 25

9,591

+ 22

213
1,361

4,259

△2

+ 47

4,275

3,448

3,515

+ 67

3,534

763

744

△ 19

740

6,985

6,932

Non-operating income

40

Non-operating expenses

545

545

Ordinary income

6,443

6,388

Net income

6,443

6,386

636

・Operating expenses (+47 mn yen)

0532

(32nd period)

6,890

△ 55

6,358

△0

- Gain on disposition part of LF Harajuku (33rd period)- Office Rent (pass-through)- Utilities and other revenue- Residential Rent (pass-through)- Gain on disposition part of LF Harajuku (32nd period)- Rent on disposition part of LF Harajuku (32nd period)- Rent on disposition part of LFHarajuku (33rd period)- Maintenance and repairs- Utilities- Property taxes- Property taxes for property acquired in 31st period- Property management fee- Asset management fee- Operating exp. for disposition part of LF Harajuku

△ 52

△3

Increase/decrease factor (32nd – 33rd)

6,357

559

512

・Operating revenue (△26 mn yen)

5,806

5,825

△ 76

+ 19

5,844

- Gain on disposition part of LF Harajuku

1,916,330

1,916,330－

1,916,330

3,030

3,040

+ 10

3,050

NOI

7,489

7,421

7,373

NOI yield

3.7%

3.6%

△ 67

410,518

408,737△ 1,780

407,455

Total dividends

DPU
Total units outstanding (units)
DPU (yen)

Other Indices (million yen)

Acquisition price(weighted average based on the number ofoperating days during the period)△ 0.1PT

3.6%

+42
+31
+14
+7
△21
△19
△6

Increase/decrease factor (33rd – 34th)△ 56

Reserve for reduction entry+1,345+22+22+4△1,347△38△15(anticipated in 34th period) +1,361(33rd period)△1,345- Rent on disposition part of LF Harajuku (33rd period)△31- Utilities and other revenue

・Operating expenses (+15 mn yen)
- Property taxes- Depreciation- Utilities- Property management fee- Maintenance and repairs

・Non-operating expenses (△12 mn yen)
- Interest expenses, etc.

△8

+22
+13
+8
△15
△11
△12

10

2-7 Portfolio of premium properties in central Tokyo
Investment strategy based on long-term perspective
Invest in properties that can be expected to maintain and improve asset value over the long run.
True premium properties in central Tokyo are sure to capture office demand by functioning as headquarters, even after the spread oftelecommuting that has been triggered by COVID-19.
Invest in properties that are located in areas that can expect improved asset value for the entire area based on regional development and area
management, instead of only focusing on the value of individual properties.

Even amidst Japan’s declining population and changes① Investment in central Tokyo“Truly central and excellent location” even
within central Tokyo

in work styles that have been triggered by COVID-19,
premium properties in central Tokyo that are “truly

Location

central” and in “excellent locations” are sure to capture
office demand by functioning as headquarters

Premium properties with excellent facilities, high② Investing in premium properties
Property with excellent facilities, earthquake
resistance and environmental performanceearthquake resistance, and environmental performancethat offer excellent convenience, comfort, and safety
will provide competitive advantages, regardless of

Qualityof assets

economic trends or the spread of telecommuting thathas been triggered by COVID-19

Invest in properties that can be expected to further③ Value creation
Value improvement through regional
development and area management

improve profitability and asset value by continuously
developing over time alongside the entire region
through excellent regional development and area

Value
Creationmanagement, instead of only focusing on the value ofindividual properties11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

88.4%

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

Head office location of IPO companies (2021)(Companies)
30
25

24

20

17

15
10

10

9

7
4

5
0

Minato港区
ward

Shibuyaward

Chiyodaward

Shinjuku
ward

Chuo
ward

Shinagawaward(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 2021 whose head
offices are located in Tokyo.

IT firms located in Minato ward
Apple
Microsoft
Meta Platforms
NVIDIA
Tencent
Cisco Systems
Qualcomm
Netflix
Softbank
Baidu
m3

Nexon
Oracle Japan
SBI Holdings
Mercari
JMDC
Money Forward
GREE
Monex GroupNHN JAPAN
Appier Group
Bengo4.com

JTOWER
MedleyAirTrip
OpenDoor
ExaWizards
BASE
WingArc1st
Speee
UzabaseZIGExN
Enigmo(Source) Prepared by the Asset Manager based on the disclosed data etc. as ofFebruary 28, 2022.

13

2-10 (2) Quality of assets
Premium Properties(Excellent comfort and safety with extensive facilities)

Strong demand for headquarter offices＜Overview and facilities of representative properties＞
Property nameGross floor
area

Access fromthe nearest
stationNumber ofshops &
restaurants

Roppongi Hills

Connected to758,203㎡- Roppongi
Station

222

Toranomon Hills

791,495 - Connected to(After total Toranomon
completion) Hills Station

ARK Hills

2-minute walkfrom Roppongi
310,979㎡1-chome
StationANA InterContinental
52 (THANN SANC TUARY

3-minute walkfrom
151,106㎡Onarimon
Station17 (Atago Gre en Hills SPA)

Atago Green Hills

Hotel
(spa)

Grand Hyatt Tokyo(NAGO MI SPA AND FITNESS)

91 Andaz Tokyo(C urrent) (AO SP A AND CLUB)SPA AKASAKA)

Conference
Incubation
Members’ club

Cultural facility
Observatory

Residential
SA

Academyhills
Ropponngi Hills
Club

Mori Art Museum
Tokyo City View
TOHO Cinemas

Ropponngi Hills
Residence

Toranomon Hills
Forum
ARCH

-

Toranomon Hills
Residential Tower

KaleidoWorks
ARK Hills Club-

Suntory Hall

-

Green
coverage ofthe site

29.8%

30.6%
(Mori Tower)

ARK Towers

42.1%

Atago Green Hills
Forest Tower

51.5%(Source) Prepared by the Asset Manager based on disclosed materials as of August 31, 2022.
(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..

14

2-11 (2) Quality of assets
Superior environmental performance

Excellent earthquake resistance
performance
A group of properties based on high quake-resistant engineering
standards stipulated by Mori Building, the sponsor of MHR

Ratio of GB certified
properties in portfolio

Highest quality
among all J-REITs

93.5%

Level above the new earthquake
resistance standard (Note)

PML

Roppongi Hills Mori Tower

◎

0.59%

ARK Mori Building

◎

0.78%

Koraku Mori Building

◎

0.73%

ARK Hills South Tower

◎

1.56%

Toranomon Hills Mori Tower

◎

0.50%

Holland Hills Mori Tower

◎

0.85%

Akasaka Tameike Tower

◎

1.79%

Atago Green Hills MORI Tower

◎

2.35%

Property name

In highest ratings
72.1%※ In acquisition price base by excluding Laforet Harajuku (Land)

CASBEE for Real Estate: Rank S(Note) Earthquake resistance performance above standards stipulated in the current
Building Standards Act

Firm ground
Located in area with firm ground at higher altitudes where liquefactionis less likely to occur

Roppongi Hills
Mori Tower

ARK Mori
Building

Atago Green Hills Toranomon Hills(MORI Tower)
Mori Tower

CASBEE forReal Estate : Rank A

Akasaka Tameike
Tower

Koraku Mori
Building

Holland Hills
Mori Tower

DBJ Green Building
Certification: Four stars

ARK Hills
South Tower<Topographical map of ground height above sea levelin Tokyo Metropolitan Area>

Toranomon
RoppongiKamiyacho(Source) Geographical Survey InstituteArea where the properties
owned by MHR are located15

2-12 (2) Quality of assets
Ecological Networks
MHR’s properties have a high green coverage ratio and provide comfortable spaces for tenants while creating green spaces based on the“Tokyo Environmental Master Plan” of Tokyo Metropolitan Government and ”Minato City Greenery and Water Comprehensive Plan” of Minato
Ward, so the spaces act as “ecological network(Note) hubs” in which living creatures can dwell in and use as stopping points when they travel
between green spaces such as the Imperial Palace and Shiba Park.

Mohri Garden(Roppongi Hills)

Rhyothemis fuliginosadragonfly (Toranomon Hills)

Japanese tit(Roppongi Hills)

Oval Plaza(Toranomon Hills)

Roppongi Sakurazaka(Roppongi Hills)

Along Atagoshita Avenue(Atago Green Hills)

Slope green area
(ARK Hills South Tower)(Note) There is a need to create conditions under which living things can live easily, allowing movement by linking green areas thatform the living bases for creatures with small-scale green areas and roadside trees. Such a network of habitats is referred toas an ecological network (extracted from Biodiversity and Greening Guide, Minato Ward).

Suntory Hall rooftop(ARK Hills)

16

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

Toranomon Hills Business Tower(Toranomon Hills area)(Completed January 2020)

Toranomon Hills
Mori Tower

Toranomon Hills
Residential Tower

Completion: January 2022

Completion: May 2014

Toranomon Hills
Station Tower

Planned completion: July 2023

Toranomon Hills
Business Tower

Completion: January 2020

Total area: approx. 7.5ha
Total floor area: approx. 800,000m2
Office space: approx. 300,000m2
Residential units: approx. 720
Retail space: approx. 26,000m2
Green space: approx. 15,000m2

Toranomon Hills Station
on Hibiya subway line
Opened: June 2020（c）Mariko Mori≪Cycloid Ⅴ≫

An international-standard, large-scale officebuilding with an innovation center
Business Tower is a 36-story office tower, featuring internationalstandard, large-scale office space of approximately 96,000m², and retailfacility area of approximately 7,600m².
On the 4th floor is a large membership-based incubation center “ARCH,”
which was established especially to support large enterprises' internalbusiness restructuring and new business creation. It boasts around3,800m² of office work space and has become a base for Japan's uniqueinnovation ecosystem.
From the first basement floor to the 3rd floor, commercial spaces with a
total of 58 restaurants and stores support global lifestyles.
The 3rd floor houses Toranomon Yokocho, a landmark dining facility
featuring offerings from famous stores from all over Tokyo.

17

2-14 (3) Value creation
Toranomon Hills Station Tower(Projected completion July 2023)

Obtained LEED ND and WELL preliminary
certification
Tokyo’s first Platinum LEED ND, the highest rank

The Toranomon Hills Area Project and Toranomon Azabudai Project
have obtained preliminary certification for the top rank of Platinum of
the U.S. Green Building Council’s Leadership in Energy &Environmental Design (LEED) (Note1) certification in the Neighborhood
Development (ND) category. Even on a global scale, it is rare for acity-center mixed-use development to obtain the rank of Platinum.
Toranomon Hills Station Tower (Block A-1) and Toranomon Azabudai
Project’s Block A have obtained preliminary certification for theCouncil’s WELL (Note2) certification and expect to obtain the top rank of
Platinum after completion.

