Investor Presentation for the Merger
August 28, 2020 Contents
1. Overview of the Merger P. 2
2. Significance of the Merger P. 10
3. Growth Strategy P. 18
4. Financial Strategy P. 23
5. Post-Merger Financial Forecast P. 26
Appendix P. 28
(Note) Figures of less than one unit are truncated and percentage figures are calculated by rounding to the nearest whole number. 1. Overview of the Merger Basic Principle of the New Investment Corporation
The largest(1) diversified J-REIT(2) investing in real estate that provide metropolitan life foundations
(JRF) (MMI)
Japan Metropolitan Fund Investment Corporation
Support metropolitan life (live, work and consume) in Japan from the perspective of real estate
*Please refer to page 41 for the notes to this page. 3 Significance of the Merger
Enhance unitholder values of both JRF and MMI through transition into diversified REIT
1. Fit to Environment Changes Enhance Stability Promote flexible operation of facilities beyond the framework of asset classes, amid changes in operational environment Further diversify portfolio
Strengthen capabilities to operate mixed-use properties by area or by asset level, Build resilience to deterioration in under the structure of diversified REIT business environment
Increase liquidity of the investment units 2. Expand Investment Universe and exposures in major indices
Able to acquire mixed-use properties(1) and residential properties etc.
Able to enter into large scale transactions, such as bulk sale of multiple type assets
Allow greater flexibility in acquisition strategies to cope with expected changes in the social structure Accelerate Growth Further promote asset replacement and external growth 3. Create the Largest J-REIT Make the best use of properties beyond Increase market presence significantly the framework of asset class
Improve stability by more-diversified portfolio Accelerate investment for growth on the back of higher risk tolerance Enhance liquidity by increasing market capitalization
(1) The term “Mixed-use properties” means properties occupied by more than two types of tenants such as retail, office, residential, hotel or other uses. 4 Characteristics of JRF and MMI
Office buildings located in the three major metropolitan areas Urban retail properties located in “where people gather” Main investment target (Tokyo area, Osaka area and Nagoya area)
• Track record of 18 years • Proactive acquisition of properties since the MC-UBS Group • The largest J-REIT focusing on retail properties in terms of participation as sponsor in 2015 asset size • Almost doubled asset size in the past five years • Promotion of asset replacement from suburban-type to • Shifted the focus of the portfolio from Osaka area to Tokyo urban-type area Before (End of) latest MC-UBS Group (End of) latest As of listing(1) period(2) Operating results participation(6) period(2) Number of properties 4 100 Number of properties(7) 12 25
Asset size(3) 40.9bn yen 877.2bn yen Asset size(3)(7) 157.6bn yen 282.7bn yen
DPU(4) 3,313 yen 4,500 yen DPU(8) 1,191 yen 2,049 yen
NAV per unit(4)(5) 111,900 yen 223,600 yen NAV per unit(5)(8) 63,500 yen 98,500 yen
Key properties
GYRE KAWASAKI Le FRONT mozo wonder city Twin 21 Yokohama i-land Tower Cube Kawasaki
*Please refer to page 41 for the notes to this page. 5 Merged Investment Corporation at a Glance
Japan Retail Fund MCUBS MidCity New Investment Corporation Investment Corporation Investment Corporation (Japan Metropolitan Fund) (as of August 31, 2020) as of March 1, 2021) as of June 30, 2020)(6) （ (Pro forma)(5) （ (Pro forma)(7) Asset size (based on (anticipated) acquisition price) 888,884 million yen 282,710 million yen 1,191,594 million yen
Number of properties Portfolio 102 properties 25 properties 127 properties NOI yield (based on (anticipated) acquisition price)(1) 4.9% 4.5% 4.7% NOI yield after depreciation (based on (anticipated) acquisition price) (2) 3.6% 3.6% 3.6%
Unrealized gain or loss 160,917 million yen 23,241 million yen 160,917 million yen
Financials LTV 45.5% 42.1% 43.9%
Interest-bearing debt 411,725 million yen 126,975 million yen 538,700 million yen
Credit rating AA-(R&I) AA-(JCR) Aim to maintain/ improve Unitholder
Value NAV per unit(3) 223,800 yen 98,500 yen 108,300 yen
Book value per unit(4) 166,400 yen 87,500 yen 87,500 yen
Feb. 2021 Period (38th) Jun. 2020 Period (28th) Aug. 2021 Period (39th) (Forecast) (Actual) (Forecast)
DPU DPU (forecast) 4,500 yen 2,049 yen 2,286 yen MCUBS MidCity DPU (forecast) (after accounting for Japan Retail Fund Investment merger ratio and unit split) 2,250 yen 2,049 yen % Investment Corporation (8) Corporation Change 1.6% 11.6% ＋ ＋
*Please refer to page 41 for the notes to this page. 6 Post-merger Portfolio
Diversification by Area(1) Diversification by Use(2) Diversification by Property Size(4) Others Suburban Nagoya 11.8% retail Area 20.2% 5.7% Others (3) Share of Three 1.3% Share of Top 10 Asset Size Metropolitan Areas Mixed- Properties use Urban retail % 11.6% bn yen % 88.2 1,191.5 51.2% 31.5 Tokyo Share of top 10 Osaka properties before Area merger Area 54.0% Office 28.5% 15.6% JRF 35.4%
MMI 72.0%
Tenant Diversification(5) Walking Minutes from Nearest Station(6) Others
More than 10 Within Fixed 98.1 minutes 1 minute Rent Type ％ 15.0 (based on ％ 21.3 ％ annual rent) Revenue-based 1.9 Share of Top 10 Within ％ Tenants 10 minutes Ordinary building (land) 42.3 37.9 85.0 Lease Type lease contract ％ Share of top 10 ％ ％ More than 1 (based on tenants before More than 5 minute and annual rent) Fixed-term building merger 57.7 minutes and less less than or (land) lease contract ％ JRF 45.3% than or equal to equal to 5 Lease 10 minutes minutes Average lease period years MMI Period(7) 10.3 57.3% 17.3 46.5 ％ ％
*Please refer to page 42 for the notes to this page. 7 Growth Strategy
Future Create virtuous cycle where area value and asset Vision value improve together
• Revenue increase backed by external growth Mid- to Execute various • Implementing reconstruction and conversion, etc. Long-term • Other investment measures for growth such as growth investments M&As
Short- to Build base for growth and • Further shift into urban properties and
Enhance Unitholder Value Enhance diversify asset type Mid-term improve profitability • Aim to increase DPU level
Basic Principle of the New Investment Corporation Support metropolitan life (live, work and consume) in Japan from the perspective of real estate
8 Outline of Merger and Planned Schedule
Outline of Merger Planned Schedule
Name of the Japan Retail Fund Investment Corporation MCUBS MidCity Investment Corporation Japan Metropolitan Fund Investment Corporation new investment Abbreviation : JMF (JRF) (MMI) corporation Execution of the Merger Agreement Absorption-type merger August 28, 2020 Surviving corporation : Method of the Record date for meeting of Record date for meeting of Japan Retail Fund Investment Corporation (JRF) Merger unitholders unitholders Dissolving corporation : August 31, 2020 September 13, 2020 MCUBS MidCity Investment Corporation (MMI) Meeting of unitholders Meeting of unitholders October 23, 2020 October 22, 2020 JRF : MMI 1 : 1 (Allot 1 JRF＝ investment unit per one MMI investment unit※) Delisting A two for one unit split of JRF is scheduled in order to allot February 25, 2021 ※ Merger ratio one or more JRF investment units to MMI unitholders and the merger ratio will be based on the number of JRF units End of the fiscal period End of the final fiscal period after the unit split (immediately before the Merger) before the Merger(2) February 28, 2021 February 28, 2021 For reference, the merger ratio based on the number of JRF ※ units before the unit split is JRF : MMI 1 : 0.5 Effective date of the Merger ＝ March 1, 2021
Payment of merger The Merger is subject to that a proposal for approval of Payment of distribution consideration(3) Conditions for the Merger Agreement (a special resolution(1)) will be Middle of May, 2021 May, 2021 the Merger approved at the meetings of unitholders of both JRF and MMI
End of the first fiscal period after the Merger August 31, 2021
(1) Such resolution shall be passed with at least a two-thirds majority of the votes of the attending unitholders with the unitholders in attendance holding over half of the units outstanding. (2) MMI will submit a proposal for a revision of the Articles of Incorporation to change the 29th business period, from the period from July 1, 2020 to December 31, 2020 to that from July 1, 2020 to February 28, 2021, to its general meeting of unitholders to be held on October 22, 2020, subject to approvals of the Merger Agreement at the respective general meetings of unitholders of JRF and MMI. The same shall apply hereinafter. (3) An amount equivalent to the cash distribution for the business period of MMI from July 1, 2020 to February 28, 2021 will be paid as the merger consideration. 9 2. Significance of the Merger Environment Changes
COVID-19 is accelerating environment changes
Widespread e-commerce and Mixed use means higher added value Growing needs for living near office Accelerating contraction of rural area ✔ Various types of use head for coexistence and Increase in number of elderly people and economies remote working co-prosperity women who work, and more needs for nursing The decline and outflow of population
