Tokyu REIT : Notice Concerning Revision to Expected Operating Condition and Distribution Forecast

Distribution

Distribution

Operating

Operating

Ordinary

Net Income

per Unit

Net Income

(not including

in Excess of

Revenues

Income

Income

(Millions

per Unit

distribution in

Earnings per

(Millions

(Millions

(Millions

of Yen)

(Yen)

excess of

Unit

of Yen)

of Yen)

of Yen)

earnings)

(Yen)

(Yen)

Previous Forecast (A)

8,412

4,101

3,690

3,689

3,773

3,410

―

Revised Forecast (B)

11,587

7,386

6,975

6,974

7,134

3,950

―

Change (B) -(A)

3,174

3,284

3,285

3,285

3,361

540

―

Change

37.7 %

80.1 %

89.0 %

89.1 %

89.1 %

15.8 %

―

Distribution

Distribution

Operating

Operating

Ordinary

per Unit

Net Income

Net Income

(not including

in Excess of

Revenues

Income

Income

(Millions

per Unit

distribution in

Earnings per

(Millions

(Millions

(Millions

of Yen)

(Yen)

excess of

Unit

of Yen)

of Yen)

of Yen)

earnings)

(Yen)

(Yen)

Previous Forecast (A)

8,939

4,501

4,104

4,106

4,200

3,780

―

Revised Forecast (B)

8,307

4,521

4,125

4,127

4,222

3,800

―

Change (B) -(A)

-631

19

20

20

22

20

―

Change

-7.1 %

0.4 %

0.5 %

0.5 %

0.5 %

0.5 %

―

Preconditions and Assumptions

・Regarding the 32 properties owned by TOKYU REIT as of today, it is assumed that Setagaya

Business Square will be disposed of on December 1, 2021, that 30% co-ownership interest in

OKI System Center (land with leasehold interest) will be disposed of on December 24, 2021

Property portfolio

and on February 25, 2022 respectively, that Aoyama Oval Building will be acquired on December

10, 2021, and that Akasaka 4-chome Building (Tokyu Agency Inc. Head Office Building) will be

disposed of on March 31, 2022. Subsequently, it is assumed that there will be no transfers

(additional property acquisition or disposition of owned properties) until the end of the fiscal

period ending July 2022.

・Rental revenue is calculated in consideration of rent level, occupancy rate, etc., and other

fluctuation factors in light of recent real estate market conditions, state of negotiations with

tenants, presence of competitive properties in the area, etc., in addition to lease agreements

effective as of today.

Operating revenues

・Gain on sale of real estate, etc. of ¥3,354 million in the fiscal period ending January 2022

resulting from the disposition of Setagaya Business Square is projected.

・Occupancy Rates as of the end of the fiscal period ending January 2022 and the fiscal period

ending July 2022 are projected to be 97.1% and 99.1%, respectively.

・As to the impact of COVID-19, rent reduction/exemption of some retail tenants concluded at

this point in time are factored in upon calculation.

・Outsourcing expenses for the fiscal period ending January 2022 and the fiscal period ending July

2022 are projected to be ¥441 million and ¥391 million, respectively.

・Repair, maintenance and renovation expenses for buildings for the fiscal period ending January

2022 and the fiscal period ending July 2022 are projected to be ¥285 million and ¥301 million,

respectively. In an aim to improve the competitiveness of properties and the satisfaction of

tenants under management, etc., constructions scheduled in the future will be implemented with

priority. Actual repair, maintenance and renovation expenses for each fiscal period may, however,

differ significantly from estimated amounts due to unforeseen circumstances or emergencies

and the others.

・Property and other taxes, such as fixed property tax and city planning tax, on real estate TOKYU

Operating expenses

REIT possesses are calculated based on the amount expected to be imposed in each fiscal period

(Period Ending January 2022: ¥637 million / Period Ending July 2022: ¥654 million).

Fixed property tax and other taxes paid as part of the purchase prices to the seller upon the

property acquisition were not recorded as expenses but included in the relevant property

acquisition costs.

・Depreciation and amortization expenses, including associated costs and additional capital

expenditure in the future, are calculated based on the straight-line method (Period Ending

January 2022: ¥998 million / Period Ending July 2022: ¥820 million).

・Rental expenses other than those listed above are calculated in consideration of fluctuation

factors based on results in past fiscal periods.

