Frontier Real Estate Investment : Summary of Financial Results for the 35th Fiscal Period (July 1, 2021 to December 31, 2021)

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

:

March 30, 2022

Scheduled date to commence distribution payments

:

March 8, 2022

Operating

Operating

Ordinary Income

Net Income

Revenue

Income

Period ended,

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

December 31, 2021

11,401

6.0

6,255

8.9

5,936

8.1

5,935

8.1

June 30, 2021

10,755

(0.9)

5,742

2.4

5,490

2.9

5,489

2.9

Net Income

Return on Equity

Ordinary Income to

Ordinary Income to

per Unit

(Note)

Total Assets

Operating Revenue

Period ended,

yen

%

%

%

December 31, 2021

10,976

3.6

1.9

52.1

June 30, 2021

10,747

3.5

1.8

51.0

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

%

%

December 31, 2021

10,972

5,935

–

–

99.9

3.4

June 30, 2021

10,747

5,489

–

–

99.9

3.4

Total Assets

Net Assets

Equity Ratio

Net Assets

(Note)

per Unit

Period ended,

Millions of yen

Millions of yen

%

yen

December 31, 2021

330,060

174,446

52.9

322,452

June 30, 2021

307,510

159,101

51.7

311,495

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

December 31, 2021

7,580

(22,877)

17,345

11,932

June 30, 2021

7,442

(901)

(6,836)

9,885

(% 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)

Period ended,

Millions of

%

Millions of

%

Millions of

%

Millions of

%

yen

yen

yen

yen

yen

yen

June 30, 2022

11,490

0.8

6,228

(0.4)

5,948

0.2

5,947

0.2

10,970

–

December 31,

11,518

0.2

6,273

0.7

5,980

0.5

5,979

0.5

10,990

–

2022

Pre-Conditions & Assumptions

・ The 36th fiscal period ending June 30, 2022 (January 1, 2022 to June 30, 2022) (181 days)

Calculation Period

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

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

Investment

・ As for Ito-YokadoHigashi-Yamato, it is assumed that 10% quasi co-ownership stake of trust

beneficiary rights to real estate is to be disposed on June 24, 2022 and 20% on December 23, 2022.

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 February 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 December 31, 2022.

Loan to Value

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

approximately 45% and 44%, 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 of February 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

¥ 10 million for the 36th fiscal period and ¥ 33 million for the 37th 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 36th and 37th fiscal

period.

Pre-Conditions & Assumptions

・ Property taxes, city planning taxes, etc. are expected to be ¥ 1,212 million for the 36th fiscal period

and ¥ 1,208 million for the 37th fiscal period. However, should properties be newly acquired during

the 36th and the 37th 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 ¥ 390 million for the 36th fiscal period and ¥ 429 million

for the 37th 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 ¥ 2,038 million for the 36th fiscal period and

¥ 1,955 million for the 37th 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 ¥ 280 million for the 36th fiscal period and

Expenses

¥ 294 million for the 37th fiscal period.

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

distribution policy described in its Articles of Incorporation.

・ It is assumed that gains on property sales for the 36th and 37th fiscal period due to the disposition

of Ito-YokadoHigashi-Yamato are to be set aside as reserve for reduction entry, applying the special

case of taxation on replacement of specified assets system (Article 65-7 of the Special Taxation

Distribution

Measures Law.)

per Unit

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

(excluding distribution

which are 541,000 units.

in excess of earnings)

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

investment units or the buyback or the cancellation of investment units until the end of the 37th fiscal

period (December 31, 2022).

・ 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.

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

Others

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

aforementioned forecasts.