One REIT : Summary of Financial Results for the Fiscal Period Ended February 2022 (REIT)

					Translation Purpose Only
Summary of Financial Results for the Fiscal Period Ended February 2022 (REIT)
					April 14, 2022
REIT Issuer:		One REIT, Inc.		Stock Exchange Listing: Tokyo Stock Exchange
Securities Code:		3290		URL: https://one-reit.com/en/
Representative:	(Title)	Executive Director	(Name)	Hirofumi Nabeyama
Asset Management Company:	Mizuho REIT Management Co., Ltd.
Representative:	(Title)	Chief Executive Officer	(Name)	Hirofumi Nabeyama
Contact:	(Title)	Executive Officer Finance &	(Name)	Takeshi Akimoto
		Administration Division
	TEL:	[phone]

Scheduled date of submission of securities report:	May 30, 2022
Scheduled date of commencement of distribution payment:	May 19, 2022
Preparation of supplementary financial results briefing materials:	Yes
Holding of financial results briefing session:	Yes (for institutional investors and analysts)
	(Amounts are rounded down to the nearest million yen)

1. Status of Management and Assets for the Fiscal Period Ended February 2022 (September 1, 2021, to February 28, 2022)

(1)

Management Status

(% figures are the percentage of increase (decrease) compared with the previous period)

Fiscal period

Operating revenue

Operating profit

Ordinary profit

Net income

million yen

%

million yen

%

million yen

%

million yen

%

Ended Feb. 2022

4,384

(10.3)

2,262

(21.4)

1,967

(24.7)

1,966

(24.7)

Ended Aug. 2021

4,889

20.4

2,878

125.9

2,613

155.4

2,612

155.6

Fiscal period

Net income per unit

Ratio of net income to

Ratio of ordinary profit to

Ratio of ordinary profit to

equity

total assets

operating revenue

yen

%

%

%

Ended Feb. 2022

7,423

3.4

1.6

44.9

Ended Aug. 2021

10,890

5.0

2.3

53.5

(2)

Distributions status

Distribution per

Total

unit

distributions

Distribution per

Total

Ratio of

(excluding

(excluding

distributions in

Distribution

Fiscal period

unit in excess of

distributions to

distribution in

distribution in

excess of

payout ratio

earnings

net assets

excess of

excess of

earnings

earnings)

earnings)

yen

million yen

yen

million yen

%

%

Ended Feb. 2022

7,326

1,966

－

－

99.9

3.3

Ended Aug. 2021

7,546

1,810

－

－

69.2

3.4

(Note)

Distribution payout ratio is calculated by the following formula (rounded down to one decimal place).

Distribution payout ratio = Total distributions (excluding distribution in excess of earnings) ÷ Net income × 100

(3)

Financial position

Fiscal period

Total assets

Net assets

Equity ratio

Net assets per unit

million yen

million yen

%

yen

Ended Feb. 2022

130,582

61,322

47.0

228,417

Ended Aug. 2021

113,808

53,156

46.7

221,570

(4) Status of cash flows

Net cash provided by

Net cash provided by

Net cash provided by

Cash and cash

Fiscal period

(used in) operating

(used in) investing

(used in) financing

equivalents at end of

activities

activities

activities

period

million yen

million yen

million yen

million yen

Ended Feb. 2022

2,105

(15,432)

14,047

10,221

Ended Aug. 2021

11,453

(12,252)

1,026

9,500

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Translation Purpose Only

2. Forecast of Financial Results for the Fiscal Periods Ending August 2022 (March 1, 2022, to August 31, 2022) and February 2023 (September 1, 2022, to February 28, 2023)

(% figures are the percentage of increase (decrease) compared with the previous period)

Fiscal period	Operating revenue	Operating profit		Ordinary profit		Net income
	million yen	%	million yen		%	million yen		%	million yen		%
Ending Aug. 2022	4,439	1.3	2,127		(5.9)	1, 826		(7.2)	1,825		(7.2)
(Note)
Ending Feb. 2023	4,405	(0.8)	2,071		(2.6)	1,773		(2.9)	1,771		(2.9)
Fiscal period		Distribution per unit		Distribution per unit in excess of earnings
(excluding distribution in excess of earnings)
					yen						yen
Ending Aug. 2022					7,120						－
(Note)
Ending Feb. 2023					6,600						－

