Financial Results Presentation Materials(8Th Period)

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Financial Results Presentation Materials(8Th Period) 8th Fiscal Period ended January 31, ES CON JAPAN REIT Investment Corporation Securities code: 2971 2021 Financial Results Presentation Material Table of Contents Executive Summary 2 1 Highlights for 8 th Fiscal Period 3 5 Financial Strategy 20 Historical Unit Price 4 Financial Status and Basic Policy 21 6 ESG Strategy 22 ESG Initiatives 23-25 2 Financial Results Summary and Features 5 th Performance for 8 Fiscal Period (ended January 3 1, 2021) 6 7 Status of Unitholders 26 P/L and Main Reasons for Fluctuation 7 Status of unitholders as of January 31, 2021 27 Impact of COVID-19 8-11 Appendix 28 3 Earnings Forecast 12 3 業績予想 12 Balance Sheet 29 Forecast for 9 th Fiscal Period (ending July 31, 2021) 13 第9期(2021年7月期)予想 Profit and Loss Statement 30 Forecast for 10 th Fiscal Period (ending January 31, 2022) 14 第10期(2022年1月期)予想 Income and Expenditure & Appraisal Value 31 Forecast for 9 th /10 th Fiscal Period DPU 15 分配⾦推移(予想) (as at the end of 8 th Fiscal Period) Portfolio (as at the end of Fiscal Period ended January 31, 2021 ) 32 Growth Strategy Remaining Lease Term 33 44 1616 Internal Growth 17 NAV Growth per Investment Unit 34 内部成⻑ Partnerships with Sponsor and Supporters 18 FFO Payout ratio 35 スポンサー及びサポート会社との連携 External Growth 19 Outline of Sponsor and Support Companies 36 外部成⻑ Development Cases of Sponsor Company 37 Business Partnership of Sponsor and Support Companies 38 1 Executive Summary The regional communities near our commercial facilities have given their enduring Highlights for support for our properties particularly during COVID-19. In addition, ESCON REIT 1 th 8 Fiscal Period unit price is on average performing well on back of the stability of leasehold land long-term agreements as well. 8th Fiscal Period DPU : 3,599 yen (increase by 110 yen or 3.2% from previous Financial Results Summary forecast of 3,489 yen). COVID-19 impact was limited given that previous forecasts 2 And Features were exceeded. th 8 Fiscal Period New rent reductions during 8 th Fiscal Period: 3 tenants (17,000 yen). (ended January 31, 2021) 100% collection rate of deferred rent payments due to PM’s meticulous efforts. 9th Fiscal Period DPU : 3,492 yen (increase by 92 yen or 2.7% from previous forecast of 3,400 yen). △85 yen given that property/city planning taxes of 7 th fiscal period PO acquisitions are accounted as expenses from 9 th fiscal period onwards. +58 Earnings Forecast yen from the free transfer of the deck space of tonarie Yamatotakada. Possible DPU 3 Forecast for 9 th Fiscal Period (ending July 31, 2021) increase from collecting penalty fees etc. th Forecast for 10 Fiscal Period 10 th Fiscal Period DPU : 3,315 yen △176 yen due to costs for refinancing debt (first (ending January 31, 2022) time since IPO). Expecting expenses for unitholders’ meeting. Expecting higher occupancy if and when COVID-19 impacts subside. Prioritize securing distribution while paying close attention to the impact of COVID-19 Take advantage of support from the sponsor, continue external growth centered, 4 Growth Strategy lifestyle-focused commercial facilities and their leasehold lands. We aim to achieve AUM of 100 billion yen over the medium term. Extra promotion of initiatives for ESG, such as the newly acquisition of DBJ Green Building Certification (three stars) for two properties *Prices are rounded down, and percentages are rounded off, unless otherwise specified. 2 1. Highlights for 8th Fiscal Period 1. Highlights for 8 th Fiscal Period Historical Unit Price Performance stability of ESCON REIT properties amid this prolonged pandemic helped ESCON REIT unit price to outperform the TSE REIT Index February 13, 2019 (listing February 3, 2020 July 31, 2020 January 29, 2021 date) Issue price 1st PO price Closing price Closing price 101,000 yen 124,029 yen 97,000 yen 121,600 yen Historical Unit Price after IPO and Major Initiatives Forecast dividend yield* 2 ESCON REIT 5.6% ※1 J-REIT Average 3.75% Unit: yen エスコンジャパンリートESCON REIT 東証REIT指数Tokyo Stock Exchange REIT Index *1 160,000 円 February 3, 2020 1st PO February 4, 2020 Acquisition of January 8, 2021 July 27, 2020 2nd declaration September 27, 2019 additional properties April 7, 2020 1st declaration DBJ Green Building of a state of 140,000 円 Support agreement Certification with Chuden Real Estate of a state of emergency Offer price (1st PO) emergency 120,000 円 Issue price (IPO) 100,000 円 November 26, 2019 August 26, 2019 November 29, 2019 Acquisition of an Concluded a memorandum 80,000 円 Announced issuer rating by R&I with Chuden Real Estate for introduction of ESOP [A-] (stable) a warehousing function, etc. 60,000 円 5th Fiscal Period 6th Fiscal Period 7th Fiscal Period 8th Fiscal Period (February 1, 2019 - July 31, 2019 ) (August 1, 