investor presentation for the merger...2020/08/28 · • mixed-use • retail external growth aim...

I n v e s t o r P r e s e n t a t i o n f o r t h e M e r g e r

August 28, 2020

1. Overview of the Merger

2. Significance of the Merger

3. Growth Strategy

4. Financial Strategy

5. Post-Merger Financial Forecast

Appendix

Contents

P. 2

P. 10

P. 18

P. 23

P. 26

P. 28

Figures of less than one unit are truncated and percentage figures are calculated by rounding to the nearest whole number. (Note)

1. Overview of the Merger

Basic Principle of the New Investment Corporation

Support metropolitan life (live, work and consume) in Japan from the perspective of real estate

The largest(1) diversified J-REIT(2) investing in real estate that provide metropolitan life foundations

Japan Metropolitan Fund Investment Corporation

(MMI) (JRF)

3 *Please refer to page 41 for the notes to this page.

Significance of the Merger

Fit to Environment Changes

Promote flexible operation of facilities beyond the framework of asset classes, amid changes in operational environment

Strengthen capabilities to operate mixed-use properties by area or by asset level, under the structure of diversified REIT

Enhance unitholder values of both JRF and MMI through transition into diversified REIT

Expand Investment Universe Able to acquire mixed-use properties(1) and residential properties etc.

Able to enter into large scale transactions, such as bulk sale of multiple type assets

Allow greater flexibility in acquisition strategies to cope with expected changes in the

social structure

Create the Largest J-REIT Increase market presence significantly

Improve stability by more-diversified portfolio Enhance liquidity by increasing market capitalization

Enhance Stability

Further diversify portfolio

Build resilience to deterioration in business environment

Increase liquidity of the investment units and exposures in major indices

Accelerate Growth Further promote asset replacement and

external growth

Make the best use of properties beyond the framework of asset class

Accelerate investment for growth on the back of higher risk tolerance

1.

2.

3.

4 The term “Mixed-use properties” means properties occupied by more than two types of tenants such as retail, office, residential, hotel or other uses.

(1)

As of listing(1) (End of) latest period(2)

Number of properties 4 100

Asset size(3) 40.9bn yen 877.2bn yen

DPU(4) 3,313 yen 4,500 yen

NAV per unit(4)(5) 111,900 yen 223,600 yen

Before MC-UBS Group participation(6)

(End of) latest period(2)

Number of properties(7) 12 25

Asset size(3)(7) 157.6bn yen 282.7bn yen

DPU(8) 1,191 yen 2,049 yen

NAV per unit(5)(8) 63,500 yen 98,500 yen

Urban retail properties located in “where people gather” Main investment target Office buildings located in the three major metropolitan areas (Tokyo area, Osaka area and Nagoya area)

• Track record of 18 years • The largest J-REIT focusing on retail properties in terms of

asset size • Promotion of asset replacement from suburban-type to urban-

type

Operating results

• Proactive acquisition of properties since the MC-UBS Group participation as sponsor in 2015

• Almost doubled asset size in the past five years • Shifted the focus of the portfolio from Osaka area to Tokyo

area

Key properties

Characteristics of JRF and MMI

GYRE KAWASAKI Le FRONT mozo wonder city Twin 21 Yokohama i-land Tower Cube Kawasaki


Japan Retail Fund Investment Corporation

(as of August 31, 2020)(5)

MCUBS MidCity Investment Corporation

（as of June 30, 2020)(6)

New Investment Corporation (Japan Metropolitan Fund)

（as of March 1, 2021) (Pro forma)(7)

Portfolio

Asset size (based on (anticipated) acquisition price) 888,884 million yen 282,710 million yen 1,191,594 million yen

Number of properties 102 properties 25 properties 127 properties

NOI yield (based on (anticipated) acquisition price)(1) 4.9% 4.5% 4.7%

NOI yield after depreciation (based on (anticipated) acquisition price) (2) 3.6% 3.6% 3.6%

Unrealized gain or loss 160,917 million yen 23,241 million yen 160,917 million yen

Financials

LTV 45.5% 42.1% 43.9%

Interest-bearing debt 411,725 million yen 126,975 million yen 538,700 million yen

Credit rating AA-(R&I) AA-(JCR) Aim to maintain/improve

Unitholder Value

NAV per unit(3) 223,800 yen 98,500 yen 108,200 yen

Book value per unit(4) 166,400 yen 87,500 yen 87,500 yen

Merged Investment Corporation at a Glance

Feb. 2021 Period (38th) (Forecast)

Jun. 2020 Period (28th) (Actual)

Aug. 2021 Period (39th) (Forecast)

DPU

DPU (forecast) 4,500 yen 2,049 yen 2,286 yen

DPU (forecast) (after accounting for merger ratio and unit split) 2,250 yen 2,049 yen Japan Retail Fund

Investment Corporation

MCUBS MidCity Investment Corporation

＋1.6% ＋11.6%

% Change(8)


Post-merger Portfolio

Diversification by Use(2) Diversification by Property Size(4) Diversification by Area(1)

Urban retail 51.2%

Office 15.6%

Mixed-use

11.6%

Others (3) 1.3%

Suburban retail

20.2%

Share of Top 10 Properties

31.5%

Walking Minutes from Nearest Station(6) Others Tenant Diversification(5)

Within 10 minutes

Within 1 minute 21.3％

More than 1 minute and less than or equal to 5 minutes 46.5％

More than 10 minutes

15.0％

Share of Top 10 Tenants

37.9％

Rent Type (based on annual rent)

Fixed 98.1％

Revenue-based 1.9％

Lease Type (based on annual rent)

Ordinary building (land) lease contract 42.3％

Fixed-term building (land) lease contract 57.7％

Lease Period(7) Average lease period 10.3years

85.0％ Share of top 10 tenants before merger

JRF 45.3%

MMI 57.3%

Share of top 10 properties before merger

JRF 35.4%

MMI 72.0%

Asset Size

1,191.5bn yen

More than 5 minutes and less than or equal to 10 minutes 17.3％

Others 11.8%

Tokyo Area 54.0%

Osaka Area

28.5%

Nagoya Area 5.7%

Share of Three Metropolitan Areas

88.2%


Growth Strategy

Basic Principle of the New Investment Corporation

Support metropolitan life (live, work and consume) in Japan from the perspective of real estate

Enha

nce

Unith

olde

r Val

ue

Short- to Mid-term

Mid- to

Long-term

Future Vision

Create virtuous cycle where area value and asset value improve together

• Further shift into urban properties and diversify asset type • Aim to increase DPU level

Build base for growth and improve profitability

• Revenue increase backed by external growth • Implementing reconstruction and conversion, etc. • Other investment measures for growth such as M&As

Execute various growth investments

8

Outline of Merger and Planned Schedule

Outline of Merger

Name of the new investment corporation

Japan Metropolitan Fund Investment Corporation Abbreviation : JMF

Method of the Merger

Absorption-type merger Surviving corporation :Japan Retail Fund Investment

Corporation (JRF) Dissolving corporation :MCUBS MidCity Investment

Corporation (MMI)

Merger ratio

JRF : MMI＝1 : 1 (Allot 1 JRF investment unit per one MMI investment unit※) ※ A two for one unit split of JRF is scheduled in order to

allot one or more JRF investment units to MMI unitholders and the merger ratio will be based on the number of JRF units after the unit split

※ For reference, the merger ratio based on the number of JRF units before the unit split is JRF : MMI＝1 : 0.5

Conditions for the Merger

The Merger is subject to that a proposal for approval of the Merger Agreement (a special resolution(1)) will be approved at the meetings of unitholders of both JRF and MMI

Planned Schedule

Execution of the Merger Agreement August 28, 2020

Record date for meeting of unitholders

August 31, 2020

Record date for meeting of unitholders

September 13, 2020

Meeting of unitholders October 23, 2020

Meeting of unitholders October 22, 2020

Delisting February 25, 2021

End of the final fiscal period before the Merger(2)

February 28, 2021

End of the fiscal period (immediately before the Merger)

February 28, 2021

Effective date of the Merger March 1, 2021

Payment of distribution Middle of May, 2021

Payment of merger consideration(3)

May, 2021

End of the first fiscal period after the Merger August 31, 2021


(JRF) MCUBS MidCity Investment Corporation

(MMI)

9

Such resolution shall be passed with at least a two-thirds majority of the votes of the attending unitholders with the unitholders in attendance holding over half of the units outstanding. MMI will submit a proposal for a revision of the Articles of Incorporation to change the 29th business period, from the period from July 1, 2020 to December 31, 2020 to that from July 1, 2020 to February 28, 2021, to its general meeting of unitholders to be held on October 22, 2020, subject to approvals of the Merger Agreement at the respective general meetings of unitholders of JRF and MMI. The same shall apply hereinafter. An amount equivalent to the cash distribution for the business period of MMI from July 1, 2020 to February 28, 2021 will be paid as the merger consideration.

