IR Presentation For the Fiscal Period Ended October 2020 (12th Fiscal Period) Securities Code: 3451 Contents Tosei Reit Investment Corporation 3 Overview of Financial Results 21 Earnings/Cash Distribution Forecast ⚫ Overview of the 12th Fiscal Period ⚫ Basic Policy and Points of Management for the Near Term ⚫ Impact of COVID-19 and Response ⚫ Earnings Forecast for the 13th and 14th Fiscal Periods ⚫ Cash Distribution per Unit ⚫ Increase in Cash Distribution 7 Operating Results 25 ESG ⚫ Occupancy Rate ⚫ ESG - Environment - ⚫ Rent Status - New Contracts and Cancellations ⚫ ESG - Social - ⚫ Rent Status - Rent Revision ⚫ ESG - Governance - ⚫ Tama Center Tosei Building: ⚫ Connection Between Tosei Reit’s Key Issues and SDGs Expiration of Fixed-Rent Master Lease Agreement ⚫ Initiatives for Maintaining and Enhancing Asset Value 30 Appendix ⚫ Initiatives for Maintaining and Enhancing Asset Value ⚫ Changes in Portfolio (Residential Properties) ⚫ Main Portfolio Indicators ⚫ Status of Appraisal Value and Unrealized Gains at End of Distribution of Tenants (at End of 12th Fiscal Period) 12th Fiscal Period ⚫ ⚫ Unitholder Composition (at End of 12th Fiscal Period) 15 Property Acquisition ⚫ Balance Sheet ⚫ Changes to Portfolio ⚫ Statement of Income ⚫ Newly Acquired Properties ⚫ Portfolio List (54 properties) (1) - (2) ⚫ Overview of Portfolio and Earnings Performance of Properties (at End of 12th Fiscal Period) (1) - (8) 18 Financial Status ⚫ Profile of Tosei Reit ⚫ Financial Management (1) - (2) ⚫ Profile of Tosei Asset Advisors, Inc. ⚫ Disclaimer Earnings Announcement for 12th Fiscal Period 2 Tosei Reit Investment Corporation Overview of Financial Results Earnings Announcement for 11th Fiscal Period 3 Overview of the 12th Fiscal Period Tosei Reit Investment Corporation ◼ Results for the 12th Fiscal Period ◼ Property-Related Operating Revenue (¥ MM) (comparison with forecast) (¥ MM) 12th FP (Ended October 2020) 11th FP 12th FP (Ended Oct. 2020) (Ended Forecast Compared Actual Forecast Actual Announced with Differences April 2020) Results Announced June Results June 15, 2020 Forecast 15, 2020 Days in Property-related operating 182 184 184 - 3,040.2 3,097.4 57.1 operation revenue Rent, common service income, Operating 2,771.1 2,818.9 47.8 2,996 3,040 3,097 +1.9% facility income revenue Operating ・ Offices 1,322.8 1,342.1 19.2 1,501 1,453 1,532 +5.5% income ・ Retail facilities 237.0 242.0 4.9 Ordinary 1,244 1,172 1,259 +7.5% ・ Residential properties 1,211.1 1,234.7 23.5 income Utilities revenue 218.9 219.4 0.5 Net income 1,243 1,171 1,258 +7.5% Other operating revenue (construction to restore properties to 50.1 58.9 8.7 Cash original state, renewal fees, cancellation distribution 3,696 3,520 3,697 +5.0% penalties, etc.) per unit (¥) ◼ Property-Related Operating Expenses (¥ MM) (comparison with forecast) Total assets 76,345 - 77,012 - 12th FP (Ended Oct. 2020) Forecast Actual Differences ◼ Main Factors of Change in Net Income (comparison with forecast) Announced Results June 15, 2020 (¥ MM) 1,300 Property-related operating Results 1,313.2 1,288.1 -25.1 1,258 expenses 1,250 PMBM fees 292.0 293.7 1.7 +25.1 +5.2 Utilities expenses 236.8 222.4 -14.4 +87.5 Decrease in Forecast +57.1 property-related 1,200 operating Repair and maintenance expenses 121.5 123.0 1.5 1,171 expenses Other Property taxes 219.9 219.7 -0.1 Forecast Increase in 1,171 Other 1,150 property- 92.2 68.2 -24.0 related (advertising expenses, etc.) operating revenue Depreciation 350.6 360.8 10.1 1,100 分類 1 分類 2 分類 3 分類 4 分類 5 (Note) The forecast is the forecast figure for the 12th FP ended October 2020 released Earnings Announcement for 12th Fiscal Period 4 on June 15, 2020. Impact of COVID-19 and Response Tosei Reit Investment Corporation ⚫ Status of Response to Rent Reduction/Exemption, Etc. in 12th FP ◼ Status of Request for Rent Reduction/Exemption, Etc. (¥ MM) (reduction/exemption, postponement) and Future Outlook Expectation Results Number of (Number of ⚫ 12th FP Amount Amount implemented requests) • Sincerely responded to each tenant based on the requests from cases shops, etc., and conducted rent reduction/exemption, etc. for 11 Total 12.5 4.4 11 (42) tenants Shops, etc. 12.5 4.4 11 (31) • Although rent revenue decreased due to rent reduction/exemption, Other than shops, etc. 0.0 0.0 0 (11) etc., it fell below the expectations at the beginning of the period Impact on cash distribution -37 -13 - - • No specific issues have occurred regarding the status of rent per unit (¥) payment after the end of the response to rent reduction/exemption, etc. ⚫ Reflection on Earnings Forecast for the 13th and 14th Fiscal Periods (¥ MM) ⚫ 13th FP and 14th FP 13th FP 14th FP • Revise the currently expected amount as the period of rent Initially expected Currently expected Expected amount