Global One Real Estate Investment : Financial Results for the Six-Month Period Ended September 2023 (the 40th Period)

(8958)

Financial Results for the Six-Month Period Ended September 2023 (the 40th Period)

(Explanatory Material)

16 November 2023

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2

Overview of Global One Real Estate Investment Corporation (as of 30 September 2023)

Selective Investment in High-quality Office Buildings

Solid Financial Base Supported by Financial Sponsors

	GOR	Average of
	other office REITs (*1)
Walking distance: 0 - 5 min.	100.0	％	79.7	％
Average building age	18.8	years	25.7	years
Portfolio PML	1.8	% (*2)	2.5	%
Average acquisition price	16.3	billion yen	8.8	billion yen
Average total leasable area	11,787	sqm	8,060	sqm

LTV	Book value basis	45.2	%	(*3)
(Interest-bearing debt / total assets)	Appraisal value basis	38.2	%
Ratio of long-term /		87.0	%	(*3)
fixed interest-bearing liabilities
Average financing term		6.9	years	(*3)
Average interest rate		0.64	%	(*3)
Rating	AA-Stable（JCR）

Government-designated cities other than

Total acquisition price

major 3 metropolitan areas

13 properties,

8.0％

212.5 billion yen

Sapporo

Otemachi

Major 3 metropolitan areas

Yodoyabashi 8.0%

5.0%

3.7%

Hirakawacho

Tokyo Central

other than Tokyo

Midosuji

8.6%

4.3%

Metropolitan Area

Nagoya

Minami-

5 Wards

16.2％

8.1%

aoyama

34.0%

16.5%

Saitama

10.7%

Sengokuyama

4.0%

Tokyo suburban areas

Yokohama

Kinshicho

Tokyo 23 Wards other than

Toyosu 7.6%

8.4% Shinagawa

19.1%

5.6%

9.9%

the central 5 Wards

22.8%

							Expertise in
							real estate investment
					and management
	Real estate investment/		Finance
	management			Finance
							Expertise in
							the financial and trust
							businesses
	Finance		Real estate brokerage
							Expertise in
							real estate investment
				and management
	Real estate development/operation

Japan Credit Rating Agency, Ltd. (JCR)

Long-term Issuer Rating

AA-

(Stable)

[Asset Manager]

(*1)	"Other office REITs" refers to J-REITs (excluding GOR) which have an investment policy where 70% or a higher percentage (based on acquisition prices) of funds are allocated to commercial real
	estate of which main use is office. Average figures are calculated based on figures indicated in the most recent disclosure materials of each REIT that could be confirmed as of 30 September 2023.
(*2)	Portfolio PML of a total of 12 properties excluding Otemachi as of 30 September 2023
(*3) Calculated by deducting the balance of the bridge loan (10.4billion yen) which is scheduled to be repaid using the proceeds from the transfer of Otemachi (hereinafter "bridge loan") from interest-	3
	bearing liabilities and total assets as of 30 September 2023.

Table of Contents

Ⅰ Preface
１．Efforts to Increase Unitholder Value	6
２．Financial Highlights	7
３．Near-term Initiatives	8
Ⅱ Financial Results
１．Overview of Financial Results	10
２．Performance Forecast	12
３．Result and Forecast of DPU	14

• Portfolio Management

１．Internal Growth	16
２．External Growth	25
３．Financial Management	34
４．Promotion of ESG	37
Ⅳ Reference Material
１．Portfolio Data	47
２．Financial Data	58
３．Overview of Asset Manager	64

The following abbreviations will be used for the following pages:

"GOR" = Global One Real Estate Investment Corporation "GAR" = Global Alliance Realty Co., Ltd.

"Otemachi" = Otemachi First Square "Hirakawacho" = Hirakawacho Mori Tower "Minami-Aoyama" = Rakuten Crimson House Aoyama "Sengokuyama" = ARK Hills Sengokuyama Mori Tower "Kinshicho" = Arca Central

"Toyosu" = Toyosu Prime Square "Shinagawa"= Shinagawa Seaside West Tower "Yokohama" = Yokohama Plaza Building

"Saitama" = Meiji Yasuda Life Insurance Saitama-Shintoshin Building "Midosuji" = Meiji Yasuda Life Insurance Osaka Midosuji Building "Yodoyabashi" = Yodoyabashi Flex Tower

"Sapporo" = THE PEAK SAPPORO "Nagoya" = Global One Nagoya Fushimi "Ueno" = Global One Ueno "Tosabori" =Tosabori Daibiru Building "Shin-Daibiru"=Shin-Daibiru Building

For some terms used in this document, please refer to the notes attached at the end of this document.

Unless otherwise indicated, amounts are rounded down and percentages, number of years, walking time to the station and areas are rounded.