Trend of mixed-use by area and Place to offer experience that cannot be Growing needs for consumption near Increase in vacant facilities ✔ gained via e-commerce home Reduction in number of tenants by property Further distinction between online and real Increase in daytime population due to the spread of work from home Urban Commuter-town Suburban
Changes in needs for office floors Accelerating trend of mixed trend of Accelerating
Office A role of offices is changing from a place for work to a place for interaction Decline in demand for office properties located in suburban No change in advantage of Urban Office Office Satellite Office areas Convenient offices remain highly valued as a (Headquarters) (Branches) place for interaction Needs for consumption in office districts Added value Decline in needs for floor to sell product Rise in e-commerce Retail Decline in retail
- properties located in
Properties in favorable locations will by area oruse by property Facilities that can be used for Supermarkets and other increasingly become mixed-use suburban areas Showrooming/ other purposes, including facilities deeply Conversion into a showrooming space or other hands-on services shops, other services, restaurants, engaged in daily living use accelerates offices and hotels Needs for consumption Added value Continued concentration of population in living areas
Residence to urban areas Population inflow into urban areas because of their strengths in social infrastructure More people prefer to live in urban areas Residential area Residential area Growing needs for residence in Urban (Urban Commuter-town Needs for areas where one can work and ） （ ） consume increase
Investment Target of the New Investment Corporation 11 Increase in Mixed-use Properties
Urban Commuter-town
Office District Principal commercial districts Major stations/ Residential stations
Examples of mixed-use by area Akasaka/ Shibuya Omotesando/ Aoyama Tachikawa Through active redevelopment, a number of Mixed-use properties containing offices, A number of mixed-use properties are mixed-use properties which are occupied by residence and retail shops increase as the completed upon redevelopment mainly in the retailers and hotels emerged commercial district has expanded north side of Tachikawa Station
Retail Satellite Office Retail Distribution hub × × KAWASAKI Le FRONT Machinoma Omori Examples of Fulfills a function as a hub of broad area mixed-use distribution of online supermarkets by property
Office Retail × Twin 21 and Nagoya Lucent Tower are occupied by tenants, including cafes and Retail Office Office Retail restaurants and other services for office × × workers and tenants that prefer spaces with a G-Bldg. Daikanyama 02 Osaka YM Bldg. scenic view in upper floors
12 Strengths and Challenges of JRF and MMI
The Merger is the best way to enhance unitholder values of both JRF and MMI
Capability to operate offices with deep Strength Track record of managing operational assets Strength Operational capabilities understanding of market trends
Strong presence as one of the largest holders of Strength Strength Track record of achieving unique external growth retail properties in Japan Capabilities of acquisitions
Challenge Sector-specialized REIT subject to greater limitations Investment targets Challenge Sector-focused REIT subject to greater limitations
Negative impacts on the retail sector in proportion Office leasing market uncertainties in association Challenge Challenge to the popularization of e-commerce Current environment with spreading remote working
Breakthrough by the Merger
Fit to Environment Changes Expand Investment Universe Create the Largest J-REIT
13 MC-UBS Asset Management Capability
Both JRF and MMI have built up a variety of experiences in multiple asset types
Leasing Value Enhancement Area Management ESG
Tenant Relationships Renewal Area Focused Acquisition Front-runner among J-REITs Internal and external growth supported A number of large-scale renewal works Property acquisition focuses on specific The asset manager embarked on ESG by the network of approximately 1,400 with designing space areas to which competitive tenants are efforts from an early stage and signed up tenants attracted, with an aim to enhance to a number of initiatives, as the first of leasing potential in the relevant area J-REITs or its asset manager
Research of Leasing Market Reconstruction/ Floor Expansion/ Analysis of Flow of People Highest-awarded J-REIT Trends of leasing market and rents are Conversion The flow of people is analyzed based on Both of the two investment corporations analyzed through regular information locational information via smartphones, received the highest ESG ratings in the J- Reconstruction, floor expansion by exchange with research firms which is extended to analyses of REIT sector from external ESG rating building an annex building, tenant people’s movements in the area and parties replacement premised on conversion, utilized for leasing etc. have been implemented
G-Square Shibuya MMI GYRE JRF Omotesando/ Harajuku/ JRF MSCI ESG Indices (1) JRF MMI Dogenzaka Aoyama Acquisition with a low Re-acquisition of the Achievement of upside Both are rated as AA, the occupancy rate of 70%. former Esquisse rent revisions through highest rating in the J- Achievement of Omotesando as GYRE, tenant replacement at REIT sector, as of August revenue increase by after reconstruction of 18 properties held in 28, 2020, and selected raising the occupancy the property. the area for MSCI Japan ESG rate and average unit Renovation works in Select Leaders Index, for rent the restaurant floor has which only 8 J-REITs are been completed selected recently
(1) Inclusion of both of the investment corporations in the MSCI Index and their use of MSCI's logo, trademarks, service marks and indices in this document are not intended to constitute sponsorship, advertisement or sales promotion by MSCI or its affiliates for the two investment corporations. MSCI has the exclusive right to use the MSCI Index, and MSCI and the MSCI Index and its logo are trademarks and service marks of MSCI and its affiliates. 14 Fit Ourselves to Environment Changes
Implement internal growth measures beyond asset type by leveraging our capabilities
1 Seek the best use of properties 2 Area Management Examine options of reconstruction and conversion, for Area management in view of synergy effects among tenants of different uses in optimal use of properties free from their traditional uses urban areas in which further increase of mixed-use properties is expected
Consistently positive attitude for tenant replacement and • Increase in value of the KAWASAKI Le FRONT Cube Kawasaki renewal × adjacent land as an office A food court is set up, Plan site by increasing the value aiming to improve convenience of office Plan of a retail property workers in the surrounding area Supermarket at lower GMS near stations in floors and rental residential areas housing at upper floors 3 Enhance tenant relationships Utilize relationships with existing tenants beyond the borders of uses Retail property near Distribution center and stations in residential • Attraction of retail tenants to office properties supermarket Plan areas • Attraction of office tenants to retail properties for showrooming use
Retail stores at lower Urban amusement floors and offices at 4 facility Keep up with changes in needs for offices upper floors Change in the role of offices from a place for work to a place for interaction Differentiate with an ability to attract people, cultivated in retail property management Property adjacent to the Large-scale mixed-use portfolio properties property • Introduction of retailer tenants that can raise value of office buildings Plan • Renewal of common areas for easier gathering and interaction
15 Expand Investment Universe
Enables sustainable external growth in accordance with environment changes
Before merger Post-merger
Promote acquisition of offices in favorable Urban Offices location and high building specifications
Offices Offices in urban areas Examine satellite offices as a new target. Commuter-town Offices However, the target will be limited to those that can also be used as retail space for a while
Prime area Facing high street Located on main streets in major retail areas Retail Major stations Urban retail properties Those that can be turned into mixed-use properties Properties Residential Station Residential Station With supermarkets being the main tenants
Mixed-use Office x Retail Residence x Retail Properties Office x Residence Complex for three or more uses
Located within 30-minute from key business areas Rental houses in urban areas and within 10-minute walk from the nearest station Limited to those with fixed rent, in favorable Others Hotels in urban areas Hotels in urban areas location and highly versatile
New categories
16 Create the Largest J-REIT
Benefitting from advantages of larger asset size
Asset Size of J-REITs (based on (anticipated) acquisition price)(1)
(bn yen) Advantages of larger asset size
1,191.5 ✔ Portfolio diversification 1,132.7 1,053.2 1,031.0 Enhance stability through diversification of properties, tenants and property uses 877.2
745.6 ✔ More flexibility in investment management 696.1 678.9 Enhance growth opportunities through increasing investment management options
