This documentation is the English translation of the Japanese announcement on May 19, 2025
Additional Documentation for Press Release
“Notice Concerning Revision of Management Status Forecasts for Fiscal Period Ending November 2025 (48th Fiscal Period) and Announcement of Management Status Forecasts for Fiscal Period Ending May 2026 (49th Fiscal Period)”
May 19, 2025
（note）A photo of the fitness gym, work lounge, and entrance of HF MEGURO GYONINZAKA RESIDENCE.
Summary of NEXT VISION Ⅱ+
In January 2025, the Investment Corporation established the "Three Enhancement Initiatives“, consisting of "Increasing investor returns“, "Facilitating internal growth“,
and “Strengthening asset turnover-type strategy“.
The new medium-term goal, "NEXT VISION II+“, was set by adding “Three Enhancement Initiatives" to the medium-term goal, "NEXT VISION II“.
NEXT VISION Ⅱ⁺Steady Growth & Sustainable Profit
Stage of pursuing the sustainable increase of unitholder value
+
AUM
Target 300 billion yen
(Unit: billion yen)
Target
300.0
251.2
237.2
230.9
228.4
Aim to acquire 15 billion yen to 20 billion yen's worth of properties annually
ESG
GHG reduction target
(from the levels in 2018 by 2030)
90%
Shift to renewable energy target 100%
GHG
End of 46th FP Actual Performance
reduction
Renewable
energy
-79.5%
100%
Contribute to reduction in climate change risk
Rating (JCR)
TargetＡＡ
End of 46th FP Actual Performance
AA-(Stable)
Aim to improve to AA ratings through an increase in asset size and liquidity.
Enhance measures to improve capital efficiency and maximize unitholder value
49th FP Forecast
48th FP Forecast
47th FP Forecast
46th FP Actual Performance
45th FP Actual Performance
44th FP Actual Performance
After the Initiative
(estimated)
End of 46th FP
Actual Performance
End of 45th FP
Actual Performance
End of 44th FP
Actual Performance
DPU
Target 4,200 yen
(Unit: yen)
4,200
3,965
3,950
3,850
3,640
3,380
3,300
The target was revised upwardfrom the previous 3,800 yen
Target
after the adoption of new policies for enhancing investor returns, asset turnover and internal growth.
Aim to achieve incremental DPU growth.
Achieve DPU in excess of EPU by enhancing investor returns using
Acquire resources for growth with large rent gap still remaining
Procure funds flexibly, taking advantage of high liquidity on hand and a low LTV ratio and using the primary market
1% rise following the adoption of new policies for enhancing investor returns, asset turnover and internal growth.
Aim to build a portfolio that sets the rent income growth rate at 1% per
Control the increase in the cost of financing as a result of upgrading.
Internal growth
Annual increase in rent revenue target ＋2%
ROI target 10％
45th FP Actual
+0.48%
Performance
46th FP Actual
Annual increase in rent revenue
1.30%
+0.82%
Performance
46th FP Actual
Performance
Average ROI
14.4%
The annual rent revenue
growth target was revised upwards from the previous
Expect inclusion in the investment universe of foreign investors and regional financial institutions as a result of upgrading.
Aim to switch the power used at newly acquired properties acquired within a year of acquisition
internal reserves and gain on sales.
Maintain DPU forecasts despite short-term fluctuation in performance
Expand opportunities for investments to include those in urban-type commercial facilities, health care facilities and hotels to address changes in market demand and social needs.
annum.
Aim for an ROI of 10% through value-adding investment.
Aim for the sustainable increase of future cash flow by revising rents upward through continuous value-adding investment.
(note 1) “NEXT VISION II+” is the medium-term target set by the Investment Corporation as of the date
of this document. There is no guarantee or promise that this target will be realized or achieved.
(note 2) The “DPU” for the 47th, 48th, and 49th fiscal periods mentioned above are estimates of the Investment Corporation as of the date of this document and do not guarantee or promise their realization. For details on the assumptions used in calculating these figures, please refer to the “Notes” below, the "Notice Concerning Revision of Management Status Forecasts for Fiscal Period Ending May 2025 (47th Fiscal Period) and Fiscal Period Ending November 2025 (48th Fiscal Period)“ published on April 10, 2025, and the ”Notice Concerning Revision of Management Status Forecasts for Fiscal Period Ending November 2025 (48th Fiscal Period) and Announcement of Management Status Forecasts for Fiscal Period Ending May 2026 (49th Fiscal Period)" published on May 19, 2025.