(1) (2) (3)

2. Significance of the Merger

Environment Changes

Urban

Mixed use means higher added value Various types of use head for coexistence and co-prosperity

Place to offer experience that cannot be gained via e-commerce Further distinction between online and real

Commuter-town Suburban

Office

Retail Residence

Changes in needs for office floors

No change in advantage of Urban

A role of offices is changing from a place for work to a place for interaction

Convenient offices remain highly valued as a place for interaction

Decline in needs for floor to sell product

Properties in favorable locations will increasingly become mixed-use

Rise in e-commerce

Conversion into a showrooming space or other use accelerates

Continued concentration of population to urban areas

Growing needs for residence in Urban

Population inflow into urban areas because of their strengths in social infrastructure

Needs for areas where one can work and consume increase

Accelerating contraction of rural area economies The decline and outflow of population

Increase in vacant facilities Reduction in number of tenants

✔ Widespread e-commerce and remote working

✔ Trend of mixed-use by area and by property

Growing needs for living near office Increase in number of elderly people and women who work, and more needs for nursing

Growing needs for consumption near home Increase in daytime population due to the spread of work from home

COVID-19 is accelerating environment changes

Office (Headquarters)

Office (Branches) Satellite Office

Showrooming / hands-on services

Facilities that can be used for other purposes, including

shops, other services, restaurants, offices and hotels

Supermarkets and other facilities deeply

engaged in daily living

Residential area (Urban）

Residential area （Commuter-town）

Added value

Needs for consumption in living areas

Needs for consumption in office districts

More people prefer to live in urban areas

Decline in retail properties located in

suburban areas

Decline in demand for office properties located in suburban

areas

Investment Target of the New Investment Corporation Accelerating trend of m

ixed-use by area or by property

Added value

11

Increase in Mixed-use Properties

Office District Principal commercial districts Major stations/Residential stations

Examples of mixed-use

by area

Examples of mixed-use

by property

Urban Commuter-town

Akasaka / Shibuya Through active redevelopment, a number of mixed-use properties which are occupied by retailers and hotels emerged

Omotesando / Aoyama Mixed-use properties containing offices, residence and retail shops increase as the commercial district has expanded

Tachikawa A number of mixed-use properties are completed upon redevelopment mainly in the north side of Tachikawa Station

Retail × Satellite Office KAWASAKI Le FRONT

Retail × Distribution hub Machinoma Omori

Fulfills a function as a hub of broad area distribution of online supermarkets

Retail × Office Office × Retail G-Bldg. Daikanyama 02 Osaka YM Bldg.

Office × Retail Twin 21 and Nagoya Lucent Tower are occupied by tenants, including cafes and restaurants and other services for office workers and tenants that prefer spaces with a scenic view in upper floors

12

Strengths and Challenges of JRF and MMI

The Merger is the best way to enhance unitholder values of both JRF and MMI

Fit to Environment Changes Expand Investment Universe Create the Largest J-REIT

Operational capabilities Strength Track record of managing operational assets Strength Capability to operate offices with deep understanding of market trends

Capabilities of acquisitions Strength Strong presence as one of the largest holders of retail properties in Japan Strength Track record of achieving unique external growth

Investment targets Challenge Sector-specialized REIT subject to greater limitations Challenge Sector-focused REIT subject to greater limitations

Current environment Challenge Negative impacts on the retail sector in proportion to the popularization of e-commerce Challenge

Office leasing market uncertainties in association with spreading remote working

Breakthrough by the Merger

13

MC-UBS Asset Management Capability

Both JRF and MMI have built up a variety of experiences in multiple asset types

Internal and external growth supported by the network of approximately 1,400 tenants

G-Square Shibuya Dogenzaka

Acquisition with a low occupancy rate of 70%. Achievement of revenue increase by raising the occupancy rate and average unit rent

Tenant Relationships

Trends of leasing market and rents are analyzed through regular information exchange with research firms

Research of Leasing Market

A number of large-scale renewal works with designing space

Renewal

Reconstruction, floor expansion by building an annex building, tenant replacement premised on conversion, etc. have been implemented

Reconstruction/Floor Expansion /Conversion

Property acquisition focuses on specific areas to which competitive tenants are attracted, with an aim to enhance leasing potential in the relevant area

Area Focused Acquisition

The flow of people is analyzed based on locational information via smartphones, which is extended to analyses of people’s movements in the area and utilized for leasing

Analysis of Flow of People

The asset manager embarked on ESG efforts from an early stage and signed up to a number of initiatives, as the first of J-REITs or its asset manager

Front-runner among J-REITs

Both of the two investment corporations received the highest ESG ratings in the J-REIT sector from external ESG rating parties

Highest-awarded J-REIT

Value Enhancement Leasing Area Management ESG

GYRE

Re-acquisition of the former Esquisse Omotesando as GYRE, after reconstruction of the property. Renovation works in the restaurant floor has been completed recently

Omotesando /Harajuku / Aoyama

Achievement of upside rent revisions through tenant replacement at 18 properties held in the area

MSCI ESG Indices (1)

Both are rated as AA, the highest rating in the J-REIT sector, as of August 28, 2020, and selected for MSCI Japan ESG Select Leaders Index, for which only 8 J-REITs are selected

14

MMI JRF JRF JRF MMI

Inclusion of both of the investment corporations in the MSCI Index and their use of MSCI's logo, trademarks, service marks and indices in this document are not intended to constitute sponsorship, advertisement or sales promotion by MSCI or its affiliates for the two investment corporations. MSCI has the exclusive right to use the MSCI Index, and MSCI and the MSCI Index and its logo are trademarks and service marks of MSCI and its affiliates.

(1)

Fit Ourselves to Environment Changes

Examine options of reconstruction and conversion, for optimal use of properties free from their traditional uses

Consistently positive attitude for tenant replacement and renewal

Implement internal growth measures beyond asset type by leveraging our capabilities

Area management in view of synergy effects among tenants of different uses in urban areas in which further increase of mixed-use properties is expected

• Increase in value of the adjacent land as an office site by increasing the value of a retail property

GMS near stations in residential areas

Supermarket at lower floors and rental

housing at upper floors

Retail property near stations in residential

areas

Distribution center and supermarket

Urban amusement facility

Retail stores at lower floors and offices at

upper floors

Property adjacent to the portfolio properties

Large-scale mixed-use property

Area Management

Plan

Enhance tenant relationships

Keep up with changes in needs for offices

Seek the best use of properties 1 2

3

4

Plan

Utilize relationships with existing tenants beyond the borders of uses

• Attraction of retail tenants to office properties • Attraction of office tenants to retail properties for showrooming use Plan

Change in the role of offices from a place for work to a place for interaction Differentiate with an ability to attract people, cultivated in retail property

management

• Introduction of retailer tenants that can raise value of office buildings • Renewal of common areas for easier gathering and interaction Plan

A food court is set up, aiming to improve convenience of office workers in the surrounding area

KAWASAKI Le FRONT×Cube Kawasaki

15

Expand Investment Universe

Enables sustainable external growth in accordance with environment changes

Offices

Retail Properties

Mixed-use Properties

Others

Offices in urban areas

Before merger Post-merger

Urban Offices

Prime area

Major stations

Residential Station

Hotels in urban areas

Commuter-town Offices

Facing high street

Urban retail properties

Residential Station

Office x Retail

Office x Residence

Residence x Retail

Complex for three or more uses

Rental houses in urban areas

Hotels in urban areas

New categories

Located on main streets in major retail areas

Those that can be turned into mixed-use properties

With supermarkets being the main tenants

Promote acquisition of offices in favorable location and high building specifications

Examine satellite offices as a new target. However, the target will be limited to those that can also be used as retail space for a while

Located within 30-minute from key business areas and within 10-minute walk from the nearest station Limited to those with fixed rent, in favorable location and highly versatile

16

1,191.5 1,132.7

1,053.2 1,031.0

877.2

745.6 696.1 678.9

282.7

NewInvestmentCorporation

NipponBuilding

Fund

Japan RealEstate

NomuraReal Estate

Master Fund

Japan RetailFund

DaiwaHouse REIT

NipponPrologis REIT

ORIX JREIT MCUBSMidCity

Create the Largest J-REIT

Benefitting from advantages of larger asset size

Asset Size of J-REITs (based on (anticipated) acquisition price)(1)

(bn yen)

Enhance stability through diversification of properties, tenants and property uses

Portfolio diversification ✔

Higher presence in capital market ✔

Increase liquidity of the investment units and exposures in major indices

More flexibility in investment management ✔

Enhance growth opportunities through increasing investment management options

Advantages of larger asset size


3. Growth Strategy

The growth strategy is a plan as of the date of this document and it is not guaranteed that such plan will be achieved. (Note)

Short-to-Mid Term : Build Base for Growth and Improve Profitability

Aim to raise the level of DPU by implementing growth strategies

成長施策

Improve NOI yield after depreciation 1 Asset replacement

Utilize cash on hand of approx. 30bn yen Remaining borrowing capacity of approx. 25bn yen to reach LTV of

45%(3) 2 Acquisition with cash on hand and borrowings

Monetize unrealized gains Unrealized gains on suburban retail properties(2) : 25.8bn yen 3 Distribution of

disposition gains

Scheduled refinancing amount for the five fiscal periods after the Merger: 120.5bn yen/ Average debt cost(1): 1.1%

Latest debt financing of the surviving corporation (JRF) : Borrowing term of 10 years debt cost of 0.4％

4 Reduction in debt cost

Aim to further raise the level of

DPU


Asset Replacement

Assets to be Acquired Asset Replacement

Further shift into urban properties and diversify asset type

Assets to be Sold

• Office x Retail • Office x Residence • Residence x Retail • 3 or more purposes

Offices

Retail Properties

Mixed-use Properties

Residence

• Urban offices • Commuter-town offices

• Rental houses in urban areas

• Facing high street • Urban retail properties • Residential Station

Suburban Retail Properties • Properties with inferior location/profitability that fall

under the categories of sub assets and secondary core assets of JRF

Urban Retail Properties with Low Profitability • Properties with low profitability that are unlikely to

improve in the future • Properties that may be offered in exchange for other

properties which requires replacement property to be proposed

Urban Retail 51％

Office 16％

Mixed-use 12％

Others(2)

1％ Suburban Retail 20％

Post-merger Portfolio(1)

Others • Hotels in urban areas • New categories

20

It is based on (anticipated) acquisition price of the New Investment Corporation. Hotel assets are classified into this category. In addition, residential and other new types of assets are classified into this category although that none of them are owned at present.

