We would like to express our deep gratitude to all our stakeholders for their support of Daiwa Office Investment Corporation (DOI).
In the 12th Fiscal Period, DOI posted increases in both sales and profit with operating revenues of 7,605 million yen and operating income of 3,317 million yen. Despite the temporary expenses to have all borrowings unsecured, our distribution per unit for the 12th Fiscal Period is 4,464 yen, an increase by 793 yen from the 11th Fiscal Period.
The 12th Fiscal Period featured the acquisition of the E SPACE TOWER in July 2011. This property was acquired for 24 billion yen and is the second largest property in our portfolio following Shinjuku Maynds Tower. This acquisition contributed to a growth in the distribution per unit paid. DOI continues to have ample room to make further investments since our borrowing ratio remains low even after the acquisition. Consequently, we continue to have many building owners who are considering the sale of their properties bring opportunities to us. DOI will analyze and grasp in detail information on the surrounding market for properties we are introduced to and selectively invest in properties that can maintain competitiveness over the long-term.
The circumstances surrounding the management of existing assets remain severe with a new large supply of office buildings being completed in 2011 and 2012. The occupancy of DOI as of the end of the 12th Fiscal Period dropped to 92.4% and the average contracted rent for the portfolio, excluding E SPACE TOWER, also declined gradually. Although there are already signs of improvement in the occupancy rate and rents of high quality and large-scale buildings like the Shinjuku Maynds Tower and E SPACE TOWER, the impact of the large supply is expected to continue impacting small office buildings. The asset management company of DOI has increased the staff of its management team and is committed to improving tenant satisfaction and improving occupancy rates while also maintaining and improving rent revenue.
Thanks to the understanding of many financial institutions we were able to make improvements in the financing related area by realizing a status of all borrowings being unsecured as of the end of September 2011. This has led to further diversification of lenders and an ability to diversify fund-raising methods. Consequently, our financial foundation has been reinforced.
The keys to further growth of DOI are not only a growth in the business through the acquisition of properties but also an improvement in the profitability of existing properties. It is our intent to proceed to a stage of further growth via leasing activities and reinforcing tenant relations.
We wish for the continued success of our stakeholders and ask for your continued support of DOI.
Executive Director of Daiwa Office Investment Corporation
Kazuo Otaka
(as of February 13, 2012)
