One REIT : Summary of Financial Results for the Fiscal Period Ended August 2021 (REIT)

					Translation Purpose Only
Summary of Financial Results for the Fiscal Period Ended August 2021 (REIT)
					October 15, 2021
REIT Issuer:		One REIT, Inc.		Stock Exchange Listing: Tokyo Stock Exchange
Securities Code:		3290		URL: https://one-reit.com/en/
Representative:	(Title)	Executive Director	(Name)	Hirofumi Nabeyama
Asset Management Company:	Mizuho REIT Management Co., Ltd.
Representative:	(Title)	Chief Executive Officer	(Name)	Hirofumi Nabeyama
Contact:	(Title)	Managing Director	(Name)	Takeshi Akimoto
		Finance & Administration Division
	TEL	[phone]
Scheduled date of submission of securities report:	November 29, 2021
Scheduled date of commencement of distribution payment:	November 19, 2021
Preparation of supplementary financial results briefing materials: Yes
Holding of financial results briefing session:	Yes (for institutional investors and analysts)

(Amounts are rounded down to the nearest million yen)

1. Status of Management and Assets for the Fiscal Period Ended August 2021 (March 1, 2021, to August 31, 2021)

(1)

Management status

(% figures are the percentage of increase (decrease) compared with the previous period)

Fiscal period

Operating revenue

Operating profit

Ordinary profit

Net income

million yen

%

million yen

%

million yen

%

million yen

%

Ended Aug. 2021

4,889

20.4

2,878

125.9

2,613

155.4

2,612

155.6

Ended Feb. 2021

4,060

(2.6)

1,274

(41.6)

1,023

(46.7)

1,022

(46.7)

Net income

Ratio of

Ratio of

Ratio of

Fiscal period

net income to

ordinary profit to

ordinary profit to

per unit

equity

total assets

operating revenue

yen

%

%

%

Ended Aug. 2021

10,890

5.0

2.3

53.5

Ended Feb. 2021

4,260

1.9

0.9

25.2

(2)

Distributions status

Distribution

Total

Distribution

Total

per unit

distributions

Distribution

Total

per unit

distributions

Ratio of

(excluding

(excluding

per unit

distributions

(including

(including

Distribution

Fiscal period

distributions

distribution

distribution

in excess of

in excess of

distribution

distribution

payout ratio

to net assets

in excess of

in excess of

earnings

earnings

in excess of

in excess of

earnings)

earnings)

earnings)

earnings)

yen

million yen

yen

million yen

yen

million yen

%

%

Ended Aug. 2021

7,546

1,810

－

－

7,546

1,810

69.2

3.4

Ended Feb. 2021

5,057

1,213

2,548

611

7,605

1,824

118.6

2.3

(Note 1) Distribution payout ratio is calculated by the following formula (rounded down to one decimal place). Distribution payout ratio = Total distributions (excluding distribution in excess of earnings) ÷ Net income × 100

(Note 2) Distribution in excess of earnings for the fiscal period ended February 2021 is from allowance for temporary difference adjustments.

(3) Financial position

Fiscal period	Total assets	Net assets	Equity ratio	Net assets per unit
	million yen	million yen	%	yen
Ended Aug. 2021	113,808	53,156	46.7	221,570
Ended Feb. 2021	110,403	52,368	47.4	218,284
(4) Status of cash flows
	Net cash	Net cash	Net cash	Cash and cash equivalents
Fiscal period	provided by (used in)	provided by (used in)	provided by (used in)
at end of period
	operating activities	investing activities	financing activities
	million yen	million yen	million yen	million yen
Ended Aug. 2021	11,453	(12,252)	1,026	9,500
Ended Feb. 2021	2,022	(317)	(1,918)	9,273
		1

Translation Purpose Only

2. Forecast of Financial Results for the Fiscal Periods Ending February 2022 (September 1, 2021, to February 28, 2022) and August 2022 (March 1, 2022, to August 31, 2022)

(% figures are the percentage of increase (decrease) compared with the previous period)

