Message from Executive Director

On behalf of TOKYU REIT, I would like to express my sincere appreciation to all of you, our unitholders, for your continued support and patronage to us.

 I hereby report our operating environment and results for the 28th fiscal period from February 1, 2017 to July 31, 2017.

Kazuyoshi Kashiwazaki
Executive Director
Representative Director & President, Chief Executive Officer
Tokyu Real Estate Investment Management Inc.

Kazuyoshi Kashiwazaki

 In the current period, we focused on the internal growth of existing properties centering on leasing of Setagaya Business Square and strived to reduce interest expenses through the refinancing of borrowings following the previous period.
 At Setagaya Business Square, there was a move-out of large tenants in May 2016 and the occupancy rate dropped to 80.1% at the end of the 26th period (end of July 2016) but recovered to 95.8% at the end of the current period (end of July 2017) as a result of progressing value enhancement investments in the interior mainly in vacated sections as well as smoothly progressing leasing activities. A recovery in revenue is expected from the next fiscal period due to the full-period contribution of rental revenue and the ending of free rent period. In addition, the sections vacated by large tenants (10 sections) were occupied by 7 tenants up until the 28th fiscal period (fiscal period ended July 2017) and we aimed for diversification of tenants. Therefore, the future risk of move-outs by large tenants decreased and stable occupancy is expected.
 As a result, we achieved operating revenue of 6,919 million yen, net income of 2,355 million yen and an overall portfolio occupancy rate of 98.3%.
 In the current period, revenue decreased from the previous period due to the absence of gain on sales of Tokyu Saginuma 2 Building recorded in the previous period but increased compared with the financial results forecast announced in March 2017.
 In addition, distribution per unit will be 2,650 yen (96 yen decrease from the previous period, same amount as forecast) by reversing the reserve for reduction entry (240 yen per unit) accumulated through property replacement, etc. until the previous period. With the reversal in the current period, the balance of reserve for reduction entry per unit became 467 yen. We plan to continue utilizing the reserve for reduction entry to stabilize distribution.
 TOKYU REIT will strive to maximize unitholder value through “investment in highly competitive properties in areas with strong growth potential.”
 TOKYU REIT greatly appreciates your continued support.

September 2017

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