A super-high-rise mixed-use tower project
integrating the station into the complex
This project will be a 49-story, approximately 266m super-high-rise
tower with world-class 3,306m² office floors, retail facilities
integrated into a plaza, and an international-standard hotel.
The top floors will contain an extensive mixed-use facility with aforum for wide-ranging business events, a gallery and restaurants,
forming a hub for new business and innovation.
In addition to a bustling public plaza connected to the station, apedestrian deck above Sakurada Avenue will create a multi-layer
pedestrian network serving as a new transit hub for the Toranomon
Hills area.

ⓒDBOX for Mori Building Co.

Oval Plaza at Toranomon Hills Mori Tower

Central squarein Toranomon-Azabudai Project (image)(Note 1) LEED is one of the world’s most widespread environmental evaluation
systems for buildings, evaluating building and neighborhood environmental
performance through efficient water and energy usage, interior environments,
sustainable material use, etc. LEED was developed by the U.S. Green Building
Council.
(Note 2) WELL is the world’s first building standard to focus on the effect of building
environments on human health and wellness. It mainly evaluates interior
environments and health-related facilities and services. WELL is managed by
the U.S. Green Building Council.

18

2-15 (3) Value creation
Development around MHR’s properties (Toranomon-Azabudai Project: projected completion 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 approx. 861,500m², with approx.
213,900m² of office space, 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 approx. 330m in height.
Offices in the main tower, the West Tower and Podium Building
will encourage free and creative work.

ⓒDBOX for Mori Building Co.

“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 landscaping totaling
approx. 2.4 ha including a 6,000m² central square.
ⓒDBOX for Mori Building Co.

ⓒDBOX for Mori Building Co.

ⓒDBOX for Mori Building Co.

ⓒDBOX for Mori Building Co.

ⓒDBOX for Mori Building Co.

19

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

Toranomon Hills Area
Innovation Program
developed in the U.S.

Meet up ＠
TORANOMON HILLS“Thursday Gathering” bySponsor hosted this event to

Venture Café, a sister

expose the various communities

organization of Cambridge

formed by Toranomon Hills to a

Innovation Community,

wide range of visitors with thepromotes exchanges between

hope that people would build

participants to support the

new connections, experience newcreation of new innovations.

ideas, and deepen connections
with people beyond theMeet up @ TORANOMON HILLS(Toranomon Hills Mori Tower &Business Tower,etc.)

Thursday Gathering(Toranomon Hills)

community.

Roppongi Hills Area

ARCH
(Toranomon Hills Business Tower)

Incubation Center“ARCH”Art Festival
representing Tokyo“ARCH,” a large membership-“Roppongi Art Night,” an art

based incubation center was

festival representing Tokyo,

established especially to support

integrates art and the city tolarge enterprises' internal

improve the cultural image ofbusiness reforms and new

Roppongi and create abusiness creation. It boasts

pioneering model of urban

around 3,800 m2 of office work

development through art in thespace and is becoming a basefor Japan's unique innovation
ecosystem.

(c) Roppongi Art Night Execution Committee

metropolis Tokyo.

Roppongi Art Night(Roppongi Hills Arena)20

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

KaleidWorks(ARK Mori Building)

Workplace where
venture capitalgathers

Pioneer of urban
markets:
Hills Marche“KaleidWorks” consists of an

Hills Marche is the first Marche

office area where independent

Japon Project of the Ministry ofventure capitalists representing

Agriculture, Forestry andJapan are located and a lounge

Fisheries. Based on the concept

area. People who want tothat “the best ingredients are ininnovate in a wide range ofthe city," through fresh, local

fields can interact on common

food Hills Marche reinforces thegrounds in shared spaces.

Hills Marche(ARK Karajan Place)

Close experience ofhigh-quality music

ARK HILLS KIDSCOMMUNITY
Based on the idea of creating “a“ARK Hills Music Week” is acity that is friendly to kids andunique music festival wherefamilies,” this project provides

people can casually enjoy high-formative experiences to children

quality music. Many speciallythat will help set them up for aselected music events where

fulfilling future, including

people of various ages andexposure to lush nature, top-

nationalities can interact withclass music and art, and cuttingGREEN WORKSHOP（ARK Garden）

rich lifestyle of ARK Hills.

edge technology.

ARK Hills Music Week
(ARK Karajan Place)each other in the city are held
during the period.

21

2-18 External growth
Aim to continuously increase DPU and NAV per unit through external growth that focuses onpremium properties in central Tokyo
While disposing of parts of Laforet Harajuku (Land), make new acquisitions concurrently to expand portfolio size and continuously increase DPU
over the medium to long term.
Acquisition of premium properties in central Tokyo without competitive bidding is possible by utilizing the abundant and extensive property
pipeline of Mori Building, the sponsor.

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

200

⇒ Estimate

145

6.3%

149

5.5%

4.7%

4.0%

100

3.1%
120

114
100
92

80
2007

2008 2009 2010

91

95

2011 2012 2013

99

103

6.7%
5.9%

5.6% 5.5%

109

127

1.9%

5.0
4.0

131

113

7.0
6.0

4.5%
3.6%

120
2.6%

Vacancy rate

8.0

7.3%

160

Rent index

9.0

8.1%

180

140

10.0

8.9% 9.0% 8.7%

3.0
110

107

1.6%

2.0

106

106

2023

2024 2025

102

1.0
0.0

2014 2015 201620172018 20192020

Change in return on real estate investment

2021 2022(Source)
Prepared by the Asset Manager based on the“Office Rent Forecast in Tokyo(2022-2025),”etc.
by the Office Market 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.

Mori Building’s extensive property pipeline

(%)

4.8
4.5

4.2%

4.2
3.9

4.2%

Number of properties under(as of the end of March, 2022)(as of April, 2022)

2.3 trillion yen

3.8%

3.8%

Total assets:management: 97 buildings

3.5%

3.6

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

3.3

3.4%
3.0%

3.0%

3.0%

3.0

MHR has “preferential negotiation rights”

2.7
06

08

10

12

14

16

18

20

22

(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

409

Growth utilizing
sponsor’s pipeline

400

390

390

26th
Jul.
2019

28th
Jul.
2020

402

billion yen

360

350
300

339

338

20th
Jul.
2016

22nd
Jul.
2017

281

252

250

230
201

200

211

212

210

8th
Jul.
2010

10th
Jul.
2011

12th
Jul.
2012

159

150
100

142

2nd
Jul.
2007

4th
Jul.
2008

6th
Jul.
2009

14th
Jul.
2013

16th
Jul.
2014

18th
Jul.
2015

24th
Jul.
2018

30th
Jul.
2021

32nd
Jul.
2022

Acquired premium properties in central Tokyo lower than appraisal values(Acquired as of August 2, 2021)
Toranomon Hills Mori Tower
Toranomon Hills
Mori Tower

Recent officeacquisition bylisted REITs (Note 1)△ 20.2 %△ 6.2 %

Building age

6.6 years

22.0 years

PML

0.50 %

4.33 %

Discount ofacquisition price toappraisal value (Note 2)

Anticipatedacquisition price

7,870 million yen

Appraisal value

9,856 million yen

Location

Minato-ku, Tokyo(Note 1) Average based on information of acquisitions (23 properties) disclosed from August 2020 to January 2021.
(Note 2) Discount of acquisition price to appraisal value = (Acquisition price – appraisal value) / appraisal value.

23

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 2022.”(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
Maintained high occupancy rate amidst COVID-19 pandemic
Even as office vacancy rates rose in the five central wards, including Minato Ward, a high occupancy rate was maintained due to the excellent
location and quality of MHR’s properties.
Although the occupancy rates and rents for several pass-through-type offices have weakened, these properties account for only a small portionof the entire portfolio and thus the impact was minimal.

Comparison of Vacancy Rates in Central
Tokyo Offices (since January 2020)

Trend in occupancy rates
(%)

100%

100

99.7%

(%)

99.6%

9.0

98.9%
98.0%

98.2%
97.1%

96.2%

Minato Ward

8.0

94.9%

94.8%

MHR

7.0

94.8%

8.5%

8.2%

5 central wards

96.1%

95

8.3%

6.5%

6.3%

6.3%

6.4%

6.0
4.8%

5.0

90
4.0

3.0

Office (total)

2.8%

Residential (total)

85

3.5%

2.0

1.8%

Office (pass-through)

1.0

1.9%

2.2%
1.7%

1.6%

1.5%
0.4%
0.0%

0.0

80
27th
Jan. 2020

28th
Jul. 2020

29th
Jan. 2021

30thJul. 2021

31stJan. 2022

32nd
Jul. 2022

Jan.
2020

Jul.

Jan.
2021

Jul.

Jan.
2022

Jul.

(Source) Prepared by the Asset Manager based on “Office Market Data” by Miki Shoji Co.,
Ltd.
(Note)
Figures of “Mori Hills REIT” are the total figures for the office sections of all
owned properties.

25

2-22 Internal growth
Result of rent revision and tenant replacement (pass-through type)Net impact of rent revisions accumulated since 16th period

Rent revision rate (Office)(Monthly rent basis)

(%)

+8

+7.1%

※ Average of all contracts subject to revision(million yen)
+35
Residential

+5.6%

+6

Office+30+25.7 mn yen

+3.6%

+4

+25
+21.8 mn yen

+2

+20

+0.6%

27th
Jan. 2020

28th
Jul. 2020

29th
Jan. 2021

30thJul. 2021

△0.7%

31st
Jan. 2022

△1.2%

32nd
Jul. 2022

Rent revision rate (Residential)

5.7

6.0

6.2

20.5

21.3

21.5

21.4

20.7

28th
Jul. 2020

29th
Jan. 2021

30thJul. 2021

31stJan. 2022

32nd
Jul. 2022

4.9

+10

16.8
+5

+0
27th
Jan. 2020(%)+8※ Average of all contracts subject to revision

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

+6.0%
+6

(million yen)

+4.8%

+20

+3.6%

+4

+15

+1.5%

+2.7%

+2

+10

+1.1%

+0

△2

5.6

5.2

+15

+0

△2

+27.0 mn yen +27.3 mn yen +27.5 mn yen +27.0 mn yen(Office)
△3.1%
△9.9%

(Residential)

0.0※ Average of
all contracts
with replacement

△0.2%

△2.8%

29th
Jan. 2021

30thJul. 2021

31stJan. 2022

32nd
Jul. 2022

-0.1
-0.2
-0.3

Old tenant-0.3

New tenant

-0.4
-0.4

+0

28th
Jul. 2020

-0.1

-0.2

+5

27th
Jan. 2020

0.1

31st
Jan. 2022

32nd
Jul. 2022

31stJan. 2022

32nd
Jul. 202226

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)

400

180

160

160
140

300

Above market rent
(over +5%)

120
100

200

Above market rent
(under +5%)100

Below market rent

80

54

60
40

36

30

32

36

35th
Jan. 2024

36th
Jul. 2024

37th
Jan. 2025

20

0

0

31st
Jan. 2022

32nd
Jul. 2022

Rate of rent gap

+3.4%

+6.0%

This indicates that current rents
are above market rents(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 July 31, 2022

33rd
Jan. 2023

34th
Jul. 2023

38th
Jul. 2025
or after

The occupancy rates and rents for several pass-throughtype offices have weakened, and the rate of the rent gap
is increasing. However, the impact has been minimal
because these properties account for only a small portionof the entire portfolio.
Offices (fixed rent master lease type) have even higher
quality, and occupancy rates of their end tenants havecontinued to remain high, so MHR has no concerns
regarding contract renewals.

