Mori Hills REIT Investment Corporation
Results of the 31st Fiscal Period ended January 31, 2022
Presentation Material
March 17, 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

3

4

Unit price performance5

Financial results

6

Overview of new acquisition

3. Operation highlights

43

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

44

Change in assets under management

45

Change in unrealized capital gain/loss

46

Appraisal value

47

Change in the rent and occupancy rates

48

Tenant status by month and major tenants

49(Acquired as of August 2, 2021)

7

Dividends per unit growth record

9Medium- to long-term
disposition and acquisition policy (model)

10

Financial overview (as of January 31, 2022)

50

Increase in appraisal NAV per unit

11

Unitholders breakdown (as of January 31, 2022)

51

Forecasts

12

Portfolio of premium properties in central Tokyo

13

External growth

24

Internal growth27

Financial management

31

Sustainability initiatives

33

TCFD summary

35

MHR’s representative property

39

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

52

Business environment recognition

53

MHR’s policy/strategy

54

Market-related information

56

5. Appendix

62

2

1. Executive summary
Financialsummary
31st period(Jan. 2022)

Operating revenue: 9,820 million yen, operating income: 6,085 million yen,
net income: 5,513 million yen Decreased revenue and income period-over-period
DPU: 2,927 yen (+0.5% from 30th period) Increasing for 23 consecutive fiscal periods (Drawdown of reserve
for reduction entry: 50 yen)

NAV per unit: 156,688 yen (+6.4% from 30th period) Increasing for 22 consecutive fiscal periods
The impact of the contract renewal accompanying a rent decrease for the portfolio’s only fixed-rent
master lease with a large rent gap and the decrease in occupancy rates for pass-through-type properties
was offset by the property acquisition and the utilization of internal reserves, resulting in continued
consecutive increase in dividends.

External
growthAdditionally acquired “Toranomon Hills Mori Tower” (7.8 billion yen) at the beginning of the 31st period.
Premium properties in central Tokyo are expected to continuously demonstrate competitive advantages
even after the spread of telecommuting, as these properties can capture office demand by functioning as
headquarters.

Internal
growthEven as office vacancy rates rise in central Tokyo, MHR’s office occupancy rate for the 31st period
maintained a high level of 98.0% due in part to the excellent location and quality of the properties.
Although the occupancy rates and rents for some of the pass-through type offices were weaker, those
properties account for only a small portion of the entire portfolio and thus the impact has been limited.
The residential occupancy rate for the 31st period was 94.8%, which is the same level as that of theprevious period.

Financialmanagement

The fund procurement environment has not changed despite the COVID-19 pandemic. MHR maintained
the target level by book value basis LTV: 46.8%, appraisal value basis LTV: 37.7%, remaining duration of
debt: 4.6 years.
Green bonds were issued. (November 2021: 1.5 billion yen)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

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,
2017
2012
2014
2018
2020
2010
2011
2012
2013
2015
2016
2017
2011
2013
2015
2019
2020
2014
2019
2016
2018
2021
2021
2022

Marketvalue

41.9 bn yen(Sep. 14, 2010)

270.2 bn yen(Jan. 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
Although the 31st period (January 2022) saw decreased revenue and income compared with the 30th period,
MHR realized a DPU increase for the twenty-third consecutive fiscal period with the utilization of internal reserves
The impact of the contract renewal accompanying a rent decrease for the portfolio’s only fixed-rent master lease with a large rent gap and thedecrease in occupancy rates for pass-through-type properties was offset by the property acquisition and the utilization of internal reserves, resulting
in continued consecutive increase in dividends.
NAV per unit increased for the twenty-second consecutive period due to the effect of the property acquisition at a price significantly below theappraisal value and the increase in the appraisal values of owned properties.
30th period

31st period

31st period

Jul. 31, 2021

Jan. 31, 2022

Jan. 31, 2022

ActualActualDifference

Forecasted

△ 20

9,818

Operating Highlights (million yen)・Operating revenue (△20 mn yen)

Operating revenue

9,841

9,820

Rent revenues

9,609

9,626

232

194

3,683
3,325

Other operating revenues

Operating expenses
Expenses related to properties
SG&A

Operating income
Non-operating income
Non-operating expenses

+ 17

9,610
208

3,735

△ 37

+ 51

3,764

3,401

+ 76

3,428

357

333

335

6,157

6,085

△ 24

1

△ 72

6,053

1

+0

0

△3

5,481

575

571

Ordinary income

5,583

5,514

Net income

5,582

5,513

△ 69

－

572
5,480

95

△ 68

+ 95

95

5,582

5,609

+ 26

5,576

1,916,330

1,916,330－

1,916,330

2,913

2,927

+ 14

2,910

NOI

7,588

7,498

7,471

NOI yield

3.8%

3.6%

△ 90

402,910

410,737+ 7,827

410,737

Reversal of reserve for reduction entry
Total dividends

DPU
Total units outstanding (units)
DPU (yen)(weighted average based on the number ofoperating days during the period) (Note)- Property acquisition in 31st period- Utilities and other revenue- Office Rent (fixed rent master lease)- Office Ren(pass-through)- Cancellation penalty

・Operating expenses (+51 mn yen)
- Property acquisition in 31st period- Property management fee- Utilities- Property taxes for property acquired in 29th period- Asset management fee- Depreciation

・Non-operating expenses (△3 mn yen)
- Interest expenses, etc.

+169
+10
△92
△66
△44
+40
+18
+17
+10
△21
△14
+18

(Property acquisition in 31st period)- Interest expenses, etc.
- Amortization of investment unit issuance cost

△15
△6

Increase/decrease factor for 31st period

Other Indices (million yen)

Acquisition price

Increase/decrease factor (30th – 31st)△ 0.2PT

3.6%(Forecasted - Actual)・Operating income (+31 mn yen)
- Maintenance and repairs- Office rent (pass-through)- Utilities- Utilities and other revenue

+23
+10
+8
△12

(Note) If properties are acquired during the period, the acquisition price is the weighted average based on the number of operating days.

62-3 Overview of new acquisition (Acquired as of August 2, 2021)
Toranomon Hills Mori Tower (Additional acquisition)

Office1. Super high rise tower - Tokyo’s new landmark
Quake-resistance structure with 52 floors and 247 meters above ground.
High-specification offices with a broad floor plate of approx. 1,000 tsubo,
international-standard conference facilities, Japan’s first Andaz hotel “theAndaz Tokyo”, retail facilities and residences.

2. Located in the center of the Toranomon area where further
development is expected
Directly connected to "Toranomon Hills Station" on the Hibiya subway line
and 6 transit stations and 11 lines are nearby. It is easily accessible fromHaneda Airport and ideal as a new hub for international business.
As a result of a number of redevelopment projects currently in progressaround the building, the Toranomon area has begun to rapidly evolve into aninternational urban center.

＜Acquisition portion＞
Hotel
Residential
Location

23-1, Toranomon 1-chome,
Minato-ku, Tokyo

C onstruction date

May 2014

Total number of floors

52 floors above ground,
5 floors below ground

Gross floor area

241,581.95 m2

Acquisition
priceAppraisal value

Acquired as of
12,220 mn yen 15,232 mn yen
September 1, 2020
Acquired as ofAugust 2, 2021

7,870 mn yen

9,856 mn yen

Portions ofacquisition

11% quasi-co-ownershipinterest in trust
beneficial interests

Portion of
the red area
(note)

OfficeConference

NOI yield

facilities
3.4%

3.4%

Total acquired: 78%
quasi-co-ownershipinterest including
past acquisition

Restaurant, etc.

(Note) MHR acquired the trust beneficial interests in 87.95% co-ownership interest incompartmentalized ownership of the 28-35th floors

7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 (tentative name), the total area of the Toranomon Hills complex
including Toranomon Hills Mori Tower will reach about 7.5 hectares and about
800,000m2 of the total floor space. The area will evolve into a true
"international unban center and a global business hub" with integratedfunctions such as international standard offices, residences, hotels, retailfacilities and transportation infrastructure.

