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Let’s start with API’s portfolio strategy and external & internal growth cycle strategy.
The upper pie-charts show API’s portfolio structure in chronological order.
In June 2012 when API was listed, Greek government debit crisis shook globally, and Japanese economy remained in difficult circumstances with TSE REIT index hovering at 900 points.
Given that, API’s portfolio at IPO had been composed mainly of retail properties which have high fixed-rent rates and relatively long leaseholds contributing to stable revenue.
Then, from around 2013 where financial market started to recover, vacancy rate had lowered and rent increased accordingly in real estate market. Convinced that the market would enter fully-fledged recovery, we continually strived for external growth mainly with office buildings with lower rents, therefore having upside potential.
As a result, the ratio of Urban Retail properties and Tokyo Office properties, our two focused investment categories has remained around 80%, with expanding proportion of office from 28.5% at IPO to 43.3% at the end of Nov. 2015, then 55.1% at the end of Jun. 2018, which allows us to create actively the most appropriate portfolio reflecting the changing market.
The bottom part explains the continual external growth enabling reinforcement and creating growth capability in the portfolio, as well as our strategy on external & internal growth cycle.
The pie-chart at the bottom left shows the rent ratio of top 10 tenants.
At the end of the second period shortly after IPO, top 10 tenants represented 54.8%, over half, though at the end of the 13th period, the ratio lowered by half to 28.6%, which contributes to reinforce the stabilization by diversifying tenants.
At the bottom center, the area with rent increase of Tokyo Office is detailed.
From the 4th period, we have achieved rent increase in a total of more than 24,000tsubo. As you could see, properties that we have acquired after IPO contribute largely to the internal growth of Tokyo Office properties.
At the bottom right, API’s ”External & Internal growth cycle” is explained.
Since IPO, API continued actively its external growth through rigorously selected investment, and continued also striving to reinforce stability and internal growth capability through construction of the most appropriate portfolio reflecting closely the changing market.
We believe that this external growth contributing to internal growth should lead a continuous improvement in unitholders’ value, through public offerings enabling a stable growth of DPU.
Please turn to the next page.
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