2019 - January 31, 2020 ) (February 1, 2020 - July 31, 2020) (August 1, 2020 - January 31, 2021) Occupancy Feb. 2019 Mar. 2019 Jun. 2019 Nov. 2019 Feb.2020 Mar. 2020 Jun. 2020 Jan. 2021 rate 99.5 % 99.6 % 99.7 % 99.9 % 99.8 % 99.9 % 99.8 % 99.8 % *1 Benchmarked the closing price on the IPO date of ESCON JAPAN REIT. *2 The forecast dividend yield is calculated by dividing the sum total of the distributions forecasts for the fiscal periods ending July 31, 2021 and January 31, 2022 by the investment unit price (closing price) as at January 29, 2021. The average forecast dividend yield of all J-REITs is the market capitalization-weighted average forecast annualized dividend yield disclosed in the monthly REIT Report (for February 2021) of the Japan Exchange Group. 4 2.Financial Results Summary and Features 2. Financial Results Summary and Features Performance for 8 th Fiscal Period (ended January 31, 2021) Impact of COVID-19 was limited as ESCON REIT business results surpassed forecasted results Financial highlights of the 8 th Fiscal Period Previous forecast and previous results 3,599 yen DPU 3,489 yen (forecast as at September 15, 2020) (+110 yen, +3.2 %) th Occupancy Rate 99.8% Occupancy rate at the end of 7 Fiscal Period: 99.8% (as at July 31, 2020) th LTV *1 43.5% LTV at the end of 7 Fiscal Period: 43.6% (△ 0.1 %) (as at July 31, 2020) NOI yield *2 NOI yield after depreciation as at January 31, 2021: 4.8% (NOI yield before depreciation: 5.3%) *1 Based on total assets. *2 Based on book value at the end of the fiscal period. 6 2. Financial Results Summary and Features P/L and Main Reasons for Fluctuation of 8 th Fiscal Period The performance exceeded initial forecast steadily : Net income +31 million yen, forecasted DPU +110 yen (+ 3.2 %) Earnings Performance for the 8th Fiscal Period (ended January 31, 2021) Main reasons for fluctuation in net income (vs. forecast) Unit: million yen Unit: million yen 7th Fiscal 8th Fiscal 8th Fiscal From new lease agreements and increased Period Period vs. New contracts, etc. +3 Period Forecast vs. space/rent. Performance Performance previous as at September forecast ended July 31, ended January 31, period 15, 2020 (c-b) Increased percentage Sales-linked rent and 2020 2020 (c-a) Variable rent +6 (b) sales events (a) (c) Operating Penalty fees from vacating tenants. 1,902 1,913 1,922 20 9 Revenue from Benefitting from time lapse between revenues 6 penalties, etc. receiving notice for contract termination and + Operating actual termination date. 1,110 1,084 1,111 0 26 income From reducing expenses by altering utilities Utility expenses agreement and gaining access to a water 7 Ordinary + 971 988 1,019 48 31 well in Asumigaoka Brand-New Mall. income Repair expenses Expenditure on necessary repairs △24 Net income 970 987 1,018 48 31 Change in NOI and 2 others + DPU 3,430 yen 3,489 yen 3,599 yen 169 yen 110 yen General and Actual results based on expected borrowing administrative 28 rates, IR expenses. + expenses, etc Depreciation 124 125 125 0 0 Total (net income) vs. forecast +31 NOI after 1,245 1,266 1,268 23 2 1,020 depreciation Increase Decrease 1,010 NOI yield after Change in 4.8% 4.8 % 4.8% 0% 0% Utility depreciation 1,000 NOI expenses Performance Revenue and others +7 1,018 Number of from +2 182 days 184 days 184 days 2 days 0 days 990 Variable penalties, General operating days rent Repair New etc. and Forecast 6 expenses 980 contracts, + +6 administrative 987 etc △24 *Property and city planning taxes on the three properties acquired in the 7 th fiscal period will be expenses, +3 etc accounted for as expenses from the 9 th fiscal period onwards. 970 7 +28 2. Financial Results Summary and Features Impact of COVID-19 (Leasehold land) Received no requests from leasehold land tenants for rent payment extension or reduction during the 8 th fiscal period due to a solid lineup of highly creditworthy tenants that are quite resilient against the impact of COVID-19 Stability of leasehold lands Asset type * Remaining lease term for leasehold land * (Based on acquisition price ) (Based on NOI after depreciation) (Based on leasable area ) less than 5 years 20-30 Leasehold Leasehold 1.9% years land land 5.1% 49.2% 48.4% 5-10 15-20 50.8% 51.6% years Over Land and Buildings 5 years years Land and Buildings 39.2% (lifestyle-focused (lifestyle-focused 98.1 % 22.8% commercial facilities) commercial facilities) Average 12.6 years 10-15 years (only leasehold land ) 30.9% Leasehold land tenants* Leasehold land properties rented by unlisted companies (Based on rent revenue ) Based on rent revenue 1 Tsutaya Sakai-minami (General products ) ( ) 2 One-Karubi Kasuga (Restaurants ) General products 3 Suke-san Kasuga (Restaurants ) Restaurants Services Unlisted companies 3.2% 1.2% Leasehold land properties rented by listed 10 NAFCO Kasuga (DIY stores)
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