82-4 Dividends per unit growth record(yen/unit)

3,400

3,200

23 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 onGain ondisposition disposition

2,753

2,567

2,600

2,606 2,610

370

420

2,659

2,502
2,367

2,400

2,303

2,200

Drawdown
of internal
reserves(50-yen)

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

32nd period
0.8 bn yen
33rd period
1.3 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
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.
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

※ 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Medium- to long-term
2-5 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)

Gain on disposition 2.69 bn yen
Dividends
1.51 bn yen
Internal reserve1.17 bn yen

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

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%)(32nd period:(32nd period:
previous forecast) new forecast)
+5.9%

370

Gain ondisposition

DPU
2,860
yen

3,030
yen

2,660
Excludinggain ondisposition

Impact of revising the level ofthe asset management fee
Utilize the funds for promotionof ESG and reinforcement of
personnel development

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)102-6 Increase in appraisal NAV per unit
(yen/unit)

160,000

156,688

150,000

22 consecutive
fiscal period
increase

140,000

145,583

Longest among
all J-REITs

146,390

147,182 147,297

137,697
134,550130,000
124,618
117,627
114,893
112,546 112,811

120,000

110,000
104,064
101,957
99,665100,000

90,00086,941

88,82681,99278,027 78,434

80,00072,73570,00062,73164,85660,00050,0009th
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
period
Jul.
2015

19th
period
Jan.
2016

20th
period
Jul.
2016

21st
period
Jan.
2017

22nd
period
Jul.
2017

23rd
period
Jan.
2018

24th
period
Jul.
2018

25th
period
Jan.
2019

26th
period
Jul.
2019

27th
period
Jan.
2020

28th
period
Jul.
2020

29th
period
Jan.
2021

30th
period
Jul.
2021

31st
periodJan.
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.

112-7 Forecasts
The 32nd period is forecast to have increased revenue and income compared with the 31st period due to the effect ofproperty disposition, and DPU is forecast to be 3,030 yen (+3.5% compared with the 31st period).
DPU for the 33rd period is forecast to be 3,040 yen
Laforet Harajuku (Land) will be divided and the 7% ownership interest will be disposed in each of the 32nd period and 33rd period. While conducting
disposition over the medium to long term, new acquisitions will be made at the same time to seek continuous growth in DPU.
By revising the level of the asset management fee and utilizing the funds for promotion of ESG and reinforcement of personnel development, further
contribution to the growth of MHR will be pursued.
31st period

32nd period

33rd period

Jan. 31, 2022

Jul. 31, 2022

Jan. 31, 2023

ActualForecast

Difference

Forecast

・Operating revenue (+1,358 mn yen)

Operating Highlights (million yen)
Operating revenue

9,820

11,178+ 1,358

11,136

Rent revenues

9,626

9,633

+6

9,579

194

197

+3

211

－

1,347

+ 1,347

1,345

3,735

4,183

+ 447

4,215

3,401

3,441

+ 39

3,471

Other operating revenues
Gain on sales of real estate properties

Operating expenses
Expenses related to properties
SG&A

Operating income
Non-operating income
Non-operating expenses

333

741

+ 408

743

6,085

6,995

+ 910

6,921

1

0

△0

0

571

548

Ordinary income

5,514

6,448

+ 933

6,368

Net income

5,513

6,447

△ 23

+ 933

6,366

Reserve for reduction entry

－

638

+ 638

540

Reversal of reserve for reduction entry

95

－

－

5,609

5,806

△ 95

+ 197

5,825

1,916,330

1,916,330－

1,916,330

2,927

3,030

+ 103

3,040

NOI

7,498

7,482

7,420

NOI yield

3.6%

3.7%

△ 15

0.1PT

3.6%

410,737

410,518△ 218

408,737

Total dividends

DPU
Total units outstanding (units)
DPU (yen)554(weighted average based on the number ofoperating days during the period)- Gain on disposition of Laforet Harajuku (32nd period) +1,347- Residential Rent (pass-through)+8- Office Rent (pass-through)+6- Rent on disp. part of Laforet Harajuku (32nd period)△7

・Operating expenses (+447 mn yen)

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

・Non-operating expenses (△23 mn yen)
- Interest expenses, etc.

+390
+18
+14
+13
+10
+7
△8
△23

Increase/decrease factor (32nd – 33rd)・Operating revenue (△42 mn yen)
- Gain on disposition of Laforet Harajuku (33rd period)- Utilities and other revenue- Gain on disposition of Laforet Harajuku (32nd period)- Rent on disp. part of Laforet Harajuku (32nd period)- Rent on disp. part of Laforet Harajuku (33rd period)

・Operating expenses (+32 mn yen)

Other Indices (million yen)

Acquisition price

Increase/decrease factor (31st – 32nd)- Property taxes- Depreciation- Property taxes for property acquired in 31st period- Utilities- Maintenance and repairs- Operating exp. for disp. part of Laforet Harajuku(32nd period)(33rd period)

・Non-operating expenses (+5 mn yen)
- Interest expenses, etc.

+1,345+12△1,347
△38
△15
+14
+7
+7
+5
+4
△6
△3

+5

12

2-8 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 properties13

2-9 (1) Location
Highest property percentage in Central Tokyo among J-REITs

Tokyo’s Five
Central Wards
and their vicinity

Tokyo’s ThreeCentral Wards

88.1%

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.

14

2-10 (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 those 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.

15

2-11 (2) Quality of assets
Premium Properties(Excellent comfort and safety with extensive facilities)

Strong demand for headquarter offices＜Overview and facilities of representative properties＞
Access fromthe nearest
station

Property nameGross floor
area

Roppongi Hills

Connected to758,203㎡- Roppongi
Station

Toranomon Hills

ARK Hills

Atago Green Hills

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

2-minute w alk
from Roppongi
310,979㎡1-chome
Station3-minute w alk
from
151,106㎡Onarimon
StationNumber ofshops &
restaurants

Hotel
(spa)

Grand Hyatt Tokyo
224 (NAGOMI SPA AND
FITNESS)

88 Andaz Tokyo(C urrent) (AO SPA AND C LUB)

ANA InterContinental
55 (THANN SANC TUARY
SPA AKASAKA)

18 (Atago Green Hills SPA)

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 Tow er

51.5%(Source) Prepared by the Asset Manager based on disclosed materials as of August 31, 2021.
(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..

162-12 (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 Existing Buildings: 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 for
Existing Buildings: 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 located17

2-13 (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)

18

2-14 (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

Opened Jun. 2014

Completed Jan. 2022

Toranomon Hills Station Tower

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

Opened Jun. 2020

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

Toranomon Hills Station of
Hibiya subway line
Opened Jun. 2020

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

19

2-15 (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 is developing a 49-story, approximately 265m superhigh-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
area.

ⓒDBOX for Mori Building Co.

Oval Plaza at Toranomon Hills Mori Tower

Central squarein Toranomon-Azabudai Project (image)(Note 1) Developed by the U.S. Green Building Council, LEED is one of the world’s
most widespread environmental evaluation systems for buildings, evaluatingbuilding and neighborhood environmental performance through efficientwater and energy usage, interior environments, sustainable material use, etc.
(Note 2) Also offered by the Council, 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 andservices.

20

2-16 (3) Value creation
Development around MHR’s properties (Toranomon-Azabudai Project: projected completion Mar. 2023)
The future version of “Hills” boasts anastonishing scale and impact
Large central square of approx. 6,000m² is set in the center ofthe city and various city functions such as offices, residences,hotel, an international school, retail facilities and cultural
facilities will be tightly integrated.
Total floor area will be 861,500m², with 213,900m² of officespace, approx. 1,400 residential units. Approx. 20,000 office
workers and 25-30 million people per year are expected to visit.
The main tower will soar 64 stories and 330m in height. Officesin the main tower, the West Tower and Podium Building willencourage free and creative work.

ⓒ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.

21

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

Toranomon Hills Area
Community
connected byflowers

Partnership withworld's largest
innovation center“Thursday Gathering” by“Toranomon Flower Mart,” aVenture Café, a sister

new market unique toorganization of Cambridge

Toranomon Hills serves as an

Innovation Community,

intersection connecting

promotes exchanges between

prominent greenery in central

participants to support theTokyo including Atagoyama

creation of new innovations.

and Hibiya Park. Unique andpopular flower shops that do
TORANOMON FLOWER MART(Toranomon Hills Mori Tower)

Thursday Gathering(Toranomon Hills)

gather at the same place, andworkshops, etc. are also held.

Understanding
attractivenessacross Japan

Incubation Center“ARCH”

ARCH(Toranomon Hills Business Tower)

not usually get together“ARCH,” a large membership-“Touring Stand” was a

based incubation center wascollection of dining facilities

established especially tostanding side by side alongsupport large enterprises'

the road where people could

internal business reforms andenjoy seasonal ingredientsnew business creation. It

and local cuisine from acrossboasts around 3,800 m2 ofJapan including at the special

office work space and isbecoming a base for Japan's
unique innovation ecosystem.

