Mori Hills REIT Investment Corporation
Results of the 30th Fiscal Period ended July 31, 2021
Presentation Material
September 14, 2021

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

41

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

42

Change in assets under management

43

Change in unrealized capital gain/loss

44

Appraisal value

45(Acquired as of August 2, 2021)

7

Change in the rent and occupancy rates

46

Dividends per unit growth record

9

Tenant status by month and major tenants

47

Strengths of continuous growth in DPU and NAV

10Financial overview (as of July 31, 2021)

48

Increase in appraisal NAV per unit

11

Debt status (as of July 31, 2021)

49

Forecasts

12

Unitholders breakdown (as of July 31, 2021)

50

Highest quality portfolio among all J-REITs

13

External growth

22Internal growth25

Financial management

29

Business environment recognition

52

Sustainability initiatives

31

MHR’s policy/strategy

53

TCFD summary

33

Market-related information

55

MHR’s representative property

37

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

5. Appendix

51

61

2

1. Executive summary
Financialsummary

Operating revenue: 9,841 million yen, operating income: 6,157 million yen,

30th period

DPU: 2,913 yen (+0.1% from 29th period) Increasing for 22 consecutive fiscal periods(Jul. 2021)

net income: 5,582 million yen Increased revenue and income period-over-period

NAV per unit: 147,297 yen (+0.1% from 29th period) Increasing for 21 consecutive fiscal periods
As a result of maintaining a high occupancy rate even as office vacancy rates rise in central Tokyo,
DPU and NAV per unit continued to increase.

External
growthAdditionally acquired “Toranomon Hills Mori Tower” (7.8 billion yen) at the beginning of the 31st period.
In the 31st period, although the impact of the contract renewal accompanying a rent decrease for the
portfolio’s only fixed-rent master lease with a large rent gap is offset by property acquisition, other factors
caused a downward revision in income. However this income gap will be covered by the utilization ofinternal reserves resulting in the DPU forecast (2,910 yen) remaining unchanged.
Going forward, 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 byfunctioning as headquarters.

Internal
growthEven as office vacancy rates rise in central Tokyo, MHR’s office occupancy rate for the 30th period
maintained a high level of 98.9% due in part to the excellent location and quality of the properties.
Regarding rent trends, rent revision saw a slight increase in rent and tenant replacement saw a slightdecrease in rent.
The residential occupancy rate for the 30th period was 94.8%, which is roughly the same level as that ofthe previous period.

Financialmanagement

The fund procurement environment has not changed despite the COVID-19 pandemic. MHR maintained
the target level by book value basis LTV 46.0%, appraisal value basis LTV 38.3%, remaining duration ofdebt 4.5 years. (After the property acquisition in the 31st period, LTV based on book value is forecast at 46.8% and
LTV based on appraisal value is forecast at 38.9%)

Green bonds were issued. (February 2021: 2.0 billion yen, July 2021: 1.8 billion yen)3

2. Investment highlights

42-1 Unit price performance(yen)

200,000
PublicOffering inMar. 2013

190,000

PublicOffering in
Sep. 2013

PublicOffering in
Aug. 2014

PublicOffering inFeb. 2016

PublicOffering in
Aug. 2020

PublicOffering in
Aug. 2018180,000
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

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

Marketvalue

41.9 bn yen(Sep. 14, 2010)308.7 bn yen(Jul. 31, 2021)(Note 1) Unless otherwise stated in this document, all amounts are rounded down below the unit and all fractions and areas are rounded up below the decimal point.
(Note 2) TSE REIT Index is adjusted as of the 8th period result announcement (Sep. 14, 2010) and shows the relative performance vs. MHR’s unit price performance.

52-2 Financial results
The 30th period (July 2021) saw increased revenue and income compared with the 29th period and MHR posted a DPU
increase for the twenty-second consecutive fiscal period
A high occupancy rate has been maintained even as office vacancy rates rise in central Tokyo. With respect to rent trends for pass-through-type
properties, rent revision saw a slight increase in rent and tenant replacement saw a slight decrease in rent.
NAV per unit also increased for the twenty-first consecutive period. A further increase will be seen when the effect of property acquisition in the 31st
period is reflected.
29th period

30th period

30th period

Jan. 31, 2021

Jul. 31, 2021

Jul. 31, 2021

ActualActualDifference

Forecasted

Operating Highlights (million yen)

Increase/decrease factor (29th – 30th)・Operating revenue (+20 mn yen)

Operating revenue

9,820

9,841

+ 20

9,820

Rent revenues

9,614

9,609

9,620

206

232

△5

+ 25

200

3,646

3,683

+ 36

3,667

- Full period contribution of property
acquired in 29th period- Cancellation penalty- Office Rent (pass-through)- Utilities and other revenue- Residential and other revenue

3,315

3,325

+9

3,354

・Operating expenses (+36 mn yen)

331

357

+ 26

312

6,173

6,157

6,153

Non-operating income01

Non-operating expenses

598

575

△ 15

Ordinary inc ome

5,576

5,583

Net income

5,575

5,582

Total dividends

5,574

Other operating revenues

Operating expenses
Expenses related to properties
SG&A

Operating inc ome

+0

1

△ 23

576

+7

5,578

+7

5,577

5,582

+7

5,576

1,916,330

1,916,330－

1,916,330

2,909

2,913

+4

2,910

- Asset management fee- Depreciation- Full period contribution of property
acquired in 29th period- Property taxes for property
acquired in 29th period- Other lease business expenses- Utilities- Property management fee

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

DPU
Total units outstanding (units)
DPU (yen)

Other Indices (million yen)
7,561

7,588

+ 26

7,535

NOI yield

3.7%

3.8%

0.1PT

3.8%

400,851

402,910+ 2,058

402,910(weighted average based on the numberof operating days during the period) (Note)

+25
+11
+10
+10
+6
△15
△13
△19

Increase/decrease factor for 30th period(Forecasted - Actual)・Operating income (+4 mn yen)

NOI

Ac quisition price

+43
+39
△40
△11
△8

- Cancellation penalty- Maintenance and repairs- Asset management fee- Office rent (pass-through)(Note) If properties are acquired during the period, the acquisition price is the weighted average based on the number of operating days.

+44
+15
△40
△14

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

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

Drawdown ofreserve for
reduction entry(50-yen)

3,200

3,000

(forecast)

22 consecutive
fiscal period
increase

2,800

Longest among
all J-REITs

2,822

2,909 2,913 2,910 (forecast)
2,883 2,898
2,860
2,850

2,753
2,659
2,567

2,600

2,606 2,610

2,502
2,367

2,400
2,303
2,200

2,151
2,019

2,000

1,910
1,833

1,800

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

1,600

1,400

1,200

1,315

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
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.
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

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

92-5 Strengths of continuous growth in DPU and NAV① Premium properties in central Tokyo(+ external growth potentialfrom property pipeline)

Central Tokyo ratio
Tokyo’s three
central wards

88.1%

Tokyo’s five central
wards and vicinity

100%

Premium
Properties

99.0%

Green building
ratio

PML

93.5%

0.90%

A group of properties with high convenience, comfort, andsafety that will be chosen to function as headquarters evenafter the spread of telecommuting② Stability throughfixed-rent master
leases③ Strong financial
structure

Fixed-rent master
lease ratio

Credit rating (JCR)

AA(Stable)
66.2%

LTV (Appraisal)Premium properties in central
Tokyo are advantageous for
capturing medium- to longterm demand, and fixed-rent
master leases can beeffective for short-term
vacancies

38.9%
The procurement environment
has not changed despite the
COVID-19 pandemic.
Investment unit prices arestable, and public offerings
have been conducted*The figure above is for after the acquisition of the new property

Impact of COVID-19 on business performance (30th period)
Office: No significant impact
Office: Maintained high occupancy rates
Occupancy Rate 99.6% in the 29th period and98.9% in the 30th period
Even as office vacancy rates rose in the five central wards, including
Minato Ward, a high occupancy rate was maintained due in part to theexcellent location and quality of MHR’s properties
Rent trends
Rent revision saw a slight increase in rent andtenant replacement saw a slight decrease in rent
Rent exemption and non-payment
No incidents

Residential: Occupancy rates were roughly the same
Residential: as those in the previous period
Occupancy Rate 94.9% in the 29th period and94.8% in the 30th period (roughly the same level)
While occupancy rates have been declining at some properties,
the overall portfolio impact has been minimal
Rent trends
Rent revision saw a slight increase in rent andtenant replacement saw a slight decrease in rent
Rent exemption and non-payment
No incidents102-6 Increase in appraisal NAV per unit
(yen/unit)

160,000

150,000

21 consecutive
fiscal period
increase

140,000

145,583

Longest among
all J-REITs

146,390

147,182 147,297

148,334

137,697
134,550130,000
124,618

120,000

117,627
114,893
112,546 112,811

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
After
period acquisition
Jul.
2021

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

112-7 Forecasts
The 31st period is forecast to have decreased revenue and income compared with the 30th period, and DPU is forecast
to remain unchanged with utilization of internal reserve.
DPU for the 32nd period is forecast to be △50 yen (△1.7%) compared with the 31st period
In the 31st period, although the impact of the contract renewal accompanying a rent decrease for the portfolio’s only fixed-rent master lease with alarge rent gap is offset by property acquisition, other factors caused a downward revision in income. However this income gap will be covered by theutilization of internal reserves resulting in the DPU forecast remaining unchanged.
Although vacancy rates will increase somewhat, the increase will be limited in comparison with the average vacancy rates for offices in central Tokyoand thus will have only a minimal negative impact on revenue.
30th period

31st period

32nd period

Jul. 31, 2021

Jan. 31, 2022

Jul. 31, 2022

ActualForecast

Difference・Operating revenue (△22 mn yen)

Forecast

Operating Highlights (million yen)
Operating revenue

9,841

9,818

Rent revenues

9,609

9,610

232

208

3,683

Other operating revenues

Operating expenses
Expenses related to properties
SG&A

Operating inc ome

△ 22

9,799

3,764

+ 81

3,765

3,325

3,428

+ 103

3,460

357

335

△ 21

304

6,157

6,053

Non-operating income

10

Non-operating expenses

575

572

+1

9,592

△ 24

206

5,481

- Interest expenses, etc.

