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FY 2017 1Q Financial Results:Principal Questions and Answers

Offices/Retail Business

  • Q1What is the reason that the vacancy rate in the five wards in Tokyo improved to 2.1%?

    A1Leasing for the Shinagawa Season Terrace was completed as well as temporary vacancies dropped due to tenants entering and leaving at major properties in central Tokyo.

  • Q2What is the leasing status of the "Shimbashi 1-chome" project?

    A2Currently, we are carefully monitoring the customer's response. The building will be completed in July 2019 and concrete progress is ongoing.

  • Q3The vacancy rate has been minimized and the tenants for "Otemachi 2-1" project have already been procured. If so, it may not be possible to respond to the demands of existing tenants to extend their floor space? How do you look at the future office building development?

    A3As you mentioned, current large-scale office building development projects are "Otemachi 2-1" project and "Shimbashi 1-chome" project. We are concerned about a massive supply of office space expected in 2018 or later and in order to respond to this issues we are implementing critical measures such as extending the contract terms with existing tenants, changes to fixed-term lease contract, etc.

  • Q4What do you think about the rent for existing properties?

    A4We understand the expectation that when the vacancy rate drops pressure increases to raise rents. As a current policy, however, instead of raising rents, we are first making longer contract periods for existing tenants, changing contracts to fixed-term lease contracts, etc.

  • Q5Please tell us about the background of how the compensation for the urban redevelopment project accrued.

    A5The lost earnings are compensated for the rights holders of the land for the period of construction of new buildings in the large-scale development project in which we participated. Compensation is to be paid several years later but since the land rights and amount of money are fixed, the estimated lost earnings are declared in this term.

    QIs it a temporary matter? Is it included in the initial plan?

    AThis will be done only this time and is included in the initial plan.

    QIs it possible that a similar compensation will accrue in the future?

    AIt is unlikely a bond that has similar influence like this will occur.

    QWhat is the impact after the next term of receiving compensation in a lump sum?

    ACompensation received this time is estimated lost earnings for the period when a new building is constructed in the future. This is the plan far in advance so it should not affect earnings for the next several years.

Residential Business

  • Q1The number of condominium units in stock is increasing. How is this being addressed?

    A1Some large-scale properties had some units that were not sold immediately following completion of the building. This means that the number of units in stock is increasing. We will carefully control the inventory.

  • Q2We assume that the risk was lowered for large-scale properties in the suburbs but how are sales for these units?

    A2Most of the delivered units in this term were those in areas near the center of Tokyo. But we have been promoting suburban properties and, even though not at the same pace as central Tokyo. They have started moving.

  • Q3Is there potential property that may have more completed units in stock because sales are being prolonged from now on?

    A3The appeal of the property is causing the difference. Some properties being considered for discounts such as those near central Tokyo and leasehold properties are selling steadily but others are not matching the price that the customer thinks appropriate, requiring more time to sell those properties.

  • Q4Previously, you mentioned an approach to change sales strategy. How is this going?

    A4We are changing sales agents, changing advertisements, etc.

  • Q5Isn't is necessary to adjust sales prices?

    A5We are not thinking about aggressively lowering sales prices but we are adjusting prices according to the market in some areas.


  • Q1How is the NTT Group CRE progressing?

    A1We are reviewing the matter mainly with NTT Holding Company but it may take more time to give you more details.

  • Q2We heard that NTT Group plans to move to "Otemachi 2-1" project as tenants. Are there any changes?

    A2There are no changes. We are now proceeding with processes such as contracts.


  • Q1When do you start addressing IFRS?

    A1We are planning to implement IFRS in the account settlement in 2018. We will need to generate the IFRS numbers for fiscal 2017 for the year to compare.