・Operating expenses other than expenses from real estate operation (investment management fees

and asset custodian fees, etc.) for the fiscal period ending January 2022 and the fiscal period ending

July 2022 are expected to be ¥979 million and ¥835 million, respectively.

Non-operating expenses

・Interest expenses for the fiscal period ending January 2022 and the fiscal period ending July 2022

are expected to be ¥384 million and ¥369 million, respectively. Interest expenses include interest

expense, interest expense on investment corporation bonds, and other financial expenses.

・The balance of interest-bearing debt as of today, is ¥97,600 million (short-term debt of ¥3,200

million, long-term debt of ¥86,400 million and investment corporation bonds of ¥8,000

million). Short-term debt of ¥3,200 million due for repayment in the fiscal period ending

January 2022 is assumed to be repaid using proceeds from the sale of Setagaya Business Square.

Interest-Bearing Debt

In addition, long-term debt of ¥5,000 million is assumed to be entirely refinanced.

・As for long-term debt of ¥9,400 million due for repayment in the fiscal period ending July 2022,

it is assumed that part of ¥900 million will be repaid while the remaining will be refinanced.

・Balance of interest-bearing debt as of the end of the fiscal period ending January 2022 is projected

to be ¥94,400 million (long-term debt of ¥86,400 million and investment corporation bonds of

¥8,000 million), and the fiscal period ending July 2022 is projected to be ¥93,500 million (long-

term debt of ¥85,500 million and investment corporation bonds of ¥8,000 million).

3

Interest-Bearing Debt

・LTVs as of the end of the fiscal period ending January 2022 and the fiscal period ending July

2022 are projected to be 41.7% and 41.6%, respectively.

(LTV: Interest-bearing debt (forecast) / total assets (forecast))

Total number of

・It is assumed that there will be no additional issuance of investment units to the 977,600 units

investment units issued

issued and outstanding as of today, through the end of the fiscal period ending July 2022.

and outstanding

・Distribution per unit is calculated based on the distribution policy stipulated in the Articles of

Incorporation.

・Forecasts are based on the assumption that, as for the capital gain projected from the disposition

of Shonan Mall Fill (land with leasehold interest), ¥428 million of the ¥662 million in capital

gains projected, which is to be posted in the fiscal period ending January 2022, are retained

through application of the “Special Provisions for Taxation in Cases of Repurchase of

Specified Assets” (Article 65-7 of Special Taxation Measures Law) for provision as reserve for

reduction entry, up to the limit amount of reserve as stipulated in the “Ordinance on

Accountings of Investment Corporations.”

・Forecasts are based on the assumption that, as for the capital gain projected from the disposition

of Setagaya Business Square, ¥2,683 million of the ¥3,354 million in gain on sale of real estate,

etc. projected, which is to be posted in the fiscal period ending January 2022, are retained

Distribution per unit

through application of the “Special Provisions for Taxation in Cases of Repurchase of

Specified Assets” (Article 65-7 of Special Taxation Measures Law) for provision as reserve for

reduction entry of replaced property stipulated in the “Ordinance on Accountings of

Investment Corporations.”

・Forecasts are based on the assumption that, as for the capital gain projected from the disposition

of Akasaka 4-chome Building (Tokyu Agency Inc. Head Office Building), ¥412 million of the

¥1,417 million in gain on sale of real estate, etc. projected, which is to be posted in the fiscal

period ending July 2022, are retained through application of the “Special Provisions for

Taxation in Cases of Repurchase of Specified Assets” (Article 65-7 of Special Taxation

Measures Law) for provision as reserve for reduction entry, up to the limit amount of reserve

as stipulated in the “Ordinance on Accountings of Investment Corporations.”

・It is possible that the distribution per unit could change due to various factors, including changes

in assets under management, changes in rental revenue accompanying changes in tenants, etc.,

and unexpected maintenance and repairs.

Distribution in excess of

・TOKYU REIT does not currently anticipate distribution in excess of earnings per unit.

earnings per unit

・Forecasts are based on the assumption that any major revisions to regulatory requirements,

accounting standards and taxation will not impact forecast figures.

Other

・Forecasts are based on the assumption that there will be no major unforeseen changes to

economic trends and in real estate and other markets.

・Forecasts are made under the assumption that there will be no prolonged impact of the COVID-

19 pandemic or further spread.