reduction/exemption, etc. is long and the impact will continue to be amount amount seen until the 14th FP for some requests that were handled in the Direct impact due to rent 0 8.1 3.9 12th FP reduction/exemption, etc. • Estimate a certain amount regarding the impact of the economic Secondary impact due to 13.8 5.1 - downturn caused by COVID-19 and record it in the 13th FP for the economic downturn contracts that have not been actualized as of now Total 13.8 13.3 3.9 Impact on cash distribution -41 -39 -12 ◼ Ratio of the Leased Area of Shops, Etc. in Entire Portfolio per unit (¥) (based on leasable area) ⚫ Status of Response by Use Use Status of Response Ratio of Shops, Etc. in Entire Portfolio Breakdown by Type of Shop, Etc. ⚫ Principally plans not to accept requests for rent Offices reduction/exemption, etc. of the portion used as offices. Shops, etc., Other Restaurant Declined 7 requests in the 12th FP 10.6% 12.1% service 13.2% ⚫ Conduct hearing of business conditions including temporary closure from tenants using the property as shops, etc. and individually responding to them Shops Sports club ⚫ Agreement on rent reduction/exemption, etc. was reached with 13.4% Product sales 27.7% 11 out of the 31 tenants who made requests (cancelled lease Nursery/day care contract with 1 tenant) 5.1% ⚫ Principally plan not to accept requests for rent Other than Residential reduction/exemption, etc. from tenants using the property as shops, etc., 87.9% Cram school proprieties 13.2% Clinic residence. Declined 2 requests in the 12th FP 16.7% Parking lot and ⚫ Declined 2 requests for rent reduction/exemption of parking lot other (Note) Calculated for a total of 54 properties consisting of 50 properties owned as of the end of the 12th Earnings Announcement for 12th Fiscal Period 5 Fiscal Period and 4 properties acquired in the 13th Fiscal Period. Cash Distribution per Unit Tosei Reit Investment Corporation ⚫ Actual result for the 12th Fiscal Period was ¥3,697 per unit, +¥177 (+5.0%) from the most recent forecast ‐ The portion scheduled to be distributed through the reversal of internal reserve (¥80) will be retained to prepare for the stabilization of future cash distribution payment Cash distribution per unit (¥) Initial forecast (Note) 4,500 Actual Results 4,052 4,000 Capital 3,675 3,696 3,697 3,592 3,532 gain, etc. 3,520 3,435 ¥534 3,430 3,480 (Note) 3,500 3,371 3,382 3,208 3,256 3,259 3,202 3,252 3,263 3,063 2,986 Reversal 3,000 2,844 Reversal of internal reserve of internal 2,772 ¥90 reserve ¥80 2,500 1,938 2,000 1,500 1,000 500 373 0 1st FP Results 2nd FP Results 3rd FP Results 4th FP Results 5th FP Results 6th FP Results 7th FP Results 8th FP Results 9th FP Results 10th FP Results 11th FP Results 12th FP Results (Ended Apr. (Ended Oct. (Ended Apr. (Ended Oct. (Ended Apr. (Ended Oct. (Ended Apr. (Ended Oct. (Ended Apr. (Ended Oct. (Ended Apr. (Ended Oct. 2015) 2015) 2016) 2016) 2017) 2017) 2018) 2018) 2019) 2019) 2020) 2020) IPO 1st PO 2nd PO 3rd PO 4th PO 5th PO 12 properties 5 properties 1 property 5 properties 8 properties 6 properties 1 property 12 properties 1 property ¥17.4 BN ¥11.9 BN ¥1.4 BN ¥5.3 BN ¥9.8 BN ¥10.6 BN ¥1.0 BN ¥11.9 BN ¥1.6 BN (Note) Initial forecast indicates figures initially announced. However, the initial forecast for 12th FP ended October 2020 is the figure released on June 15, 2020. Earnings Announcement for 12th Fiscal Period 6 Tosei Reit Investment Corporation Operating Results Earnings Announcement for 11th Fiscal Period 7 Occupancy Rate Tosei Reit Investment Corporation ◼ Change in Occupancy Rate (%) ⚫ The occupancy rate as of the end of the 12th Fiscal Period was 97.7%, 7th FP 8th FP 9th FP 10th FP 11th FP 12th FP remaining at the same level as that at the end of the previous fiscal 100 period. The stable trend was also seen with the exertion of the strengths of diversified REITs 99 • For offices, successfully achieved 100% occupancy for 2 properties (Hon-Atsugi and Higashitotsuka) • Refilled approximately 60% of the section where a large tenant at Kannai Tosei Building 98 II vacated as of the end of the period, and already concluded lease contracts for approximately 51 tsubos out of the remaining approximately 175 tsubos of area • Although the occupancy rate for offices and retail facilities decreased slightly, such 97 decrease was covered by the increase for residential properties which remain relatively stable 96 ◼ Factors of Change in Occupancy Rate ⚫ While full occupancy was achieved for two buildings through the 95 acquisition of buildings that are fully occupied as well as occupancy April October April October April October by new tenants, the occupancy rate declined as the refilling of the 2018 2018 2019 2019 2020 2020 entire section vacated by large tenants at Kannai Tosei Building