The impacts of the following splits of investment units are taken into consideration for "After split(s)" or "Adjusted after split(s)" in the material.

･2-for-1 split of investment units with 1 April 2014 as the effective date ･4-for-1 split of investment units with 1 April 2018 as the effective date

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• Preface

5

1．Efforts to Increase Unitholder Value

		Actual performance in the 40th Period	Future efforts
DPU	●Secured an increased amount of 3,038 yen with the partial transfer of Otemachi	●Aim to stabilize DPU at 2,400 yen or more as ordinary DPU level after the
and internally reserved part of the gain on sale	elimination of the gain on sale of Otemachi by utilizing internal reserves as
（*1）	39th Period:2,860 yen → 40th Period:3,038 yen (＋6.2%)	necessary
	growth	●Portfolio occupancy rate was 96.6%	●Recover the occupancy rate as early as possible through leasing up of vacancies
	●Rent increase through tenant replacement and rent revision	(Especially for Toyosu and Yokohama)
			●Aim for rent increase in total through careful dialogue with tenants while having
	Internal	The monthly rent based on contracts increased by 2.2 million yen from the	market rents in mind
	previous period (*2)	●Capture signs of vacancy rate headway in existing buildings and aim to obtain
			better leasing terms
	growth	●Completed the 2nd settlement of the transfer in segment over 5 periods of	●Asset replacement to enhance portfolio quality
	●Decided the transfer of Yodoyabashi and acquisition of Ueno (exchange)	●Further building up the pipeline to achieve the mid- to long-term goal of
		Otemachi	Continue with efforts to sale assets for the acquisition of quality properties
	External	●Decided the partial transfer of Minami-Aoyama and partial acquisition of Shin-	achieving an asset size of 250 billion yen
	pipeline
		Daibiru and Tosabori (exchange)	Sourcing drawing upon both the sponsor, etc. route and independent route
		●Secured preferential negotiation rights for 2 properties as a Mid-toLong-term
	・IR	●Released 1.2 billion yen of security deposit	●Further promote diversification of due dates and extension of financing terms
	●Reduced costs through refinancing at reduced amount of 1 billion yen	●Flexible LTV control responding to the real estate market conditions and financial
	Finance	●Borrowing of 2.5 billion yen with mixed interest rate loan	environment
	(floating interest rate + fixed interest rate)	●Respond to the severe interest rate environment by taking all possible measures,
		●"Online IR meetings (with domestic/overseas institutional investors/for retail	including devising financing methods
		investors) "	● Continue to implement green finance

ESG

●Acquired "5 Stars" in the 2023 GRESB Real Estate Assessment and "A Level" for the GRESB Public Disclosure, the highest results for four consecutive years

●Respond to the acquisition of SBTi certification

●Conduct information disclosure in line with the TCFD recommendations (quantitative assessment of the risks of climate change)

●Work for GOR's medium- to long-term growth through ESG initiatives such as responding to "Materiality" and contribute to the achievement of target for the SDGs

(*1)	"DPU" refers to dividend per unit
(*2)	Indicates the total amount of rents (including common area charges) for lease agreements that underwent tenant replacement or rent revision during the period, obtained by subtracting monthly	6
	rent before rent revision or tenant replacement from monthly rent after rent revision or tenant replacement.

2．Financial Highlights

DPU for the 40th Period is 3,038 yen. 2,959 yen(*1) is expected for the 41st Period and 2,400 yen(*1) is expected for the 42nd Period

(*1) Including the third portion of the return of gain on sale of Otemachi transferred in segment over five periods (announced on 24 October 2022) in the 41st Period and the fourth portion in the 42nd Period

				41st Period	42nd Period
		39th Period	40th Period	Forecast	Forecast
		Mar '23	Sep '23	Mar '24	Sep '24
				(*7)	(*7)
I/S - Dividends
Operating revenue	million yen	6,664	7,239	7,191	6,443
(Property-related revenues)	(5,776)	(6,139)	(6,100)	(6,082)
Operating profit	million yen	3,341	3,775	3,743	3,116
(Property-related profits and losses)	(3,074)	(3,345)	(3,351)	(3,383)
Net income	million yen	2,923	3,353	3,322	2,678
Total number of	Units	1,022,826	1,022,826	1,022,826	1,022,826
investment units issued

Net income per unit	yen	(*2)	2,858	3,279	3,248	2,618
Dividend per unit	yen		2,860	3,038	2,959	2,400
Portfolio
NOI yield	%	(*3)	4.0	4.0	4.1	4.2
Term-end occupancy rate	%	(*4)	96.3	96.6	97.2	95.4
(Forecast as of 18 May 2023)	%			96.5	96.5
Others
Term-end total assets	million yen	209,923	220,925
Interest-bearing liabilities	million yen	96,600	105,600
Unrealized gain/loss	million yen	38,156	38,950
LTV (book value)	%	(*5)	45.4	45.2
LTV (appraisal value)	%	(*6)	38.3	38.2

(*2) Net income per unit = net income ÷ total number of investment units issued

(*3) NOI yield = NOI for the six months ×2 ÷ acquisition price

(*4) Ueno, Shin-Daibiru and Tosabori are included in the forecast for the 41st Period and the 42nd Period.

