Points for Internal Growth (Executive Summary)

Transcription

1 4. Points for Internal Growth 34

2 Points for Internal Growth (Executive Summary) 1. New Market Rent D.I. New market rent D.I. for the office portfolio reached second highest ever. 2. Rent Gap Office [-6.4%]: Existing contract rent increased involving narrowing of negative gap in rent. Retail (Urban) [-4.8%]: Increase in existing contract rent involving narrowing of negative gap in rent continued. 3. Analysis of Monthly Contract Rent Rental revenues (on monthly basis) have slightly increased. (Excluded decreasing factors as a result of sale of Beacon Hill Plaza) 4. Advertised Areas on PM Companies' Websites Advertised area remain on a declining trend. Aim to shorten downtime and pull up ceiling of the occupancy rate. 5. Changes in Average Rent Revision Interval and Average Fixed Interest Rate Period of Debt Address risk of rise in interest rate as well by making average fixed interest rate of debt longer than the average rent revision interval. 6. Other Internal Growth Factors Revised power rate unit cost for tenants for the first time since the Great East Japan Earthquake in an aim to improve balance of cash flow on utilities expenses. Enhanced competitiveness by continuously implementing construction works to enhance value. (Enhance tenant satisfaction and shorten downtime) High tenant credit is the source of stability and growth of rental revenues. Room for reduction in interest expenses may arise if low interest rate continues. This might lead to increasing resistance to the time when the bold monetary easing on a different level becomes terminated. 7. Changes in Vacancy Rate Vacancy rate is estimated to be 2.% at the ending July 215 due to shortening of downtime until tenant moves in, and will lead to pulling up the ceiling of the occupancy rate. 35

3 New Market Rent D.I. (Office Portfolio: 17 properties) * Number of properties in TOKYU REIT s office portfolio with higher new market rent further increased, marking second highest D.I. ever. New market rent D.I. for TOKYU REIT s office portfolio (percentage of number of properties with increase minus number of properties with decrease compared with 6 months ago) DI Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec. Jun Dec Jun. Dec. Jun. Dec. Jun. Dec. Jun. Dec. Jun. Dec. Jun. Dec. Jun. Dec. Jun. Dec. Jun. Dec. Jun. Dec Number of properties Properties with an increase in new market rent compared with 6 months ago Properties with no change Properties with a decrease in new market rent compared with 6 months ago Total Percentage Properties with an increase in new market rent compared with 6 months ago Properties with no change Properties with a decrease in new market rent compared with 6 months ago Total New market rent D.I. for office portfolio * New market rent is the mean value of rents appraised by CBRE for individual properties. * OKI System Center (sokochi) is excluded from the office portfolio. 36

4 Changes in Rent Gap (Office) * Existing contract rent is on an upward trend, which involves narrowing of negative gap in rent. Aimed no change or higher in negotiations for continued rent. Unit ( /Month/Tsubo) 3, 5 Existing contract rent New market rent Number of properties at the end of the (office) 25, Positive gap Largest: +22.4% * The impact of the sale of Resona Maruha Building. * New market rent rises due to rent market upturn. Existing contract rent slightly increased , 15, End of 23rd : -6.4% Negative gap * Existing contract rent does not hold as much volatility as new market rent. Largest: -29.4% End of 22nd Rent Gap : -1.% , 5, * Negative gap widening in new market rent falling environment Change in environment * Negative gap narrowing in new market rent rising environment End 第 3 of 末 3rd End 第 5 of 末 5th End 第 7 of 末 7th End 第 9 of 末 9th End 第 11 of 末 11th End 第 13 of 末 13th End 第 15 of 末 15th End 第 17 of 末 17th End 第 19 of 末 19th End 第 21 of 末 21st End 第 23 of 末 23rd Jan. 25 Jan. 26 Jan. 27 Jan. 28 Jan. 29 Jan. 21 Jan. 211 Jan. 212 Jan. 213 Jan. 214 Jan. 215 * In calculating the existing contract rent, vacant spaces have not been factored in. * Existing contract rent and new market rent include common area charges (excludes income from parking, warehousing and billboards). * Oki System Center (sokochi) is excluded. * New market rent is the mean value of rents appraised by CBRE for individual properties. 37

