ORIX JREIT : Announces Financial Results for 44th Fiscal Period

＜For Immediate Release＞

Provisional translation only

April 19, 2024

ORIX JREIT Inc. (TSE:8954) Hiroshi Miura Executive Director

ORIX Asset Management Corporation

Geki Mochizuki

General Manager of General Affairs and Accounting Department

Tel: [phone]

ORIX JREIT Announces Financial Results for 44th Fiscal Period

Distribution per unit: ¥3,902

Overview of Financial Results

ORIX JREIT Inc. (OJR) today announced the financial results for its 44th fiscal period ended February 29,

2024. Operating revenues for the period were ¥28,804 million, income before income taxes was ¥11,553 million, net income was ¥11,539 million, and the distribution amount will be ¥10,769 million, or ¥3,902 per unit. The pay-out ratio will be 93.3%.

As of February 29, 2024, OJR's total assets were approximately ¥678,727 million, interest-bearing liability was ¥292,087 million (composed of ¥266,087 million in loans and ¥26,000 million in investment corporation bonds), and total net assets were ¥349,084 million, or ¥126,480 per unit.

Highlights

Dispositions and Acquisitions

During the 44th fiscal period, OJR acquired Cross Residence Nihonbashi Honcho (acquisition price: ¥2,200 million) on December 1, 2023, and SHINYOKOHAMA SQUARE BUILDING (acquisition price: ¥20,300 million) on December 27, 2023; and sold Cross Residence Mishuku (sale price: ¥2,900 million) on December 1, 2023, Round-Cross Shiba Daimon (sale price: ¥4,800 million) and Seafort Square Center Building (sale price: ¥13,000 million) on February 29, 2024. As a result, the OJR portfolio consisted of 111 properties at a total investment of ¥696,178 million (on an acquisition price basis) as of February 29, 2024.

After the end of the 44th fiscal period, OJR acquired Cross Residence Takadanobaba (acquisition price: ¥8,400 million) and Sun Mullion Tower (acquisition price: ¥19,000 million) on March 1, 2024, Cross Residence Rikugien (acquisition price: ¥1,980 million) on March 29, 2024; and sold MG Shirokanedai Building (sale price: ¥8,780 million) on April 1, 2024. Details were disclosed in the press releases dated January 25, 2024 and February 15, 2024.

And OJR will acquire Cross Residence Awaza (acquisition price: ¥2,650 million) and Cross Residence Kobe Motomachi (acquisition price: ¥1,650 million) in exchange for Round-Cross Akasaka (sale price: ¥3,050 million) on April 26, 2024; and will acquire Cross Residence Kiyosumi-Shirakawa (acquisition price: ¥1,650 million) on April 26, 2024, Cross Residence Kanda Jimbocho (acquisition price: ¥2,275 million) on May 31, 2024. Details were disclosed in the press releases dated January 25, 2024 and March 29, 2024.

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Portfolio Profile

As noted above, on February 29, 2024, OJR owned a total of 111 properties, consisting of 54 office buildings, 26 retail facilities, 19 residential properties, five logistics facilities and seven hotels and others, and was leasing approximately 1,115,508.16 m² of space to 1,059 tenants. OJR's portfolio occupancy rate as of February 29, 2024 was approximately 98.9%.

The total acquisition price of OJR's portfolio of 111 properties was ¥696,178 million as of February 29, 2024. The portfolio's appraisal value, evaluated by four major Japanese real estate appraisers, was ¥ 852,765 million as of February 29, 2024.

Equity Financing and Debt Financing

OJR procured funds as described below during the 44th fiscal period.

OJR took out long-term loans of ¥13,838 million from September 2023 through February 2024 to repay loans of which repayment dates arrived, as well as short-term loans of ¥2,500 million in January 2024 to repay investment corporation bonds.

As a result of the activities above, as of February 29, 2024, outstanding loans amounted to ¥266,087 million, the balance of investment corporation bonds stood at ¥26,000 million, and the balance of interest-bearing liability totaled ¥292,087 million. The LTV (based on total assets) (Note 1) was 43.0%, the fixed-rate debt ratio (Note 2) was 91.1%, and the long-term debt ratio (Note 3) was 85.0%.

Note 1: "LTV (based on total assets)" is the figure obtained by dividing the balance of interest-bearing liability by total assets stated on the balance sheet and is rounded to the first decimal place.

Note 2: "Fixed-rate debt ratio" is the figure obtained by dividing the balance of fixed-rate debt (including loans whose rates were fixed through interest rate swaps) by the balance of interest-bearing liability and is rounded to the first decimal place.

Note 3: "Long-term debt ratio" is the figure obtained by dividing the balance of long-terminterest-bearing liability (except for long-term debt to be reimbursed or redeemed within one year) by the balance of interest-bearing liability and is rounded to the first decimal place.