(1) (2)

• Office • Mixed-use • Retail

External Growth

Aim to achieve sustainable external growth utilizing own network and sponsor support

69.9bn yen/year

74％

39.1bn yen/year 30.8bn yen/year

JRF MMI

Past Track Record

74％ 26％

Based on own network Sponsor support

Approx. 30bn yen

Approx. 340bn yen

Approx. 20bn yen Approx. 9bn yen

• Mixed-use • Retail

Approx. 200bn yen Approx. 50bn yen Approx. 90bn yen

Greater potential for external growth by expanding investment universe and opportunities to utilize sponsor support

• Bulk sale of multiple type assets • Mixed-use and residential properties

• Use of Mitsubishi Corporation Group’s capabilities of complex urban development(4)

Redevelopment of east side of

Shinagawa Station

Redevelopment of Tennozu District

Development capabilities of Mitsubishi Corporation Urban Development

• UBS Asset Management has extensive experience and track record in residential and mixed-use assets globally including Japan, with 75,000 residential units valued at ca. USD 25 billion(5)

Consideration of development of large-scale mixed-use property

Consideration of development of a new asset category such as Retail×Arena

(acquisition price basis)

Average annual acquisition amount in the past 5 years(1)

Acquisition based on own network

in the past 5 years

Current Pipeline External Growth Opportunities Going Forward(3)

Preferential negotiation right(2)

Deals in consideration(2)

New opportunities from expanded investment universe

Further use of sponsor support

Examples of past complex development of Mitsubishi Corp.


Mid-to-Long Term : Execute Various Growth Investments

Aim to further enhance unitholder value on the basis of stable profitability

Growing asset size/revenues through acquisitions

Acquisition with a plan of reconstruction/conversion etc.

Participation in development opportunities

Exploring new asset categories

Improvement of profitability through renewal and conversion

Reconstruction/redevelopment with assets kept on balance sheet

Differentiation by space-designing capabilities

Initiatives within 5% of portfolio (Consideration of equity investment or mezzanine loan investment)

Utilization of IT

Seeking for M&A opportunities

Future Vision: Create virtuous cycle where area value and asset value improve together

External Growth Internal Growth Other Growth

22

4. Financial Strategy

Financial Strategy

Post-merger Financial Indicators

Aug. 2021 Period (39th)

Feb. 2022 Period (40th)

Aug. 2022 Period (41st)

Feb. 2023 Period (42nd)

Aug. 2023 Period (43rd)

Total/Average

Total Amount 30,250mn yen 21,000mn yen 27,900mn yen 14,500mn yen 26,900mn yen 120,550mn yen

Avg. term 7.2 years 7.9 years 7.6 years 8.4 years 7.4 years 7.6 years

Avg. debt cost(6) 0.99％ 1.11％ 1.04％ 1.06％ 0.90％ 1.01％

Latest Debt Financing of the Surviving Corporation, JRF (Jul. 2020)

Amount 4.3bn yen

Borrowing term 10 years

Debt cost (7) 0.38％

Credit ratings

Aim to maintain/improve

JRF:AA-(R&I) MMI:AA-(JCR)

LTV(1)

Book value:43.9％

Appraisal value:38.8％

Average debt cost(2)

0.80％

Average loan term remaining (3)

4.6 years

Long-term borrowing ratio(4)

98.7％

Fixed-interest ratio

91.6％

Commitment Line

Borrowing to be Refinanced for the Post-merger Five Fiscal Periods (Long-term Fixed and Investment Corporation Bond Only)

Maximum amount Contract period Longest borrowing period Lender

① 50bn yen 3 years 5 years MUFG Bank, Ltd., Sumitomo Mitsui Trust Bank, Ltd., Mizuho Bank, Ltd.

② 10bn yen 2 years 3 years Sumitomo Mitsui Banking Corporation

③ 15bn yen 3 years 3 years MUFG Bank, Ltd., Sumitomo Mitsui Trust Bank, Ltd., Mizuho Bank, Ltd.

Total:75bn yen Largest amount in the J-REITs(5)

Aim to reduce debt cost by maintaining the strong balance sheet

(As of end of July 2020)

JRF・MMI


Return to Unitholders

Negative goodwill as of August 26 (pro forma)(1) 45,107mn yen

Reserves will be used for maintaining stable DPU

Post-merger Reserve Post-merger Asset Management Fee Structure

The asset management fee structure of the surviving corporation (JRF) will be used

Post-merger reserve (pro forma)

Retained earnings for temporary difference

adjustment (pro forma)

43,750mn yen

Reserves of JRF, surviving

corporation

5,902mn yen

Post-merger reserve (pro forma)

49,653mn yen

49,653mn yen

<Breakdown>

To be used for stabilization of the DPU level Regular reversal of retained earnings for temporary difference adjustment

(50 years, 100 fiscal periods) Makeup for temporary revenue decrease due to changes in external

circumstances Makeup for temporary revenue decrease due to an exit of large-lot tenant Makeup for temporary revenue decrease due to asset replacement in which

asset sale precedes acquisition Makeup for revenue decrease along with reconstruction, conversion and

renewal

Policy to utilize the reserve

Asset Management Fee I Gross Asset Value× 0.45% (per annum)

Asset Management Fee II Total Distribution × 5.65%

Acquisition Fee Acquisition Value × 0.8%

Disposal Fee Disposition value × 0.6% *No Disposition Fee shall be paid in the case of a capital loss from disposition

Fee Structure of the Surviving Corporation (JRF)

Merger Fee Appraisal value of assets received at merger × up to 2.0%

25 This is an estimate based on the investment unit price of JRF as of August 26, 2020 and the appraisal value of the properties in MMI’s portfolio as of June 30, 2020 (the end of 28th Period) (market value as of the same date with regard to silent partnership interest). (1)

5. Post-Merger Financial Forecast

Forecast of Post-merger Operating Results

Aug. 2021 Period (39th)

(Forecast) Memo

Operating revenue 39,689 mn yen Takes into account the delay in leasing activities caused by COVID-19 Operating expenses 23,025 mn yen Decrease in depreciation and SG&A of MMI due to the Merger Temporary expenses related to merger(1) 1,357 mn yen Merger fee of 1,000 million yen, Merger cost of 357 million yen

(NOI: excluding gain on sales of property) 28,027 mn yen

Operating income 16,663 mn yen

Non-operating revenues - mn yen

Non-operating expenses 2,073 mn yen Decrease in cost related to financing, etc. of MMI due to the Merger Ordinary income 14,590 mn yen

Extraordinary income 45,107 mn yen Gain on negative goodwill in association with the Merger Net income 59,697 mn yen

Allocation to reserve 43,750 mn yen Addition to reserve of gain on negative goodwill excluding temporary cost in association with the Merger

Reversal of reserve 31 mn yen Amortization of existing reserve for temporary difference adjustments of JRF on a straight-line basis

Total distribution 15,977 mn yen

Units outstanding 6,989,091 units

Distribution per unit 2,286 yen

Capital expenditure 4,269 mn yen

Repair cost 946 mn yen

Total 5,216 mn yen

Depreciation 6,502 mn yen

27 This is the total of merger fees payable to the Asset Manager and expenses related to the Merger including financial advisory fee and other advisory fees payable to professional advisors; the same shall apply hereinafter. (1)

Appendix

Asset Manager

Mitsubishi Corp.-UBS Realty Inc.

