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Toshiya Kuroda
Executive Director
Japan Rental Housing Investments Inc.
To Our Unitholders
I would like to begin by expressing my sincere appreciation for the ongoing support that all unitholders have shown Japan Rental Housing Investments Inc. over the years.
During the fiscal period under review, a cautionary outlook for the Japanese economy was spreading, reflecting the downside risks associated with overseas economies, such as the fiscal problems in Europe and the fears of an economic slowdown in the United States, as well as the appreciation of the yen and high oil prices, although the economy followed a moderate recovery path from the effects of the Great East Japan Earthquake.
Under these circumstances, Japan Rental Housing Investments Inc. (“the Investment Corporation”) achieved a higher asset management performance than initially planned, except for losses on the transfer of properties and others during the period, as a result of its efforts to reduce expenses and an increase in rental revenues. In particular, the average occupancy rate of the assets under management during the period improved to 96.5% (rising 0.7 percentage points from 95.7% in the previous period), while the occupancy rate at the end of the period under review (March 31, 2012) rose to 97.8% (up 1.6 percentage points from 96.2% at the end of the previous period), both of which were the highest levels since the foundation of the Investment Corporation.
With respect to new properties, in February and March 2012 we acquired two properties, Act Forme Asakusa (Taito, Tokyo) and West Park Hasekura (Aoba, Sendai), for approximately \2.4 billion (with an average yield of 7.1%), and sold eight small and low-yield properties (with an average yield of about 4.4%) for approximately \1.9 billion in March 2012 to improve the profitability and quality of our portfolio. We also reduced the number of property management companies by one to cut down on property-related and other expenses and improve asset management efficiency.
In terms of borrowings, although we recently borrowed \4.0 billion to prepay some loans (approximately \1.4 billion) acquiring the new properties mentioned above and for refinancing existing borrowings of approximately \2.6 billion, we appropriated approximately \1.3 billion out of the proceeds from the transfer of properties for prepayment. Therefore, the total amount of borrowings increased only slightly, and we maintained a stable financial position.
Consequently, our asset management operations remained steady, and our total amount of distributions came to \1,680 million, an increase of \150 million from the \1,530 million initially planned, as we appropriated distribution deposits for losses on the transfer of properties and others. As a result, distributions per investment unit increased by \113 (9.8%) to \1,263 from our initial forecast of \1,150.
The Investment Corporation will continue to focus on expanding its assets and stabilizing revenues from investment properties, aiming for steady distributions to unitholders in the medium and long term.
We respectfully ask for the continued support and encouragement of our valued investors.
Toshiya Kuroda
Executive Director
Japan Rental Housing Investments Inc.
