Ichigo Office(8975)

Ichigo Office April 2020 Fiscal Period
Corporate Presentation
June 15, 2020

Ichigo Office REIT Investment Corporation (8975)
Ichigo Investment Advisors Co., Ltd.

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

www.ichigo-office.co.jp/english

We would like to express our deepest condolences
to all those across the world affected by the Covid-19
coronavirus pandemic and our wishes for the earliest
possible recovery.

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

2

Make The World
More Sustainable© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

April 2020 Results

Ichigo Office ESG

 April 2020 Highlights
 April 2020 Earnings
 April 2020 Financial Metrics
 Strong Record of Sustainable & Enduring Dividend Growth Growing Shareholder Value: Continued Growth in Base EPS
 Growing Shareholder Value: Continued Growth in NAV
 Sustained High Office Occupancy: 99.6%
 Organic Growth: Driving Rental Growth Organic Growth: Existing Tenants at Higher Rents
 Organic Growth: New Tenants at Higher Rents
 Acquisition-Driven Growth: Specialized Office Portfolio
 Launch of Ichigo J.League Shareholder Program Ichigo Office’s Sustainability Commitment
 Environmental
 Social
 GovernanceAppendix Financial & Portfolio Data
 About Ichigo Office

Ichigo Office Growth Strategy
 Covid-19 Impact
 Covid-19 Measures
 Mid-Size Offices With/After Covid-19
 Growth Strategy Roadmap
 Organic Growth via Value-Add Capex Rent Gap Offers Further NOI Upside Driving Higher NOI & Harvesting Gains in Strong Market
 Sustainable Growth via Sponsor Support
 Access to Ichigo’s Robust Pipeline of Office Assets
 Shift to No Fixed Fee, Performance Fee-Only Structure October 2020 Forecast April 2021 Forecast© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

6

April 2020 Results© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

7

April 2020 Highlights
Achievements
AcquisitionDriven
GrowthOrganic Growth

Financing• Acquired: Ichigo Nakameguro Building(Price: JPY 1.49B)• Sold: Lions Square Kawaguchi(Price: JPY 2.84B)

Details• Sold retail asset and continued strengthening ofspecialized office portfolio• Gains on sale (JPY 390M) exceeded unrealizedgains• Occupancy: 99.6%• No Covid-19 impact this period• 68 upward rent renewals (avg +9.0%)• Rent renewals: +JPY 10M per month• 34 new tenants at higher rents (avg +30.1%) • New tenants: +JPY 12M per month• 5th Bond Issuance(5-year maturity, 0.3% interest rate)• Hedging interest rate risk (97.8% of loans are
fixed rate; 7.4 year avg maturity on new loans)• Bond Issuance: JPY 1B• Refinancing:
JPY 8.8B

Base EPS1

JPY 2,073(+JPY 41, +2.0% vs. October 2019)• Continued Base EPS growth: +JPY 20 vs. initial
forecast of JPY 2,053 (+1.0%)

FFO2

JPY 2,621• FFO growth driving Base EPS & dividend growth

Dividend

JPY 2,163

NAV3

JPY 93,193(+JPY 40, +1.5% vs. October 2019)(+JPY 13, +0.6% vs. October 2019)(+JPY 1,575, +1.7% vs. October 2019)1 Base EPS = EPS – Capital Gains

2 FFO = Funds From Operations• Includes gains on sale of JPY 21 per share(vs. JPY 49 in previous period)• +JPY 41 vs. initial forecast of JPY 2,122 (+1.9%)• Unrealized gains: JPY 41.8B (+JPY 2.1B)

3 NAV = BPS + Unrealized Capital Gains© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

8

April 2020 Earnings(JPY million)
October 2019
ActualOperative Revenue

8,304

April 2020
Actual (A)8,260

April 2020
Forecast (B)vs. Forecast(A) - (B)

7,836

+424

Operating Profit

4,363

4,381

3,956

+424

Recurring Profit

3,554

3,576

3,147

+428

Net Income

3,554

3,575

3,147

+428

Dividend Reserve (-)

364

366

–

+366

Dividend Reserve Release (+)

105

105

105

–

Dividend

JPY 2,150

JPY 2,163

JPY 2,122+JPY 41

EPS

JPY 2,032

JPY 2,073

JPY 2,053+JPY 20

NOI

5,679

5,748

5,649

+ 98

85

85

85

–

Occupancy (on Last Day of Period)

99.4%

99.6%

98.5%

+1.1%

Average Occupancy

99.3%

99.3%

99.3%

–

No. of Assets

Major Variation Factors (vs. April 2020 Forecast)
Increase in Gains on Sale of Real Estate +398
Increase in Rental Income +25
Increase due to April 2020 Asset Acquisition +3
Decrease due to April 2020 Asset Sale -5[Existing Assets]
Increase in common area services income +27(Ichigo Kanda Nishikicho Building +7)(Ichigo Omiya Building +3)
Increase in lease termination penalties and restoration & cleaning fee +10
Increase in facility use income +6
Decrease in utilities income -18
Decrease in Rental Expenses -69
Decrease in utilities expenses -59
Decrease in repair expenses -37
Increase in service provider expenses (mainly brokerage fees) +24
Increase in depreciation +4
Increase in Operating Expenses (excluding Rental Expenses) +68
Increase in performance fee to asset manager +40
Increase in AM fees due to asset sale +14
Increase in non-deductible consumption tax +26
Decrease in other expenses through cost reduction -12
Increase in Non-Operating Revenue +3
Increase in reversal of accrued dividends +1
Increase in insurance income +1
Reference: Capex
April 2020 Actual 525
Reference: April 2020 Reserves (Post-Dividend)
Negative Goodwill Reserve 9,319
Dividend Reserve 3,367* NOI = Rental Income - Rental Expenses + Depreciation
No. of Assets is Period-End© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

9April 2020 Financial Metrics
Lengthening Debt Maturities & Increasing Fixed-Rate Loans (Now 98%)
April 2019

October 2019

April 2020

FFO (per Share)

JPY 2,558

JPY 2,581

JPY 2,621

Dividend

JPY 2,255

JPY 2,150

JPY 2,163

NAV (per Share)

JPY 87,934

JPY 91,618

JPY 93,193

LTV

48.1%

48.0%

48.1%

Average Interest Rate

1.00%

0.99%

0.97%

Average Debt Maturity

6.2 years

6.4 years

6.7 years% Fixed Rate Loans

96.9%

97.7%

97.8%

* FFO = Net Income + Depreciation + Loss on Disposal of Fixed Assets + Liability for Asset Retirement Obligation + Loss on Asset Sale Gain on Asset Sale - Extraordinary Gain + Extraordinary Loss
LTV = Interest-Bearing Liabilities/Total Assets
Average Debt Maturity is Period-End© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

10Strong Record of Sustainable & Enduring Dividend Growth
18 Consecutive Periods of Dividend Growth(Apr 2010 to Apr 2019, +13.2% CAGR)

2,150 2,163

1,904 1,923 1,930
1,706
1,494

1,537 1,541 1,547

(JPY)

2,255

1,964

2,014

2,106 2,087

1,740

1,603

1,387
1,219

979*

1,031*

899*
737*

Apr
2010

Oct
2010

Apr
2011

Oct
2011

Apr
2012

Oct
2012

Apr
2013

Oct
Apr
2013 2014

Oct
2014

Apr
2015

Oct
2015

Apr
2016

Oct
2016

Apr
2017

Oct
2017

Apr
2018

Oct
2018

Apr
2019

Oct
2019

Apr
2020

Oct
2020

Apr
2021

Forecast* Apr 2010 to October 2011 dividends adjusted to reflect stock split on November 1, 2011; CAGR = Compound Annual Growth Rate
© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

11

Growing Shareholder Value: Continued Growth in Base EPS
April 2020 Dividend includes JPY 21 of Gains on Sale (JPY 49 in Oct 2019)
Conservative forecasts & continued focus on Base EPS growth
Gains on Sale
Release from Dividend Reserve and Negative Goodwill Reserve
Base EPS

2,255

Dividend

1,964
107

1,857
(+1.8%)

April 2018

2,014
69

1,945

186

(JPY)

2,150
49

2,163
21

2,106

2,087

69

69

69

69

69

2,000

2,032

2,073

2,037

2,018

(+4.7%)(+2.8%)(+1.6%)(+2.0%)(-1.7%)(-0.9%)

October 2018

April 2019

October 2019

April 2020
(Actual)October 2020
(Forecast)April 2021
(Forecast)Base EPS = EPS – Capital Gains© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

12

Growing Shareholder Value: Continued Growth in NAV
Growing Value via Value-Add Capex & Pro-Active Acquisitions/Sales(JPY)

NAV per share+47.6%
Became Specialized Office REIT
in September 2015

70,11773,49376,40078,336

October
2016

April
2017

81,15584,07685,957April
2018

October
2018

87,934

91,61893,193October
2019

April
2020

63,140

April
2015

October
2015

April
2016

October2017© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

April
2019

13

Sustained High Office Occupancy: 99.6%
High Occupancy & Rising Rents
Occupancy (Office)

Average Rent per Tsubo (3.3m2)(JPY)

Office (All)

100%
98.9%

99.1%

99.3%

99.3%

17,800

99.6%
98.9%

99.1%

16,90016,90017,20017,30098.2%*

98.5%
97.2%

Office (Central Tokyo)

Occupancy
Free Rent-Adjusted Occupancy

95%

14,20014,50014,60014,70015,000* Reflects impact of free-rent period as of April 30, 2020 for
main tenant at Ebisu Green Glass (O-51) that departed in
March 2020
90%
April 2018 October 2018 April 2019 October 2019 April 2020

Average Free-Rent Period:
April 2020
0.8 months
October 2019
0.7 months

Apr 2018

All Offices
74 Assets(Central Tokyo) (42 Assets)

Oct 2018
77 Assets(44 Assets)

Apr 2019
79 Assets(45 Assets)

Oct 2019
80 Assets(45 Assets)

Apr 2020
81 Assets(45 Assets)

Occupancy is Period-End© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

14

Organic Growth: Driving Rental Growth
New Tenants/
Increased Space

Departing Tenants/
Decreased Space

Renewals at
Higher Rent

+58

-42

+10

Change due toTenant Movements+JPY 16M (+1.5%)(JPY million)

Change due to
Lease Renewals+JPY 10M (+0.9%)

1,128
1,101
+4.9% p.a.