27

2-24 Internal growth
Overview of fixed rent master lease
Ratio of fixed rent master lease● Structural changes to office demand will not
impact premium properties in central Tokyo
Fixedrent
66.4%● Display a defensive posture to the temporary
uptick in vacancy

Realize stable
cash flow

Realize stable cash flow in both the short term
and the mid to long termMonthly 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. 10.8% of entire
property)
Total

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

475.2

225.2

29.5%

14.0%

Breakdownof property

Leased floor
area
2
(m )

Payer ofmanagement
associated fee

Monthly rent by contract expiration (mn yen)
2023

23rd & 24th

8,993.45－

19th & 22nd

8,609.47

20th

3,879.19

28th

4,460.13

25th

4,156.66

26th, 27th & 29th
13th/12th & 22nd
23rd & 25th

5,742.95

4th, 15th & 24th

7,680.52

DHC

3,212.41

2024

2025

2026 or after

Expiration of
the leaseagreement

－

－

99.2

Jul. 2026

95.0

－

－

－

Sep. 2023

－

42.8

－

－

Jul. 2024

－

－

49.2

－

Sep. 2025

－

－

－

45.8

Jan. 2026

12,942.64

－

－

－

142.9

Mar. 2026

7,952.55

－

－

－

77.9

Jan. 2026

－

－

－

55.5

Jan. 2026

－

－

－

73.8

Jan. 2026

Master lessee

－

－

－

17.9

Mar. 2028

MHR

MHR

168.7

10.5%

Office, residential& retail

29,667.58

Master lessee

－

－

－

168.7

Apr. 2027

201.6

12.5%

Part of 28th to
35th floors

19,046.16

MHR

－

－

－

201.6

Jul. 2027

1,070.8

66.4%

95.0

42.8

49.2

883.7

(8.9%)(4.0%)(4.6%)(82.5%)

28

2-25 Financial management
Maintaining a strong financial structure with a credit rating (JCR) of AA (stable), and LTV (appraisalvalue basis) of 36.6%
The fund procurement environment has not changed despite the COVID-19 pandemic. MHR’s policy is to continue to maintain LTV (book-value
basis) in the mid-40% range and the average remaining duration of debt at 4.0 years or longer.
Anticipate interest rate fluctuation risk over the medium to long term by constantly monitoring economic conditions and interest rate trends,
taking appropriate measures when necessary.

Reduction in LTV

Overview of debt financing

(%)

60.0

57.4%

End of 31st
periodLTV (appraisal value basis)

LTV (book value basis)

53.7%

55.0

Debt Balance

50.0
49.3%

46.2%

45.4%

48.8%

46.8% 46.6%

45.8%

45.7%

(Note 1)

LTV (book value basis)(Note 2)

LTV (appraisal value basis)

45.0

Avg. remaining duration

42.3%

40.0

40.4%

36.6%
38.2%

35.0
9th
10th
11th
period period period
Jan.
2011

Jul.
2011

Jan.
2012

・・・

38.1%

37.7%

23rd
24th
25th
26th
27th
28th
29th
30th
31st
32nd
period period period period period period period period period period
Jan.
2018

Jul.
2018

Jan.
2019

Jul.
2019

Jan.
2020

Jul.
2020

Jan.
2021

Jul.
2021

Jan.
2022

Jan. 31, 2022

Jul. 31, 2022

192,422 mn yen

192,422 mn yen

46.8%

46.6%

37.7%

36.6%

4.6 years

4.5 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)].

Jul.
2022

Long-term debt ratio/Fixed rate ratio

Reduction in average interest rate(including borrowing expenses)
2.25
(%)

End of 32nd
period＜Long-term debt ratio＞＜Fixed rate ratio＞

2.1%

2.0%

2.00
1.75
1.50

Long-term
100%

1.25
1.00

0.74%

0.75

0.69%

0.68%

0.63%

Fixed
88.4%

0.58% 0.56%

0.50
0.25
9th
10th
11th
period period period
Jan.
2011

Jul.
2011

Jan.
2012

・・・

23rd
24th
25th
26th
27th
28th 29th
30th
31st 32n d (Note) Total interest-bearing debt cost is calculated as [(interest expenses + interest
expenses on investment corporation bonds + borrowing expenses + amortization
period period period period period period period period period period
of investment corporation bond issuance costs) ×365 ÷operating days during
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
2018
2018
2019
2019
2020
2020
2021
2021
2022
2022
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
4.5

4.0

4.0

4.3

4.4

4.6

4.7

4.6

4.5

4.6

Japan Credit Rating (JCR)

4.5

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

・・・

23rd 24th 25th 26th 27th 28th 29th 30th 31st 32nd
period period period period period period period period period period
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
2018 2018 2019 2019 2020 2020 2021 2021 2022 2022

Overview of maturity (as of July 31, 2022)(billion yen)

20
Long-term loans

Investment corporation bonds

15

10

8.0

5

9.2

11.2

8.2
7.6

6.0
0
33rd
periodJan.
2023

Averageinterest 0.5%
rate

9.1

8.8

2.0

13.6

14.2

13.1

14.3

12.4

4.8
6.3

5.0
2.0

9.8

11.0
4.0

34th
period
Jul.
2023

35th
period
Jan.
2024

36th
period
Jul.
2024

37th
period
Jan.
2025

38th
period
Jul.
2025

39th
period
Jan.
2026

40th
period
Jul.
2026

0.6%

0.7%

0.6%

0.5%

0.7%

0.5%

0.5%

41st
period
Jan.
2027

2.0
42n d
period
Jul.
2027

43rd
period
Jan.
2028

44th
period
Jul.
2028

45th
period
Jan.
2029

46th
period
Jul.
2029

47th
period
Jan.
2030

48th
period
Jul.
2030

2.8

3.8

49th
period
Jan.
2031

50th
period
Jul.
2031

1.5

1.0

51st
period
Jan.
2032

52nd
period
Jul.
2032

30

2-27 Sustainability initiatives
Important ESG Issues (Materiality)
Materiality● Reduce greenhouse gas emissions

and promote energy saving at
owned properties
Environment ● Use of renewable energy

E● Coexist with nature

Main Initiatives

Main related SDGs

● Participate in Japan Climate Initiative● Support the TCFD recommendations● Promote energy savings (such as introducing the energy saving

technologies)● Expand use of renewable energy● Promote greenery and take measures against heat island● Protection of biodiversity● Various initiatives to obtain Green Building certifications and make● Response to sustainability certifications

improvements● Implement training regarding Green Building● BCP measures (disaster prevention

and building resilience)● Tenants' health, comfort andconvenience

S
Social● Respect for human rights● Promote diversity● Enhance BCP Measures● Strengthen emergency management systems and implement

general disaster-readiness training● Initiative for barrier-free accress● Due diligence when acquiring real estate● Conduct Tenant Satisfaction Survey● Create an appropriate environment for a whistleblower system● Implement human rights and diversity training (including LGBT)● Create a pleasant working environment for women● Provide personnel evaluations and feedback from diverse● Talent development

perspectives including compliance and ESG initiatives● Provide various course-based training and qualification acquisition systems● Promote a healthy and comfortableG

work environment and improve
employee's work/life balance● Increase employee's satisfaction● Promote paid holiday acquisition and overtime work reduction● Maintain systems for employee safety and health management● Implement health checks● Conduct Employee Satisfaction Survey● Mutual communication with Stakeholders

See "ESG Report"● Strive for fair and effective corporate

governance● Adhere to compliance and corporate ethics
Governance● Prevent conflict-of-interest transactions● Identify risks and manage responses● Respond to requests for ESG information
disclosure● Implement evaluation of the effectiveness of the board of directors● Conduct compliance training including fraud prevention● Regularly expose risks, as well as monitor and respond to risks

appropriately● Enhance ESG information disclosure on the website● Issuance of ESG Report31

2-28 Sustainability initiatives
MSCI ESGMHR has been selected as a constituent of the MSCI Japan ESG
Select Leaders Index, provided by MSCI. This index is composed ofcompanies selected by MSCI from among the constituents of the
MSCI Japan IMI Index for excellence in ESG initiatives, and has
been selected by the Government Pension Investment Fund (GPIF)
for its passive management index.

GRESB Assessment
In the 2021 GRESB Real Estate Assessment,
MHR received a “Green Star” rating for thetenth consecutive year, and received thehighest evaluation of “5 Stars” in the GRESB
Rating(Note).
(Note) The comparative assessment of the overall score
was initially introduced in 2016. It is a global
ranking utilizing a five-star scale (“5 Stars” as thehighest rank).

DISCLAIMER
THE INCLUSION OF MHR IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS,SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP,
ENDORSEMENT OR PROMOTION OF MHR BY MSCI OR ANY OF ITS AFFILIATES. THE MSCIINDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND
LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

GRESB is an annual benchmarking assessment tomeasure ESG (Environmental, Social and Governance)
integration of real estate companies and funds, as well as
the name of organization which runs the assessment. It
was founded in 2009 by a group of major European
pension funds who played leading roles in launching
Principles for Responsible Investment (PRI).

ESG Report

MHR’s Website

This report describes the overall efforts of MHR and the AssetManager Mori Building Investment Management Co., Ltd. tocontribute to the realization of a sustainable society and to
maximize unitholder value over the medium to long term.

The pages dedicated to ESG have expanded, and information
is proactively disclosed.

URL: https://www.mori-hills-

URL: https://www.mori-hills-

reit.co.jp/en/ir/library/esg_report/tabid/456/Default.aspx

reit.co.jp/en/outline/Sustainability/tabid/171/Default.aspx

32

2-29 TCFD summary
Information reporting based on TCFD recommendations
MIM announced its support for the recommendations issued in June 2017 by the Financial Stability
Board’s Task Force on Climate-related Financial Disclosures (TCFD), which was established by the
Financial Stability Board (FSB).
MIM will press ahead with risk management and initiatives for climate change based on therecommendations and carry out information disclosure.