282.7 ✔ Higher presence in capital market Increase liquidity of the investment units and exposures in major indices
New Nippon Japan Real Nomura Japan Retail Daiwa Nippon ORIX JREIT MCUBS Investment Building Estate Real Estate Fund House REIT Prologis REIT MidCity Corporation Fund Master Fund
*Please refer to page 42 for the notes to this page. 17 3. Growth Strategy
(Note) The growth strategy is a plan as of the date of this document and it is not guaranteed that such plan will be achieved. Short-to-Mid Term : Build Base for Growth and Improve Profitability
Aim to raise the level of DPU by implementing growth strategies
成長施策 Scheduled refinancing amount for the five fiscal periods Reduction in after the Merger: 120.5bn yen/ Average debt cost(1): 1.1% Latest debt financing of the surviving corporation (JRF) : 4 debt cost Borrowing term of 10 years debt cost of 0.4 ％ Aim to further raise the level of Distribution of Monetize unrealized gains (2) DPU 3 disposition gains Unrealized gains on suburban retail properties : 25.8bn yen
Acquisition with Utilize cash on hand of approx. 30bn yen cash on hand and Remaining borrowing capacity of approx. 25bn yen to reach LTV of 2 45%(3) borrowings
Asset Improve NOI yield after depreciation 1 replacement
*Please refer to page 42 for the notes to this page. 19 Asset Replacement
Further shift into urban properties and diversify asset type
Asset Assets to be Acquired Replacement Assets to be Sold
• Office x Retail (1) Mixed-use • Office x Residence Post-merger Portfolio Suburban Retail Properties • Residence x Retail Properties • Properties with inferior location/profitability • 3 or more purposes Others(2) that fall under the categories of sub assets and secondary core assets of JRF 1 Suburban ％ • Urban offices Mixed-use Retail Offices • Commuter-town offices 12 20 ％ ％ Urban Retail Properties with Office Low Profitability 16 ％ • Properties with low profitability that are unlikely • Rental houses in urban to improve in the future Residence areas Urban Retail • Properties that may be offered in exchange for 51 ％ other properties which requires replacement property to be proposed Retail • Facing high street • Urban retail properties Properties • Residential Station
• Hotels in urban areas Others • New categories
(1) It is based on (anticipated) acquisition price of the New Investment Corporation. (2) Hotel assets are classified into this category. In addition, residential and other new types of assets are classified into this category although that none of them are owned at present. 20 External Growth
Aim to achieve sustainable external growth utilizing own network and sponsor support
Past Track Record Current Pipeline External Growth Opportunities Going Forward(3) Greater potential for external growth by expanding investment Average annual universe and opportunities to utilize sponsor support acquisition amount Preferential negotiation in the past 5 years(1) right(2) New opportunities from expanded investment universe
• Bulk sale of multiple type assets 69.9bn yen/ year Approx. 30bn yen • Mixed-use and residential properties • Mixed-use Approx. 20bn yen JRF 39.1bn yen/ year • Retail Approx. 9bn yen Further use of sponsor support MMI 30.8bn yen/ year • Use of Mitsubishi Corporation Group’s capabilities of complex urban development(4) Acquisition Examples of past complex Development capabilities of Mitsubishi based on own network development of Mitsubishi Corp. Corporation Urban Development (2) in the past 5 years Deals in consideration Consideration of development of large- scale mixed-use property Consideration of development of a new asset category such as Retail Arena 74 Approx. 340bn yen × (acquisition price％ basis) Redevelopment of east Redevelopment of • Office Approx. 200bn yen side of Shinagawa Station Tennozu District Based on own network 74 • Mixed-use Approx. 50bn yen Sponsor support 26％ • UBS Asset Management has extensive experience and track record ％ • Retail Approx. 90bn yen in residential and mixed-use assets globally including Japan, with 75,000 residential units valued at ca. USD 25 billion(5)
*Please refer to page 42 for the notes to this page. 21 Mid-to-Long Term : Execute Various Growth Investments
Aim to further enhance unitholder value on the basis of stable profitability
External Growth Internal Growth Other Growth
Growing asset size/ revenues Improvement of profitability Initiatives within 5% of portfolio through acquisitions through renewal and conversion (Consideration of equity investment or mezzanine loan investment) Acquisition with a plan of Reconstruction/ redevelopment reconstruction/ conversion etc. with assets kept on balance sheet Utilization of IT
Participation in development Differentiation by space-designing Seeking for M&A opportunities opportunities capabilities
Exploring new asset categories
Future Vision: Create virtuous cycle where area value and asset value improve together
22 4. Financial Strategy Financial Strategy
Aim to reduce debt cost by maintaining the strong balance sheet Post-merger Financial Indicators Average loan term Long-term Credit ratings LTV (1) Average debt cost(2) Fixed-interest ratio remaining (3) borrowing ratio(4) Aim to Book value 43.9 maintain/ improve ％ 0.80 4.6 years 98.7 91.6 JRF:AA-(R&I) Appraisal value 38.8 ％ ％ ％ MMI:AA-(JCR) ％ Commitment Line Longest borrowing Maximum amount Contract period period Lender
MUFG Bank, Ltd., Sumitomo Mitsui Trust Bank, Ltd., Mizuho JRF MMI 50bn yen 3 years 5 years ・ ① Bank, Ltd. Total:75bn yen 10bn yen 2 years 3 years Sumitomo Mitsui Banking Corporation ② Largest amount in the J-REITs(5) MUFG Bank, Ltd., Sumitomo Mitsui Trust Bank, Ltd., Mizuho 15bn yen 3 years 3 years (As of end of July 2020) ③ Bank, Ltd.
Borrowing to be Refinanced for the Post-merger Five Fiscal Periods (Long-term Fixed and Investment Corporation Bond Only)
Aug. 2021 Feb. 2022 Aug. 2022 Feb. 2023 Aug. 2023 Period Period Period Period Period Latest Debt Financing of the Surviving (39th) (40th) (41st) (42nd) (43rd) Total/ Average Corporation, JRF (Jul. 2020)
Total Amount 30,250mn yen 21,000mn yen 27,900mn yen 14,500mn yen 26,900mn yen 120,550mn yen Amount 4.3bn yen
Avg. term 7.2 years 7.9 years 7.6 years 8.4 years 7.4 years 7.6 years Borrowing term 10 years Avg. debt cost(6) 0.99 1.11 1.04 1.06 0.90 1.01 Debt cost (7) 0.38 ％ ％ ％ ％ ％ ％ ％
*Please refer to page 42 for the notes to this page. 24 Return to Unitholders
Reserves will be used for maintaining stable DPU
Post-merger Reserve Post-merger Asset Management Fee Structure
Negative goodwill as of August 26 (pro forma)(1) 45,107mn yen The asset management fee structure of the Post-merger reserve (pro forma) 49,653mn yen surviving corporation (JRF) will be used
Asset Management Policy to utilize the reserve Total Distribution 5.65% Fee II × To be used for stabilization of the DPU level Regular reversal of retained earnings for temporary difference Acquisition Fee Acquisition Value 0.8% adjustment (50 years, 100 fiscal periods) × Makeup for temporary revenue decrease due to changes in external Disposition value 0.6% circumstances Disposition Fee *No Disposition Fee shall× be paid in the case of Makeup for temporary revenue decrease due to an exit of large-lot tenant a capital loss from disposition Makeup for temporary revenue decrease due to asset replacement in Appraisal value of assets received which asset sale precedes acquisition Merger Fee Makeup for revenue decrease along with reconstruction, conversion and at merger up to 2.0% × renewal
(1) This is an estimate based on the investment unit price of JRF as of August 26, 2020 and the appraisal value of the properties in MMI’s portfolio as of June 30, 2020 (the end of 28th Period) (market value as of the same date with regard to silent partnership interest). 25 5. Post-Merger Financial Forecast Forecast of Post-merger Operating Results
Aug. 2021 Period (39th) (Forecast) Memo Operating revenue 39,689 mn yen Takes into account the delay in leasing activities caused by COVID-19 Operating expenses 23,025 mn yen Decrease in depreciation and SG&A of MMI due to the Merger Temporary expenses related to merger(1) 1,357 mn yen Merger fee of 1,000 million yen, Merger cost of 357 million yen (NOI: excluding gain on sales of property) 28,027 mn yen Operating income 16,663 mn yen Non-operating revenues - mn yen Non-operating expenses 2,073 mn yen Decrease in cost related to financing, etc. of MMI due to the Merger Ordinary income 14,590 mn yen Extraordinary income 45,107 mn yen Gain on negative goodwill in association with the Merger Net income 59,697 mn yen Addition to reserve of gain on negative goodwill excluding temporary cost in Allocation to reserve 43,750 mn yen association with the Merger Amortization of existing reserve for temporary difference adjustments of JRF on a Reversal of reserve 31 mn yen straight-line basis Total distribution 15,977 mn yen Units outstanding 6,989,091 units Distribution per unit 2,286 yen
Capital expenditure 4,269 mn yen Repair cost 946 mn yen Total 5,216 mn yen
Depreciation 6,502 mn yen
(1) This is the total of merger fees payable to the Asset Manager and expenses related to the Merger including financial advisory fee and other advisory fees payable to professional advisors; the same shall apply hereinafter. 27 Appendix Asset Manager
Mitsubishi Corp.-UBS Realty Inc.
