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  3. To Our Unitholders

To Our Unitholders

執行役員: 石川 久夫

We would like to begin by thanking our unitholders for their continued support of NIPPON REIT. We closed the eighth fiscal period (ended June 30, 2016) on a successful note.
1is is in part attributable to the ongoing support from our stakeholders, including our unitholders. We give you our heartfelt thanks.
I would like to report on our operations and financial performance for the eighth fiscal period. In the current fiscal period, in addition to additional acquisitions made by the bridge fund that was formed in the previous fiscal period (1 property, ¥1.3 billion), we formed 2 new bridge funds, namely Godo Kaisha Nicolas Capital 9 (3 properties, ¥4 billion) in March 2016 and Godo Kaisha Nicolas Capital 8 (4 properties, ¥6.8 billion) in June 2016, obtaining right of first negotiation for 8 properties worth ¥12.3 billion. With this, as of the end of the eighth fiscal period there are 10 properties with the right of first negotiation worth ¥22.5 billion, marking steady development of our external growth initiatives.
As for internal growth of our portfolio, the occupancy rate as of the end of the eighth financial term was a robust 95.9% and the upward trend in rent continues. Of the 115 tenants becoming subject to rent renewals this fiscal period we succeeded in increasing rents for 23 tenants (equivalent to 19.5% of floor space). Additionally, through our engineering management initiatives that target lasting maintenance and growth in the asset value of the portfolio, there has been a marked improvement in our earnings capability.
We outperformed our forecasts for the fiscal period under review, posting operating revenues of
¥6,607 million and net income of ¥2,944 million. Distributions per unit were ¥7,519, which was significantly higher than our initial forecast of ¥7,165.
In June 2016 Toshio Sugita became President & CEO of Sojitz REIT Advisors K.K., to which we consign its asset management. Under this new management structure, the Asset Management Company will strive to deliver further improvements to asset value.
We will continue to work hand in hand with Sojitz REIT Advisors K.K. and sponsor companies to improve unitholder value.
We ask for the continued support and guidance of our stakeholders.

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