Indicators and Targets
MHR revised its targets in June 2022 to promote further reduction.
We aim to reduce CO2 emissions of MHR’s and MIM’s offices and properties owned by MHR (total emissions; Scopes 1, 2 and 3) by 50%
by FY 2030 when compared with FY 2019 as the baseline year and achieve net-zero emissions by FY 2050.

＜Carbon Dioxide Emission and Intensity＞
Medium-term target

Long-term target

Performance(FY 2030)(FY 2050)(FY 2021)

Net-Zero(total amount basis:
vs FY 2019)50% reduction(total amount basis:
vs FY 2019)(t-CO2)50,0006.9% reduc tion

(Unit：t-CO2)(kg-CO2/m2)
Intensity

103.7

Scope 1

1,626

1,843

1,767

1,718

1,696

Scope 2

18,376

19,285

18,952

16,151

15,770

Scope 3

9,335

10,766

10,531

10,624

11,627

101.0
95.9

100

40,00081.5

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

31,89430,000120

77.9

31,251

29,33728,49380

29,09460

20,00040

Total

29,33731,894

31,251

28,49329,094

Verification/Guarantee rate

78.9%

77.4%

77.4%

77.7%

78.2%

C over rate

87.0%

87.4%

87.6%

87.8%

88.0%

10,00020

00
FY 2017

FY 2018

FY 2019

FY 2020

FY 202133

2-30 TCFD summary
Strategy
Climate-Related Scenario Analysis
This analysis aims to understand the future risks and opportunities that climate change-driven extreme weather and rising social demandfor climate change countermeasures present to MHR and MIM, verify the efficacy of current climate change countermeasures and serve infuture strategy formulation as necessary. In accordance with the TCFD’s recommendations, we have analyzed both the 2ﾟC and 4ﾟCscenarios, aiming to ensure resilience in varying weather conditions and social environments and achieve sustainable business growth.

Risk
type

Driving Forces

Increased pricing on GHG emissions

Transition
risks

Mandates on and regulation of existingproducts and services●Substitution of existing products andservices with low-carbon options●Changing consumer behavior andpreferences

Physical
risks

Risk

Increased carbon tax burden●Taxation on owned properties for their GHG emissions
due to carbon tax
Increased investment in repair work and facilities to
respond to regulations●Strengthening of standards for energy conservation(zero-energy building, ZEB) of buildings andintroduction of regulations on total emissions
Reduced demand for properties that perform poorly inenergy conservation●Increased number of tenants who emphasize energy
conservation due to increased environmental awareness

Increased stakeholder concerns or
negative feedback

Increases in fund-raising costs●Buildings that do not save much energy lose value
as ESG investors multiply

Increased severity of extreme weather
events such as typhoons and floods

Increases in repair costs for damages to owned
properties and degradation of existing assets●Damage and destruction to owned properties due
to typhoons or floods

Rising mean temperatures

Increases in utility costs●Increases in utility costs

Financial Impact andPeriod Maximizing
2℃
Scenario

4℃
Scenario

Medium―Long-term
Small

Small

Mediumterm

Mediumterm

Small

Small

Long-term Long-term
Small

Small

Long-term Long-term
Small

Small

Opportunities and Countermeasures

Reduce GHG emissions●Increase percentage of renewable energy●Introduce energy-saving equipment and energy
management system
Reduce utility costs●Renovation to meet building energy-saving
standards (ZEB)●Invest in facilities
Increased demand for highly energy-saving properties●Acquire Green Building Certifications●Disclose environmental performance information
Lower fundraising costs●Increase ESG evaluation rating●Conduct green financing●Own highly resilient properties●Take appropriate measures based on flood riskLong-term Long-term
Small

Small

Long-term Long-term

assessment●Introduce energy-saving technology and increase

the green ratio●Work with tenants to save energy34

2-31 TCFD summary
2ﾟC Scenario World: Low-Carbon Society (as of 2050)＜Analysis Result＞
The 2ﾟC scenario presents significant transition risks particularly if Japan introduces a high carbon tax to reduce CO2 emissions andMHR’s property management costs increase due to taxes on properties’ CO2 emissions and renovations to meet stricter energy-saving
standards and other environmental regulations. Stricter regulations will also impact tenants’ office selection, reducing demand forproperties that save less energy than their peers. Furthermore, if we own a large number of such properties, the cost to raise funds
from investors and lenders could also increase.
In preparation for a transition to the low-carbon society of the 2ﾟC scenario and its accompanying risks, MHR has mainly acquired its
portfolio of highly energy-saving properties and those with high-level green building certifications to maintain competitiveness, andactively updates facilities on a continuous basis, so we deem these risks to have a limited impact on business.
Weather

Government

Generally, stay the same

Aggressive climate change policy

・ Little change in typhoon frequency

・ Introduction of high carbon tax

・ Little change in Japan’s flood
frequency

・ More government promotion of ZEBs,
stricter energy-saving standards

・ Slight rise in utility fees due totemperature increase

Investors/lenders

MHR

Increased ESG
investment/lending

Limited increase in energysaving investment

・ Demand for more corporate
ESG reporting・ Some increase in investment to meetenergy-saving standards but limited

・ Lower fundraising costs
for owners of highly
energy-saving properties

・ Increase in carbon tax
burdenClients (tenants)
Focus on energy saving in
office selection・ More tenant demand forhighly energy-saving
properties

・ Steady demand for highly
energy-saving properties35

2-32 TCFD summary
4ﾟC Scenario World: Intensification of Natural Disasters (as of 2050)＜ Analysis Result ＞
The 4ﾟC scenario forecasts increased renovation costs due to intensifying extreme weather and increased utility costs due to higher
average temperatures.
Because MHR invests in highly energy-saving, resilient properties located in areas with low flood risk, we deem these risks to have alimited impact on business.

Weather

Government

Increase in extreme weather frequency

Passive climate change policy

・ Increase in strong typhoon frequency

・ No introduction of additional carbon tax

・ Doubling of Japan’s flood frequency,
increase in risk of property flooding

・ Limited government promotion of
ZEBs, energy-saving standards

・ Rise in utility fees due to temperature
increase

Investors/lenders

MHR

Increase in importance ofphysical risk

Limited natural disastercountermeasures/energy-saving
investment

・ Little change in demand forcorporate ESG reporting・ Some property repair costs, operating
loss, etc. but limited

・ Lower fundraising costs
for owners of highly
resilient properties

・ Limited investment to meetenergy-saving standards

Clients (tenants)
Focus on disaster response in
office selection・ More tenant demand forhighly resilient properties

・ Steady demand for highly
resilient properties36

2-33 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.

37

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 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.

38

2-34 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.

39

Residence

Toranomon Hills Residence

Pleasing views of central Tokyo landmarks 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
With the completion of Toranomon Hills Business Tower, Toranomon Hills
Residential Tower and the currently under construction Toranomon Hills
Station Tower, 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.

40

3. Operation highlights

41

3-1 Factors that led to changes in dividends per unit
from the previous fiscal period
32nd period (Jul. 2022)

31st

33rd period (Jan. 2023) Forecast(yen/unit)

3,100

3,040
yen/unit

3,030
yen/unit

Dividends per unit

(forecast)

3,000
2,927
yen/unit

2,900

△50

△4

△4
＋371

△371

＋410

2,800
△215

2,700
△9

＋13

△13
△23

△2

＋10

2,600

Absence of NOI change Decrease in
Increase
drawdownof existing
rent fromin assetof reserve
properties
disposed managementforproperty
fee
reduction(32nd)
entry

OthersFinancingcosts
decrease

Gain ondisposition

Major factors behind change in NOI from existing properties:+ Residential rent (pass-through)+ Office rent (pass-through)+ Decrease in maintenance and repairs－ Increase in property management fee－ Increase in property taxes－ Utilities and other revenue (net)－ Increase in depreciation－ Property taxes for property acquired in 31st period (3-months)

Absence of NOI change Decrease ingain onof existing
rent from
disposition properties
disposedin previous
properties
period(32nd・33rd)

OthersDecrease
Gain onin assetdisposition
management
fee

Major factors behind change in NOI from existing properties:
+10
+7
+6
△9
△8
△5
△5
△4

+ Office rent (pass-through)+ Decrease in property management fee+ Residential rent (pass-through)－ Increase in maintenance and repairs－ Increase in property taxes－ Utilities and other revenue (net)－ Property taxes for property acquired in 31st period (3-months)－ Increase in other lease business expenses(Note) Factors that led to change are arrived at by dividing the change from the previous fiscal period by 1,916,330 units and indicated as an approximate figure in yen.

+12
+11
+3
△22
△7
△5
△4
△3

42

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

450
Existing properties

402

400

409

410

billion yen

31stperiod
Jan.
2022

32nd
period
Jul.
2022

390

352

350

339

338

21st
period
Jan.
2017

22nd
period
Jul.
2017

300

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

・・・

23rd
period
Jan.
2018

24th
period
Jul.
2018

25th
period
Jan.
2019

26th
period
Jul.
2019

27th
period
Jan.
2020

28th
period
Jul.
2020

29th
period
Jan.
2021

30th
period
Jul.
2021

43

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

(%)

130

60
Unrealized capital gain/loss

120

Unrealized capital gain/loss ratio

112
bn yen

110

50

98

100
90

40

80
70

28.4%

30

24.8%

60
50

20.2%
20

40
30

28

8.2%

10

20

11
10
0

0
△10
△20
△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△14.9%

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

△31

9th
period
Jan.
2011

10th
period
Jul.
2011

・・・

23rd
period
Jan.
2018

24th
period
Jul.
2018

25th
period
Jan.
2019

26th
period
Jul.
2019

27th
period
Jan.
2020

28th
period
Jul.
2020

29th
period
Jan.
2021

30th
period
Jul.
2021

31st
period
Jan.
2022

32nd
period
Jul.
2022

△10

△20

44

3-4 Appraisal value
Reflects the impact ofpartial disposition(million yen)
As of end of 31st period
Jan. 31, 2022
Principal
use

Property
name

PropertyNo.

