June 18, 2024

Main Q&As Regarding the Financial Results of NTT UD REIT Investment Corporation
for the 43rd Fiscal Period
Date and time: June 17, 2024 (Monday) at 11:30 a.m. (Teleconference)
Speaker: Yutaka Torigoe, President & CEO, NTT Urban Development Asset Management
Corporation
Q. Regarding Landic Shimbashi 2 Building, you explained that transferring the property was among theoptions being discussed. If you were to transfer it, would you consider property replacement? Or since
you also mentioned lowering LTV, would you allocate the proceeds to repayment of borrowings?
A. As to Landic Shimbashi 2 Building, we are considering property replacement as an option. Currently,
we are consulting with the sponsor and outside parties. Property replacement is one idea, but whether
we will make the acquisition of the same scale is not necessarily a precondition. The current transaction
market environment is very severe, and we think it is quite difficult to acquire a property attractive
enough although it may be possible to find a property with the right conditions. Even if we were able toreplace the property, we expect the size of the acquisition to be smaller than that of the transfer. It isalso possible that we elect not to acquire a property.
Q. The Earnings Presentation mentions “lowering LTV.” Is now a phase to lower LTV? Or are you going tomaintain LTV and focus on property replacement? I would like to ask the background for lowering LTV.
A. We mentioned in this Earnings Presentation that we will consider property transfer. By this, we meanthat although the performance of properties owned is generally quite well, some properties are facing
growing issues due to leasing risk and other risks such as maintenance and repairs. Our main aim is tobasically unload these properties. At the same time, since interest rates are currently unstable and arebasically expected to increase in the future, our current stance is that we would like to lower LTV a little
although the current figure of 47.8% is not something that would immediately violate the guidelines.
Q. I feel that the momentum of the office market has been steadily improving. Will it enter a phase of rent
increase? I would like to hear that in comparison with six months ago.
A. We feel a gradual improvement in the office market environment itself as a whole. The current leasing
status also indicates a turnaround except for those properties that must be taken care of, including
unloading, as mentioned earlier. On the other hand, however, as to whether rents for other properties
will go up soon, we have not yet felt that much strength. Therefore, we expect it will take some moretime for rents to fully turn around.
Q. You have explained the direction of lowering LTV going forward, and the Earning Presentation mentions
that you will also be considering acquisition of treasury investment units. Since repayment of borrowings
seems to be a higher priority for the time being, even if acquisition of treasury investment units isconducted, I think the scale will be very limited. I would like to ask your thoughts on the possibility ofacquisition of treasury investment units and the expected scale of it.

A. Acquisition of treasury investment units is mentioned in the Earnings Presentation, but as I explained
earlier, I would like to first prioritize property transfer, in principle, from the perspective of improving theportfolio quality. The scale is yet to be finalized at the moment because there are some properties undernegotiation, but we assume it to be between 10 billion to 20 billion yen, hopefully closer to 20 billion yen.
We plan to lower LTV with the funds from property transfer and also set relatively high criteria forproperty acquisition. With the current investment unit price, the benefits of conducting acquisition oftreasury investment units are becoming more significant, so we will naturally consider it. We will discuss
the scale of the acquisition of treasury investment units while watching the scale of property transfers,of which progress is yet to be finalized at this moment.
Q. Page 13 of the Earnings Presentation shows office tenant exposure to the NTT Group. I would like toask about present situation of NTT Group’s offices. After COVID-19, we have heard the news of NTT
Group reducing its floor space by half, but has the situation calmed down and is there a move to avoid
this, or is demand returning to NUD?.
A. From our point of view, there are two major characteristics of NTT Group’s movement. One is themovement of promoting new hybrid work styles utilizing remote offices, which was driven beginningabout three years ago when the COVID-19 pandemic struck. This is basically still ongoing, but somecompanies are more actively adopting remote work while others do not adopt it as much, depending on
the type of industry and business, and the trend has generally settled down to a point where it now
depends on the characteristics of each company. In that sense, we believe that the major part of thetrend has already been achieved, although we are not sure if there will be any new increase or decreasein this factor in the future.
The other major characteristic is that NTT Group companies have traditionally used floor space ofvarious companies and not necessarily that of NTT Group companies’ floor space. Against such practice,
the holding company is leading a drive that “promotes NTT Group companies to use NTT Group’s floor
space in principle.” As a result, more NTT Group companies which often used other companies’ floor
space are having more opportunities to use properties of NTT Urban Development or NUD. As a recentcase, NTT Data moved into Tokyo Opera City Building.
Q. I remember seeing in a presentation that NTT Data is considering a data center REIT. Have you heard
anything about this from NTT Group?
A. We are aware that the holding company, NTT Data, and others talked about this. But there has been no
official word from them. My understanding is that the REIT(s) the holding company and NTT Data areconsidering at present are those overseas, and since we are a REIT in Japan, our official position isthat our REIT will not be involved.
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