△ 102

5,480

- Interest expenses, etc.
- Amortization of investment unit issuance cost

0
552

5,481

Net income

5,582

5,480

－

95

+ 95

－

5,582

5,576

△5

5,480

Total units outstanding (units)

1,916,330

1,916,330

2,913

2,910

NOI

7,588

7,471

NOI yield

3.8%

3.6%

402,910

410,737

DPU (yen)

Other Indices (million yen)

Ac quisition price(weighted average based on the numberof operating days during the period)- Property acquisition in 31st period- Utilities- Maintenance and repairs- Property taxes for property
acquired in 29th period- Property management fee- Asset management fee- Depreciation

△2

△0

5,583

DPU

・Operating expenses (+81 mn yen)

6,033

△ 102

Total dividends- Property acquisition in 31st period- Utilities and other revenue- Office Rent (fixed rent master lease)- Office Rent (pass-through)- Cancellation penalty△ 104

Ordinary inc ome

Drawdown of reserve for reduc tion
entry

Increase/decrease factor (30th – 31st)

・Non-operating expenses (△2 mn yen)
(Property acquisition in 31st period)

+169
+22
△92
△76
△44
+40
+25
+24

+10
+10
△21
△11
+18
△13
△6

Increase/decrease factor (31st – 32nd)

・Operating revenue (△19 mn yen)－

1,916,330

△3

2,860

△ 0.2PT

3.7%

△ 117

7,437

+ 7,827

410,780- Office Rent (pass-through)・Operating expenses (+0 mn yen)
- Property taxes- Depreciation- Property management fee- Property taxes for property
acquired in 31st period- Maintenance and repairs- Asset management fee

・Non-operating expenses (△19 mn yen)
- Interest expenses, etc.

△22

+21
+17
+9

+7
△25
△25
△17

12

2-8 Highest quality portfolio among all J-REITs
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 further
improve profitability and asset value by continuously③ Value creation
Value improvement through regional
development and area management

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

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

Access fromthe nearest
stationNumber ofshops &
restaurants

Roppongi Hills

Connected to758,203㎡- Roppongi
Station

224

Toranomon Hills

791,495㎡- Connected to(After to ta l- Toranomon
co m ple tion) - Hills Station

ARK Hills

2-minute walk
310,979㎡- from Roppongi
1-chome Station

Atago Green Hills

3-minute walk
151,106㎡- from Onarimon
Station

Hotel
(spa)

Grand Hyatt Tokyo(NAGO MI SP A AND FITNESS)

86 Andaz Tokyo(Curre nt) (AO SPA AND CLUB)ANA InterContinental
55 (THANN SANCTUAR Y
SPA AKASAKA)

18 (Ata go Gree n Hills SP A)

Greencoverage ofthe site

Conference
Incubation
Members’ club

Cultural facility
Observatory

Residential
SA

Academyhills
Ropponngi Hills
Club

Mori Art Museum
Tokyo City View
TOHO Cinemas

Ropponngi Hills
Residence

30.1%

Toranomon Hills
Forum
ARCH

-

Toranomon Hills
Residential Tower

30.4%

ARK Towers

43.3%

Atago Green Hills
Forest Tower

51.9%

KaleidoWorks
ARK Hills Club-

Suntory Hall-

(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..

15

2-11 (2) Quality of assets
Earthquake-resistant feature

Environmental performance

Ratio of GB certified
properties in portfolio

Lowest portfolio
PML of all listed
J-REITsBest among
all J-REITs

0.90%

93.5%
In highest Ratings
72.1%※ PML refers to the probable maximum loss ratio expected to result from an earthquake.
A smaller figure indicates superiority in earthquake-resistance.

PML

Earthquakeresistant feature

Roppongi Hills Mori Tower

0.59%

Seismic damping

ARK Mori Building

0.78%

Seismic damping

0.73%

Seismic damping

1.56%

Seismic damping

Toranomon Hills Mori Tower

0.50%

Seismic damping

Holland Hills Mori Tower

0.85%

Seismic damping

Akasaka Tameike Tower

1.79%

Seismic damping

2.35%

Seismic damping

2.34%

Seismic damping

5.94%

－

2.20%

－

2.20%

－

Property nameKoraku Mori Building
ARK Hills South Tower

MORI Tower
Atago Green Hills

Forest Tower

Type

OfficeOffice(Partly
residential)

Plaza
Roppongi First Plaza
Roppongi View Tower

Highest among
all J-REITs

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

CASBEE for Existing Buildings: Rank S

Roppongi Hills
Mori Tower

ARK Mori
Building

Atago Green Hills Toranomon Hills(MORI Tower)
Mori Tower

CASBEE for
Existing Buildings: Rank A

Akasaka Tameike
Tower

Koraku Mori
Building

Holland Hills
Mori Tower

DBJ Green Building
Certification: Four stars

ARK Hills
South Tower16

2-12 (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

Projected completion 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 will be a large membership-based incubation center“ARCH,” which was established especially to support large enterprises'
internal business restructuring and new business creation. It boasts
around 3,800m² of office work space and aims to become a base forJapan's unique innovation ecosystem.
From the first basement floor to the 3rd floor, commercial spaces with a
total of 58 restaurants and stores will support global lifestyles.
The 3rd floor will house Toranomon Yokocho, a landmark dining facility
featuring offerings from famous stores from all over Tokyo.

17

2-13 (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-storey, 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.

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.

18

2-14 (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.

“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.

19

2-15 (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)

ARCH(Toranomon Hills Business Tower)

not usually get together
gather at the same place, andworkshops, etc. are also held.

Incubation Center“ARCH”

Understanding
attractivenessacross Japan“ARCH,” a large membership-“Touring Stand” is a collection

based incubation center wasof dining facilities standing

established especially toside by side along the roadsupport large enterprises'

where people can enjoy

internal business reforms andseasonal ingredients and local

new business creation. It

cuisine from across Japanboasts around 3,800 m2 ofincluding at the special event

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

Touring stand(Shintora-Dori)“Touring Ippinichi.”20

2-16 (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 wecommon grounds in sharedspaces.

Hills Marche(ARK Karajan Place)

reinforce the rich lifestyle 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)21

2-17 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)
(%)

160
8.9%
150

9.0%

8.1%

10.0
8.7%

8.0

7.3%

140
130

9.0

126

125

120

126

5.5%

4.7%

4.0%

3.6%

100

108
100

90

101
96

105

94

92

5.0
4.0
3.0

3.1%

96

7.0
6.0

4.5%

109
2.7%

125
120

119

110

6.3%

2.0
1.9%

1.6%

2018

2019

1.0

80

0.0
2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Change in return on real estate investment

2020

Rent index
Vacancy rate
(Source)
Prepared by the Asset Manager based on“Office Market Data” by Miki Shoji Co., Ltd.
(Note)
Results of a survey of major buildings withstandard floor area of 100 tsubo or more inTokyo’s five central wards as of December of
each year are shown. The rent index
represents new asking rent (excludingcommon area revenue) of a standard floor,
rebased to 100 as of 2010.
For 2021, the figures are based on the survey
results as of July.

2021

Mori Building’s extensive property pipeline

(%)

4.8
4.5
4.2%

4.2

4.2%

3.5%
Cap rate of class A
office buildings(Marunouchi and Otemachi)

3.3

Number of properties under(as of the end of March, 2021)(as of April, 2021)

2.2 trillion yen

4.0%

3.9
3.6

Total assets:management: 96 buildings

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 April each year.

22

2-18 External growth
Trend in assets under management (based on acquisition price)(billion yen)

450

410

Growth utilizing
sponsor’s pipeline

400

300

26th
Jul.
2019

28th
Jul.
2020

402

339

338

20th
Jul.
2016

22nd
Jul.
2017

281
252

250

230
201

200

100

390

360

350

150

390

billion yen

142

2nd
Jul.
2007

211

212

210

8th
Jul.
2010

10th
Jul.
2011

12th
Jul.
2012

159

4th
Jul.
2008

6th
Jul.
2009

14th
Jul.
2013

16th
Jul.
2014

18th
Jul.
2015

24th
Jul.
2018

30th
Jul.
2021

After
acquisition

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 value23

2-19 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 2021.”(Note 1) Some of the properties have been partially acquired and held by MHR.
(Note 2) Properties are developed, owned, managed and planned for development by Mori Building Group, and there are no properties currently anticipated to be acquired by MHR.

24

2-20 Internal growth
Maintained high occupancy rate amidst COVID-19 pandemic
Even as office vacancy rates rose in the five central wards, including Minato Ward, the impact on MHR’s properties has been limited due totheir excellent location and quality
In the 30th period, regarding office rents (pass-through type), rent revision saw a slight increase in rent and tenant replacement saw a slightdecrease in rent. While the occupancy rate for some residential properties has decreased, the overall portfolio impact has been minimal

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

Trend in occupancy rates
(%)

100

99.7%

99.9%

100.0%

99.7%

(%)

99.6%
98.9%

9.0
8.3%

Minato Ward

97.7%
8.0

96.8%
96.2%

5 central wards

96.1%
94.9%

95

94.8%

7.4%

MHR

7.0

6.5%
6.3%

6.0

5.7%
4.8%
4.8%

5.0

90
4.0

Residential (total)

2.0

3.9%

2.8%

3.0

Office (total)

85

3.5%

1.8%

1.8%

1.5%

1.6%

Office (pass-through)

1.9%
1.6%

0.7%

1.0

80

0.0%

0.1%

Jan.
2020

Apr.

0.2%

0.4%

0.0

25th
January 2019

26th
July 2019

27th
January 2020

28th
July 2020

29th
January 2021

30th
July 2021

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.

