NIPPON REIT Investment Corporation

Securities code:3296

JAPANESE

Growth Strategy

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Overview of Growth Strategy

Overview of Sponsor Support

(Note 1) “Qualified real estate” refers to real estate, trust beneficiary interests in real estate, real estate-backed securities or equity interests in anonymous partnership backed by real estate (including real estate under development), which correspond to the investment policy established by NIPPON REIT and the Asset Management Company.
(Note 2) “PM” and “BM” represent “property management” and “building management,” respectively.

Summary of Growth Strategy

NRT aims to maximize unitholder value through its characteristic management system "trinity management."

Growth Strategy Summary

External Growth Strategy

Without veering from the investment policies to which we have held fast since the listing, we will use a disciplined external growth strategy to drive the maximization of unitholder value.

External Growth Strategy

(Note) NOI yield refers to the NOI yield based on NIPPON REIT's cash flow projection at the time of acquisition against the acquisition price. The same applies hereafter.

Internal Growth Strategy

Stabilization and improvement of occupancy rate

As a result of our flexible and proactive leasing activities, as well as the enhanced tenant satisfaction and building competitiveness stemming from our engineering management, the occupancy rate as of the end of the 9th period reached the highest ever. We will continue to target further stabilization and improvement of occupancy rates, at the same time, we will work to improve cash flow by reducing vacancy and free rent periods.

Activities to Enhance Portfolio Profitability

In the fiscal period under review, out of floor space of 40,556 square meters (representing 98 tenants), we managed to increase rents for an area of 12,532 square meters (representing 31 tenants), or 30.9% of the total. In addition, the overall rent increase(Note) of 2.3% was significantly greater than the target of 1%, and reached the highest level ever. Moreover, for the 10th and 11th fiscal periods, we have upwardly revised our target from the previous 1% to 1.5%, and will seek to further raise the floor for distributions per unit going forward.
(Note) Overall rent increase refers to the ratio of total rent for all end-tenants after rent renewal, to the total rent before renewal, for office properties. The same applies hereafter.

Internal Growth Strategy

Engineering Management to Maintain and Improve Portfolio Value

We are working to improve tenant satisfaction as well as to maintain and enhance profitability and competitiveness of the portfolio. As a result of the effective implementation of Engineering Management, we expect to attribute to approximately \150 million per year increase in NOI over the four periods starting from the 7th period. We aim to further increase asset value by pursuing economic efficiencies such as reducing costs of works.

Internal Growth Strategy

Track record in raising NOI through engineering management(Note)

Track record in raising NOI through engineering management

(Note) Actual results and forecast values for improvements to NOI are calculated by the asset management corporation based on the contracts, quotes and proposals, and do not constitute any kind of warranty with regard to the operations results of the Investment Corporation.

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