Touring stand(Shintora-Dori)event “Touring Ippinichi.”22

2-18 (3) Value creation
Creating community and innovation through the Area Management by sponsor
ARK Hills Area
Workplace where
venture capitalgathers

KaleidWorks(ARK Mori Building)

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

Hills Marche is the first

office area where independent

Marche Japon Project of theventure capitalists

Ministry of Agriculture,

representing Japan are located

Forestry and Fisheries. Basedand a lounge area. People whoon the concept that “the best

want to innovate in a wide

ingredients are in the city,"

range of fields can interact on

through fresh, local food Hills

common grounds in sharedspaces.

Hills Marche(ARK Karajan Place)

Marche reinforces the richlifestyle of ARK Hills.

Roppongi Hills Area

ARK Hills Music Week
(ARK Karajan Place)

Close experienceof high-quality
music

Art Festival
representing
Tokyo“ARK Hills Music Week” is a“Roppongi Art Night,” an art

unique music festival where

festival representing Tokyo,

people can casually enjoy high-integrates art and the city toquality music. Many specially

improve the cultural image of

selected music events where

Roppongi and create apeople of various ages andpioneering model of urban

nationalities can interact with

development through art ineach other in the city are held
during the period.

(c) Roppongi Art Night Execution Committee

the metropolis Tokyo.

Roppongi Art Night(Roppongi Hills Arena)23

2-19 External growth
Contributed to the increase of DPU and NAV per unit by acquiring premium property in central Tokyo
Additional acquisition of Toranomon Hills (August 2021: 7.8 billion yen). Acquisition made at a price significantly below the appraisal value,
contributing to the increase in DPU and NAV.
Ability to acquire premium properties in central Tokyo without competitive bidding by utilizing the abundant and extensive property pipeline ofMori Building, the sponsor.

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

200
8.1%

180

8.9% 9.0% 8.7%

⇒ Estimate

145

5.5%

4.7%

80
2008

2009 2010

95

92

91

2011

2012 2013

99

103

109

5.0

4.2%

4.5%
3.6%

124
3.1%
120

114
100

6.0

5.3%
4.0%

2.6%

2007

7.0

6.3% 6.1%

149

Rent index
Vacancy rate

8.0

120
100

9.0

7.3%

160
140

10.0

127

131
118

113

110
1.9%

1.6%

2017 2018

2019

109

116

3.5%

4.0
3.0
2.0
1.0
0.0

2014

2015

2016

2020 2021

Change in return on real estate investment

2022

2023 2024(Source)
Prepared by the Asset Manager based on the“Autumn 2021 Office Rent Forecast in Tokyo,
Osaka and Nagoya (2021-2025)” by the OfficeMarket Trends Research Committee(Japan Real Estate Institute and Miki Shoji Co.,
Ltd.).
(Note)The rent index targets large and medium
buildings (standard floor area of 100 tsubo ormore) in Tokyo’s five central wards. The rent
index is rebased to 100 as of 2010.

2025

Mori Building’s extensive property pipeline

(%)

4.8
4.5

4.2%

4.2

Total assets:

4.2%

2.2 trillion yen

4.0%(as of the end of September, 2021)

3.9
3.6
3.3

3.5%

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

Number of properties undermanagement: 96 buildings(as of April, 2021)

3.5%
3.2%
3.0%

3.0%

3.0

MHR has “preferential negotiation rights”

2.7
07
09
11
13
15
17
19
21
(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 October each year.

24

2-20 External growth
Trend in assets under management (based on acquisition price)(billion yen)

450

410

Growth utilizing
sponsor’s pipeline

400
350

339

300

281

200

100

390

25th
Jan.
2019

27th
Jan.
2020

402

352

293

252

250

150

390

billion yen

142

142

1st
Jan.
2007

3rd
Jan.
2008

201

201

5th
Jan.
2009

7th
Jan.
2010

211

211

210

9th
Jan.
2011

11th
Jan.
2012

13th
Jan.
2013

15th
Jan.
2014

17th
Jan.
2015

19th
Jan.
2016

21st
Jan.
2017

23rd
Jan.
2018

29th
Jan.
2021

31st
Jan.
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.

25

2-21 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.

26

2-22 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 some of the pass-through type offices were weaker, those properties account for only a small
portion of the entire portfolio and thus the impact has been limited.

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

Trend in occupancy rates
(%)

99.9%

100%

100

99.7%

(%)
9.0

99.6%
98.9%

8.6%

98.0%

Minato Ward

8.0

96.8%
96.2%

5 central wards

96.1%
94.9%

95

94.8%

94.8%

8.3%

7.4%

MHR

7.0

8.5%

6.5%

6.3%

6.5%

6.3%

5.7%

6.0

4.8%

5.0

4.8%
4.8%

90
4.0

Office (total)

3.9%

3.0
2.8%

Residential (total)

85

3.5%

2.0

1.8%

1.8%

1.5%

1.6%

0.0%

2.2%

Oct.

Jan.
2022

1.6%

Office (pass-through)

1.0

2.2%
1.9%

0.7%
0.2%

0.1%

0.4%

0.0

80
26th
July 2019

27th
January 2020

28th
July 2020

29th
January 2021

30th
July 2021

31st
January 2022

Jan.
2020

Apr.

Jul.

Oct.

Jan.
2021

Apr.

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.

27

2-23 Internal growth
Result of rent revision and tenant replacement (pass-through type)
Rent revision rate (Office)Net impact of rent revisions accumulated since 26th period(%)(Monthly rent basis)+8(million yen)

+7.1%

Residential

+5.6%

+6

※ Cumulative total from 16th period+30

Office+25+21.8 mn yen

+3.6%

+4

+27.0 mn yen+20+27.3 mn yen +27.5 mn yen+25.7 mn yen

5.6

5.7

6.0

20.5

21.3

21.5

21.4

28th
Jul. 2020

29th
Jan. 2021

30thJul. 2021

31stJan. 2022

5.2

4.9+16.7 mn yen

+2
+15

+0.6%

+1.5%

4.2

0
+10

※ Average of all contracts subject to revision△2

26thJul. 201927th
Jan. 2020

28th
Jul. 2020

29th
Jan. 2021

30thJul. 2021

△0.7%

31st
Jan. 2022

Rent revision rate (Residential)

16.8
12.5
+5

+0
26th
Jul. 2019

(%)

+8

+6

27th
Jan. 2020

Net impact on increase/decrease of tenant replacement+5.9%(Monthly rent basis)+6.0%(million yen)
+20

+4.8%

(Office)(Residential)

0.0

+3.6%

+4

+15
+2.7%

+2

+10

△2.7%

※ Average of
all contracts
with replacement
△9.9%

△2.7%

△0.2%

+5

27th
Jan. 2020

28th
Jul. 2020

29th
Jan. 2021

-0.2

-0.3
-0.4
-0.4

+0
26th
Jul. 2019

-0.1

-0.3

New tenant※ Average of all contracts subject to revision
△2

-0.1

-0.2

Old tenant

+1.1%

0

0.1

30th
Jul. 2021

31stJan. 2022

30thJul. 2021

31stJan. 2022

30thJul. 2021

31stJan. 202228

2-24 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

160

Above market rent
(over +5%)300

Above market rent
(under +5%)

120
100
80

200

135

140

70

60

100

Below market rent

54
36

40

30
18

20

0

0

30th
Jul. 2021

31stJan. 2022

32nd
Jul. 2022

33rd
Jan. 2023

34th
Jul. 2023

35th
Jan. 2024

36th
Jul. 2024

37th
Jan. 2025
or afterRate of rent gap

△0.3%

+3.4%

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 January 31, 2022

Rents for some of the pass-through type offices decreased
both upon rent revision and tenant replacement. However,
the impact has been minimal because those properties
account for only a small portion of 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.

29

2-25 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

2024

2025

2026 or after

Expiration of
the leaseagreement

23rd & 24th

8,993.45

－

－

－

99.2

Jul. 2026

19th & 22nd

8,609.47

95.0

－

－

－

Sep. 2023

20th

3,879.19

－

42.8

－

－

Jul. 2024

28th

4,460.13

－

－

49.2

－

Sep. 2025

MHR

25th

4,156.66

－

－

－

45.8

Jan. 2026

26th, 27th & 29th

12,942.64

－

－

－

142.9

Mar. 2026

13th/12th & 22nd

7,952.55

－

－

－

77.9

Jan. 2026

23rd & 25th

5,742.95

－

－

－

55.5

Jan. 2026

4th, 15th & 24th

7,680.52

－

－

－

73.8

Jan. 2026

DHC

3,212.41

Master lessee

17.9

－

－

－

Mar. 2023

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%

113.0

42.8

49.2

865.7

(10.6%)(4.0%)(4.6%)(80.8%)

30

2-26 Financial management
Maintaining a strong financial structure with a credit rating (JCR) of AA (stable), and LTV (appraisalvalue basis) of 37.7%
The fund procurement environment has not changed despite the COVID-19 pandemic, and because the interest rate for new debt is below theinterest rates of existing debt, financial costs are expected to decline upon refinancing.
The 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. Green bonds have been issued (November 2021: 1.5 billion yen).

