We, ORIX JREIT Inc., and our asset management company, ORIX Asset Management Corporation, would like to express our sincere gratitude to our unitholders for their continued loyal patronage and support.
The current Japanese economy during the 29th fiscal period ended August 2016 hasn’t recovered from a temporary slowdown, with capital investment and personal consumption still being stagnant. As for the global economy, concerns over the economic slowdown of emerging countries are increasing and an unstable condition is continuing due to the rise in geopolitical tension and the impact of “Brexit”.
In such a business climate, acquisitions of properties are locked in fierce competition in various asset types in Japan’s real estate trading market and excellent properties in the market continues to be in short supply. In the real estate lease market, vacancy rates of offices are declining and rents are generally on the rise, however it is necessary to pay close attention to influence of the anticipated large supply of office buildings mainly in central Tokyo area. On the other hand, though depending on the individual characteristics of properties, mid-to-long term growth in urban-type retail facility and hotel sectors is expected as a result of increasing inbound visitors.
Under these circumstances, we raised funds by issuing new investment units through public offering during the 29th fiscal period ended August 2016 and newly acquired five properties for a total amount of 26.14 billion yen by utilizing our acquisition capacity and strength of the external growth strategy. In addition, we enhanced stability, growth potential and profitability of the portfolio by a replacement strategy through disposition of a property by taking into account the future competitiveness of the properties. As for the internal growth strategy, we have consistently enhanced internal growth by leveraging direct property management. As for the financial strategy, we have enhanced financial stability through extension and diversification of maturity and reduced financing cost while at the same time maintaining and expanding acquisition capacity through controlling LTV appropriately. Furthermore, we have been securing stability of distributions by setting aside internal reserves through property disposition. These efforts were recognized and then the long-term corporate credit rating by Standard & Poor’s (S&P) was raised from “A- (positive)” to “A (stable)”.
As a result, we generated 20.3 billion yen in operating revenues, 9.1 billion yen in operating income and 7.5 billion yen in net income. The distribution per unit was 3,000 yen.
Furthermore, against a background of expansion of each strategy, at the beginning of the 30th fiscal period ending February 2017, we procured funds by issuing new investment units through public offering and made selective investments in an office located in central Tokyo area and an urban-type retail facility by utilizing the ORIX Group’s pipeline and strength, while at the same time enhancing acquisition capacity for the future by lowering LTV.
We aim to achieve sustainable growth of unitholder’s value for the medium to long term by continuing to implement the various strategies that anticipate the changes in the environment.
Again, we would like to thank our unitholders, and deeply appreciate your continued understanding and support.