(Reference) Forecast net income per unit (fiscal period ending August 2022): 6,799 yen Forecast net income per unit (fiscal period ending February 2023): 6,599 yen

(Note) As tenants of owned properties are scheduled to vacate in the fiscal period ending August 31, 2022, operating revenue and other amounts are expected to be lower than the forecasted operating results for the fiscal period ending August 31, 2022, announced in "Summary of Financial Results for the Fiscal Period Ended August 2021 (REIT)." However, we plan to maintain the forecast distribution levels announced in the same document by allocating retained earnings brought forward to distributions.

• Other
• 1. Changes in accounting policies, changes in accounting estimates and retrospective restatement

• Changes in accounting policies accompanying amendments to accounting standards, etc.: Yes

②	Changes in accounting policies other than ① :	No
③	Changes in accounting estimates:	No
④	Retrospective restatement:	No
	(Note) For more details, please see "Notes on Changes to Accounting Policies" on page 17.

1. Total number of investment units issued and outstanding
2. • Total number of investment units issued and outstanding (including own investment units) at end of period

Fiscal period ended Feb. 2022	268,468	units
Fiscal period ended Aug. 2021	239,908	units

• Number of own investment units at end of period

Fiscal period ended Feb. 2022	－	units
Fiscal period ended Aug. 2021	－	units

(Note) For the number of investment units used as the basis for calculating net income per unit, please refer to "Notes on Per Unit Information" on page 27.

• Summary of financial results are exempt from the audit by a certified public accountant or an auditing firm.
• Special note
  The management status outlook and other forward-looking statements contained in this document are based on information currently available to and certain assumptions deemed reasonable by One REIT. Accordingly, actual management status and other results may differ materially due to a variety of factors. In addition, the forecast is not a guarantee of the amount of distributions. For the assumptions for the forecast of management status, please refer to "Assumptions for the Forecast of Management Status for the Fiscal Periods Ending August 2022 and February 2023" presented on page 7.

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One REIT, Inc. (3290) Summary of Financial Results for the Fiscal Period Ended February 2022

• Table of Contents

1. Management Status ..................................................................................................................................................................	4
(1)	Management Status.............................................................................................................................................................	4
① Overview of the Fiscal Period Under Review.................................................................................................................	4
② Outlook for the Next Fiscal Period .................................................................................................................................	5
③ Subsequent Material Events............................................................................................................................................	6
(2)	Investment Risks.................................................................................................................................................................	8
2. Financial Statements.................................................................................................................................................................	9
(1)	Balance Sheet......................................................................................................................................................................	9
(2)	Statement of Income .........................................................................................................................................................	11
(3)	Statement of Unitholders' Equity......................................................................................................................................	12
(4)	Statement of Cash Distributions .......................................................................................................................................	14
(5)	Statement of Cash Flows ..................................................................................................................................................	15
(6)	Notes on the Going Concern Assumption .........................................................................................................................	16
(7)	Notes on Matters Concerning Significant Accounting Policies ........................................................................................	16
(8)	Notes on Changes to Accounting Policies ........................................................................................................................	17
(9)	Notes to the Financial Statements .....................................................................................................................................	18
(10) Increase (Decrease) in Total Number of Investment Units Issued and Outstanding .......................................................	28
3. Reference Information ............................................................................................................................................................	29
(1)	Information on Price of Assets Under Management, Etc. .................................................................................................	29
(2)	Status of Capital Expenditures ..........................................................................................................................................	41
(3)	Borrowing Status ..............................................................................................................................................................	43

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One REIT, Inc. (3290) Summary of Financial Results for the Fiscal Period Ended February 2022

