ORIX JREIT : Uploaded 44th Presentation Material

April 19, 2024

The 44th Fiscal Period ended February 29, 2024

Securities code：8954

Table of Contents

1

Executive summary
Key Message					3
Stable Growth of Unitholder Value	4
Strategic Asset Replacement since FP 23/8	5
Factors for Change in DPU (Actual)	6
Factors for Change in DPU (Forecasts)	7
Financial Results for FP24/2	8
Forecasts for FP24/8 & FP25/2	9
Impact on DPU					10
Internal Growth
Portfolio Status					12
Offices					13
Offices -Portfolio Analysis-	14
Retail Facilities					15
Residential Properties	16
Logistics Facilities	17
Hotel（Hotel Universal Port, HUP）	18
Hotel（Tokyo Bay Maihama Hotel First Resort, Maihama）		19
External Growth
New Acquisition	I				21
New Acquisition	II	22
New Acquisition	III	23
New Acquisition	IV	24
New Acquisition	V			25

Finance
Financial Indicators				27
Trends on Financial Indicators	28
Sustainability
External Awards and Accreditations	30
Recent Initiatives	31
Appendix
Five Period Performance Summary	33
Breakdown of NOI by Property Type	34
List of Interest-bearing Liabilities	35
Sponsor Pipeline and Acquisition Track Record			36
OJR's Approach to ESG	37
Accreditations on Properties	38
Investor Status	39
AUM	40
Property List I	41
Property List II	42
Hotel List				43
Disposed Properties during and after FP24/2			44
Overview of Appraisal Value	45
Appraisal Value List I	46
Appraisal Value List II	47

Executive Summary

Key Message

3

Unitholder

Value

Growth

Growth

Strategy

Financial

Management

Sustainability

• Pursue stable unitholder value (NAV & DPU) growth through internal and external growth strategy
• Aiming for stable DPU growth from 3,700 yen

FP24/2：3,902 yen (+2 yen compared to forecast / +158 yen compared to FP23/8）

FP24/8：3,720 yen

FP25/2：3,760 yen

• Realized portfolio quality improvement through continuous asset replacement

During and after FP23/8：

Acquisition (13 properties) 75.7 bil yen, Disposition (7 properties) 38.4 bil yen, NOI+1.7 bil yen

• • Cash and deposits at the end of Mar. 2024：Approx. 28 bil yen
• Achieved rent increase in all property types while increasing occupancy rate

FP24/2：NOI for existing properties +0.5 bil yen

• Maintain disciplined financial management with focus on long-term fixed rate loan

End of FP24/2: LTV 43.0%, Average duration to maturity 3.8 years, Fixed-rate debt ratio 91.1%

• Utilize floating rate and mid-term loan flexibly to deal with interest rate hike
• Received various external awards and accreditations by promoting measures

toward net zero

GRESB: Rating "5 Star" for 3rd year, Public Disclosure "A" for 6th year in a row

Won Bronze in fundraiser category at Ministry of Environment's ESG Finance Awards Won "Best Recommendation Award, Environment Division" in ARES ESG Award 2023

Stable Growth of Unitholder Value

• Pursue stable growth of NAV and DPU to increase unitholder value

4

• Aiming for stable DPU growth from 3,700 yen

NAV per unit including internal reserves				（yen/unit）
DPU				197,310 200,508 202,486 205,191
				192,171
	185,963	185,314	186,883	187,796
	180,718
	175,771
	170,980
162,210	165,399
156,539
150,841
144,824

137,534

130,683

122,652	Internal reserves
per unit
	925 yen

2,604

2,717

2,929

2,989

3,000

3,252

3,230

3,299

3,489

3,487

3,755

4,058

3,840

3,546

3,553

3,460

3,852

4,068

3,744

3,902

14/8

15/2

15/8

16/2

16/8

17/2

17/8

18/2

18/8

19/2

19/8

20/2

20/8

21/2

21/8

22/2

22/8

23/2

23/8

24/2

(FP25)

(FP26)

(FP27)

(FP28)

(FP29)

(FP30)

(FP31)

(FP32)

(FP33)

(FP34)

(FP35)

(FP36)

(FP37)

(FP38)

(FP39)

(FP40)

(FP41)

(FP42)