October 2019

Monthly Rent

April 2020

Change in Occupancy:
99.3% (October 2019)  99.6%* (April 2020)* Change in Occupancy is like-for-like and thus excludes newly acquired or sold assets© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

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Organic Growth: Existing Tenants at Higher Rents
Record High +9% Average Increase at Renewal+JPY 10M Monthly Increase in Rents
New Rent vs. Previous Rent

Change in Total Rents(Office, Leased Area Basis)(Office)■ Downward
0.1%■ Flat■ Upward

0%0%(Monthly rent, JPY thousand)+10,053

UpwardDownward

0%

10,053+7,024

Downward:
None

7,024

70.2%

67.6%

61.3%

+4,873
Flat: 191 tenants

82.8%

4,873
Rent
Change+2,826
2,838

Averageincrease:+7.4％

Averageincrease:
+8.5％

29.8%

Averageincrease:
+6.6％

17.1%
Oct 2018

32.4%

Apr 2019

Oct 2019

38.7%
Averageincrease:+9.0％

Apr 2020

Upward:68 tenants

517
-11

0

0

0

0

Oct 2018

Apr 2019

Oct 2019

Apr 2020

Oct 2020* Oct 2020 reflects leases in place as of May 25, 2020.
© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

16

Organic Growth: New Tenants at Higher Rents
90% of New Tenants at Higher Rents+30.1% Average Increase from New Tenants, +JPY 12M Monthly Increase
New Tenant Rent vs. Previous Tenant Rent

Impact on Rental Income from Tenant Turnover (Office)(Office, Leased Area Basis)■ Downward■ Flat■ Upward
2.3%

13.6%

0%

12.1%

8.5%

4.8%
2.1%

Downward:
3 new tenants
Decrease:-13.2%
Flat: 1 new tenant(Monthly rent, JPY thousand)UpwardDownward
Rent
Change+12,980
13,156+8,9209,500

0%+5,183
Upward:34 new tenants+3,75093.1%
86.4%
Averageincrease:+30.4％

87.9%
Averageincrease:+20.8％

5,235

89.2%

3,876
Averageincrease:+21.2％

Averageincrease:+30.1％

1,171

Oct 2018

Apr 2019

Oct 2019

Apr 2020

-579

-125

-52

-175

0

Oct 2018

Apr 2019

Oct 2019

Apr 2020

Oct 2020* Oct 2020 reflects leases in place as of May 25, 2020.
© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

17

Acquisition-Driven Growth: Specialized Office Portfolio
Acquired 1 Mid-Size Office Near Shibuya; Sold Retail Asset with Gains on
Sale Funding Both Dividend & Growth Investments
Asset Sale

Asset Acquisition
Ichigo Nakameguro Building

Lions Square Kawaguchi

Asset

Acquisition Date

April 14, 2020

Asset Type

RetailSellerDomestic GK

Book Value

JPY 2,360M

Area

Meguro-ku, Tokyo

Appraisal Value

JPY 2,530M

Location

8-min walk from Nakameguro Station on Tokyu
Toyoko Line and Tokyo Metro Hibiya LineSale Price

JPY 2,845M

Investment
RationaleMid-size office in Nakameguro, an area near
Shibuya, one of Tokyo’s commercial centers

Closing Date

April 24, 2020

Gains on Sale

JPY 390M

Acquisition Price

JPY 1,495M

Buyer

Domestic Operating Company

Appraisal Value

JPY 1,670M

NOI Yield

4.6%

Gains on sale to be partially retained for growth investments (suchas value-add capex & asset acquisitions)© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

18

Launch of Ichigo J.League Shareholder Program
Represents Two Firsts for a Shareholder Program in Japan− Ichigo is the first Japanese company to include not just its own shareholders, butalso the shareholders of the REITs and YieldCo that it manages, in its
shareholder program− Ichigo is the first company to offer shareholders free tickets to every J.League
game at every J.League club (56 clubs in total)

Ichigo is deepening its partnership with the J.League and working tofurther Ichigo’s mission of promoting local community developments.

Ichigo J.League Shareholder
Program Website Landing Page
© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

19

Ichigo Office Growth Strategy© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

20

Covid-19 Impact as of May 25, 2020
– Some rent reduction requests and termination notices from tenants
such as restaurants
Current
StatusRent Reduction Request

Termination

No. of Requests

52

15% of Leasable Area*

7.0%

1.3%

*% of Total Leasable Area as of April 30, 2020(as of May 25, 2020)– Discussing rent deferral and rent reduction options to support
tenants on a case-by-case basis– Some delays in leasing activities and repairs due to restrictions

Earnings
Impact– Although earnings impact is expected to be limited, October 2020
and April 2021 earnings forecasts reflect rental revenue decrease(October 2020: -JPY 69M, April 2021: -JPY 90M)
– Leasing plans assume some downtime
AverageOccupancy

Apr 2020(Actual)Oct 2020(Plan)

Apr 2021(Plan)

99.3%

98.7%

98.3%

– Continuing to carry out value-add capex, while being conservativein projecting value-add upside© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

21

Covid-19 Measures
−
−
−
−
−

Posters promoting awareness and prevention at all Ichigo Office buildings
Posting & distribution of all government announcements
Hand sanitizers in common areas
Disinfecting surfaces such as elevator buttons and doorknobs
Building management employees and cleaning staff carrying out thoroughhygienic practices (masks, hand-washing, disinfecting surfaces, etc.)− Facilitate communication with relevant government entities and implement fastbuilding disinfection if a case is reported by a tenant
Posters Promoting Awareness and Prevention© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

22

Mid-Size Offices With/After Covid-19
Satellite offices located between city centers are expected to emerge as
WFH (work from home) grows
Offices With/After Covid-19
Before Covid-19

With/After Covid-19

Regional
CitiesRegional
CitiesSuburbs

Suburbs
City
CenterCity
CenterBCP-oriented
management

Offices mainly located in city centers

Easing of peak traffic
congestion• Offices built between city centers and suburbs• WFH in regional cities and resort areas© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

23

Growth Strategy Roadmap
2019/42022/4

Goal

Sustainable Growth to Maximize Shareholder Value
Build Robust Portfolio & Drive Sustainable Growth
Organic Growth• Provide differentiated Ichigo Layout Office and Ichigo Lounge
high-quality office spaces• Increase asset value & investment returns via value-add capex• Maintain & drive earnings growth with a focus on tenant satisfaction• Support tenant growth via tenant networking and business matching• Minimize downtime at re-tenanting and free-rent periods

Acquisition-Driven Growth

Action Plans• Pursue acquisition-driven growth opportunities via bridge funds & sponsor support• Build a durable growth model via asset acquisitions/sales & full-scale, value-add
asset renovations➡ Leverage Ichigo’s market-leading value-add capabilities

Finance & IR
• Diversify funding (accretive equity financing, green bonds, retail bonds, etc.)• Raise credit rating & enter global REIT indices

April 2022 Targets
Base EPS
JPY 2,000 ➡ JPY 2,200(+10.0%)

Dividend
JPY 2,069 ➡ JPY 2,269(+9.7%)

Credit Rating
A
A+➡
(Stable) (Stable)➡ Selected for Inclusion in FTSE EPRA Nareit Global Real Estate Index• Further improve borrowing terms

Global REIT Indices*

ESG• Acquire environmental certifications and achieve energy reduction goals• Promote wheelchair access and other barrier-free design at assets• Maintain and strengthen best-in-class J-REIT governance© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

Index Entry*Target only if >JPY 250B in AUM

24

Organic Growth

Organic Growth via Value-Add Capex
Driving organic growth and increasing asset value via tailored value-add
capex
April 2019

October 2019

April 2020

Ichigo Uchi Honmachi Building(Chuo-ku, Osaka)

Ichigo Uchikanda Building(Chiyoda-ku, Tokyo)

Ichigo Nogizaka Building(Minato-ku, Tokyo)

Ichigo Lounge

Ichigo Layout Office– Increased rental income via creating ashared lounge and conference room
space for tenants designed for comfort
and functionality– Increased rental income via office spacedesigned to facilitate open innovationand communication– Simultaneous roll-out on 9th and 10th
floors– Increased rental income via high-quality
shared work space designed to help
tenants communicate and collaborate– Renovated common area of vacant floor
and first floor entrance and facade

Outcomes

Outcomes

Outcomes

Capex

JPY 19M

Capex

JPY 24M

Capex

JPY 58M

Rent Increase

N/A (created new
tenant office space)

Rent Increase

45.5%

Rent Increase

16.3%

NOI

+JPY 6M p.a.

NOI

+JPY 7M p.a.

NOI

+JPY 25M p.a.

ROI

35.1%

ROI

29.4%

ROI

44.1%

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

25

Rent Gap Offers Further NOI Upside
Office Market Continued to be Robust through April 2020 Period(JPY million)

Difference at Time of Lease Renewal■ >10%■ -10% to 0%

Difference Between Tenant Rent and Market Rent
(Office, By Leased Area)

336（35.7%）■ 0% to 10%■ Below -10%
64

5%

All areas

0.40%

48

1.48%
-0.34%

0%249（26.5%）
8
59

0.38%

188（20.0%）

0.21%-1.07%-0.43%

167（17.8%）
826-2.15%-2.35%-5%-6.20%-6.74%-8.07%-8.84%-9.13%-8.59%

Below-Market Rent Tenants

1.48%

Central Tokyo

19
64

43

75

37
46
147

117
89

84

-10%

October
2016

April
2017

October
2017

April
2018

October
2018

April
2019

October
2019

April
2020

Oct 2020

Apr 2021

Oct 2021

Apr 2022~* Numbers in parentheses are % of total rent up for renewal in the period© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

26

Driving Higher NOI & Harvesting Gains in Strong Market
Acquisitions & Sales Over Past Three Years
April 2017 & October 2017

April 2018 & October 2018

• 4 assets

Sales(11 assets)

Acquisitions• 3 retail assets• Price: JPY 6B(serviced apartments andretail)• Price: JPY 4.4B
(Gains on sale: JPY 30M)

• 3 retail assets• Price: JPY 6B(Gains on sale: JPY 1.6B)• 3 mid-size office assets• Price: JPY 7B

April 2019 & October 2019

• 3 mid-size office assets• Price: JPY 7.4B

April 2020
• 1 retail asset• Price: JPY 2.8B

(Gains on sale: JPY 1.1B)• 3 mid-size office assets• Price: JPY 8.3B

(Gains on sale: JPY 390M)• 1 mid-size office asset• Price: JPY 1.5B

(10 assets)

Portfolio Size

Office %NOI Increase

JPY B

2,023
Outcomes

1,945+JPY 7.8B(+4.0%)

88.1%

+8.6%

96.7%

JPY 230M per annum* NOI Increase = Forecast NOI ofacquired assets less NOI of soldassetsGains on Sales

Retail Assets(Apr 30, 2020)

Dec 31, 2016

Apr 30, 2020

Dec 31, 2016

No. of
Retail Assets

4

Total
Appraisal Value© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

Apr 30, 2020

JPY 7.5B+JPY 3.1B

Unrealized
Gains

JPY 1B(+16.4%)27

Acquisition-Driven Growth

Sustainable Growth via Sponsor Support
Pursuing Long-Term Sustainable Growth by Leveraging Ichigo’s MarketLeading Value-Add Capabilities
Buy

Sell

Ichigo Office

Ichigo(8975)(TSE1 2337)

ThirdParty
Investors

Buy

Preserve and improve real estateleveraging
Ichigo’s value-add capabilities

Real
EstateValue-Add

Buy/SellAsset Warehousing
Sell

Ichigo Office Sourcing Strengths
・ Sourcing Diversity: Ichigo Office proprietary sourcing routes + Ichigo sponsor network
・ Strong Sponsor Support: Ichigo assets fully available to Ichigo Office for acquisition
・ Stable Sourcing: Backed by Ichigo value-add capabilities, so less sensitive to market environment© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

