(Securities Code: 8961) https://www.mt-reit.jp/en/ Fiscal Period Ended September 2018 (33rd Fiscal Period) Information Package (Asset Management Company) MEMO Contents 1. Overview of the Settlement and Forecasts 3 4. Initiatives Related to ESG 24 Fiscal Period Ended September 2018 Settlement Highlights 4 Initiatives Related to ESG 25 Overview of the Settlement for the Fiscal Period Ended September 5 5. Characteristics of MORI TRUST Sogo Reit, Inc. 28 2018 Basic Policy and Characteristics of MORI TRUST Sogo Reit, Inc. 29 Factors for Change in Distributions per Unit 6 (the fiscal period ended September 2018) Mori Trust Group 31 Forecasts for the Fiscal Period ending March 2019 7 Major Properties Held, Developed, etc. in Central Tokyo by Mori Trust Group 32 Factors for Change in Distributions per Unit 8 (the fiscal period ending March 2019) 6. Reference 33 Fiscal Period Ending September 2019 Forecasts and Changes in 9 Balance Sheets 34 Internal Reserves Statements of Income and Retained Earnings 35 Changes in Distributions 10 Statement of Cash Distributions / Statements of Cash Flows 36 11 2. Portfolio Operations Data Changes in Indicators 37 Investment Strategy 12 Changes in Occupancy Rate 38 Initiatives for Internal Growth (1) (Major Situations of Occupancy of 13 Portfolio Summary and Breakdown of Property-Related 39 Individual Properties) Revenues/Expenses Initiatives for Internal Growth (2) (Situation of Rent Revision and 14 Changes in Asset Size, LTV and Distribution Per Unit 42 Initiatives for Cost Reduction) Changes in Unit Prices 43 Property Portfolio List as of the End of the Fiscal Period 15 Asset Management Company Remuneration Methods 44 Appraisal Values of Portfolio Properties at the Fiscal Period-End 16 Overview of Occupancy Rate and Lease Contracts at the Fiscal 17 Period-End Disclaimer / Contact Information 3. Financial Operations Data 19 Loans Made in the Fiscal Period Under Review and 20 Loan Repayment Schedule Diversification Interest-Bearing Liabilities and Rating 21 Interest-Bearing Liabilities 22 (Reference) Investors 23 Cover picture: Kioicho Building Disclaimer: This document is intended to provide information about the business performance and strategies of MORI TRUST Sogo Reit, Inc. (MTR). It is not intended and should not be construed as an inducement or invitation to purchase or invest in the products or investment units of MTR. We caution readers to contact their securities company representative if intending to acquire or sell any of MTR’s investment products or investment units, and to undertake investment decisions subject to individual determination. Statements in this document that are not historical facts are “forward-looking statements.” While MTR takes all reasonable care in the preparation of this document, it does not guarantee the accuracy and completeness of its content. Readers are also cautioned that the contents of this document may be changed or deleted without prior notice. 2 1. Overview of the Settlement and Forecasts 3 Fiscal Period Ended September 2018 (33rd Fiscal Period) Information Package Fiscal Period Ended September 2018 Settlement Highlights 1. Overview of the Settlement and Forecasts Distribution Per Unit ¥3,650 (+/- 0 vs. the fiscal period ended March 2018, +/- 0 vs. forecast) Distribution per unit excluding the portion appropriated from retained earnings was ¥3,638 (up ¥23 from the previous fiscal period, up ¥57 vs. forecast) As of September, 2018 (change from the previous fiscal period in parentheses) Asset Debt Number of property: 15 properties (–) Balance of interest-bearing debt: ¥155.0 billion (–) Average interest rate for borrowings Asset size: ¥324.0 billion (–) (Note 1) during fiscal period: 0.59% (down 0.03%) LTV: 47.1% (down 0.1%) Occupancy rate: 99.6% (down 0.2%) * Sublease basis 99.5% (up 0.05%) (Note 2) Long-term rating of issuers: AA (stable) / Japan Credit Rating Agency, Ltd. JCR Appraisal values of portfolio properties at the fiscal period end: ¥351.3 billion (up ¥7.0 billion) Equity Unrealized profit: ¥41.4 billion (up ¥8.0 billion) (Note 3) Number of units issued: 1,320,000 units (–) NAV per unit: ¥152,538 (up 4.2%) Investment ratio: [by area] Tokyo metropolitan area 80.2% (–) [by use] Office building 71.2% (–) Investment unit price: ¥162,000 / closing price on September 28, 2018) (Note 1) Asset size is the total acquisition price. (Note 2) For the properties that adopt the master lease contract with the system of linking rental revenue with rents under the sublease contract or the master lease contract of the pass-through type, the occupancy rate calculated based on the occupancy rate under the sublease contract is stated. (Note 3) Unrealized profit is the difference between total appraisal value at the end of the fiscal period and total book value at the end of the fiscal period. 