NIPPON REIT Investment : Investor Presentation for the 20th Period

NIPPON REIT Investment Corporation (TSE code：3296)

Investor Presentation

for the 20th Period (Ended June 30, 2022) August 16, 2022

NIPPON VISION

Serious, Steady, Solid.

https://www.nippon-reit.com/en/

Contents

1. Summary of Financial Results for the 20th Period (Jun. 2022)

⚫	Financial Highlights	3
⚫ Summary of Financial Results for the 20th Period (Jun. 2022)	4
⚫ Summary of Forecast for the 21st Period (Dec. 2022)	5
	and the 22nd Period (Jun. 2023)
⚫	Track Record of Unitholders' Value	6

2.	Portfolio Summary
⚫	Portfolio Summary (As of the end of the 20th Period)	8
⚫	Risk Diversification (As of the end of the 20th Period)	9

4. Data Related to Financial Results for the 20th Period (Jun. 2022)

⚫ Financial Results for the 20th Period (Jun. 2022)

25

• Financial Forecast for the 21st Period (Dec. 2022)

	and the 22nd Period (June. 2023)	26
⚫ Financial Forecast for the 21st Period (Dec. 2022)	27
⚫	Balance Sheets	28
⚫	Historical Operating Results	29
⚫	Property NOI Yield	30
⚫	Appraisal Value Summary	34
⚫	Portfolio Appraisal Value	35
⚫ Portfolio Summary (as of the end of the 20th Period)	39
⚫	Notes	43

3. Management Status for the 20th Period		Appendix
⚫ Environment Recognition and Growth Strategies	11	⚫ Nippon REIT's Policy and Asset Management Company	46
⚫ Track Record of AUM	12	⚫ Overview of NIPPON REIT	47
⚫ Asset Replacement and Pipeline	13	⚫	Portfolio/Portfolio Diversification/Tenant Diversification	48
⚫ Occupancy Rate and Rent-free Period Trend	14	⚫ Characteristics of Medium-sized Office	49
⚫ Status and Cause of Move-in/out; Rent Change at the Time of		⚫ Ratio of Tenant (by leased area) (as of the end of the 20th
	Tenant Replacement (Office)	15		Period)	50
⚫ Track Record of Rent Renewals		⚫ Residential Tenant Data (as of the end the 20th Period)	51
	and Rent Increase Upon Contract Renewals (Office)	16	⚫ Track Record of Asset Replacement Based on Tearing
⚫ Track Record of Rent Change Ratio and Rent Gap Trend (Office)	17		Projects	52
⚫ Status of Tenant Move-in/out, Rent Change and Occupancy		⚫ Status of Cancellation Notices (Office & Retail)	53
	Rate by Region (Residential)	18	⚫	Original Leasing Services	55
⚫	Engineering Management	19	⚫	Sustainability Initiatives	56
⚫	Financial Management	21	⚫ Overview of Sponsor Support	60
⚫	Sustainability Initiatives (Summary)	23	⚫	Unitholder Status	61
			⚫ Historical Unit Price (from IPO to the end of the 20th Period
				(Jun. 30, 2022))	62

1

1. Summary of Financial Results for the 20th Period (Jun. 2022)

2

Financial Highlights

20th Period DPU: ¥8,825 (+¥239 Change from the Forecast)

Operating Revenue

• 8,534 mm

External Growth

Internal Growth

ESG

Operating Income	Ordinary Income
¥ 4,599 mm	¥ 3,971 mm

AUM	Asset Replacement
(as of the end of 20th period)
(during the 20th period)

106 properties ¥254.7bn Transfer 1 property ¥1.4bn

Acquisition 0 property ¥0bn

Occupancy Rate	Monthly Rent Increase
through Rent Renewal and
(as of the end of 20th period)
Tenant Replacement
98.0％	(Office and Residential) (20th period)
¥0.82mm/month
(office 98.3％)
+¥11/fiscal period in DPU

• Acquired ZEB Ready Certification at two properties (Nishi-Shinjuku Sanko Building and La Verite AKASAKA)
• Acquired CASBEE for Real Estate certification at FORECAST Sakurabashi
• Switching to Virtually Renewable Energy Derived Electricity at Omiya Center Building
• Released ESG Annal Report 2021 (June 2022 revision)

Net Income

• 3,970 mm

Gain on Sales ¥0.12bn

Pipeline

(as of the end of 20th period)

10 properties ¥9.1bn

Expected NOI Increase through

Engineering Management

(for the 20th period)

¥21.25mm p.a.

+¥23/fiscal period in DPU

Environmental Certification

(as of the end of 20th period)

35.7%

of the total floor area

21st Period	22nd Period
DPU Forecast	¥8,259	DPU Forecast	¥8,260
Operating Revenue	Operating Income	Operating Revenue	Operating Income
¥8,434mm	¥4,392mm	¥8,538mm	¥4,392mm
Ordinary Income	Net Income	Ordinary Income	Net Income
¥3,716mm	¥3,716mm	¥3,717mm	¥3,716mm

3

Summary of Financial Results for the 20th Period (Jun. 2022)

(¥/mm)	19th	20th	20th	20th Period	20th Period
	Period	Period	Period	(Result)	(Result)
	vs	vs
	(Dec. 2021)	(Jun. 2022)	(Jun. 2022)
	19th Period	20h Period
	Result	Forecast	Result	(Result)	(Forecast)
				(difference)	(difference)
	a	b	ｃ	c-a	c-b
Operating	10,041	8,519	8,534	(1,506)	+15
Revenues
Operating	(3,997)	(4,023)	(3,935)	+62	+88
Expenses
Operating	6,043	4,495	4,599	(1,444)	+104
Income
Ordinary	5,390	3,863	3,971	(1,419)	+107
Income
Net	5,335	3,863	3,970	(1,365)	+107
Income
DPU	¥11,665	¥8,586	¥8,825	(¥2,840)	+¥239
NOI	6,355	6,222	6,330	(25)	+107
Days	184	181	181	-	-

• Comparison against the 19th Period (Dec. 2021) Result (c-a)

《Major fluctuation factor》		(¥/mm)
Decrease in Operating Revenues		(1,506)
Decrease in rental revenue	Decrease in revenues resulting from	(18)
	the sale of the Sunworld Building
Decrease in utilities charge	Increase in residential properties	(14)
revenue
Decrease in gain on sales of real	Absence of gain on the sale of the	(1,477)
estate properties	Toshin Higashi-Ikebukuro Building and
	three other properties
Decrease in Operating Expenses		+62
Increase in utility expenses	Rise in electricity charges	(44)
Decrease in repair expense		+29
Increase in tax	Accrual of fixed asset and city
	planning taxes on properties acquired	(25)
	in the 18th and 19th fiscal periods,
	etc.
Decrease in other expense	Decrease in other expense	+35
Decrease in non-deductible		+34
consumption taxes
Decrease in Non-operating	Decrease in borrowing expenses due	+15
Expenses	to fewer business days, etc.

• Comparison against the 20th Period (Jun. 2022) Forecast (c-b)

《Major fluctuation factor》		(¥/mm)
Increase in Operating Revenues		+15
Increase in rental revenue		+2
Increase in utilities charge revenue	Increase in invoiced unit price, increase in	+22
	usage, etc.
Decrease in miscellaneous income		(8)
Decrease in Operating Expenses		+88
Decrease in repair expense		+37
Decrease in tax		+13
Decrease in Leasing related	Delay in leasing progress, etc.	+31
expense
Increase in AM fee	NOI increase, etc.	(7)

(¥/mm)

Internal105

Reserves

4