Reduction in LTV

Overview of debt financing

(%)

60.0

57.4%

End of 30th
periodLTV (appraisal value basis)

LTV (book value basis)

53.7%

55.0

Debt Balance

50.0
49.3%

48.8%

46.4%

44.7%

45.7%

46.0%

45.7%

46.8%

LTV (book value basis)(Note 1)

LTV (appraisal value basis)45.0(Note 2)

Avg. remaining duration

42.1%

40.0

41.9%
39.4%

38.0%

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

Jul.
2011

Jan.
2012

・・・

38.3% 37.7%

22nd
23rd
24th
25th
26th
27th
28th
29th
30th
31st
period period period period period period period period period period
Jul.
2017

Jan.
2018

Jul.
2018

Jan.
2019

Jul.
2019

Jan.
2020

Jul.
2020

Jan.
2021

Jul.
2021

Jul. 31, 2021

Jan. 31, 2022

186,222 mn yen

192,422 mn yen

46.0%

46.8%

38.3%

37.7%

4.5 years

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

Jan.
2022

Long-term debt ratio/Fixed rate ratio

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

End of 31st
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

0.76%

0.75

0.71%

0.69%

0.66%

Fixed
92.1%

0.61% 0.58%

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

Jul.
2011

Jan.
2012

・・・

22nd
23rd
24th
25th
26th
27th
28th
29th
30th
31st (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
Jul.
2017

Jan.
2018

Jul.
2018

Jan.
2019

Jul.
2019

Jan.
2020

Jul.
2020

Jan.
2021

Jul.
2021

Jan.
2022

of investment corporation bond issuance costs) ×365 ÷operating days during
each period ÷average interest-bearing debt balance during each period].

31

2-27 Financial management
Extension in remaining duration of debt

Rating(years)

5.5
5.0
4.5
3.8

4.0

4.0

4.3

4.4

4.6

4.7

4.6

4.5

Japan Credit Rating (JCR)

4.6

Long-term issuer rating:

3.7

3.5

AA (Stable)

3.0
2.5
2.0
1.5

1.5

1.2

1.4

・・・

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

・・・

22nd 23rd 24th 25th 26th 27th 28th 29th 30th 31st
period period period period period period period period period period
Jan.
Jan.
Jul.
Jan.
Jul.
Jul.
Jan.
Jul.
Jan.
Jul.
2017 2018 2018 2019 2019 2020 2020 2021 2021 2022

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

20
Long-term loans

Investment corporation bonds

15

10

5

8.0
9.5

9.2

8.2

11.2
7.6

6.0
0
32nd
periodJul.
2022

Averageinterest 0.7%
rate

9.1

8.8

5.0
2.0

2.0

8.7

11.0

33rd
period
Jan.
2023

34th
period
Jul.
2023

35th
period
Jan.
2024

36th
period
Jul.
2024

37th
period
Jan.
2025

38th
period
Jul.
2025

39th
period
Jan.
2026

0.5%

0.6%

0.7%

0.6%

0.5%

0.7%

0.5%

4.0
40th
period
Jul.
2026

41st
period
Jan.
2027

13.6

14.2

13.1

14.3
10.8

0.7
4.7

2.0
42nd
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
49th
period
Jan.
2031

3.8
50th
period
Jul.
2031

1.5
51st
period
Jan.
2032

32

2-28 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 Report33

2-29 Sustainability initiatives
GRESB Assessment
In the 2021 GRESB Real Estate Assessment, MHR received a “Green Star” rating forthe tenth consecutive year, and received the highest 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 the highest rank).
GRESB is an annual benchmarking assessment to measure ESG (Environmental, Social and Governance) integration ofreal estate companies and funds, as well as the name of organization which runs the assessment. It was founded in2009 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.
URL: https://www.mori-hillsreit.co.jp/en/ir/library/esg_report/tabid/456/Default.aspx

The pages dedicated to ESG have expanded, andinformation is proactively disclosed.
URL: https://www.mori-hillsreit.co.jp/en/outline/Sustainability/tabid/171/Default.aspx

34

2-30 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
We set the targets of a 25% reduction by 2024 and a 30% reduction by 2030 in CO2 emission intensity for the total calculated floor areaof MHR and MIM’s offices and properties owned by MHR (with 2013 as the baseline year). The targeted intensity is for the total of Scope 1
and Scope 2. The amount of CO2 emission decreased temporarily in 2020 due to the decline in the number of workers and visitors as aresult of the spread of COVID-19.

＜Carbon Dioxide Emission and Intensity＞
Short-range objective Long-range objective

Performance(year 2024)(year 2030)(year 2020)

25% reduc tion

30% reduc tion

32.6% reduc tion

(intensity basis:vs year 2013)(intensity basis:vs year 2013)(t-CO2)50,000106.3(intensity basis:vs year 2013)(Unit：t-CO2)

Year
2016

Year
2017

Year
2018

Year
2019

Year
2020

Scope 1

1,487

1,626

1,843

1,767

1,718

Scope 2

18,321

18,376

19,285

18,952

16,151

Scope 3

9,341

9,335

10,766

10,531

10,624

Total

29,15029,33731,894

31,251

28,493

Verification/Guarantee rate

80.7%

78.9%

77.4%

77.4%

77.7%

C over rate

86.8%

87.0%

87.4%

87.6%

87.8%

(kg-CO2/m2)
125
Intensity

103.7

101.0
95.9

40,00031,89430,00029,150100
81.5

31,251

29,33728,49375

20,00050

10,00025

00Year 2016

Year 2017

Year 2018Year 2019Year 202035

2-31 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 energy362-32 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 properties37

2-33 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 properties38

2-34 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.

39

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.

40

2-35 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.

41

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 (tentative name), the total area of the Toranomon Hills complex
including Toranomon Hills Mori Tower will reach about 7.5 hectares and about
800,000m2 of the total floor space. The area will evolve into a true
"international unban center and a global business hub" with integratedfunctions such as international standard offices, residences, hotels, retailfacilities and transportation infrastructure.

42

3. Operation highlights

43Factors that led to changes in dividends per unit
3-1 from the previous fiscal period
30th

31st period (Jan. 2022)

32nd period (Jul. 2022) Forecast(yen/unit)

3,100

3,030
yen/unit

Dividends per unit

(forecast)

3,000
2,927
yen/unit

2,913
yen/unit

2,900
＋11

＋13

＋50

△50

△10

△4

△118

＋370
＋58

2,800

△204

2,700
△10

＋11

OthersFinancingcosts
decrease

2,600

NOI changeof existing
properties

Properties
acquired(31st)

Financingcosts
decrease

OthersDrawdownof reservefor
reduction
entry

Absence ofdrawdownof reservefor
reduction
entry

Major factors behind change in NOI from existing properties:+ Decrease in depreciation－ Office rent (fixed rent master lease)－ Office rent (pass-through)－ Decrease in cancellation penalty－ Increase in property management fee－ Property taxes for property acquired in 29th period (3-months)

NOI changeof existing
properties

Decrease in
Increaserevenuein assetfrommanagement
property
fee
disposition(32nd)

Gain ondisposition(32nd)

Major factors behind change in NOI from existing properties:
+8
△48
△35
△23
△9
△5

+ Residential rent (pass-through)+ Decrease in maintenance and repairs+ Office rent (pass-through)－ Increase in property taxes－ Increase in depreciation－ Increase in property management fee－ Property taxes for property acquired in 31st period (3-months)(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.

