Frontier Real Estate Investment Corporation

Code 8964

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Features and Investment Policy

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Features

FRI is a REIT specializing in retail facilities and aims to secure stable earnings over the medium to long term. While making the most of three key strengths, FRI maintains as its basic policy the stable payment of distributions.

Portfolio focusing on “best-in-town” facilities and Mitsui Fudosan's expertise in operation and management

The success of a retail facility is influenced by a wide range of factors, such as the retail trading area, market trends and competition, compatibility with consumer needs, and building condition. “Best-in-town” facilities are properties that FRI considers capable of maintaining competitiveness over the medium to long term based on comprehensive judgment of these and other factors. Since FRI's portfolio is composed primarily of “best-in-town” facilities, its properties continue to be favored by consumers in the communities they serve, despite the severe retail environment. Due to the strength of FRI's properties and the efforts of our tenants, FRI's portfolio maintains its strong performance.

Retail facilities are faced with constant changes in consumer needs and the retail environment. To maintain competitiveness, a very high degree of expertise is required. FRI therefore leverages Mitsui Fudosan's established track record in operating retail facilities throughout Japan. FRI has concluded shopping center (SC) management contracts with Mitsui Fudosan for all its portfolio properties (excluding land interests) and outsources their operation and management to the company. This allows us to maintain a stable earnings structure.

  • For details of the SC management contracts, please click here.

A strong earnings structure based on long-term lease contracts with fixed rents

FRI's portfolio comprises mainly long-term lease contracts with fixed rents concluded with tenants possessing high creditworthiness. These contracts have an exceptionally long average term of about 20 years. The ability to conclude such contracts is an important feature of retail facilities and a major factor in maintaining stable cash flow over the medium to long term.

  • For more information about lease contracts, please click here.

Conservative financial operations through use of leasehold and security deposits

In terms of financing, our great strength is that we are able to conduct financial operations by effectively utilizing the considerable deposits (both leasehold and security) received from tenants, a characteristic unique to retail facilities. Furthermore, by maintaining a low loan-to-value (LTV) ratio based on leasehold and security deposits along with borrowings, FRI is carrying out conservative financial operations.

  • For more information about the LTV ratio and FRI's liabilities, please click here.
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