Message from the Executive Director

On behalf of HEIWA REAL ESTATE REIT, Inc., and HEIWA REAL ESTATE Asset Management CO., LTD., I would like to express our sincere appreciation to all of our investors for your continued patronage and support.
It is with great pleasure that I take this opportunity to report briefly on our operating performance and financial results for the 33rd Fiscal Period (ended May 31, 2018).

Backed by the solid sponsorship of HEIWA REAL ESTATE CO., LTD., we achieved steady progress in implementing a number of strategies aimed at securing financing and ensuring internal and external growth during the fiscal period. We also succeeded in cutting costs, particularly those associated with financial procurement, while maintaining a high occupancy rate for the property portfolio. As a result, during the period under review we posted operating revenues of ¥8,803 million, ordinary income of ¥4,815 million, and net income of ¥4,815 million. We also decided on a distribution per unit of ¥2,300.

During the 33rd Fiscal Period, new investment was difficult to achieve due to persistently high real estate prices, among other factors. Of the properties acquired through replacement transactions, HF RYOGOKU RESIDENCE, a residence that was planned and developed by our sponsor, is of very high quality. Although a gain on transfer was incurred in accordance with the transfer of the property, we retained a portion of the gain as internal reserves to serve as a source for the future distribution payment.

To achieve internal growth, we focused on increasing rents at office buildings under management, and succeeded in continuing to raise the average rental amount for the seventh consecutive year. A high operating rate for office buildings was maintained during the period with the average occupancy rate reaching 98.74%.

On the financial front, HEIWA REAL ESTATE REIT also promoted the diversification of its methods for procuring funds by issuing investment corporation bonds for the second time since its change of sponsor. We also worked to both cut the costs and lengthen the period of fund procurement, and established a more stable fund procurement base.

In line with our basic management philosophy, we will work to steadily expand assets under management and secure stable profits over the medium and long terms, with the goal of maximizing value for investors. As we carry out these endeavors, we look forward to your continued encouragement and support.

Masaaki Higashihara
Executive Director


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