+4
+4
+3
△8
△7
△5
△4

44

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

450

410

Existing properties

billion yen

402

400

390

350

339

338

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

・・・

20th
period
Jul.
2016

21st
period
Jan.
2017

22nd
period
Jul.
2017

23rd
period
Jan.
2018

24th
period
Jul.
2018

25th
period
Jan.
2019

26th
period
Jul.
2019

27th
period
Jan.
2020

28th
period
Jul.
2020

29th
period
Jan.
2021

30th
period
Jul.
2021

31st
period
Jan.
2022

45

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

(%)

120

60
Unrealized capital gain/loss

110

Unrealized capital gain/loss ratio

98
bn yen

100

50

90
81
80

40

70
60

30
24.8%

50

20.9%

20.2%
40

20
28

30
8.2%
20

10
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

・・・

22nd
period
Jul.
2017

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

△10

△20

46

3-4 Appraisal value
Reflects the impact ofadditional acquisition
As of end of 30th period
Jul. 31, 2021
Principal
use

Property
name

PropertyNo.

Acquisition
price

Book
value

(A)
Appraisal
value(Note 1)

OfficeAs of end of 31st period
Jan. 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(million yen)
Unrealized
capitalgain/loss(B)-book
value

Roppongi Hills
Mori Tower

O-0

115,380

111,048

146,700

2.8%

154,300

2.7%

2.4%

2.8%

7,600

5.2%

43,251

ARK Mori Building

O-1

62,48061,42563,9003.2%

66,800

3.1%

2.8%

3.2%

2,900

4.5%

5,374

Koraku Mori Building

O-4

27,20024,63225,440

3.4%

24,240

3.3%

2.9%

3.6%

Akasaka Tameike Tower

O-6

43,93041,42634,8003.2%

34,300

3.1%

2.8%

3.2%

△ 1,200△ 4.7%△ 392

Atago Green Hills

O-7

42,09039,938

46,102

3.4%

47,582

3.3%

2.8%

3.5%

1,480

3.2%

ARK Hills South Tower

O-8

19,15018,577

25,1003.0%

24,800

3.0%

2.8%

3.2%

Toranomon Hills
Mori Tower

O-9

56,30055,61160,367

2.6%

73,9442.5%

2.2%

Holland Hills Mori Tower

O-10

16,330

16,246

21,9003.2%

22,2003.1%

382,860

368,906

424,309－448,166

Sub total△ 500△ 1.4%△ 7,126

13,577△ 1.2%

6,222

2.6%

△ 300

22.5%

18,332

2.7%

3.3%

300

1.4%

5,953

－

－

－

23,857

5.6%

79,259

7,643

Roppongi First Plaza

R-3

2,100

2,232

2,680

3.7%

2,730

3.6%

3.4%

3.7%

50

1.9%

497

ResidenRoppongi View Tower
tial

R-4

4,000

4,061

3,520

3.8%

3,590

3.7%

3.5%

3.8%

70

2.0%

6,100

6,294

6,200

－

6,320

－

－

－

120

1.9%

△ 471

21,82022,074

41,2003.8%

41,400

－

3.8%

－

200

0.5%

19,325

21,82022,074

41,200－41,400

－

－

－

200

0.5%

19,325

410,780

397,275

471,709－495,886－－－

24,177

5.1%

98,610Sub total
Laforet Harajuku (Land)
Retail (Note 2)andothers
Sub total
Total

S-1

25

(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 30th period shows the discount rate used in the DCF analysis.

47

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

24th
periodJul. 2018(actual)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(forecast)

33rd
periodJan. 2023(forecast)

Office rent (yen/tsubo)

30,62930,84230,92431,02031,13931,30931,372

31,13531,12031,100Residential rent (yen/tsubo)

15,09515,302

15,49815,69815,766

15,741

15,77215,807

15,85815,787

Office occupancy

99.5%

99.7%

99.9%

100%

99.7%

99.6%

98.9%

98.0%

98.1%

98.1%

Residential occupancy

97.9%

97.7%

96.8%

96.2%

96.1%

94.9%

94.8%

94.8%

95.6%

95.9%

Retail occupancy

100%

100%

99.2%

98.8%

98.5%

98.9%

98.9%

98.9%

98.9%

98.8%

60

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

48

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)
25,000(%)
100

20,00030,00090

90

15,00020,00080
10,000

0

80

5,000
70

Aug.
2021

Sep.

Oct.

Nov.

Dec.

Jan.
2022

Rent (yen/tsubo)

31,13531,154

31,166

31,117

31,10931,130Occupancy rate

98.0%

98.1%

97.8%

98.2%

98.0%

97.8%

Top 5 tenants
End tenantsMori Building Co., Ltd.

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

66.0%

2

Mylan Seiyaku Ltd.

Holland Hills Mori Tower

3,458.53 m

2.0%

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)2,565.06 m2

1.5%

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%

129,800.16 m2

73.4%

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 January 31, 2022.

0

Aug.
2021

Sep.

Oct.

Nov.

Dec.

Jan.
2022

Rent (yen/tsubo)

15,796

15,78915,81915,81815,76515,852

Occupancy rate

95.2%

95.3%

94.4%

94.3%

94.2%

95.1%

70

Tenant Contribution by Industry
Type-Office

Others21.5%

Law firms,
etc.
11.2%
Finance/insuranc e
12.1%

Information
andcommunic ation
36.2%

Manufac turing
19.0%(Note 1) As for fixed rent master lease, ratios are based on monthly rents of tenants who are
actually using the floor areas as of January 31, 2022.
It is multiplied by the relevant percentage of ownership for each property.
(Note 2) Business types are classified by the Asset Manager.

49

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

Long-termLong-term
100%
100%

Fixed
92.1%

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

End of 30th period
Jul. 31, 2021

End of 31st period
Jan. 31, 2022

186,222 mn yen

192,422 mn yen

Long-term loan

167,422 mn yen

172,122 mn yen

Investment corporation bonds

18,800 mn yen

20,300 mn yen

46.0%

46.8%

LTV (Appraisal value basis) (Note 2)

38.3%

37.7%

DSCR (Note 3)

17.0x

16.6x

4.5 years

4.6 years

0.45%

0.43%

LTV (Book value basis)(Note 1)

Avg. remaining duration
Weighted avg. interest rate

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

Lenders

BalanceRatio

MUFG Bank, Ltd.

42,196 mn yen

24.5%

Mizuho Bank, Ltd.

29,898 mn yen

17.4%

Sumitomo Mitsui Banking Corporation

24,425 mn yen

14.2%

Sumitomo Mitsui Trust Bank, Limited

20,923 mn yen

12.2%

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 Insuranc e Company, Limited

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

503-8 Unitholders breakdown (as of January 31, 2022)
Unitholders breakdown

End of 31st period＜Number of unitholders＞
Other domestic
Financialcorporations
institutions
1.6%
Foreign(Incl. securities
corporations
companies)
and individuals
1.4%
2.2%

＜Number of investment units＞

Foreigncorporations
and individuals
16.6%

Individuals
6.2%

Other
domestic
corporations
16.6%

Individuals
94.8%

End of 30th period

Top 10 unitholders

Other domestic
Financialcorporations
institutions
1.7%
Foreign(Incl. securities
corporations
companies)
and individuals
1.4%
2.2%

Financial
institutions(Incl. securities
companies)
60.7%

Foreigncorporations
and individuals
16.7%(Investment
trust 33.3%)

Individuals
6.0%

Other
domestic
corporations
16.6%

Individuals
94.7%

Financial
institutions(Incl. securities
companies)
60.8%

Name

Number of units
held

1

Custody Bank of Japan, Ltd.
(Trust account)

423,80322.1%

2

Mori Building Co., Ltd.

287,472

15.0%

3

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

266,805

13.9%

4

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

74,614

3.9%

5

Custody Bank of Japan, Ltd.
(Securities investment trust acc ount)

49,159

2.6%

6

STATE STREET BANK WEST CLIENT - TREATY
50523423,985

1.3%

7

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

21,8681.1%

8JP MORGAN CHASE BANK 385781

21,164

1.1%

9

LEGAL + GENERAL ASSURANCE PENSIONSMANAGEMENT LIMITED

20,388

1.1%

17,6740.9%

1,206,932

63.0%

Rank

10 JP MORGAN CHASE BANK 385771

Total of top 10 unitholders

Ratio(Investment
trust 33.2%)

51

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

524-1 Business environment recognition
Real estate market / Lending attitude

Interest rate trends / Macro environment

Vacancy rates for office buildings in central Tokyo have been on an

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

upward trend and rents continued to fall.

which had remained low due to the monetary policy of the Bank of(Office Market Trends Research Committee: Tokyo’s five central wards)

Japan, have also seen a rising trend. The core CPI rate of increase

Vacancy rate: 4.5% (2020) → 6.3% (2021)
Rent index: 131 (2020) → 118 (2021)
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% (April 2021) → 3.0% (October 2021)
Lending attitude toward the real estate industry has temporarily
weakened but remains at a highly positive level.

is also on an upward trend albeit at a low level.
10-year bond rates: 0.17% (January 31, 2022)
Core CPI: +0.5% (December 2021)
In the December 2021 preliminary business conditions composite
index, the leading index was at 104.3 (+0.4 PT increase from previous
month) and the coincident index was at 92.6 (△0.2 PT increase fromprevious 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.