(FP43)

(FP44)

Actual and new forecast

Previous forecast

Difference

FP24/2（FP44）Actual

3,902 yen

3,900 yen

+2 yen

FP24/8（FP45）Forecast

3,720 yen

3,530 yen

+190 yen

FP25/2（FP46）Forecast

3,760 yen

ー

ー

Strategic Asset Replacement since FP23/8

• Improved portfolio quality through continuous asset replacement

5

Asset Replacement since FP23/8

Acquired assets (total acquisition price：75.7 bil yen)

Effect of Asset Replacement

1 Income Growth (Note1,2)

Disposed assets

NOI : 1.2 bil yen

Income after depreciation

: 0.7 bil yen

Acquired assets

NOI : 2.9 bil yen

Income after depreciation

: 2.4 bil yen

DS Tower	Cross Residence	Cross Residence	Sapporo	Cross Residence	SHINYOKOHAMA	Cross Residence
Taihakudori	Nihonbashi	Osaki	22 Square	Nihonbashi	SQUARE	Takadanobaba
	Hamacho			Honcho	BUILDING
Apr. 27, 2023	Apr. 28, 2023	Apr. 28, 2023	Aug. 31, 2023	Dec. 1, 2023	Dec. 27, 2023	Mar. 1, 2024

2 Profitability Improvement (Note3)

Disposed assets

NOI yield : 3.2%

Yield after depreciation

: 1.9%

Acquired assets

NOI yield : 3.9%

Yield after depreciation

: 3.3%

Sun Mullion	Cross Residence	Cross Residence	Cross Residence	Cross Residence	Cross Residence
Tower	Rikugien	Awaza	Kobe Motomachi	Kiyosumi-Shirakawa	Kanda Jimbocho
Mar. 1, 2024	Mar. 29, 2024	Apr. 26, 2024	Apr. 26, 2024	Apr. 26, 2024	May. 31, 2024
		(Scheduled)	(Scheduled)	(Scheduled)	(Scheduled)

Disposed assets (total disposition price：38.4 bil yen)

Round-Cross	Hotel Nikko	Cross Residence	Round-Cross	Seafort Square	MG Shirokanedai	Round-Cross
Tsukiji	Himeji	Mishuku	Shiba Daimon	Center Building	Building	Akasaka
Apr. 3, 2023	Aug. 31, 2023	Dec. 1, 2023	Feb. 29, 2024	Feb. 29, 2024	Apr. 1, 2024	Apr. 26, 2024

3 Building Age Improvement（Note4）

Disposed assets		Acquired assets
Average building age		Average building age
: 30.9 years		: 16.0 years

4 Mitigation of Downside Risk

Disposed assets

Completed disposition of concerned properties, Hotel Nikko Himeji which had risk of impairment and Seafort Square Center Building which faced downside risk of rent.

Note1: NOI of acquired assets is net operating income based on direct capitalization method indicated in appraisal report at the time of decision to acquire. Income after depreciation is calculated as NOI - estimated depreciation expense.

Note2: NOI and income after depreciation of disposed assets is the sum of actual figures for two fiscal periods before the fiscal period to which the disposition date belongs.

Note3: NOI yield and yield after depreciation of acquired assets is calculated by dividing NOI and income after depreciation by acquisition price. NOI yield and yield after depreciation of disposed assets is calculated by dividing NOI and income after depreciation by disposition price.

Note4: Building age is calculated on a weighted average basis by acquisition price as of acquisition date for acquisition properties and disposition date for disposition properties.

Factors for Change in DPU (Actual)

6

• Rent increase in existing properties, mainly hotels, and rent from properties newly acquired since FP23/8 contributed to FP24/2 DPU growth

（yen/unit）

Amount related to capital gains

80

+90

-6

-52

+206

3,664

Sapporo 22 Square	53
SHINYOKOHAMA SQUARE BUILDING	34
DS Tower Taihakudori	4
Cross Residence Nihonbashi Hamacho	2
Cross Residence Osaki	2
Cross Residence Nihonbashi Honcho	-5

Rental revenues	215
Offices	11
Retail Facilities	26
Residential Properties	10
Logistics Facilities	6
Hotels and Others	162
Others	-9

3,902

23/8	Impact of	Impact of	Impact of	Others	24/2
(FP43)	acquired	disposed	existing	（Note）	(FP44)
Actual	properties	properties	properties		Actual

Note: "Others" includes the amount of reversal of internal reserves equivalent to the amount for environmental investments such a s installation of LED lighting and acquisition of accreditations for properties.

