章区切り 投資法人みらい 3rd Fiscal Results & Progress of Mid-term Management Plan MIRAI Corporation Security Code:3476 Mitsui Bussan & IDERA Partners Co., Ltd. December 2017 http://3476.jp/en Memo 1 Executive Summary 2 1. Steady growth in distributions per unit (DPU) 3rd FP 4th FP 5th FP Annual DPU (Oct. 2017) (Apr. 2018) (Oct. 2018) Forecast (Note1) As of June 2017 Forecast Forecast nd N/A 10,200 yen (2 FP) 5,100 yen 5,100 yen (Note2) (Note2) As of December 11 Actual Forecast Forecast (3rd FP) 5,175 yen 5,600 yen 5,600 yen 11,200 yen +75 yen +500 yen Maintain DPU level Stabilized DPU +10% 2. Improvement in quality of our portfolio 3. Improvement in strength of our financial base Maintained stable occupancy Refinanced short-term loans and set up commitment line of 2 (occupancy rate at end of the period 99.4% billion yen Mitigated portfolio concentration risk through replacement of Increased long-term and fixed interest debt ratio assets (Long-term and fixed interest debt ratio 100 (Note3) ) Enhanced profitability through acquisition of Growth Asset Growth of NAV/Unit (Note 4) End of the 3rd FP: ¥193,114/ up ¥8,013 from the previous FP) Note1: Sum of DPU forecasts for 2 FPs. Note2: This forecast is based on certain assumptions as of December 11, 2017 and subject to change due to conditions such as change in rent income thorough tenant turnovers, acquisition and disposition of assets, and additional unit issuance. The forecast should not be construed as guarantee of DPU. Note3: After repayment of short-term loan of 10 billion with proceeds from transfer of 36.6% quasi co-ownership interest of Shinagawa Seaside Parktower. Note4: NAV (Net Asset Value) = Net assets + Unrealized gain. Hereafter, the definition is the same in this material. 目次 Table of Contents 3 Section1. 3rd Fiscal Period Highlights P 4 1. Risk Diversification Through Replacements of Assets P 5 2. Acquisition of Growth Asset Aimed at Improvement in Profitability P 9 3. ESG and Initiatives to Enhance the Value of Properties P 12 4. External Growth Strategy/ Status of Pipelines P 13 5. Tenant Diversification/ Leasing Activities P 15 6. Financial Activities/ IR Activities and Schedule P 17 7. Progress of Mid-Term Management Plan P 20 Section2. 3rd Fiscal Period Financial Summary & Forecasts P 23 1. Financial Summary & Forecasts P 24 2. Leasing & Occupancy Track Record P 27 Appendix1. Basic Information P 31 Appendix2. Information of Real Estate Market P 41 Appendix3. Financials in Detail P 45 Appendix4. Portfolio in Detail P 53 章区切り Section1. 3rd Fiscal Period Highlights 本文ページ Risk Diversification Through Replacements of Assets 5 Achieved portfolio and tenant diversification through disposition of interest in the largest property and acquisition of other properties (office buildings). Disposition Acquisition Shinagawa Seaside Parktower Tokyo Front Terrace Property name Nippo Hommachi Building (36.6% quasi-co-ownership (Note 1)） (50.2% quasi-co-ownership(Note 2)) Total /Average Location Shinagawa, Tokyo Shinagawa, Tokyo Osaka, Osaka (2 properties) Disposition End of February 2018 The date separately agreed October 26, 2017 /acquisition date or the date separately agreed on on by the end of February 2018 Price for disposition 12,004 million yen 10,592 million yen 1,465 million yen 12,057 million yen /acquisition price Appraisal value 11,895 million yen 10,793 million yen 1,530 million yen 12,323 million yen Appraisal NOI yield 4.3% 4.1% 5.4% 4.2% NOI yield after 3.5% 3.7% 4.8% 3.8% depreciation Note1:MIRAI has entered into a disposition agreement with GK SS2 (Limited Liability Company), which has a discretionary investment agreement with Mitsui & Co., Realty Management Ltd. (hereinafter “MBRM”) for 36.6% of the quasi-co-ownership interest related to Shinagawa Seaside Parktower. After the establishment of private REIT under consideration by MBRM, the position of the buyer will be transferred to the private REIT. Note2: MIRAI acquired 50.2% of the quasi-co-ownership interest, and JA Mitsui Leasing Tatemono Co., Ltd. (hereinafter “JA Mitsui Leasing Tatemono”) acquired residual interest (49.8%). After the establishment of private REIT, JA Mitsui Leasing Tatemono plans to dispose the 49.8% quasi-co-ownership interest to the private REIT. 本文ページ Risk Diversification Through Replacements of Assets 6 Optimized investment allocation though collaboration with both our sponsors. Financial support through co-ownership of asset Mitsui&Co. Asset Management MIRAI Corporation Shinagawa Seaside Park Tower Holdings LTD. (MAH) (Note) (36.6% quasi-co-ownership 12.0 billion yen (disposition) Strategic Co-ownership 63.4% MIRAI 50.2% 36.6% MAH 49.8% Nippo Hommachi Building Tokyo Front Terrace Tokyo Front Terrace ¥1.4 billion (acquisition) (50.2% quasi-co-ownership) (49.8% quasi-co-ownership) ¥10.5 billion (acquisition) ¥10.5 billion (acquisition) Sourcing & Leasing Support IDERA Capital Management Ltd. Note: Includes private funds and private REITs under the control of MAH as well as Mitsui & Co. Group companies. 