Presentation Material for the First Half of FY2020 (Ending December 31, 2020) August 11, 2020 Disclaimer This material has been translated from a portion of the Japanese original for reference purposes only. In the event any discrepancy arises between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for this translation, nor for direct, indirect, or any other form of damages that may arise from using this translation. This English version includes some explanatory notes. The utmost care is applied to the information presented in this material; nevertheless, the accuracy and reliability of this information is not guaranteed. Please be aware that content may be changed without advance notice. This material contains the current plans and forecasts concerning the business performance of the Tokyo Tatemono Group. These forecasts are based on the Company’s assumptions and judgments on the basis of information currently available to the Company and include various risks and uncertain factors. Actual results may differ from these forecasts due to changes in the environment and other various factors. 2 Copyright © Tokyo Tatemono Co., Ltd. All Rights Reserved. Contents ■ Summary p.4 ■ Business Results by Segment p.19 ■ Business Results for the First Half of FY2020 p.5 (1) Commercial Properties Business p.20 and Full-Year Earnings Forecast for FY2020 ■ Main Impacts of the COVID-19 Pandemic p.6 (2) Residence Business p.28 ■ Assessment of the Market Environment and p.7 (3) Real Estate Service Business p.36 Future Policies ■ ESG Report: Recent Initiatives p.8 (4) Other p.38 ■ Shareholder Returns p.9 ■ Appendix p.43 Long-Term Vision and Medium-Term Business p.44 ■ Financials p.10 Plan Consolidated Statement of Income p.11 Main Indicators p.50 for the First Half of FY2020 Consolidated Balance Sheet p.12 Fair Value of Rental Properties p.51 for the First Half of FY2020 Balance of Real Estate for Sale p.14 Quarterly Segment Data p.52 Consolidated Statement of Cash Flows p.15 List of Facilities p.54 for the First Half of FY2020 Investment Plans p.16 Market Data p.56 Revision of Full-Year Earnings Forecast for ■ p.17 FY2020 3 Copyright © Tokyo Tatemono Co., Ltd. All Rights Reserved. Summary Business Results for the First Half of FY2020 • Decrease in revenue and income due to factors such as decrease in sales and gross profits of for-sale condominiums, decrease in property sales to investors in the commercial properties business and the real estate service business, in addition to decline in parking and resort facility occupancy due to the impact of the COVID-19 outbreak. Full-Year Earnings Forecast for FY2020 • As the leasing business of hotels and commercial facilities, the parking lot business, and the leisure business have been particularly impacted by the COVID-19 outbreak, a portion of the full-year earnings forecast for FY2020, initially announced at the beginning of the fiscal year (February 5, 2020), has been revised. • When revising the forecast, the impacts of the partial rent reductions and exemptions at hotels and commercial facilities as well as a decline in parking and resort facility occupancy were taken into consideration in addition to the expectation that property sales to investors will include real estate for other uses as an alternative to hotels and commercial facilities. Furthermore, the earnings forecast is premised on the notion that the business environment surrounding the Tokyo Tatemono Group will gradually recover and assumes that the business environment will essentially return to normal toward the end of the fiscal year. • Despite an increase in property sales to investors, operating income, business income, and ordinary income will decrease from the previous fiscal year in FY2020 as a result of factors such as decrease in sales of for-sale condominiums, decline in parking and resort facility occupancy due to the impact of the COVID-19 outbreak, as well as higher corporate costs associated with head office relocation. However, as for revenue from operations and profit attributable to owners of the parent, an increase in revenue and income is anticipated and the amounts will remain unchanged from the forecast announced at the beginning of the fiscal year. Topics • The rights conversion plan was approved for Yaesu 1-Chome East B Area Urban Redevelopment Project. (June) • Completed T-LOGI Kuki, Tokyo Tatemono’s first logistics facility. (June) • Completed Hareza Tower, an office building, and opened the entirety of Hareza Ikebukuro. (July) • Issued the first sustainability bond in Japan’s real estate sector (July) • Released the Integrated Report 2020 (August) 4 Copyright © Tokyo Tatemono Co., Ltd. All Rights Reserved. Business Results for the First Half of FY2020 and Full-Year Earnings Forecast for FY2020 • Decrease in revenue and income due to factors such as decrease in sales and gross profits of for-sale condominiums, decrease in property sales to investors in the commercial properties business and