Board Members Track Record

President & CEO & Representative Director Katsuji Okamoto

Deputy President & Representative Director Naoki Suzuki

Director (full-time) Tadatsugu Matsutani

Director (part-time) Naoshi Ogikubo

Director (part-time) Katsuhisa Sakai

Director (part-time) Joe Azelby

Director (part-time) Keiichi Miki

Director (part-time) Graham Mackie

Mission

Vision

“Always create new values, for people, the community and the world” Through real estate investment management, we create new demands in our society and new values that exceed people’s expectations

We strive to be the leading group of professionals, trusted by people, the community and the world

Mission and Vision Post-merger Structure

18 years of experience in operating J-REITs ✔

Operating 3 REITs ✔

Largest J-REIT AUM of 1.4tn yen(1) ✔

One of the largest buyers of commercial real estate in Japan ✔

Sponsor

スポンサー

New Division Asset Manager


Industrial Division


Support metropolitan life in Japan

Support Japanese industries

29 This is the sum of the acquisition prices of the three investment corporations managed by the asset manager as of the end of July 2020. (1)

Forecast of Operating Results Before Merger (JRF)

Aug. 2020 Period (37th) (Forecast)(1)

Feb. 2021 Period (38th) (Forecast) Period-on-period change

Operating revenue 30,617 mn yen 29,823 mn yen -793 mn yen

Gain on sales of property 1,787 mn yen - mn yen -1,787 mn yen

Operating expenses 17,154 mn yen 17,475 mn yen +321 mn yen

Of which temporary expenses related to merger 198 mn yen 73 mn yen -125 mn yen

(NOI: excluding gain on sales of property) 20,443 mn yen 20,928 mn yen +485 mn yen

Operating income 13,462 mn yen 12,348 mn yen -1,114 mn yen

Non-operating revenues - mn yen - mn yen - mn yen

Non-operating expenses 1,716 mn yen 1,648 mn yen -67 mn yen

Ordinary income 11,746 mn yen 10,699 mn yen -1,047 mn yen

Extraordinary income - mn yen - mn yen - mn yen

Net income 11,746 mn yen 10,698 mn yen -1,047 mn yen

Allocation to reserve 66 mn yen - mn yen -66 mn yen

Reversal of reserve 31 mn yen 1,012 mn yen +981 mn yen

Total distribution 11,711 mn yen 11,711 mn yen - mn yen

Units outstanding 2,602,483 units 2,602,483 units - units

Distribution per unit 4,500 yen 4,500 yen - yen

Capital expenditure 2,853 mn yen 2,363 mn yen -489 mn yen

Repair expenses 500 mn yen 585 mn yen +84 mn yen

Total 3,354 mn yen 2,949 mn yen -405 mn yen

Depreciation 5,455 mn yen 5,439 mn yen -15 mn yen

Calculated by adding temporary expense related to the Merger to the forecast announced on August 7, 2020. (1)

30

Results and Forecast of Operating Results Before Merger (MMI)

Jun. 2020 Period (28th) (Actual)

Feb. 2021 Period (29th) (Forecast)(1)

Operating revenue 9,061 mn yen 12,233 mn yen

Operating expenses 4,785 mn yen 6,910 mn yen

(NOI: excluding gain on sales of property) 6,318 mn yen 8,162 mn yen

Operating income 4,276 mn yen 5,322 mn yen

Non-operating revenues 3 mn yen - mn yen

Non-operating expenses 619 mn yen 941 mn yen

Of which temporary expenses related to merger - mn yen 142 mn yen

Ordinary income 3,660 mn yen 4,380 mn yen

Extraordinary income 10 mn yen - mn yen

Extraordinary loss 10 mn yen - mn yen

Net income 3,657 mn yen 4,379 mn yen

Allocation to reserve - mn yen - mn yen

Reversal of reserve - mn yen 998 mn yen

Total distribution 3,657 mn yen 5,377 mn yen

Units outstanding 1,784,125 units 1,784,125 units Distribution per unit (29th: Merger consideration per unit) 2,049 yen 3,014 yen

Capital expenditure 1,002 mn yen 1,433 mn yen

Repair expenses 300 mn yen 571 mn yen

Total 1,303 mn yen 2,004 mn yen

Depreciation 1,267 mn yen 1,760 mn yen

Based on the assumption of 8-month business period from July 1, 2020 to February 28, 2021. (1)

31

Specified Affiliated Company

(Parent Company of the Asset Manager)

MUFG Bank, Ltd. Mizuho Bank, Ltd.

PwC Tax Japan

Mitsubishi UFJ Trust and Banking Corporation

Structure of the Merged Investment Corporation

(a) Asset Management Agreement / Trademark License Agreement (b) Asset Custodian Contract / General Administrative Services Agreement / Account Administrative Service Agreement / Special Accounts Administration Agreement (c) Fiscal Agency Agreement / Administrative Services Agreement Related to Principal and Interest Payment (d) Tax Service Agreement

Name of contracts



General Meeting of Unitholders

Mitsubishi Corp.-UBS Realty Inc.

Asset Manager

Mitsubishi Corporation

Board of Directors

Executive Director: Shuichi Namba

Supervisory Director: Masahiko Nishida

Supervisory Director: Masaharu Usuki

PricewaterhouseCoopers Arata LLC

Independent Auditor

Asset Custodian/ General Administrator/

Special Accounts Administrator

General Operations Agent of Investment Corporation

Bond

Tax Administrator

(a)

(51% Owned) (b)

(c)

(d)

32

Japan Retail Fund Investment Corporation (JRF) MCUBS MidCity Investment Corporation (MMI)

Representative (Executive director) Shuichi Namba Katsuhiro Tsuchiya

Supervisory director Masahiko Nishida Masaharu Usuki

Haruo Kitamura Osamu Ito

Kyoko Nagata

TSE code 8953 3227

Date of fund listing March 12, 2002 August 29, 2006

Fiscal period Six months ending in February and August Six months ending in June and December

Units outstanding(1) 2,618,017 units 1,784,125 units

Total equity(1) 411,878 mn yen 151,540 mn yen

Asset Manager Mitsubishi Corp.-UBS Realty Inc. Mitsubishi Corp.-UBS Realty Inc.

Asset custodian Mitsubishi UFJ Trust and Banking Corporation Sumitomo Mitsui Trust Bank, Ltd.

Unitholder registry administrator Mitsubishi UFJ Trust and Banking Corporation Mitsubishi UFJ Trust and Banking Corporation

General administrator of accounting, etc. Mitsubishi UFJ Trust and Banking Corporation Sumitomo Mitsui Trust Bank, Ltd.

General operations agent of Investment Corporation bond MUFG Bank, Ltd. Mizuho Bank, Ltd.

Overview of the Two Investment Corporations

33 The figures are as of the end of the most recent fiscal period. (1)

0

200

400

600

800

1,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Progress and Growth of the Two Investment Corporations (JRF)

0

1,000

2,000

3,000

4,000

5,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

877.2 bn yen


4,500 yen


Asset size

Distribution per unit(1)

(bn yen)

(yen)

Expand asset size, with a focus on suburban-type ML properties

Strengthen the balance sheet

Merger

Resume external growth

Shifting focus on urban properties Acquisition of urban properties

and disposition of suburban properties

(based on acquisition price)

34 JRF implemented a four-for-one unit split on March 1, 2010, the figures from the Aug. 2002 (1st) Period to the Feb. 2010 (16th) Period are calculated by dividing the actual amount of distribution by four respectively. (1)

Progress and Growth of the Two Investment Corporations (MMI)

Asset size(1)

Distribution per unit(2)

(bn yen)

(yen)

Before participation of MC-UBS Group as a sponsor

External growth via focused investment in three metropolitan areas and four public offerings Improvement of portfolio profitability through internal growth, strengthening financial soundness

and strategic asset replacement

0

100

200

300

2006 2014 2015 2016 2017 2018 2019 2020

0

1,000

2,000

3,000

2006 2014 2015 2016 2017 2018 2019 2020

Gain on sales of property etc.

Participation of MC-UBS Group

as a sponsor

282.7 bn yen

Jun. 2020 Period (28th)

2,049 yen

Jun. 2020 Period (28th)

(based on acquisition price)

Participation of MC-UBS Group

as a sponsor

35

Excluding the equity interest in a silent partnership (tokumei kumiai), the underlying asset of which is Nagoya Lucent Tower. As MMI implemented a five-for-one unit split on January 1, 2018, the figures from the Aug. 2002 (1st) Period to the Dec. 2017 (23rd) Period are calculated by dividing the actual amount of distribution by five respectively.

(1) (2)

Area Property Name Location

(Anticipated)Acquisition

Price(million yen)

InvestmentRatio

(pro forma)

Leasable

Space (m²)(1)

Occupancy

Rate(1)

No. of

Tenants(1)

CoreMachinoma Omori Ota-ku, Tokyo 9,100 0.8% 8,963.39 95.9% 36G-Bldg. Daikanyama 02 Shibuya-ku, Tokyo 3,600 0.3% 2,166.69 79.4% 8Abiko Shopping Plaza Abiko-shi, Chiba 10,322 0.9% 41,293.90 100.0% 58Ito-Yokado Yabashira Matsudo-shi, Chiba 1,616 0.1% 21,308.78 100.0% 1Ito-Yokado Tsunashima Yokohama-shi, Kanagawa 5,000 0.4% 16,549.50 100.0% 1AEON Itabashi Shopping Center Itabashi-ku, Tokyo 12,411 1.0% 72,748.34 100.0% 1SEIYU Hibarigaoka Nishi Tokyo-shi, Tokyo 6,100 0.5% 19,070.88 100.0% 1Round1 Machida Machida-shi, Tokyo 2,450 0.2% 6,801.89 100.0% 1Round1 Stadium Itabashi Itabashi-ku, Tokyo 2,400 0.2% 14,828.74 100.0% 1Summit Store Nakano Minamidai Nakano-ku, Tokyo 3,100 0.3% 3,536.50 100.0% 1Colline Bajikouen Setagaya-ku, Tokyo 3,100 0.3% 5,368.02 100.0% 10Kawaramachi OPA Kyoto-shi, Kyoto 18,500 1.6% 18,848.20 100.0% 1G-Bldg. Shinsaibashi 01 Osaka-shi, Osaka 1,582 0.1% 886.46 100.0% 2Round1 Stadium Sennichimae(Land with leasehold interest)

