MCUBS — Market News — The Closing Table

Internal growth, lower funding costs ensure steady rise in DPU, potential for regular acquisitions?

Occupancy remained high at the two flagship properties in Osaka Business Park, up 0.4ppt from 97.6% at end-15/12 to 98.0% at end-16/6 at Twin 21, and flat at 97.1% over the same period at the Matsushita IMP Building. Elsewhere at office buildings in the Honmachi area, occupancy rose from 87% to 100% at the MID Midosujikawaramachi Building, and rose by 2.2–3.0ppt at other office buildings, with no declines in occupancy at any buildings. This reflected a decline in the amount of office stock as a result of older office buildings being redeveloped as hotels in addition to improved economic sentiment, and suggested that conditions on the Osaka office market may now have bottomed out, having hitherto given cause for concern. Guidance for 16/12 calls for rental income from properties in the Osaka Business Park to rise as rent-free periods come to an end, but for only a minimal impact from properties in the Honmachi area, which account for a smaller portion of rental income.