Fiscal period	Operating revenue	Operating profit		Ordinary profit	Net income
	million yen	%	million yen	%		million yen	%	million yen		%
Ending Feb. 2022	4,365	(10.7)	2,235	(22.3)		1,931	(26.1)	1,930		(26.1)
Ending Aug. 2022	4,425	1.4	2,218	(0.8)		1,912	(1.0)	1,911		(1.0)
Fiscal period		Distribution per unit				Distribution per unit
(excluding distribution in excess of earnings)			in excess of earnings
				yen						yen
Ending Feb. 2022				7,190						－
Ending Aug. 2022				7,120						－
(Reference) Forecast net income per unit (fiscal period ending February 2022): 7,190 yen
Forecast net income per unit (fiscal period ending August 2022):	7,120 yen

• Other
• 1. Changes in accounting policies, changes in accounting estimates and retrospective restatement

• Changes in accounting policies accompanying amendments to accounting standards, etc.: No

②	Changes in accounting policies other than ① :	No
③	Changes in accounting estimates:	No
④	Retrospective restatement:	No

1. Number of investment units issued and outstanding
2. • Number of investment units issued and outstanding (including own investment units) at end of period

Fiscal period ended August 2021	239,908	units
Fiscal period ended February 2021	239,908	units

• Number of own investment units at end of period

Fiscal period ended August 2021	－	units
Fiscal period ended February 2021	－	units

(Note) For the number of investment units used as the basis for calculating net income per unit, please refer to "Notes on Per Unit Information" on page 26.

• Summary of financial results are exempt from the audit by a certified public accountant or an auditing firm.
• Special note
  The management status outlook and other forward-looking statements contained in this document are based on information currently available to and certain assumptions deemed reasonable by One REIT. Accordingly, actual management status and other results may differ materially due to a variety of factors. In addition, the forecast is not a guarantee of the amount of distributions. For the assumptions for the forecast of management status, please refer to "Assumptions for the Forecast of
  Management Status for the Fiscal Periods Ending February 2022 and August 2022" presented on page 8.

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One REIT, Inc. (3290) Summary of Financial Results for the Fiscal Period Ended August 2021

• Table of Contents

1. Management Status ..................................................................................................................................................................	4
(1)	Management Status.............................................................................................................................................................	4
① Overview of the Fiscal Period Under Review.................................................................................................................	4
② Outlook for the Next Fiscal Period .................................................................................................................................	5
③ Subsequent Material Events............................................................................................................................................	6
(2)	Investment Risks.................................................................................................................................................................	9
2. Financial Statements...............................................................................................................................................................	10
(1)	Balance Sheet....................................................................................................................................................................	10
(2)	Statement of Income .........................................................................................................................................................	12
(3)	Statement of Unitholders' Equity......................................................................................................................................	13
(4)	Statement of Cash Distributions .......................................................................................................................................	14
(5)	Statement of Cash Flows ..................................................................................................................................................	15
(6)	Notes on the Going Concern Assumption .........................................................................................................................	16
(7)	Notes on Matters Concerning Significant Accounting Policies ........................................................................................	16
(8)	Notes to the Financial Statements .....................................................................................................................................	19
(9)	Increase (Decrease) in Total Number of Investment Units Issued and Outstanding .........................................................	28
3. Reference Information ............................................................................................................................................................	29
(1)	Information on Price of Assets Under Management, Etc. .................................................................................................	29
(2)	Status of Capital Expenditures ..........................................................................................................................................	40
(3)	Borrowing Status ..............................................................................................................................................................	42

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One REIT, Inc. (3290) Summary of Financial Results for the Fiscal Period Ended August 2021

1. Management Status

1. Management Status

• Overview of the Fiscal Period Under Review

1. Brief History of the Investment Corporation
   One REIT has Mizuho REIT Management Co., Ltd. (hereinafter referred to as the "Asset Management Company") (Note 1), which is a member of the Mizuho Financial Group, as its asset management company, and sets middle-sized office buildings (Note 2) as its focal investment target while incorporating other office buildings, etc., aiming to construct a portfolio that both ensures stable income in the medium to long term and exhibits growth potential. Furthermore, One REIT strives for further growth with the aim of maximizing unitholder value under the basic policies of "continuous growth of distributions" and "disciplined external growth while considering the portfolio and financial structure," alongside obtaining various support in terms of property acquisition, management, and financial aspects from our sponsor, Mizuho Trust & Banking Co., Ltd., which has an abundant track record in the Japanese real estate market.
   The Investment Corporation was incorporated, pursuant to the Act on Investment Trusts and Investment Corporations (hereinafter the "Investment Trust Act"), on June 25, 2013, with the Asset Management Company as the organizer and listed on the J-REIT section of the Tokyo Stock Exchange (securities code: 3290) on October 9, 2013. With public offering, etc. that followed, the total number of investment units issued and outstanding as of the end of the period under review stands at 239,908.