本文ページ Risk Diversification Through Replacements of Assets 7 Achieved portfolio diversification through replacement and co-ownership of assets under current market environment. (Reference) No replacement of portfolio (Note1) Acquisition of the entire Tokyo Front Terrace Before Replacement After Replacement + continuous ownership of (as of the end of September, 2017) (as of the end of February, 2018) the entire Shinagawa Seaside Parktower Portfolio Top 3 assets Top 3 assets Top 3 assets Diversification 65 % 51 % 60 % Top 10 tenants 57 % 53 % 51 % Total number of tenants 97 tenants 160 tenants 160 tenants Number of properties 15 properties 18 properties 18 properties AUM (Total acquisition price) 100.7 billion yen 105.5 billion yen 127.8 billion yen Total amount of debts 49.0 billion yen 54.0 billion yen 76.0 billion yen LTV (Note2) 45 % 48 % 56 % Note1: Assume the acquisition of Tokyo Front Terrace (100%) at 21.1 billion yen in addition to Nippo Hommachi Building, Nara Heijo Plaza and MIUMIU Kobe (building) with loan of 27.0 billion yen, while the entire Shinagawa Seaside Parktower is continuously owned. Note2: LTV=Outstanding interest-bearing debt / Total assets. 本文ページ Tenant Breakdown of Tokyo Front Terrace 8 IDERA Capital Management Ltd. began leasing activities in the second half of 2015 and have realized occupancy rate of 96.5% and average rent of 17,100 yen. Stacking Plan Tenant Diversification Lease commencement date (based on rent) (based on rent) Q R S T Telecom P U O V The second The first N A half of 2017 half of 2016 20F Telecom Telcom M Manufacturing L K Telcom J I Telcom B 15F H Telcom G The first half Manufacturing Telcom Financial of 2017 C The second Transportation Wholesale F half of 2016 E Wholesale Service D Rent 10F Service Market rent (rent/ per tsubo / per month) Food and Beverage Average under 16,000 Area Wholesale Telcom Manufacturing Manufacturing Over 17,500 rent 16,000-16,500 Chiyoda 40,499 yen Service Shibuya 25,182 yen 5F (Note) Average rent Minato 28,851 yen Service 17,100 yen Shinjuku 29,599 yen Directly connected to the monorail station Tokyo Front Terrace 1F Entrance Chuo 24,554 yen in negotiations 17,000-17,500 Shinagawa 20,286 yen 16,500-17,000 Source : Building Group Co., Ltd. June, 2017 Note: Rounded to the nearest 100 yen. 本文ページ Acquisition of Growth Asset to Enhance Profitability 9 Started investing in Growth Asset to pursue upside while controlling risk. Nara Heijo Plaza Advantages of Revitalization-type Retail Property Deep Competitive rent due to low acquisition price discount Relatively high yield and upside can be expected High degree of flexibility in layout due to full renovation Flexibility Flexibility in tenant mix without the constraints of business affiliation Inheriting existing customer base Publicity Enjoying a high publicity from the time it opens Scenario Analysis (Note1) Based on Base case Scenario minimum (forecast for the Upside guaranteed rent 5th FP) Rent revenue 840 million yen 970 million yen 1.08 billion yen NOI 300 million yen 440 million yen 540 million yen NOI yield 6.0% 8.7% 10.8% 5,750yen 5,600yen 5,350yen 650yen DPU 500yen Impact 250yen Core-DPU (Note2) 5,100yen Note1: This information based on certain assumptions as of December 11, 2017 and is intended for reference purposes only. It may not be the same as business forecasts to be announced in the future and is not a guarantee of future performance of DPU. Note2: Assuming portfolio consisting of core assets only, excluding Nara Heijo Plaza based on assumptions as of December 11, 2017, and is intended for reference purposes only. 本文ページ Tenant Layout of Nara Heijo Plaza 10 “Tourism-oriented retail property” combining daily needs and leisure. 1F Groceries/Drugs/Food Court 2F Fashion/Household & Accessories 3F Kids & Family Lifestyle Amusement Fashion Service Restaurants In negotiations 4F Samurai, Ninja & Kingyo(goldfish) Museum 5F Amusement / Art Gallery RF Amusement / Beer Hall Note: Prepared by the Asset Management Company based on conclusion of lease contracts (pre-commitments) and the receipt of store opening applications as of December 11, 2017 and subject to change. 本文ページ Tenant Breakdown of Nara Heijo Plaza 11 2/3 of tenants cater for daily needs while 1/3 are amusement and tourism-oriented tenants. Majority of contracts are long-term contracts of 10 years or more and fixed rent. In A negotiations Amusement Tenant B Service Tenant category Diversification Restaurant C D J Fashion E I Lifestyle H G F In In negotiations More than negotiations 20 years 5 years of Lease term Rent type Fixed rent less Sales-linked rent 5-10 years Fixed rent + 10-20 years Sales-linked rent Note: Figures show diversification on a leased area basis and were prepared by the Asset Management Company based on conclusion of lease contracts (pre-commitments) and the receipt of store opening applications as of December 11, 2017 and are subject to change.