Forecasts for the 45th and 46th Fiscal Periods

In accordance with Tokyo Stock Exchange listing requirements, OJR here announces financial results forecasts for the 45th fiscal period, which runs from March 1, 2024 through August 31, 2024. For the 45th fiscal period, OJR forecasts operating revenues of ¥25,831 million, income before income taxes of ¥10,770 million, and net income of ¥10,753 million. The estimated distribution per unit for the 45th fiscal period is ¥3,720.

The financial results forecasts for the 46th fiscal period, from September 1, 2024 through February 28, 2025 are as follows: operating revenues of ¥25,199 million, income before income taxes of ¥10,311 million, and net income of ¥10,294 million. The estimated distribution per unit for the 46th fiscal period is ¥3,760.

Overview of OJR

OJR was established on September 10, 2001, and was listed and commenced trading on the Tokyo Stock Exchange on June 12, 2002 as the fourth Real Estate Investment Trust in Japan, or "JREIT," to be listed. A JREIT is an externally managed property fund formed under the Act on Investment Trusts and Investment Corporations of Japan. ORIX Asset Management Corporation, a wholly owned subsidiary of ORIX Corporation (TSE: 8591, NYSE: IX (ADR)), is the asset manager of OJR. OJR is a diversified JREIT that invests in office buildings, retail facilities, residential properties, logistics facilities, and hotels and others, aiming to provide stable cash flow and healthy asset growth over the medium to long term.

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Notices

Information Disclosure to Investors

OJR maintains a policy of timely disclosure of important information in both the English and Japanese languages. For more information on OJR, please visit our website at https://www.orixjreit.com.

Forward-looking Statements Disclaimer

In making forward-looking statements about the forecasts for the 45th and 46th fiscal periods, certain assumptions have been made. We consider that these assumptions were appropriate and reasonable based on the information available to us when we made the forecasts. However, our actual operating results, and therefore the distribution per unit, may differ from our expectations and will be affected by a number of factors, many of which are beyond our control, or may not be capable of being foreseen or accurately predicted. For example, our actual distribution amount could be affected by the rental revenues we actually receive from our properties, and/or our operating expenses, interest expenses and the ability of our tenants to meet their financial obligations during the relevant period. It may also be affected by economic conditions in Japan and conditions relating to the real estate market in Japan, particularly in Tokyo. These factors and others could also affect the validity of the assumptions that we used in the preparation of our forecasts. No assurance can be given by us or by any other party that our forecasts will prove accurate.

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(Summary Financial Information Attached)

• This provisional English translation of the original Japanese document is provided solely for informational purposes. Should there be any discrepancies between this translation and the Japanese original, the latter shall take precedence.

**OJR is a real estate investment corporation (commonly referred to as a JREIT) listed on the Tokyo Stock Exchange JREIT Section (TSE: 8954) whose objective is to provide stable income returns to investors over the medium to long term through investing in diversified types of quality real estate, mostly office buildings and properties in the Greater Tokyo Area. ORIX Asset Management Corp., a wholly owned subsidiary of ORIX Corp. (TSE: 8591), provides the asset management services for OJR.

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ORIX JREIT Inc.

BALANCE SHEETS

As of August 31, 2023 and February 29, 2024

		As of		As of
	August 31, 2023	February 29, 2024
		(In millions of yen)
Assets
Current assets:
Cash and deposits including trust accounts		48,461		46,650
Rental receivables		1,370		1,438
Investment in finance lease		1,729		1,650
Prepaid expenses		95		110
Other current assets		25		36
Less: Allowance for doubtful receivables		(14)		(13)
Total current assets		51,668		49,873
Property and equipment, at cost:
Land including trust accounts		460,036		467,121
Buildings and structures including trust accounts		191,271		185,590
Building improvements including trust accounts		60,669		58,635
Machinery and equipment including trust accounts		7,077		7,012
Construction in progress		79		1,998
		719,134		720,358
Less: Accumulated depreciation		(100,964)		(99,423)
Net property and equipment		618,169		620,935
Other assets:
Investment securities		502		507
Leasehold interests including trust accounts		4,170		4,150
Long-term prepaid expenses		1,488		1,433
Others		1,836		1,826
Total assets		677,836		678,727
Liabilities and net assets
Liabilities
Current liabilities:
Trade and other payables		3,246		2,539
Short-term debt		－		2,500
Long-term debt due within one year		37,108		41,260
Accrued expenses		342		334
Rents received in advance		3,732		3,762
Income taxes payable		14		13
Consumption taxes payable		360		646
Other current liabilities		441		609
Total current liabilities		45,244		51,666
Non-current liabilities:
Long-term debt		254,979		248,327
Leasehold and security deposits received		29,558		29,467
Deferred tax liabilities		－		1
Asset retirement obligations		179		180
Total liabilities		329,962		329,643

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Net assets
Unitholders' equity:
Unitholders' capital		335,757		335,757
Units authorized: 10,000,000 units
Units issued and outstanding: 2,760,000 units as of
August 31, 2023 and 2,760,000 units as of February 29, 2024
Retained earnings		12,117		13,323
Total unitholders' equity		347,874		349,080
Valuation and translation adjustments:
Net unrealized holding gains (losses) on investment securities		－		3
Total valuation and translation adjustments		－		3
Total net assets		347,874		349,084
Total liabilities and net assets		677,836		678,727

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ORIX JREIT Inc.