25

2-21 Internal growth
Result of rent revision and tenant replacement (pass-through type)Net impact of rent revisions accumulated since 25th period

Rent revision rate (Office)(Monthly rent basis)(%)(million yen)+10

※ Average of all contracts subject to revision+30+27.0 mn yen +27.3 mn yen+8+25.7 mn yen

Residential

+25

+7.1%

+6.9%

Office+21.8 mn yen

+5.6%

+6

+20

+0.6%

+10

27th
Jan. 2020

28th
Jul. 2020

29th
Jan. 2021

30thJul. 2021

Rent revision rate (Residential)※ Average of all contracts subject to revision

11.7

12.5

25th
Jan. 201926th
Jul. 2019

+5.3%

29th
Jan. 2021

30thJul. 2021(Monthly rent basis)
+35

+6.0%

+30

+4.8%

27th
Jan. 2020

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

+8

+6

+5

+0

(%)

+5.9%

28th
Jul. 2020

16.8

0

+10

21.5

4.2

+1.5%
26th
Jul. 2019

21.3+15.4 mn yen

3.7

25th
Jan. 2019

20.5

4.9

+15

+2

5.7

+16.7 mn yen

+3.6%

+4

5.6

5.2

(Office)(Residential)※ Average of
all contracts
with replacement+14.9%

+25
+20

+4

+15

+1.1%

0
25th
Jan. 201926th
Jul. 201927th
Jan. 2020

28th
Jul. 2020

△2.7%

+10

+2.7%

+2

29th
Jan. 2021

30thJul. 2021+5

Old tenant

△0.5%

△2.7%

New tenant+0
29th
Jan. 2021

30thJul. 2021

29th
Jan. 2021

30thJul. 202126

2-22 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%)

136

140
120
100
80

200

70

60

100

Below market rent

40

54
37
29

23

20
0

0
29th
Jan. 2021

30thJul. 2021

31stJan. 2022

32nd
Jul. 2022

33rd
Jan. 2023

34th
Jul. 2023

35th
Jan. 2024

36th
Jul. 2024
or afterRate of rent gap

△2.3%

△0.3%

This indicates that contracts have
not reached market rent levels
and have room for upside(Note 1) Market rent is based on the report by CBRE K.K.
(Note 2) Rent gap = Total tenants’ rent ÷ “Total market rent” – 1(Note 3) Figures reflect move outs of end tenants confirmed as of July 31, 2021

The rent gap has narrowed with rent revision seeing aslight increase in rent and tenant replacement seeing aslight decrease in rent
Even as office vacancy rates rise in central Tokyo, theincrease in vacancy rates for MHR’s properties has been
limited. MHR will aim for the maintenance of overall rental
income27

2-23 Internal growth
Overview of fixed rent master lease
Ratio of fixed rent master lease (after new acquisition)● Structural changes to office demand will not
impact premium properties in central Tokyo
Fixedrent
66.2%● 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

29.4%

13.9%

Breakdownof property

Leased floor
area
2
(m )

Payer ofmanagement
associated fee

Monthly rent by contract expiration (mn yen)
2022

2023

2024

2025 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

10.4%

Office, residential& retail

29,667.58

Master lessee

168.7

－

－

－

Apr. 2022

201.6

12.5%

Part of 28th to
35th floors

19,046.16

MHR

201.6

－

－

－

Jul. 2022

1,070.8

66.2%

370.3

113.0

42.8

544.6

(34.6%)(10.6%)(4.0%)(50.9%)(Note) Figures reflect the acquisition as of August 2, 2021.

28

2-24 Financial management
Maintaining a strong financial structure with a credit rating (JCR) of AA (stable), and LTV (appraisalvalue basis) of 38.3%
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 (February 2021: 2.0 billion yen, July 2021: 1.8 billion yen)

Reduction in LTV

Overview of debt financing

(%)

60.0

57.4%

End of 29th
period

53.7%

55.0

Debt Balance

50.0
49.3%

48.8%

46.4%

44.7%

45.0

Jan. 31, 2021

End of 30th
periodJul. 31, 2021

184,422 mn yen

186,222 mn yen

45.8%

46.0%

38.1%

38.3%

4.6 years

4.5 years

LTV (appraisal value basis)

LTV (book value basis)

45.7%

LTV (book value basis)

46.0% 46.8%

45.7%(Note 1)
(Note 2)

LTV (appraisal value basis)
Avg. remaining duration

42.1%

40.0

41.9%
39.4%

38.0%

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

Jul.
2011

Jan.
2012

・・・

38.3% 38.9%

After
22nd 23rd 24th 25th 26th 27th 28th 29th 30th
period period period period peri od period period period period acquisition
Jul.
2017

Jan.
2018

Jul.
2018

Jan.
2019

Jul.
2019

Jan.
2020

Jul.
2020

Jan.
2021

Jul.
2021

Long-term debt ratio/
Fixed rate ratio

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

＜Long-term debt ratio＞

2.1%

2.0%

(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)].

＜Fixed rate ratio＞

2.00
1.75
1.50

Long-term
100%

1.25
1.00

0.76%

0.75

0.71%

0.69%

0.66%

Fixed
91.8%

0.61%

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 (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
Jul.
2017

Jan.
2018

Jul.
2018

Jan.
2019

Jul.
2019

Jan.
2020

Jul.
2020

Jan.
2021

Jul.
2021

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

29

2-25 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

Japan Credit Rating (JCR)

4.5

Long-term issuer rating:

3.7

3.5

AA (Stable)

3.0
2.5
2.0
1.5

1.5

1.2

1.4

・・・

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

・・・

22nd 23rd 24th 25th 26th 27th 28th 29th 30th
period period period period period period period period period
Jan.
Jul.
Jan.
Jul.
Jul.
Jan.
Jul.
Jan.
Jul.
2017 20182018 2019 2019 2020 2020 2021 2021

Overview of maturity (as of July 31, 2021)(billion yen)

20
Long-term loans

Investment corporation bonds

15

10

8.0
12.5

5

9.5

9.2

11.2

6.0

Averageinterest 0.9%
rate

2.0

2.0

7.8
8.2

11.0

7.6

0
31st
period
Jan.
2022

8.2

9.1

32n d
period
Jul.
2022

33rd
period
Jan.
2023

34th
period
Jul.
2023

35th
period
Jan.
2024

36th
period
Jul.
2024

37th
period
Jan.
2025

38th
period
Jul.
2025

0.7%

0.5%

0.6%

0.7%

0.6%

0.5%

0.7%

5.0
39th
period
Jan.
2026

4.0
40th
period
Jul.
2026

41st
period
Jan.
2027

13.6

12.2

13.1
9.7
5.3

4.7

47th
period
Jan.
2030

48th
period
Jul.
2030

2.0
42nd
period
Jul.
2027

43rd
period
Jan.
2028

44th
period
Jul.
2028

45th
period
Jan.
2029

46th
period
Jul.
2029

3.8
49th
period
Jan.
2031

50th
period
Jul.
2031

30

2-26 Sustainability initiatives
Important ESG Issues (Materiality)
Materiality● Reduce greenhouse gas emissions

E
Environment

and promote energy saving at
owned properties● Use of renewable energy● 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 training and qualification acquisition systems based on courses● Promote a healthy and comfortableG

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

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

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

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

2-27 Sustainability initiatives
GRESB Assessment
In the 2020 GRESB Real Estate Assessment, MHR received a “Green Star” rating forthe ninth 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 (Japanese)

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/Portals/0/images/ir/ir_pdf/ESG_Report_2020.pdf

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

32

2-28 TCFD summary
Information reporting based on TCFD recommendations
MIM announced its support for the recommendations issued in June 2017 by TCFD (the Financial
Stability Board’s Task Force on Climate-related Financial Disclosures), 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
With 2013 as the baseline year, we are targeting a 25% reduction in CO2 emission intensity for the total calculated floor area of MHR and
MIM’s offices and properties owned by MHR by 2024 and a 30% reduction by 2030.
The targeted intensity is for the total of Scope 1 and Scope 2.

＜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)(kg-CO2/m2)

50,000125
106.3(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%

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 202033

2-29 TCFD summary
Strategy
Climate-Related Scenario Analysis
This analysis aims to understand the future risks and opportunities that climate change-driven extreme weather and rising social demandfor climate change countermeasures present to MHR and MIM, verify the efficacy of current climate change countermeasures and serve infuture strategy formulation as necessary. In accordance with the TCFD’s recommendations, we have analyzed both the 2ﾟC and 4ﾟCscenarios, aiming to ensure resilience in varying weather conditions and social environments and achieve sustainable business growth.

Risk
type

Driving Forces

Increased pricing on GHG emissions

Transition
risks

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

Physical
risks

Risk

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

Increased stakeholder concerns or
negative feedback

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

Increased severity of extreme weather
events such as typhoons and floods

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

Rising mean temperatures

Increases in utility costs●Increases in utility costs

Financial Impact andPeriod Maximizing
2℃
Scenario

4℃
Scenario

Medium―Long-term
Small

Small

Mediumterm

Mediumterm

Small

Small

Long-term Long-term
Small

Small

Long-term Long-term
Small

Small

Opportunities and Countermeasures

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

Small

Long-term Long-term

assessment●Introduce energy-saving technology and increase

the green ratio●Work with tenants to save energy342-30 TCFD summary
2ﾟC Scenario World: Low-Carbon Society (as of 2050)＜Analysis Result＞
The 2ﾟC scenario presents significant transition risks particularly if Japan introduces a high carbon tax to reduce CO2 emissions andMHR’s property management costs increase due to taxes on properties’ CO2 emissions and renovations to meet stricter energy-saving
standards and other environmental regulations. Stricter regulations will also impact tenants’ office selection, reducing demand forproperties that save less energy than their peers. Furthermore, if we own a large number of such properties, the cost to raise funds
from investors and lenders could also increase.
In preparation for a transition to the low-carbon society of the 2ﾟC scenario and its accompanying risks, MHR has mainly acquired its
portfolio of highly energy-saving properties and those with high-level green building certifications to maintain competitiveness, andactively updates facilities on a continuous basis, so we deem these risks to have a limited impact on business.
Weather

Government

Generally, stay the same

Aggressive climate change policy

・ Little change in typhoon frequency

・ Introduction of high carbon tax

・ Little change in Japan’s flood
frequency

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

・ Slight rise in utility fees due totemperature increase

Investors/lenders

MHR

Increased ESG
investment/lending

Limited increase in energysaving investment

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

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

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

・ Steady demand for highly
energy-saving properties35

2-31 TCFD summary
4ﾟC Scenario World: Intensification of Natural Disasters (as of 2050)＜ Analysis Result ＞
The 4ﾟC scenario forecasts increased renovation costs due to intensifying extreme weather and increased utility costs due to higher
average temperatures.
Because MHR invests in highly energy-saving, resilient properties located in areas with low flood risk, we deem these risks to have alimited impact on business.