スポンサー Mission and Vision Post-merger Structure
Sponsor “Always create new values, for people, the community and the world” Mission Through real estate investment management, we create new demands in our society and new values that exceed people’s expectations Asset Manager New Division Industrial Division
We strive to be the leading group of professionals, trusted by people, Vision Japan Metropolitan Fund the community and the world Investment Investment Corporation Corporation Support metropolitan Support Japanese industries life in Japan
Track Record Board Members
President & CEO & Representative Director Katsuji Okamoto ✔ 18 years of experience in operating J-REITs Deputy President & Representative Director Naoki Suzuki
Director (full-time) Tadatsugu Matsutani ✔ Operating 3 REITs Director (part-time) Naoshi Ogikubo
Director (part-time) Katsuhisa Sakai ✔ Largest J-REIT AUM of 1.4tn yen(1) Director (part-time) Joe Azelby
Director (part-time) Keiichi Miki ✔ One of the largest buyers of commercial real estate in Japan Director (part-time) Graham Mackie
(1) This is the sum of the acquisition prices of the three investment corporations managed by the asset manager as of the end of July 2020. 29 Forecast of Operating Results Before Merger (JRF)
Aug. 2020 Period (37th) Feb. 2021 Period (38th) (Forecast)(1) (Forecast) Period-on-period change Operating revenue 30,617 mn yen 29,823 mn yen -793 mn yen Gain on sales of property 1,787 mn yen - mn yen -1,787 mn yen Operating expenses 17,154 mn yen 17,475 mn yen +321 mn yen Of which temporary expenses related to merger 198 mn yen 73 mn yen -125 mn yen (NOI: excluding gain on sales of property) 20,443 mn yen 20,928 mn yen +485 mn yen Operating income 13,462 mn yen 12,348 mn yen -1,114 mn yen Non-operating revenues - mn yen - mn yen - mn yen Non-operating expenses 1,716 mn yen 1,648 mn yen -67 mn yen Ordinary income 11,746 mn yen 10,699 mn yen -1,047 mn yen Extraordinary income - mn yen - mn yen - mn yen Net income 11,746 mn yen 10,698 mn yen -1,047 mn yen Allocation to reserve 66 mn yen - mn yen -66 mn yen Reversal of reserve 31 mn yen 1,012 mn yen +981 mn yen Total distribution 11,711 mn yen 11,711 mn yen - mn yen Units outstanding 2,602,483 units 2,602,483 units - units Distribution per unit 4,500 yen 4,500 yen - yen
Capital expenditure 2,853 mn yen 2,363 mn yen -489 mn yen Repair expenses 500 mn yen 585 mn yen +84 mn yen Total 3,354 mn yen 2,949 mn yen -405 mn yen
Depreciation 5,455 mn yen 5,439 mn yen -15 mn yen
(1) Calculated by adding temporary expense related to the Merger to the forecast announced on August 7, 2020. 30 Results and Forecast of Operating Results Before Merger (MMI)
Jun. 2020 Period (28th) Feb. 2021 Period (29th) (Actual) (Forecast)(1) Operating revenue 9,061 mn yen 12,233 mn yen Operating expenses 4,785 mn yen 6,910 mn yen (NOI: excluding gain on sales of property) 6,318 mn yen 8,162 mn yen Operating income 4,276 mn yen 5,322 mn yen Non-operating revenues 3 mn yen - mn yen Non-operating expenses 619 mn yen 941 mn yen Of which temporary expenses related to merger - mn yen 142 mn yen Ordinary income 3,660 mn yen 4,380 mn yen Extraordinary income 10 mn yen - mn yen Extraordinary loss 10 mn yen - mn yen Net income 3,657 mn yen 4,379 mn yen Allocation to reserve - mn yen - mn yen Reversal of reserve - mn yen 998 mn yen Total distribution 3,657 mn yen 5,377 mn yen Units outstanding 1,784,125 units 1,784,125 units Distribution per unit 2,049 yen 3,014 yen (29th: Merger consideration per unit)
Capital expenditure 1,002 mn yen 1,433 mn yen Repair expenses 300 mn yen 571 mn yen Total 1,303 mn yen 2,004 mn yen
Depreciation 1,267 mn yen 1,760 mn yen
(1) Based on the assumption of 8-month business period from July 1, 2020 to February 28, 2021. 31 Structure of the Merged Investment Corporation
Asset Manager Investment Corporation Asset Custodian/ General Administrator/ Mitsubishi Corp.-UBS Realty (a) Special Accounts Inc. Japan Metropolitan Fund Administrator Investment Corporation (b) Mitsubishi UFJ Trust and (51% Owned) General Meeting of Banking Corporation Specified Affiliated Unitholders Company General Operations Agent of (Parent Company of the Board of Directors Asset Manager) Investment Corporation Bond Executive Director: (c) Mitsubishi Corporation Shuichi Namba MUFG Bank, Ltd. Supervisory Director: Mizuho Bank, Ltd. Masahiko Nishida Supervisory Director: Masaharu Usuki
Independent Auditor Tax Administrator (d) PricewaterhouseCoopers PwC Tax Japan Arata LLC
Name of contracts (a) Asset Management Agreement/ Trademark License Agreement (b) Asset Custodian Contract/ General Administrative Services Agreement/ Account Administrative Service Agreement/ Special Accounts Administration Agreement (c) Fiscal Agency Agreement/ Administrative Services Agreement Related to Principal and Interest Payment (d) Tax Service Agreement
32 Overview of the Two Investment Corporations
Japan Retail Fund Investment Corporation (JRF) MCUBS MidCity Investment Corporation (MMI)
Representative (Executive director) Shuichi Namba Katsuhiro Tsuchiya
Haruo Kitamura Masahiko Nishida Supervisory director Osamu Ito Masaharu Usuki Kyoko Nagata
TSE code 8953 3227
Date of fund listing March 12, 2002 August 29, 2006
Fiscal period Six months ending in February and August Six months ending in June and December
Units outstanding(1) 2,618,017 units 1,784,125 units
Total equity(1) 411,878 mn yen 151,540 mn yen
Asset Manager Mitsubishi Corp.-UBS Realty Inc. Mitsubishi Corp.-UBS Realty Inc.
Asset custodian Mitsubishi UFJ Trust and Banking Corporation Sumitomo Mitsui Trust Bank, Ltd.
Unitholder registry administrator Mitsubishi UFJ Trust and Banking Corporation Mitsubishi UFJ Trust and Banking Corporation
General administrator of accounting, etc. Mitsubishi UFJ Trust and Banking Corporation Sumitomo Mitsui Trust Bank, Ltd.
General operations agent of Investment MUFG Bank, Ltd. Mizuho Bank, Ltd. Corporation bond
(1) The figures are as of the end of the most recent fiscal period. 33 Progress and Growth of the Two Investment Corporations (JRF)
Strengthen Shifting focus on urban properties Expand asset size, with a focus on Resume external the balance sheet Acquisition of urban properties and suburban-type ML properties growth Merger disposition of suburban properties
(bn yen) Feb. 2020 Period (36th) 1,000 877.2 bn yen 800
600 Asset size (based on 400 acquisition price) 200
0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (year)
Feb. 2020 Period (yen) (36th) 5,000 4,500 yen
4,000
Distribution 3,000 per unit(1) 2,000
1,000
0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (year)
(1) JRF implemented a four-for-one unit split on March 1, 2010, the figures from the Aug. 2002 (1st) Period to the Feb. 2010 (16th) Period are calculated by dividing the actual amount of distribution by four respectively. 34 Progress and Growth of the Two Investment Corporations (MMI)