4 Fiscal Period Ended September 2018 (33rd Fiscal Period) Information Package Overview of the Settlement for the Fiscal Period Ended September 2018 1. Overview of the Settlement and Forecasts In addition to occupancy of Hiroo MTR Building (Note 1) that was acquired in the previous fiscal period, throughout the fiscal period, rental revenue grew mainly due to the steady filling of vacant lots, and reduced repair expenses and loan costs. As a result, operating revenues were up ¥133 million from the previous fiscal period and up ¥38 million from the forecast, and ordinary income was up ¥30 million from the previous fiscal period and up ¥74 million from the forecast. (Unit: Million yen) Period ended Period ended Period ended ▮ Main factors for change March 2018 September 2018 September 2018 Vs. previous Vs. forecast actual forecast actual fiscal period Vs. previous fiscal period (Unit: Million yen) (A) (B) (C) (C-A) (C-B) Operating revenues Operating revenues 8,686 8,780 8,819 133 38 Rental revenues (a) 8,686 8,780 8,819 133 38 ● Increase in revenues due to occupancy of Hiroo MTR 76 Building throughout the full fiscal period Operating expenses 3,438 3,579 3,556 118 -23 ● Change in revenues due to move-in/out of tenants, etc. 24 Property-related expenses (b) 2,990 3,130 3,091 100 -38 ● Increase in utilities revenues due to seasonal factors, 17 Property and other taxes 876 899 898 21 -1 etc. Overhead expenses 831 968 931 100 -36 ● Temporary factors relating to Tenjin Prime 30 (penalty due to vacation of tenant, etc.) Depreciation (c) 1,282 1,262 1,262 -20 -0 Selling, general and adminis 447 448 464 17 15 Operating expenses Profits and losses from real (d)=(a)-(b) estatebusiness 5,695 5,650 5,727 32 77 ● Increase in expenses due to the occupancy of Hiroo 36 MTR Building throughout the fiscal period, etc. (Note 2) Earnings before depreciation (d)+(c) ● Increase in fixed asset tax, etc. (Note 3) 36 and amortization (NOI) 6,978 6,913 6,990 12 76 ● Increase in utilities expenses due to seasonal 42 Operating income 5,248 5,201 5,263 15 62 fluctuation etc. Non-operating revenues 10 1 3 -6 1 ● Increase in brokerage fees, etc. 33 Non-operating expenses 486 475 464 -22 -10 ● Decrease in depreciation -28 Ordinary income 4,771 4,727 4,802 30 74 Non-operating expenses Profit before income taxes 4,771 4,727 4,802 30 74 ● Decrease in interest expenses -22 Income taxes - current 010-0 -0 Income taxes - deferred (*) -14 -28 -5 9 23 Vs. forecast Profit 4,785 4,755 4,806 21 51 (Unit: Million yen) Operating revenues Reversal of reserves for reduction entry (*) 32 62 11 -21 -51 ● Higher-than-forecast rents, etc. 28 Total distribution 4,818 4,818 4,818 －－● Higher-than-forecast utilities revenues due to seasonal 10 Distribution per unit (yen) 3,650 3,650 3,650 －－factors, etc. Total number of outstanding investment units 1,320,000 1,320,000 1,320,000 －－ Operating expenses ■ Internal reserves (*) (Unit: Million yen) ● Higher-than-forecast utilities expenses due to seasonal 11 Period ended Period ended Period ended factors, etc. March 2018 September 2018 September 2018 Vs. previous ● Higher-than-forecast brokerage fees, etc. 6 Vs. forecast actual Forecast Actual fiscal period ● Lower-then-forecast repair expenses etc. -54 Amount of reduction 47 91 16 -30 -74 Non-operating expenses (Note 1) On August 1, 2018, the name was changed from Hiroo SK Building. ● Lower-than-forecast interest expenses -10 (Note 2) Utilities expenses, repair expenses, depreciation and other operating expenses for Hiroo MTR Building are included in this item. (Note 3) Properties whose fixed asset taxes are linked to rents are excluded. 5 Factors for Change in Distributions per Unit Fiscal Period Ended September 2018 (33rd Fiscal Period) Information Package (the fiscal period ended September 2018) 1. Overview of the Settlement and Forecasts Distribution per unit excluding the portion appropriated from retained earnings was up ¥23 from the previous fiscal period and up ¥57 from the forecast. 23 (Unit: Yen) 18 Temporary factors 16 3,650 relating to Tenjin 3,650 3,650 30 Prime -27 (penalty due Increase in 12 Portion Change in to vacation of fixed asset tax, 21 appropriated revenues due to tenant, etc.) etc. -18 from 35 move-in/out of (Note 2) Decrease in -15 3,638 retained tenants, etc. Increase in utilities interest expenses earnings expenses due to Other seasonal fluctuation +¥23 etc. 69 Increase in Decrease in 3,615 revenues due to -25 depreciation occupancy of Hiroo Increase in MTR Building brokerage fees, throughout the etc. fiscal period (Note 1) +¥57 Distribution 3,581 excluding the portion appropriated from retained earnings Period ended Period ended Period ended March 2018 September September Results 2018 2018 Results Forecast Current Announced fiscal period May 2018 (Note 1) Operating revenues, utilities expenses, repair expenses, depreciation and other operating expenses for Hiroo MTR Building are included in this item.