MIRAI Corporation
Q&A from result announcement for fiscal period ended April 2024
(The 16th fiscal period)
Date of the result announcement: June 19, 2024 (Wednesday) *Held online
Q1.
What is the reason for the increase in internal reserves and how do you plan to use it?
A1.
Firstly, it is assumed that distributions will be made on a net income (EPU) basis without
reversal of internal reserves from the fiscal period ending October 31, 2024 (the 17th fiscalperiod) onward since a certain amount of internal reserves was secured through this increase.
While we estimate expenses related to leasing business and finance costs somewhat
conservatively in the face of rising interest rates and inflation, we expect they will be used toprepare for the risk of higher-than-expected increases of costs and to cover one-time DPU
decreases, such as dilution and costs in the event of a public offering.
Q2.
Does the additional tax burden associated with internal reserves actually drain funds
outward? Is there a specific risk that requires profits that should be returned to investors
to be retained internally, despite incurring an additional tax burden?
A2.
The additional tax burden incurred is recorded as corporate tax, inhabitant tax, and enterprisetax, and there will be an outflow of funds upon payment of the tax. Rather than considering
specific risks, we took into account the fact that as a real estate stock, investors generally
view MIRAI as having a higher risk toward interest rate hikes, and that there are few options
to retain internal reserves due to the timing of the IPO, and decided to increase internal
reserves at this time based on comprehensive consideration including MIRAI’s ability to pay
the same amount of distributions as forecast DPU without having to draw down the internal
reserves that was originally anticipated, as well as the level of additional tax burden andothers.

Q3.
I think the main scenario for fixed rent hotels whose contracts are about to expire is toswitch to variable rent, but how much room is there for switching to variable rent(including changing operators), including for properties to be considered for acquisitionin the future?
A3.
As stated in the question, our policy for the renewal of fixed-rent hotel contracts in the future
is to aim for either a large rent increase or a switch to variable rents that offer upside potential.
We believe that there is ample room for switching to variable rents, as we plan to consult withmultiple candidates, not limited to existing operators, while assessing their strengths andweaknesses in the target assets and geographical areas, and selecting those that we believe
have high feasibility for their plan.
In the past, we have switched the operators of the hotel in Ise to The COURT under oursponsor IDERA Capital, and the hotels in Osaka and Kyoto to Smile Hotel, and we willcontinue to consider initiatives to maximize the appeal of each property.
Q4.
The Offices in the bay area is being backfilled. What is the rent level compared to theprevious tenants?
A4.
Leasing for Shinagawa Seaside Parktower and Tokyo Front Terrace in Tennozu is progressing
relatively smoothly, maintaining a high level of occupancy rate. Although there has been no
significant decline in contractual unit rents, we have been proactive in leasing activities,
taking into account vacancies and information on future vacancies in the surrounding area,and have been somewhat flexible in terms of free rent and rent holidays as a means ofencouraging potential tenants to make decisions. There is a certain gap between thecontractual rent and the actual rent, as indicated by the difference between the “AverageOccupancy Rate” and the “Rent Generating Occupancy” in the graph on the right side of page
16 of the presentation material.
Going forward, MIRAI plans to achieve upside through free rent coming to an end and raising
rents for tenants that have entered into fixed-term lease agreements with relatively low rents,
although the number of such tenants is not large (i.e., re-signing existing tenants at higherrents or replacement with tenants that pay higher rents).

Q5.
A large availability for a building believed to be Shinjuku East Side Square is being
advertised on an office leasing information site. I would like to know about the leasing
policy for this property and the timing of the impact on business performance if
vacancies were to occur.
A5.
Although we are unable to give a specific answer regarding the movements of a major tenantof Shinjuku East Side due to the relationship with the tenant and co-owners of the asset, weexpect that the impact of the move-out will be felt beyond the fiscal period ending April 2025
(the 18th fiscal period), the period for which the earnings forecast has been announced thistime.
With regard to leasing policy, discussions will be held with existing tenants that have indicateda desire for floor space expansion on a priority basis, and then consider attracting multiple
tenants.
The Tokyo office market has largely survived the massive supply in 2023, and there are signs
that occupancy and rents will recover to some extent this year. Supply in 2025 is expected tobe similar to that of 2023, but we estimate the market will be able to weather the supply given
the influx of workers to Tokyo. Since buildings to be supplied in the future are expected to beaccompanied by higher rents to some extent, reflecting the recent rise in construction costs,
MIRAI believes that offices in the mid-rent range (10,000-low 20,000s yen per tsubo), which
is its main focus, will be relatively unaffected by the large supply of new buildings.

(End)*In addition to questions from investors, FAQs (frequently asked questions) prepared by theasset manager may also be included.