Changes in distribution per unit (DPU) forecast resulting from this Initiative
The DPU forecast for the 49th fiscal period (ending May 2026) is 3,965 yen, representing a 3.0% increase from the estimated level for the 47th fiscal period (ending May 2025).
(yen)
1,262
1,273
4,500
Effect on DPU of (Gain on sales + amount allotted to internal reserve -
expenses related to value–adding investments and dispositions)
+3.0%
Effect on DPU of expenses related to value-adding investments and dispositions
4,000
3,850 yen 3,950 yen 3,950 yen 3,965 yen1,168
3,500
3,000
2,500
258 221 211 169
1,329
2,000
1,500
2,410
2,424
1,000
500
0
April 10, 2025 Announced forecasts
47thFP
April 10, 2025 Announced forecasts
48thFP
Revised forecast Revised forecast
49thFP
DPU – Effect on DPU of (Gain on sales + amount allotted to internal reserve – expenses related to value-adding investments and dispositions)
2,534
2,456
May 2025
November 2025
May 2026
2,682
2,677
2,621
2,703
+0.8%
(note 1) ”Expenses related to value-adding investments” refers to expenses related to investments that contribute to improvement of future cashflow, such as investments value of common areas of office building based on plans to enhance added value of entire buildings, furnished offices in exclusive areas, and
replacement of various facilities and changes in the specifications including layout changes in exclusive areas of residential properties. In the 47th fiscal year (May 2025), “expanses related to value-adding investments” will include not only the value-adding related expenses defined above but also advance repair costs utilizing gain on sales.
(note 2) The “distributions per unit” for the forecasts of the 47th, 48th, and 49th fiscal years mentioned above are projections by HFR as of the date of this document and does not guarantee or commit the realization. For details regarding the assumptions underlying the calculation of these figures,
please refer to the “Notes” sections below, the announcement titled “Notice Concerning Revision of Management Status Forecasts for Fiscal Period Ending May 2025 (47th Fiscal Period) and November 2025 (48th Fiscal Period)” published on April 10, 2025, and the announcement tiled “Notice Concerning
Notes
(Note) Unless otherwise noted, amounts less than the indicated units (or less than the indicated decimal places when a decimal point is indicated) are rounded down, and percentages are rounded to the first decimal place.
Page 1
(Note 1) DPU forecast for the fiscal period ending May 2025 (47th fiscal period) is announced in “Notice Concerning Revision of Management Status Forecasts for Fiscal Period Ending May 2025 (47th Fiscal Period) and Fiscal Period Ending November 2025 (48th Fiscal Period)” dated April 10, 2025. The DPU forecasts for the fiscal period ending November 2025 (48th fiscal period) and for the fiscal period ending May 2026 (49th fiscal period) are the estimated values for these periods announced in “Notice Concerning Revision of Management Status Forecasts for Fiscal Period Ending November 2025 (48th Fiscal Period) and Announcement of Management Status Forecasts for Fiscal Period Ending May 2026 (49th Fiscal Period)” dated May 19, 2025.
(Note 2) "Internal reserves" refers to the portion of profits that is accumulated within an investment corporation without outflowing in the form of dividends, etc. Internal reserve by a J-REIT are usually made only within the scope of special exceptions to the taxation system, such as all or part of gains from the dispositions.
(Note 3) "EPU" means earnings per unit; and "DPU" means distributions per unit.
(Note 4) Regarding “AUM (Asset Under Management),” the actual asset size as of the end of the 44th fiscal period, 45th fiscal period and 46th fiscal period and After the Initiative (to be defined in (Note 5) below) (scheduled) indicates the total (expected) acquisition price of the portfolio assets as of the end of the 44th fiscal period, 45th fiscal period and 46th fiscal period and After the Initiative (scheduled).