(Note 1) Mizuho Financial Group, Inc., Mizuho Trust & Banking Co., Ltd. and Mizuho Realty One Co., Ltd. (hereinafter referred to as "MONE") fall within the scope of parent companies of the Asset Management Company. MONE is a wholly owned subsidiary of Mizuho Trust & Banking Co., Ltd., the sponsor, and holds all issued shares of the Asset Management Company and Mizuho Real Estate Management Co., Ltd. (hereinafter referred to as "MREM"). Three companies, namely MONE, the Asset Management Company and MREM, together comprise the MONE Group. MREM is the management company of MONE Group's private real estate fund.

(Note 2) "Middle-sized Office Building" is a category of office building with a total floor area within the range of 3,300 m2 (approximately 1,000 tsubos) and 33,000 m2 (approximately 10,000 tsubos).

1. Investment Environment and Management Performance
   In the fiscal period under review (fiscal period ended August 2021 (16th fiscal period)), the economic environment was severe both in Japan and abroad due to the impact of COVID-19 but trends for a pick-up is continuing as the vaccination has proceeded while measures to prevent the spread of COVID-19 were taken. However, it is still difficult to predict the end of the pandemic considering factors including the recording of the highest number of new daily COVID-19 cases in Tokyo in August 2021.
   In the office building leasing market, the vacancy rate in central Tokyo, which was at a record-low level, turned upward due to the impact of COVID-19, raising concerns over possible decline in the rent level.
   One REIT made partial amendments to the Articles of Incorporation to exclude retail facilities from the main investment targets at its general meeting of unitholders held on May 25, 2021, for the purpose of aiming to construct a portfolio that both ensures stable income in the medium to long term and exhibits growth potential more than ever before. In addition, to improve portfolio quality under asset replacement, One REIT transferred three properties (Yushima First Genesis Building, 36 Sankyo Building, and fab Minami-Osawa) on March 26, 2021, and acquired three properties (D'sVARIE HONGO BLDG, MSB-21Minami-Otsuka Building, and D'sVARIE KANDA BLDG) on March 30, 2021.
   Furthermore, One REIT conducted leasing activities focused on maintaining and enhancing occupancy rates by flexibly setting new advertised rent and such in light of market trends, while working to realize optimal costs in property management by taking into consideration tenant needs and the characteristics of the respective properties. As such, One REIT endeavored to enhance leasing business revenues.
   As a result, One REIT's portfolio as of the end of the fiscal period ended August 2021 comprised a total of 25 properties (total acquisition price: 104,270 million yen; not including silent partnership equity interest) with a total leasable area of 152,934.87 m2, and the occupancy rate as of the end of the fiscal period ended August 2021 was 99.2%.
   (Reference)
   One REIT acquired six properties (Kuramochi Building Daiichi, REID-C Chiba Ekimae Building, Shinkawa 1-chome Building, Hakozaki 314 Building, Aperto Higashi-Nakano Building and Daido Life Mito Building; total acquisition price of 15,657 million yen) on September 24, 2021. Through these acquisitions, One REIT sought to improve the quality of its portfolio through tenant diversification and stabilization of the revenue base.
2. Overview of Financing
   In the fiscal period ended August 2021, One REIT procured 2,850 million yen through syndicated loans arranged by Mizuho Trust & Banking Co., Ltd. and Mizuho Bank, Ltd. on March 30, 2021, and used the funds for the acquisition and ancillary costs of D'sVARIE HONGO BLDG, MSB-21Minami-Otsuka Building and D'sVARIE KANDA BLDG.
   As a result, as of August 31, 2021, the balance of interest-bearing liabilities was 53,674 million yen and the ratio of interest-bearing liabilities to total assets (LTV) was 47.2%.
3. Overview of Business Performance and Distributions
   As a result of the management described above, business performance in the fiscal period ended August 2021, was operating revenue of 4,889 million yen, operating profit of 2,878 million yen, ordinary profit of 2,613 million yen and net income of 2,612 million yen.
   One REIT decided to distribute almost the entire amount of unappropriated retained earnings after deducting the amount internally reserved in or before the previous fiscal period with the reversal of allowance for temporary difference adjustments (611 million yen), the accrual of gain on sale of real estate properties and such in a manner that the maximum amount of distributions of earnings would be included in deductible expenses by application of the special provisions for taxation on investment corporations (Article 67-15 of the Act on Special Measures Concerning Taxation).
   As a result, One REIT declared distribution per investment unit of 7,546 yen.