5 Changes in Rent Gap (Retail (Urban)) * Increase in existing contract rent, which involves narrowing of negative gap in rent, continued. Negotiations for continued rent remained strong. Unit Price ( /Month/Tsubo) 5, 5 Existing contract rent New market rent Number of properties at the end of the (Retail (Urban)) 45 45, Positive gap Largest: +16.7% 4 Rent gap * The impact of the rent revisions in TOKYU REIT Shibuya Udagawa-cho Square, etc. 4, 35 End of 23rd : -4.8% 3 35, Negative gap Largest: -13.4% End of 22nd : -7.6% , 25, * Increase in new market rent and slight increase in existing contract rent , End of 7th End of 9th End of 11th End of 13th End of 15th End of 17th End of 19th End of 21st 第 End of 23rd 7 末第 9 末第 11 末第 13 末第 15 末第 17 末第 19 末第 21 末第 23 末 Jan Jan Jan Jan Jan Jan Jan Jan Jan * In calculating the existing contract rent, vacant spaces have not been factored in. * Existing contract rent and new market rent include common area charges (excludes income from parking, warehousing and billboards). * New market rent is prepared by Tokyu REIM based on various reports and other materials. 38

6 Analysis of Rental Revenues * Rental revenues (on monthly basis) have slightly increased when excluding decreasing factors as a result of sale of Beacon Hill Plaza. Status of Rent Revision with Existing Tenants Breakdown of Increase/Decrease in Rental Revenues (on Monthly Basis) ( million) 1,8 Increase Decrease Status quo Total 1,7 22nd Period (Ended July 214) 23rd Period (Ended January 215) Increased % 1.% 74.% 1.% % 9.8% 68.3% 1.% 1,6 1, * Approx. 2.1% of all tenants revised rents and rental revenues from the revised tenants increased approx. 2.3%. 1,4 *If 1 tenant who occupies several spaces has revised rent, then that tenant is classified under respective leasing condition. *Terminations of temporal rent reductions are also included in Increase and Decrease. However, terminations of rent reductions and reductions which application didn t reach a certain of time aren t included in the calculation. *Figures under Status quo are those for which rent revision s arrived and the rents remained unchanged. *Include tenants who have renewed their respective contracts due to expiry of their fixed-term lease contracts. 1,3 1,2 1,6 *Decrease as a result of sale of Beacon Hill Plaza 1,1 1, 99 * When comparing rental revenues (on monthly basis) with that of end of the previous, there were no moveouts or rent revised downward in retail facilities As 年 of 7 July 月分入居退去増額改定減額改定 Increase/decre 約定に基づく取得 売却 215 As of 年 January 1 月分 214 (end of Move-in Move-out Upward Downward ase based on Acquisition/ 215 (end of 22nd ( 第 22 ) 末 ) revision i revision ii agreements, 増減等 Disposal ( 23rd 第 23 ) 末 ) etc. * Comparison of rental revenues as of the end of each (on monthly basis; including common area charges) with percentage rents excluded. cocoti * Rent for Setagaya Business Square is the figure arrived by multiplying 55%, the co-ownership ratio. * In case temporal rent reductions (free rent, rent holiday, etc.) commenced or terminated, such will be included in Increase/decrease based on agreements, etc. Tokyu Sakuragaoka-cho Building 1,13 39

