Investment Policy
Advance Residence Investment Corporation (ADR) seeks to maximize unitholder value by aiming to achieve stable earnings and growth of its portfolio assets over the medium and long term through investments that it will conduct in a diversified manner by setting all types of rental housing located across Japan as its target investment. With companies, mainly the ITOCHU Group as well as those that have an equity stake in the asset manager, providing complete back-up in the housing business - encompassing rental housing acquisition, operation, management and marketing - and dispatching personnel, ADR intends to accomplish the stated objectives by leveraging the asset management skills and know-how possessed by the ITOCHU Group and support companies that provide the ITOCHU Group with support (hereafter, "support companies"). In pursuit of ADR's steady growth, ADR will construct an enriched support framework with each of the mentioned companies and strive to secure portfolio assets that meet the investment criteria.
ADR will invest into the rental housing market, which is a market that it views has stable earnings and is backed by growing rental housing needs.
Considering that investment can be easily diversified in terms of tenants, location and residential unit types and that the rent of housing, as an essential cost of living, is less susceptible to the impacts of economic and social conditions, ADR recognizes the stability of earnings from rental housing to be high compared to office, retail and other properties.
In addition, while the upward trend in the Japanese population is weakening, there is an ongoing increase in the population of metropolitan areas centering on Tokyo. ADR sees this to be a reflection of the trend to return to the inner city in correlation with the heightening needs for city conveniences and concentration of corporate bases. Furthermore, the number of members in a household is showing a downward trend and there is a rising number of households, due in part to the increase in single-person households (households consisting of a single person, student, etc.; the same hereafter) and DINKs households (double income households of couples with no kids; the same hereafter). Meanwhile, ADR perceives the desire to own housing to be declining among individuals, due to such factors as the emerging difficulty since the collapse of the bubble in building wealth through the owning of real estate, as well as the greater instability in the employment of white collar workers and their income as a result of changes being made to the traditional employment policies of Japanese companies. On the other hand, there is believed to be a trend of corporate housing and dormitories being abolished in line with corporate downsizing. Based on these factors and coupled with the transition to an aging population among other changes in the surrounding environment, ADR speculates personal rental housing demand to be on the rise.
Based on the thinking that the population and number of households are increasing and that rental housing needs are growing as a consequence, ADR has adopted the following strategy.
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Conduct diversified investment across Japan and into all types of residential units |
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The basic policy of ADR is to seek earnings stability through diversified investment with the whole of Japan as its target investment area and rental housing of all types of residential units as its target investment properties. In the distribution of assets in the portfolio, the weight will be placed on the Single Type and Compact Type located in the Tokyo Metropolitan Area (investments will be focused on the Tokyo Central 7 Wards), which is seen to be an area where corporate activities tend to concentrate and an area that, for the time being, forms a large rental housing market coupled with the active needs for rental housing primarily from the single-person households and DINKs households. (See Policy on Portfolio Building) |
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| (2) |
Incorporate operational rental housing into the portfolio |
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To seize the possibilities of achieving earnings in a stable manner over the medium and long term, ADR will invest into operational rental housing (properties operated entirety by an operator; the same hereafter) as rental housing capable of accurately responding to the demands that cannot be captured by general rental housing. Such demands include the demand for rental housing as a substitute for corporate housing and dormitories that increases in correlation with the abolishment of corporate housing and dormitories, the demand for rental housing by students due to such factors as advancement to schools in remote areas, and the demand for rental housing by the elderly associated with the transition to an aging population. (See Policy on Portfolio Building)
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ADR realizes the basic strategy described above with multilateral support, such as in the aspects of property supply, property sourcing, leasing operations and property management. ADR obtains such support through optimally leveraging the strengths of the ITOCHU Group and its support companies, including the business foundation established with business partners from a broad range of business fields. At ADR, the integrated system of the companies within the ITOCHU Group is utilized as the nationwide rental housing business and tenant management system for developing rental housing adapted to the market, advertising leasing based on an accurate grasp of market trends and managing tenants, and for other matters required to drive rental housing related businesses. ADR will realize external and internal growth with the reinforcement of these respective services and functions based on said system. The asset manager engaged in asset management for ADR aims to maximize unitholder value through executing the strategy described above. The asset manager does so with the backing in terms of human resources from the ITOCHU Group and other companies that have an equity stake in the asset manager and by taking maximum advantage of the operational know-how on real estate and finance possessed by such companies. Furthermore, upon the acquisition of investment assets from the ITOCHU Group or its support companies (with the exception of Tokyo Tatemono Real Estate Sales Co., Ltd.), operations are conducted by duly observing the compliance and governance frameworks. This includes establishing the basis of such transactions in accordance with the rules on transactions with interested parties and other regulations, as well as ensuring independence of operations.