Weather

Government

Increase in extreme weather frequency

Passive climate change policy

・ Increase in strong typhoon frequency

・ No introduction of additional carbon tax

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

・ Limited government promotion of
ZEBs, energy-saving standards

・ Rise in utility fees due to temperature
increase

Investors/lenders

MHR

Increase in importance ofphysical risk

Limited natural disastercountermeasures/energy-saving
investment

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

・ Lower fundraising costs
for owners of highly
resilient properties

・ Limited investment to meetenergy-saving standards

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

・ Steady demand for highly
resilient properties36

2-32 MHR’s representative property (1) Roppongi Hills

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

Roppongi
Hills

redevelopment at about 11.6 hectares, more than 40 million

OfficeRoppongi Hills Mori Tower

people have visited Roppongi Hills each year from all over

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

the world. As this community has matured, Roppongi Hills

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

has only multiplied its global magnetic attraction. Japan real

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

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

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

creating a community where humanity, culture, interaction

resistance performance and thorough security.

and vision toward the next era is born.

37

Residence

Roppongi Hills Residence

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

RetailShops and Restaurants

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

Hotel

Grand Hyatt Tokyo

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

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

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

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

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

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

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

38

2-33 MHR’s representative property (2) Toranomon Hills

Toranomon Hills Mori Tower
Toranomon
Hills

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

OfficeToranomon Hills Mori Tower

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

39

Residence

Toranomon Hills Residence

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

RetailShops and Restaurants

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

Hotel

Andaz Tokyo

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

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

40

3. Operation highlights

41Factors that led to changes in dividends per unit
3-1 from the previous fiscal period
29th period

30th period (Jul. 2021)

31st period (Jan. 2022) Forecast(yen/unit)

2,950

Dividends per unit

2,900

2,910
yen/unit

2,913
yen/unit

2,909
yen/unit(forecast)

+12

△7
△14

+13
+50

2,850

+11

△133

+11

+58

2,800

2,750

NOI
change ofexisting
properties

OthersProperties
acquired(29th)

Financingcosts
decrease

NOIchange ofexisting
properties

Major factors behind change in NOI from existing properties:+ Increase in cancellation penalty+ Decrease in property management fee－ Office rent (pass-through)－ Increase in depreciation－ Residential and other revenue－ Increase in other lease business expenses

Properties
acquired(31st)

Financingcosts
decrease

OthersDrawdownof reservefor
reduction
entry

Major factors behind change in NOI from existing properties:
+20
+7
△21
△6
△4
△4

+ Decrease in depreciation－ Office rent (fixed rent master lease)－ Office rent (pass-through)－ Decrease in cancellation penalty－ Increase in maintenance and repairs－ Increase in property management fee－ Property taxes for property acquired in 29th period (3-months)－ Increase in other lease business expenses(Note) Factors that led to change are arrived at by dividing the change from the previous fiscal period by 1,916,330 units and indicated as an approximate figure in yen.

+6
△48
△40
△23
△13
△5
△5
△5

42

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

450
Existing properties

410

New property

billion yen

402

400

7

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

After
acquisition43

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

(%)

100

50
Unrealized capital gain/loss

Unrealized capital gain/loss ratio

90

83
81

bn yen

80

40

70

60

30

50
20.9% 21.0%

20.2%
40

20
28

30

20

8.2%

10

11
10

0

0

△10
△20

△14.9%△30△40

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

△31

1st
period
Jan.
2007

2nd
period
Jul.
2007

3rd
period
Jan.
2008

4th
period
Jul.
2008

5th
period
Jan.
2009

6th
period
Jul.
2009

7th
period
Jan.
2010

8th
period
Jul.
2010

9th
period
Jan.
2011

10th
period
Jul.
2011

・・・

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
After
period acquisition
Jul.
2021

△10

△20

44

3-4 Appraisal value(million yen)
As of end of 29th period
Jan. 31, 2021
Principal
use

Property
name

PropertyNo.

Acquisition
price

Book
value

(A)
Appraisal
value(Note 1)

OfficeAs of end of 30th period
Jul. 31, 2021

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

Yield (Direct
capitalization
method)Discount
rate
(DCF)

Terminal
yield
(DCF)

Difference(B)－(A)

Difference(B)/(A)－1

Unrealized
capitalgain/loss(B)-book
value

Roppongi Hills
Mori Tower

O-0

115,380

111,379

146,300

2.8%

146,700

2.8%

2.5%

3.0%

400

0.3%

35,320ARK Mori Building

O-1

62,48061,49063,9003.2%

63,900

3.2%

2.9%

3.4%

0

0.0%

2,409

Koraku Mori Building

O-4

27,20024,71125,5003.4%

25,440

3.4%

3.0%

3.7%

O-6

43,93041,47334,8003.2%

34,800

3.2%

2.9%

3.4%

△ 0.2%

728

Akasaka Tameike Tower△ 60

Atago Green Hills

O-7

42,09040,086

47,1003.4%

46,102

3.4%

2.9%

3.6%

ARK Hills South Tower

O-8

19,15018,621

25,2003.0%25,100

3.0%

2.8%

3.2%

△ 998

△ 2.1%

Toranomon Hills
Mori Tower

O-9

48,43047,86960,032

2.6%

60,367

2.6%

2.3%

2.8%

335

0.6%

12,497

Holland Hills Mori Tower

O-10

16,330

16,25121,8003.2%

21,900

3.2%

2.8%

3.4%

100

0.5%

5,648

374,990361,885424,632－

424,309

－

－

－

△ 323

△ 0.1%

62,423

2.7%

446
△ 543

Sub total

0

△ 100

△ 0.4%△ 6,673
6,015
6,478

Roppongi First Plaza

R-3

2,100

2,233

2,610

3.8%

2,680

3.7%

3.5%

3.9%

ResidenRoppongi View Tower
tial

R-4

4,000

4,063

3,400

3.9%

3,520

3.8%

3.6%

4.0%

120

3.5%

6,100

6,297

6,010

－

6,200

－

－

－

190

3.2%

21,82022,07441,0003.8%

41,200

－

3.8%

－

200

0.5%

19,125

21,82022,07441,000－41,200

－

－

－

200

0.5%

19,125402,910390,256

471,642－

471,709

－

－

－

67

0.0%

81,452Sub total
Laforet Harajuku (Land)
Retail (Note 2)andothers
Sub total
Total

S-1

70

0.0%

△ 97

(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 29th period shows the discount rate used in the DCF analysis.

45

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

40,000100

35,00095

30,00090

25,00085

20,00080

15,00075

10,000

70

5,000

65

0

23rd
periodJan. 2018(actual)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(forecast)

32nd
periodJul. 2022(forecast)

Office rent (yen/tsubo)

30,642

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

31,16031,198Residential rent (yen/tsubo)

14,85815,09515,302

15,49815,69815,766

15,741

15,772

15,733

15,640

Office occupancy

98.4%

99.5%

99.7%

99.9%

100%

99.7%

99.6%

98.9%

97.8%

97.4%

Residential occupancy

96.3%

97.9%

97.7%

96.8%

96.2%

96.1%

94.9%

94.8%

94.6%

95.3%

Retail occupancy

100%

100%

100%

99.2%

98.8%

98.5%

98.9%

98.9%

98.9%

98.9%

60

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

46

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

Residential: Rent and occupancy rate(yen/tsubo)

(%)
100

40,000(yen/tsubo)

(%)
100

25,00020,00030,00090

90

15,00020,00080
10,000

0

80

5,000
70

Feb.
2021

Mar.

Apr.

May.

Jun.

Jul.

Rent (yen/tsubo)

31,34331,36831,36931,25331,44531,456

Occupancy rate

99.6%

99.3%

99.3%

99.0%

98.1%

98.1%

Top 5 tenants
End tenantsMori Building Co., Ltd.

Property nameRoppongi Hills Mori Tower
ARK Mori Building
Koraku Mori Building
Atago Green Hills
Toranomon Hills Mori Tower

0

70

Feb.
2021

Mar.

Apr.

May.

Jun.

Jul.

Rent (yen/tsubo)

15,78915,764

15,667

15,824

15,847

15,740Occupancy rate

95.3%

94.6%

94.9%

94.6%

94.5%

94.7%

Tenant Contribution by Industry
Type-Office

Leased space

Ratio(Note 1)

113,949.93 m2

65.3%
Others22.2%

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

2.0%

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

1.1%

125,262.29 m2

71.8%

Total of top 5 tenants

10,000(Note 1) Leased space is the lease area stated in the lease contract with the end tenant.
It is multiplied by the relevant percentage of ownership for each properties.
(Note 2) This indicates the figures as of July 31, 2021.

Law firms,
etc.
11.5%
Financ e/
insuranc e
11.8%

Information
andcommunication
36.9%

Manufac turing
17.6%(Note 1) As for fixed rent master lease, ratios are based on monthly rents of tenants who are
actually using the floor areas as of July 31, 2021.
It is multiplied by the relevant percentage of ownership for each property.
(Note 2) Business types are classified by the Asset Manager.

47

3-7 Financial overview (as of July 31, 2021)
Long-term debt ratio/Fixed rate ratio＜Long-term debt ratio＞＜Fixed rate ratio＞

Long-termLong-term
100%
100%

Fixed
91.8%

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

End of 29th period
Jan. 31, 2021

End of 30th period
Jul. 31, 2021

184,422 mn yen

186,222 mn yen

Long-term loan

167,422 mn yen

167,422 mn yen

Investment corporation bonds

17,000 mn yen

18,800 mn yen

45.8%

46.0%

LTV (Appraisal value basis) (Note 2)

38.1%

38.3%

DSCR (Note 3)

16.3x

17.0x

4.6 years

4.5 years

0.46%

0.45%

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.

43,696 mn yen

26.1%

Mizuho Bank, Ltd.

29,898 mn yen

17.9%

Sumitomo Mitsui Banking Corporation

24,425 mn yen

14.6%

Sumitomo Mitsui Trust Bank, Limited

20,923 mn yen

12.5%

The Bank of Fukuoka

8,300 mn yen

5.0%

Resona Bank, Limited.

7,430 mn yen

4.4%

The Norinc hukin Bank

7,000 mn yen

4.2%

Development Bank of Japan Inc.

5,950 mn yen

3.6%

Shinsei Bank, Limited

5,200 mn yen

3.1%

Mizuho Trust & Banking Co., Ltd.

4,800 mn yen

2.9%

The Nishi-Nippon City Bank, Ltd.

