Financial Results Briefing for the 11Th Fiscal Period (Fiscal Period Ended August 31, 2019) Table of Contents 2
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Securities Code 3295 October 16, 2019 Financial Results Briefing for the 11th Fiscal Period (Fiscal Period Ended August 31, 2019) Table of Contents 2 Ⅰ. Financial Highlights Appendix 1. Investment Highlights from the 11th FP 4 1. Statements of Income 36 2. Summary of the 6th PO 5 2. Balance Sheets 38 3. Portfolio Summary 6 3. Various Indicators 39 Ⅱ. Asset Management Results 4. Overview of Compensation and Fees 40 1. Distribution and NAV per unit 9 5. Newly Acquired Properties 41 2. Results of External Growth 10 6. Overview of Private Nursing Homes 45 3. Results of Internal Growth 11 7. Portfolio Map 46 4. Financial Condition 15 8. Photographs of Properties 47 Ⅲ. Summary of Financial Results and Earnings Forecast 9. List of Portfolio Properties (After the 6th PO) 50 1. Summary of Results for the 11th FP 17 10. Status of Appraisal Values by Property (End of the 11th FP) 53 2. Summary of Forecasts for the 12th FP 18 11. List of Appraisal Values by Property 55 3. Summary of Forecasts for the 13th FP 19 (Compared with the 10th FP) 4. Balance Sheets 20 12. Financial Condition 57 5. Status of Appraisal Values 21 13. Breakdown of Unitholders 58 Ⅳ. Future Strategy 14. Hulic Reit’s Basic Missions and Portfolio Composition Policy 59 1. Strategy Framework 24 15. Focused Investment in Tokyo Commercial Properties 60 2. Initiatives for DPU Growth 25 16. Investments in Next-Generation Assets Plus 61 3. Internal Growth Strategy 26 17. About Hulic 62 4. External Growth Strategy 27 18. Key Achievements and Projects of the Hulic Group 63 5. Main Sponsor-developed and owned Projects 28 19. Collaboration with the Hulic Group 67 Ⅴ. ESG Initiatives 20. Structure of Hulic Reit 68 1. Continuous ESG Initiatives 31 21. Overview of Asset Management Company 69 22. Unit Price and Total Market Value 70 23. Definitions of Terms 71 Please refer to “Definitions of Terms” on pages 71 to 74 for the definitions of the terms used in this document. Ⅰ Financial Highlights Hulic Ginza 7 Chome Building 1. Investment Highlights from the 11th FP 4 External Growth Internal Growth Financial*2 Strategy Continuation of Stringently Selected Investments Maintain High Occupancy Rate Implementation of Stable and Sound Financial Focused on Location • The occupancy rate for portfolio was 100% at the end Management • Due to the capital increase through the 6th PO and of the 11th FP (Aug. 31, 2019). • JCR*3 rating is AA- (Positive) loans, a total of 4 properties (2 office buildings in 3 • Although several tenants are expected to vacate in the • Acquisition capacity up to an LTV of 45% generated central Tokyo wards and 2 private nursing homes near future, we aim to lease these spaces quickly. approx. ¥11.9 billion*4 due to LTV control through the 6th developed by the sponsor) were acquired for ¥18.1 PO. billion (in Jun. and Sep. 2019) and asset size reached Change in Occupancy Ratio ¥325 billion. End of the 10th FP End of the 11th FP JCR’s Credit Rating Occupancy Rate Change in Total Assets 99.9% 100.0% Credit Rating (Outlook) AA- (Positive) for Portfolio End of the 10th FP After the 6th PO Total Assets ¥306.9 billion ¥325.0 billion Change in LTV Ongoing Increase in Rent End of the 11th FP After the 6th PO • Rent increased about 53% (based on floor area) in Key Indicators of Tokyo Commercial Properties *4 the 11th FP (the FP ended Aug. 31, 2019) due to LTV 44.3% 43.1% Percentage in 6 Central Tokyo Wards 91.7% upward rent revisions in spaces with a negative Percentage within 5-minute Walk from Station 92.3% percentage of rent divergence (offices). • The average percentage of divergence in spaces ESG Increase in Unrealized Gain/Loss Ratio Contributing with a negative percentage of rent divergence for to NAV Growth offices was -9.2%*2, and we aim for ongoing increases Evaluation by External Organizations for Continuous • Unrealized gain/loss ratio expanded steadily to in rent. Initiatives +16.6% due to stringently selected investments in • Successive selection in MSCI Japan ESG Select Result of Rent Increases in the 11th FP central Tokyo area properties located near stations. Leaders Index (9 J-REITs are selected among 63 (Tokyo Commercial Properties) Change in Unrealized Gain/Loss Ratio J-REITs) Rate of Rent Increase due to Rent Revisions 5.6% • In the 2019 GRESB Real Estate Survey, we earned for End of the 10th FP After the 6th PO Rate of Rent Increase due to Replacements 16.1% three straight years Green Star and 4-Stars GRESB Unrealized