Osaka-shi, Osaka 8,000 0.7% 1,711.63 100.0% 1

G-Bldg. Shinsaibashi 02 Osaka-shi, Osaka 4,380 0.4% 948.72 100.0% 1Round1 Kyoto Kawaramachi Kyoto-shi, Kyoto 2,800 0.2% 8,821.66 100.0% 1G-Bldg. Shinsaibashi 03 Osaka-shi, Osaka 30,500 2.6% 5,319.29 100.0% 4EDION Kyobashi(Land with leasehold interest)

Osaka-shi, Osaka 5,640 0.5% 4,307.16 100.0% 1

G-Bldg. Abeno 01 Osaka-shi, Osaka 4,285 0.4% 4,757.35 100.0% 10G-Bldg. Umeda 01 Osaka-shi, Osaka 9,483 0.8% 3,529.51 100.0% 12G-Bldg. Shinsaibashi 04 Osaka-shi, Osaka 3,170 0.3% 1,610.63 100.0% 5G-Bldg. Kyoto Kawaramachi 01 Kyoto-shi, Kyoto 2,180 0.2% 2,398.34 100.0% 4G-Bldg. Midosuji 01 Osaka-shi, Osaka 9,975 0.8% 2,446.00 100.0% 2Round1 Sannomiya Station Kobe-shi, Hyogo 3,200 0.3% 10,054.52 100.0% 1G-Bldg. Kobe Sannomiya 01 Kobe-shi, Hyogo 3,000 0.3% 3,750.38 100.0% 5G-Bldg. Midosuji 02 Osaka-shi, Osaka 15,000 1.3% 1,428.28 100.0% 1Kyoto Family Kyoto-shi, Kyoto 5,340 0.4% 19,639.09 100.0% 63AEON MALL Tsurumi Ryokuchi Osaka-shi, Osaka 29,902 2.5% 138,538.63 100.0% 1AEON MALL Itami Itami-shi, Hyogo 21,488 1.8% 157,904.26 100.0% 1Life Shimodera(Land with leasehold interest)

Osaka-shi, Osaka 1,683 0.1% 4,344.18 100.0% 1

Life Taiheiji(Land with leasehold interest)

Higashi Osaka-shi, Osaka 1,282 0.1% 3,898.01 100.0% 1

KAMISHIN PLAZA Osaka-shi, Osaka 3,900 0.3% 12,008.81 89.0% 38m-city Toyonaka Toyonaka-shi, Osaka 5,570 0.5% 33,301.93 100.0% 1G-Bldg. Nagoya Sakae 01 Nagoya-shi, Aichi 1,900 0.2% 794.02 24.8% 1AEON Yagoto Nagoya-shi, Aichi 3,698 0.3% 63,702.48 100.0% 1mozo wonder city Nagoya-shi, Aichi 55,480 4.7% 86,526.78 100.0% 219Valor Kachigawa(Land with leasehold interest)

Kasugai-shi, Aichi 6,350 0.5% 20,509.10 100.0% 1

Tokyoarea

Nagoyaarea

Osakaarea

Portfolio List


36



Price(million yen)

InvestmentRatio

(pro forma)

Leasable

Space (m²)(1)

Occupancy

Rate(1)

No. of

Tenants(1)

CoreG-Bldg. Minami Aoyama 02 Minato-ku, Tokyo 5,350 0.4% 1,529.15 100.0% 4G-Bldg. Daikanyama 01 Shibuya-ku, Tokyo 1,235 0.1% 599.79 100.0% 1GYRE Shibuya-ku, Tokyo 22,712 1.9% 4,828.12 100.0% 15Bic Camera Tachikawa Tachikawa-shi, Tokyo 11,920 1.0% 20,983.43 100.0% 2G-Bldg. Kita Aoyama 01 Minato-ku, Tokyo 989 0.1% 492.69 100.0% 2G-Bldg. Jiyugaoka 01 Meguro-ku, Tokyo 3,093 0.3% 2,274.60 59.7% 2Cheers Ginza Chuo-ku, Tokyo 4,200 0.4% 1,686.58 100.0% 10G-Bldg. Jingumae 06 Shibuya-ku, Tokyo 2,360 0.2% 670.42 100.0% 4G-Bldg. Jingumae 01 Shibuya-ku, Tokyo 3,400 0.3% 555.75 100.0% 2G-Bldg. Jingumae 02 Shibuya-ku, Tokyo 2,233 0.2% 426.29 100.0% 3G-Bldg. Minami Aoyama 01 Minato-ku, Tokyo 10,085 0.8% 1,592.90 100.0% 3La Porte Aoyama Shibuya-ku, Tokyo 9,400 0.8% 4,158.53 96.9% 23G-Bldg. Shinjuku 01 Shinjyuku-ku, Tokyo 6,600 0.6% 1,093.67 100.0% 1G-Bldg. Jingumae 03 Shibuya-ku, Tokyo 5,520 0.5% 1,676.87 100.0% 8G-Bldg. Minami Ikebukuro 01 Toshima-ku, Tokyo 5,800 0.5% 5,066.06 100.0% 8Urban Terrace Jingumae Shibuya-ku, Tokyo 2,797 0.2% 1,719.19 100.0% 2Arkangel Daikanyama(Land with leasehold interest)

Meguro-ku(Shibuya-ku), Tokyo

1,000 0.1% 904.04 100.0% 1

G-Bldg. Omotesando 01 Shibuya-ku, Tokyo 5,850 0.5% 1,508.03 100.0% 1Round1 Yokohama Station West Yokohama-shi, Kanagawa 3,930 0.3% 6,560.09 100.0% 1G-Bldg. Sangenjaya 01 Setagaya-ku, Tokyo 3,725 0.3% 3,471.52 100.0% 3G-Bldg. Ginza 01 Chuo-ku, Tokyo 5,500 0.5% 1,610.54 100.0% 6KAWASAKI Le FRONT Kawasaki-shi, Kanagawa 30,000 2.5% 49,222.44 100.0% 67G-Bldg. Shibuya 01 Shibuya-ku, Tokyo 3,230 0.3% 1,630.03 100.0% 2G-Bldg. Omotesando 02 Shibuya-ku, Tokyo 17,705 1.5% 5,555.65 100.0% 6G-Bldg. Kichijoji 01 Musashino-shi, Tokyo 3,460 0.3% 1,718.21 100.0% 1CUTE CUBE HARAJUKU Shibuya-ku, Tokyo 8,520 0.7% 1,428.55 100.0% 10G-Bldg. Ueno 01 Taito-ku, Tokyo 3,320 0.3% 1,471.80 100.0% 1G-Bldg.Takadanobaba 01 Shinjyuku-ku, Tokyo 5,945 0.5% 3,569.20 100.0% 13G-Bldg. Akihabara 01 Chiyoda-ku, Tokyo 4,980 0.4% 2,701.99 100.0% 1G-Bldg. Akihabara 02 Chiyoda-ku, Tokyo 2,500 0.2% 1,037.33 100.0% 1G-Bldg. Kichijoji 02 Musashino-shi, Tokyo 15,300 1.3% 8,838.79 100.0% 1G-Bldg. Ginza Chuo-Dori 01 Chuo-ku, Tokyo 13,000 1.1% 3,141.07 100.0% 9MARINE & WALK YOKOHAMA Yokohama-shi, Kanagawa 11,300 0.9% 8,347.69 98.5% 25G-Bldg. Jingumae 07 Shibuya-ku, Tokyo 1,950 0.2% 373.12 100.0% 1G-Bldg. Minami Aoyama 03 Minato-ku, Tokyo 12,200 1.0% 1,373.46 74.7% 5G-Bldg. Jingumae 08 Shibuya-ku, Tokyo 2,490 0.2% 802.40 100.0% 3Round1 Stadium Kawasaki Daishi Kawasaki-shi, Kanagawa 2,370 0.2% 13,559.17 100.0% 1G-Bldg. Jingumae 09 Shibuya-ku, Tokyo 7,000 0.6% 1,127.06 85.3% 5

Tokyoarea

(2)

For “Leasable Space”, “Occupancy Rate” and “No. of Tenants”, the figures are as of the end of June, 2020. For “GYRE”, its acquisition price includes the initially-held land with leasehold and the property additionally acquired.