3,300 mn yen

2.0%

The Chugoku Bank, Limited.

1,500 mn yen

0.9%

Aozora Bank, Ltd.

1,000 mn yen

0.6%

The Hiroshima Bank, Ltd.

1,000 mn yen

0.6%

Oita Bank Co. Ltd.

1,000 mn yen

0.6%

Shinkin Central Bank

1,000 mn yen

0.6%

Nippon Life Insuranc e Company

1,000 mn yen

0.6%

Total borrowings

167,422 mn yen

100%

Investment c orporation bonds

18,800 mn yen

Total interest-bearing debt

186,222 mn yen

48

3-8 Debt status (as of July 31, 2021)
Debt
LenderSumitomo Mitsui Banking Corporation, MUFG Bank, Ltd.
Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited
Development Bank of Japan Inc .
Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd.
Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited
Mizuho Bank, Ltd., MUFG Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd.
Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd.
MUFG Bank, Ltd., Mizuho Bank, Ltd.,Sumitomo Mitsui
Trust Bank, Limited, Shinsei Bank, Limited
Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd.
The Norinc hukin Bank, Resona Bank, Limited.
Shinsei Bank, Limited, Mizuho T rust & Banking Co., Ltd.
The Hiroshima Bank, Ltd.
Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd.
Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited
The Bank of Fukuoka, Development Bank of Japan, Inc .
Aozora Bank, Ltd.
MUFG Bank, Ltd., Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Shinkin Central Bank
The Norinc hukin Bank
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
The Bank of Fukuoka
Resona Bank, Limited.
Sumitomo Mitsui Trust Bank, Limited
Mizuho Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.
Oita Bank Co. Ltd.
The Norinc hukin Bank
The Nishi- Nippon City Bank, Ltd.
The Bank of Fukuoka
Resona Bank, Limited.
Mizuho Trust & Banking Co., Ltd.
Shinsei Bank, Limited
The Nishi- Nippon City Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
Development Bank of Japan Inc .
MUFG Bank, Ltd.
Mizuho Bank, Ltd.
Mizuho Bank, Ltd.
The Nishi- Nippon City Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Mizuho Bank, Ltd.
The Bank of Fukuoka
The Norinc hukin Bank
Shinsei Bank, Limited
Mizuho Trust & Banking Co., Ltd.
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
Development Bank of Japan Inc .
MUFG Bank, Ltd.
Resona Bank, Limited.
Mizuho Bank, Ltd.
The Bank of Fukuoka
The Norinc hukin Bank
Sumitomo Mitsui Banking Corporation

Balanc e(mn yen)Rate ofinterest

Borrowingdate

Maturity
date

6,500

0.75%

2014/11/28

2021/11/30

1,700

0.80%

2015/3/27

2023/3/27

6,500

0.70%

2015/5/29

2022/5/31

6,000

0.49%

2015/8/31

2021/8/31

2,500

0.65%

2015/9/16

2023/8/31

3,200

0.50%

2015/11/30

2022/11/30

6,300

0.62%

2015/11/30

2023/11/30

7,500

0.33%

2016/3/31

2023/3/31

7,100

0.41%

2016/3/31

2024/3/31

7,200

0.50%

2016/3/31

2025/3/31

1,000
500
1,100
1,000
500
500
2,000
1,100
500
1,000
600
1,000
500
500
1,500
500
500
2,650
2,600
750
4,700
2,700
3,000
800
2,400
3,000
1,300
1,300
1,300
1,300
3,600
1,400
500
5,000
1,300
1,400
2,000
3,000
1,144

0.18%
0.37%
0.47%
0.52%
0.52%
0.61%
0.48%
0.58%
0.58%
0.23%
0.49%
0.49%
0.47%
0.47%
0.47%
0.54%
0.54%
0.55%
0.58%
0.64%
0.41%
0.60%
0.19%
0.26%
0.33%
0.43%
0.38%
0.43%
0.52%
0.47%
0.56%
0.67%
0.67%
0.43%
0.48%
0.44%
0.17%
0.27%
0.40%

2016/3/31
2017/8/1
2017/8/1
2017/8/1
2017/8/1
2017/8/1
2017/8/1
2017/8/1
2017/8/1
2017/11/30
2017/11/30
2017/11/30
2018/2/28
2018/2/28
2018/2/28
2018/2/28
2018/2/28
2018/2/28
2018/2/28
2018/2/28
2018/2/28
2018/2/28
2018/5/23
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2018/8/31
2019/5/31
2019/5/31
2019/5/31

2022/9/30
2024/7/31
2025/7/31
2026/7/31
2026/7/31
2027/7/31
2028/7/31
2029/7/31
2029/7/31
2022/11/30
2024/11/30
2024/11/30
2025/8/31
2025/8/31
2025/8/31
2025/8/31
2025/8/31
2026/2/28
2027/2/28
2027/2/28
2027/8/31
2030/2/28
2022/5/23
2022/8/31
2023/8/31
2024/8/31
2024/8/31
2024/8/31
2025/8/31
2025/8/31
2026/8/31
2027/8/31
2027/8/31
2028/2/29
2028/8/31
2029/8/31
2026/5/31
2026/5/31
2027/11/30

Lender
MUFG Bank, Ltd.
Mizuho Bank, Ltd.
Mizuho Bank, Ltd.
The Chugoku Bank, Limited.
Resona Bank, Limited.
Sumitomo Mitsui Trust Bank, Limited
The Norinc hukin BankMUFG Bank, Ltd.
Mizuho Bank, Ltd.
Shinsei Bank, Limited
Sumitomo Mitsui Banking Corporation
The Bank of Fukuoka
Development Bank of Japan Inc .
The Chugoku Bank, Limited.
Shinsei Bank, Limited
Nippon Life Insuranc e Company
Mizuho Trust & Banking Co., Ltd.
The Bank of Fukuoka
The Nishi- Nippon City Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
MUFG Bank, Ltd.
Resona Bank, Limited.
Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.
Resona Bank, Limited.
MUFG Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
MUFG Bank, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Total

Balanc eRate of(mn yen) interest
3,904 0.31%
1,952 0.44%
1,000 0.20%
1,000 0.22%
2,500 0.34%
1,000 0.14%
600 0.26%
2,200 0.19%
1,100 0.33%
900 0.36%
1,600 0.47%
2,000 0.29%
2,000 0.44%
500 0.32%
500 0.39%
1,000 0.48%
1,000 0.45%
1,000 0.32%
1,000 0.57%
834 0.27%
2,816 0.26%
830 0.30%
1,134 0.48%
1,408 0.40%
1,000 0.24%
1,400 0.21%
1,400 0.38%
1,400 0.36%
960 0.21%
2,400 0.22%
1,200 0.24%
1,440 0.39%
1,294 0.23%
1,369 0.24%
2,738 0.35%
1,099 0.35%

Borrowingdate
2019/5/31
2019/5/31
2019/8/30
2019/8/30
2019/8/30
2019/11/29
2019/11/29
2019/11/29
2019/11/29
2019/11/29
2019/11/29
2019/11/29
2019/11/29
2020/5/20
2020/5/20
2020/5/20
2020/5/20
2020/5/20
2020/5/20
2020/5/29
2020/5/29
2020/5/29
2020/5/29
2020/5/29
2020/8/31
2020/8/31
2020/8/31
2020/8/31
2020/11/30
2020/11/30
2020/11/30
2020/11/30
2021/5/31
2021/5/31
2021/5/31
2021/5/31

Maturitydate
2028/11/30
2029/5/31
2025/8/31
2026/8/31
2029/8/31
2024/11/30
2026/5/31
2026/11/30
2027/5/31
2027/11/30
2028/5/31
2028/11/30
2028/11/30
2027/5/20
2028/5/20
2028/5/20
2029/5/20
2030/5/20
2030/5/20
2025/5/31
2027/5/31
2028/5/31
2028/11/30
2029/5/31
2026/8/31
2027/8/31
2028/8/31
2029/8/31
2025/11/30
2027/11/30
2027/11/30
2028/11/30
2026/5/31
2028/5/31
2029/5/31
2029/5/31

167,422(Note) The interest rates above are the interest rates actually fixed following the conclusion of an interest
swap agreement.

Investment corporation bonds
Bond
12th Series Unsec ured Corporation Bond (10 years)
14th Series Unsec ured Corporation Bond (10 years)
16th Series Unsec ured Corporation Bond (10 years)
17th Series Unsec ured Corporation Bond (10 years)
18th Series Unsec ured Corporation Bond (10 years)
19th Series Unsec ured Corporation Bond (10 years)
20th Series Unsec ured Corporation Bond (5 years)
21st Series Unsec ured Corporation Bond (10 years)
22nd Series Unsec ured Corporation Bond (10 years)
Total

AmountRate of(mn yen) Interest
2,000 0.87%
2,000 0.82%
1,500 0.89%
2,000 0.34%
2,000 0.49%
2,000 0.50%
3,500 0.25%
2,000 0.50%
1,800 0.42%

Payment
date
2014/11/27
2015/5/26
2015/11/26
2016/8/30
2017/1/31
2017/6/30
2020/11/25
2021/2/22
2021/7/30

Maturitydate
2024/11/27
2025/5/26
2025/11/26
2026/8/28
2027/1/29
2027/6/30
2025/11/25
2031/2/21
2031/7/30

18,80049

3-9 Unitholders breakdown (as of July 31, 2021)
Unitholders breakdown

End of 30th period＜Number of unitholders＞
Other domestic
Financialcorporations
institutions
1.7%
Foreign(Incl. securities
corporations
companies)
and individuals
1.4%
2.2%

＜Number of investment units＞

Foreigncorporations
and individuals
16.7%

Other domestic
Financialcorporations
institutions
1.6%
Foreign(Incl. securities
corporations
companies)
and individuals
1.4%
2.1%

Financial
institutions(Incl. securities
companies)
60.8%

Foreigncorporations
and individuals
15.9%

Individuals
94.9%

Number of units
held

1

Custody Bank of Japan, Ltd.
(Trust account)

422,05622.0%2Mori Building Co., Ltd.

287,472

15.0%

3

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

251,798

13.1%

4

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

71,124

3.7%

5

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

51,378

2.7%

6

STATE STREET BANK W EST CLIENT - TREATY
505234

22,671

1.2%

7JAPAN SECURITIES FINANCE CO., LTD.