28

Acquisition-Driven Growth

Access to Ichigo’s Robust Pipeline of Office Assets
Ichigo’s Office Assets (c. JPY 62B*)

Ichigo Hakata
Ekimae Square(Fukuoka)

Tradepia Odaiba(Tokyo)Ichigo Kakyoin
Building(Sendai)

Kichijoji Central
Building(Tokyo)Asset with Preferential
Negotiation Right (TK Equity Interest)

Unizo Tachikawa(Tokyo)Ichigo Hakata
Meiji Dori Building(Fukuoka)
Location

8-min walk from Tachikawa Station
on JR Chuo Line and 7-min walkfrom Tachikawa Kita Station on
Tama Toshi Monorail Line

AcquisitionPrice

JPY 3.83B

Right
Exercise
PeriodMay 16, 2021

Ichigo Hakata Eki
Higashi Building(Fukuoka)

Operator

Tachikawa Holdings GK*Cumulative Acquisition price as of February 29, 2020

Total TK
Investment
AmountJPY 1.15B(Includes Ichigo Office investmentof JPY 50M)

Ichigo Akasaka 317
Building(Tokyo)Ogaku Building(Tokyo)© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

29

Shift to No Fixed Fee, Performance Fee-Only Structure (1)BeforeAsset Management Fee Structure

After(from Nov 1, 2020)

Asset Size-Based

AM Fee I

Total Asset Value

X

0.25%

–

Asset Acquisition Fee

Acquisition Price

X

0.5%

–

Asset Sale Fee

Sale Price

X

0.5%

–

Merger Fee

Valuation of Real Estate

X

0.5%

–

Recurring CF

X

2.0%

–

Total Dividends

X

2.0%

–

Performance Fee(CF per Share of Current Period －CF per Share of Previous Period) *No. of Shares Outstanding

X

30.0%

–

NOI & Dividend
Performance Fee

DPS * NOI

X–

0.0054%

Gains on Sale
Performance Fee

Gains on Sale

X

–

15.0%

Gains on Merger
Performance Fee

Gains per Share *No. of Shares Outstanding

X

–

15.0%

Gains on REIT TOB Sale
Performance Fee

Gains per Share *No. of TOB Shares

X

–

15.0%

AM Fee II

EliminatedEarnings-Based

New

Notes:
Reflects amendments to the Articles of Incorporation to be approved at the Shareholder Meeting on July 18, 2020 to be effective as of November 1, 2020
Gains on Sale Performance Fee has a high-water mark, such that it will only be paid if the cumulative sum of all of Ichigo Office’s Gains/Losses on Sales to-date are positive.
Gains on Merger Performance Fee will only be paid if the share price calculated based on the merger ratio is higher than net assets per share.
Gains on REIT TOB Sale Performance Fee will only be paid if the share price of the TOB is higher than net assets per share.
© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

30

Shift to No Fixed Fee, Performance Fee-Only Structure (2)Asset Management Fee Structure Comparison(5-Year Cumulative AM fees from October 2015 to April 2020)

8,009
844
108

(JPY million)- 4.2%

7,670
528

391
1,464

■ AM Fee I■ AM Fee II■ Asset Acquisition Fee■ Asset Sale Fee■ Performance Fee■ NOI & Dividend Performance Fee■ Gains on Sale Performance Fee

7,142
5,201

Before Change

After Change(Estimate)© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

31

October 2020 Forecast(JPY million)
April 2020
Actual (B)Operating Revenue

October 2020
Forecast (A)vs. April 2020(A) - (B)

7,772

-488

8,260

Operating Profit

4,381

3,940

-440

Recurring Profit

3,576

3,123

-452

Net Income

3,575

3,122

-452

Dividend Reserve (-)

366

–

-366

Dividend Reserve Release (+)

105

105

–

Dividend

JPY 2,163

JPY 2,106-JPY 57

EPS

JPY 2,073

JPY 2,037-JPY 37

NOI

5,748

5,645

-102

85

85

–

Occupancy (on Last Day of Period)

99.6%

98.4%

-1.2%

Average Occupancy

99.3%

98.7%

-0.6%

No. of Assets

Major Variation Factors (vs. April 2020)
Decrease in Gains on Sale of Real Estate -398
Decrease in Rental Income -89
Increase due to April 2020 asset acquisition +30
Decrease due to April 2020 asset sale -113
[Existing Assets]
Decrease in common area services income -16(Ebisu Green Glass +20)
(Ichigo Nogizaka Building +16)
(Ichigo Akihabara Building +11)
Decrease due to Covid-19 -69
Increase in utilities income due to weather fluctuation +13
Decrease in lease termination penalties and restoration & cleaning fee -6
Increase in Rental Expenses +6
Increase due to April 2020 asset acquisition +9
Decrease due to April 2020 asset sale -61[Existing Assets]
Increase in utilities expenses due to weather fluctuation +46
Increase in maintenance fees +26
Decrease in service provider expenses -20
Increase in property tax +7
Decrease in Operating Expenses (excluding Rental Expenses) -54
Decrease in April 2020 performance fee to asset manager -37
Decrease in April 2020 asset sale fee -14
Decrease in non-deductible consumption tax -26
Increase in other operating expenses +23
Decrease in Non-Operating Revenue -3
Decrease in April 2020 insurance payment income -1
Increase in Non-Operating Expenses +9
Decrease in interest payment (including bond interest) -11
Increase in up-front loan fees & related expenses +21
Reference: Capex
October 2020 Forecast 686* NOI = Rental Income - Rental Expenses + Depreciation
No. of Assets is Period-End

Reference: October 2020 Reserve (Post-Dividend)
Negative Goodwill Reserve 9,214
Dividend Reserve 3,367© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

32

April 2021 Forecast(JPY million)
October 2020
Forecast (B)April 2021
Forecast (A)vs. October 2020(A) - (B)Operating Revenue

7,772

7,762

-9

Operating Profit

3,940

3,883

-57

Recurring Profit

3,123

3,093

-30

Net Income

3,122

3,092

-30

Dividend Reserve (-)

–

–

–

105

105

–

Dividend

JPY 2,106

JPY 2,087-JPY 19EPS

JPY 2,037

JPY 2,018-JPY 19

NOI

5,645

5,664

+19

85

85

–

Occupancy (on Last Day of Period)

98.4%

98.0%

-0.4%

Average Occupancy

98.7%

98.3%

-0.4%

Dividend Reserve Release (+)

No. of Assets

Major Variation Factors (vs. October 2020)
Decrease in Rental Income -9
Decrease in common area services income -2(Ebisu Green Glass +19)
(Ichigo Nishisando Building +12)
(Ichigo Shinkawa Building +6)(Ichigo Hatchobori Building +6)
Decrease due to Covid-19 -90
Decrease in utilities income due to weather fluctuation -4
Decrease in lease termination penalties and restoration & cleaning fee -4
Decrease in Rental Expenses -13
Decrease in utilities expenses due to weather fluctuation -15
Decrease in service provider expenses -11
Increase in depreciation +15
Increase in Operating Expenses +60
Increase in AM fee +71
Decrease in other non-operating revenue -10
Decrease in Non-Operating Expenses -26
Decrease in interest payment (including bond interest) -30
Increase in up-front loan fees & related expenses +3
Reference: Capex
April 2021 Forecast 714
Reference: April 2021 Reserve (Post-Dividend)
Negative Goodwill Reserve 9,109
Dividend Reserve 3,367* NOI = Rental Income - Rental Expenses + Depreciation
No. of Assets is Period-End© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

33

Ichigo Office ESG© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

34

Ichigo Office ESG

Ichigo Office’s Sustainability Commitment
Ichigo Sustainability Policy
Ichigo believes that working on behalf of society and the environment is a fundamental social responsibility and will support the sustainable growth of
Ichigo and Ichigo Office. Ichigo has thus made sustainability a key priority, and has established the following Sustainability Policy to actively work to
reduce Ichigo’s environmental impact and support sustainable outcomes.
1. Harmony with the Environment
Ichigo actively monitors and minimizes the environmental impact of its real estate operations.
2. Energy Conservation, CO2 Emissions Reduction, and Recycling
Ichigo seeks to contribute to a low-carbon, low-waste society by lowering its energy consumption, extending the useful life of its
assets, actively recycling, and reducing waste and water consumption.
3. Regulatory and Environmental Compliance
Ichigo complies with all environmental laws and regulations and Ichigo’s own independently-established environmental rules. Ichigo
also carefully monitors and complies with all applicable changes in laws and regulations.
4. Training and AwarenessIchigo promotes understanding of its Sustainability Policy and works to increase sustainability awareness among all Ichigo employees.
Ichigo will also promote sustainability in coordination with Ichigo stakeholders, seeking understanding and cooperation onsustainability from Ichigo partner companies and tenants.
5. Sustainability Performance Communication and Disclosure
Ichigo communicates this Sustainability Policy and Ichigo’s sustainability initiatives to society at large. Ichigo also obtains
certifications for its sustainability activities on an ongoing basis.
6. Green Procurement
Ichigo will implement green procurement measures, such as environmentally-sensitive building materials and sustainable design, in
Ichigo’s building renovations, as well as selecting partner companies based on their environmental sustainability initiatives.

Ichigo Sustainability Structure− The Head of Ichigo Office is responsible for promoting sustainability and ensuring compliance with the Sustainability Policy.
− Quarterly meetings to monitor sustainability efforts and compliance Attended by the Heads of Sustainability, Asset Management, and Administration
 Develop sustainability goals and initiatives in coordination with sponsor Ichigo− Training and Awareness Conduct annual sustainability training for Office REIT asset management staff− Information Disclosure Disclose sustainability goals and performance and communicate to stakeholders© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

35

Ichigo Office ESG

Environmental
GRESB Real Estate Assessment (since 2016)− Awarded Highest Green Star Ranking in 2019 for third year in a row
 Assessment Key Points• Performance Index, Risk & Opportunities, Stakeholder Engagement
 Awarded Three Stars in the GRESB Rating (maximum five stars)

Environmental Certifications: 11 Assets, 21.1% of Total Leasable Area for Offices
CASBEE(Comprehensive Assessment System
for Built Environment Efficiency)

BELS(Building-housing Energy-efficiency
Labeling System)

S rankIchigoTakamatsu
Building

IchigoMarunouchi
Building

A rankEbisu
Green Glass

IchigoSakaisuji
Honmachi
Building

Ichigo Sendai
East Building

IchigoKanda
Nishikicho
Building

IchigoIkenohata
Building

2 Stars (★★)

1 Star (★)

Ichigo Akihabara
North Building

Ichigo Omiya
Building(as of April 30, 2020)
DBJ Green Building

3 Stars (★★★) 2 Stars (★★)

Ichigo Nihonbashi
East Building

Win Gotanda
Building

Energy Efficiency− HVAC upgrades and LED lighting installations lowering energy consumption

Sustainable Real Estate Serving a Sustainable Society− Ending wasteful practices of demolishment and embracing value-add− Lengthening useful life and improving quality of existing real estate© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