(*5) LTV (book value)＝(interest-bearing liabilities - bridge loans) ÷ (term-end total assets - bridge loans)

(*6) LTV (appraisal value)＝(interest-bearing liabilities - bridge loans) ÷ (term-end total assets - bridge loans) + unrealized gain/ loss)"

Trend of dividend per unit (DPU)

(yen)

Trend of NAV per unit (*8)

(yen)

by tenants yet to be decided is not factored into

- total dividends + unrealized gain/loss ) ÷total

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3．Near-term Initiatives

Aim to improve unitholder value by striving for growth and stabilization of dividends through various efforts

▶Recover occupancy rate through proactive asset management and improvement of tenant satisfaction

Leasing of Toyosu and Yokohama

▶Further increase opportunities of acquiring properties

Proactive approach to all directions including the further understanding of parties with whom business relationship has been built

	Acquisition
	of quality
	properties
Asset	Rent
increase/
replacement	Improvement
	of occupancy
	rate

▶Acquire better properties to replace assets on our portfolio

Acquisition of properties for which preferential negotiation rights have been secured and promotion of tenant diversification

▶Stable financial management under an environment where interest rates are rising

Achieving stable funding in terms of both diversified maturity and cost reduction by trying every possible means such as the selection of term and green finance

Maximization

Public offering	of	Promote
	Unitholder	ESG
	Value

Acquisition	Strategic
of own
financial
investment	management
units	Expansion
	of IR
	activities

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• Financial Results

9

1．Overview of Financial Results (Period ended Sep. 2023) : (1) Comparison with forecast

Profit increased mainly due to the downturn in repairs and maintenance and improvement in revenue and expenditure of utility charges DPU for the 40th Period resulted in 3,038yen, ±0 yen from the dividend forecast

(million yen)

		40th Period	40th Period	Changes from
		Forecast	Actual
		40th forecasts
		Sep. '23	Sep. '23
		（*1）
Operating Revenue	7,252	7,239	-13	-0.2%
	Rental revenues(a)	6,144	6,139	-4	-0.1%
	Rental revenues, etc.	5,729	5,736	7	0.1%
	Utility charges	413	401	-11	-2.9%
	Other rental revenues	1	1	0	15.2%
	Gain on sale of real estate	1,108	1,099	-8	-0.8%
Operating Expenses	3,511	3,464	-47	-1.4%
	Property-related expenses(b)	2,835	2,794	-40	-1.4%
	Property management fees	649	655	5	0.9%
	Utilities expenses	509	481	-27	-5.4%
	Property and other taxes	556	555	-1	-0.2%
	Insurance	14	14	0	0.4%
	Repairs and maintenance	134	118	-16	-11.9%
	Depreciation and amortization(c)	962	961	-1	-0.1%
	Loss on retirement of non-current assets(d)	1	1	-0	-2.1%
	Other rental expenses	5	5	-0	-2.9%
	Asset management fees	489	491	2	0.5%
	Other general administrative cost	187	178	-8	-4.8%
Operating Profit	3,740	3,775	34	0.9%
Property-related profits and losses (a-b)	3,308	3,345	36	1.1%
NOI (a-b+c+d)	4,273	4,308	35	0.8%
Non-operating Income	－	1	1	－
Non-operating Expenses	429	422	-7	-1.7%
	Interest expenses	331	324	-6	-2.1%
	Other non-operating expenses	98	98	-0	-0.3%
Ordinary Profit	3,311	3,354	43	1.3%
Net Income	3,310	3,353	43	1.3%
Reserve for reduction entry	203	246	43	21.4%
Total Dividends	3,107	3,107	－	－
The number of units issued at end of period	1,022,826 units	1,022,826 units	－	－
Dividend per unit (DPU)	3,038 yen	3,038 yen	－	－

Main reasons for variance (million yen)				Converted to
		Increased Decreased
		DPU
		profit			profit
						（*2）
Operating profit		34			33 yen
Property-related profits and losses			36
Increase in rental revenues, etc.			7
Revenue and expenditure of utility charges			15
Increase in property management fees					-5
Decrease in property and other taxes			1
Decrease in repairs and maintenance			16
Increase in reserve for reduction entry		-43	-42 yen

(*1) Forecasts are figures as of 18 May 2023.

(*2) Figure arrived at by dividing the amount of increase/decrease in profit by the total number of investment units issued (1,022,826 units).

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