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 are expected to demonstrate continued
competitive advantages.

Business sentiment is expected to continue recovery trend
although COVID-19 is likely to have 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 page53

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 investment54

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 are expected to continuously demonstrate competitive advantages
even after the spread of telecommuting, as these properties can capture office demand by functioning as
headquarters.
While conducting disposition 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.

55

4-4 Market-related information (1)Change in rent and vacancy rate of office buildings (Tokyo’s five central wards)
(%)
10.0

200
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%

4.5%

4.7%

3.1%

109

100

2.6%

124
131
3.5%

118

114

109
100

101

120

92

80

91

95

99

103

5.0

4.2%

127

3.6%

120
2.9%

6.0

5.3%
4.0%

124

7.0

6.1%

113

3.0

116
110

1.9%

4.0

2.0

109

1.6%

1.0
0.0

Rent index
Vacancy rate

(Source)
Prepared by the Asset Manager based on the“Autumn 2021 Office Rent Forecast in Tokyo,
Osaka and Nagoya (2021-2025)” by the OfficeMarket Trends Research Committee(Japan Real Estate Institute and Miki Shoji Co.,
Ltd.).
(Note)The rent index targets large and medium
buildings (standard floor area of 100 tsubo ormore) in Tokyo’s five central wards. The rent
index is rebased to 100 as of 2010.

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

56

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%

20,00018,0006.2%

16,00012,000

03

04

05

06

07

08

09

10

11

12

13

14

15

16

17

18

19

19,5504.0
18,88014,00010,000(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.

6.0

5.0%

20

21

Avg. rents of Minato ward
Avg. vacancy rates of Minato ward

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.

18,00016,92916,00014,000
03

04

05

06

07

08

09

10

11

12

13

14

15

16

17

18

19

20

21

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

22
01

57

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

6.0%

6.0
5.5

5.5%

5.0

5.6%
5.3%
5.0%

4.8%
4.5%

4.5%
4.0%
4.0%

4.0
3.5

3.8%

4.9%

4.5% 4.5% 4.5%
4.2%

4.0%
4.0%

4.0%

4.0%

4.2% 4.2% 4.2% 4.2%

3.8%

3.7%

4.0%

3.8%
3.5%

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

5.9%

5.3%
5.0%

4.5

6.0% 6.0%

3.7%

3.5%

4.7%

4.5% 4.5% 4.5% 4.4%

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

3.5%

3.5% 3.5% 3.5% 3.4%

3.5%
3.3%

3.0

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

3.2% 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
Oct.
2005

Oct.
2006

Oct.
2007

Oct.
2008

Oct.
2009

Oct.
2010

Oct.
2011

Oct.
2012

Oct.
2013

Oct.
2014

Oct.
2015

Oct.
2016

Oct.
2017

Oct.
2018

Oct.
2019

Oct.
2020

Oct.
2021

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

1H
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.
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21(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.

58

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. Jul.
2013

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

Change in core CPI (Year-on-year comparison)
(%)
+ 2.0

Based on figures excluding thedirect effects of theconsumption tax rate increase

+ 1.5
+ 1.0

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

+ 0.5
+ 0.0
△ 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

59

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

Leading index

90

Coincident index

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

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

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

60

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

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

61

5. Appendix

62

5-1 Financial highlights
Indic es

30th period
Period ended Jul. 31, 2021

31st period
Period ended Jan. 31, 2022

Net income

5,582 mn yen

5,513 mn yen

Depreciation and amortization

1,072 mn yen

1,079 mn yen

971 mn yen

203 mn yen

Total assets

404,953 mn yen

411,259 mn yen

Total net assets

200,818 mn yen

201,657 mn yen

CAPEX

Calculation formula

Total net assets/unit (BPS)

104,793 yen

105,231 yen Total net assets/Total units outstanding

Unit price (as of end of each period)

161,100 yen

141,000 yen

1,916,330 units

1,916,330 units

Total units outstanding
Total dividends

5,582 mn yen

5,609 mn yen

Dividends/unit

2,913 yen

2,927 yen

Dividend yield

3.6%

FFO

6,655 mn yen

4.1% Dividends per unit (annualized)/Unit price as of end of period
6,593 mn yen Net income + Depreciation and amortization - Gain or loss on sales of real estate properties

FFO/unit

3,473 yen

3,440 yen FFO/Total units outstanding

Annualized

7,003 yen

6,824 yen Based on a period of 365 days

23.0x

20.7x Unit price as of end of period/FFO per unit (annualized)

PER

FFO multiple

27.4x

24.7x Unit price as of end of period/Net income per unit (average during the periods, annualized)

PBR

1.5x

1.3x Unit price as of end of period/Net assets per unit

ROA

1.4%

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

2.8%

2.7% Based on a period of 365 days

2.8%

2.7% Net income/Average of total net assets during the period

5.6%

5.4% Based on a period of 365 days

Annualized
ROE
Annualized
NAV
NAV/unit
NAV multiple

282,271 mn yen
147,297 yen
1.1x

300,267 mn yen Total net assets + Total appraisal value - Total book value - Total liabilities
156,688 yen
0.9x Unit price as of end of period/NAV per unit

Interest-bearing debt

186,222 mn yen

LTV (book value basis)

46.0%

46.8% Interest-bearing debt/Total assets

LTV (appraisal value basis)

38.3%

37.7% Interest-bearing debt/(Total assets + Total appraisal value - Total book value)

Operating days

181 days

192,422 mn yen

184 days63

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

30th period

31st period

30th period

31st period

Period ended Jul. 31, 2021

Period ended Jan. 31, 2022

Period ended Jul. 31, 2021

Period ended Jan. 31, 2022

24,326,674

17,517,469

22,000,000

15,500,000

2,326,674

2,017,469

179,807,771

192,084,427

18,800,000

20,300,000

145,422,000

156,622,000

14,778,470

14,944,553

807,300

217,873

204,134,446

209,601,896

AssetsLiabilities

Current assets

13,713,562

12,736,238

Current liabilities

C ash and deposits

8,310,173

6,950,040

C urrent portion of long-termloans payable

C ash and deposits in trust

4,805,924

5,175,674

Other

597,464

610,523

391,128,128

398,412,419

Investment corporation bonds

359,605,597

366,623,801

Long-term loans payable

Other

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

Deferred assets
Total assets

30,650,962

30,652,036

871,567

1,136,581

111,424

110,713404,953,115

411,259,371

Noncurrent liabilities

Lease and guarantee depositedin trust
Other

Total liabilities
Net assets
Unitholders' equity
Unitholders' capital,net
Total surplus

201,620,396(Note)

195,188,791

201,552,048(Note)

195,235,522

6,431,605

6,316,525

291,944

291,944

6,139,661

6,024,581△ 801,727

105,426

Total net assets△ 801,727

200,818,669

201,657,474

Total liabilities and net assets

404,953,115

411,259,371

Voluntary retained earnings
Unappropriated retained
earnings

Valuation and translation
adjustments

Deferred gains or losses onhedges105,426(Note) Figure after deducting allowance for temporary difference adjustments.

