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API Features

Portfolio Composition Policy

We intend to acquire a competitive portfolio in the medium- to long-term by investing primarily in Urban Retail properties and Tokyo Office properties. We intend to make these investments upon consideration of location as the most important factor, followed by other factors such as size, quality, specifications, and suitability for use by tenants.

Urban Retail Properties

Advantages of Urban Retail Properties

We position Urban Retail properties as one of the priority categories of our investment goals. Urban Retail properties are easily recognizable and are located near major train stations or popular areas in Tokyo, Government-designated major cities within Japan's three largest metropolitan areas, or other major cities in Japan. We believe they have the following three advantages:

Three advantages
  • The ability to attract a large number of customers, supported by population inflows into major cities and stable retail sales there
  • A large and diverse tenant pool, in response to diversifying consumer needs
  • Scarcity due to the relatively short supply of properties

Characteristics of Urban Retail Properties

  • Large commercial areas with the ability to attract large numbers of customers due to their location in Tokyo, Government-designated major cities located in the three major metropolitan areas, or other major cities in Japan.
  • Ability to attract customers and various types of stores as end-tenants, since properties are located in convenient areas adjacent to major train stations or busy commercial areas.
  • Well-known commercial areas, including Omotesando, Harajuku, and Ginza in Tokyo, which serve as places to experience and interact through communication, information exchange, and cultural exchange, in addition to being strong retail areas.
  • Less business fluctuation due to tenant suitability and knowledge of trends in tenant selection and management, which are expected to lead to medium- to long-term growth.
  • Scarcity due to relatively limited suitable locations and the small number of properties.

Lower vacancy rate and more stable occupancy rate than other major cities in Japan

The graph below shows trends in the vacancy rates of leased office properties with gross floor areas of 500 tsubo or more in the 23 wards of Tokyo and in other major cities in Japan. The vacancy rate in the 23 wards of Tokyo was lower than in any other major cities from 1998 to December 2011. We assume that this is partly due to the high concentration of headquarters in Tokyo. The vacancy rate in the 23 wards of Tokyo, which declined from 2003 to 2007, rose after 2007, reflecting the effect of the global financial crisis triggered by the subprime loan crisis in the United States. However, increases in the vacancy rate in the 23 wards were limited compared with those in other major cities, and the vacancy rate in the 23 wards started to decline in 2011. We believe that the market in leased office properties is recovering.

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Solid tenant demand for office properties based on a high concentration of corporate entities

The chart below shows a breakdown of the headquarters of Global 500 companies by industry in Tokyo, Beijing, Paris, New York, and London. Those companies are classified into 14 industries. Tokyo is less dependent on the financial services industry than the other cities, and global companies with headquarters in Tokyo are more diversified than in the other cities. We think that the international city of Tokyo has attributes that meet office demand from major corporations in a variety of industries, and that industry-specific risks are diversified in the Tokyo leased office market.

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Tokyo Office Properties

Advantages of Tokyo Office Properties

We believe that the office properties we focus on investing in within the 23 wards of Tokyo, in areas with a high concentration of offices and close to major train stations, have the three advantages described below.

Three advantages
  • Solid tenant demand due to the concentration of corporate entities
  • Relatively low vacancy rates and stable occupancy rates compared with properties in other major cities in Japan
  • A large stock of leased office properties and higher liquidity

Characteristics of Tokyo Office Properties

  • Continued demand in the medium- to long-term is expected due to the sustainable concentration of corporations and the population in Tokyo, with companies consolidating the functions of their headquarters and promoting streamlining.
  • A wide variety and abundance of suitable tenants expected to be stable in the medium- to long-term, as Tokyo is the center of Japan and one of the largest cities in Asia. Tenant substitution is high, and the occupancy rate is stable in the medium- to long-term.
  • High sensitivity to business trends and increased profits are expected in a business recovery phase.
  • Compared to properties in other areas or for other uses, a relatively high volume of investment properties; high liquidity, which enables us to acquire properties in a timely manner compared with other properties; and various market participants involved in trading.

Lower vacancy rate and more stable occupancy rate than other major cities in Japan

The graph below shows trends in the vacancy rates of leased office properties with gross floor areas of 500 tsubo or more in the 23 wards of Tokyo and in other major cities in Japan. The vacancy rate in the 23 wards of Tokyo was lower than in any other major cities from 1998 to December 2011. We assume that this is partly due to the high concentration of headquarters in Tokyo. The vacancy rate in the 23 wards of Tokyo, which declined from 2003 to 2007, rose after 2007, reflecting the effect of the global financial crisis triggered by the subprime loan crisis in the United States. However, increases in the vacancy rate in the 23 wards were limited compared with those in other major cities, and the vacancy rate in the 23 wards started to decline in 2011. We believe that the market in leased office properties is recovering.

Note: Click here for more information.

Solid tenant demand for office properties based on a high concentration of corporate entities

The chart below shows a breakdown of the headquarters of Global 500 companies by industry in Tokyo, Beijing, Paris, New York, and London. Those companies are classified into 14 industries. Tokyo is less dependent on the financial services industry than the other cities, and global companies with headquarters in Tokyo are more diversified than in the other cities. We think that the international city of Tokyo has attributes that meet office demand from major corporations in a variety of industries, and that industry-specific risks are diversified in the Tokyo leased office market.

Note: Click here for more information.

Activia Account Properties

Careful selection in consideration of the characteristics and competitiveness of individual properties

To achieve stability and profitability in our portfolio through diversification, after assessing the features and competitiveness of each property, we selectively invest in properties in Tokyo, Government-designated major cities in the three major metropolitan areas, other major cities in Japan, and surrounding areas other than Urban Retail properties and Tokyo Office properties. In selecting Activia Account Properties, which are diverse due to regional characteristics and other factors, we take the following factors into consideration.

Retail properties
  • A large population in the trade area
  • Good access to the nearest station or arterial roads
  • Key tenant lease terms in the medium- to long-term
Office properties
  • Competitiveness in the surrunding area

Relatively high expected capitalization rates for suburban retail properties and offices outside of Tokyo

The chart below shows trends in expected capitalization rates by location for commercial properties, primarily retail properties, and office properties, based on the Japanese Real Estate Investor Survey conducted by the Japan Real Estate Institute. The expected capitalization rate for commercial properties (Ginza), commercial properties (Omotesando), and Tokyo (Marunouchi, Otemachi) was around 4%, while the expected capitalization rate was higher for suburban commercial properties and office properties outside of Tokyo.
We select properties by carefully considering the characteristics and competitiveness of each property. If we expect sufficiently high profitability, we will acquire properties other than Urban Retail properties and Tokyo Office properties to achieve stability and profitability in the entire portfolio.

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