NIPPON REIT Investment Corporation

Securities code:3296

JAPANESE

To Our Unitholders

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執行役員: 石川 久夫

We would like to begin by thanking our unitholders for their continued support of NIPPON REIT (“NRT”).
We closed the tenth fiscal period (ended June 30, 2017) on a successful note.
This is in good part attributable to the ongoing support from our stakeholders, including our unitholders.
We offer you our heartfelt thanks.
I would like to report on our operations and financial performance for the tenth fiscal period.
During the fiscal period under review, we established new bridge fund “Nicolas Capital 10” and have been granted the right to first negotiation for acquisition of 5 properties (equivalent to 7.2 billion yen), total amount of pipeline became 15 properties (equivalent approximately 29.7 billion yen). Going forward, we will continue to maximize unitholders’ value through disciplined external growth while maintaining our acquisition target.
Furthermore, we have been focusing on the internal growth of the portfolio. As a result, we recorded the highest occupancy rate of 99.8% which exceeded the record as of the end of the previous period. Moreover, we succeeded in increasing rents for 46 tenants (equivalent to 36.1% of floor space) out of the 120 tenants that were subject to rent renewals during this fiscal period. The resulting improvement in our profitability significantly exceeded targets, leading to record levels of profit.
In addition, we continue to work on Engineering Management, of which aim is to improve the portfolio's earnings capability by increasing tenant satisfaction, reducing costs and creating new sources of profit, and we expect this will contribute to total of approximately ¥195 million per year increase in NOI over the five periods starting from the seventh fiscal period including the plans for the eleventh fiscal period.
Accordingly, distributions per unit reached ¥8,217, which means an increase of ¥417 (5.3%) over the ¥7,800 figure that was result of the previous period or an increase of \212 (2.6%) over the \8,005 figure that was forecast at the end of the previous fiscal period. We keep, with great pleasure, the trend of steady growth in normalized distributions per unit that has been in place since the listing.
We will continue to work hand in hand with asset management company Sojitz REIT Advisors K.K. and sponsor companies to improve portfolio quality and enhance unitholder value.
We ask for the continued support and guidance of our stakeholders.

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