Frontier Real Estate Investment : Summary of Financial Results for the 36th Fiscal Period (January 1, 2022 to June 30, 2022)

Name of REIT Issuer

:

Frontier Real Estate Investment Corporation

Stock Exchange Listing

:

Tokyo Stock Exchange

Securities Code

:

8964

Website

:

https://www.frontier-reit.co.jp/en/

Representative

:

Takao Iwadou, Executive Director

Name of Asset Manager

: Mitsui Fudosan Frontier REIT Management Inc.

Representative

:

Shintaro Ono,

Chief Executive Officer and Representative Director

Contact

:

Teruyuki Hayashi,

Chief Finance Officer and Director

TEL: +81-3-3289-0440

Scheduled date to file securities report

:

September 29, 2022

Scheduled date to commence distribution payments

:

September 6, 2022

Operating

Operating

Ordinary Income

Net Income

Revenue

Income

Period ended,

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

June 30, 2022

11,523

1.1

6,300

0.7

6,023

1.5

6,022

1.5

December 31, 2021

11,401

6.0

6,255

8.9

5,936

8.1

5,935

8.1

Net Income

Return on Equity

Ordinary Income to

Ordinary Income to

per Unit

(Note)

Total Assets

Operating Revenue

Period ended,

yen

%

%

%

June 30, 2022

11,132

3.5

1.8

52.3

December 31, 2021

10,976

3.6

1.9

52.1

Note: Return on Equity = Net income / ((Net assets at beginning of period + Net assets at end of period)/2) ×100

(2) Distributions

(Ratios are rounded down)

Distribution

Total

per Unit

Distributions

Distribution

Total

Payout

Distribution

(excluding

(excluding

in Excess of

Distributions

Ratio

to Net

distribution

distributions

Earnings

in Excess of

(Note)

Assets

in excess of

in excess of

per Unit

Earnings

earnings)

earnings)

Period ended,

yen

Millions of yen

yen

Millions of yen

%

%

June 30, 2022

11,117

6,014

–

–

99.8

3.4

December 31, 2021

10,972

5,935

–

–

99.9

3.4

Total Assets

Net Assets

Equity Ratio

Net Assets

(Note)

per Unit

Period ended,

Millions of yen

Millions of yen

%

yen

June 30, 2022

330,351

174,533

52.8

322,612

December 31, 2021

330,060

174,446

52.9

322,452

Note: Equity Ratio = Net assets / Total assets×100

(4) Cash Flows

Cash Flows from

Cash Flows from

Cash Flows from

Cash and Cash

Equivalents

Operating Activities

Investing Activities

Financing Activities

at End of Period

Period ended,

Millions of yen

Millions of yen

Millions of yen

Millions of yen

June 30, 2022

9,858

(1,201)

(5,936)

14,653

December 31, 2021

7,580

(22,877)

17,345

11,932

(% show period-on-period changes)

Distribution

per Unit

Distribution

(excluding

Operating

Operating

Ordinary

Net Income

in Excess

distribution

Revenue

Income

Income

of Earnings

in excess of

per Unit

earnings)

(Note 2, 3, 4)

Period ended,

Millions of

%

Millions of

%

Millions of

%

Millions of

%

yen

yen

yen

yen

yen

yen

December 31,

11,416

(0.9)

6,254

(0.7)

5,956

(1.1)

5,955

(1.1)

10,990

–

2022

June 30,2023

11,397

(0.2)

6,248

(0.1)

5,934

(0.4)

5,933

(0.4)

10,990

–

Pre-Conditions & Assumptions

・ The 37th fiscal period ending December 31, 2022 (July 1, 2022 to December 31, 2022) (184 days)

Calculation Period

・ The 38th fiscal period ending June 30, 2023 (January 1, 2023 to June 30, 2023) (181 days)

・ The Investment Corporation owns total 39 properties as of August 15, 2022.

Investment

・ As for Ito-YokadoHigashi-Yamato, it is assumed that 20% quasi co-ownership stake of trust

beneficiary rights to real estate is to be disposed on December 23, 2022 and 70% on June 23, 2023.

Assets

・ Actual numbers may change due to the future acquisitions and/or disposals of existing properties, if

any.

・ The balance of borrowings, etc. as of August 15, 2022 is ¥ 123,400 million.