Acquisition
price

Book
value

(A)
Appraisal
value(Note 1)

OfficeAs of end of 32nd period
Jul. 31, 2022

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
capitalgain/loss(B)-book
value

Roppongi Hills
Mori Tower

O-0

115,380

110,981

154,300

2.7%

160,200

2.6%

2.3%

2.7%

5,900

3.8%

49,218ARK Mori Building

O-1

62,48061,44666,8003.1%

69,000

3.0%

2.7%

3.1%

2,200

3.3%

7,553

Koraku Mori Building

O-4

27,20024,572

24,2403.3%

24,720

3.2%

2.8%

3.5%

480

2.0%

147

Akasaka Tameike Tower

O-6

43,93041,30734,3003.1%

34,900

3.0%

2.7%

3.1%

600

1.7%

Atago Green Hills

O-7

42,09039,91547,582

3.3%

48,988

3.2%

2.7%

3.4%

1,406

3.0%

△ 6,407

ARK Hills South Tower

O-8

19,15018,53524,8003.0%

24,800

3.0%

2.8%

3.2%

0

0.0%

6,264

Toranomon Hills
Mori Tower

O-9

56,30055,46073,944

2.5%

76,986

2.4%

2.1%

2.5%

3,042

4.1%

21,525

Holland Hills Mori Tower

O-10

16,330

16,29022,2003.1%

22,900

3.0%

2.6%

3.2%

700

3.2%

6,609

382,860

368,510448,166－

462,494－－－

14,3283.2%

93,983Sub total

9,072

Roppongi First Plaza

R-3

2,100

2,224

2,730

3.6%

2,800

3.5%

3.3%

3.6%

70

2.6%

575

ResidenRoppongi View Tower
tial

R-4

4,000

4,058

3,590

3.7%

3,680

3.6%

3.4%

3.7%

90

2.5%

6,100

6,282

6,320

－

6,480

－

－

－

160

2.5%

△ 378

20,292

20,52841,4003.8%

38,688－3.8%－

20,52841,400－38,688－－－△ 6.6%

18,15920,292△ 2,712409,252

395,322495,886－

507,662－－－

11,776

2.4%

112,339

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

S-1

△ 2,712△ 6.6%

197

18,159(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 31st period shows the discount rate used in the DCF analysis.

45

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

25th
periodJan. 2019(actual)

26th
periodJul. 2019(actual)27th
periodJan. 2020(actual)28th
periodJul. 2020(actual)29th
periodJan. 2021(actual)

30th
periodJul. 2021(actual)

31stperiodJan. 2022(actual)

32nd
periodJul. 2022(actual)

33rd
periodJan. 2023(forecast)

34th
periodJul. 2023(forecast)

Office rent (yen/tsubo)

30,84230,92431,02031,13931,30931,372

31,135

31,10931,04530,966

Residential rent (yen/tsubo)

15,302

15,49815,69815,766

15,741

15,77215,807

15,901

15,993

15,890

Office occupancy

99.7%

99.9%

100%

99.7%

99.6%

98.9%

98.0%

98.2%

98.7%

99.0%

Residential occupancy

97.7%

96.8%

96.2%

96.1%

94.9%

94.8%

94.8%

97.1%

97.1%

97.2%

Retail occupancy

100%

99.2%

98.8%

98.5%

98.9%

98.9%

98.9%

98.9%

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.

46

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

Residential: Rent and occupancy rate(yen/tsubo)

(%)
100

40,000(yen/tsubo)

(%)
100

25,00020,00030,00090

90

15,00020,00080
10,000

0

80

5,000
70

Feb.
2022

Mar.

Apr.

May.

Jun.

Jul.

Rent (yen/tsubo)

31,18331,005

31,10731,153

31,11931,089

Occupancy rate

98.2%

98.4%

98.1%

98.1%

98.1%

98.3%

Top 5 tenants
End tenantsMori Building Co., Ltd.

0

70

Feb.
2022

Mar.

Apr.

May.

Jun.

Jul.

Rent (yen/tsubo)

15,791

15,811

15,83015,932

16,03915,999

Occupancy rate

95.6%

96.3%

97.2%

98.2%

97.6%

97.8%

Tenant Contribution by Industry
Type-Office

Property nameLeased space(N ote 1 )Ratio

Roppongi Hills Mori Tower
ARK Mori Building
Koraku Mori Building
Atago Green Hills
Toranomon Hills Mori Tower

116,635.93 m2

65.5%
Others21.5%

Mylan Seiyaku Ltd.

Holland Hills Mori Tower

3,458.53 m2

1.9%

Mitsubishi UFJ Research andConsulting Co.,Ltd.

Holland Hills Mori Tower

3,436.90 m2

1.9%

Mori Building Ryutsu
System Co., Ltd.

Laforet Harajuku (Land)2,385.51 m2

1.3%

Japan Worker's Credit Fund
Association

Koraku Mori Building

1,851.87 m2

1.0%

SoldOut, Inc.

Koraku Mori Building

1,851.87 m2

1.0%

129,620.61 m2

72.7%

Total of top 5 tenants

10,000(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 July 31, 2022.

Law firms,
etc .
11.3%
Finance/insurance
11.4%

Information
andc ommunic ation
36.9%

Manufacturing
18.9%(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 July 31, 2022.
It is multiplied by the relevant percentage of ownership for each property.
(Note 2) Business types are classified by the Asset Manager.

47

3-7 Financial overview (as of July 31, 2022)
Long-term debt ratio/Fixed rate ratio＜Long-term debt ratio＞

Fixed
88.4%

Major financial indicator
End of 31st period

End of 32nd period

Jan. 31, 2022

Jul. 31, 2022

192,422 mn yen

192,422 mn yen

Long-term loan

172,122 mn yen

172,122 mn yen

Investment corporation bonds

20,300 mn yen

20,300 mn yen

46.8%

46.6%

LTV (Appraisal value basis) (Note 2)

37.7%

36.6%

DSCR (Note 3)

16.6x

19.6x

4.6 years

4.5 years

0.43%

0.42%

Debt balance

LTV (Book value basis)(Note 1)

Avg. remaining duration
Weighted avg. interest rate

Lenders

Balanc e

Ratio

MUFG Bank, Ltd.

41,837 mn yen

24.3%

Mizuho Bank, Ltd.

29,643 mn yen

17.2%

Sumitomo Mitsui Banking Corporation

24,217 mn yen

14.1%

Sumitomo Mitsui Trust Bank, Limited

20,745 mn yen

12.1%

The Bank of Fukuoka

8,800 mn yen

5.1%

The Norinc hukin Bank

8,000 mn yen

4.6%

Resona Bank, Limited.

7,430 mn yen

4.3%

Shinsei Bank, Limited

6,200 mn yen

3.6%

Development Bank of Japan Inc.

5,950 mn yen

3.5%

Mizuho Trust & Banking Co., Ltd.

4,800 mn yen

2.8%

The Nishi-Nippon City Bank, Ltd.

4,000 mn yen

2.3%

The Chugoku Bank, Limited.

2,500 mn yen

1.5%

Aozora Bank, Ltd.

2,000 mn yen

1.2%

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%

Nippon Life Insuranc e Company

1,000 mn yen

0.6%

Mitsui Sumitomo Insurance Company, Limited

1,000 mn yen

0.6%

The Bank of Yokohama,Ltd.

1,000 mn yen

0.6%

Total borrowings

172,122 mn yen

100%

Investment c orporation bonds

20,300 mn yen

Total interest-bearing debt

192,422 mn yen＜Fixed rate ratio＞

Long-termLong-term
100%
100%

End of 21st period
Jan. 31, 2017

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].

48

3-8 Unitholders breakdown (as of July 31, 2022)
Unitholders breakdown

End of 32nd period＜Number of unitholders＞
Other domestic
Financialcorporations
institutions
1.7%
Foreign(Incl. securities
corporations
companies)
and individuals
1.3%
2.2%

＜Number of investment units＞

Foreigncorporations
and individuals
17.1%

Individuals
6.0%

Other
domestic
corporations
16.7%

Individuals
94.8%

End of 31st period

Top 10 unitholders

Other domestic
Financialcorporations
institutions
1.6%
Foreign(Incl. securities
corporations
companies)
and individuals
1.4%
2.2%

Financial
institutions(Incl. securities
companies)
60.2%

Foreigncorporations
and individuals
16.6%(Investment
trust 32.8%)

Individuals
6.2%

Other
domestic
corporations
16.6%

Individuals
94.8%

Financial
institutions(Incl. securities
companies)
60.7%

Name

Number of units
held

1

Custody Bank of Japan, Ltd.
(Trust account)

480,18525.1%

2Mori Building Co., Ltd.

287,472

15.0%

3

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

261,226

13.6%

4

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

74,9883.9%

5SSBTC CLIENT OMNIBUS ACCOUNT

25,228

1.3%

6

STATE STREET BANK WEST CLIENT - TREATY
505234

23,477

1.2%

7

Custody Bank of Japan, Ltd.
(Money trust taxable ac count)

21,868

1.1%

8

LEGAL + GENERAL ASSURANCE PENSIONSMANAGEMENT LIMITED

19,542

1.0%

9The Shinkumi Federation Bank

18,756

1.0%

10 JP MORGAN CHASE BANK 385781

17,0830.9%

1,229,825

64.2%

Rank

Total of top 10 unitholders

Ratio(Investment
trust 33.3%)49

4. Business environment recognition & MHR’s policy/strategy504-1 Business environment recognition
Real estate market / Lending attitude

Interest rate trends / Macro environment

Vacancy rates for office buildings in central Tokyo remained

Amid the global interest rate hike, Japan’s long-term interest rates,

relatively high despite a lull in the increase and rents continued towhich had remained low due to the monetary policy of the Bank oftrend downward.

Japan, have also seen a rising trend. The core CPI rate of increase(Office Market Trends Research Committee: Tokyo’s five central wards)

is also on an upward trend albeit at a low level.

Vacancy rate: 6.3% (2021) → 5.9% (2022:forecast)

10-year bond rates: 0.18% (July 29, 2022)

Rent index: 110 (2021) → 107 (2022: forecast)Core CPI: +2.2% (June 2022)

Cap rates have remained at historically low levels.
(Japan Real Estate Institute’s “The Japanese Real Estate Investor Survey”)

Class A buildings in Marunouchi
Cap rate: 3.0% (October 2021) → 3.0% (April 2022)
Lending attitude toward the real estate industry has temporarily
weakened but remains at a highly positive level.

The rise in the vacancy rates for office buildings in central Tokyo
has been slowing down, but the office market is expected toremain weak for the time being partly due to an increase insupply in 2023 and after.
Even under such an environment, genuine premium properties incentral Tokyo have maintained high occupancy rates and are
expected to demonstrate competitive advantages in the future.

In the June 2022 preliminary business conditions composite index,
the leading index was at 100.6 (△0.6 PT decrease from previous month)and the coincident index was at 99.0 (+4.1 PT increase from previous
month).
Business sentiment has been on a recovery trend although effectof COVID-19 pandemic has persisted.
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.

Business sentiment is expected to continue its recovery trend
although COVID-19 is likely to have an impact for some time.
Pressure to raise interest rates has been mounting globally, andinterest rates in Japan, which had been kept low by themonetary policy of the Bank of Japan, are expected to rise by acertain degree as well.
Inflow of funds to companies with high ESG ratings is expected
to continue in the future.

