United Urban Investment Corporation

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To Our Unitholders

Ikuo Yoshida
Executive Officer
United Urban Investment Corporation

I would like to take this opportunity to express my sincere gratitude to you for your support and patronage of United Urban Investment Corporation ("United Urban").

I am Ikuo Yoshida, and I assumed the position of the Executive Officer of United Urban on September 1, 2017. I will dedicate all my effort to achieve our future growth and would like to humbly ask you for the same support and help given to my predecessor.

United Urban was listed in the real estate investment trust section of the Tokyo Stock Exchange (the J-REIT section) in December 2003 as a diversified J-REIT, investing in properties varied both in types of use and geographical location. Since its listing, United Urban has been making efforts to maintain or improve its revenues and reduce various risks for the purpose of obtaining stable earnings over the medium to long term. As of May 31, 2017 (at the end of the 27th fiscal period), its asset size was 621.5 billion yen, and United Urban is one of the largest among all J-REITs in terms of asset size.

In the 27th fiscal period, approx. 16.7 billion yen of equity was raised by the 10th public offering (December 2016) and the third-party allotment (January 2017), which has strengthened United Urban’s financial standing. As for an external growth, United Urban acquired five new properties (total acquisition amount: 35 billion yen) including “SS30”, a celebrated large-scale complex in Sendai Area comprising an office building, a fitness club building and a hotel building and “LOOP-X・M”, a property located in bay area of Minato-ku, Tokyo, comprising an office building and a residential building. We also acquired the land adjacent to our existing property “b roppongi” attempting extension of the building in the future. On the other hand, United Urban sold one office building which was experiencing deterioration in profitability due to the staggering occupancy ratio, and could achieve improvement of the asset quality and profitability in conjunction with the asset increase.

The performance of our existing properties has been good due to the robust business performance of Japanese corporations and increase of foreign tourists. The properties acquired during the previous fiscal period (26th fiscal period ended November 30, 2016) and the increased rent revenues from the properties adopting variable rent system have also contributed to this fiscal period's profit increase.

In the 27th fiscal period, United Urban was able to achieve operating revenues of 22,982 million yen, operating income of 11,497 million yen and net income of 10,285 million yen. Succeeding the previous fiscal period, a part of net income (431 million yen) was retained as “reserve retained for distribution” in order to strengthen the capability to cope with the risk (the corporate tax was not imposed for this reserve). In addition, United Urban reversed approx.75 million yen of the negative goodwill (“reserve for temporary difference adjustments”) and added it to the cash distribution complying with the tax reform enforced from this fiscal period. Consequently, the cash distribution per unit for the 27th fiscal period became 3,250 yen (increased by approx. 8% or 240 yen per unit from the previous period), the highest since the IPO, and we could increase cash distribution per unit for seven consecutive fiscal periods from the 21st fiscal period.

United Urban, together with its asset manager, Japan REIT Advisors Co., Ltd. ("JRA"), will do its best to secure the stability in its earnings over the medium to long term pursuant to its investment policy. Your continuous support and kind attention will be highly appreciated.

September 2017

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