Before participation of External growth via focused investment in three metropolitan areas and four public offerings MC-UBS Group Improvement of portfolio profitability through internal growth, strengthening financial soundness and strategic as a sponsor asset replacement
(bn yen) Jun. 2020 Period (28th) Participation of bn yen 300 MC-UBS Group 282.7 as a sponsor
200 Asset size(1) (based on acquisition price) 100
0 (year) 2006 2014 2015 2016 2017 2018 2019 2020
(yen) Gain on sales of property etc. 3,000 Participation of Jun. 2020 Period MC-UBS Group (28th) as a sponsor 2,049 yen 2,000 Distribution per unit(2) 1,000
0 (year) 2006 2014 2015 2016 2017 2018 2019 2020
(1) Excluding the equity interest in a silent partnership (tokumei kumiai), the underlying asset of which is Nagoya Lucent Tower. (2) As MMI implemented a five-for-one unit split on January 1, 2018, the figures from the Aug. 2002 (1st) Period to the Dec. 2017 (23rd) Period are calculated by dividing the actual amount of distribution by five respectively. 35 Portfolio List
Japan Retail Fund Investment Corporation
(Anticipated) Investment (Anticipated) Investment Leasable Space Occupancy No. of Leasable Space Occupancy No. of Area Property Name Location Acquisition Price Ratio Area Property Name Location Acquisition Price Ratio (1) (1) (1) (m²)(1) Rate(1) Tenants(1) (m²) Rate Tenants (million yen) (pro forma) (million yen) (pro forma) Core Core G-Bldg. Minami Aoyama 02 Minato-ku, Tokyo 5,350 0.4% 1,529.15 100.0% 4 Machinoma Omori Ota-ku, Tokyo 9,100 0.8% 8,963.39 95.9% 36 G-Bldg. Daikanyama 01 Shibuya-ku, Tokyo 1,235 0.1% 599.79 100.0% 1 G-Bldg. Daikanyama 02 Shibuya-ku, Tokyo 3,600 0.3% 2,166.69 79.4% 8 GYRE (2) Shibuya-ku, Tokyo 22,712 1.9% 4,828.12 100.0% 15 Abiko Shopping Plaza Abiko-shi, Chiba 10,322 0.9% 41,293.90 100.0% 58 Bic Camera Tachikawa Tachikawa-shi, Tokyo 11,920 1.0% 20,983.43 100.0% 2 Ito-Yokado Yabashira Matsudo-shi, Chiba 1,616 0.1% 21,308.78 100.0% 1 G-Bldg. Kita Aoyama 01 Minato-ku, Tokyo 989 0.1% 492.69 100.0% 2 Ito-Yokado Tsunashima Yokohama-shi, Kanagawa 5,000 0.4% 16,549.50 100.0% 1 Tokyo AEON Itabashi Shopping Center Itabashi-ku, Tokyo 12,411 1.0% 72,748.34 100.0% 1 G-Bldg. Jiyugaoka 01 Meguro-ku, Tokyo 3,093 0.3% 2,274.60 59.7% 2 area Cheers Ginza Chuo-ku, Tokyo 4,200 0.4% 1,686.58 100.0% 10 SEIYU Hibarigaoka Nishi Tokyo-shi, Tokyo 6,100 0.5% 19,070.88 100.0% 1 G-Bldg. Jingumae 06 Shibuya-ku, Tokyo 2,360 0.2% 670.42 100.0% 4 Round1 Machida Machida-shi, Tokyo 2,450 0.2% 6,801.89 100.0% 1 G-Bldg. Jingumae 01 Shibuya-ku, Tokyo 3,400 0.3% 555.75 100.0% 2 Round1 Stadium Itabashi Itabashi-ku, Tokyo 2,400 0.2% 14,828.74 100.0% 1 G-Bldg. Jingumae 02 Shibuya-ku, Tokyo 2,233 0.2% 426.29 100.0% 3 Summit Store Nakano Minamidai Nakano-ku, Tokyo 3,100 0.3% 3,536.50 100.0% 1 G-Bldg. Minami Aoyama 01 Minato-ku, Tokyo 10,085 0.8% 1,592.90 100.0% 3 Colline Bajikouen Setagaya-ku, Tokyo 3,100 0.3% 5,368.02 100.0% 10 La Porte Aoyama Shibuya-ku, Tokyo 9,400 0.8% 4,158.53 96.9% 23 Kawaramachi OPA Kyoto-shi, Kyoto 18,500 1.6% 18,848.20 100.0% 1 G-Bldg. Shinjuku 01 Shinjyuku-ku, Tokyo 6,600 0.6% 1,093.67 100.0% 1 G-Bldg. Shinsaibashi 01 Osaka-shi, Osaka 1,582 0.1% 886.46 100.0% 2 G-Bldg. Jingumae 03 Shibuya-ku, Tokyo 5,520 0.5% 1,676.87 100.0% 8 Round1 Stadium Sennichimae Osaka-shi, Osaka 8,000 0.7% 1,711.63 100.0% 1 G-Bldg. Minami Ikebukuro 01 Toshima-ku, Tokyo 5,800 0.5% 5,066.06 100.0% 8 (Land with leasehold interest) Urban Terrace Jingumae Shibuya-ku, Tokyo 2,797 0.2% 1,719.19 100.0% 2 G-Bldg. Shinsaibashi 02 Osaka-shi, Osaka 4,380 0.4% 948.72 100.0% 1 Arkangel Daikanyama Meguro-ku Round1 Kyoto Kawaramachi Kyoto-shi, Kyoto 2,800 0.2% 8,821.66 100.0% 1 1,000 0.1% 904.04 100.0% 1 (Land with leasehold interest) (Shibuya-ku), Tokyo G-Bldg. Shinsaibashi 03 Osaka-shi, Osaka 30,500 2.6% 5,319.29 100.0% 4 G-Bldg. Omotesando 01 Shibuya-ku, Tokyo 5,850 0.5% 1,508.03 100.0% 1 EDION Kyobashi Tokyo Osaka-shi, Osaka 5,640 0.5% 4,307.16 100.0% 1 Round1 Yokohama Station West Yokohama-shi, Kanagawa 3,930 0.3% 6,560.09 100.0% 1 (Land with leasehold interest) area G-Bldg. Sangenjaya 01 Setagaya-ku, Tokyo 3,725 0.3% 3,471.52 100.0% 3 G-Bldg. Abeno 01 Osaka-shi, Osaka 4,285 0.4% 4,757.35 100.0% 10 G-Bldg. Ginza 01 Chuo-ku, Tokyo 5,500 0.5% 1,610.54 100.0% 6 G-Bldg. Umeda 01 Osaka-shi, Osaka 9,483 0.8% 3,529.51 100.0% 12 KAWASAKI Le FRONT Kawasaki-shi, Kanagawa 30,000 2.5% 49,222.44 100.0% 67 G-Bldg. Shinsaibashi 04 Osaka-shi, Osaka 3,170 0.3% 1,610.63 100.0% 5 G-Bldg. Shibuya 01 Shibuya-ku, Tokyo 3,230 0.3% 1,630.03 100.0% 2 Osaka G-Bldg. Kyoto Kawaramachi 01 Kyoto-shi, Kyoto 2,180 0.2% 2,398.34 100.0% 4 area G-Bldg. Omotesando 02 Shibuya-ku, Tokyo 17,705 1.5% 5,555.65 100.0% 6 G-Bldg. Midosuji 01 Osaka-shi, Osaka 9,975 0.8% 2,446.00 100.0% 2 G-Bldg. Kichijoji 01 Musashino-shi, Tokyo 3,460 0.3% 1,718.21 100.0% 1 Round1 Sannomiya Station Kobe-shi, Hyogo 3,200 0.3% 10,054.52 100.0% 1 CUTE CUBE HARAJUKU Shibuya-ku, Tokyo 8,520 0.7% 1,428.55 100.0% 10 G-Bldg. Kobe Sannomiya 01 Kobe-shi, Hyogo 3,000 0.3% 3,750.38 100.0% 5 G-Bldg. Ueno 01 Taito-ku, Tokyo 3,320 0.3% 1,471.80 100.0% 1 G-Bldg. Midosuji 02 Osaka-shi, Osaka 15,000 1.3% 1,428.28 100.0% 1 G-Bldg.Takadanobaba 01 Shinjyuku-ku, Tokyo 5,945 0.5% 3,569.20 100.0% 13 Kyoto Family Kyoto-shi, Kyoto 5,340 0.4% 19,639.09 100.0% 63 G-Bldg. Akihabara 01 Chiyoda-ku, Tokyo 4,980 0.4% 2,701.99 100.0% 1 AEON MALL Tsurumi Ryokuchi Osaka-shi, Osaka 29,902 2.5% 138,538.63 100.0% 1 G-Bldg. Akihabara 02 Chiyoda-ku, Tokyo 2,500 0.2% 1,037.33 100.0% 1 AEON MALL Itami Itami-shi, Hyogo 21,488 1.8% 157,904.26 100.0% 1 Life Shimodera G-Bldg. Kichijoji 02 Musashino-shi, Tokyo 15,300 1.3% 8,838.79 100.0% 1 Osaka-shi, Osaka 1,683 0.1% 4,344.18 100.0% 1 (Land with leasehold interest) G-Bldg. Ginza Chuo-Dori 01 Chuo-ku, Tokyo 13,000 1.1% 3,141.07 100.0% 9 Life Taiheiji MARINE & WALK YOKOHAMA Yokohama-shi, Kanagawa 11,300 0.9% 8,347.69 98.5% 25 Higashi Osaka-shi, Osaka 1,282 0.1% 3,898.01 100.0% 1 (Land with leasehold interest) G-Bldg. Jingumae 07 Shibuya-ku, Tokyo 1,950 0.2% 373.12 100.0% 1 KAMISHIN PLAZA Osaka-shi, Osaka 3,900 0.3% 12,008.81 89.0% 38 G-Bldg. Minami Aoyama 03 Minato-ku, Tokyo 12,200 1.0% 1,373.46 74.7% 5 m-city Toyonaka Toyonaka-shi, Osaka 5,570 0.5% 33,301.93 100.0% 1 G-Bldg. Jingumae 08 Shibuya-ku, Tokyo 2,490 0.2% 802.40 100.0% 3 Round1 Stadium Kawasaki Daishi Kawasaki-shi, Kanagawa 2,370 0.2% 13,559.17 100.0% 1 G-Bldg. Jingumae 09 Shibuya-ku, Tokyo 7,000 0.6% 1,127.06 85.3% 5
(1) For “Leasable Space”, “Occupancy Rate” and “No. of Tenants”, the figures are as of the end of June, 2020. (2) For “GYRE”, its acquisition price includes the initially-held land with leasehold and the property additionally acquired. 36 Portfolio List