Factors for Change in DPU (Forecasts)

7

•

•

FP24/8 is forecasted to be 3,720 yen due to increase in utility charges reflecting government policy change, though rent increase in acquired and existing properties is expected to continue

FP25/2 is forecasted to be 3,760 yen mainly due to contribution of newly acquired properties

+119	-69

-161

（yen/unit）

-71

+64

-6

-40+22

3,902

Sun Mullion Tower	82
SHINYOKOHAMA SQUARE BUILDING	51
Cross Residence Awaza	11
Cross Residence Kiyosumi-Shirakawa	7
Cross Residence Kobe Motomachi	6
Others including up-front costs for	-38
newly-built residences

Rental revenues

Offices

Retail Facilities

Residential Properties

Logistics Facilities

Hotels and Others

Utility charges and others

43

17

17

-11

0

20

-204

3,720

Cross Residence Takadanobaba	21
Cross Residence Nihonbashi Honcho	14
SHINYOKOHAMA SQUARE BUILDING	7
Cross Residence Awaza	6
Others	16

Rental revenues	-52
Offices	-24
Retail Facilities	12
Residential Properties	1
Logistics Facilities	-
Hotels and Others	-41
Utility charges and others	12

3,760

24/2	Impact of	Impact of	Impact of	Others	24/8	Impact of	Impact of	Impact of	Others	25/2
(FP44)	acquired	disposed	existing	（Note）	(FP45)	acquired	disposed	existing	（Note）	(FP46)
Actual	properties	properties	properties		Forecast	properties	properties	properties		Forecast

Note: "Others" includes the amount of reversal of internal reserves equivalent to the amount for environmental investments such a s installation of LED lighting and acquisition of accreditations for properties.

Financial Results for FP24/2

8

								（million yen）
			23/8	24/2	Change		24/2	Change
			（FP43）	（FP44）		（FP44）
			Actual (A)	Actual (B)	(B)-(A)		Forecast (C)	(B)-(C)			Major variation factors
											◆Actual (24/2) - Actual (23/8)
Total operating revenues	25,698	28,804	3,106		26,006	2,798
	Rental revenues	21,884	22,713	828	①	22,391	321	⑤	①	Increase in rental revenues		828
	Other operating revenues	2,692	2,635	-57		2,548	87				Existing Properties		595
	Gains on disposition of real estate properties	1,121	3,455	2,334		1,065	2,389				Offices		29
Total operating expenses	16,699	16,178	-520		13,805	2,372				Retail Facilities		71
	Property-related expenses	11,634	11,602	-31		11,927	-324				Residential Properties		28
		Property management fees	2,142	2,129	-13		2,156	-27				Logistics Facilities		18
		Utility charges	2,188	2,080	-108	②	2,348	-267	⑥			Hotels and Others		446
		Property-related taxes	1,977	1,992	14		1,964	27				Acquired / Disposed Properties		233
		Repair costs	890	1,021	131	③	1,068	-47		②	Decrease in utility charges		-108
		Depreciation expenses	3,940	3,940	0		3,954	-14				Decrease due to seasonal factors and decrease	-130
		Others	494	438	-55		434	4				in fuel cost adjustments
	Losses from property dispositions	3,251	2,659	-592		-	2,659				Increase/Decrease due to acquisition/disposition	22
	Expenses other than property-related expenses	1,813	1,916	103	④	1,878	38		③	Increase in repair costs due to delay in construction	131
		Asset management fees	1,510	1,512	2		1,512	-0			by COVID
		Administrative service fees	87	95	7		98	-3		④	Expenses other than property-related expenses		103
		Other expenses	215	308	93		267	41				Increase in nonrecoverable tax		65
Operating income	8,999	12,626	3,627		12,200	425
NOI	16,962	17,766	803		17,047	719			◆Actual (24/2) - Forecast (24/2)
Non-operating income	6	3	-2		3	0		⑤	Increase in rental revenues		321
Non-operating expenses	1,086	1,075	-11		1,079	-3				Offices		153
	Financing-related costs	1,084	1,071	-13		1,074	-2				Retail Facilities		42
	Other expenses	1	4	2		4	-0				Residential Properties		62
Ordinary income	7,918	11,553	3,635		11,124	429				Logistics Facilities		-
Extraordinary income or losses	-	-	-		-	-				Hotels and Others		63
Income before income taxes	7,918	11,553	3,635		11,124	429		⑥	Decrease in utility charges due to lower than expected	-267
Provision for income taxes	14	14	0		17	-2			fuel cost adjustments etc.
Net income	7,904	11,539	3,635		11,107	432
Provision of internal reserves (+) / Reversal of internal reserves (-)	-2,429	770	3,199		343	427
	Allocation for environmental investments	-77	-84	-7		-79	-5
Distributable profits	10,334	10,770	436		10,765	5
Number of investment units outstanding (unit)	2,760,000	2,760,000	-		2,760,000	-
DPU (yen)	3,744	3,902	158		3,900	2
Total assets	677,836	678,727	890
Interest-bearing liabilities	292,087	292,087	-		N/A
LTV	43.1%	43.0%	-0.1%
Cash and deposits	48,461	46,650	-1,810						Cash and deposits as of Mar. 31, 2024	Approx. 28bil
CAPEX	1,539	994	-545		1,124	-130