Gain/Loss Ratio 16.1% 16.6%*1 rating. Ongoing Growth in Unitholder Value Change in Distribution per unit Change in NAV per unit The 11th FP The 12th FP The 13th FP The 10th FP After the 6th PO (FP Ended Aug. 31, 2019) (FP Ending Feb. 29, 2020) (FP Ending Aug. 31, 2020) (FP Ended Feb. 28, 2019) (Assumption) (Previous Forecast) (Result) (Previous Forecast) (New Forecast) (Forecast) ¥3,410 ¥3,481 ¥3,410 ¥3,460 ¥3,460 ¥169,415 Approx. ¥173,300 per unit per unit per unit per unit per unit per unit per unit *1 The difference between the appraisal value and acquisition price at the time of acquisition for assets acquired during the 12th FP (FP ending Feb. 29, 2020) is calculated as unrealized gains after the 6th PO. *2 Figure is as of the end of the 11th FP(Aug. 31, 2019). *3 JCR stands for Japan Credit Rating Agency, Ltd. The same shall apply hereinafter. *4 Figures are stated in the securities registration statements submitted on Sep. 9, 2019, is noted here. For details, please refer to the securities registration statements submitted on Sep. 9, 2019. 2. Summary of the 6th PO 5 Outline of the 6th PO Unit Price (thousands of yen) Offering Format Public Offering (Domestic) 200 Unit Price Pricing Date (Sep. 18) Payment Amount ¥10,975 million TSE REIT Index*1 ¥190,700 (incl. Third-party Allotment) vs. TSE REIT Index +0.4pt 195 Units Offered (incl. OA) 61,000 units Number of Investment Units 1,312,000 units Outstanding after the 6th PO 190 Issue Price (Offer Price) ¥185,932 per unit Delivery Date (Sep. 27) Launch Date (Sep. 9) ¥199,700 Issue Value (Amount to be paid) ¥179,924 per unit ¥192,800 vs. TSE REIT Index +1.7pt 1850 Demand Multiple 19.6 times 9/4/20194 6 8 10 12 14 16 18 20 22 24 26 28 30 (date) Change in Indicators Asset Size LTV End of the 10th FP End of the 11th FP (%) After the 6th PO (Feb. 28, 2019) (Aug. 31, 2019) 46 The 5th PO The 6th PO ¥306.9 billion ¥314.0 billion ¥325.0 billion 45 NAV per unit 44.3 End of the 10th FP End of the 11th FP After the 6th PO 44 (Feb. 28, 2019) (Aug. 31, 2020) 43.5 43.2 43.1*3 ¥169,415 ¥172,657 Approx. ¥173,300 43 Adjusted DPU *2 The 10th FP Result 420 (FP Ended Feb. 28, 2019) The 12th FP Forecast The 13th FP Forecast End of the 9th FP End of the 10th FP End of the 11th FP After the 6th PO (Result before the PO) (FP Ending Feb.29, 2020) (FP Ending Aug.31, 2020) (Aug. 31, 2018) (Feb. 28, 2019) (Aug. 31, 2019) (Assumption) *3 ¥3,330 per unit ¥3,431 per unit ¥3,460 per unit Expected Acquisition Capacity after the 6th PO Up to LTV 45% Approx. ¥11.9 billion Up to LTV 50% Approx. 47.1 billion + 3.9% *1 Index is based on the assumption that Hulic Reit’s unit price closing value is the same as its closing value on Sep. 9, 2019, the launch date of the 6th PO. *2 Refers to the amount of cash distributions per unit after adjustments for unexpensed fixed asset tax and city planning tax after property acquisitions, and gain on sales by dispositions of properties as well as at the time of related type Ⅱ management fee. For details, please refer to page 9. *3 Figures are stated in the securities registration statements submitted on Sep. 9, 2019, is noted here. For details, please refer to the securities registration statements submitted on Sep. 9, 2019. 2. Portfolio Summary 6 At the beginning of the 12th FP (FP ending Feb. 29, 2020), Hulic Reit acquired the properties by carrying out its 6th PO and borrowing funds, which increased its scale of assets to ¥325.0 billion. Trend of Total Assets and LTV since the Listing Total Assets 53 Properties ¥325.0 billion Tokyo Commercial Properties 35 Properties ¥263.7 billion (81.2%) Avg. NOI Yield 4.5% Occupancy Rate 100.0% Next-Generation Assets Plus Unrealized Gains/Losses 53.6 billion *1 18 Properties ¥61.2 billion (18.8%) The 6th PO The 5th PO (billions of yen) 53 Properties 51物件 3,500 The 4th PO 50 Properties ¥325.0 billion ¥314.0 billion ¥306.9 billion The 3rd PO 46 Properties 3,000 44 Properties The 2nd PO 43 Properties ¥271.5 billion 37 Properties ¥256.4 billion ¥249.7 billion 2,500 ¥231.3 billion The 1st PO 34 Properties ¥200.8 billion 32 Properties 2,000 31 Properties 28 Properties ¥169.0 billion ¥156.2 billion ¥148.2 billion 1,500 21 Properties ¥101.4 billion 1,000 5000 End of End of End of End of End of End of End of End of End of End of End of 第1期末 第2期末 第3期末 第4期末 第5期末 第6期末 第7期末 第8期末 第9期末 第10期末 第11期末 本増資後After the 1st FP the 2nd FP the 3rd FP the 4th FP the 5th FP the 6th FP the 7th FP the 8th FP the 9th FP the 10th FP the 11th FP the 6th PO (2014年8月末) (2015年2月末) (2015年8月末) (2016年2月末) (2016年8月末) (2017年2月末) (2017年8月末) (2018年2月末) (2018年8月末) (2019年2月末) (2019年8月末) LTV (Aug.