STATEMENTS OF INCOME

For the six months ended August 31, 2023 and February 29, 2024

		For the six months ended
	August 31, 2023	February 29, 2024
		(In millions of yen)
Operating revenues:
Rental revenues		21,884		22,713
Other operating revenues		2,692		2,635
Gains on sale of real estate properties		1,121		3,455
Total operating revenues		25,698		28,804
Operating expenses:
Property-related expenses		11,634		11,602
Loss on sale of real estate properties		3,251		2,659
Asset management fees		1,510		1,512
Administrative service fees		87		95
Other expenses		215		308
Total operating expenses		16,699		16,178
Operating income		8,999		12,626
Interest income		1		－
Interest expense		(823)		(807)
Borrowing expenses		(250)		(252)
Other expenses, net		(7)		(12)
Ordinary income		7,918		11,553
Income before income taxes		7,918		11,553
Provision for income taxes		14		14
Net income		7,904		11,539
		For the six months ended
	August 31, 2023	February 29, 2024
Earnings per unit
Net income (In yen)		2,864		4,181
Weighted average number of units outstanding		2,760,000		2,760,000

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ORIX JREIT Inc.

STATEMENTS OF CASH FLOWS

For the six months ended August 31, 2023 and February 29, 2024

		For the six months ended
	August 31, 2023	February 29, 2024
		(In millions of yen)
Cash Flows from Operating Activities:
Income before income taxes		7,918		11,553
Adjustments to reconcile income before income taxes
to net cash provided by operating activities:
Depreciation		3,940		3,940
Amortization of long-term prepaid expenses		183		186
Amortization of investment corporation bond issuance costs		10		10
Allowance for doubtful receivables		(1)		－
Interest income		(1)		－
Interest expense		823		807
Loss on disposal of property and equipment		10		19
Changes in assets and liabilities:
Rental receivables		(112)		(67)
Consumption taxes payable		(188)		286
Investment in finance lease		79		79
Prepaid expenses		28		(15)
Payments of long-term prepaid expenses		(286)		(131)
Decrease in property and equipment due to sale		2,855		17,659
Decrease in property and equipment held in trust due to sale		5,062		1,815
Withdrawal from reserve for repairs and maintenance		145		－
Trade and other payables		486		(356)
Rents received in advance		(11)		29
Others, net		(17)		178
Subtotal		20,926		35,994
Cash proceeds from interest income		－		2
Cash payments of interest expense		(811)		(816)
Cash payments of income taxes		(12)		(14)
Net cash provided by operating activities		20,102		35,166
Cash Flows from Investing Activities:
Payments for investing in time deposits		－		(3,000)
Proceeds from maturity of time deposits		－		6,000
Purchases of property and equipment		(17,644)		(26,547)
Purchases of investment securities		(502)		－
Proceeds from leasehold and security deposits		1,227		1,451
Repayments of leasehold and security deposits		(1,054)		(1,524)
Payments for restricted deposits held in trust		(617)		(940)
Proceeds from restricted deposits held in trust		151		613
Others, net		(110)		(20)
Net cash used in investing activities		(18,550)		(23,968)

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Cash Flows from Financing Activities:
Proceeds from short-term debt		－		2,500
Proceeds from long-term debt		27,750		13,838
Repayments of long-term debt		(27,750)		(16,338)
Payment of dividends		(11,223)		(10,335)
Net cash used in financing activities		(11,223)		(10,335)
Net change in cash and cash equivalents		(9,671)		862
Cash and cash equivalents at the beginning of the period		52,901		43,230
Cash and cash equivalents at the end of the period		43,230		44,092

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ORIX JREIT Inc.

STATEMENTS OF CHANGES IN NET ASSETS

For the six months ended August 31, 2023 and February 29, 2024

				(In millions of yen)
	Number of				Valuation and
	Units	Unitholders' Capital	Retained Earnings	translation adjustments	Total Net Assets
Balance as of February 28, 2023	2,760,000	335,757		15,440	－	351,197
Cash Dividends declared	－	－		(11,227)	－	(11,227)
Net Income	－	－		7,904	－	7,904
Balance as of August 31, 2023	2,760,000	335,757		12,117	－	347,874
Cash Dividends declared	－	－		(10,333)	－	(10,333)
Net Income	－	－		11,539	－	11,539
Net unrealized holding gains (losses)
on investment securities	－	－		－	3	3
Balance as of February 29, 2024	2,760,000	335,757		13,323	3	349,084

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