Japan Retail Fund Investment Corporation MCUBS MidCity Investment Corporation (Anticipated) Investment Investment Leasable Space Occupancy No. of Appraisal Value Leasable Space Occupancy No. of Area Property Name Location Acquisition Price Ratio Area Property Name Location Ratio (1) (1) (1) (m²)(1) Rate(1) Tenants(1) (million yen)(1) (m²) Rate Tenants (million yen) (pro forma) (pro forma) Core Sumitomo Fudosan Ueno Bldg. No.6 Taito-ku, Tokyo 8,690 0.7% 6,858.16 100.0% 2 G-Bldg. Nagoya Sakae 01 Nagoya-shi, Aichi 1,900 0.2% 794.02 24.8% 1 G-Square Shibuya Dogenzaka Shibuya-ku, Tokyo 17,000 1.4% 5,051.06 100.0% 9 AEON Yagoto Nagoya-shi, Aichi 3,698 0.3% 63,702.48 100.0% 1 Nagoya Shibuya Sakuragaoka Square Shibuya-ku, Tokyo 19,700 1.7% 6,379.66 100.0% 4 mozo wonder city Nagoya-shi, Aichi 55,480 4.7% 86,526.78 100.0% 219 area Yokohama Creation Square Kanagawa-ku, Yokohama 8,250 0.7% 12,704.18 99.2% 43 Valor Kachigawa Kasugai-shi, Aichi 6,350 0.5% 20,509.10 100.0% 1 (Land with leasehold interest) Cube Kawasaki Kawasaki-ku, Kawasaki 23,600 2.0% 24,494.06 100.0% 10 Round1 Hiroshima Hiroshima-shi, Hiroshima 2,970 0.2% 9,890.63 100.0% 1 Higashi-Nihombashi Green Bldg. Chuo-ku, Tokyo 3,200 0.3% 3,254.77 100.0% 7 DFS T GALLERIA OKINAWA Naha-shi, Okinawa 15,600 1.3% 42,088.14 100.0% 1 Sasazuka Center Bldg. Shibuya-ku, Tokyo 9,310 0.8% 8,240.30 100.0% 9 G-Bldg. Sendai Ichibancho 01 Sendai-shi, Miyagi 4,320 0.4% 2,387.17 100.0% 1 Tokyo USC Bldg. Koto-ku, Tokyo 11,500 1.0% 12,487.73 93.9% 9 G-Bldg. Naha-shintoshin 01 Naha-shi, Okinawa 5,650 0.5% Not disclosed (2) 100.0% 2 area Others Yoshiyasu Kanda Bldg. Chiyoda-ku, Tokyo 4,250 0.4% 3,149.39 100.0% 7 G-Bldg. Tenjin Nishi-dori 01 Fukuoka-shi, Fukuoka 4,850 0.4% 2,667.42 88.8% 7 TOYOTA MOBILITY SERVICE Bldg. Chuo-ku, Tokyo 10,400 0.9% 6,123.81 100.0% 1 G-Bldg. Tenjin Nishi-dori 02 (3) Fukuoka-shi, Fukuoka 5,000 0.4% 1,496.56 100.0% 1 M-City Akasaka 1-chome Bldg. Minato-ku, Tokyo 4,470 0.4% 2,550.44 100.0% 12 AEON Naha Shopping Center Naha-shi, Okinawa 10,830 0.9% 79,090.48 100.0% 1 AEON MALL Sapporo Hassamu Sapporo-shi, Hokkaido 18,818 1.6% 102,162.16 100.0% 1 Yokohama i-land Tower Naka-ku, Yokohama 23,900 2.0% 25,460.50 100.0% 7 Secondary core M-City Edogawabashi Bldg. Bunkyo-ku, Tokyo 4,240 0.4% 3,472.70 100.0% 2 Tokyo AEON MALL Musashi Murayama Musashimurayama-shi, Tokyo 30,600 2.6% 137,466.97 100.0% 1 East Square Tokyo Koto-ku, Tokyo 9,760 0.8% 12,208.42 77.5% 12 area m-city Kashiwa Kashiwa-shi, Chiba 5,520 0.5% 20,437.36 100.0% 1 AEON MALL Tsudanuma Narashino-shi, Chiba 29,000 2.4% 101,210.44 100.0% 1 Osaka Ario Otori Sakai-shi, Osaka 19,040 1.6% 95,135.36 100.0% 1 Hotel Vista Premio Tokyo Minato-ku, Tokyo 11,000 0.9% 4,236.46 100.0% 2 area AEON MALL Kobe Kita Kobe-shi, Hyogo 10,920 0.9% 128,050.62 100.0% 1 Twin 21 Chuo-ku, Osaka 60,300 5.1% 82,304.82 98.0% 103 Nara Family Nara-shi, Nara 34,875 2.9% 82,927.89 99.2% 113 Chuo-ku, Osaka 2,670 0.2% 4,277.63 100.0% 21 Others Oyama Yuen Harvest Walk Oyama-shi, Tochigi 10,709 0.9% 59,535.10 98.5% 65 MID Imabashi Bldg. Tecc Land Fukuoka Shime Honten Kasuya-gun, Fukuoka 4,150 0.3% Not disclosed (2) 100.0% 1 Kitahama MID Bldg. Chuo-ku, Osaka 11,500 1.0% 10,189.49 100.0% 10 Osaka Sub MID Nishihommachi Bldg. Nishi-ku, Osaka 2,600 0.2% 3,881.74 100.0% 18 area AEON MALL Yamato Yamato-shi, Kanagawa 16,823 1.4% 85,226.68 100.0% 1 Higobashi MID Bldg. Nishi-ku, Osaka 4,400 0.4% 4,655.57 100.0% 12 Higashi-Totsuka Aurora City Yokohama-shi, Kanagawa 50,500 4.2% 109,355.90 100.0% 5 Tokyo Osaka YM Bldg. Fukushima-ku, Osaka 8,180 0.7% 9,952.88 100.0% 28 area Ito-Yokado Yotsukaido Yotsukaido-shi, Chiba 13,744 1.2% 59,762.30 100.0% 2 Konami Sports Club Kyobashi Miyakojima-ku, Osaka 3,430 0.3% 9,586.26 100.0% 1 Makuhari Plaza Chiba-shi, Chiba 5,700 0.5% 24,505.37 100.0% 5 Sendai Capital Tower Aoba-ku, Sendai 6,800 0.6% 12,999.80 95.2% 75 AEON Takatsuki Takatsuki-shi, Osaka 11,700 1.0% 77,267.23 100.0% 1 Others Hakata-ku, Fukuoka 4,560 0.4% 5,554.91 100.0% 2 Life Kishibe Dormy Inn Hakata Gion Suita-shi, Osaka 1,910 0.2% 5,516.61 100.0% 1 (Land with leasehold interest)
Osaka Izumisano Shofudai MMI Total/Average 25 Properties 302,710 381,285.18 98.5% 407 Izumisano-shi, Osaka 2,625 0.2% 44,009.52 100.0% 2 area (Land with leasehold interest) Sakai-shi, Osaka 1,750 0.1% 17,521.46 100.0% 1 Acquisition Price Round1 Stadium Sakai Chuo Kanjyo Area Property Name Location (million yen) pivo Izumi Chuo Izumi-shi, Osaka 6,000 0.5% 21,182.94 100.0% 17 Silent partnership interest related to office building Round1 Stadium Takatsuki Takatsuki-shi, Osaka 2,080 0.2% 19,767.64 100.0% 1 Nagoya AEON MALL Sapporo Naebo Sapporo-shi, Hokkaido 9,260 0.8% 74,625.52 100.0% 1 Nagoya Lucent Tower Nishi-ku, Nagoya 4,919 Others area MrMax Nagasaki Nagasaki-shi, Nagasaki 2,475 0.2% 12,115.09 100.0% 2
JRF Total/Average 102 Properties 888,884 2,308,120.39 99.7% 989
(1) For “Leasable Space”, “Occupancy Rate”, “No. of Tenants” and “Appraisal Value”, the figures are as of the end of June, 2020. (2) Not disclosed because consent from tenants has not been obtained. (3) To be acquired on August 31, 2020. 37 Post-merger Financial Data
Overview of Borrowings (as of Aug. 28, 2020) Maturity Ladder Average Average (as of Aug. 28, 2020) Balance(1) Average debt (mn yen) borrowing remaining (mn yen) cost(2) 80,000 Commitment line: 75.0bn yen term(2) period (2) 70,000 Short-term 7,000 0.5 years 0.1 years 0.19% Short-term borrowing 60,000 Long-term 479,200 8.3 years 4.7 years 0.77% Long-term borrowing 50,000 Investment Investment corporation bond 52,500 8.2 years 4.1 years 0.72% Corporation Bond 40,000 1,500 Green bond 7,000 30,000 2,000 Total 538,700 8.2 years 4.6 years 0.76% 6,000 9,500 4,000 30,575 7,000 8,000 20,000 38,250 7,500 24,150 28,500 31,975 25,850 28,800 (3) 30,800 25,700 21,000 14,400 Status of Lenders (as of Aug. 28, 2020) 10,000 24,400 18,900 25,700 17,050 21,350 22,850 7,000 19,800 12,900 16,250 Balance 0 Lender Proportion (mn yen) Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. MUFG Bank, Ltd. 149,217 27.7% 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Sumitomo Mitsui Banking Corporation 68,500 12.7% Credit Ratings (as of Aug. 28, 2020) Sumitomo Mitsui Trust Bank, Limited 59,509 11.0% JRF MMI Development Bank of Japan, Inc. 57,475 10.7% Credit rating agency Issuer rating Issuer rating Mizuho Bank, Ltd. 40,400 7.5% Rating and Investment Information, Inc.(R&I) AA- A+ Shinsei Bank, Limited 14,500 2.7% (Stable) (Stable) Resona Bank, Limited 13,700 2.5% (4) Japan Credit Rating Agency, Ltd. (JCR) AA- (Stable) The Bank of Fukuoka, Ltd. 11,550 2.1% (5) S&P Global Rating (S&P) A Shinkin Central Bank 10,200 1.9% (Stable) Others 51,200 9.5% Moody's Investors Service, Inc. (Moody’s) A3 (Negative) Investment corporation bond 52,500 9.7% (4) It is a long-term issuer rating. Total 538,700 100% (5) It is a long-term issuer rating. Further, JRF is also rated A-1 for a short-term issuer rating.