36

Ichigo Office ESG

SocialCovid-19 Measures− Ichigo Office posters promoting awareness and prevention and distribution of government announcements− Hand sanitizers in common areas and disinfecting surfaces such as elevator buttons and doorknobs− Building management employees and cleaning staff carrying out thorough hygienic practices (masks, handwashing, disinfecting surfaces, etc.)− Facilitating communication with relevant government entities and implement fast building disinfection if acase is reported by a tenant tenant
Elevator Emergency Kits Vending Machines as part

Helping Disaster-Struck Communities& AEDsof Disaster Recovery

Emergency Drills− Send engineers and donate emergency equipment tosupport disaster recovery and response

Healthy and Supportive Workplace− Supporting Work-Life Balance & Promoting Gender Equality
 Extensive measures to support career development for women employees• Ichigo employee return rate from childcare leave: 100%
− Sports & Arts Supporting world-class athletes in weightlifting, rifle shooting, and track & field Gold Sponsor of Paralym Art to support artists with disabilities− Social Welfare Activities Supporting University of Miyazaki’s Program for Children with Cancer− Local Communities
 Promoting community development via sponsorship of J.League
 Working to strengthen local communities, create jobs, and increase
Japan’s food self-sufficiency via support for Smart Agriculture© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

37

Ichigo Office ESG

Governance
REIT

Asset Management Company (AMC)− Monitors Asset Management Company− All Ichigo Office Directors are Independent Directors− Active dialogue and effective internal controls via Board
discussions led by REIT Executive Director− Draw upon expertise of REIT Supervisory Directors(qualified lawyers & accountants)− Majority of AMC Directors (3 of 5) are Independent Directors− Independent asset management team & best-practiceexecution on behalf of Ichigo Office REIT within AMC− Risk/Compliance and Audit are directly under the AMC
President to monitor and review critical compliance matters− Ensure objectivity by including third-party, independentlawyers and accountants in the Investment Committee &Risk & Compliance Committee

Independence of REIT from AMC➡ 30 of 63 J-REITs have AMC Presidents serving as Executive Director of the REIT
All Ichigo Office Directors are Independent
Independent Directors at AMC➡ Only 4 Asset Management Companies have any Independent Directors
Majority (3 of 5) of Ichigo AMC Directors are Independent

Ichigo Office (8975) and Ichigo Hotel (3463) are the only J-REITs (out of 63)
that both have an AMC board that has a majority of Independent Directors and whose
AMC President does NOT serve as the Executive Director of the REIT

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

38

Appendix: Financial & Portfolio Data

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

39

April 2020 vs. October 2019 Earnings(JPY million)
October 2019
Actual (B)April 2020 Actual vs. October 2019
(A)(A) - (B)Operating Revenue

8,304

8,260

-43

Operating Profit

4,363

4,381

+18

Recurring Profit

3,554

3,576

+21

Net Income

3,554

3,575

+21

Dividend Reserve (-)

364

366

+1

Dividend Reserve Release (+)

105

105

–

Dividend

JPY 2,150

JPY 2,163+JPY 13EPS

JPY 2,032

JPY 2,073+JPY 42

NOI

5,679

5,748

+69

85

85

–

Occupancy (on Last Day of Period)

99.4%

99.6%

+0.2%

Average Occupancy

99.3%

99.3%

–

No. of Assets

Major Variation Factors (vs. October 2019)
Decrease in Gains on Sale of Real Estate -42
October 2019 440, April 2020 398
Decrease in Rental Income -2
Increase due to October 2019 asset acquisition +12
Increase due to April 2020 asset acquisition +3
Decrease due to October 2019 asset sale -11
Decrease due to April 2020 asset sale -8[Existing Assets]
Increase in common area services income +53(Ichigo Kanda Nishikicho Building +10)
(Ichigo Uchikanda Building +9)(Ichigo Motoazabu Building +6)
Decrease in utilities income due to weather fluctuation -57
Increase in facility use and other income +6
Decrease in Rental Expenses -74
Increase due to October 2019 asset acquisition +7
Increase due to April 2020 asset acquisition +0.9
Decrease due to October 2019 asset sale -6
Decrease due to April 2020 asset sale -2[Existing Assets]
Decrease in utilities income due to weather fluctuation -78
Decrease in repair expenses -28
Decrease in depreciation -3
Increase in service provider expenses (mainly brokerage fees) +29
Increase in other expenses +6
Increase in Operating Expenses (excluding Rental Expenses) +12
Increase in performance fee to asset manager +8
Increase in non-deductible consumption tax +8
Decrease in other operating expenses -3
Decrease in Non-Operating Expenses -3
Decrease in interest payment (including bond interest) -15
Increase in up-front loan fees & related expenses +12* NOI = Rental Income - Rental Expenses + Depreciation
No. of Assets is Period-End© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

40

Rapid Re-Tenanting After Vacancies
Newly Leased and Newly Vacated Office Space (m2)
Newly Leased
Newly Vacated

13,185

8,187
5,778

4,636

5,723

-4,028-5,300-5,590-7,433-7,522

April 2020

October 2020
(Forecast)-11,434
April 2018

October 2018

April 2019

October 2019

Newly Leased

11.3%

4.8%

3.5%

4.6%

6.5%

Newly Vacated

9.8%

4.4%

3.0%

4.5%

5.9%

Net Leasing+1,751

+477

+608

+133

+754

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

TBD
6.0%
TBD

41

Borrowing Details (1)Loan Details

Average Interest Rate and Average Remaining Loan Maturity(Interest Rate)(Average Remaining Loan Maturity including Bonds, Years)

2.5%

5

Average Interest Rate
Average Remaining Loan Maturity

2.0%

3.4 years

3.2 years

3.3 years

3.3 years

3.5 years

3

1.0%

2

1.02%

1.00%

0.99%

0.97%

0.5%

1

0.0%

0
April 2018

October 2018

April 2019

October 2019

April 2020

Maturity

Interest
Rate

JPY 2.47B 7.8 years

0.844%(Fixed)JPY 5.38B 7.7 years

0.876%(Fixed)JPY 955M 6.9 years

3M TIBOR+0.59%Bond

JPY 1.00B 5.0 years

0.300%

Total/
Average

JPY 9.81B 7.4 years

0.788%

Amount

4

1.5%

1.02%

Borrowings and Bond Issuancein the April 2020 Period

Bank
Loans

Fixed vs. Floating Loan Ratio

Fixed

Floating

9.1%

6.0%

3.1%

2.3%

2.2%

90.9%

94.0%

96.9%

97.7%

97.8%

Apr 2018

Oct 2018

Apr 2019

Oct 2019

Apr 2020

100%

Fixed *
Floating* Fixed includes
floating loans
fixed via
interest rateswaps

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

0%42Borrowing Details (2)Loan Maturity Distribution (as of April 30, 2020)
Bank Loans (fixed rate including fixed via interest rate swaps)
Bank Loans (floating rate)
Bonds
10,233
9,574

9,639

9,629

9,633

(JPY million)

9,623

9,056

8,846
1,000

7,346

1,200
7,266

1,000

5,910

4,600
7,246
2,900

6,346

4,955

2,793

7,856

2,000
900
Oct
2020

Apr
2021

Oct
2021

Apr
2022

Oct
2022

Apr
2023

Oct
2023

Apr
2024

1,200

1,000
955

600
Oct
2024

Apr
2025

Oct
2025

Apr
2026

Oct
2026

Apr
2027

Oct
2027

Apr
2028

Oct
2028

Apr
2029

Oct
2029

Apr
2030

LTV (as of April 30, 2020)
55
LTV

LTV (Market Value-Basis)*

50
47.5%

46.9%

47.6%

48.1%

41.7%

41.7%

48.0%

48.1%

45

40

42.5%
41.5%

40.8%

40.6%

Oct 2019

Apr 2020* Market Value =Total Assets +Unrealized Gains35
Oct 2017

Apr 2018

Oct 2018

Apr 2019© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

43

Lender Base and Ichigo Office Credit Rating
Credit Rating

Lender Base (as of April 30, 2020)(JPY million)

LenderAmount

Ratio

SMBC

27,431

25.1%

Mizuho Bank

18,885
13,74817.3%

11,862
9,957
8,645

10.8%

3,400
3,306
2,189

3.1%

1,715
1,638

1.6%

1,217
103,997

1.1%

Shinsei BankMUFG Bank
Aozora Bank
Resona Bank
Development Bank of Japan
Bank of Fukuoka
ORIX Bank
The Kagawa Bank
Mizuho Trust
Nishi-Nippon City Bank
Total

Bonds

AmountJapan Credit Rating Agency (JCR)Type of Rating

Long-Term Issuer Rating

RatingA

Rating Outlook

Stable

12.6%
9.1%
7.9%
3.0%
2.0%
1.5%
95.1%

Ratio

Unsecured Bond No.1
Unsecured Bond No.2
Unsecured Bond No.3

1,200
1,000
1,000

1.1%
0.9%
0.9%

Unsecured Bond No.4
Unsecured Bond No.5

1,200
1,000

1.1%

Total

5,400
109,397

4.9%

Total Interest-Bearing Liabilities

Credit Rating Agency

0.9%
100.0%© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

44

Continued Growth in Portfolio Unrealized Gains
Unrealized Gains of JPY 41.8B, +JPY 2.1B vs. Oct 2019
(JPY million)
500,000

Period-End Book Value

Period-End Appraisal Value30%

Unrealized Gains

21.01%

19.82%

400,000
15.01%

20%

17.13%

15.98%

13.09%
11.17%
300,000

8.18%

9.36%

10%

5.13%
229,198

200,000

220,799
219,100
207,537
209,667
197,617
195,249
189,765
190,506
188,598
173,447
174,955
164,977
161,721234,805

200,472

240,131200,413241,167

199,2970%-10%

100,000-20%

0
Oct 2015(77 assets)

Apr 2016(73 assets)

Oct 2016(85 assets)

Apr 2017(82 assets)

Oct 2017(85 assets)

Apr 2018(82 assets)

Oct 2018(85 assets)© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

Apr 2019(85 assets)

Oct 2019(85 assets)

Apr 2020(85 assets)

45

Lease Renewals
April 2020: Change in Monthly Rent by Asset TypeOct 31, 2019
(A)

New
Contracts

Contract
Terminations

Office

1,101

+58

-42

Other

53

–

Total

1,154

+58

((JPY million)
Change(B) - (A)Change at
Existing
AssetsDownward

Asset
Acquisition

Asset Sale

Apr 30, 2020
(B)

+10

–

+5

–

1,133

+32

+26

–

–

–

–

-11

41

-11

–

-42

+10

–

+5

-11

1,175

+20

+26

UpwardApril 2020: Lease Renewals by Asset Type
Asset Type
UpwardDownward

Flat

Total

No. ofAssetsLeasedArea

Change in Rent
(Semi-Annual)