(1) (2)



Price(million yen)

InvestmentRatio

(pro forma)

Leasable

Space (m²)(1)

Occupancy

Rate(1)

No. of

Tenants(1)

CoreRound1 Hiroshima Hiroshima-shi, Hiroshima 2,970 0.2% 9,890.63 100.0% 1DFS T GALLERIA OKINAWA Naha-shi, Okinawa 15,600 1.3% 42,088.14 100.0% 1G-Bldg. Sendai Ichibancho 01 Sendai-shi, Miyagi 4,320 0.4% 2,387.17 100.0% 1G-Bldg. Naha-shintoshin 01 Naha-shi, Okinawa 5,650 0.5% Not disclosed 100.0% 2G-Bldg. Tenjin Nishi-dori 01 Fukuoka-shi, Fukuoka 4,850 0.4% 2,667.42 88.8% 7G-Bldg. Tenjin Nishi-dori 02 Fukuoka-shi, Fukuoka 5,000 0.4% 1,496.56 100.0% 1AEON Naha Shopping Center Naha-shi, Okinawa 10,830 0.9% 79,090.48 100.0% 1AEON MALL Sapporo Hassamu Sapporo-shi, Hokkaido 18,818 1.6% 102,162.16 100.0% 1

Secondary coreAEON MALL Musashi Murayama Musashimurayama-shi, Tokyo 30,600 2.6% 137,466.97 100.0% 1m-city Kashiwa Kashiwa-shi, Chiba 5,520 0.5% 20,437.36 100.0% 1Ario Otori Sakai-shi, Osaka 19,040 1.6% 95,135.36 100.0% 1AEON MALL Kobe Kita Kobe-shi, Hyogo 10,920 0.9% 128,050.62 100.0% 1Nara Family Nara-shi, Nara 34,875 2.9% 82,927.89 99.2% 113Oyama Yuen Harvest Walk Oyama-shi, Tochigi 10,709 0.9% 59,535.10 98.5% 65Tecc Land Fukuoka Shime Honten Kasuya-gun, Fukuoka 4,150 0.3% Not disclosed 100.0% 1

SubAEON MALL Yamato Yamato-shi, Kanagawa 16,823 1.4% 85,226.68 100.0% 1Higashi-Totsuka Aurora City Yokohama-shi, Kanagawa 50,500 4.2% 109,355.90 100.0% 5Ito-Yokado Yotsukaido Yotsukaido-shi, Chiba 13,744 1.2% 59,762.30 100.0% 2Makuhari Plaza Chiba-shi, Chiba 5,700 0.5% 24,505.37 100.0% 5AEON Takatsuki Takatsuki-shi, Osaka 11,700 1.0% 77,267.23 100.0% 1Life Kishibe(Land with leasehold interest)

Suita-shi, Osaka 1,910 0.2% 5,516.61 100.0% 1

Izumisano Shofudai(Land with leasehold interest)

Izumisano-shi, Osaka 2,625 0.2% 44,009.52 100.0% 2

Round1 Stadium Sakai Chuo Kanjyo Sakai-shi, Osaka 1,750 0.1% 17,521.46 100.0% 1pivo Izumi Chuo Izumi-shi, Osaka 6,000 0.5% 21,182.94 100.0% 17Round1 Stadium Takatsuki Takatsuki-shi, Osaka 2,080 0.2% 19,767.64 100.0% 1AEON MALL Sapporo Naebo Sapporo-shi, Hokkaido 9,260 0.8% 74,625.52 100.0% 1MrMax Nagasaki Nagasaki-shi, Nagasaki 2,475 0.2% 12,115.09 100.0% 2

JRF Total/Average 102 Properties 888,884 2,308,120.39 99.7% 989

Others

Others

Tokyoarea

Osakaarea

Others

Tokyoarea

Osakaarea

Portfolio List

Japan Retail Fund Investment Corporation MCUBS MidCity Investment Corporation

37

(2)

(2)

(3)

Area Property Name LocationAppraisal

Value(million yen)

InvestmentRatio

(pro forma)

Leasable

Space (m²)(1)

Occupancy

Rate(1)

No. of

Tenants(1)

Sumitomo Fudosan Ueno Bldg. No.6 Taito-ku, Tokyo 8,690 0.7% 6,858.16 100.0% 2

G-Square Shibuya Dogenzaka Shibuya-ku, Tokyo 17,000 1.4% 5,051.06 100.0% 9

Shibuya Sakuragaoka Square Shibuya-ku, Tokyo 19,700 1.7% 6,379.66 100.0% 4

Yokohama Creation Square Kanagawa-ku, Yokohama 8,250 0.7% 12,704.18 99.2% 43

Cube Kawasaki Kawasaki-ku, Kawasaki 23,600 2.0% 24,494.06 100.0% 10

Higashi-Nihombashi Green Bldg. Chuo-ku, Tokyo 3,200 0.3% 3,254.77 100.0% 7

Sasazuka Center Bldg. Shibuya-ku, Tokyo 9,310 0.8% 8,240.30 100.0% 9

USC Bldg. Koto-ku, Tokyo 11,500 1.0% 12,487.73 93.9% 9

Yoshiyasu Kanda Bldg. Chiyoda-ku, Tokyo 4,250 0.4% 3,149.39 100.0% 7

TOYOTA MOBILITY SERVICE Bldg. Chuo-ku, Tokyo 10,400 0.9% 6,123.81 100.0% 1

M-City Akasaka 1-chome Bldg. Minato-ku, Tokyo 4,470 0.4% 2,550.44 100.0% 12

Yokohama i-land Tower Naka-ku, Yokohama 23,900 2.0% 25,460.50 100.0% 7

M-City Edogawabashi Bldg. Bunkyo-ku, Tokyo 4,240 0.4% 3,472.70 100.0% 2

East Square Tokyo Koto-ku, Tokyo 9,760 0.8% 12,208.42 77.5% 12

AEON MALL Tsudanuma Narashino-shi, Chiba 29,000 2.4% 101,210.44 100.0% 1

Hotel Vista Premio Tokyo Minato-ku, Tokyo 11,000 0.9% 4,236.46 100.0% 2

Twin 21 Chuo-ku, Osaka 60,300 5.1% 82,304.82 98.0% 103

MID Imabashi Bldg. Chuo-ku, Osaka 2,670 0.2% 4,277.63 100.0% 21

Kitahama MID Bldg. Chuo-ku, Osaka 11,500 1.0% 10,189.49 100.0% 10

MID Nishihommachi Bldg. Nishi-ku, Osaka 2,600 0.2% 3,881.74 100.0% 18

Higobashi MID Bldg. Nishi-ku, Osaka 4,400 0.4% 4,655.57 100.0% 12

Osaka YM Bldg. Fukushima-ku, Osaka 8,180 0.7% 9,952.88 100.0% 28

Konami Sports Club Kyobashi Miyakojima-ku, Osaka 3,430 0.3% 9,586.26 100.0% 1

Sendai Capital Tower Aoba-ku, Sendai 6,800 0.6% 12,999.80 95.2% 75

Dormy Inn Hakata Gion Hakata-ku, Fukuoka 4,560 0.4% 5,554.91 100.0% 2

MMI Total/Average 25 Properties 302,710 381,285.18 98.5% 407

Area Property Name LocationAcquisition

Price(million yen)

Silent partnership interest related to office building

Nagoyaarea

Nagoya Lucent Tower Nishi-ku, Nagoya 4,919

Osakaarea

Others

Tokyoarea

For “Leasable Space”, “Occupancy Rate”, “No. of Tenants” and “Appraisal Value”, the figures are as of the end of June, 2020. Not disclosed because consent from tenants has not been obtained. To be acquired on August 31, 2020.

(1) (2) (3)

(1)

7,000

30,575 38,250

28,500 24,400

19,800 18,900

12,900 30,800

21,350

31,975 25,700

22,850 21,000

25,850 25,700

28,800 17,050

16,250 14,400

24,150

1,500

6,000

7,500

7,000 9,500 4,000 2,000 8,000

7,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug.

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Short-term borrowingLong-term borrowingInvestment corporation bondGreen bond

Post-merger Financial Data

Commitment line: 75.0bn yen

Overview of Borrowings Balance(1)

(mn yen)

Average borrowing

term(2)

Average remaining period (2)

Average debt cost(2)

Short-term 7,000 0.5 years 0.1 years 0.19%

Long-term 479,200 8.3 years 4.7 years 0.77%

Investment Corporation Bond 52,500 8.2 years 4.1 years 0.72%

Total 538,700 8.2 years 4.6 years 0.76%

Status of Lenders(3)

Lender Balance (mn yen) Proportion

MUFG Bank, Ltd. 149,217 27.7% Sumitomo Mitsui Banking Corporation 68,500 12.7% Sumitomo Mitsui Trust Bank, Limited 59,509 11.0%

Development Bank of Japan, Inc. 57,475 10.7%

Mizuho Bank, Ltd. 40,400 7.5%

Shinsei Bank, Limited 14,500 2.7%

Resona Bank, Limited 13,700 2.5%

The Bank of Fukuoka, Ltd. 11,550 2.1%

Shinkin Central Bank 10,200 1.9%

Others 51,200 9.5%

Investment corporation bond 52,500 9.7%

Total 538,700 100%

(as of Aug. 28, 2020)

(as of Aug. 28, 2020)

Credit Ratings JRF MMI

Credit rating agency Issuer rating Issuer rating

Rating and Investment Information, Inc.(R&I) AA- (Stable)

A+ (Stable)

Japan Credit Rating Agency, Ltd. (JCR) AA-(4)

(Stable)

S&P Global Rating (S&P) A(5)

(Stable)

Moody's Investors Service, Inc. (Moody’s) A3 (Negative)

(as of Aug. 28, 2020)

Maturity Ladder (as of Aug. 28, 2020)

(mn yen)

38

The figures are calculated by aggregating the amount of interest-bearing debt of JRF and MMI as of the date of this document. The figures are calculated as weighted average based on the amount of interest-bearing debt of JRF and MMI as of the date of this document. The figures are calculated based on the amount of interest-bearing debt of JRF and MMI as of the date of this document.

(1) (2) (3)

(4) It is a long-term issuer rating. (5) It is a long-term issuer rating. Further, JRF is also rated A-1 for a short-term issuer rating.