(Note 5) "After the Initiative" means directly after completion of all the acquisitions of the Offering (defined later in (Note 6), the Anticipated Acquisitions (defined later in (Note 7), and the Anticipated Disposals (defined later in (Note 8). Figures After the Initiative are calculated under certain assumptions based on indexes regarding the Anticipated Acquisitions and the Anticipated Disposals, and do not reflect circumstances that may arise in the future, excluding the acquisition of the Anticipated Acquisitions and the disposition of the Anticipated Disposals. In practice, as various circumstances, other than the above, will likely arise by December 5, 2025 when all acquisitions of the Anticipated Acquisitions are scheduled to be completed, the calculated figures may not always match actual figures After the Initiative.
(Note 6) The “Offering” is a collective term referring to the public offering pursuant to the securities registration statement submitted on May 19, 2025 (hereinafter referred to as the “Primary Offering”), the secondary offering by way of overallotment and third-party allotment (refers to the issuance of new investment units by way of third-party allotment to SMBC Nikko Securities Inc., hereinafter referred to as the “Third-Party Allotment"”).
(Note 7) “Anticipated Acquisitions” refers collectively to six properties (Park East Sapporo (quasi co-ownership interest: 45%), HF MEGURO GYONINZAKA RESIDENCE, HF NISHI-SUGAMO RESIDENCE, HF NISHI-SUGAMO RESIDENCE II, HF TOBU NERIMA RESIDENCE and HF RYOGOKU RESIDENCE EAST; hereinafter referred to as the "Assets Acquired in the 47th Fiscal Period") which the Investment Corporation acquired in the 47th period (fiscal period ending May 2025) and assets to be acquired using proceeds, etc. from public offering (Park East Sapporo (additional purchase; quasi co-ownership interest: 24%), KYOMACHIBORI SQUARE and HF OSHIAGE RESIDENCE; hereinafter referred to as the “Assets to be Acquired” ).
(Note 8) "Anticipated Disposals" collectively refers to KOJIMACHI HF BUILDING disposed in March 2025 (hereinafter referred to as the "Asset disposed of in the 47th fiscal period"), HF HIGASHI-SHINSAIBASHI RESIDENCE scheduled to be disposed in May 2025 (hereinafter referred to as the “Asset to be disposed of in the 47th fiscal period”), HF HAMAMATSUCHO BUILDING and HF HIGASHI-SHINJUKU RESIDENCE scheduled to be disposed in June 2025 (hereinafter referred to as the “Asset to be disposed of in the 48th fiscal period”).
(Note 9) “Rent gap” means the difference arising when the current rent of a property owned by the Investment Corporation is lower than the market rent.
(Note 10) “Annual increase in rent revenue target” under “Internal growth” is an annualized index that evaluates the increase /decrease in rental revenue in the period between a specific fiscal period and the following fiscal period and is calculated by aggregating figures for two consecutive fiscal periods, which are obtained by dividing the amount of increase /decrease in revised rent (monthly amount) in each fiscal period by total (monthly) rent as of the end of the previous fiscal period. The figure shown under “45th FP Actual Performance” is the figure obtained by dividing the amount of increase /decrease in revised rent (monthly amount) in the 45th fiscal period by total (monthly) rent as of the end of the 44th fiscal period, and the figure shown under “46th FP Actual Performance” is the figure obtained by dividing the amount of increase /decrease in revised rent (monthly amount) in the 46th period by total (monthly) rent as of the end of the 45th fiscal period, both of which are rounded to the nearest one one-hundredth of one percent. Free rent periods and rent holidays (refers to arrangements under existing least contracts to waive the payment of rent for a specified period within the contract period; the same applies hereinafter) are not reflected in the calculation.
Annual increase in rent revenue = (Revised monthly amount of increase / decrease in rent in the 45th fiscal period (fiscal period ended May 2024) ÷ Total amount of monthly rent as of the end of the 44th fiscal period (fiscal period ended November 2023) + (Revised monthly amount of increase / decrease in rent in the 46th fiscal period (fiscal period ended November 2024)) ÷ Total amount of monthly rent as of the end of the 45th fiscal period (fiscal period ended May 2024)
Notes
(Note 11) "ROI" described under "Internal growth" is obtained using the following formula. Free rent periods and rent holidays are not taken into consideration in the calculation.
ROI = Rent revision for a unit after construction work to increase investment value or the amount of the increase in monthly rent following tenant replacement × 12 ÷ Expenses for construction work to increase investment value.