・ It is assumed that refinancing and partial self-financing will be executed for the repayment of

borrowings due by June 30, 2023.

Loan to Value

・ The loan to value ratio (LTV*) as of December 31, 2022 and June 30, 2023 are expected to be

approximately 44% and 43%, respectively.

Ratio

* LTV = (Borrowings, etc. + Security deposits – Unrestricted cash and deposits**) / (Total assets –

Unrestricted cash and deposits)

** Unrestricted cash and deposits is calculated by substracting planned distributions for the next

fiscal period and deposits in trust account such as tenant leaseholds, etc. from cash and deposits

on the balance sheet of each fiscal periods.

・ The pre-condition assumes lease business revenue from the aforementioned investment assets of

39 properties. It is calculated based on the individual lease contracts valid as ofAugust 15, 2022 and

estimated fluctuating factors.

Operating Revenue

・ Due to the disposition of Ito-YokadoHigashi-Yamato, gains on sales of property are expected to be

¥ 32 million for the 37th fiscal period and ¥ 135 million for the 38th fiscal period.

・ Considering the impact of new coronavirus infectious disease (COVID-19), the pre-condition

assumes a risk of decreased lease business revenue to a certain extent for the 37th and 38th fiscal

period.

Pre-Conditions & Assumptions

・ Property taxes, city planning taxes, etc. are expected to be ¥ 1,205 million for the 37th fiscal period

and ¥ 1,243 million for the 38th fiscal period. However, should properties be newly acquired during

the 37th and the 38th fiscal period and municipal property taxes and other monies for settlement

occur between the Investment Corporation and the seller, the aforementioned monies will be

included in its acquisition cost.

Operating Expenses

・ Repairs and maintenance are expected to be ¥ 309 million for the 37th fiscal period and ¥ 351 million

for the 38th fiscal period. However, actual repairs and maintenance may be substantially different

from the expected amount due to outlay date or certain unanticipated factors.

・ Depreciation and amortization are expected to be ¥ 1,960 million for the 37th fiscal period and

¥ 1,906 million for the 38th fiscal period.

・ Other expenses related to rent business (property management expenses, etc.) are calculated

based on actual figures and estimated fluctuating factors.

Non-operating

・ It is assumed that non-operating expenses, which include interests charged on borrowings, security

deposits, investment corporation bonds and so on, will be ¥ 298 million for the 37th fiscal period and

Expenses

¥ 314 million for the 38th fiscal period.

・ Cash dividends (distribution per unit) are calculated according to the Investment Corporation’s

distribution policy described in its Articles of Incorporation.

・ The forecast distribution per unit for the 37th fiscal period is calculated based on the assumption that

net income less ¥9 million (the difference between the reserve for reduction entry and the reversal of

the reserve for reduction entry) will be distributed.

・ The forecast distribution per unit for the 38th fiscal period is calculated based on the assumption that

Distribution

net income plus ¥12 million (the difference between the reversal of the reserve for reduction entry and

the reserve for reduction entry) will be distributed.

per Unit

(excluding distribution

・ The number of the outstanding investment units is based on the number as of August 15, 2022,

in excess of earnings)

which are 541,000 units.

・ It is assumed that the Investment Corporation will not engage in the issuance of additional

investment units or the buyback and cancellation of investment units until the end of the 38th fiscal

period (June 30, 2023).

・ Cash distribution per unit may change for a variety of reasons including changes in the Investment

Corporation’s investment assets, changes in rent revenues due to tenant movements, etc. and/or

the incidence of unforeseen repairs and maintenance.

Distribution in Excess

・ The Investment Corporation does not currently anticipate cash distributions in excess of earnings

of Earnings per Unit

per unit.

Pre-Conditions & Assumptions

・ Excluding above, it is assumed that fallout from the COVID-19 pandemic will not expand in a way

that significantly exceeds current estimates.

・ Calculations and operating forecasts are based on the assumption that there will be no changes in

Others

legislation, taxation, accounting standards, regulations applying to publicly listed companies, rules

and requirements imposed by the Investment Trusts Association, Japan, that would impact the

aforementioned forecasts.

・ Calculations and operating forecasts are also based on the assumption that there will be no material

changes in general economic and real estate market conditions in Japan.