1. Management Status

1. Management Status

• Overview of the Fiscal Period Under Review

1. Brief History of the Investment Corporation
   One REIT has Mizuho REIT Management Co., Ltd. (hereinafter referred to as the "Asset Management Company") (Note 1), which is a member of the Mizuho Financial Group, as its asset management company, and sets middle- sized office buildings (Note 2) as its focal investment target while incorporating other office buildings, etc., aiming to construct a portfolio that both ensures stable income in the medium to long term and exhibits growth potential. Furthermore, One REIT strives for further growth with the aim of maximizing unitholder value under the basic policies of "continuous growth of distributions" and "disciplined external growth while considering the portfolio and financial structure," alongside obtaining various support in terms of property acquisition, management, and financial aspects from our sponsor, Mizuho Trust & Banking Co., Ltd., which has an abundant track record in the Japanese real estate market.
   The Investment Corporation was incorporated, pursuant to the Act on Investment Trusts and Investment
   Corporations (hereinafter the "Investment Trust Act"), on June 25, 2013, with the Asset Management Company as the organizer and listed on the J-REIT section of the Tokyo Stock Exchange (securities code: 3290) on October 9, 2013. With public offering, etc. that followed, the total number of investment units issued and outstanding as of the end of the period under review stands at 268,468.

(Note 1) Mizuho Financial Group, Inc., Mizuho Trust & Banking Co., Ltd. and Mizuho Realty One Co., Ltd. (hereinafter referred to as "MONE") fall within the scope of parent companies of the Asset Management Company. MONE is a wholly owned subsidiary of Mizuho Trust & Banking Co., Ltd., the sponsor, and holds all issued shares of the Asset Management Company and Mizuho Real Estate Management Co., Ltd. (hereinafter referred to as "MREM"). Three companies, namely MONE, the Asset Management Company and MREM, together comprise the MONE Group. MREM is the management company of MONE Group's private real estate fund.

(Note 2) "Middle-sized Office Building" is a category of office building with a total floor area within the range of 3,300 m2 (approximately 1,000 tsubos) and 33,000 m2 (approximately 10,000 tsubos).

1. Investment Environment and Management Performance
   For the economic environment during the period under review (fiscal period ended February 2022 (17th fiscal period)), the number of new COVID-19 cases fell into the end of 2021, and there were movements toward normalization of economic and social activities. However, it remains difficult to foresee when the situation will be resolved with a phase of re-expansion from January 2022 due to the emergence of a variant.
   In the office building leasing market, although there has been a lull in the rise in vacancy rates, the spread of new work styles such as telecommuting, triggered by needs to prevent the spread of COVID-19, is making it more apparent that companies are reviewing their office strategies.
   One REIT acquired six properties (Kuramochi Building Daiichi, REID-C Chiba Ekimae Building, Shinkawa 1- chome Building, Hakozaki 314 Building, Aperto Higashi-Nakano Building and Daido Life Mito Building; total acquisition price of 15,657 million yen; hereinafter referred to as the "newly acquired assets") on September 24, 2021.
   Through acquisition of these assets, One REIT sought to improve the quality of its portfolio through tenant diversification and stabilization of the revenue base.
   Furthermore, One REIT conducted leasing activities focused on maintaining and enhancing occupancy rates by flexibly setting new advertised rent and such in light of market trends, while working to realize optimal costs in property management by taking into consideration tenant needs and the characteristics of the respective properties. As such, One REIT endeavored to enhance leasing business revenues.
   As a result, One REIT's portfolio as of the end of the fiscal period ended February 2022 comprised a total of 31 properties (total acquisition price: 119,927 million yen; not including silent partnership equity interest) with a total leasable area of 171,928.65 m2, and the occupancy rate as of the end of the fiscal period ended February 2022 was 97.6%.
2. Overview of Financing
   In the fiscal period ended February 2022, One REIT procured 6,000 million yen through syndicated loans arranged by Mizuho Trust & Banking Co., Ltd. and Mizuho Bank, Ltd. on September 7, 2021, and used the funds for scheduled repayment of existing borrowings and payment of various related costs.
   In addition, One REIT executed capital increase of 7,628 million yen (total paid-in amount) through public offering with a payment date of September 22, 2021, as well as 3,000 million yen in short-term borrowings and 4,900 million yen in long-term borrowings on September 24, 2021. The proceeds were used to partially fund the acquisition of six new properties and incidental expenses. Furthermore, One REIT executed capital increase of 381 million yen (total paid-in amount) by way of third-party allotment in connection with the capital increase through public offering, with payment date of October 15, 2021.
   In addition, on January 27, 2022, One REIT issued its first green bond (5th Unsecured Investment Corporation Bonds, total issue amount: 3,000 million yen), and used the proceeds alongside cash on hand to repay 3,000 million yen in short-term borrowings procured on September 24, 2021, for the purpose of allocation to the acquisition of Kuramochi Building Daiichi, a specified asset meeting eligibility criteria, before their maturity on February 28, 2022.
   As a result, as of the end of the fiscal period ended February 2022, the balance of interest-bearing liabilities was 61,574 million yen and the ratio of interest-bearing liabilities to total assets (LTV) was 47.2%.