(Note 12) The figure for “Average ROI” under “Internal growth” is the actual figure for the 46th fiscal period (fiscal period ended November 2024) and is calculated using the following formula.
Free rent periods and rent holidays are not taken into consideration in the calculation.
Average ROI = Total amount of increase in monthly rent in the portion where added-value renovation works were completed, which gave rise to rent revision or tenant replacement after the completion of the renovation works until November 2024 during the 46th fiscal period (fiscal period ended November 2024) × 12 ÷ Total renovation work cost in the portion where rent revision or tenant replacement was implemented after the completion of added-value renovation works until November 2024, among the portions where the renovation works were completed during the 46th fiscal period (fiscal period ended November 2024)
(Note 13) “Rating” refers to the rating acquired by the Investment Corporation from Japan Credit Rating Agency, Ltd. (JCR) as a long-term issuer rating, not the rating received for investment units of the Investment Corporation (the “Investment Units”). At the Investment Corporation's request, there are no credit ratings that have been provided or made publicly available by credit rating agencies or credit ratings that will be provided or made publicly available by credit agencies with respect to the investment units.
(Note 14) The “90% reduction in greenhouse gas (GHG) emissions by 2030” under “ESG” is a target for reducing Scopes 1 and 2 GHG emissions compared to the gross emissions in 2018, and Scope 3 GHG emissions are excluded.
In addition, the “Shift to renewable energytarget 100%” under “ESG” refers to the target of switching all of the electricity used by properties, excluding co-owned properties, compartmentalized ownership properties, etc. where management associations manage electrical power and properties based on special contract forms, to electricity from renewable energy sources. The individually owned portions of residential properties are excluded.
(Note 15) The medium-term targets of NEXT VISION II+ announced by the Investment Corporation in January 2025 are described. They are merely medium-term targets set by the Investment Corporation as of the date of this document and are not intended to guarantee or pledge that these targets will be achieved or when they will be achieved. It is possible that the Investment Corporation fails to reach the target for distributions per unit and the result deviates from the image of growth due to factors such as actual asset management performance and operating conditions, and the impact of disasters. It is possible that the Investment Corporation fails to reach the target for an increase in its asset size and the result deviates from the image of growth due to factors such as financing conditions, timing of development of properties in pipelines, the availability of opportunities to achieve other assets, and negotiations with sellers. Regarding internal growth, targets for annual growth rate of rent income and ROI may not be achieved due to fluctuations in market rent and costs for construction work to increase investment value. The targets and policies set out in NEXT VISION II+ are shown for distributions per unit, asset size, internal growth, credit rating (JCR) and ESG respectively, but these are merely targets and policies set by the Investment Corporation as of the date of this document and there is the possibility of different courses of action actually being taken.
Page 2
(Note 1) DPU forecast for the fiscal period ending May 2025 (47th fiscal period) and for the fiscal period ending November 2025 (48th fiscal period) announced on April 10, 2025 are the DPU forecasts for the 47th and the 48th fiscal periods announced in “Notice Concerning Revision of Management Status Forecasts for Fiscal Period Ending May 2025 (47th Fiscal Period) and Fiscal Period Ending November 2025 (48th Fiscal Period)” dated April 10, 2025. The DPU forecasts for the fiscal period ending November 2025 (48th fiscal period) and for the fiscal period ending May 2026 (49th fiscal period) in the revised forecast are the DPU forecasts announced in “Notice Concerning Revision of Management Status Forecasts for Fiscal Period Ending November 2025 (48th Fiscal Period) and Announcement of Management Status Forecasts for Fiscal Period Ending May 2026 (49th Fiscal Period)” dated May 19, 2025. The DPU for the forecast of 47th, 48th, and 49th fiscal periods is the estimated value as of the date of this document and does not guarantee or promise its realization. For details of the assumptions underlying the calculation of such figures, please refer to the“Notice Regarding the Revision of Forecasts for the Operating Results for the Fiscal Period Ending May 2025 (47th Fiscal Period) and the Fiscal Period Ending November 2025 (48th Fiscal Period)” published on April 10, 2025, and the “Attachment1 Main assumptions for management status forecasts for fiscal period ending November 2025 (48th Fiscal Period) and May 2026 (49th Fiscal Period)”.