Activia Properties Inc.
FP21 Ended May 2022
Q&A Session Summary
Date: Friday, July 15, 2022 (Telephone Conference)

Q1 ： In the office leasing, you’re struggling with Shiodome and Shinagawa area, and on theother hand things are going well with the greater Shibuya area. How do you understandthose differences; does it come from area characteristics, or size of properties?
A1 ： We recognize that the difference is largely attributable to the area characteristics. In thegreater Shibuya area, the market vacancy rate declined, and it was reflected in the occupancyimprovement of our properties. When we watch the tenant trends, the area enjoys new
demand generating from not only tech companies and start-ups that have been present until
now, but also other sectors. The Shinagawa and Shiodome area, on the other hand, has ademand/supply balance less favorable, as for example, there are abundant competitive
buildings in the area. Besides, the size of areas also affects: small areas require less effort tobe leased up than large areas, for which it takes longer time. In addition, tenant demand forlarge areas has not recovered yet.

Q2 ： Regarding the asset replacement strategy that you will continue, what is the type of properties
to be disposed? Please tell if you have ideas on asset type, size or other factors.
A2 ： For the properties to be disposed, in global terms, we will continue to use the criteria ofprofitability, building age and competitiveness, while assessing each property rather thanadhering to a particular asset type such as retail or office. We determined to dispose the two
assets because the assessment of conditions those are facing found that those may require acertain amount of time to improve the profitability or make further growth. Regarding thesize of asset, one guide should be several billions of yen, though it may vary depending on
circumstances.

Q3 ： The DPU target has been raised to 9,300 yen this time. Can it go up further or lower on
the contrary? Please tell, for example, if there are any specific thresholds for occupancy
rate to raise the target DPU or DPU level to accumulate internal reserves.
A3 ： At the public offering last year, we expected to achieve a minimum stabilized DPU of 9,200
yen based on the assumption that the current portfolio would make continually stableperformance. The operational circumstances altered after that and the current profitability is
on downtrend. With that said, we have an outlook on 9,300 yen as a result of a series ofmeasures toward improvement of unitholder value such as asset replacement, buyback andcancellation of units. For the near term, it should be achievable through utilizing the capitalgain from disposition of Luogo Shiodome and continued asset replacements as it will takemore time to complete the leasing of Shiodome and Shinagawa and come back on track
toward a stable organic growth. As for internal reserves, the principle is to secure a certain
amount for a mid-to-long term. And at present, we are at the stage to accumulate it in order
to cover the mid-to-long term risk, even though a part of them may be used to make up for
deficiencies to be 9,300 yen when DPU from organic performance resulted to be 9,270 yen,for instance.

Q4 ： The forecast DPU for the May 2023 period is 9,350 yen. Do you have any intention orbackground for the increment from the preceding period? If the minimum DPU target
is 9,300 yen, reserve the 50 yen can be an option.
A4 ： DPU of 9,300 yen was certainly an option, though we preferred unitholder return as the officeoccupancy excluding the Shiodome and Shinagawa Higashi is expected to improve from theMay 2023 period and the capital gains is larger than originally expected.

Q5 ： You are struggling with Shiodome Building, and what is your plan of future leasing
conditions? Will lower further the rent level and extend free-rent period, etc.? Pleasetell the probability of the forecast occupancy rates as well.
A5 ： Certainly, it is taking time to lease up the areas, and we should be flexible about rent and freerend period as the surrounding competitor buildings are also faced a similar situation. After
six months of leasing activities, we received a positive feedback for a certain level of rent, sothat will be a benchmark for further leasing. The profitability will decline due to lowered rentand extended free-rent period, and we will make it up with asset replacements. If I make an
additional statement on the leasing status of Shiodome Building, we were finalizing lease
contracts with some candidates who sought to relocate in a larger area, though finally thosedetermined not to do so. Even though we failed to conclude contracts with them, we once
again recognized the demands for the building as the candidates highly appreciated it. Thatallowed us to be confident about new leases to be completed if we take some time.