Change from
Previous Rent

Office68

26,254m2+JPY 60.3M

+9.0%

Other

–

–

–

–

Total

68

26,254m2+JPY 60.3M+9.0%

Office

–

–

–

–

Other

–

–

–

–

Total

–

–

–

–

Office191

41,506m

2

–

–

Other

2

2,109m2

–

–

Total

193

43,616m

2––

Office259

67,760m2+JPY 60.3M

+3.6%

Other

2

2,109m2

–

–

Total

261

69,870m2+JPY 60.3M+3.5%* Excludes assets sold during the April 2020 period© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

46

Leased Area
April 2020: Leased Area by Asset TypeNew
Contracts

Oct 31, 2019((m²)
Contract
Terminations

Asset
Acquisition

Asset Sale

Apr 30, 2020

Change at
Existing
AssetsChangeOffice247,658+8,187-7,433+1,037–

249,449+1,791

+754

Other

17,142–––-7,7889,354-7,788–

Total

264,801+8,187-7,433+1,037-7,788258,804-5,996+754

April 2020: New Leases & Lease Terminations by Asset Type
New Leases

Lease Terminations
Asset Type

UpwardDownward

Flat

Total

No. ofAssetsLeasedArea

No. ofAssetsTotal Rent
(Semi-Annual)

LeasedArea

Total Rent
(Semi-Annual)2

Office34

7,621m2+JPY 341M

Office33

7,433m-JPY 253M

Other

–

–

–

Other

–

–

–

Total

34

7,621m2+JPY 341M

Total

33

7,433mOffice3

2

390m+JPY 6M

Other

–

–

–

Total

3

2

390m

+JPY 6M

Office1

174m

2+JPY 3M

Other

–

–

–

Total

1

174m

2

+JPY 3M

Office38

28,187m+JPY 351M

Other

–

–

–

Total

38

8,187m2+JPY 351M© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

2-JPY 253M

47

Survey of New & Departing Tenants: Why Relocating?
New Tenants

Departing Tenants

Moving to a different building for larger floor space or better location

Moving to a different building for larger floor space or better location

Opening a new office

Closing office

Reducing cost or floor space

Reducing cost or moving to a different building to integrate with other divisions

Other

Other

Oct 2018

51.7%

37.9%

Apr 2019

50.0%

37.5%

Oct 2019

Apr 2020

61.1%

50.0%

33.3%

44.7%

6.9%
3.4%

8.3%
4.2%

0%
5.6%

5.3%

Oct 2018

28.6%

10.7%

50.0%

10.7%

Apr 2019

28.6%

9.5%

52.4%

9.5%

Oct 2019

14.3%

Apr 2020

24.2%

17.9%

18.2%

57.1%

48.5%

10.7%

9.1%

0%

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

48

Decreasing Free-Rent Incentives
Free Rent Incentive Trends

Rental Income Loss due to Free Rent
(Months)

3

Tokyo Metro Area (Average)
Regional Cities (Average)(JPY million)
Loss from Free Rent

94

Actual Rent Income

81

21

13

41

6,614

6,811

6,876

6,931

Oct 2018

Apr 2019

Oct 2019

Apr 2020

2.1
2
1.6
1.2

6,471

1.1

1

0.9
0.7
0.7

0.8

0.7

0.7

Oct 2019

Apr 2020

0
Apr 2018

Oct 2018

Apr 2019

Apr 2018© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

49

Value-Add Capex Plan
Capex Tailored to Tenant Needs
Maintenance Costs, Capex, and Depreciation

October 2020 Capex Plan
(JPY million)

1,200

Maintenance

900

CAPEX

839

Depreciation

831

842

847

Ichigo Nogizaka Building

Common Area Renovation

JPY 29M

Ichigo Nogizaka Building

Exterior Wall Renovation

JPY 28M

Ichigo Otsuka Building

Elevator Upgrade

JPY 19M

Ichigo Nogizaka Building

HVAC Upgrade

JPY 18M

Asset Name
Koriyama Big-i

300

133

109

132

124

0

Oct 2019

Apr 2020

Investment

April 2021 Capex Plan

525

478

Details

714

686

600

Asset Name

Oct 2020
Forecast

Details

Investment

Air Conditioning Upgrade

JPY 52M

Ichigo Nishi Honmachi Building Air Conditioning Upgrade

JPY 34M

Ichigo Hakata Building

Elevator Upgrade

JPY 25M

Ichigo Nishisando Building

Elevator Upgrade

JPY 20M

Apr 2021
Forecast© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

50

Portfolio Growth as REIT Specializing in Mid-Size Offices
As of April 30, 2019

As of October 31, 2019

As of April 30, 2020

Total

85 assets

85 assets

85 assets

Office79 assets

80 assets

81 assets

Other

6 assets

5 assets

4 assets

Total

JPY 203.0B

JPY 203.2B

JPY 202.3B

Office

95%

96%

97%

Other

5%

4%

3%

Central Tokyo

58%

57%

57%

Tokyo Metropolitan Area

22%

22%

22%

Four Major Regional Cities

14%

15%

15%

Other Regional Cities

6%

6%

6%

Appraisal Value

JPY 234.8B

JPY 240.1B

JPY 241.1B

Leasable Area

264,762m

2

266,478m

2

259,717m

99.3%

99.4%

99.6%

921

934

938

5.6%

5.6%

5.7%

No. of Assets

Portfolio Size

Area

Occupancy
No. of Tenants
NOI Yield••

2

Annualized NOI Yield. Four Major Regional Cities refers to Osaka, Nagoya, Fukuoka, and Sapporo.
NOI Yield is calculated excluding assets sold in each period; NOI Yield of assets acquired in the April 2020 period are determined from the annual NOI
calculated using a DCF method based on appraisal value at acquisition.

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

51

High Seismic Safety Level
Acquisition Guidelines− Seismic safety：Compliant with new seismic standard− Seismic PML1：Stand-alone PML of 20% or less, with a non-exceedance probability of
90% for the entire portfolio
Portfolio Assets Seismic Safety Profile (as of April 30, 2020)
Assets Built under Old SeismicStandard, but Seismic Renovation
Completed
4 assets(Leasable Area Ratio 6.9%)

Assets Built under Old SeismicStandard, but Original Construction
Met New Earthquake ResistanceStandard2
3 assets

Portfolio PML

2.51%(Leasable Area Ratio 3.3%)

as of April 30, 2020
Assets Built under Old Seismic Standard, but
Seismic Renovation Completed (4 assets)
Ichigo Sakae Building, Ichigo Mita Building, Ichigo Gotanda Building,and Ichigo Higashi Ikebukuro Building
Assets Built under Old Seismic Standard, but Original Construction
Met New Earthquake Resistance Standard (3 assets)2
New Earthquake ResistanceStandard 78 assets

Ichigo Ginza 612 Building, Ichigo Ofuna Building, andIchigo Nagoya Building(Leasable Area Ratio 89.8%)

1 PML (Probable Maximum Loss) is the maximum expected loss from a large-scale earthquake (defined as an earthquake with an expected frequency of occurrence once

every 475 years, or a 10% chance of occurrence within the next 50 years) occurring in the next 50 years, expressed as a ratio to the estimated replacement cost.
2 Assets evaluated as having seismic strength equivalent to new earthquake resistance standards and for which a third-party seismic evaluation report has been obtained.

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

52

Portfolio Details (1)as of April 30, 2020
Asset
Type

OfficeNo.

Asset Name

Area

Location

Acquisition
Price(JPY M)Book
Value(JPY M)

Leasable
Area

Occupancy2(m )Apr 2020 Appraisal

Oct 2019 Appraisal

ChangeValue(JPY M)

Cap rate

Value(JPY M)

Cap rate

Value(JPY M)