7 Changes in Advertised Area on PM Companies' Websites (Note) * Advertised area, including Setagaya Business Square (SBS), remains on a decreasing trend. TOKYU REIT aims to shorten downtime and pull up ceiling of the occupancy rate. (Note)Advertised area on PM companies' websites indicates the total area advertised for tenants publicized in the websites of property management companies which TOKYU REIT entrusts business to. The figure excludes cases which advertisement toward outside parties had been ceased due to receiving application to move in and being retained for the floor area expansion within the property. (Announced on monthly basis in TOKYU REIT s website as well.) Advertised area (m 2 ) SBS Advertised 募集面積 area in SBS 募集面積合計 Total advertised area 9, Tokyu Ikejiri-ohashi Building +1,42 8,2 8, 7, 6, Tokyo Nissan Taito Building +778 TOKYU REIT Hatchobori Building +73 Tokyo Nissan Taito Building +1,557 SBS +296 Tokyo Nissan Taito Building -338 SBS -92 Tokyo Nissan Taito Building -338 Tokyu Ikejiri-ohashi Building -1,42 Tokyo Nissan Taito Building -763 TOKYU REIT Toranomon Building -68 TOKYU REIT Hatchobori Building , 4,397 TOKYU REIT Toranomon Building ,48 4, 3,731 Aim to pull up ceiling of the occupancy rate by shortening downtime through early lease-up of vacant spaces 3,74 3, Ratio to total TOKYU REIT Hatchobori Building -73 leasable area (as of the end of 2, January 215): 1.6% 1, 746 1,42 '13/2 Feb. '13/3 Mar. '13/4 Apr. '13/5 May '13/6 Jun. '13/7 Jul. '13/8 Aug. '13/9 Sep. '13/1'13/11'13/12 Oct. Nov. Dec. '14/1 Jan. '14/2 Feb. '14/3 Mar. '14/4 Apr. '14/5 May '14/6 Jun. '14/7 Jul. '14/8 Aug. '14/9 Sep. '14/1'14/11'14/12 Oct. Nov. Dec. '15/1 Jan. '15/2 Feb

8 Changes in Average Rent Revision Interval and Average Fixed Interest Rate Period of Debt * Controlling spread between the average rent revision interval and average fixed interest rate of debt will lead to earnings structure that is tolerant of changes in economic environment and even capable of addressing risk of rise in interest rate resulting from economic expansion. Time Lags Among Rise in Interest Rate Resulting from Economic Expansion, Rise in Occupancy Rate and Rise in Rent (years) Rise in Increase in occupancy 4.5 demand for floor rate areas 4. Time lag Activation of 3.5 economic Increase in tenants rent- Rise in rent 3. activities paying capacity (economic 2.5 expansion) Changes in Rise in monetary interest 2. policies rate Time lag 1.5 Time 1. Controlling spread between the fixed interest rate and the rent revision.5 5 interval is the measure to address risks accompanying the time lags mentioned above.. There is a gap between TOKYU REIT s average interest rate and the market interest rate. As there is a room for average interest rate to decrease further, it is believed to be resistant to rise in market interest rate. (Please refer to page 42) (years) Changes in Average Rent Revision Interval Concluded a long-term lease contract in TOKYU REIT Shibuya Udagawa-cho Square 都心商業 Retail (Urban) ( 間 ) () 郊外商業 Retail ( (Suburban) 間 ) () オフィス Office ( 間 () ) 合計 Total ( 間 () ) 7th 8th 9th 1th 11th 12th 13th 14th 15th 16th 17th 18th 19th 2th 21st 22nd 23rd (years) Changes in Average Fixed Interest Rate Period of Debt (Note) 7th (Note) Remaining s of floating interest rate debts are calculated as 3 days (1 month). 8th 9th 1th 11th 12th 13th 14th 15th 16th 17th 18th 19th 2th st 22nd 23rd Spread between Average Fixed Interest Rate Period of Debt and Average Rent Revision Interval 7th (Average fixed interest rate of debt - Average rent revision interval (Total)) 8th There are chances for rent revision before rise in interest rate arrives th 1th 11th 12th 13th 14th 15th 16th 17th 18th 19th 2th 21st 22nd 23rd 41