22,535

1.2%

8SSBTC CLIENT OMNIBUS ACCOUNT

22,313

1.2%

9

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

21,868

1.1%

10

LEGAL + GENERAL ASSURANCE PENSIONSMANAGEMENT LIMITED

19,383

1.0%

1,192,598

62.2%(Investment
trust 33.2%)

Individuals
6.0%

Other
domestic
corporations
16.6%

Financial
institutions(Incl. securities
companies)
61.5%

Name

Rank

Individuals
6.0%

Other
domestic
corporations
16.6%

Individuals
94.7%

End of 29th period

Top 10 unitholders

Total of top 10 unitholders

Ratio(Investment
trust 35.6%)50

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

514-1 Business environment recognition
Real estate market / Lending attitude
Vacancy rates for office buildings in central Tokyo continued to rise
while new rents trended down.
(“Office Market Data” by Miki Shoji Co., Ltd. for Tokyo’s five central wards)

Vacancy rate: 1.6% (December 2019) → 6.3% (July 2021)
Rent index: 126 (December 2019) → 120 (July 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% (October 2020) → 3.0% (April 2021)
Lending attitude toward the real estate industry has temporarily
weakened but remains at a highly positive level.

Interest rate trends / Macro environmentLong-term interest rates remain low due to the monetary easing
policy, and although the money supply temporarily grewsignificantly amid carrying out countermeasures against COVID-19,
the core CPI rate of increase is at a low level.
10-year bond rates: 0.015% (July 30, 2021)
Core CPI: +0.2% (June 2021)
In the June 2021 preliminary business conditions composite index,
the leading index was at 104.1 (+1.5 PT increase from previous month)and the coincident index was at 94.0 (+1.9 PT increase from previous
month).
While both leading and coincidental indices deteriorated
significantly after the spread of COVID-19, these are currently on
a recovery trend.
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 office market is expected to remain weak for the time being
due to the impact of the proliferation of telecommuting and the
downturn in business sentiment.
On the other hand, premium properties in central Tokyo are
expected to demonstrate continued competitive advantages evenafter the proliferation of telecommuting, as these properties cancapture office demand by functioning as headquarters.

Global business sentiment deteriorated significantly due to
COVID-19, but is now on a recovery trend due to various
policies.
The interest rate level is expected to remain low for a while, but
it is necessary to assume an interest rate rise in the medium tolong term.
Inflow of funds to companies with high ESG ratings is expected
to increase further in the future.

Continues to “MHR’s policy/strategy” on the next page52

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 investment53

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

Target premium properties in Central Tokyo and aim for annual external growth of approximately 30
billion yen by best utilizing sponsors’ pipeline. (Set target yield at the mid 3% range or higher for NOI-based
yield and around 3.0% or higher for after-depreciation-based yield.)Going forward, premium properties in central Tokyo are expected to continuously demonstratecompetitive advantages even after the spread of telecommuting, as these properties can capture officedemand by functioning as headquarters.
Focus on portfolio size expansion in order to further enhance stability and liquidity as an investment
corporation while also considering disposition depending on conditions.

Internal
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 basis: in the mid 40% range; appraisal value basis: in the upper 30%
range) as the target in order to secure property acquisition capacity while maintaining a durable position
for times of economic slowdown.
Target average remaining duration of debt of 4 years or longer, and gradually increase the fixed rate ratioat the appropriate timing.

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.

54

4-4 Market-related information (1)Change in rent and vacancy rate of office buildings (Tokyo’s five central wards)
160
8.9%

150

9.0%

(%)
10.0
8.7%

8.0

7.3%

140
130

9.0

8.1%

6.3%

126

125
125

126

5.5%

6.0

4.7%

120

4.0%

110
100

125

120

119

3.6%

105

2.7%

100

90

96

3.0

3.1%

2.0

101
94

96

1.9%

92

5.0
4.0

4.5%

109
108

7.0

1.6%

1.0

80

0.0
2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Rent index
Vacancy rate
(Source)
Prepared by the Asset Manager based on“Office Market Data” by Miki Shoji Co., Ltd.
(Note)
Results of a survey of major buildings withstandard floor area of 100 tsubo or more inTokyo’s five central wards as of December of
each year are shown. The rent index
represents new asking rent (excludingcommon area revenue) of a standard floor,
rebased to 100 as of 2010.
For 2021, the figures are based on the survey
results as of July.

2021

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

700⇒ Estimate

600
500

536
478

473

400

343
294

300
221

265

245

220

480

460

254

308
250

239

190

200

140

140

100
0
2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

(Source)
Prepared by the Asset Manager based on the“Autumn 2020 Office Rent Forecast in Tokyo,
Osaka and Nagoya (2020-2025)” by
the Office Market Trends Research Committee(Japan Real Estate Institute and Miki Shoji
Co., Ltd.).

2024

55

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: 7.0%

20,00018,0006.2％
5.0%

16,000

04

05

06

07

08

09

10

11

12

13

14

15

16

17

18

19

18,96003

18,880

4.0

12,00010,000(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

14,00020

21
1Q

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.

18,00017,93916,00014,000
03

04

05

06

07

08

09

10

11

12

13

14

15

16

17

18

19

20

21
01

21
04

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

21
07

56

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

6.0

6.0%

6.0% 6.0% 6.0%

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

5.8%

5.7%

5.5%

5.5

5.2%
5.0%

4.9%

5.1%
4.9% 4.8%

5.0
4.5%

4.5%
4.5
4.0

4.5% 4.5% 4.5%
4.0%

4.2%

4.3%

4.2% 4.2% 4.2%

4.0%

3.8%

3.7% 3.6%

3.5% 3.5% 3.5% 3.5%

3.8%

3.8%
3.5%

4.5% 4.5% 4.5%

3.5%

3.5%

3.0

3.4%
3.2%

3.0% 3.0% 3.0% 3.0%

2.5
Apr.
2005

Apr.
2006

Apr.
2007

Apr.
2008

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

4.3%

4.0% 4.0% 4.0%

3.5

4.6%

Apr.
2009

Apr.
2010

Apr.
2011

Apr.
2012

Apr.
2013

Apr.
2014

Apr.
2015

Apr.
2016

Apr.
2017

Apr.
2018

Apr.
2019

Apr.
2020

Expected cap rate of high-end
multifamily residences (high-rise)(Source)
Prepared by the Asset Manager based on“The Japanese Real Estate Investor Survey” by theJapan Real Estate Institute.

Apr.
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

(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.

57

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.

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
+ 0.5

(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.

+ 0.0
△ 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.

58

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

Money stock (M3: year-on-year comparison)
(%)
+7.8

+7.2
+6.6
+6.0
+5.4
+4.8
+4.2
+3.6
+3.0
(Source)
Prepared by the Asset Manager based on“Money Stock Statistics” by the Bank of Japan.

+2.4
+1.8
Jan.
2013

Jul.

Jan.
2014

Jul.

Jan.
2015

Jul.

Jan.
2016

Jul.

Jan.
2017

Jul.

Jan.
2018

Jul.

Jan.
2019

Jul.

Jan.
2020

Jul

Jan.
2021

Jul

59

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

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.

60

5. Appendix

61

5-1 Financial highlights
Indic es

29th period
Period ended Jan. 31, 2021

30th period
Period ended Jul. 31, 2021

Net inc ome

5,575 mn yen

5,582 mn yen

Depreciation and amortization

1,056 mn yen

1,072 mn yen

CAPEX

240 mn yen

971 mn yen

Total assets

402,887 mn yen

404,953 mn yen

Total net assets

200,763 mn yen

200,818 mn yen

Calculation formula

Total net assets/unit (BPS)

104,764 yen

104,793 yen Total net assets/Total units outstanding

Unit price (as of end of each period)

145,800 yen

161,100 yen

1,916,330 units

1,916,330 units

5,574 mn yen

5,582 mn yen

Dividends/unit

2,909 yen

2,913 yen

Dividend yield

4.0%

Total units outstanding
Total dividends

FFO

6,631 mn yen

3.6% Dividends per unit (annualized)/Unit pric e as of end of period
6,655 mn yen Net income + Depreciation and amortization - Gain or loss on sales of real estate properties

FFO/unit

3,460 yen

3,473 yen FFO/Total units outstanding

Annualized

6,864 yen

7,003 yen Based on a period of 365 days

FFO multiple

21.2x

23.0x Unit price as of end of period/FFO per unit (annualized)

PER

25.2x

27.4x Unit price as of end of period/Net income per unit (average during the periods, annualized)

PBR

1.4x

1.5x 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%

2.8% Based on a period of 365 days

2.8%

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

5.6%

5.6% Based on a period of 365 days

Annualized
ROE
Annualized
NAV
NAV/unit
NAV multiple

282,049 mn yen
147,182 yen
1.0x

282,271 mn yen Total net assets + Total appraisal value - Total book value - Total liabilities
147,297 yen
1.1x Unit price as of end of period/NAV per unit

Interest-bearing debt

184,422 mn yen

LTV (book value basis)

45.8%

46.0% Interest-bearing debt/Total assets

LTV (appraisal value basis)

38.1%

38.3% Interest-bearing debt/(Total assets + Total appraisal value - Total book value)

Operating days

184 days

186,222 mn yen

181 days62

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

29th period

30th period

29th period

30th period

Period ended Jan. 31, 2021

Period ended Jul. 31, 2021

Period ended Jan. 31, 2021

Period ended Jul. 31, 2021

22,894,889

24,326,674

2,000,000－

19,000,000

22,000,000

1,894,889

2,326,674

179,229,087

179,807,771

15,000,000

18,800,000

148,422,000

145,422,000

14,957,614

14,778,470

849,472

807,300

202,123,976

204,134,446

AssetsLiabilities

Current assets

11,504,301

13,713,562

C ash and deposits

5,479,946

8,310,173

C ash and deposits in trust

5,340,188

4,805,924

684,166

597,464

391,282,393

391,128,128

359,704,855

359,605,597

30,650,962

30,650,962

Other

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

Deferred assets
Total assets

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

Noncurrent liabilities
Investment corporation bonds
Long-term loans payable

926,574

871,567

Lease and guarantee depositedin trust

101,047

111,424

Other

402,887,742

404,953,115

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

201,612,224(Note)

195,324,850

201,620,396(Note)

195,188,791

6,287,373

6,431,605

291,944

291,9445,995,429

6,139,661△ 848,458

Total net assets△ 848,458△ 801,727

200,763,766

200,818,669

Total liabilities and net assets

402,887,742

404,953,115

Voluntary retained earnings
Unappropriated retained
earnings

Valuation and translation
adjustments

Deferred gains or losses onhedges△ 801,727(Note) Figure after deducting allowance for temporary difference adjustments.