645-3 Income statement(thousand yen)

30th period

31st period

Period ended Jul. 31, 2021

Period ended Jan. 31, 2022

Operating revenue

9,841,235

9,820,674

Rent revenues

9,609,038

9,626,195

232,197

194,479

3,683,286

3,735,181

3,325,513

3,401,656

Asset management fee

254,320

232,424

Directors' compensation

7,000

8,400

Asset custody fee

10,072

10,123Administrative service fees

19,33918,676

Other operating expenses

67,041

63,9006,157,949

6,085,492

1,056

1,097

Interest income

50

53Gain on forfeiture of unclaimed dividends

854

1,044

Other

151

－

575,116

571,781Interest expenses

369,592

371,586

Interest expenses on investment corporation bonds

46,47250,969Am ortiza tion of inve stm e nt corporation bonds issua nce cost

7,683

8,465

Borrowing expenses

137,194

133,516

Amortization of investment unit issuance c ost

12,310

5,358

Other

1,862

1,884

Ordinary income

5,583,890

5,514,809

Inc ome before inc ome taxes

5,583,890

5,514,809

Net inc ome

5,582,775

5,513,920

Unappropriated retained earnings

6,139,661

6,024,581

Other operating revenues
Operating expenses
Expenses related to properties

Operating income
Non-operating income

Non-operating expenses

OfficeResidential
RetailLand
Other rent revenue

Parking revenue
Utilities and other revenue
Cancellation penalty

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

8,102,778
774,173
75,714
667,800
5,728

45,810148,60464

1,200,616
753,174
118,637
64,033
20,7205,986
1,079,135
144,549
14,80465

5-4 Statement of cash flows / Retained earnings
Statement of cash flows(thousand yen)

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

30th period

31st period

30th period

31st period

Period ended Jul. 31, 2021

Period ended Jan. 31, 2022

Period ended Jul. 31, 2021

Period ended Jan. 31, 2022

Net cash provided by (used in) financ ing ac tivities

7,120,863

6,482,419

Income before inc ome taxes

5,583,890

5,514,809

Proceeds from long-term loans payable

Depreciation and amortization

1,072,822

1,079,135

Repayments of long-term loans payable

Amortization of investment c orporation bonds
issuance c ost

7,683

8,465

Proceeds from issuance of investment corporationbonds

Amortization of investment unit issuance c ost

12,3105,358

Redemption of investment corporation bonds

△ 50

△ 53

Interest income
Gain on forfeiture of unclaimed dividends
Interest expenses△ 854

416,064△ 1,044

Dec rease (inc rease) in ac c ounts rec eivable

51,651

55,114

Increase (decrease) in acc ounts payable332,300

Increase (decrease) in acc rued expenses

27,309△ 262,053

Increase (decrease) in advances rec eived△ 8,338

Increase (decrease) in deposits rec eived
Dec rease (inc rease) in prepaid expenses
Dec rease (inc rease) in long-term prepaid
expenses
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid

Net cash provided by (used in) investing activities
Purc hase of property, plant and equipment in
trust
Repayments of lease and guarantee depositedin trust
Proc eeds from lease and guarantee deposited intrust△ 4,169

422,555－

7,538,471

6,896,965

50

53△ 416,564△ 413,483

53,063△ 1,115△ 1,019,845△ 8,079,083△ 88,498△ 493,630

92,094△ 6,500,000△ 12,500,000△ 2,000,000－

1,486,886△ 5,574,683

2,295,962△ 5,580,604

10,820,134

13,116,097

13,116,097

12,125,714△ 990,382

16,114△ 68△ 1,023,441

17,200,000

33,010△ 3,505△ 1,094

6,500,000

3,769,628

606,281△ 24,006△ 11,647
59,567

Dividends paid
Net inc rease (dec rease) in c ash and cash
equivalents
Cash and c ash equivalents at beginning of theperiodCash and c ash equivalents at the end of theperiod△ 3,805,055△ 8,084,650

499,196

Retained earnings(yen)

Ⅰ Unappropriated retained earnings

30th period

31st period

Period ended Jul. 31, 2021

Period ended Jan. 31, 2022

6,139,661,200

6,024,581,500－

95,177,162

46,731,158

482,669,237

46,731,158

482,669,237

5,582,269,290

5,609,097,910

2,913

2,927

510,660,752

27,991,515

Ⅱ Reversal of voluntary retained earnings
Reversal of reserve for reduc tion entry
Ⅲ Capitalization
Reversal of allowance for temporary
differenc e adjustments
Ⅳ Amount of Dividends
Amount of dividends per unit
Ⅴ Retained earnings c arried forward66

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

Kora k u Mori Building

Ak asa k a Ta m e ik e Tower

Acquisition price

115,380,000
30th

31st

Jul. 2021

Ja n. 2022

O pe ra tion da ys

181 da ys

184 da ys

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
30th

31st

Jul. 2021

Ja n. 2022

3 da ys

181 da ys

184 da ys

0.0P T

100%

100%

100%

0.0P T

100%

1

0

1

Differe nce

262,998

262,518－100%

0.0P T

96.3%

92.6%

1

0

21

21

3 da ys

181 days

184 da ys

3 days

1.8PT

94.5%

94.9%

0.4PT

△ 3.7PT

94.0%

94.8%

0.8PT

135

138

3

△ 24,351

779,529

786,774

7,245

73,18673,011△ 24,578

852,715859,786△ 174

173,187

174,646

1,459△ 2,41443,58941,8390－－－74,00173,774△ 92,056

1,351,486

1,351,486－

721,200

696,622－

164,853

182,443

17,58984,342

82,04484,322

83,67530,397

－

－

－

△ 646

32,811－△ 479△ 2,298－

50,33956,436

6,097

22,013

27,231△ 1,749

－

－

－

355

－

19,5094,470

44,351

15,024

5,108

451

2,123

2,286

162

1,737

1,807

△ 15,039

29,327

4,656

△ 355

69

2,163

2,251

88

336,828

331,646

69,58969,969379

91,764

93,1651,401

135,085

137,769

2,683

376

373

△ 5,181

2,693

2,784

90

83,951

86,914

2,963

10,624

10,622

1,052,727

1,047,515

323,938

341,159

17,221

364,456355,235

438,71322,721

1,803,878

1,027,548

1,010,326

341,386

421,073

2,135,525

1,097,138

1,080,296

448,508

434,552

558,842

4,236,231

2,212,460

2,142,978862,020

1,108,574

3.7%

3.5%

3.4%

3.2%

2.5%

－

80,475

4,545

12,776

90,3482,135,525

294,662

1,016,662

1,075,750

59,088373,626

421,776△ 62,104

155,044

1,840,863△ 75,930

74,881

NCF (3)-(4)△ 386,688△ 0.2PT

2.6%

386,688△ 0.1P T

3.3%

CAP EX (4)△ 0.2P T△ 42,429

1,153,097

3.9%△ 69,482

904,450

Annua lize d NO I/
Acquisition price△ 255,791△ 13,955

571,810

4,492,022△ 16,842△ 15,650

Annua lize d NO I

△ 92,025△ 15,357

436,724

2,227,551△ 17,221356,744

NO I (3) ((1)+(2))△ 86,844△ 9,220415,991

1,890,722△ 5,212△2

48,149416,765

468,494(Note 2)447,868

93.0%－

Tota l property
ope rating ex penses
P roperty ope rating
incom e (2)447,868

184 da ys

91.2%

Diffe rence

622,848

O the r e xpe nse s

2,851,394

181 da ys

0.0P T

Ja n. 2022

647,199

De pre cia tion (1)2,943,450

3 da ysJul. 2021－

Maintena nce a nd
repairs
Insura nce
pre m ium－Ja n. 2022

31st

Difference

1,351,486

Utilitie s－

Jul. 2021

Differe nce

43,930,000
30th

1,351,486(Note 1)

2,851,394

31st△ 92,056

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

2,943,450

27,200,000
30th

△2

△ 226

7,071

5,218

△ 12,967△ 44,523△ 0.1PT△ 64,695

51,728(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 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.

67

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 Gre e n Hills

ARK Hills South Tower

Tora nom on Hills Mori Towe r

Holla nd Hills Mori Towe r

19,150,000

56,300,000 (before acquisition 48,430,000)

Acquisition price

42,090,000
30th

31st

Jul. 2021

Ja n. 2022

O pe ra tion da ys

181 da ys

184 da ys

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

30th

31st

Jul. 2021

Ja n. 2022

3 da ys

181 da ys

184 da ys

0.0P T

94.4%

85.3%

100%

0.0P T

94.1%

89.1%

1

0

43

39

△4

Differe nce

1,012,320

1,012,320－

459,495

435,312－－－

21,38025,931

1,012,320

1,012,320－

480,876

461,243

2,664

2,664

－

44,83845,526

69,17868,84836,50335,918

－

－

△ 330

－

22,480

－

－

－

3,714

3,812

190,907179,276

53,681

58,202

320,145

312,803692,174

699,516

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

883,081878,792

Annua lize d NO I

1,780,800

1,743,256

Annua lize d NO I/
Acquisition price

4.2%

4.1%

CAP EX (4)191,485

31,343

NCF (3)-(4)691,596

847,449

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)30th31st (Note 3)