4

One REIT, Inc. (3290) Summary of Financial Results for the Fiscal Period Ended August 2021

• Outlook for the Next Fiscal Period

1. Future Investment Environment
   The domestic economy is expected to pick up by balancing measures to prevent the spread of COVID-19, including vaccinations, and resumption of economic activities going forward. However, resurgence of COVID-19 cases and its prolongation as well as fluctuations in financial and capital markets should continue to be watched carefully.
   In the office building leasing market, close attention needs to be paid to the impact of COVID-19 on tenants and the movements of tenants, such as cutback of office expenses in line with deterioration of business results and reviewing of future offices amid the promotion and increase of remote work. In the office building transaction market, since there still are many investors both in Japan and abroad who are eager to acquire prime investment properties, transaction prices are expected to remain at a high level. However, it will be important to firmly maintain the attitude of making selective investment while carefully monitoring the impact of COVID-19 on the trends of the real estate market.
2. Future Management Policy and Challenges to Address
   One REIT strives to grow while obtaining various support in terms of property acquisition, management and financial aspects from our sponsor, Mizuho Trust & Banking Co., Ltd., which has an abundant track record in the Japanese real estate market, and aims to maximize unitholder value. One REIT will seek to maintain and increase the value of assets under management through operation and management aimed at maximizing competitiveness (internal growth) as well as improve the portfolio quality by continuing to conduct selective investment (external growth) to achieve stable growth over the medium to long term.
   In order to achieve the growth strategy in both aspects of external growth and internal growth as described above, it is the policy of One REIT to take full advantage of support from Mizuho Trust & Banking Co., Ltd., the sponsor, in addition to utilizing investment expertise and business as well as other resources of the Asset Management Company, MONE and MREM.

1. External Growth
   One REIT aims to expand asset size, while maintaining and enhancing the portfolio quality by conducting investment having assessed the location, building specifications, tenant attributes, etc. of individual properties, based on the policy to build a portfolio with middle-sized office buildings as the core investment target while also incorporating other office buildings, etc.
   With the Tokyo metropolitan area, which has a relatively large market size and holds abundant acquisition opportunity, as the primary investment target region and also targeting ordinance-designated cities and core regional cities equivalent to ordinance-designated cities (Note) (hereinafter collectively referred to as "ordinance-designated cities, etc.") which offer the prospect of a degree of rental demand, One REIT will seek to build a portfolio that diversifies investment to regional areas as well. By formulating main investment target areas and degree of importance for each region in the Tokyo metropolitan area and in ordinance-designated cities, etc., investment areas are carefully selected and, furthermore, suitability of location is scrutinized in each investment area in terms of convenience of transportation, ability to attract tenants, etc.

(Note) "Core regional cities" refers to non-ordinance-designated cities located outside the Tokyo metropolitan area that are the location of a prefectural government (prefectural capitals) or their equivalent.

(b) Internal Growth

One REIT will seek to maintain and increase occupancy rates and increase leasing business revenue by taking the following initiatives.

• Strengthening collaboration with property management companies and brokers
• Building and strengthening tenant relations
• Negotiating for upward rent revisions to meet the market trends
• Maintaining and enhancing property value through utilization of strategic CAPEX (capital expenditure) (Note)
• Reducing operation/management costs by reviewing current contracts
• Strengthening ESG (environment, society and governance) initiatives for which there is strong demand from society

(Note) "Strategic CAPEX (capital expenditure)" refers to implementing capital expenditures for renovation work, introduction of individual air-conditioning systems, improvement of building visibility through renovating entrance areas and other work for maintaining and enhancing property value based on long-term perspectives, in a timely and appropriate manner while taking priority level and other factors into consideration.

5