(1) The figures are calculated by aggregating the amount of interest-bearing debt of JRF and MMI as of the date of this document. (2) The figures are calculated as weighted average based on the amount of interest-bearing debt of JRF and MMI as of the date of this document. (3) The figures are calculated based on the amount of interest-bearing debt of JRF and MMI as of the date of this document. 38 ESG Efforts and Evaluations
Award from External Parties Efforts by the Asset Manager
GRESB • Both JRF and MMI have achieved the highest ranking of Green Star Introduced a sustainability committee and Chief Sustainability Officer • JRF was selected as Asia Retail Sector Leader in 2018 To reinforce a system for promotion of sustainability, newly organized a JRF MMI “Sustainability Committee”
Real Estate Green Star Green Star Introduced Chief Sustainability Officer (CSO), and appointed Deputy President & Assessment (5 consecutive years) (4 consecutive years) Representative Director of MCUBS to the role Rating ★★★★ ★★★★★ Public A A Disclosure (3 consecutive years) (3 consecutive years) Conducted a joint ESG conference with the three REITs
• JRF is the first participant among J-REITs since 2016 CDP Climate Conducted an ESG conference with cooperation Change Initiative • JRF received a score “B”, two ranks better than the previous year of the three REITs that are managed by the 2016 2017 2018 2019 Asset Manager
Score C C C B Many institutional investors and sell-side analysts attended the event
MSCI ESG Rating(1) • Both JRF and MMI are rated as AA, the highest among J-REITs Published ESG Report
JRF MMI In order to share MCUBS Group’s basic idea Rating AA AA and activities of ESG with the stakeholders, published ESG Report, which concisely covers ESG activities of the whole group Inclusion into MSCI Japan ESG Select Leaders Index
• Both JRF and MMI are selected • 8 J-REITs are selected • GPIF engages in passive investment tracking this index
(1) Inclusion of both of the investment corporations in the MSCI Index and their use of MSCI's logo, trademarks, service marks and indices in this document are not intended to constitute sponsorship, advertisement or sales promotion by MSCI or its affiliates for the two investment corporations. MSCI has the exclusive right to use the MSCI Index, and MSCI and the MSCI Index and its logo are trademarks and service marks of MSCI and its affiliates. 39 ESG Approvals and Initiatives
Environmental Approvals (As of August 28, 2020) Initiatives Supported by Asset Manager
Principles for Responsible Investment JRF MMI (PRI) Montreal Carbon Pledge
1 property ★★★★★ 7 properties 3 properties Signatory since Signatory since ★★★★ August 2013 September, 2015 7 properties ★★★ First as J-REIT asset manager First as J-REIT asset manager DBJ Green Building 6 properties ★★ United Nations Environment Certification 2 properties ★ Programme Finance Initiative United Nations Global Compact (1) Total 23 properties 3 properties (UNEP FI) (UNGC)
JRF MMI Signatory since October 2016 Signatory since October 2016 S 16 properties First as J-REIT asset manager First J-REIT as asset manager A 2 properties 2 properties B 3 properties CASBEE ＋ Principles for Financial Action toward a For Real Estate For Real Estate Sustainable Society (Principles for Task Force on Climate-related 18 properties 5 properties For Wellness Office Total Financial Action for the 21st Century) Financial Disclosures (TCFD) For Wellness 1 property Office Signatory since June 2013 Endorsement since August 2019 JRF MMI
1 property ★★★★ Japan Climate Initiative 1 property BELS Certification ★★★ 4 properties Joined since May 2020 ★★ Total 1 property 5 properties
(1) Mitsubishi Corp.-UBS Realty Inc. has supported the Corporate Responsibility Initiative of the United Nations Global Compact and its principles in the areas of human rights, labor, environment, and anti-corruption since 2016. 40 Note
P.3 (1) It is based on the comparison between the total acquisition price stated in the financial information of respective investment corporations as of July 31, 2020 (as of the end of the most recent fiscal period) and the estimated value which are the sum of total acquisition price of Japan Retail Fund Investment Corporation (“JRF”) as of July 31, 2020, anticipated acquisition price of the asset anticipated to be acquired which was announced in “Notice Concerning Acquisition of Trust Beneficiary Right in Real Estate in Japan (G-Bldg. Tenjin Nishi-dori 02)” dated August 26, 2020, and the appraisal values of MCUBS MidCity Investment Corporation (“MMI”) as of June 30, 2020. Such value may be different from the actual asset size (based on acquisition price) of the New Investment Corporation as of the effective date of the Merger, and it is not guaranteed that the asset size of the New Investment Corporation will be the largest among J-REITs as of the effective date of the Merger. The total of appraisal values of MMI is adopted to calculate the asset size of the New Investment Corporation after the Merger, as JRF will succeed the MMI assets at market value, based on the purchase accounting method for accounting purposes. (2) The New Investment Corporation will not acquire any new industrial real estate properties which are investment target of Industrial & Infrastructure Fund Investment Corporation. The same applies hereinafter.
P.5 (1) It means “as of March 12, 2002” for the number of properties and asset size, “as of the Aug. 2002 (1st) Period” for DPU, or “as of the end of the Aug. 2002 (1st) Period” for NAV per unit. (2) It means (The end of) the Feb. 2020 (36th) Period for JRF and (The end of) the Jun. 2020 (28th) Period for MMI. (3) It means the total of acquisition price. (4) As JRF implemented a four-for-one unit split on March 1, 2010, the figure as of listing (the Aug. 2002 (1st) Period), is calculated by dividing the actual figure of DPU and NAV per unit by four as the split had not taken place by that time. (5) (Net assets + Unrealized gain or loss – Total distribution (to be) paid) / Units outstanding (rounded down the figure less than 100 yen) (6) It means “as of April 22, 2015” for the number of properties and asset size, “as of the Dec. 2014 (17th) Period” for DPU or “as of the end of the Dec. 2014 (17th) Period” for NAV per unit, which are before Mitsubishi Corp.-UBS Realty Inc. acquired 65% shares in MID REIT Management Co., Ltd. (7) It means the total of acquisition price, excluding the equity interest in a silent partnership (tokumei kumiai), the underlying asset of which is Nagoya Lucent Tower. (8) As MMI implemented a five-for-one unit split on January 1, 2018, the figure before MC-UBS Group participation (the Dec. 2014 (17th) Period) is calculated by dividing the actual figure of DPU and NAV per unit by five as the split had not taken place by that time.
P.6 (1) The figure is calculated by dividing the total actual or estimated annual NOI by the asset size (based on (anticipated) acquisition price). (2) The figure is calculated by subtracting actual or estimated annual depreciation from the total actual or estimated annual NOI and dividing it by the asset size (based on (anticipated) acquisition price). (3) (Net Asset + Unrealized Gain or Loss - Total Distribution (to be) Paid) / Units Outstanding (4) Net Asset / Units Outstanding (5) Estimate As of the End of August 2020 of Japan Retail Fund Investment Corporation • Asset size (based on (anticipated) acquisition price): The figure is the total of acquisition price of the properties in the portfolio as of the end of Feb. 2020 (36th) Period, reflecting the acquisitions and dispositions of properties from March 1, 2020 to the date of this document, and adding the anticipated acquisition price of G-Bldg. Tenjin Nishi-dori 02, which is to be acquired as of August 31, 2020. The same shall apply hereinafter. • Number of properties: The figure is the number of properties in the portfolio as of the end of Feb. 2020 (36th) Period, reflecting the acquisitions and dispositions of properties from March 1, 2020 to the date of this document, and adding G-Bldg. Tenjin Nishi-dori 02, which is to be acquired as of August 31, 2020. • NOI yield: The figure is calculated by dividing the total of annualized actual NOI for the Feb. 2020 (36th) Period of the properties held in the portfolio from the end of Feb. 2020 (36th) Period to the date of this document (for KAWASAKI Le Front, estimated NOI after the renewal) and estimated annual NOI of the properties acquired or to be acquired from March 1, 2020 to August 31, 2020 as of each acquisition, by the asset size (based on (anticipated) acquisition price). • NOI yield after depreciation: The figure is calculated by dividing the total of annualized figures calculated by deducting depreciation expenses for the Feb. 2020 (36th) Period from actual NOI of the properties held in the portfolio from the end of Feb. 2020 (36th) Period to the date of this document (for KAWASAKI Le Front, an estimate after the renewal) and figures calculated by deducting estimated annual depreciation expenses from estimated annual NOI of the properties acquired or to be acquired from March 1, 2020 to August 31, 2020 as of each acquisition, by the asset size (based on (anticipated) acquisition price). • Unrealized gain or loss: The figure is calculated by deducting the unrealized gain or loss of the property disposed of on March 2, 2020 and then adding the figures calculated by deducting (anticipated) acquisition price from appraisal value from respective properties acquired or to be acquired from March 1, 2020 to August 31, 2020 to the unrealized gain or loss as of the end of the Feb. 2020 (36th) Period (calculated by deducting book value from appraisal value; the same shall apply hereinafter). • LTV: The figure is calculated by dividing the total of interest-bearing debt as of the date of this document by the estimated total assets as of the end of the Aug. 2020 (37th) Period. • Interest-bearing debt: The figure is the total of interest-bearing debt as of the date of this document. Any new borrowing or issuance of investment corporation bonds is not scheduled by August 31, 2020. • Rating: indicating (long-term) issuer ratings as of the date of this document. • NAV per unit: The figure is calculated by dividing the figure calculated by adding the unrealized gain or loss to the net assets as of the end of the Feb. 2020 (36th) Period, from which the total acquisition value of own investment units cancelled as of August 19, 2020 and estimated total distribution for the Aug. 2020 (37th) Period were deducted, by the total units outstanding as of the date of this document. • Book value per: The figure is calculated by dividing the figure calculated by deducting the total acquisition value of own investment units cancelled as of August 19, 2020 from the net assets as of the end of the Feb. 2020 (36th) Period, by the total units outstanding as of the date of this document. (6) Estimate As of the End of June 2020 of MCUBS MidCity Investment Corporation • The portfolio does not include the silent partnership interest in Nagoya Lucent Tower and the other indicators are calculated by the methods similar to those applied to JRF. (7) Assumption of New Investment Corporation (Japan Metropolitan Fund Investment Corporation) as of March 1, 2021: • Asset size (based on (anticipated) acquisition price): the asset size of the portfolio of the New Investment Corporation is represented by the sum of the total of (anticipated) acquisition price of the properties in JRF’s portfolio as of August 31, 2020 and the total of appraisal value of the properties in MMI’s portfolio as of June 30, 2020, as JRF, an acquiring investment corporation, will succeed assets of MMI, an investment corporation being acquired, at market value, subject to the purchase accounting method. • NOI yield: The figure is calculated by dividing the total of actual or estimated annual NOI by the asset size (based on (anticipated) acquisition price); the acquisition price of MMI’s assets used for calculation of NOI yield of the portfolio of the New Investment Corporation are based on their appraisal value as of June 30, 2020. • NOI yield after depreciation: The figure is calculated by dividing the figure calculated by deducting actual or estimated annual depreciation expenses from the total of actual or estimated annual NOI, by the asset size (based on (anticipated) acquisition price); the acquisition price of MMI’s assets used for calculation of NOI yield of the portfolio of the New Investment Corporation are based on their appraisal value as of June 30, 2020. • Unrealized gain or loss: unrealized gain or loss of the portfolio of the New Investment Corporation is represented by that of JRF as JRF will succeed the MMI’s assets at market value. • Book value per unit: For the units outstanding of the New Investment Corporation, please refer to Page 27; the net assets of the New Investment Corporation is calculated based on the appraisal value of MMI’s assets as of June 30, 2020; the same shall apply hereinafter. • NAV per unit: calculated according to the following formula: (Net assets + Unrealized gain or loss – Total distribution (to be) paid) / Units outstanding. NAV per unit of the New Investment Corporation is calculated according to the following formula: (Net assets calculated under certain conditions based on the merger ratio and JRF’s investment unit price as of August 26, 2020 + Unrealized gain or loss of JRF – Estimated total distribution (to be) paid) / Units outstanding. (8) It indicates a rate of an increase or a decrease in DPU of the New Investment Corporation from (estimated) DPU of the respective investment corporations before the Merger in consideration of the merger ratio and unit split.