Cap rate

O-02 Ichigo Nishisando Building

Central Tokyo

Shibuya-ku, Tokyo

3,254

3,338

4,564.63

99.1%

3,260

4.1%

3,290

4.1%

-30

–

O-03 Ichigo Mita Building

Central Tokyo

Minato-ku, Tokyo

2,740

2,728

4,119.63

100.0%

3,630

4.2%

3,620

4.2%

+10

–

O-04 Ichigo Nanpeidai Building

Central Tokyo

Shibuya-ku, Tokyo

1,920

1,911

1,925.24

100.0%

2,690

3.5%

2,670

3.5%

+20

–

O-05 Ichigo Hanzomon Building

Central Tokyo

Chiyoda-ku, Tokyo

1,550

1,507

2,080.37

100.0%

1,950

3.7%

1,950

3.7%

–

–

O-06 Ichigo Hijirizaka Building

Central Tokyo

Minato-ku, Tokyo

1,200

1,214

1,947.90

100.0%

1,470

4.5%

1,470

4.5%

–

–

O-07 Ichigo Shibuya Kamiyamacho Building Central Tokyo

Shibuya-ku, Tokyo

1,505

1,363

1,321.54

100.0%

1,890

3.8%

1,880

3.8%

+10

–

O-08 Ichigo Akasaka 5 Chome Building

Minato-ku, Tokyo

735

720

683.52100.0%

876

3.7%

829

3.7%

+47

–

Central Tokyo

O-09 Ichigo Shibakoen Building

Central Tokyo

Minato-ku, Tokyo

1,100

1,098

1,602.29

100.0%

1,160

4.3%

1,160

4.3%

–

–

O-10 Ichigo Ebisu Nishi Building

Central Tokyo

Shibuya-ku, Tokyo

1,917

1,920

1,484.39

100.0%

2,510

3.8%

2,510

3.8%

–

–

O-11 Ichigo Ginza 612 Building

Central Tokyo

Chuo-ku, Tokyo

1,773

1,777

1,379.06

100.0%

2,120

3.8%

2,090

3.8%

+30

–

O-12 Ichigo Uchikanda Building

Central Tokyo

Chiyoda-ku, Tokyo

1,140

1,125

1,378.83

100.0%

1,350

4.3%

1,350

4.3%

–

–

O-14 Ichigo Yotsuya 4 Chome Building

Central Tokyo

Shinjuku-ku, Tokyo

550

504

780.64100.0%

590

4.2%

590

4.2%

–

–

O-15 Ichigo Tameike Building

Central Tokyo

Minato-ku, Tokyo

580

517

494.14100.0%

722

3.8%

722

3.8%

–

–

O-16 Ichigo Jimbocho Building

Central Tokyo

Chiyoda-ku, Tokyo

1,820

1,803

1,891.01

92.6%

2,440

4.1%

2,420

4.1%

+20

–

O-17 Ichigo Hakozaki Building

Central Tokyo

Chuo-ku, Tokyo

1,150

1,137

2,387.34

100.0%

1,180

4.4%

1,180

4.4%

–

–

O-18 Ichigo Kudan 2 Chome Building

Central Tokyo

Chiyoda-ku, Tokyo

763

730

1,288.31

100.0%

954

4.3%

953

4.3%

+1

–

O-19 Ichigo Kudan 3 Chome Building

Central Tokyo

Chiyoda-ku, Tokyo

844

816

1,302.43

100.0%

868

4.4%

860

4.4%

+8

–

O-20 Ichigo Gotanda Building

Central Tokyo

Shinagawa-ku, Tokyo

5,060

4,832

5,346.39

100.0%

6,320

4.5%

6,320

4.5%

–

–

O-21 Ichigo Shin Yokohama Building

Tokyo Metro Area

Yokohama

1,816

1,687

4,021.32

97.7%

1,740

4.7%

1,740

4.7%

–

–

O-22 Ichigo Minami Ikebukuro Building

Tokyo Metro Area

Toshima-ku, Tokyo

1,460

1,368

1,491.50

100.0%

1,870

4.0%

1,790

4.0%

+80

–

O-23 Ichigo Nakano North Building

Tokyo Metro Area

Nakano-ku, Tokyo

764

730

1,250.85

100.0%

935

4.8%

935

4.8%

–

–

O-24 Ichigo Eitai Building

Tokyo Metro Area

Koto-ku, Tokyo

1,490

1,459

2,605.54

100.0%

1,440

4.7%

1,320

4.7%

+120

–

O-26 Ichigo Ikejiri Building

Tokyo Metro Area

Meguro-ku, Tokyo

2,030

1,956

2,385.69

100.0%

2,230

4.3%

2,230

4.3%

–

–

O-27 Ichigo Nishi Ikebukuro Building

Tokyo Metro Area

Toshima-ku, Tokyo

639

599

1,261.91

100.0%

989

4.4%

966

4.4%

+23

–

O-28 Ichigo Nishi Gotanda Building

Central Tokyo

Shinagawa-ku, Tokyo

765

754

1,329.06

100.0%

873

4.5%

846

4.5%

+27

–

O-29 Ichigo Kichijoji Building

Tokyo Metro Area

Musashino City, Tokyo

2,160

2,182

4,210.87

100.0%

2,960

4.8%

2,920

4.8%

+40

–

O-34 Ichigo Sakae Building

Four Major Cities

Nagoya

4,705

4,690

3,928.12

100.0%

6,290

4.8%

6,490

4.8%

-200

–

O-37 Ichigo Marunouchi Building

Four Major Cities

Nagoya

6,710

5,700

8,009.11

100.0%

7,590

4.2%

7,910

4.2%

-320

–

O-38 Ichigo Toyamaeki Nishi Building

Other Regional Cities Toyama City, Toyama

1,645

1,511

8,601.71

99.1%

1,850

5.9%

1,840

5.9%

+10

–

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

53

Portfolio Details (2)as of April 30, 2020
Asset
Type

OfficeNo.

Asset Name

Location

Area

Acquisition
Price(JPY M)Book
Value(JPY M)

Leasable
Area
2
(m )

Occupancy

Apr 2020 Appraisal

Oct 2019 Appraisal

Value(JPY M)

Cap rate

Value(JPY M)

ChangeCap rate

Value(JPY M)

Cap rate

O-39 Ichigo Mirai Shinkin Building

Other Regional Cities Oita City, Oita

1,158

1,133

3,551.46

95.8%

1,330

6.0%

1,320

6.0%

+10

–

O-42 Ichigo Takamatsu Building

Other Regional Cities Takamatsu City, Kagawa

3,010

2,272

6,329.33

100.0%

3,650

6.1%

3,650

6.1%

–

–

O-46 Ichigo Kanda Nishikicho Building

Central Tokyo

2,130

1,998

2,523.09

100.0%

3,310

3.8%

3,310

3.8%

–

–

Chiyoda-ku, Tokyo

O-47 Ichigo Akihabara North Building

Central Tokyo

Chiyoda-ku, Tokyo

5,500

5,542

6,250.53

100.0%

7,780

4.4%

7,130

4.4%

+650

–

O-48 Ichigo Sakaisuji Honmachi Building

Four Major Cities

Osaka

1,940

1,767

3,729.35

100.0%

2,380

4.5%

2,360

4.5%

+20

–

O-49 Ichigo Kanda Ogawamachi Building

Central Tokyo

Chiyoda-ku, Tokyo

2,210

2,195

2,309.39

100.0%

2,580

4.1%

2,540

4.1%

+40

–

O-50 Ichigo Hatchobori Building

Central Tokyo

Chuo-ku, Tokyo

1,905

1,788

2,697.36

100.0%

2,680

4.5%

2,680

4.5%

–

–

O-51 Ebisu Green GlassCentral Tokyo

Shibuya-ku, Tokyo

5,900

5,807

3,159.27

100.0%

7,460

3.5%

6,890

3.5%

+570

–

O-52 Ichigo Omori Building

Central Tokyo

Shinagawa-ku, Tokyo

3,850

3,788

3,585.93

100.0%

4,450

4.3%

4,450

4.3%

–

–

O-53 Ichigo Takadanobaba Building

Central Tokyo

Shinjuku-ku, Tokyo

1,580

1,582

1,606.92

100.0%

1,910

4.0%

1,910

4.0%

–

–

O-54 Ichigo Omiya Building

Tokyo Metro Area

Saitama City, Saitama

3,430

3,593

6,180.68

97.5%

4,170

5.1%

4,100

5.1%

+70

–

O-55 Ichigo Sagamihara Building

Tokyo Metro Area

Sagamihara City, Kanagawa

1,174

1,223

2,960.81

100.0%

1,280

5.3%

1,280

5.3%

–

–

O-56 Ichigo Ofuna Building

Tokyo Metro Area

Kamakura City, Kanagawa

2,000

1,942

2,364.71

100.0%

2,620

5.3%

2,620

5.3%

–

–

O-57 Ichigo Sendai East Building

Other Regional Cities Sendai

1,840

1,635

5,205.49

100.0%

2,150

5.5%

2,140

5.5%

+10

–

O-58 Ichigo Kumamoto Building

Other Regional Cities Kumamoto City, Kumamoto

1,450

1,478

4,507.59

99.0%

1,590

5.9%

1,590

5.9%

–

–

O-59 Ichigo Jingumae Building

Central Tokyo

Shibuya-ku, Tokyo

7,200

7,414

4,510.04

100.0%

8,280

3.3%

8,280

3.3%

–

–

O-60 Ichigo Shibuya Dogenzaka Building

Central Tokyo

Shibuya-ku, Tokyo

3,650

3,675

2,789.86

100.0%

5,430

3.4%

5,350

3.4%

+80

–

O-61 Ichigo Hiroo Building

Central Tokyo

Shibuya-ku, Tokyo

3,960

4,010

3,510.44

100.0%

4,710

3.8%

4,710

3.8%

–

–

O-62 Ichigo Sasazuka Building

Central Tokyo

Shibuya-ku, Tokyo

4,780

4,923

6,425.29

100.0%

5,770

4.0%

5,720

4.0%

+50

–

O-63 Ichigo Nihonbashi East Building

Central Tokyo

Chuo-ku, Tokyo

4,700

4,486

4,216.97

100.0%

5,600

3.9%

5,600

3.9%

–

–

O-64 Ichigo Sakurabashi Building

Central Tokyo

Chuo-ku, Tokyo

2,500

2,562

2,971.22

100.0%

3,100

3.9%

3,080

3.9%

+20

–

O-65 Ichigo Shinkawa Building

Central Tokyo

Chuo-ku, Tokyo

2,360

2,381

2,312.03

100.0%

3,000

3.8%

2,930

3.8%

+70

–

O-66 Ichigo Kudan Building

Central Tokyo

Chiyoda-ku, Tokyo

3,190

3,207

3,090.65

100.0%

3,600

3.9%

3,590

3.9%

+10

–

O-67 Ichigo Higashi Gotanda Building

Central Tokyo

Shinagawa-ku, Tokyo

3,660

3,646

4,548.10

100.0%

4,260

4.0%

4,250

4.0%

+10

–

O-68 Axior Mita

Central Tokyo

Minato-ku, Tokyo

1,800

1,737

2,369.82

100.0%

2,320

3.8%

2,320

3.8%

–

–

O-69 Ichigo Higashi Ikebukuro Building

Tokyo Metro Area

Toshima-ku, Tokyo

4,570

4,604

4,433.00

100.0%

5,310

4.0%

5,310

4.0%

–

–

O-70 Koriyama Big-i (Office Section)

Other Regional Cities Koriyama City, Fukushima

1,660

1,463

3,433.07

100.0%

2,130

5.1%

2,120

5.1%

+10

–

O-71 Ichigo Kawasaki Building

Tokyo Metro Area

Kawasaki City, Kanagawa

1,750

1,807

3,710.17

98.1%

2,180

4.2%

2,180

4.2%

–

–

O-72 Ichigo Shibuya East Building

Central Tokyo

Shibuya-ku, Tokyo

1,350

1,353

1,041.36

100.0%

1,560

3.5%

1,610

3.5%

-50

–

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

54

Portfolio Details (3)as of April 30, 2020
Asset
Type

No.

Asset Name

O-73 Ichigo Ningyocho Building

OfficeArea

Central Tokyo

Location

Chuo-ku, Tokyo

Acquisition
Price(JPY M)

1,450

Book
Value
(JPY M)

1,478

Leasable
Area

Occupancy2(m )Apr 2020 Appraisal

Oct 2019 Appraisal

Value(JPY M)

Cap rate

Value(JPY M)

ChangeCap rate

Value(JPY M)