ESG Efforts and Evaluations

Award from External Parties GRESB

• Both JRF and MMI have achieved the highest ranking of Green Star

• JRF was selected as Asia Retail Sector Leader in 2018

JRF MMI

Real Estate Assessment

Green Star (5 consecutive years)

Green Star (4 consecutive years)

Rating ★★★★ ★★★★★

Public Disclosure

A (3 consecutive years)

A

CDP Climate Change Initiative

• JRF is the first participant among J-REITs since 2016 • JRF received a score “B”, two ranks better than the previous

year 2016 2017 2018 2019

Score C C C B

MSCI ESG Rating(1)

• Both JRF and MMI are rated as AA, the highest among J-REITs

JRF MMI

Rating AA AA

Inclusion into MSCI Japan ESG Select Leaders Index

• Both JRF and MMI are selected • 8 J-REITs are selected • GPIF engages in passive investment tracking this index

Efforts by the Asset Manager Introduced a sustainability committee and Chief Sustainability Officer

Conducted a joint ESG conference with the three REITs

Published ESG Report

To reinforce a system for promotion of sustainability, newly organized a “Sustainability Committee”

Introduced Chief Sustainability Officer (CSO), and appointed Deputy President & Representative Director of MCUBS to the role

Conducted an ESG conference with cooperation of the three REITs that are managed by the Asset Manager

Many institutional investors and sell-side analysts attended the event

In order to share MCUBS Group’s basic idea and activities of ESG with the stakeholders, published ESG Report, which concisely covers ESG activities of the whole group

39

Inclusion of both of the investment corporations in the MSCI Index and their use of MSCI's logo, trademarks, service marks and indices in this document are not intended to constitute sponsorship, advertisement or sales promotion by MSCI or its affiliates for the two investment corporations. MSCI has the exclusive right to use the MSCI Index, and MSCI and the MSCI Index and its logo are trademarks and service marks of MSCI and its affiliates.

(1)

JRF MMI

★★★★★ 1 property

★★★★ 7 properties 3 properties

★★★ 7 properties

★★ 6 properties

★ 2 properties

Total 23 properties 3 properties

JRF MMI

★★★★ 1 property

★★★ 1 property

★★ 4 properties

Total 1 property 5 properties

JRF MMI

S 16 properties

A 2 properties 2 properties

B＋ 3 properties

For Real Estate Total

18 properties 5 properties

For Wellness Office 1 property

ESG Approvals and Initiatives

Environmental Approvals Initiatives Supported by Asset Manager

Principles for Responsible Investment (PRI) Montreal Carbon Pledge

Signatory since August 2013

United Nations Environment Programme Finance Initiative (UNEP FI)

United Nations Global Compact (UNGC)(1)

Principles for Financial Action toward a Sustainable Society (Principles for Financial Action for the 21st Century)

Task Force on Climate-related Financial Disclosures (TCFD)

First as J-REIT asset manager

Signatory since September, 2015 First as J-REIT asset manager

Signatory since October 2016 First as J-REIT asset manager

Signatory since October 2016 First J-REIT as asset manager

Signatory since June 2013 Endorsement since August 2019

DBJ Green Building Certification

CASBEE For Real Estate

For Wellness Office

BELS Certification

(As of August 28, 2020)

Japan Climate Initiative

Joined since May 2020

40 Mitsubishi Corp.-UBS Realty Inc. has supported the Corporate Responsibility Initiative of the United Nations Global Compact and its principles in the areas of human rights, labor, environment, and anti-corruption since 2016. (1)

http://montrealpledge.org/

41

P.3

It is based on the comparison between the total acquisition price stated in the financial information of respective investment corporations as of July 31, 2020 (as of the end of the most recent fiscal period) and the estimated value which are the sum of total acquisition price of Japan Retail Fund Investment Corporation (“JRF”) as of July 31, 2020, anticipated acquisition price of the asset anticipated to be acquired which was announced in “Notice Concerning Acquisition of Trust Beneficiary Right in Real Estate in Japan (G-Bldg. Tenjin Nishi-dori 02)” dated August 26, 2020, and the appraisal values of MCUBS MidCity Investment Corporation (“MMI”) as of June 30, 2020. Such value may be different from the actual asset size (based on acquisition price) of the New Investment Corporation as of the effective date of the Merger, and it is not guaranteed that the asset size of the New Investment Corporation will be the largest among J-REITs as of the effective date of the Merger. The total of appraisal values of MMI is adopted to calculate the asset size of the New Investment Corporation after the Merger, as JRF will succeed the MMI assets at market value, based on the purchase accounting method for accounting purposes. The New Investment Corporation will not acquire any new industrial real estate properties which are investment target of Industrial & Infrastructure Fund Investment Corporation. The same applies hereinafter.

(1) (2)

P.6

The figure is calculated by dividing the total actual or estimated annual NOI by the asset size (based on (anticipated) acquisition price). The figure is calculated by subtracting actual or estimated annual depreciation from the total actual or estimated annual NOI and dividing it by the asset size (based on (anticipated) acquisition price). (Net Asset + Unrealized Gain or Loss - Total Distribution (to be) Paid) / Units Outstanding Net Asset / Units Outstanding Estimate As of the End of August 2020 of Japan Retail Fund Investment Corporation • Asset size (based on (anticipated) acquisition price): The figure is the total of acquisition price of the properties in the portfolio as of the end of Feb. 2020 (36th) Period, reflecting the acquisitions and dispositions of properties from March 1, 2020 to the date of this document, and

adding the anticipated acquisition price of G-Bldg. Tenjin Nishi-dori 02, which is to be acquired as of August 31, 2020. The same shall apply hereinafter. • Number of properties: The figure is the number of properties in the portfolio as of the end of Feb. 2020 (36th) Period, reflecting the acquisitions and dispositions of properties from March 1, 2020 to the date of this document, and adding G-Bldg. Tenjin Nishi-dori 02, which is to be

acquired as of August 31, 2020. • NOI yield: The figure is calculated by dividing the total of annualized actual NOI for the Feb. 2020 (36th) Period of the properties held in the portfolio from the end of Feb. 2020 (36th) Period to the date of this document (for KAWASAKI Le Front, estimated NOI after the renewal) and

estimated annual NOI of the properties acquired or to be acquired from March 1, 2020 to August 31, 2020 as of each acquisition, by the asset size (based on (anticipated) acquisition price). • NOI yield after depreciation: The figure is calculated by dividing the total of annualized figures calculated by deducting depreciation expenses for the Feb. 2020 (36th) Period from actual NOI of the properties held in the portfolio from the end of Feb. 2020 (36th) Period to the date of

this document (for KAWASAKI Le Front, an estimate after the renewal) and figures calculated by deducting estimated annual depreciation expenses from estimated annual NOI of the properties acquired or to be acquired from March 1, 2020 to August 31, 2020 as of each acquisition, by the asset size (based on (anticipated) acquisition price).

• Unrealized gain or loss: The figure is calculated by deducting the unrealized gain or loss of the property disposed of on March 2, 2020 and then adding the figures calculated by deducting (anticipated) acquisition price from appraisal value from respective properties acquired or to be acquired from March 1, 2020 to August 31, 2020 to the unrealized gain or loss as of the end of the Feb. 2020 (36th) Period (calculated by deducting book value from appraisal value; the same shall apply hereinafter).

• LTV: The figure is calculated by dividing the total of interest-bearing debt as of the date of this document by the estimated total assets as of the end of the Aug. 2020 (37th) Period. • Interest-bearing debt: The figure is the total of interest-bearing debt as of the date of this document. Any new borrowing or issuance of investment corporation bonds is not scheduled by August 31, 2020. • Rating: indicating (long-term) issuer ratings as of the date of this document. • NAV per unit: The figure is calculated by dividing the figure calculated by adding the unrealized gain or loss to the net assets as of the end of the Feb. 2020 (36th) Period, from which the total acquisition value of own investment units cancelled as of August 19, 2020 and estimated

total distribution for the Aug. 2020 (37th) Period were deducted, by the total units outstanding as of the date of this document. • Book value per: The figure is calculated by dividing the figure calculated by deducting the total acquisition value of own investment units cancelled as of August 19, 2020 from the net assets as of the end of the Feb. 2020 (36th) Period, by the total units outstanding as of the date of

this document. Estimate As of the End of June 2020 of MCUBS MidCity Investment Corporation • The portfolio does not include the silent partnership interest in Nagoya Lucent Tower and the other indicators are calculated by the methods similar to those applied to JRF. Assumption of New Investment Corporation (Japan Metropolitan Fund Investment Corporation) as of March 1, 2021: • Asset size (based on (anticipated) acquisition price): the asset size of the portfolio of the New Investment Corporation is represented by the sum of the total of (anticipated) acquisition price of the properties in JRF’s portfolio as of August 31, 2020 and the total of appraisal value of

the properties in MMI’s portfolio as of June 30, 2020, as JRF, an acquiring investment corporation, will succeed assets of MMI, an investment corporation being acquired, at market value, subject to the purchase accounting method. • NOI yield: The figure is calculated by dividing the total of actual or estimated annual NOI by the asset size (based on (anticipated) acquisition price); the acquisition price of MMI’s assets used for calculation of NOI yield of the portfolio of the New Investment Corporation are based on

their appraisal value as of June 30, 2020. • NOI yield after depreciation: The figure is calculated by dividing the figure calculated by deducting actual or estimated annual depreciation expenses from the total of actual or estimated annual NOI, by the asset size (based on (anticipated) acquisition price); the acquisition price of

MMI’s assets used for calculation of NOI yield of the portfolio of the New Investment Corporation are based on their appraisal value as of June 30, 2020. • Unrealized gain or loss: unrealized gain or loss of the portfolio of the New Investment Corporation is represented by that of JRF as JRF will succeed the MMI’s assets at market value. • Book value per unit: For the units outstanding of the New Investment Corporation, please refer to Page 27; the net assets of the New Investment Corporation is calculated based on the appraisal value of MMI’s assets as of June 30, 2020; the same shall apply hereinafter. • NAV per unit: calculated according to the following formula: (Net assets + Unrealized gain or loss – Total distribution (to be) paid) / Units outstanding. NAV per unit of the New Investment Corporation is calculated according to the following formula: (Net assets calculated under

certain conditions based on the merger ratio and JRF’s investment unit price as of August 26, 2020 + Unrealized gain or loss of JRF – Estimated total distribution (to be) paid) / Units outstanding. It indicates a rate of an increase or a decrease in DPU of the New Investment Corporation from (estimated) DPU of the respective investment corporations before the Merger in consideration of the merger ratio and unit split.