the real estate service business, in addition to decline in parking and resort facility occupancy due to the impact of the COVID-19 outbreak. • As the leasing business of hotels and commercial facilities, the parking lot business, and the leisure business have been particularly impacted by the COVID-19 outbreak, a portion of the full-year earnings forecast for FY2020, initially announced at the beginning of the fiscal year (February 5, 2020), has been revised. • When revising the forecast, the impacts of the partial rent reductions and exemptions at hotels and commercial facilities as well as decline in parking and resort facility occupancy were taken into consideration in addition to the expectation that property sales to investors will include real estate for other uses as an alternative to hotels and commercial facilities. Furthermore, the earnings forecast is premised on the notion that the business environment surrounding the Tokyo Tatemono Group will gradually recover and assumes that the business environment will essentially return to normal toward the end of the fiscal year. Announced Announced February 5, 2020 August 4, 2020 Revised 2019/6 2020/6 Increase/ 2020/12 Achievement Unit: Billion yen 2020/12 Actual Actual Decrease Forecasts rate Forecasts Revenue from operations 186.2 152.4 (33.8) 350.0 350.0 44% P/L Operating income 32.3 18.5 (13.7) 53.0 48.0 39% Business income*1 32.1 18.9 (13.2) 52.0 47.5 40% Profit attributable to owners of the 20.0 10.8 (9.2) 31.0 31.0 35% parent Increase/ 2020/12 2020/12 Unit: Billion yen 2019/12-end 2020/6-end Decrease Forecasts Forecasts Total assets 1,564.0 1,623.7 59.7 - - B/S Interest-bearing debt 924.8 1,004.1 79.2 990.0 990.0 Debt equity ratio (times)*2 2.5 2.8 0.3 - - Interest-bearing debt / EBITDA 12.6 - - - - multiple (times)*3 *1: Business income = Operating income + Equity in income (loss) of affiliated companies *2: Debt equity ratio = Interest-bearing debt / Equity capital *3: Interest-bearing debt / EBITDA multiple = Interest-bearing debt / (Operating income + Interest & dividend income + Equity in income (loss) of affiliated companies + Depreciation expense + Goodwill amortization expense) 5 Copyright © Tokyo Tatemono Co., Ltd. All Rights Reserved. Main Impacts of the COVID-19 Pandemic • The leasing business of hotels and commercial facilities, the parking lot business, and the leisure business have been particularly impacted by the COVID-19 outbreak. • In terms of property sales to investors, the current policy is to forgo the sale of hotels and commercial facilities and to sell assets that have not experienced significant change in business environment. Segment Primary Impacts on Tokyo Tatemono’s Businesses • Received requests from tenant-operators to reduce or waive rent due to a decline in Commercial Leasing hotels and sales at hotels and commercial facilities. Properties retail facilities • In response to government demands, large commercial facilities were closed from middle April to middle May. • Suspension of new business activities at show houses and sales centers. For-sale Residence (Refrained from business activities with new clients in the Tokyo metropolitan area from condominiums early April to late May.) • As a result of the demands to refrain from going out, parking lot occupancy dropped Real Estate Parking lots significantly, especially for park and ride lots in front of major regional train stations and Service parking lots attached to large commercial facilities. • All facilities at the spa facility (Ofuro no Osama) were closed from early April to late May. • Resort hotel facilities (Regina Resorts) were closed in stages after the state of Other Resorts emergency was declared and reopened in June. • Golf courses in the Kanto region were temporarily closed after the state of emergency was declared. Golf courses reopened in May with a partial limitation on services. • Property sales to investors in the commercial properties segment and the real estate service segment have been forgone. Property Sales to Investors • As the business environments of properties such as for-rent condominiums and office buildings have not experienced significant changes, the policy is to sell of these properties in FY2020 in place of hotels and commercial facilities. 6 Copyright © Tokyo Tatemono Co., Ltd. All Rights Reserved. Assessment of the Market Environment and Future Policies • While the impact on offices and residences is limited, new product planning will be promoted in view of diversifying work styles over the long term. • As for the real estate transaction market, demand is expected to remain firm, especially for logistics facilities and for-rent condominiums which are expected to generate stable cashflow, and Tokyo Tatemono will make proactive investments to secure new projects Assessment of the Future Market Environment and Tokyo Tatemono’s Initiatives • The COVID-19 outbreak has had a limited impact on the current office Specific initiatives market.