63

5-3 Income statement(thousand yen)

29th period

30th period

Period ended Jan. 31, 2021

Period ended Jul. 31, 2021

Operating revenue

9,820,632

9,841,235

Rent revenues

9,614,085

9,609,038

206,546

232,197

3,646,701

3,683,286

3,315,661

3,325,513

Asset management fee

229,246

254,320

Directors' compensation

4,200

7,000

Asset custody fee

9,806

10,072Administrative service fees

18,996

19,339Other operating expenses

68,791

67,041

6,173,930

6,157,949

995

1,056

Interest income

5450

Gain on forfeiture of unclaimed dividends

941

854

－

151

598,798

575,116

Interest expenses

383,400

369,592

Interest expenses on investment corporation bonds

49,526

46,472Am ortiza tion of inve stm e nt corporation bonds issuance cost

7,757

7,683

Borrowing expenses

143,930

137,194

Amortization of investment unit issuance c ost

12,31012,310

Other

1,873

1,862

Ordinary income

5,576,128

5,583,890

Inc ome before inc ome taxes

5,576,128

5,583,890

Net inc ome

5,575,042

5,582,775

Unappropriated retained earnings

5,995,429

6,139,661

Other operating revenues
Operating expenses
Expenses related to properties

Operating income
Non-operating income

Other
Non-operating expenses

OfficeResidential
RetailLand
Other rent revenue
Parking revenue
Utilities and other revenue
Cancellation penalty
Key-money income

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

8,091,399
772,185
71,884
667,800
5,768
48,969138,333
44,793101

1,163,160
749,067
101,428
62,647
19,207
5,972
1,072,822
137,661
13,54664

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

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

29th period

30th period

29th period

30th period

Period ended Jan. 31, 2021

Period ended Jul. 31, 2021

Period ended Jan. 31, 2021

Period ended Jul. 31, 2021

Net cash provided by (used in) financ ing activities

6,672,228

7,120,863

Inc ome before income taxes

5,576,128

5,583,890

Proc eeds from long-term loans payable

11,200,000△ 3,805,055

Deprec iation and amortization

1,056,619

1,072,822

Repayments of long-term loans payable△ 6,000,000
3,479,567△ 6,500,000△ 3,500,000
5,225,932△ 2,000,000△ 5,434,018△ 5,574,683

11,559,439

10,820,134

10,820,134

13,116,097

Amortization of investment corporation bonds
issuanc e cost

7,757

7,683

Proceeds from issuance of investment corporationbonds

Amortization of investment unit issuance c ost

12,31012,310

Redemption of investment c orporation bonds

△ 54

△ 50

Interest income
Gain on forfeiture of unclaimed dividends△ 941

432,926

416,064

3,694

51,651
332,300

Inc rease (dec rease) in acc rued expenses△ 108,707
4,902

27,309Inc rease (dec rease) in advanc es rec eived

44,479Inc rease (dec rease) in deposits received△ 235△ 8,338

Interest expenses
Decrease (increase) in ac counts rec eivable
Inc rease (dec rease) in acc ounts payable△ 854△ 4,169

Decrease (increase) in prepaid expenses

18,878Decrease (increase) in long-term prepaid
expenses

49,676△ 11,647△ 24

7,097,409△ 68

7,538,471

5450△ 424,325△ 416,564

Other, net
SubtotalInterest income received

59,567

Proceeds from issuance of investment units

Dividends paid
Net increase (decrease) in cash and cash
equivalents
Cash and c ash equivalents at beginning of theperiodCash and c ash equivalents at the end of theperiodRetained earnings
Ⅰ Unappropriated retained earnings

Inc ome taxes paid

△ 909

△ 1,094△ 739,304

Purchase of property, plant and equipment in
trust
Repayments of lease and guarantee depositedin trust
Proceeds from lease and guarantee deposited intrust△ 12,383,015△ 1,019,845△ 364,315△ 88,498△ 12,478,273
459,574△ 1,023,441
92,094

2,295,962

Period ended Jan. 31, 2021

Period ended Jul. 31, 2021

5,995,429,871

6,139,661,200

136,059,430－

136,059,430－－

46,731,158－

46,731,158

5,574,603,970

5,582,269,290

2,909

2,913

5,438,544,540

5,582,269,290

2,838

2,913

136,059,430

－

71

－

556,885,331

510,660,752

Ⅲ Capitalization
Reversal of allowance for temporary
differenc e adjustments

Amount of dividends per unit

Allowanc e for temporary differenc e adjustments

－

(yen)

Dividends of earnings per unit
Net cash provided by (used in) investing activities

3,769,628

30th period

Allowanc e for temporary differenc e
adjustments

Dividends of earnings

6,500,000

29th period

Ⅱ Addition of dividends in excess of earnings

Ⅳ Amount of Dividends

Interest expenses paid

4,971,481(Note)

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

65

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

O -0

O -1

O -4

O -6

P rope rty na m e

Roppongi Hills Mori Towe r

ARK Mori Building

Korak u Mori Building

Ak asa k a Tam eik e Towe r

Acquisition price

115,380,000
29th

30th

Ja n. 2021

Jul. 2021

O pe ra tion da ys

184 da ys

181 days

O ccupa ncy ra te

100%

100%

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

Num ber of te na nts

1

P e riod

Re nt re ve nue s

62,480,000
29th

30th

Ja n. 2021

Jul. 2021△ 3 da ys

184 da ys

181 da ys

0.0P T

100%

100%

100%

0.0P T

100%

1

0

1

Differe nce

27,200,000
29th

30th

Jan. 2021

Jul. 2021△ 3 da ys

184 da ys

181 da ys

0.0P T

99.4%

91.2%

100%

0.0P T

97.2%

96.3%

1

0

23

21

Differe nce

43,930,000
29th

30th

Jan. 2021

Jul. 2021△ 3 da ys△ 0.9P T

Differe nce

Differe nce

184 da ys

181 da ys△ 8.2P T

94.2%

94.5%

△ 3 da ys

94.2%

94.0%

△2

129

135

△ 2,348787,242

779,52955

78,05473,186△ 2,292

865,297852,715△ 10,376

175,610

173,187△ 12,581

2,037

42,321

43,5891,267

26,09422,013

0.3P T△ 0.2PT
6

2,943,450

2,943,450－

1,351,486

1,351,486－

649,547

647,199

－

－

－

－

－

－

73,94574,001

2,943,450

2,943,450－

1,351,486

1,351,486－

723,493721,200

447,868

447,868－

164,853

164,853－

94,71984,342

263,478

262,998

84,96884,32232,811

－

－

－

－

△ 645

30,774

－

△ 479

－

55,68550,339

－

－

－

－

355

355

10,773

19,509△ 5,346
8,736

45,061

29,327

4,094

4,656

561

1,933

2,123

190

1,679

1,737

57

2,092

2,163

△ 15,734

333,285

336,828

3,542

67,914

69,5891,674

97,19991,764

127,520

135,085

7,565

374

376

1

2,788

2,693

83,953

83,951

10,624

1,052,727

3,626

322,458

323,9381,479

374,785

364,456△2

10,623

1,049,101△ 94△ 5,435

429,324

415,991

1,894,349

1,890,722

1,029,028

1,027,548

348,707356,7448,036

435,972

436,724

2,227,635

2,227,551

1,096,943

1,097,138

195

445,907448,508

2,600

563,492

571,8108,317

Annua lize d NO I

4,418,949

4,492,022△ 83△ 1,479△ 13,333

NO I (3) ((1)+(2))△ 3,626△ 10,328△073,072

2,176,001

2,212,460

36,459884,545904,450

19,904

1,117,797

1,153,097

35,299Annua lize d NO I/
Acquisition price

3.8%

3.9%

0.1P T

3.5%

3.5%

0.1P T

3.3%

3.3%

0.1P T

2.5%

2.6%

0.1PT

－

386,688386,688

59,33780,475

21,13862,36474,881

12,51745,212

155,044

109,832

2,227,635

1,840,863△ 386,771

1,037,605

1,016,662△ 20,943

383,543

373,626△ 9,916

518,280

416,765△ 101,514

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

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

Tota l property
ope rating ex penses
P roperty ope rating
incom e (2)CAP EX (4)NCF (3)-(4)△ 7,713△ 4,867△ 2,423△ 4,08171

752(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.

66

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

O -7

O -8

O -9

O -10

P rope rty na m e

Ata go Gree n Hills

ARK Hills South Tower

Tora nom on Hills Mori Towe r

Holla nd Hills Mori Tower

Acquisition price

42,090,000
29th

30th

Ja n. 2021

Jul. 2021

O pe ra tion da ys

184 da ys

181 days

O ccupa ncy ra te

100%

100%

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

Num ber of te na nts

1

P e riod

Re nt re ve nue s

19,150,000
29th

30th

Ja n. 2021

Jul. 2021△ 3 da ys

184 da ys

181 da ys

0.0P T

94.4%

94.4%

100%

0.0P T

97.1%

94.1%

1

0

43

43

Differe nce

48,430,000 (before acquisition 36,210,000)
29th (Note 3)