Forecasts for FP24/8 & FP25/2

9

								（million yen）
			24/2	24/8	Change		25/2	Change
			（FP44）	（FP45）		（FP46）
			Actual (A)	Forecast (B)	(B)-(A)		Forecast (C)	(C)-(B)			Major variation factors
											◆Forecast (24/8) - Actual (24/2)
Total operating revenues	28,804	25,831	-2,973		25,199	-632
	Rental revenues	22,713	22,709	-4		22,700	-8		①	Increase in utility charges	257
	Other operating revenues	2,635	2,719	83		2,498	-221	③		Increase due to seasonal factors and	331
	Gains on disposition of real estate properties	3,455	402	-3,052		-	-402			government policy change
Total operating expenses	16,178	13,924	-2,253		13,609	-314			Increase/Decrease due to acquisition/disposition	-73
	Property-related expenses	11,602	11,988	385		11,711	-276		②	Increase in "others" in property-related expenses	118
		Property management fees	2,129	2,192	63		2,120	-72
		Utility charges	2,080	2,338	257	①	2,267	-70			◆Forecast (25/2) - Forecast (24/8)
		Property-related taxes	1,992	1,940	-52		1,921	-18		③	Decrease in other operating revenues	-221
		Repair costs	1,021	1,041	19		991	-50			Decrease of one time revenue such as penalty fee	-154
		Depreciation expenses	3,940	3,918	-22		3,898	-20			Decrease in utility charges due to seasonal factors	-52
		Others	438	557	118	②	512	-45
	Losses from property dispositions	2,659	-	-2,659		-	-
	Expenses other than property-related expenses	1,916	1,936	19		1,898	-38
		Asset management fees	1,512	1,533	20		1,538	5
		Administrative service fees	95	92	-2		92	-
		Other expenses	308	310	1		266	-43
Operating income	12,626	11,907	-719		11,589	-317
NOI	17,766	17,438	-328		17,464	26
Non-operating income	3	2	-0		2	-
Non-operating expenses	1,075	1,139	63		1,279	140
	Financing-related costs	1,071	1,137	65		1,277	140
	Other expenses	4	2	-2		2	-
Ordinary income	11,553	10,770	-783		10,311	-458
Extraordinary income or losses	-	-	-		-	-
Income before income taxes	11,553	10,770	-783		10,311	-458
Provision for income taxes	14	17	2		17	-
Net income	11,539	10,753	-786		10,294	-458
Provision of internal reserves (+) / Reversal of internal reserves (-)	770	485	-285		-83	-568
	Allocation for environmental investments	-84	-37	47		-83	-46
Distributable profits	10,770	10,268	-501		10,379	110
Number of investment units outstanding (unit)	2,760,000	2,760,000	-		2,760,000	-
DPU (yen)	3,902	3,720	-182		3,760	40
CAPEX	994	2,675	1,681		2,698	23