Frontier Real Estate Investment : Summary of Financial Results for the 38th Fiscal Period (January 1, 2023 to June 30 2023)

August 15, 2023

Summary of Financial Results for the 38th Fiscal Period

(January 1, 2023 to June 30, 2023)

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: [phone]
Scheduled date to file securities report	:	September 28, 2023
Scheduled date to commence distribution payments	:	September 5, 2023

(Amounts of less than one million yen are rounded down, ratios are rounded off, unless otherwise stated)

1. Performance for the 38th Fiscal Period (January 1, 2023 to June 30, 2023)

1. Business Results

(% show period-on-period changes)

			Operating				Operating			Ordinary Income			Net Income
			Revenue				Income
	Period ended,		Millions of yen		%			Millions of yen	%			Millions of yen		%			Millions of yen		%
	June 30, 2023	11,530		0.9		6,416		1.2					6,147		1.6				6,146		1.6
	December 31, 2022	11,432		(0.8)	6,343		0.7					6,050		0.4				6,049		0.4
			Net Income				Return on Equity			Ordinary Income to			Ordinary Income to
			per Unit				(Note)						Total Assets						Operating Revenue
	Period ended,				yen				%								%						%
	June 30, 2023	11,360				3.5								1.9						53.3
	December 31, 2022	11,182				3.5								1.8						52.9
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, 2023	11,109			6,009					-					-				97.7			3.4
	December 31, 2022	11,122			6,017					-					-				99.4			3.4

Note: Payout ratio = Total Distributions (excluding distributions in excess of earnings) / Net Income ×100

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(3) Financial Position

Total Assets

Net Assets

Equity Ratio

Net Assets

(Note)

per Unit

Period ended,

Millions of yen

Millions of yen

%

yen

June 30, 2023

327,026

174,698

53.4

322,917

December 31, 2022

329,731

174,568

52.9

322,678

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, 2023

14,733

(1,408)

(8,014)

22,852

December 31, 2022

9,422

(319)

(6,214)

17,541

2. Forecasts of Results for the 39th Fiscal Period (July 1, 2023 to December 31, 2023) and for the 40th

Fiscal Period (January 1, 2024 to June 30, 2024)

																		(% 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,	11,012	(4.5)		5,917		(7.8)	5,608		(8.8)	5,607	(8.8)		10,500		-
2023
	June 30, 2024	11,564	5.0		6,085		2.8		5,758		2.7	5,757	2.7		10,640		-

Notes:

1. The aforementioned forecasts are based on the "Pre-Conditions and Assumptions for Operating Forecasts for the 39th Fiscal Period (July 1, 2023 to December 31, 2023) and for the 40th Fiscal Period(January 1, 2024 to June 30, 2024)" on Page 3.
2. Amount of less than ten yen is rounded down.
3. The forecast distribution per unit for the 39th fiscal period is calculated based on the assumption that net income plus ¥72 million (the reversal of the reserve for reduction entry) will be distributed.
4. The forecast distribution per unit for the 40th fiscal period is calculated based on the assumption that net income plus ¥2 million (the reversal of the reserve for reduction entry) will be distributed.

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				Pre-Conditions and Assumptions for Operating Forecasts
				for the 39th Fiscal Period (July 1, 2023 to December 31, 2023)
				and for the 40th Fiscal Period (January 1, 2024 to June 30, 2024)
				Pre-Conditions & Assumptions
			・ The 39th fiscal period ending December 31, 2023 (July 1, 2023 to December 31, 2023) (184 days)
	Calculation Period		・	The 40th fiscal period ending June 30, 2024 (January 1, 2024 to June 30, 2024) (182 days)
			・ The pre-conditions assumes a total of 40 properties including Mitsui Shopping Park LaLaport
				IZUMI(18.5% quasi co-ownership stake) and Shin-Kawasaki Square those are to be acquired on
				October 2, 2023 and December 22, 2023 respectively (collectively "New Properties",) in addition to
	Investment			the properties the Investment Corporation owns as of August 15, 2023 (total of 38 properties,
	Assets			"Existing Properties"). It is assumed that there will be no change in the number of the investment
				assets, due to acquisitions and/or disposals, until the end of the 40th fiscal period (June 30, 2024)
			・ 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, 2023 is ¥ 121,200 million. In addition, the
				Investment Corporation will execute borrowings to appropriate for a part of the payment of the
				acquisition of New Properties.
			・ It is assumed that refinancing and partial self-financing will be executed for the repayment of
				borrowings due by June 30, 2024.
	Loan to Value		・	The loan to value ratio (LTV*) as of December 31, 2023 and June 30, 2024 are expected to be
	Ratio
			approximately 45% and 45%, respectively.
				* 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-conditions assumes lease business revenue from the total of 40 properties, adding New
				Properties to the Existing Properties. For Existing Properties, it is calculated based on the individual
				lease contracts which is valid as of August 15, 2023 and estimated fluctuating factors. For New
	Operating Revenue			Properties, it is calculated based on the individual lease contracts those are expected to be valid on
				New Properties acquisition date and information provided by the current owners of the New
				Properties.

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			Pre-Conditions & Assumptions
			・ Property taxes, city planning taxes, etc. are expected to be ¥ 1,214 million for the 39th fiscal period
			and ¥ 1,299 million for the 40th fiscal period. However, should properties be newly acquired during
			the 39th and the 40th 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. For New Properties, municipal property taxes and other monies for
			settlement are not calculated as operating expenses but are included in their acquisition cost, which
			will be booked from the 40th fiscal period.
			・ Repairs and maintenance are expected to be ¥ 340 million for the 39th fiscal period and ¥ 384 million
	Operating Expenses		for the 40th 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 ¥ 1,917 million for the 39th fiscal period and
			¥ 2,009 million for the 40th fiscal period.
			・ Other expenses related to rent business (property management expenses, etc.) for Existing
			Properties, it is calculated based on actual figures and estimated fluctuating factors. For New
			Properties, it is calculated based on the individual lease contracts those are expected to be valid on
			New Properties acquisition date and information provided by the current owners of the New
			Properties.
	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 ¥ 309 million for the 39th fiscal period and
	Expenses
		¥ 327 million for the 40th 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 39th fiscal period is calculated based on the assumption that
			net income plus ¥72 million (the reversal of the reserve for reduction entry) will be distributed.
			・ The forecast distribution per unit for the 40th fiscal period is calculated based on the assumption that
	Distribution		net income plus ¥2million (the reversal of the reserve for reduction entry) will be distributed.
	per Unit		・ The number of the outstanding investment units is based on the number as of August 15, 2023,
	(excluding distribution
	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 40th fiscal
			period (June 30, 2024).
			・ 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.

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Pre-Conditions & Assumptions

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

	legislation, taxation, accounting standards, regulations applying to publicly listed companies, rules
	and requirements imposed by the Investment Trusts Association, Japan, that would impact the
Others
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.

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