9 Other Internal Growth Factors Balance of Cash Flow for Utilities Expenses Changes in Repair and Maintenance Costs and Capital Expenditures (x) * Implemented revision of power rate unit cost for tenants for the first time since the Great East Japan Earthquake in an aim to improve balance of cash flow for utilities expenses. Ratio of Revenue from Utility Expenses (Incidental Revenues) (Note) / Utility Expenses (left axis) Number of Properties (right axis) March 11, 211 Great East Japan Earthquake occurred * Balance of cash flow for utilities expenses deteriorated due to the Earthquake, surged fuel costs, depreciation of the yen, etc. April 212 Tokyo Electric Power Company (TEPCO) raised power rate * To be improved by the revision of power rate unit cost for tenants ( million) 35 1,4 3 1,2 25 1, * Aim to enhance competitiveness by continuously implementing construction works to enhance value Repair and Maintenance Costs (left axis) CapEx (left axis) Asset Size (right axis) * Enhance tenant satisfaction Shorten downtime * Increased due to implementation of construction ahead of schedule ( million) 25, 2, 15, 1, 5,.5 1st 3rd 5th 7th 9th 11th 13th 15th 17th 19th 21st 23rd 25th Jan. 第 124 Jan. 第 325 Jan. 第 26 5 Jan. 第 27 7 Jan. 第 28 9 Jan. 第 Jan. 第 Jan. 第 Jan. 第 Jan. 第 Jan. 第 Jan. 第 Jan. 第 (Note) Revenue from utility expenses (incidental revenues) doesn t include common area charges. 1st Jan rd Jan th Jan th Jan th Jan th 13th 15th Jan Jan Jan th 19th Jan Jan st 23rd Jan Jan th Jan Income by Tenant Credit Changes in Interest-Bearing Debt Average Duration and Average Interest Rate * Almost all tenants have credits above the average. High tenant credit is the source of stability and growth of rental revenues. Teikoku Databank Ranking 帝国データバンクランク ランク Not A B C D E Available 分け無し Total 計 商業施設 Retail (Urban) ( 都心 ) %.% 24.% 67.9% 78% 7.8% %.% 3%.3% 1.% % 商業施設 Retail (Suburban) ( 郊外 ).% 33.2% 58.5%.%.% 8.2% 1.% 商業施設 Retail オフィス Office 合計 Total.% 26.% 65.9% 6.1%.% 2.% 1.%.% 22.3% 59.7% 4.9%.% 13.2% 1.%.% 23.7% 62.1% 5.4%.% 8.9% 1.% * Governmental institutions, financial institutions and the others are classified into "Not Available". * Room for reduction in interest expenses may arise if low interest rate continues. This might lead to increasing resistance to the time when the bold monetary easing on a different level becomes terminated. (years) (%) Average Duration of Long-Term Average Duration of Interest-Bearing Average Interest Interest-Bearing Debt Debt Rate st 3rd Jan. 第 1 24 Jan. 第 /1 25/ th Jan. 第 / th Jan. 第 /1 9th Jan. 第 / * While average duration is increasing, average interest rate is decreasing th 13th 15th 17th 19th 21st 23rd 25th 第 25 Jan. 第 Jan. 第 1321 Jan. 第 Jan. 第 第 Jan Jan. 第 Jan. 第 Jan. 216/1 29/1 21/1 211/1 212/1 213/1 214/1 215/1 (Estimate) ( 予想 )

10 12.% 11.% Changes in Vacancy Rate * TOKYU REIT s vacancy rate increased in the ended January 215, but the forecast for the ending July 215 is expected to decrease to 2.% due to tenant move-ins. 1.% 9.% 8.% *Large supply of office spaces in Tokyo in 23 7.% 6.% 5.% 3.% TOKYU REIT (Estimate) TOKYU REIT (Actual) Tokyo A Grade Buildings Tokyo Central 5 Wards Tokyo 23 Wards Strive to pull up ceiling of the occupancy rate. * TOKYU REIT s overall vacancy rate indicates lower figures because its suburban type retail properties and sokochi boast occupancy of 1%. *Large supply of office spaces in Tokyo in 212 Assumptions of forecast vacancy rate (1) Calculated as there being no new move-ins for spaces that are vacant as at the time of tallying (2) Calculated as there being no new move-ins for spaces for which notices of cancellation were received as at the time of tallying 4.% 4.1% 4.1% 2.% 1.% %.% Acquired Resona Maruha Bldg. with vacancy rate of 21.1% Mar. 23 Jul. 24 Jul. 25 Jul. 26 Jul. 27 Jul. 28 Jul. 29 Jul. 21 Jul. 211 Jul. 212 Jul. 213 Jul. 214 Source: CBRE K.K. * Vacancies are spaces available to immediately move in at the time of tallying. 3.6% End of Jan. 215, Actual 4.6% 2.9% End of Jan. 216, Estimate 2.% 2.3% End of Jul. 215, Estimate Jan. 215 Jan. 216 (Est.) Jul. 215 (Est.) 43