Risk of deterioration in master-lease earnings from vacancies, rent reductions and early termination
First written in FY2018. 2 of 5 entries say "Mitigated", first in FY2020. Latest entry: FY2025.
The whole theme swung hardest in 2024: 5 of 15 companies on the "Worse" side.
8 other companies' latest entry also says "Restated".
- FY2025RestatedAnnual report
「As part of the rent-setting process, the Group collects transaction information on comparable nearby properties and conducts on-site surveys of candidate properties. It sets rents after taking into account the potential for vacancies and rent declines during the contract period, thereby working to reduce risk.」
As measures against vacancy and rent reduction risks under master leases, the Group continues to set rents based on nearby transaction information, on-site surveys, and potential vacancies and rent declines during the contract period. - FY2021MitigatedAnnual report
「As part of the rent-setting process, the Company collects transaction information on comparable nearby properties and conducts on-site surveys of candidate properties. It sets rents after taking into account the potential for vacancies and rent declines during the contract period, thereby working to reduce risk.」
As measures against vacancy and rent decline risks, the Company has outlined a rent-setting process that incorporates transaction information on nearby properties, on-site surveys, and potential vacancies and rent declines during the contract period. - FY2020MitigatedAnnual report
「The Company has taken measures including making its lease agreements with property owners more flexible depending on whether there is a tenant. However, if prolonged vacancies or rent reductions occur across numerous properties, its business performance and other results could be affected.」
As a measure against vacancy and rent reduction risks, the Company has made its agreements with owners more flexible according to tenant conditions. However, the risks themselves remain. - FY2019WorsenedAnnual report
「In principle, a fixed payment is made to the property owner regardless of whether there is a tenant. Accordingly, if rent is reduced at a tenant's request or a tenant vacates and the property becomes vacant, rental profit from the property could decline or turn negative. In addition, a master lease may be terminated early with the consent of both parties, and the owner may request termination following inheritance or the transfer of the property, even when the property is highly profitable.」
In addition to vacancy and rent reduction risks, the Company explicitly identifies early termination following the owner's inheritance or transfer of the property as a risk factor. - FY2018First statedAnnual report
「In principle, the Company is required to make fixed payments to property owners regardless of whether tenants are present. Accordingly, if rents are reduced at tenants’ request or tenants vacate and properties become vacant, rental profit from the relevant properties may decline or become negative.」
Because it is obligated to make fixed rental payments, the Company indicates that rental profit could decline or turn negative due to tenant departures, prolonged vacancies or rent reductions.