30th

Jan. 2021

Jul. 2021△ 3 da ys

184 da ys

181 da ys

0.0P T

100%

100%△ 3.0P T

100%
1

Differe nce

033,34921,3801,012,320

1,012,320－

508,434

480,876

2,664

2,664

－

45,75469,503

69,178

－

－

△ 325

－

100%

0.0P T

100%

98.8%

1

0

23

21

△ 3 da ys△ 3.7PT△ 1.2PT
△2

－

－

－

20,08563,628995,329

1,039,279

43,949557,739588,296

30,557

44,838△ 27,558

113,885

117,086

3,200

100,636

102,524

1,888

36,02536,503△ 916

478

62,14772,511

10,36335,63635,615－27,65922,480

－

－

－

5,104

4,549

－

－

5,226

4,832

△ 5,179

△ 21

－

－

－

－

4,412

3,667

3,714

47

1,030

1,123

△ 393

△ 554

93

1,693

1,925

232

1,110

1,172

61

186,107

190,907

4,799

44,32344,500176

126,385

131,502

5,117

45,38044,066

46,41153,681

7,269

1,593

1,138

92

95

2

209

210

308,355

320,145

11,790161,614

155,416△ 454△ 1,314304,204

323,121

18,916

188,077

192,550

4,472

703,964

692,174

346,820

325,459

716,157

25,032369,662395,746

26,084890,072

883,081391,144369,959

847,660

30,150415,042439,812

24,7701,765,633

1,780,800

15,166775,911746,051△ 21,184

817,509

Annua lize d NO I

△ 6,990△ 21,361

691,124

NO I (3) ((1)+(2))△ 11,790△ 6,197

1,709,369

15,678823,318

886,914

63,596

4.2%

4.2%

0.0P T

4.1%

3.9%△ 29,860

1,693,691

Annua lize d NO I/
Acquisition price

3.5%

3.5%

0.0P T

5.0%

5.4%

0.4PT

CAP EX (4)54,297

191,485

137,187

3,352

2,358

△ 0.2P T

－

1,904

1,904

6,905

54,40347,498

NCF (3)-(4)835,774

691,596△ 144,178

387,792

367,601△ 994△ 20,190

817,509845,755

28,245408,136

385,408△ 22,727(Note 2)－

96.3%

△ 12,986

Tota l property
ope rating ex penses
P roperty ope rating
incom e (2)－181 da ys

100%

524,667

O the r e xpe nse s－

184 da ys

0.0P T

537,654

De pre cia tion (1)459,495△ 3 da ys

Differe nce

43,949Maintena nce a nd
repairs
Insura nce
pre m ium

475,084

Jul. 2021

1,039,279

Utilitie s－Jan. 2021

995,329(Note 1)

1,012,320

30th

Differe nce△ 15,589

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

1,012,320

16,330,000
29th△ 11,969

43,543

4,412

1

67

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

R-3

R-4

S-1

P rope rty na m e

Roppongi First P la za

R oppongi View Tower

La foret Hara juk u (La nd)

Acquisition price

2,100,000
29th

30th

Ja n. 2021

Jul. 2021

O pe ra tion da ys

184 da ys

181 days

O ccupa ncy ra te

96.6%

82.4%

Avg. O ccupancy rate
(during pe riod)

97.3%

88.7%

Num ber of te na nts

40

34

87,56879,842450－

88,01879,842

13,293

11,923

8,376

8,369

1,181

1,088

3,108

2,451

230

P e riod

4,000,000
29th

30th

Ja n. 2021

Jul. 2021△ 3 da ys△ 8.6P T

Differe nce

21,820,000
29th

30th

Jan. 2021

Jul. 2021△ 3 da ys△ 2.4P T

Differe nce

184 da ys

181 da ys

0.0P T

98.8%

97.6%

100%

100%

0.0P T

98.8%

98.3%

△1

1

1

0

348

343

△ 2,632

667,800

667,800－

9,614,085

9,609,038

△ 661

－

－

－

206,546

232,197△ 5,047△ 3,293

667,800

667,800－

9,820,632

9,841,235

20,603

912

－

－

－

1,172,247

1,163,160

90,45090,451

1

736,413749,067957△ 14△ 9,086－－－

116,730

101,428

1,150

1,758

△ 47

608

－

－

－

65,31962,647△ 15,302

7

344

350

6

－

－

－

17,877

19,207△ 2,672
1,329

11,639215

17,076

16,937－－－

1,056,619

1,072,822

16,202

3,818

3,820

2

588

587

△ 139

－

－

－

150,453

157,179

6,726

41,43339,53245,85647,181

1,324

90,45090,451

1

3,315,661

3,325,513

9,851

46,58440,310△ 1,901

61,40556,786577,349

6,515,722

10,751

51,95078,48273,724577,350

577,349

7,588,544

26,954

115,073

104,761

155,684

148,670

1,164,267

18,98015,076,934

15,302,866

225,932

5.5%

5.0%

3.9%

3.7%

△ 7,014

1,145,286

Annua lize d NO I/
Acquisition price△ 10,312△1

7,561,590

Annua lize d NO I

△ 6,059△1

6,504,970

58,009△ 4,618

577,350

NO I (3) ((1)+(2))△ 6,274

5.2%

5.3%

0.1P T

3.7%

3.8%

0.1PT

CAP EX (4)1,819

17,104

15,284

7,198

6,732

△ 0.2P T－－－

240,488971,078

730,590

NCF (3)-(4)56,18934,845△ 21,343

71,284

66,991△ 465△ 4,292

577,350

577,349△1

7,321,102

6,617,466△ 703,635

O the r e xpe nse s(Note 2)

Tota l property
ope rating ex penses
P roperty ope rating
incom e (2)8584△ 7,726

106,600

103,967661－△ 8,176

107,261

103,967△ 1,370

12,96013,872△6

12,72912,715

△ 92

1,005

238

△ 656

11,424

Differe nce△ 3 da ys

De pre cia tion (1)△6Jul. 2021

100%

Maintena nce a nd
repairs
Insura nce
pre m ium

92.6%

Jan. 2021

181 da ys

Utilitie s

95.0%

30th

100%

(Note 1)

92.3%

Differe nce

184 da ys

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

181 da ys

93.1%

402,910,000 (before acquisition 390,690,000)
29th (Note 3)△ 0.8P T

Re nt re ve nue s

184 da ys△ 14.2P T

P ortfolio tota l△ 450△ 0.5P T△0△ 4,758△ 3 da ys△ 1.2PT△ 0.5PT△525,65012,65368

5-8 Unit price performance since IPO
Relative price performance (Since IPO - July 31, 2021)
200

Performance since listing180(At listing vs. July 31, 2021)■ MHR:+7.4%■ TSE REIT Index: +17.6%

160
140
120
100
80
60
40
20
0

Nov. 30, Jul. 31,
2006
2007

Jul. 31,
2008

Jul. 31,
2009

Jul. 31,
2010

Jul. 31,
2011

Jul. 31,
2012

Jul. 31,
2013

Jul. 31,
2014

Jul. 31,
2015

Jul. 31,
2016

Jul. 31,2017

Jul. 31,2018

Jul. 31,
2019

Jul. 31,
2020

Jul. 31,2021(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 pric e

1st (January 2007)

1,100,000 yen

11th (January 2012)

252,200 yen

21st (January 2017)

153,500 yen

2nd (July 2007)

1,080,000 yen

12th (July 2012)

330,500 yen

22nd (July 2017)

138,900 yen

3rd (January 2008)

716,000 yen

13th (January 2013)

485,000 yen

23rd (January 2018)

137,100 yen

4th (July 2008)

465,000 yen

14th (July 2013)

548,000 yen

24th (July 2018)

138,100 yen

5th (January 2009)

265,000 yen

15th (January 2014)

135,900 yen

25th (January 2019)

144,500 yen

6th (July 2009)

352,000 yen

16th (July 2014)

151,100 yen

26th (July 2019)

160,300 yen

7th (January 2010)

264,900 yen

17th (January 2015)

166,600 yen

27th (January 2020)

181,700 yen

8th (July 2010)

177,300 yen

18th (July 2015)

145,300 yen

28th (July 2020)

9th (January 2011)

281,000 yen

19th (January 2016)

152,100 yen

10th (July 2011)

258,100 yen

20th (July 2016)

160,500 yen(Reference)
IPO Price(November 30, 2006)(Split adjusted)High(May 8, 2007: in trade)

750,000 yen(150,000 yen)

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

137,100 yen(August 12, 2010: in trade)

168,200 yen

29th (January 2021)

145,800 yen(Split adjusted)(33,640 yen)

30th (July 2021)

161,100 yen

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

69

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.

70

5-10 Portfolio map (as of August 2, 2021)

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 2021.”(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.

71

5-11 Portfolio overview (as of August 2, 2021)
Type

Office building
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
0 month

7 years
2 months

16 years
6 months

20 years
10 months

19 aboveground,6 below

20 aboveground,4 below

52 aboveground,5 below

24 aboveground,2 below

approx.
46,154㎡

approx.
53,043㎡

approx.
241,581㎡

approx.
35,076㎡

ARK
Mori Building

O-0

O-1

O-4

O-8

Premium

Premium

Premium

Premium

Premium

Location

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

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

Apr. 2003

Mar. 2000

Jul. 2013

Building age

18 years
4 months

35 years
4 months

21 years
4 months

Total number offloors54 aboveground,6 below

37 aboveground,4 below

Gross floor area

approx.
442,150㎡

approx.
177,486㎡

Koraku Mori
ARK Hills
Building
South Tow er

Residential

Atago Green Hills

Toranomon
Hills Mori
Tower

Roppongi
Hills
Mori Tow er

Property name

Office building (Partly 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
0 months

19 years
9 months

20 year0 months

27 years 9 months−

25 aboveground,2 below

42 aboveground,2 below

43 aboveground,4 below

2 aboveground,1 below

20 above ground,
1 below−

approx.
46,971㎡

approx.
85,266㎡

approx.
60,815㎡

approx.
2,083㎡

approx.
22,906㎡−

Atago,
Minato-ku, Tokyo

C o- owners hip
C o- owners hip
C o- owners hip(approx. 1 9 .8 % ) (approx. 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%

91.2%

94.4%

100%

96.3%

94.5%

100%

82.4%

92.3%

100%

Average building age
19.7 years (Note 5)

Portfolio PML
0.90% (Note 2)

Total acquisition price410,780 mn yen

72

5-12 Portfolio overview (Note)(Note 1) “Type of ownership” denotes the type of rights held by MHR or the Trustee. “Ownership” stands for ownership, “Co-ownership” stands for the ownership of beneficiary interests,“Compartmentalized ownership” denotes ownership and the rights for exclusive use in or over parts of a building, and “Leased land” denotes Leasehold land. The land site of Atago
Green Hills includes joint ownership in quasi-undivided interests of leasehold land and easement.
(Note 2) This indicates the figure described in the “Report on evaluation of seismic PML for portfolio” dated February 15, 2021 by Sompo Risk Management Inc.
(Note 3) ARK Mori Building adopts “slitwall” as an earthquake-resistant feature.
(Note 4) “Occupancy rate” indicates the figures as of July 31, 2021.
(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.

73