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One REIT, Inc. (3290) Summary of Financial Results for the Fiscal Period Ended February 2022

1. Overview of Business Performance and Distributions
   As a result of the management described above, business performance in the fiscal period ended February 2022 was operating revenue of 4,384 million yen, operating profit of 2,262 million yen, ordinary profit of 1,967 million yen and net income of 1,966 million yen.
   One REIT decided to distribute almost the entire amount of unappropriated retained earnings after deduction of the amount internally reserved in or before the previous fiscal period with the incurrence of gain on sale of real estate properties and such in a manner that the maximum amount of distributions of earnings would be included in deductible expenses by application of the special provisions for taxation on investment corporations (Article 67-15 of the Act on Special Measures Concerning Taxation).
   As a result, One REIT declared distribution per investment unit of 7,326 yen.

• Outlook for the Next Fiscal Period

1. Future Investment Environment
   The domestic economy is expected to pick up by balancing measures to prevent the spread of COVID-19, including vaccinations, and resumption of economic activities going forward. However, resurgence of COVID-19 cases and its prolongation, impact from the Russian invasion of Ukraine and the resulting economic sanctions, etc., as well as fluctuations in financial and capital markets should continue to be watched carefully.
   In the office building leasing market, close attention needs to be paid to the impact of COVID-19 on tenants and the movements of tenants, such as cutback of office expenses in line with deterioration of business results and reviewing of future offices amid the promotion and increase of remote work. In the office building transaction market, since there still are many investors both in Japan and abroad who are eager to acquire prime investment properties, transaction prices are expected to remain at a high level. In the office building transaction market, since there still are many investors both in Japan and abroad who are eager to acquire prime investment properties, transaction prices are expected to remain at a high level. However, it will be important to firmly maintain the attitude of making selective investment while carefully monitoring the impact of COVID-19 and other factors on the trends of the real estate market.
2. Future Management Policy and Challenges to Address
   One REIT strives to grow while obtaining various support in terms of property acquisition, management and financial aspects from our sponsor, Mizuho Trust & Banking Co., Ltd., which has an abundant track record in the Japanese real estate market, and aims to maximize unitholder value. One REIT will seek to maintain and increase the value of assets under management through operation and management aimed at maximizing competitiveness (internal growth) as well as improve the portfolio quality by continuing to conduct selective investment (external growth) to achieve stable growth over the medium to long term.
   In order to achieve the growth strategy in both aspects of external growth and internal growth as described above, it is the policy of One REIT to take full advantage of support from Mizuho Trust & Banking Co., Ltd., the sponsor, in addition to utilizing investment expertise and business as well as other resources of the Asset Management Company, MONE and MREM.

1. External growth
   One REIT aims to expand asset size, while maintaining and enhancing the portfolio quality by conducting investment having assessed the location, building specifications, tenant attributes, etc. of individual properties, based on the policy to build a portfolio with middle-sized office buildings as the core investment target while also incorporating other office buildings, etc.
   With the Tokyo metropolitan area, which has a relatively large market size and holds abundant acquisition opportunity, as the primary investment target region and also targeting ordinance-designated cities and core regional cities equivalent to ordinance-designated cities (Note) (hereinafter collectively referred to as "ordinance-designated cities, etc.") which offer the prospect of a degree of rental demand, One REIT will seek to build a portfolio that diversifies investment to regional areas as well. By formulating main investment target areas and degree of importance for each region in the Tokyo metropolitan area and in ordinance-designated cities, etc., investment areas are carefully selected and, furthermore, suitability of location is scrutinized in each investment area in terms of convenience of transportation, ability to attract tenants, etc.

(Note) "Core regional cities" refers to non-ordinance-designated cities located outside the Tokyo metropolitan area that are the location of a prefectural government (prefectural capitals) or their equivalent.

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