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

February 15, 2023

Summary of Financial Results for the 37th Fiscal Period

(July 1, 2022 to December 31, 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: [phone]
Scheduled date to file securities report	:	March 30, 2023
Scheduled date to commence distribution payments	:	March 7, 2023

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

1. Performance for the 37th Fiscal Period (July 1, 2022 to December 31, 2022)

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		%
	December 31, 2022	11,432		(0.8)	6,343		0.7					6,050		0.4				6,049		0.4
	June 30, 2022	11,523		1.1		6,300		0.7					6,023		1.5				6,022		1.5
			Net Income				Return on Equity			Ordinary Income to			Ordinary Income to
			per Unit				(Note)						Total Assets						Operating Revenue
	Period ended,				yen				%								%						%
	December 31, 2022	11,182				3.5								1.8						52.9
	June 30, 2022	11,132				3.5								1.8						52.3
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, 2022	11,122			6,017					-				-				99.4			3.4
	June 30, 2022	11,117			6,014					-					-				99.8			3.4

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

1

(3) Financial Position

Total Assets

Net Assets

Equity Ratio

Net Assets

(Note)

per Unit

Period ended,

Millions of yen

Millions of yen

%

yen

December 31, 2022

329,731

174,568

52.9

322,678

June 30, 2022

330,351

174,533

52.8

322,612

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, 2022

9,422

(319)

(6,214)

17,541

June 30, 2022

9,858

(1,201)

(5,936)

14,653

2. Forecasts of Results for the 38th Fiscal Period (January 1, 2023 to June 30, 2023) and for the 39th

Fiscal Period (July 1, 2023 to December 31, 2023)

																			(% 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
	June 30,2023	11,581	1.3	6,341		(0.0)	6,047		(0.0)	6,046	(0.0)		10,990		-
	December 31,	10,953	(5.4)		5,832		(8.0)		5,543		(8.3)		5,542	(8.3)		10,500		-
2023

Notes:

1. The aforementioned forecasts are based on the "Pre-Conditions and Assumptions for Operating Forecasts for the 38th Fiscal Period (January 1, 2023 to June 30, 2023) and for the 39th Fiscal Period(July 1, 2023 to December 31, 2023)" on Page 3.
2. Amount of less than ten yen is rounded down.
3. The forecast distribution per unit for the 38th fiscal period is calculated based on the assumption that net income less ¥101 million (the difference between the reserve for reduction entry and the reversal of the reserve for reduction entry) will be distributed.
4. The forecast distribution per unit for the 39th fiscal period is calculated based on the assumption that net income plus ¥142 million

(the reversal of the reserve for reduction entry) will be distributed.

2

				Pre-Conditions and Assumptions for Operating Forecasts
				for the 38th Fiscal Period (January 1, 2023 to June 30, 2023)
				and for the 39th Fiscal Period (July 1, 2023 to December 31, 2023)
				Pre-Conditions & Assumptions
			・ The 38th fiscal period ending June 30, 2023 (January 1, 2023 to June 30, 2023) (181 days)
	Calculation Period		・	The 39th fiscal period ending December 31, 2023 (July 1, 2023 to December 31, 2023) (184 days)
			・ The Investment Corporation owns total 39 properties as of February 15, 2023.
	Investment		・ As for Ito-YokadoHigashi-Yamato, it is assumed that 70% quasi co-ownership stake of trust
			beneficiary rights to real estate is to be disposed 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 February 15, 2023 is ¥ 121,200 million.
			・ It is assumed that refinancing and partial self-financing will be executed for the repayment of
				borrowings due by December 31, 2023.
	Loan to Value		・ The loan to value ratio (LTV*) as of June 30, 2023 and December 31, 2023 are expected to be
			approximately 43% 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 of February 15, 2023
				and estimated fluctuating factors.
	Operating Revenue		・	Due to the disposition of Ito-YokadoHigashi-Yamato, gains on sales of property are expected to be
				¥ 139 million for the 38th fiscal period.

3

			Pre-Conditions & Assumptions
			・ Property taxes, city planning taxes, etc. are expected to be ¥ 1,242 million for the 38th fiscal period
			and ¥ 1,215 million for the 39th fiscal period. However, should properties be newly acquired during
			the 38th and the 39th 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 ¥ 423 million for the 38th fiscal period and ¥ 329 million
		for the 39th 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 ¥ 1,913 million for the 38th fiscal period and
			¥ 1,881 million for the 39th 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 ¥ 293 million for the 38th fiscal period and
	Expenses
		¥ 289 million for the 39th 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 38th fiscal period is calculated based on the assumption that
			net income less ¥101 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 39th fiscal period is calculated based on the assumption that
	Distribution		net income plus ¥142 million (the reversal of 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 February 15, 2023,
	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 39th fiscal
			period (December 31, 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.

4

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

	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.

• 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.

5