Q6 ： Your strategy on retail properties is to conduct renewals and other measures capturing
the changing trend of market. Do you intend to take those measures to improve theprofitability or prevent it from further deterioration? Please tell how the profitability
will change compared to before those renewals or pre-covid.
A6 ： The retail portfolio is quite stable as its major part is comprised of long-term contracts andfixed rents. We aim to shift to offer the value of spaces that the visitors spend time in, insteadof just for shopping. The revenue is expected to maintain the same level or slightly decrease.
Though, we plan to secure other sources of revenue independent from tenant sales, whichshould work positively when people come back and the economy recovers. The forecasts
incorporate conservative assumptions though the impact from the shift will not be significant
as the overall retail portfolio is stable.

Q7 ： You newly invited a small-scale wedding venue in DECKS Tokyo Beach. How is the sales
status of the tenant? What is the background of the invitation of that kind of wedding
operator and how their businesses in general are going? I hardly know what the smallscale wedding venue is like. The number of weddings and honeymoons seems recovering
under the impact of Covid slightly reduced.
A7 ： We don’t have a clear picture of its sales performance yet as they have just moved into ourproperty, though the current operation seems quite well. After the Covid outbreak, any
wedding gatherings were postponed, though the demand for celebrating in some form has
been accumulating. That can also explain the current favorable operation of Kobe Kyu
Kyoryuchi 25Bankan. The change in wedding trends is also important to note. In addition tothe traditional banquet style, people also tend to have a smaller-scale ceremony, and the tenant
is capturing those new demands. Such other small-scale wedding venues have existed in theOdaiba area, and among all, our facility with a view of the Rainbow Bridge is highlyappreciated by our tenant. Under these circumstances, we believe we can expect a stable saleof the tenant.

Q8 ： You booked sales-linked rent for the hotel in Kobe Kyu Kyoryuchi 25Bankan. How isthe operating status of the property compared to DECKS Tokyo Beach?
A8 ： Despite hotel sales in general deteriorated after the Covid outbreak, Kobe has been enjoying
solid sales performance as it is constantly used by domestic customers even during thepandemic. The sales-linked rent revenue was generated with an occupancy rate gradually
recovered in 2021 after a downturn due to Covid. It was largely attributable to the recovered
demand for wedding as it accounts a large part of the tenant sales in the property. Theoccupancy rate of Kobe this year is outperforming that of 2021, and we can expect to acontinual stable demand. The hotel operator is also confident, which allowed us to renew thecontract for a long term.

< End >

Disclaimer
This document is provided solely for informational purposes and should not be construed as an offer,solicitation or recommendation to buy or sell any specific product including investment units. Any
decisions making on investment absolutely rest on your own judgment and on your own responsibility.
This document is not a disclosure document or statement of financial performance required by theFinancial Instruments and Exchange Act, the Act Concerning Investment Trusts and Investment
Corporations of Japan, the rules governing companies listed on the Tokyo Stock Exchange or any otherapplicable rules.
This document includes data described by TLC REIT Management Inc. (hereinafter the “AssetManager”) and refers to data, index and other information provided by third parties in addition toinformation about Activia Properties Inc. (hereinafter the “Investment Corporation”). Also analyses,
judgments and other points of view of the Asset Manager under the present situation are included.
The information contained in this document is not audited and there is no guarantee regarding theaccuracy and certainty of the information. Analyses, judgments and other non-factual views of theAsset Manager merely represent views of the Asset Manager as of the preparation date. Different
views may exist and the Asset Manager may change its views in the future.
The figures included in this document may be different from the corresponding figures in otherdisclosure materials due to differences in rounding. Although the information contained in thisdocument is the best available at the time of its publication, no assurances can be given regarding theaccuracy, certainty, validity or fairness of this information. The content of this document can be
modified or withdrawn without prior notice.
The Investment Corporation and the Asset Manager do not guarantee the accuracy of the data, indexes
and other information provided by third parties.
The Investment Corporation’s actual performance may be materially different from results anticipatedby forward-looking statements contained in this document.