Cap rate

1,769.09

100.0%

1,630

4.1%

1,610

4.1%

+20

–

O-74 Ichigo Nishi Honmachi Building

Four Major Cities

Osaka

2,190

2,158

6,152.00

100.0%

2,470

4.7%

2,470

4.7%

–

–

O-75 Ichigo Hakata Building

Four Major Cities

Fukuoka

1,380

1,360

2,423.86

100.0%

1,520

4.8%

1,520

4.8%

–

–

O-76 Ichigo Nishiki First Building

Four Major Cities

Nagoya

2,000

1,970

3,324.70

100.0%

2,140

4.5%

2,140

4.5%

–

–

O-77 Ichigo Ikenohata Building

Tokyo Metro Area

Taito-ku, Tokyo

5,130

5,134

5,504.15

100.0%

5,520

4.2%

5,500

4.2%

+20

–

O-78 Ichigo Ikebukuro East Building

Tokyo Metro Area

Toshima-ku, Tokyo

3,010

2,984

3,118.69

100.0%

3,360

4.2%

3,290

4.2%

+70

–

O-79 Ichigo Motoazabu Building

Central Tokyo

Minato-ku, Tokyo

1,890

1,914

1,329.96

100.0%

2,300

3.5%

2,290

3.5%

+10

–

O-80 Ichigo Otsuka Building

Tokyo Metro Area

Toshima-ku, Tokyo

2,740

2,732

3,679.70

100.0%

3,050

4.3%

3,040

4.3%

+10

–

O-81 Ichigo Nagoya Building

Four Major Cities

Nagoya

3,420

3,492

4,930.30

100.0%

3,910

4.4%

3,900

4.4%

+10

–

O-82 Ichigo Fushimi Building

Four Major Cities

Nagoya

2,340

2,332

4,155.57

96.7%

2,510

4.6%

2,510

4.6%

–

–

O-83 Ichigo Nishiki Building

Four Major Cities

Nagoya

1,330

1,284

2,006.78

100.0%

1,460

4.5%

1,460

4.5%

–

–

O-84 Ichigo Minami Morimachi Building

Four Major Cities

Osaka

1,040

1,020

2,521.51

100.0%

1,170

4.5%

1,170

4.5%

–

–

O-85 Ichigo Shibuya Udagawacho Building

Central Tokyo

Shibuya-ku, Tokyo

3,500

3,580

1,491.68

100.0%

4,170

3.3%

4,160

3.3%

+10

–

O-86 Win Gotanda Building

Central Tokyo

Shinagawa-ku, Tokyo

3,100

3,105

3,689.88

100.0%

3,330

4.1%

3,320

4.1%

+10

–

O-87 Ichigo Hongo Building

Tokyo Metro Area

Bunkyo-ku, Tokyo

2,300

2,290

2,722.58

100.0%

2,630

4.3%

2,510

4.3%

+120

–

O-88 Oimachi Center Building

Central Tokyo

Shinagawa-ku, Tokyo

1,680

1,695

2,751.08

100.0%

1,970

4.2%

1,960

4.2%

+10

–

O-89 Win Gotanda Building 2

Central Tokyo

Shinagawa-ku, Tokyo

3,300

3,296

3,433.16

100.0%

3,610

4.1%

3,590

4.1%

+20

–

O-90 MIF Building

Central Tokyo

Chiyoda-ku, Tokyo

2,200

2,196

1,690.33

100.0%

2,370

4.0%

2,370

4.0%

–

–

O-91 Ichigo Uchi Honmachi Building

Four Major Cities

Osaka

1,900

1,995

3,004.07

100.0%

2,180

4.6%

2,180

4.6%

–

–

O-92 Ichigo Minami Otsuka Building

Tokyo Metro Area

Toshima-ku, Tokyo

2,780

2,861

3,127.84

100.0%

3,190

3.9%

3,180

3.9%

+10

–

O-93 Ichigo Nogizaka Building

Central Tokyo

Minato-ku, Tokyo

3,315

3,437

2,199.35

100.0%

3,670

3.4%

3,580

3.4%

+90

–

O-94 Ichigo Hakata East Building

Four Major Cities

Fukuoka

2,250

2,266

2,901.99

100.0%

2,500

4.4%

2,480

4.4%

+20

–

O-95 Ichigo Nakameguro Building

Tokyo Metro Area

Meguro-ku, Tokyo

1,495

1,554

1,037.30

100.0%

1,670

3.8%

1,670

3.8%

–

–

192,856 250,362.84

99.6%

233,667

Subtotal - Office

195,732

231,771+1,896* October 2019 Appraisal Value and Cap rate for the Ichigo Nakameguro Building (O-95),
acquired in April 2020 period, are those at the time of acquisition© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

55

Portfolio Details (4)as of April 30, 2020
Asset
Type

No.

Asset Name

Z-09 Konami Sports Club Izumi Fuchu

Other

Area

Location

Other Regional Cities Izumi City, Osaka

Z-10 Ichigo Shibuya Bunkamura Dori Building Central Tokyo

Shibuya-ku, Tokyo

Leasable
Acquisition
Book Value
Area
Price
(JPY M)
2(JPY M)(m )Occupancy

Apr 2020 Appraisal

Oct 2019 Appraisal

Value(JPY M)

Cap rate

Value(JPY M)

Cap rate

ChangeValue(JPY M)

Cap rate

1,210

1,059

3,733.68

100.0%

1,450

5.7%

1,450

5.7%

–

–

2,400

2,457

778.77100.0%

3,030

3.2%

3,030

3.2%

–

–

Z-11 Twicere Yokohama Isogo (Retail Section) Tokyo Metro Area

Yokohama

1,620

1,487

2,717.77

100.0%

1,500

5.1%

1,500

5.1%

–

–

Z-14 Ichigo Kamata Building

Ota-ku, Tokyo

1,400

1,435

2,124.68

100.0%

1,520

4.5%

1,520

4.5%

–

–

Subtotal - Other

6,630

6,440

9,354.90

100.0%

7,500

7,500

–

Total (85 Assets)

202,362

199,297 259,717.74

99.6%

241,167

239,271+1,896

Tokyo Metro Area

Reference
TK Equity
Investment

Tachikawa Holdings GK TK Equity Interest

JPY 50M© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

56

Appendix: About Ichigo Office© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

57

Specialized Office REIT
Specialized Office REIT Focusing on Mid-Size Offices, an Asset Class that
Offers Both Return Stability and Upside Potential
 Mid-size office characteristics‒ Stable cashflows supporting earnings‒ Upside earnings potential in economic upturns‒ Value-add potential due to relatively inefficient market

 Portfolio focused on Tokyo Metropolitan Area
 Driving accretive growth via value-add capex and hands-on asset management© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

58

Portfolio: 97% Office, 79% Tokyo Metropolitan Area
as of April 30, 2020
No. of Assets
Total Acquisition PriceAppraisal Value
Leasable Area
Occupancy

85 Assets
JPY 202.4B
JPY 241.2B
259,717m2
99.6%

By Asset Type

Other
3%

Map Key
Location
Acquisition Price (JPY B)% of Portfolio

Tokyo
Metro
Area
159.1
79%

Sendai1.8
1%Nagoya20.5
10%
Fukuoka
3.6
2%

Office97%

By Size< JPY 1B
3%

Kansai
8.2
4%

JPY 1B-2B
27%
Other
8.9
4%

> JPY 3B50%
JPY 2B-3B
19%© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

59

Highly Diversified Tenant Mix
as of April 30, 2020

Tenants by Industry

Total Number of Tenants: 937(based on No. of tenants)
Education
Restaurant/ 2%
Hotel
3%
Constuction
3%
Real Estate
4%

Share of Top 10 Tenants
11.0% of Leased Area
12.9% of Rental Income

Other
6%

Service29%

Top 10 Tenants (by Building & Leased Area)

Finance
5%

Asset NameIT
14%Manufacturing
15%

Retail18%* Service: Primarily advertising, consulting, HR, accounting, legal,
beauty-related, and public entities.

Leased Area
2(m )Industry

Share

1

Ichigo Akihabara North Building

Manufacturing

6,250

2.5%

2

Ichigo Sasazuka Building

Telecommunication

3,827

1.5%

3

Konami Sports Club Izumi Fuchu

Sports Club

3,733

1.5%

4

Ichigo Ikebukuro East Building

Service

2,427

1.0%

5

Ichigo Hiroo Building

Retail

2,417

1.0%

6

Ichigo Jingumae Building

Telecommunication

2,146

0.8%

7

Ichigo Toyamaeki Nishi Building /Ichigo Takamatsu Building

Manufacturing

1,846

0.7%

8

Ichigo Kamata Building

Telecommunication

1,820

0.7%

9

Ichigo Ikejiri Building

Restaurant

1,791

0.7%

10

Ichigo Sendai East Building

Retail

1,724

0.7%

27,986

11.0%

Total

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

60

Growth via Serving Tenants & Shareholders
Total Assets (JPY B)

Dividend (JPY)

2,255

1,494

1,537

1,541

1,547

1,706

1,740

165.6

162.7

1,603

1,387

1,904

1,923

191.0

189.8

1,930
196.9

1,964

192.5

2,150

2,163

203.2

203.2

2,014
199.9

203.0

1,219
1,031*

107.9

104.8

106.1

104.3

112.3

114.3

114.0

123.3

April
October
April
October
April
April
April
April
October
October
October
October
October
October
April
April
October
April
2020
2011
2012
2016
2018
2019
2013
2014
2015
2012
2014
2016
2019
2013
2015
2017
2017
2018
(71 Assets) (67 Assets) (67 Assets) (66 Assets) (68 Assets) (71 Assets) (70 Assets) (65 Assets) (77 Assets) (73 Assets) (85 Assets) (82 Assets) (85 Assets) (82 Assets) (85 Assets) (85 Assets) (85 Assets) (85 Assets)
MergerComprehensive
Refinancing

AccretivePO

AccretivePO

AccretivePO

Accretive
PO

Strategic
Restructuring

Transition to
Pure Office
REIT

Accretive
PO

Strategic
Restructuring

Bond
Issuance

Strategic
Restructuring

Bond
Issuance

JCR Credit
Rating A

Bond
Issuance

Bond
Issuance

Strategic
Restructuring

Strategic
Restructuring

Bond
Issuance

JCR Credit
Rating ADeCollateralizationof All Loans* October 2011 dividend adjusted to reflect 7:1 stock split on November 1, 2011

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

61

Acquisition-Driven Growth− Total Asset Acquisitions: JPY 146.4B− 56.3% via Sponsor Support (JPY 82.5B)
Cumulative Total
JPY 146.4B

Acquisitions and Sales Since October 2013 (Cumulative, JPY B)■ Acquisition from Sponsor■ Sale to Sponsor■ Acquisition from Third Party■ Sale to Third Party
50.9

54.4

56.3

62.4

Acquisition
from
Third Party
63.9(43.7%)

50.9

4.3
Acquisitions
Sales

8.6
0.8

67.6

74.7

80.2

82.5

Acquisition
fromSponsor
82.5(56.3%)

19.3

19.3

23.8

23.8

26.2

26.2

7.9

12.3

12.3

18.3

21.9

24.7

~ Oct 2017~ Oct 2018

~ Oct 2019~ Oct 2020
(Forecast)

38.4

12.4
7.4

Oct 2013~ Oct 2014

~ Oct 2015

Jun 2013
Initial Public
Offering(Post-Merger)

Dec 2013
Public Offering

Dec 2014
Public Offering
Acquisition&Sale
May 2015
Public Offering~ Oct 2016

Dec 2018
Apr&May 2018
Apr&May 2016
Nov 2016
Apr 2020
Public Offering Acquisition from Acquisition&Sale Acquisition&Sale Acquisition fromThird Party
Third Party
Acquisition&Sale
May 2019
Sep 2018
Apr&May 2017 Acquisition from Acquisition&Sale
Third Party
Acquisition&Sale

Sept 2015
Transition to
Pure Office REIT
© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

62

Tailored Ichigo Tenant Services & Hospitality
Tailored Tenant Services to Increase Tenant Satisfaction− Tenant services focus on increasing tenant safety and comfort via Ichigo
Property Management Standard− Conduct regular tenant satisfaction surveys to reflect feedback in tenant
services
August 2018 Survey Overview
Respondents

Tenant General
Affairs Personnel

No. ofDistributed
Surveys913

No. ofAssets84

No. ofResponses

638 (69.9%)

Overall Satisfaction – Building Quality & Functionality

Satisfied
18%

Somewhat Satisfied
55%

Somewhat
Dissatisfied 10%

Dissatisfied
2%
Tenant Feedback(Plumbing, HVAC,
Elevator Improvements)

Neither
Satisfied nor
Dissatisfied
16%

Overall Satisfaction – Tenant Services
Satisfied33%

Somewhat Satisfied
48%

Neither
Satisfied nor
Dissatisfied
14%

Dissatisfied
1%

Somewhat
Dissatisfied 4%© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

63

Ichigo Branding: Safety, Quality, Design, Tenant Service
Improve the safety, quality, and design of assets via Ichigo’s
architectural and engineering capabilities to support high tenantsatisfaction© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