Continues to “MHR’s policy/strategy” on the next page51

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 primarily on
premium properties in central
Tokyo developed by thesponsor, MHR seeks tomaintain highly competitive
portfolio quality while further
expanding the scale of theportfolio.

By making positive socialand environmental
contributions, MHR will
position itself to benefit fromthe long-term trend of funds
flowing into companies withhigh ESG ratings and build
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 investment52

4-3 MHR’s policy/strategy
External
growth policy

Target premium properties in central Tokyo and aim for annual new acquisition of properties for tens ofbillions of yen by best utilizing sponsors’ pipeline. (Set target yield at the mid 3% range or higher for NOIbased yield and around 3.0% or higher for after-depreciation-based yield.)

Premium properties in central Tokyo have maintained high occupancy rates despite the expansion of
remote working during the COVID-19 pandemic and are expected to continuously demonstratecompetitive advantages.
While disposing of parts of Laforet Harajuku (Land), make new acquisitions concurrently to expand
portfolio size over the medium to long term.

Internal
growth policy

Maintain stable revenue through fixed-rent master leases, and aim to continually maintain and improve
rent levels at pass-through-type properties.
Properly implement office property repairs as necessary and conduct value-enhancement renovation forresidential properties if such is judged to be cost-effective (there are no office properties that require largescale renewal in terms of building age or competitiveness).

Financialmanagement
policySet the current LTV level (book value: in the mid-40% range; appraisal value: in the upper 30% range) as thetarget in order to maintain a durable position for times of economic slowdown, and target averageremaining duration of debt of 4 years or longer.
Anticipate interest rate fluctuation risk over the medium to long term by constantly monitoring economic
conditions and interest rate trends, and then when necessary take appropriate measures.

ESG policy

Contribute to the improvement of various social and environmental issues by positioning ESG initiatives
as an integral 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
and efforts.

53

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

200

10.0
8.9% 9.0%
8.1%

180

160

⇒ Estimate

8.7%

9.0
8.0

7.3%
6.3%

6.1%
145

140

149

5.5%

4.2%

3.1%

120
2.9%
109

100

2.6%

114

109
100

101

92

80

91

95

99

103

5.0

127

3.6%

4.7%

4.0

120
131

113

3.0
110

1.9%

7.0
6.0

4.5%

4.0%

124

6.7%
5.9%
5.6% 5.5%

107

106

106

1.6%

Rent index
Vacancy rate

2.0
102

1.0
0.0

(Source)
Prepared by the Asset Manager based on the“Office Rent Forecast in Tokyo (2022-2025),”
etc. by the Office Market Trends ResearchCommittee (Japan Real Estate Institute andMiki 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.

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
600
531
500

478

473

460

400

343
294

300
221

265

245

220

254

308
250

239

200

150

100

(Source)
Prepared by the Asset Manager based on “OfficeMarket Data” by Miki Shoji Co., Ltd.

0
2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

54

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

24,00014.0

22,000

12.0

Minato ward’s averagevacancy rate over past
10 years: 6.7%

20,000(Source)
Prepared by the Asset Manager based on Ken Real
10.0 Estate Investment Advisors’ “Ken Residential
Market Report” included in real estate appraisal
reports by Japan Real Estate Institute regarding
8.0 properties held by MHR.

18,000
6.2%
5.5%

16,000

03

04

05

06

07

08

09

10

11

12

13

14

15

16

17

18

19

20

20,83010,0006.0
4.0

19,55014,00012,000Avg. rents of Minato ward
Avg. vacancy rates of Minato ward

21

22
1Q

2.0
0.0

(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
excluding 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.

18,00018,46416,00014,000
03

04

05

06

07

08

09

10

11

12

13

14

15

16

17

18

19

20

21

22
01

22
04

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

22
07

55

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

6.0

6.0% 6.0% 6.0% 6.0%
5.7%

5.5

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

5.8%
5.5%

5.2%

5.1%

5.0% 4.9%

4.9%

5.0
4.5% 4.5% 4.5% 4.5%

4.5%
4.5
4.0
3.5

4.8%

4.3%

4.0% 4.0% 4.0%
4.0% 4.0% 4.0%

4.0%

4.2% 4.2% 4.2% 4.2%

4.3%
3.8%

4.6%

4.0%

3.8%

3.7%

3.8%
3.5%

3.5% 3.5%
3.0

3.4%

4.5% 4.5% 4.5%

3.6% 3.5% 3.5% 3.5% 3.5%

3.2%

Expected cap rate of class
A office buildings(Marunouchi and Otemachi)

4.3%
Expected cap rate of high-end
multifamily residences (high-rise)

3.3%

3.0% 3.0% 3.0% 3.0%3.0%(Source)
Prepared by the Asset Manager based on“The Japanese Real Estate Investor Survey” by theJapan Real Estate Institute.

2.5
Apr.
05

Apr.
06

Apr.
07

Apr.
08

Apr.
09

Apr.
10

Apr.
11

Apr.
12

Apr.
13

Apr.
14

Apr.
15

Apr.
16

Apr.
17

Apr.
18

Apr.
19

Apr.
20

Apr.
21

Apr.
22

Change in real estate transaction amountLending attitude DI (Real estate industry)(billion yen)
6,000

+ 25
+ 20
+ 15

5,000

+ 10
4,000

+5

3,000

△5

+0
△ 10
△ 15

2,000

△ 20
△ 25

1,000
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

FY
19

FY
20

FY
21

(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. Mar. Mar. Mar.
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22(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.

56

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

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

△ 0.2
△ 0.3

△ 0.4
Jan.
2013

Jul.

Jan.
2014

Jul.

Jan.
2015

Jul.

Jan.
2016

Jul.

Jan.
2017

Jul.

Jan.
2018

Jul.

Jan.
2019

Jul.

Jan.
2020

Jul.

Jan.
2021

Jul.

Jan.
2022

Jul.

Change in core CPI (Year-on-year comparison)
(%)
+ 2.5

Based on figures excluding thedirect effects of theconsumption tax rate increase

+ 2.0
+ 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
△ 0.5

(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”).

△ 1.0
△ 1.5

Jan.
2013

Jul.

Jan.
2014

Jul.

Jan.
2015

Jul.

Jan.
2016

Jul.

Jan.
2017

Jul.

Jan.
2018

Jul.

Jan.
2019

Jul.

Jan.
2020

Jul.

Jan.
2021

Jul.

Jan.
2022

Jul.

57

4-8 Market-related information (5)Business conditions composite index
110
105
100
95

Leading index

90

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

85
80
75

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

70
Jan.
2013

Jul.

Jan.
2014

Jul.

Jan.
2015

Jul.

Jan.
2016

Jul.

Jan.
2017

Jul.

Jan.
2018

Jul.

Jan.
2019

Jul.

Jan.
2020

Jul

Jan.
2021

Jul

Jan.
2022

Jul

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

+8.2
+7.6
+7.0
+6.4
+5.8
+5.2
+4.6
+4.0
+3.4
+2.8

(Source)
Prepared by the Asset Manager based on“Money Stock Statistics” by the Bank of Japan.

+2.2
+1.6
Jan.
2013

Jul.

Jan.
2014

Jul.

Jan.
2015

Jul.

Jan.
2016

Jul.

Jan.
2017

Jul.

Jan.
2018

Jul.

Jan.
2019

Jul.

Jan.
2020

Jul

Jan.
2021

Jul

Jan.
2022

Jul

58

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

Jul

Jan.
2021

Jul

Jan.
2022

Jul

Consumer confidence survey
52
47
42
37

Employment

32

Consumer confidence index

27

Income growth22(Source)
Prepared by the Asset Manager based on“Consumer Confidence Survey” by the Cabinet
Office.

17
12
Jan.
2013

Jul.

Jan.
2014

Jul.

Jan.
2015

Jul.

Jan.
2016

Jul.

Jan.
2017

Jul.

Jan.
2018

Jul.

Jan.
2019

Jul.

Jan.
2020

Jul.

Jan.
2021

Jul.

Jan.
2022

Jul.

59

5. Appendix

60

5-1 Financial highlights
Indic es

31st period
Period ended Jan. 31, 2022

32nd period
Period ended Jul. 31, 2022

Net income

5,513 mn yen

6,443 mn yen

Depreciation and amortization

1,079 mn yen

1,088 mn yen

203 mn yen

683 mn yen

Total assets

411,259 mn yen

412,892 mn yen

Total net assets

201,657 mn yen

202,797 mn yen

CAPEX

Calculation formula

Total net assets/unit (BPS)

105,231 yen

105,825 yen Total net assets/Total units outstanding

Unit price (as of end of each period)

141,000 yen

153,000 yen

1,916,330 units

1,916,330 units

Total units outstanding
Total dividends

5,609 mn yen

5,806 mn yen

Dividends/unit

2,927 yen

3,030 yen

Dividend yield

4.1%

FFO

6,593 mn yen

4.0% Dividends per unit (annualized)/Unit price as of end of period
6,183 mn yen Net income + Depreciation and amortization - Gain or loss on sales of real estate properties

FFO/unit

3,440 yen

3,226 yen FFO/Total units outstanding

Annualized

6,824 yen

6,507 yen Based on a period of 365 days

20.7x

23.5x Unit price as of end of period/FFO per unit (annualized)

PER

FFO multiple

24.7x

22.6x Unit price as of end of period/Net income per unit (average during the periods, annualized)

PBR

1.3x

1.4x Unit price as of end of period/Net assets per unit

ROA

1.4%

1.6% Ordinary income/Average of total assets during the period

2.7%

3.2% Based on a period of 365 days

2.7%

3.2% Net income/Average of total net assets during the period

5.4%

6.4% Based on a period of 365 days

Annualized
ROE
Annualized
NAV
NAV/unit
NAV multiple

300,267 mn yen
156,688 yen
0.9x

315,137 mn yen Total net assets + Total appraisal value - Total book value - Total liabilities
164,448 yen
0.9x Unit price as of end of period/NAV per unit

Interest-bearing debt

192,422 mn yen

LTV (book value basis)

46.8%

46.6% Interest-bearing debt/Total assets

LTV (appraisal value basis)

37.7%

36.6% Interest-bearing debt/(Total assets + Total appraisal value - Total book value)

