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GOR carefully selects investment properties, focusing on premium real estate. Opportunities to find such quality assets may be limited, unlike other general class properties, and acquisition of premium properties with appropriate prices may become even harder specifically when markets are overheated. Therefore, it is expected that the GOR portfolio will grow at a random speed experiencing a mix of relatively moderate and fast growing phases.
GOR uses due care to avoid excessive expansion that could undermine "unitholders' interests." Looking at a mid- to long-holding period, GOR pursues well-balanced investments in terms of quality and expansion rates. However, depending on various factors (e.g., market position, attributes of the property, portfolio situation), there may be a disposition during the course of investment if that disposition is judged to be the right decision.
Three Features of GOR Portfolio
GOR primarily invests in Class-A office buildings that are located in three major metropolitan areas in Japan (the Tokyo Metropolitan Area, the Chubu Area and the Kinki Area) as well as other major cities with populations over 500,000 that are identified as government-designated cities. The three key watchwords in selecting properties are "Closer," "Newer" and "Larger."
Easily accessible from nearby train stations
GOR portfolio properties are in great locations for office buildings. Most notably, these properties are within walking distance of nearby stations for public transportation. In a country where a large majority of people commute via public transportation, office tenants place great importance on the time it takes to walk between the office and a nearby station. "Within walking distance from a nearby station" is therefore one of the strongest attractions for tenants. GOR ensures that this feature is part of its real estate portfolio.
Newly or recently built
GOR portfolio properties are newly or recently built office buildings. This has several important advantages, the first of which is that maintenance and repair costs can be kept lower than those of older structures. Buildings generally start requiring major repairs and renovations after standing for 20 years or more. Deteriorated facilities and equipment may have to be repaired or even replaced. Major repair projects, if undertaken inside the building, may adversely impact the office environment during reconstruction. Diminished tenant satisfaction, if any, may negatively influence leasing operations. Newly or recently built spaces have much less of a chance of needing major repairs and renovations.
The second advantage is that new or relatively new buildings are less likely to become "obsolete." Building obsolescence is defined as the state of being physically available but no longer appealing to tenants due to dated styles and/or technical operations. Desired levels of specification standards have substantially risen over the past 10 to 15 years. Tenants nowadays may want to have a certain ceiling height, for example, to accommodate raised flooring or prefer individual air conditioning controls. Many contemporary buildings meet such needs, and their chances of becoming "obsolete" are extremely low.
Large buildings with extensive office space
"Being large" offers two advantages. First, a large building serves as a symbol or landmark in an area, market, or industry. Tenants' preferences for larger buildings having symbolic value are evident with the recent and increasing trend of "branding" a building by displaying a brand image. Second, "being large" denotes spacial flexibility. In floor planning, it is much easier to compartmentalize a space into multiple units, offering suitable work areas of various sizes. Tenants may want to enlarge currently leased spaces. Large buildings are better able to meet such demands than small- or mid-sized buildings.
Invests in Class A building of the region
The real estate leasing business is undeniably influenced by economic conditions. An economic slowdown, for example, can weaken demand for office space, lowering occupancies and/or rent levels. A buoyant economy, on the other hand, can boost the total demand for office space, resulting in increased occupancies and/or rent levels. Based on this, GOR primarily invests in Class-A or high quality office buildings - properties that are less susceptible to economic ups and downs. GOR is confident that Class-A or premium office buildings can absorb tenants from other classes of buildings that are susceptible to the effects of economic slowdowns, specifically when demand and supply decline.
Eliminates conflicts of interest
Avoiding conflicts of interest is one of GOR's most important business policies. GOR's asset manager, Global Alliance Realty Co.,Ltd. (“GAR”), has a system in place to avoid conflicts of interest among its major sponsors - Meiji Yasuda Life Insurance Group, Mitsubishi UFJ Financial Group, and Kintetsu Group. Each of these Groups holds an equal share of 14.9 per cent of the ownership. This means that GAR is neither a subsidiary nor an affiliate of any of such sponsor companies, and that none of the sponsor companies can overly influence management. GOR, in the meantime, benefits from professional skills and expertise provided by each of the sponsor companies.