41 Note
P.7 (1) Diversification by Area: It is based on (anticipated) acquisition price of the New Investment Corporation. • Tokyo Area: Tokyo, Kanagawa, Saitama and Chiba Prefecture • Osaka Area: Osaka, Kyoto and Hyogo Prefecture • Nagoya Area: Aichi Prefecture (2) It is based on (anticipated) acquisition price of the New Investment Corporation. (3) Hotel assets are classified into this category. In addition, residential and other new types of assets are classified into this category although none of them are owned at present. (4) It is based on (anticipated) acquisition price of the New Investment Corporation. (5) It is based on annual rent. (6) It is based on the number of properties in the portfolio of the New Investment Corporation. (7) It is based on the weighted average of rent.
P.17 (1) It is based on the total acquisition price (as of the end of the most recent fiscal period) stated in the financial information of respective investment corporations as of July 31, 2020. The asset size of the New Investment Corporation is the sum of (anticipated) total acquisition price of JRF as of July 31, 2020, anticipated acquisition price of the asset anticipated to be acquired which was announced in “Notice Concerning Acquisition of Trust Beneficiary Right in Real Estate in Japan (G-Bldg. Tenjin Nishi-dori 02)” dated August 26, 2020, and the appraisal values of MMI as of June 30, 2020 as estimated assumed value. Such value may be different from the actual asset size (based on acquisition price) of the New Investment Corporation as of the effective date of the Merger, and it is not guaranteed that the asset size of the New Investment Corporation will be the largest among J-REITs as of the effective date of the Merger. The asset size of MMI excludes the equity interest in a silent partnership (tokumei kumiai) of Nagoya Lucent Tower.
P.19 (1) It is calculated by dividing the total of interest for debt and investment corporation bonds, loan-related expenses, expenses for issuance and redemption of investment corporation bonds and custodial fees of investment corporation bonds paid on interest-bearing debt and investment corporation bonds of JRF and MMI that will be due or redeemed by the end of the fifth fiscal period after the Merger, by the total interest-bearing debt of JRF and MMI that will be due by the end of the fifth fiscal period after the Merger. (2) It is the unrealized gain on the sub assets and secondary core assets of JRF as of the end of the Feb. 2020 (36th) Period. Sub-assets are GMS, roadside facilities and other assets that are not profitable to invest in. Secondary core assets are suburban malls (large shopping malls located in suburban areas) and value-add (assets with high yields and high upside potential). (3) It is an estimated amount to be borrowed if the level of book value-based LTV 43.9%, the figure calculated by dividing the total of interest-bearing debt of JRF and MMI as of the date of this document by the estimated total assets of the New Investment Corporation as of the end of the Aug. 2021 (39th) Period, is assumed to be raised to 45%. P.21 (1) The figure is the sum of annual averages of the total acquisition price from August 1, 2015 to July 31, 2020. (2) It is based on the status as of the date of this document. It is not guaranteed that the acquisitions will be realized. (3) They are plans at present. It is not guaranteed that they will be realized. (4) It describes the past track record and future plans of its development projects, over which the New Investment Corporation has not secured preferential negotiation right and it is not guaranteed that the acquisitions will be realized. (5) The New Investment Corporation has not secured any preferential negotiation right over them and no future acquisition of these properties are guaranteed.
P.24 (1) Book value-based LTV is calculated by dividing the total interest-bearing debt of JRF and MMI as of the date of this document by the estimated total assets of the New Investment Corporation as of the end of the Aug. 2021 (39th) Period calculated based on the appraisal value of MMI’s assets as of June 30, 2020. Market value-based LTV is calculated by dividing the total interest-bearing debt of JRF and MMI as of the date of this document by the sum of the unrealized gain or loss of the New Investment Corporation stated in Page 6 and the estimated total assets of the New Investment Corporation as of the end of Aug. 2021 (39th) Period calculated based on the appraisal value of MMI’s assets as of June 30, 2020. (2) It is calculated by dividing the annual total of interest for debt and investment corporation bonds, loan-related expenses, expenses for issuance and redemption of investment corporation bonds and custodial fees of investment corporation bonds as of the date of this document, by the total interest-bearing debt of JRF and MMI as of the date of this document. The same shall apply hereinafter. (3) The figure is a weighted average of remaining loan terms based on the amount of interest-bearing debt of JRF and MMI as of the date of this document; the same shall apply hereinafter. (4) Long-term loans and investment corporation bonds that become due within one year are included in the long-term borrowing. (5) Based on the publicly-available information of other investment corporations as of July 31, 2020. (6) The figure is a weighted average of debt cost based on the amount of interest-bearing debt that will be due within the respective fiscal periods, including loan-related fees, etc. (7) This includes loan-related fees, etc.
42 Disclaimer
This document is intended to provide information relating to the absorption-type merger with Japan Retail Fund Investment Corporation (“JRF”) as the surviving corporation and MCUBS MidCity Investment Corporation (“MMI”; JRF and MMI are referred to collectively as the “Investment Corporations”) as the dissolving corporation and is not intended to solicit or recommend investment in or encourage the purchase of any particular product. You may incur losses related to fluctuations in the prices of the Investment Corporations’ investment units as a result of any fluctuations in the trading market, interest rates, real estate market, and other factors, or a decrease in rental income relating to the real property underlying the investment units. When making any investment decision with respect of the Investment Corporations’ investment units, investors must make their investment decisions based on their own determinations and assume full responsibility for their own investment decisions. This document is not a disclosure statement or operational report pursuant to the Financial Instruments and Exchange Act, the Act on Investment Trusts and Investment Corporations, or the securities Listing Regulations of the Tokyo Stock Exchange. The information provided in this document is based on information available to the Investment Corporations as of the date hereof. The Investment Corporations do not guarantee the accuracy, completeness, certainty, validity or fairness of such information. Moreover, the information contained in this document is subject to revision without prior notice. This document contains statements relating to future results, plans, management targets, strategies and other forward-looking information that are based on current assumptions derived from information available as of the date hereof. Such statements will no longer be accurate or applicable if the assumptions underlying such statements change. As such, these statements are not a guarantee of any future results, outcomes or financial conditions. The information contained herein may not be reproduced, circulated, quoted or otherwise used without the prior consent of the Investment Corporations. This English language document was prepared solely for the convenience of, and reference by, non-Japanese persons. The Investment Corporations give no warranties as to its accuracy or completeness.
Asset Management Company Mitsubishi Corp.-UBS Realty Inc. ： (Financial Instruments Dealer, Director of Kanto Local Financial Bureau (Financial Instruments Dealer) Number 403, Member of The Investment Trusts Association, Japan)