Operating days

184 days

192,422 mn yen

181 days61

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

31st period

32nd period

31st period

32nd period

Period ended Jan. 31, 2022

Period ended Jul. 31, 2022

Period ended Jan. 31, 2022

Period ended Jul. 31, 2022

17,517,469

17,720,012

15,500,000

15,200,000

2,017,469

2,520,012

192,084,427

192,375,528

20,300,000

20,300,000

156,622,000

156,922,000

14,944,553

15,022,491

217,873

131,037

209,601,896

210,095,541

201,552,048

202,385,967

195,235,522

195,718,191

6,316,525

6,667,775

291,944

196,766

6,024,581

6,471,008

105,426

411,370

105,426

411,370

Total net assets

201,657,474

202,797,337

Total liabilities and net assets

411,259,371

412,892,878

AssetsLiabilities

Current assets

12,736,238

16,159,015

Current liabilities
C urrent portion of long-termloans payable

C ash and deposits

6,950,040

10,640,215

C ash and deposits in trust

5,175,674

4,951,864

610,523566,936

398,412,419

396,637,298

Investment corporation bonds

366,623,801

364,670,087

Long-term loans payable

Other

Nonc urrent assets
Property, plant and equipment
Intangible assets
Investments and other assets

Deferred assets
Total assets

30,652,036

30,651,927

1,136,581

1,315,283

110,71396,564

411,259,371

412,892,878

Other

Nonc urrent liabilities

Lease and guarantee depositedin trust
Other

Total liabilities
Net assets
Unitholders' equity
Unitholders' capital,net
Total surplus
Voluntary retained earnings
Unappropriated retained
earnings

Valuation and translation
adjustments

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

62

5-3 Income statement(thousand yen)

31st period

32nd period

Period ended Jan. 31, 2022

Period ended Jul. 31, 2022

Operating revenue

9,820,674

11,197,167

Rent revenues

9,626,195

9,652,181

194,479

197,178

Other operating revenues
Gain on sales of real estate properties
Operating expenses
Expenses related to properties
Asset management fee－

1,347,808

3,735,181

4,212,146

3,401,656

3,448,193

232,424

643,528

Directors' compensation

8,400

8,400

Asset custody fee

10,123

10,281

Administrative service fees

18,676

17,733

Other operating expenses

63,90084,0106,085,492

6,985,020

1,097

4,466

53

54

1,044

805

Subsidy income

－

3,600

Other

－

5

571,781545,584

Interest expenses

371,586

352,779

Interest expenses on investment corporation bonds

50,96952,950

Am ortiza tio n of inve stm e nt corpo ration bonds issuance cost

8,465

8,790

133,516

123,798

5,358

5,358

Operating income
Non-operating income
Interest income
Gain on forfeiture of unclaimed dividends

Non-operating expenses

Borrowing expenses
Amortization of investment unit issuance cost

1,884

1,907

Ordinary income

Other

5,514,809

6,443,902

Income before income taxes

5,514,809

6,443,902

Net income

5,513,920

6,443,017

Unappropriated retained earnings

6,024,581

6,471,008

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

8,114,679
796,777
75,137660,009
5,576

50,437
146,100640

1,217,347
779,178
125,787
51,615
20,4005,985
1,088,391
144,785
14,70063

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

Net cash provided by (used in) operating activities(thousand yen)(thousand yen)

31st period

32nd period

31st period

32nd period

Period ended Jan. 31, 2022

Period ended Jul. 31, 2022

Period ended Jan. 31, 2022

Period ended Jul. 31, 2022

6,482,419

9,741,302

Inc ome before income taxes

5,514,809

6,443,902

Proceeds from long-term loans payable

17,200,000△ 5,608,464

Deprec iation and amortization

1,079,135

1,088,391

Repayments of long-term loans payable△ 12,500,000

1,486,886△ 9,500,000△ 5,580,604△ 5,608,464

13,116,097

12,125,714

12,125,714

15,592,079

Amortization of investment c orporation bonds
issuance cost

8,465

8,790

Amortization of investment unit issuance cost

5,358

5,358

Interest inc ome

△ 53

△ 54

Interest expenses△ 1,044422,555

405,729

Decrease (inc rease) in acc ounts rec eivable

55,114

5,677
112,098

Inc rease (decrease) in acc rued expenses△ 262,053

Gain on forfeiture of unclaimed dividends

Inc rease (decrease) in acc ounts payable△ 805

458,826

Inc rease (decrease) in advanc es received△ 24,006
33,01014,356

Inc rease (decrease) in deposits rec eived

16,114

Decrease (inc rease) in prepaid expenses△ 3,505△ 7,322

Decrease (inc rease) in long-term prepaid expenses

17,50553,06342,588Decrease in property, plant and equipmentin trust due to sale－

1,545,191

Other, net

－

△ 150

SubtotalInterest inc ome received
Interest expenses paid
Inc ome taxes paid

Net cash provided by (used in) investing activities
Purchase of property, plant and equipment in trust
Purchase of intangible assets in trust
Repayments of lease and guarantee deposited intrust
Proceeds from lease and guarantee deposited intrust

Net cash provided by (used in) financ ing activities

Proceeds from issuance of investment corporation
bonds

Dividends paid
Cash and c ash equivalents at beginning of theperiodCash and c ash equivalents at the end of theperiodCash and c ash equivalents at beginning of theperiodⅠ Unappropriated retained earnings
Ⅱ Reversal of voluntary retained earnings

53

54

Reversal of reserve for reduc tion entry△ 413,483△ 397,959△ 8,079,083△ 666,472－△ 734,691

Ⅴ Voluntary retained earnings△ 493,630△ 1,092△ 120,529

189,840

Ⅵ Retained earnings c arried forward△ 8,084,650

499,196－

3,466,364(yen)

10,140,084△ 877△ 990,382

9,500,000

Retained earnings

6,896,965△ 1,115606,281

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

Reserve for reduction entry

31st period

32nd period

Period ended Jan. 31, 2022

Period ended Jul. 31, 2022

6,024,581,500

6,471,008,689

95,177,162－

482,669,237－

482,669,237－

5,609,097,910

5,806,479,900

2,927

3,030

－

636,537,274

27,991,515

27,991,515

64

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

O -0

O -1

O -4

O -6

P rope rty na m e

Roppongi Hills Mori Towe r

ARK Mori Building

Korak u Mori Building

Ak asa k a Tam eik e Towe r

Acquisition price

115,380,000
31st

32nd

Ja n. 2022

Jul. 2022

O pe ra tion da ys

184 da ys

181 days

O ccupa ncy ra te

100%

100%

Avg. O ccupancy rate
(during pe riod)100%

Num ber of te na nts

1

P e riod

Re nt re ve nue s

62,480,000
31st

32nd

Ja n. 2022

Jul. 2022△ 3 da ys

184 da ys

181 da ys

0.0P T

100%

100%

100%

0.0P T

100%

1

0

1

Differe nce

27,200,000
31st

32nd

Jan. 2022

Jul. 2022△ 3 da ys

184 da ys

181 da ys

0.0P T

93.0%

92.8%

100%

0.0P T

92.6%

1

0

Differe nce

43,930,000
31st

32nd

Jan. 2022

Jul. 2022△ 3 da ys

Differe nce

Differe nce

184 da ys

181 da ys

94.9%

98.6%

△ 3 da ys

92.6%△ 0.2P T
0.0P T

94.8%

98.2%

3.4P T

21

21

0

138

142

4

3.7P T

2,851,394

2,851,394－

1,351,486

1,351,486－

622,848

622,88941

786,774

816,753

29,978

－

－

－

－

－

－

73,77474,689914

73,011

77,1564,144

2,851,394

2,851,394－

1,351,486

1,351,486－

696,622

697,578956

859,786

893,90934,122447,868

447,868－

182,443

185,961

3,517

82,04489,504

7,459

174,646

174,114

262,518

266,908

4,389

83,67585,141

1,465

30,39732,614

2,216

41,83943,894

△ 531

－

－

－

－

－

－

56,43657,933

1,497

27,231

31,244

4,012

－

－

－

－

355

355

4,470

10,1685,698

44,351

27,135

5,108

5,025

2,286

2,249

1,777

2,214

640

69,96971,935

1,965

93,16594,033

△ 29

2,251

332,287

△ 37

1,807

331,646△ 83△ 17,215867

137,769

139,303

1,534

373

376

2

2,784

2,790

5

86,91487,035

121

10,622

10,622

1,047,515

1,052,465

4,949

341,159

348,432

7,272

355,235

373,067

17,831

438,713428,529△01,803,878

1,798,929

1,010,326

1,003,054

324,511465,379

2,131,216

1,080,296

1,074,989

418,544558,842604,683

45,8404,236,231

4,297,756

61,524

2,142,9782,167,796△ 5,306

434,552

Annua lize d NO I

△ 4,308△ 16,875

421,073

2,135,525△ 7,272

341,386

NO I (3) ((1)+(2))△ 4,949△ 10,183

24,817862,020844,026

1,219,388

110,814

3.7%

3.7%

0.1P T

3.4%

3.5%

0.0P T

3.2%

3.1%△ 17,993

1,108,574

Annua lize d NO I/
Acquisition price

2.5%

2.8%

0.3PT

－

265,639

265,639

4,545

93,44488,898

12,77634,083

21,307

90,34819,9472,135,525

1,865,576△ 269,948

1,075,750

981,545△ 94,205

421,776

384,460△ 37,315

468,494584,735△ 70,401

O the r ope rating
reve nue s
Tota l property
ope rating re ve nue
P rope rty
m a na gem ent
P rope rty tax e s(Note 1)

Utilitie s
Maintena nce a nd
repairs
Insura nce
pre m ium
De pre cia tion (1)O the r e xpe nse s(Note 2)

Tota l property
ope rating ex penses
P roperty ope rating
incom e (2)CAP EX (4)NCF (3)-(4)△ 16,008△ 0.1P T

2,054

△ 37

44,305116,241(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.
(Note 3) Property acquired or disposed during the relevant period. “Annualized NOI/ Acquisition price” was calculated by taking into consideration the changes in acquisition price during the relevant period.
“Annualized NOI” denotes the value which is based on the acquisition price as of the end of the relevant period.