Jul. 2021

Ja n. 2022

3 da ys

181 da ys

184 da ys△ 9.1P T

100%

100%

100%
1

Differe nce△ 5.0P T

16,330,000
30th

31st

Jul. 2021

Ja n. 2022

3 da ys

181 days

184 da ys

3 days

0.0PT

96.3%

96.3%

0.0PT

100%

0.0PT

98.8%

96.3%

1

0

21

21

△ 2.5PT

Difference

Diffe rence0△ 24,183

1,039,279

1,208,989

169,710524,667

515,201

4,550

－

－

－

63,62821,760△ 19,632

1,039,279

1,208,989

169,710588,296

536,962688

117,086

138,332

21,246

102,524

101,396

72,511

82,87010,35935,61535,591

27,147△ 585△ 1,127

4,667

－

－

－

4,549

5,399

849

4,832

6,033

1,200

－

－

－

4,412

925

98

1,123

1,204

81

1,925

2,405

479

1,172

1,234

△ 11,631

44,50044,536

36

131,502

151,144

19,64144,06642,815

4,521

1,138

1,720

582

95

111

15

210

209

△ 7,341

155,416

162,087

6,670

323,121374,863

51,742

192,550

187,571

7,341

325,459

299,156

716,157

834,125

117,968

395,746

349,390△ 4,289

369,959

343,692△ 26,303

847,660

985,269

137,609439,812392,206△ 37,543

746,051

681,782

1,709,369

1,955,961

246,591

886,914778,019△ 0.1P T

3.9%

3.6%

△ 64,269

3.5%

3.5%

5.4%

4.8%

△ 160,141

2,358

876

1,904

－

54,40337,669155,852

367,601

342,816△ 1,482△ 0.1PT

845,755

985,269

139,514385,408

354,537△ 26,266△ 0.3P T△ 24,784△ 1,904△ 9,466△ 41,868△ 51,334△ 24△ 3,486

61△ 1,250△0△ 4,978△ 46,355△ 47,605△ 108,895△ 0.7PT△ 16,734△ 30,871

68

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 Towe r

La fore t Hara juk u (La nd)

Acquisition price

2,100,000
30th

31st

Jul. 2021

Ja n. 2022

O pe ra tion da ys

181 da ys

184 da ys

O ccupa ncy ra te

82.4%

84.1%

Avg. O ccupancy rate
(during pe riod)

88.7%

82.1%

Num ber of te na nts

34

35

79,84272,500－－79,84272,50011,923

11,974

8,369

8,362

1,088

4,000,000

P ortfolio tota l21,820,000

31st (Note3)Jul. 2021

Ja n. 2022

3 da ys

181 days

184 da ys

3 days

0.0PT

97.6%

97.4%

100%

0.0PT

98.3%

97.5%

△ 0.2PT

1

1

0

343

342

△ 2,399

667,800

667,800－

9,609,038

9,626,195

－

－

－

－

232,197

194,479△ 2,399

667,800

667,800－

9,841,235

9,820,674△ 37,718－－－

1,163,160

1,200,616

37,455

12,701△ 154△ 20,560

90,45190,450753,174

4,107

1,057

99

－

－

△1

749,067

957

△ 14

－

101,428

118,637

17,208

1,599

1,758

4,202

2,443

－

－

－

62,64764,033

1,386

247

9

350

361

10

－

－

－

19,207

20,7201,512

11,63911,810170

16,937

17,001

63

－

－

－

1,072,822

1,079,135

6,312

3,820

3,814

587

586

－

－

157,179

165,339

8,159

41,6262,094

47,181

49,628△0－39,532△6

2,447

90,45190,4503,325,513

3,401,656

76,14340,31030,87456,786

51,939577,3501

6,515,722

6,419,018

51,95042,68473,72468,940△ 4,847

577,349

NO I (3) ((1)+(2))△ 9,435△1

577,349

577,3501

7,588,544

7,498,153△ 96,704

Annua lize d NO I

104,761

84,673

136,756

1,145,286

14,875,603

3.7%

3.4%

5.3%

5.2%

3.6%

17,104

11,258

6,732

14,989

8,257

－

－

－

971,078

203,807

NCF (3)-(4)34,84531,425△ 5,845△ 0.1PT

3.8%

CAP EX (4)△ 0.3P T△ 18,980

15,302,866

4.0%△ 11,914

1,164,267

5.0%△ 20,087

148,670

Annua lize d NO I/
Acquisition price

66,991

53,950△ 13,041

577,349

577,3501

6,617,466

7,294,346

Re nt re ve nue s
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)31stJul. 2021

Ja n. 2022

3 da ys

181 da ys

184 da ys

1.7P T

92.3%

92.0%

△ 6.6P T

92.6%

91.1%

1

84

83

△ 7,341

103,967

101,567

△1

－

－

－

△ 7,341

103,967

101,56751

13,872

13,71812,715

1,364

△7

276

2,451

4,051

238

Differe nce△ 9,265△ 1.0P T△ 3,420

30th

31st

Jul. 2021

Ja n. 2022

3 da ys

181 da ys

184 da ys△ 0.3P T

100%

100%

100%

410,780,000 (before acquisition 402,910,000)
30th

P e riod

30th

Differe nce△ 1.5P T△ 4,784

Difference

Diffe rence△ 0.8PT△1

17,157△ 90,391△ 427,263△ 0.2PT△ 767,270

676,87969

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

Performance since listing180(At listing vs. January 31, 2022)■ MHR:■ TSE REIT Index:

160
140

△6.0%
+6.0%

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(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

22nd (July 2017)

138,900 yen

2nd (July 2007)

1,080,000 yen

12th (July 2012)

330,500 yen

23rd (January 2018)

137,100 yen

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

3rd (January 2008)

716,000 yen

13th (January 2013)

485,000 yen

24th (July 2018)

138,100 yen

4th (July 2008)

465,000 yen

14th (July 2013)

548,000 yen

25th (January 2019)

144,500 yenHigh

5th (January 2009)

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

26th (July 2019)

160,300 yen(May 8, 2007: in trade)

6th (July 2009)

352,000 yen

15th (January 2014)

135,900 yen

27th (January 2020)

181,700 yen

7th (January 2010)

264,900 yen

16th (July 2014)

151,100 yen

28th (July 2020)

137,100 yen

8th (July 2010)

177,300 yen

17th (January 2015)

166,600 yen

29th (January 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)

145,800 yen(August 12, 2010: in trade)

168,200 yen

30th (July 2021)

161,100 yen(Split adjusted)(33,640 yen)

31st (January 2022)

141,000 yen

Low

70

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

Premium properties

50% or more

Office building

Premium Properties
Type

Location

Scale

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

Officebuildings

Tokyo's five central wards
and their vincity

Residential
properties

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

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

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

50% or more

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

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

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

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

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

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

(Note 3)

Ratios are based on the acquisition prices(Note 4)

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

Earthquake-resistance foc us

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

71

5-10 Portfolio map (as of January 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.

72

5-11 Portfolio overview (as of January 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

18 years
9 months

35 years
10 months

21 years
10 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

8 years
6 month

7 years
8 months

17 years
0 months

21 years
4 months

19 aboveground,6 below

20 aboveground,4 below

52 aboveground,5 below

24 aboveground,2 below

approx.
46,154㎡

approx.
53,043㎡

approx.
241,581㎡

approx.
35,076㎡

Koraku Mori
ARK Hills
Building
South Tow er

Residential

MORI Tower Forest Tower

Plaza

RetailRoppongi
First
Plaza

Roppongi
View
Tower

Laforet
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−

20 years
6 months

20 years
3 months

20 year6 months

28 years 3 months−

25 aboveground,2 below

42 aboveground,2 below

43 aboveground,4 below

2 aboveground,1 below

20 above ground,
1 below−

approx.
46,971㎡

approx.
85,266㎡

approx.
60,815㎡

approx.
2,083㎡

approx.
22,906㎡−

Atago,
Minato-ku, Tokyo

C o- owners hip
C o- owners hip
C o- owners hip(approx. 1 9 .8 % ) (approx. 6 2 .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(approx. 2 8 .8 % )(4 7 % )(4 6 % )CompartmentalizedCompartmentalized

ownershipownership

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

0.59%

0.78%

0.73%

1.56%

0.50%

0.85%

1.79%

2.35%

2.34%

5.94%

2.20%

2.20%

−

Seismic
Damping

Seismic
Damping

Seismic
Damping

Seismic
Damping

Seismic
Damping

Seismic
Damping

Seismic
Damping

Seismic
Damping

Seismic
Damping

−

−

−

−

115,380

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

2,100

4,000

21,820

100%

100%

93.0%

85.3%

100%

96.3%

94.9%

100%

84.1%

92.0%

100%

Average building age
20.2 years (Note 5)

Portfolio PML
0.90% (Note 2)

Total acquisition price410,780 mn yen

73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 January 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.

74