64

Ichigo Branding: Ichigo Layout Office and Ichigo Lounge
Provide Differentiated Ichigo Layout Office and Ichigo Lounge High-Quality
Office Spaces
Ichigo Layout Office Ichigo Jimbocho Building (Chiyoda-ku Tokyo)
 Generating substantially higher rents reflecting higher value for tenants
 Supporting needs of startups and accommodating expansion by offering flexible layout

Floor Plan

Flexible Layout

Windows & Natural Light

Work Space

Conversation Space

Ichigo Lounge Ichigo Higashi Ikebukuro Building (Toshima-ku Tokyo)
 Subdivided a vacant floor to create several private offices and a shared-use space for the exclusive use of tenants
 Generated significantly higher rents by offering attractive shared-use space

Reception
Ichigo Lounge© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

65

Japanese Mid-Size Office Investment Attractiveness (1)Rich Pool of REITable Assets
 90%+ of Japanese real estate = mid-size High liquidity

Breakdown of Buildings in Japan by Floor Area (m²)
< 500

2,000 to 5,000

1,000 to 2,000

5,000 to 10,000>10,000

Mid-Size Real Estate：94%

Broad and Deep Tenant Base
 95% of all companies have 50 employees or less
 Diverse sectors & industries

500 to 1,000

43%

25%

15%

10
%

4%
3%

Source: Ministry of Land, Infrastructure, Transportation andTourism (2013)

Largely Untapped by Professional Management
 High ownership by individuals and “passive owner” corporations

results in inadequate building maintenance Lacking professional building and management specifications
Breakdown of Companies by Number of Employees

Abundant Opportunities for Large-Scale Improvements Increase safety via seismic reinforcement
 Increase tenant satisfaction via value-add capex<5

6 to 20

21 to 50

> 51

% of Companies Suited to Mid-Size Assets：95%
64%

24%

7
5%
%

Source: Small and Medium Enterprise Agency (2017)

Significant Value-Add Potential© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

66

Japanese Mid-Size Office Investment Attractiveness (2)Mid-Size Office Rents More Stable than Larger-Size Office Rents
Office Rent Trends in 5 Central Tokyo Wards (Chiyoda, Chuo, Minato, Shinjuku & Shibuya Wards)
JPY per Tsubo (3.3m2)

60,00050,000

Grade A

40,00030,000

Grade A-

20,000

Grade B

10,000

0
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Source: CBRE
Grade A refers to buildings in the 5 central wards of Tokyo (Chiyoda, Chuo, Minato, Shinjuku, and Shibuya) built no more than 11 years ago (therefore meetingcurrent seismic resistance requirements), with leasable area of 21,450 square meters and total floor area of 33,000 square meters.
Grade A- and Grade B refers to buildings located in any of the 23 wards in Tokyo with leasable area of 14,850 square meters and total floor area of 23,100 square
meters and leasable area of 660 square meters and total floor area of 6,600 to 23,100 square meters, respectively, and meeting current seismic resistancerequirements.
© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

67

Ichigo Office’s Sponsor: Ichigo (2337)
Core Businesses: Asset Management, Sustainable Real Estate, Clean Energy‒‒‒‒

Manages Ichigo Office (8975), Ichigo Hotel (3463), and Ichigo Green (9282)
TSE First Section, JPX-Nikkei 400 Member
Deeply committed to CSR and Sustainability
Japan’s first zero-carbon listed real estate company

Ichigo(TSE First Section 2337)

Ichigo Office (8975)

Ichigo Preserves andImproves Real Estate

Hiromi Miyake(Weightlifting)

The word “Ichigo” comes from theancient Japanese proverb, Ichigo
Ichie, literally meaning “Onelifetime, one encounter.” Thephrase was first used by a 16th
century master of the tea
ceremony, Sen no Rikyu. He
called upon his disciples to give
total focus and sincerity to eachact of the tea ceremony for every
guest, because that particular
moment will only exist once andmust be fully lived and realized.

Ichigo embraces the Ichigo Ichie philosophy of sincerity
and service, and works to build strong long-term
relationships to support the success of our clients,
shareholders, and all stakeholders.

AssetManagement

Ichigo Investment Advisors

Ichigo Hotel (3463)
Ichigo Green (9282)

Sustainable
Real Estate

Clean Energy

Ichigo Estate

Miyako City

Ichigo Owners

CentroIchigo Land Shinchiku

Storage Plus

Ichigo Real Estate Services
Fukuoka

Ichigo Animation

Ichigo Marché

Hakata Hotels

Ichigo ECO Energy© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

68

Sponsor/Asset Manager/REIT Relationship

Sponsor

Ichigo (TSE First Section 2337)
100% Subsidiary

Sponsor Support
Value-Add Capabilities

Asset Manager

Ichigo Investment Advisors

Financial Support(Asset Warehousing)

Asset Management

TSE-Listed
Investment
Corporations

Ichigo Office(8975)

 Specializes in mid-size offices

Ichigo Hotel(3463)

 Specializes in hotels

Ichigo Green(9282) Solar power YieldCo

 Focused on the Tokyo Metropolitan Area
 85 assets, JPY 202.3B (as of May 31, 2020)

 Listed in November 2015 23 hotels, JPY 51.9B (as of May 31, 2020)

 Listed in December 2016 15 solar plants, JPY 11.4B (as of May 31, 2020)© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

69

Share Price (November 1, 2011 to April 30, 2020)(JPY)

150,000

Trading Volume

Ichigo Office

Post-Merger High (closing): JPY 119,300 (Feb 21, 2020)
Post-Merger Low (closing): JPY 25,310 (Nov 22, 2011)
April 2020 Period Average Daily Volume: 7,777 shares* as of April 30, 2020

125,000

60,000Public Offering
JPY 89,212
May 1, 2015

Public Offering
JPY 83,167
Dec 3, 2014

100,000(Shares Traded)

TSE REIT Index

50,000Public Offering
JPY 79,365
May 23, 2016

40,000Public Offering
JPY 62,595
May 27, 2013

30,00075,000MergerJPY 33,500 (closing)Nov 1, 2011

50,00020,00025,00010,000

0
2011年
2014年
Nov 2011 Jan 2012 2012年Jan 20132013年 Jan 20140
2015年
Jan 2015

Jan 2016年
2016

Jan 2017年
2017

2018年
Jan
2018

2019年
Jan
2019

2020年
Jan 2020

Source: Bloomberg© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

70

Shareholder Composition
as of April 30, 2020

Major Shareholders

Shareholdings by Shareholder Type
Share

1

Ichigo Trust Pte. Ltd.

344,190

22.5%

2Japan Trustee Services Bank, Ltd.,
Trust Account

195,158

12.7%

3

The Master Trust Bank of Japan,
Trust Account

174,596

11.4%

4

Trust & Custody Service Bank, Ltd.,
Securities Investment Trust Account82,402

5.4%

5

NOMURA BANK (LUXEMBOURG) S.A.

67,108

4.4%

6

Nomura Trust & Banking Co., Ltd.
Investment Trust Account57,961

3.8%

7

GOLDMAN SACHS INTERNATIONAL

41,4172.7%

8

Mitsubishi UFJ Morgan Stanley Securities
Co., Ltd.

22,687

1.5%

9

BNP PARIBAS SECURITIES SERVICESLUXEMBOURG / JASDEC / SECURITIES AIFM

21,95810Foreign Corporations & Individuals

Non-Financial Domestic Corporations

Domestic Financial Institutions

Domestic Individuals

714,073 shares(46.6%)

692,218 shares(45.2%)

14,342 shares(0.9%)

13,393 shares(0.9%)

690,632 shares(45.1%)

715,785 shares(46.7%)

644,429 shares(42.1%)

113,240 shares(7.4%)

110,891 shares(7.2%)

118,087 shares(7.7%)

Apr 2019(1,532,287 shares)

Oct 2019(1,532,287 shares) *Apr 2020(1,532,287 shares) **No. ofSharesName

757,509 shares(49.4%)
12,262 shares(0.8%)* Number of Shares Outstanding

Shareholders by Shareholder Type
1.4%

STATE STREET BANK WEST CLIENT TREATY 505234

21,509

1.4%

Total

1,028,986

67.2%

Domestic Individuals
Domestic Financial Institutions

Apr 30, 2019

Oct 31, 2019

Shareholders

Shareholders Shareholders

12,652

Apr 30, 2020

12,443

12,906

Share
96.5%

62

63

59

0.4%

City banks, trust banks

10

10

8

0.1%

Regional banks
Other (including securities companies)

10
42

12
41

10
41

0.1%
0.3%

Non-Financial Domestic Corporations

193

172

177

1.3%

Foreign Corporations & Individuals
Total

184
13,091

180
12,858226
13,3681.7%
100.0%© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

71

Ichigo Office Overview
Investment Corporation

as of April 30, 2020

Name

Ichigo Office REIT Investment Corporation

Securities Code8975

Address

1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo

Executive Director

Yoshihiro Takatsuka

Portfolio Assets

85 Assets

Portfolio Value

JPY 202B (based on acquisition price)

Fiscal Periods (Semi-Annual)November – April; May – OctoberAsset Management Company
Name

Ichigo Investment Advisors Co., Ltd.

President & Executive Officer

Hiroshi Iwai

Registration & Membership

Financial Instruments Dealer License (Investment Management Services,
Investment Advisory & Agency Services, and Type II Financial Instruments
Services): Minister of Finance, Kanto Financial Bureau #318

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

72

MEMO

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

73

MEMO

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

74

Disclaimer
These materials are for informational purposes only, and do not constitute or form a part of, and should not be construed as,
an offer to sell or a solicitation of an offer to buy any securities of Ichigo Office REIT Investment Corporation (“Ichigo Office”).
These materials may contain forward-looking statements regarding the intent, belief or current expectations of management of
Ichigo Office with respect to financial condition and future results of operations. These statements are based on certain
assumptions founded on currently available information. Accordingly, such statements are subject to risks, uncertainties andassumptions and there is no assurance as to actual financial conditions or results of operations. Actual results may vary fromthose indicated in the forward-looking statements. Accordingly, please refrain from solely relying on these statements.
These materials have been created by the management of Ichigo Office and Ichigo Investment Advisors Co., Ltd. (IIA) with thebelief that the information contained is accurate. However, there is no assurance given as to the accuracy, certainty, validity or
fairness of any such information. Please note that the content of these materials is subject to revision or retraction without priornotice.
This document is a translation. If there is any discrepancy between the Japanese version and the English translation, theJapanese version shall prevail. No copying or reproduction of these materials or part of these materials is allowed withoutobtaining prior consent from Ichigo Office and IIA.

Make The World
More Sustainable

Ichigo Office IR Desk (8975)
TEL：+81-3-3502-4891
E-mail: IR_Office@ichigo.gr.jp
www.ichigo-office.co.jp/english
Ichigo is Japan’s first zero-carbon listed real estate company.
We are taking responsibility for our environmental footprint by offsetting ourcarbon emissions and investing in low-carbon technologies such as solar energy.

© Ichigo Investment Advisors Co., Ltd. Ichigo Office REIT Investment Corporation All rights reserved.

75