65

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

O -7

O -8

O -9

O -10

P rope rty na m e

Ata go Gree n Hills

ARK Hills South Tower

Tora nom on Hills Mori Towe r

Holla nd Hills Mori Tower

Acquisition price

42,090,000

19,150,000

31st

32nd

Ja n. 2022

Jul. 2022

O pe ra tion da ys

184 da ys

181 days

O ccupa ncy ra te

100%

100%

Avg. O ccupancy rate
(during pe riod)100%

Num ber of te na nts

1

P e riod

Re nt re ve nue s

31st

32nd

Ja n. 2022

Jul. 2022△ 3 da ys

184 da ys

181 da ys

0.0P T

85.3%

85.1%

100%

0.0P T

89.1%

1

0

Differe nce

56,300,000

16,330,000(before acquisition 48,430,000)

31st (Note3)

32nd

Jan. 2022

Jul. 2022△ 3 da ys△ 3.6P T

Differe nce

Differe nce

31st

32nd

Jan. 2022

Jul. 2022

Differe nce

184 da ys

181 da ys

181 da ys

100%

100%

△ 3 da ys

184 da ys

0.0P T

96.3%

100%

△ 3 da ys

85.5%△ 0.2P T

100%

100%

0.0P T

96.3%

98.7%

2.4P T

39

40

1

1

1

0

21

23

2

△ 16,738

1,208,989

1,209,907

917

515,201

526,220

11,019－－－21,76021,1091,208,989

1,209,907

917

536,962

547,329

10,36745,392△ 19,072△ 651

138,332

138,437

104

101,396

104,889

3,493

35,91837,146

△ 134

1,227

82,87091,845

8,975

35,591

36,117526－

27,14728,733

1,586

－

－

－

5,399

5,057

－

－

6,033

3,074

－

－

－

925

1,111

3,812

3,750

1,204

1,185

2,405

2,384

1,214

181,4112,135

44,53644,646

109

151,144

151,144

△ 20

1,234

179,276△ 62△ 2,958△ 341－

42,81544,446

1,631

58,20258,159

1,720

1,618

110

208

2,210

162,087

161,796374,863

383,922

9,058

187,571

193,045△05,474

699,516

697,305

299,156

280,374

825,984354,283

4,892

878,717343,692

325,020

977,128

398,730

6,523

1,771,999

28,743681,782

655,428

1,955,961

1,970,452

14,490778,019804,070

26,051

Annua lize d NO I/
Acquisition price

4.1%

4.2%

0.1P T

3.6%

3.4%△ 26,353△ 8,141

392,206

1,743,256△ 18,672

985,269

Annua lize d NO I

△ 74

△ 8,141

349,390878,792△ 18,781

834,125

NO I (3) ((1)+(2))△ 2,210

△ 291

△0

209

315,014

△ 102

111

312,803

△ 42

3.5%

3.5%

0.0P T

4.8%

4.9%

0.2PT

CAP EX (4)31,343163,050

131,707

876

2,386

△ 0.1P T

1,510

－

－

－

37,66988,16150,491

NCF (3)-(4)847,449

715,667△ 131,781

342,816

322,634△ 20,182

985,269

977,128△ 8,141

354,537

310,569△ 43,968

O the r ope rating
reve nue s
Tota l property
ope rating re ve nue
P rope rty
m a na gem ent
P rope rty tax e s(Note 1)

Utilitie s
Maintena nce a nd
repairs
Insura nce
pre m ium
De pre cia tion (1)O the r e xpe nse s(Note 2)

Tota l property
ope rating ex penses
P roperty ope rating
incom e (2)1,012,320

1,012,320－

435,312418,573－－－

25,931

23,596

1,012,320

1,012,320－

461,243

442,170

2,664

2,664

－

45,526

68,84869,028

179

－

－

－

3.7P T△ 2,334

△ 19

185

△ 20

66

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

R-3

R-4

S-1

P rope rty na m e

Roppongi First P la za

R oppongi View Tower

La foret Hara juk u (La nd)

Acquisition price

2,100,000

4,000,000

31st

32nd

Ja n. 2022

Jul. 2022

Jan. 2022

Jul. 2022

O pe ra tion da ys

184 da ys

181 days

O ccupa ncy ra te

84.1%

98.0%

△ 3 da ys

184 da ys

181 da ys

0.0P T

97.4%

98.3%

△ 3 da ys

Avg. O ccupancy rate
(during pe riod)

82.1%

100%

0.0P T

97.5%

98.1%

0.6P T

Num ber of te na nts

1

1

0

342

358

16

667,800

660,0099,652,181

25,985627－－△ 7,791

9,626,195

627

△ 389

－

194,479

197,178

2,699

101,567

101,805

237

667,800

660,0099,820,674

9,849,359

28,684

2,342

13,71814,197479－－△ 7,791－

1,200,616

1,217,347

16,731

8,525

162

12,701

12,982281

90,45094,975

4,525

753,174

779,178

26,004

1,364

1,554

189

1,057

1,262

205

－

－

－

118,637

125,787

7,150

4,051

5,866

1,815

4,202

3,903

－

－

－

64,03351,615

247

243

361

355

－

－

－

20,72020,40012,029219

17,001

17,153△5△ 12,418

11,810

△4

△ 299
152

－

－

－

1,079,135

1,088,391

△ 319

9,256

3,814

3,814

0

586

736

150

－

－

－

165,339

165,472

132

41,62646,351

4,725

49,62850,592963

90,45094,9754,525

3,401,656

3,448,193

46,53630,87435,096

4,222

51,93951,213577,350

565,033

6,401,166

42,684

47,125

4,441

68,94068,367577,350

565,033

7,498,153

7,489,558

84,673

95,032

10,359136,756

137,867

1,111

1,145,286

1,072,531△ 12,316△ 17,851

Annua lize d NO I

△ 573

△ 12,316

6,419,018

NO I (3) ((1)+(2))△ 725

15,056,682

181,079

4.0%

4.5%

0.5P T

3.4%

3.4%

0.0P T

5.2%

5.3%△ 72,755

14,875,603

Annua lize d NO I/
Acquisition price

0.0P T

3.6%

3.7%

0.1PT

CAP EX (4)11,2583,468

14,98913,571－－

203,807

683,752

479,945

31,42543,657

53,95054,795△ 1,418－

NCF (3)-(4)△ 7,790577,350

565,033△ 12,316

7,294,346

6,805,805△ 488,541

O the r ope rating
reve nue s
Tota l property
ope rating re ve nue
P rope rty
m a na gem ent
P rope rty tax e s(Note 1)

Utilitie s
Maintena nce a nd
repairs
Insura nce
pre m ium
De pre cia tion (1)O the r e xpe nse s(Note 2)

Tota l property
ope rating ex penses
P roperty ope rating
incom e (2)Ja n. 2022

Jul. 2022△ 3 da ys

184 da ys

181 da ys

13.9P T

92.0%

93.5%

93.8%

11.7P T

91.1%

35

41

6

72,50081,447－409,252,600(before acquisition/disposition 402,910,000)

32nd (Note3)

Re nt re ve nue s

32nd

20,292,600(before disposition 21,820,000)

31st (Note3)

P e riod

31st

P ortfolio tota l

31st

32nd (Note3)

Jan. 2022

Jul. 2022△ 3 da ys

184 da ys

181 da ys

1.5P T

100%

100%

92.3%

1.2P T

100%

83

86

3

8,947

101,567

101,178－－－

72,50081,447

8,947

11,974

14,316

8,362

Differe nce

12,231

Differe nce

845

Differe nce

Differe nce

0.9P T△ 8,59567

5-8 Unit price performance since IPO
Relative price performance (Since IPO - July 31, 2022)
200

Performance since listing180(At listing vs. July 31, 2022)■ MHR:+2.0%■ TSE REIT Index: +10.1%

160
140
120
100
80
60
40
20
0

Nov. 30, Jul. 31,
2006
2007

Jul. 31,
2008

Jul. 31,
2009

Jul. 31,
2010

Jul. 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

Jul. 31,
2020

Jul. 31,2021

Jul. 31,2022(Source) Prepared by the Asset Manager based on Refinitiv.
(Note)
Rebased to 100 as per IPO price

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

Unit price

Accounting period

Unit price

Accounting period

Unit price(Reference)

1st (January 2007)

1,100,000 yen

11th (January 2012)

252,200 yen

23rd (January 2018)

137,100 yen

2nd (July 2007)

1,080,000 yen

12th (July 2012)

330,500 yen

24th (July 2018)

138,100 yen

IPO Pric e(November 30, 2006)(Split adjusted)

3rd (January 2008)

716,000 yen

13th (January 2013)

485,000 yen

25th (January 2019)

144,500 yen

4th (July 2008)

465,000 yen

14th (July 2013)

548,000 yen

26th (July 2019)

160,300 yenHigh

5th (January 2009)

265,000 yen※ 5-for-1 investment unit split (February 1, 2014)

27th (January 2020)

181,700 yen(May 8, 2007: in trade)

6th (July 2009)

352,000 yen

15th (January 2014)

135,900 yen

28th (July 2020)

137,100 yen

7th (January 2010)

264,900 yen

16th (July 2014)

151,100 yen

29th (January 2021)

145,800 yen

8th (July 2010)

177,300 yen

17th (January 2015)

166,600 yen

30th (July 2021)

9th (January 2011)

281,000 yen

18th (July 2015)

145,300 yen

10th (July 2011)

258,100 yen

19th (January 2016)

152,100 yen

750,000 yen(150,000 yen)

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

161,100 yen(August 12, 2010: in trade)

168,200 yen

31st (January 2022)

141,000 yen(Split adjusted)(33,640 yen)

32nd (July 2022)

153,000 yen

Low

68

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 vicinity

Residential
properties

Tokyo's five central wards
Gross floor area of 2,000㎡ or
and their vicinity
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 vicinity 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.

69

5-10 Portfolio map (as of July 31, 2022)

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 2022.”(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.

70

5-11 Portfolio overview (as of July 31, 2022)
Type

Office building
Roppongi
Hills
Mori Tow er

ARKMori 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

19 years
3 months

36 years
4 months

22 years
4 months

Total number offloors54 aboveground,6 below

37 aboveground,4 below

Gross floor area

approx.
442,150㎡

approx.
177,486㎡

Property name

Office building (Partly residential)
Atago Green Hills

Toranomon
Hills Mori
Tower

Holland Hills
Mori Tow er

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

9 years
0 month

8 years
2 months

17 years
6 months

21 years
10 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㎡

Koraku Mori
ARK Hills
Building
South Tow er

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(2 5 % )-Premium

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

Jingumae,
Shibuya-ku,
Tokyo

Oct. 2001

Jul. 2001

Oct. 1993−

21 years
0 month

20 years
9 months

21 years
0 month

28 years 9 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 9 .8 % ) (approx. 5 4 .9 % ) (approx. 5 6 .4 % )C o- owners hip

C o- owners hip(2 5 % )(approx. 1 0 .8 % )CompartmentalizedCompartmentalized

ownershipownership

C o- owners hip

C o- owners hip

C o- owners hip

O wners hip(approx. 2 8 .8 % )(4 7 % )(4 6 % )(9 3 % )CompartmentalizedCompartmentalized

ownershipownership

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

62,48027,20019,15056,30016,33043,93042,090

2,100

4,000

20,292

100%

100%

92.8%

85.1%

100%

100%

98.6%

100%

98.0%

93.5%

100%

Average building age
20.7 years (Note 5)

Portfolio PML
0.90% (Note 2)

Total acquisition price409,252 mn yen

715-12 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 February 15, 2021 by Sompo Risk Management Inc.
(Note 3) ARK Mori Building adopts “slitwall” as an earthquake-resistant feature.
(Note 4) “Occupancy rate” indicates the figures as of July 31, 2022.
(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.

72