(1) (2) (3) (4) (5) (6) (7) (8)

P.5

It means “as of March 12, 2002” for the number of properties and asset size, “as of the Aug. 2002 (1st) Period” for DPU, or “as of the end of the Aug. 2002 (1st) Period” for NAV per unit. It means (The end of) the Feb. 2020 (36th) Period for JRF and (The end of) the Jun. 2020 (28th) Period for MMI. It means the total of acquisition price. As JRF implemented a four-for-one unit split on March 1, 2010, the figure as of listing (the Aug. 2002 (1st) Period), is calculated by dividing the actual figure of DPU and NAV per unit by four as the split had not taken place by that time. (Net assets + Unrealized gain or loss – Total distribution (to be) paid) / Units outstanding (rounded down the figure less than 100 yen) It means “as of April 22, 2015” for the number of properties and asset size, “as of the Dec. 2014 (17th) Period” for DPU or “as of the end of the Dec. 2014 (17th) Period” for NAV per unit, which are before Mitsubishi Corp.-UBS Realty Inc. acquired 65% shares in MID REIT Management Co., Ltd. It means the total of acquisition price, excluding the equity interest in a silent partnership (tokumei kumiai), the underlying asset of which is Nagoya Lucent Tower. As MMI implemented a five-for-one unit split on January 1, 2018, the figure before MC-UBS Group participation (the Dec. 2014 (17th) Period) is calculated by dividing the actual figure of DPU and NAV per unit by five as the split had not taken place by that time.

(1) (2) (3) (4) (5) (6) (7) (8)

Note

Note

42

P.7

Diversification by Area: It is based on (anticipated) acquisition price of the New Investment Corporation. • Tokyo Area: Tokyo, Kanagawa, Saitama and Chiba Prefecture • Osaka Area: Osaka, Kyoto and Hyogo Prefecture • Nagoya Area: Aichi Prefecture It is based on (anticipated) acquisition price of the New Investment Corporation. Hotel assets are classified into this category. In addition, residential and other new types of assets are classified into this category although none of them are owned at present. It is based on (anticipated) acquisition price of the New Investment Corporation. It is based on annual rent. It is based on the number of properties in the portfolio of the New Investment Corporation. It is based on the weighted average of rent.

(1) (2) (3) (4) (5) (6) (7)

P.17

It is based on the total acquisition price (as of the end of the most recent fiscal period) stated in the financial information of respective investment corporations as of July 31, 2020. The asset size of the New Investment Corporation is the sum of (anticipated) total acquisition price of JRF as of July 31, 2020, anticipated acquisition price of the asset anticipated to be acquired which was announced in “Notice Concerning Acquisition of Trust Beneficiary Right in Real Estate in Japan (G-Bldg. Tenjin Nishi-dori 02)” dated August 26, 2020, and the appraisal values of MMI as of June 30, 2020 as estimated assumed value. Such value may be different from the actual asset size (based on acquisition price) of the New Investment Corporation as of the effective date of the Merger, and it is not guaranteed that the asset size of the New Investment Corporation will be the largest among J-REITs as of the effective date of the Merger. The asset size of MMI excludes the equity interest in a silent partnership (tokumei kumiai) of Nagoya Lucent Tower.

(1)

P.19

It is calculated by dividing the total of interest for debt and investment corporation bonds, loan-related expenses, expenses for issuance and redemption of investment corporation bonds and custodial fees of investment corporation bonds paid on interest-bearing debt and investment corporation bonds of JRF and MMI that will be due or redeemed by the end of the fifth fiscal period after the Merger, by the total interest-bearing debt of JRF and MMI that will be due by the end of the fifth fiscal period after the Merger. It is the unrealized gain on the sub assets and secondary core assets of JRF as of the end of the Feb. 2020 (36th) Period. Sub-assets are GMS, roadside facilities and other assets that are not profitable to invest in. Secondary core assets are suburban malls (large shopping malls located in suburban areas) and value-add (assets with high yields and high upside potential). It is an estimated amount to be borrowed if the level of book value-based LTV 43.9%, the figure calculated by dividing the total of interest-bearing debt of JRF and MMI as of the date of this document by the estimated total assets of the New Investment Corporation as of the end of the Aug. 2021 (39th) Period, is assumed to be raised to 45%.

(1) (2) (3)

P.21

The figure is the sum of annual averages of the total acquisition price from August 1, 2015 to July 31, 2020. It is based on the status as of the date of this document. It is not guaranteed that the acquisitions will be realized. They are plans at present. It is not guaranteed that they will be realized. It describes the past track record and future plans of its development projects, over which the New Investment Corporation has not secured preferential negotiation right and it is not guaranteed that the acquisitions will be realized. The New Investment Corporation has not secured any preferential negotiation right over them and no future acquisition of these properties are guaranteed.

(1) (2) (3) (4) (5)

P.24

Book value-based LTV is calculated by dividing the total interest-bearing debt of JRF and MMI as of the date of this document by the estimated total assets of the New Investment Corporation as of the end of the Aug. 2021 (39th) Period calculated based on the appraisal value of MMI’s assets as of June 30, 2020. Market value-based LTV is calculated by dividing the total interest-bearing debt of JRF and MMI as of the date of this document by the sum of the unrealized gain or loss of the New Investment Corporation stated in Page 6 and the estimated total assets of the New Investment Corporation as of the end of Aug. 2021 (39th) Period calculated based on the appraisal value of MMI’s assets as of June 30, 2020. It is calculated by dividing the annual total of interest for debt and investment corporation bonds, loan-related expenses, expenses for issuance and redemption of investment corporation bonds and custodial fees of investment corporation bonds as of the date of this document, by the total interest-bearing debt of JRF and MMI as of the date of this document. The same shall apply hereinafter. The figure is a weighted average of remaining loan terms based on the amount of interest-bearing debt of JRF and MMI as of the date of this document; the same shall apply hereinafter. Long-term loans and investment corporation bonds that become due within one year are included in the long-term borrowing. Based on the publicly-available information of other investment corporations as of July 31, 2020. The figure is a weighted average of debt cost based on the amount of interest-bearing debt that will be due within the respective fiscal periods, including loan-related fees, etc. This includes loan-related fees, etc.

(1) (2) (3) (4) (5) (6) (7)

Disclaimer This document is intended to provide information relating to the absorption-type merger with Japan Retail Fund Investment Corporation (“JRF”) as the surviving corporation and MCUBS

MidCity Investment Corporation (“MMI”; JRF and MMI are referred to collectively as the “Investment Corporations”) as the dissolving corporation and is not intended to solicit or recommend investment in or encourage the purchase of any particular product. You may incur losses related to fluctuations in the prices of the Investment Corporations’ investment units as a result of any fluctuations in the trading market, interest rates, real estate market, and other factors, or a decrease in rental income relating to the real property underlying the investment units. When making any investment decision with respect of the Investment Corporations’ investment units, investors must make their investment decisions based on their own determinations and assume full responsibility for their own investment decisions.

This document is not a disclosure statement or operational report pursuant to the Financial Instruments and Exchange Act, the Act on Investment Trusts and Investment Corporations, or the securities Listing Regulations of the Tokyo Stock Exchange.

The information provided in this document is based on information available to the Investment Corporations as of the date hereof. The Investment Corporations do not guarantee the accuracy, completeness, certainty, validity or fairness of such information. Moreover, the information contained in this document is subject to revision without prior notice.

This document contains statements relating to future results, plans, management targets, strategies and other forward-looking information that are based on current assumptions derived from information available as of the date hereof. Such statements will no longer be accurate or applicable if the assumptions underlying such statements change. As such, these statements are not a guarantee of any future results, outcomes or financial conditions.

The information contained herein may not be reproduced, circulated, quoted or otherwise used without the prior consent of the Investment Corporations.

This English language document was prepared solely for the convenience of, and reference by, non-Japanese persons. The Investment Corporations give no warranties as to its accuracy or completeness.

Asset Management Company：Mitsubishi Corp.-UBS Realty Inc.

(Financial Instruments Dealer, Director of Kanto Local Financial Bureau (Financial Instruments Dealer)

Number 403, Member of The Investment Trusts Association, Japan)

investor presentation for the merger...2020/08/28 · • mixed-use • retail external growth aim...

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