MIRAI : Semi Annual Report For the Fiscal Period ended April 30, 2022 (The 12th Period)

MIRAI Corporation

Semi Annual Report

For the Fiscal Period ended April 30, 2022 (The 12th Period)

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Primary Data

• Distributions

The 12th Period	The 13th Period	The 14th Period
Actual distributions per unit	Forecast distributions per unit (Note)	Forecast distributions per unit (Note)
(Start of cash distribution payment on July	(The Fiscal Period ending October 31,	(The Fiscal Period ending April 30, 2023)
14, 2022)	2022)
1,267 yen	1,285 yen	1,285 yen
(Forecast: 1,260 yen)

(Note) These forecasts are calculated based on certain assumptions as of June 14, 2022 and subject to change due to conditions such as change in rent income thorough tenant turnovers, acquisition and disposition of assets, and additional unit issuance. The forecasts should not be construed as guarantee of DPU.

	Financial Results
(billion yen)		Operating revenue	Net profit	DPU		(yen)
6	4.9	5.3	5.4	5.3	4.9	5.1	5.2	1,800
	1,563	1,561
						1,600
4	1,436			1,429
2					1,247	1,289	1,267	1,400
							1,200
	2.2	2.4	2.5	2.3	2.0	2.1	2.2
0	6th FP	7th FP	8th FP	9th FP	10th FP	11th FP	12th FP	1,000

(Note) MIRAI implemented a four-for-one investment unit split with April 30, 2019 as record date. For the purpose of comparison, the figures before 6th FP are post-split figures.

• Portfolio (as of the End of April 2022)

Acquired 4 new properties worth 10.6 billion yen from the end of the fiscal period ended October 31, 2021.

Number of properties	: 38
AUM	: 164.5 billion yen
Appraisal value	: 177.6 billion yen
Occupancy rate	: 98.1%
NOI yield (12th FP result)	: 4.5% *based on book value
Portfolio PML	: 2.9%
Ratio by Tenant	Ratio by Asset Type			Ratio by Area
(based on rent)	(based on acquisiton price)			(based on acquisiton price)
	Others			Others
	9.5%		14.4%
	Hotel		Nagoya
	16.1%		area
Top 10	Core Assets		8.9%	Three
		Metropolitan
36.8%	87.5%		Osaka	Areas
Others		Office	area	85.6%
63.2%		Tokyo
Retail	52.6%	15.8%
		area
	21.7%				60.9%

(Note) Ratio by tenant is based on lease contract in place with end tenants as of the end of April 2022.

• Finance (as of the End of April 2022)

Stable financial base maintained on the back of Mitsui & Co.'s credit.

LTV (based on total assets)	: 48.8%
Long-term fixed interest debt ratio : 100.0%
Average interest rate	: 0.56%
Average remaining maturity	: 3.9 years
Rating	: Japan Credit Rating Agency, Ltd. (JCR) / A+ (Stable)

Rating and Investment Information, Inc. (R&I) / A (Stable)

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• ESG
• • Increase ratio of assets with environmental certifications
  • • April 2022: Obtained DBJ Green Building Certification at Mi-Nara (first retail facility owned by MIRAI)
      Aim to increase ratio of assets with environmental certifications through acquisition of new certifications and maintenance and improvement of existing certifications
    • Ratio of Assets with Environmental Certifications (Note): 60.9% ▶ 74.4% (Note) Based on total floor area excluding land with leasehold interest.
  • GRESB Real Estate Assessment (ESG benchmark for real estate)
  • • First participation in 2021(2 star)
    • Multiple improvement measures are being implemented for the 2022 rating upgrade Obtain third-party assurance on environmental data / Tenant Engagement Measures
    • 2021: 2 star / Green star ▶ Aiming to improve the rating in 2022
  • Contributions to the Local Community
  • • Cycle & Bus Rides (Mi-Nara)
      Participation in a demonstration experiment of health-enhancing and environmentally friendly measures promoted by a regional local transportation company
    • Recovery accommodation facility for patients with mild cases of COVID-19 Continued to provide as a recovery accommodation facility
      (from October 11, 2021 to October 31, 2022 (scheduled))
  • Strengthening Sustainability Disclosure
  • • Disclosed the GRI Standards Reference Table, an international disclosure standard for sustainability report on MIRAI's website
      Plans to enhance sustainability-related disclosures in the future
    • Future Initiatives
      ESG Report: Publication of ESG reports to further enhance sustainability information disclosure
      TCFD Disclosures: Prepare for TCFD, a framework for addressing climate-related disclosure
      Third-party Assurance for Environmental Data: Obtain third-party assurance to ensure objectivity of disclosed environmental data

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1 Overview of Asset Management

(1) Operating Results of MIRAI Corporation (hereinafter "MIRAI")

			The 8th Period	The 9th Period	The 10th Period	The 11th Period	The 12th Period
Period			From Nov. 1, 2019	From May 1, 2020	From Nov. 1, 2020	From May 1, 2021	From Nov. 1, 2021
			to Apr. 30, 2020	to Oct. 31, 2020	to Apr. 30, 2021	to Oct. 31, 2021	to Apr. 30, 2022
Operating revenue	(Million yen)		5,448	5,367	4,973	5,113	5,275
Operating expenses	(Million yen)		2,583	2,744	2,652	2,716	2,727
Operating income	(Million yen)		2,865	2,622	2,321	2,397	2,547
Ordinary income	(Million yen)		2,595	2,378	2,073	2,144	2,245
Net income	(Million yen)		2,594	2,376	2,072	2,143	2,244
Total assets	(Million yen)		161,027	159,222	161,815	161,226	171,982
[Changes from the previous period]	(%)		[5.2]	[(1.1)]	[1.6]	[(0.4)]	[6.7]
Net assets	(Million yen)		75,572	75,428	75,110	75,308	80,743
[Changes from the previous period]	(%)		[6.6]	[0.2]	[(0.4)]	[0.3]	[7.2]
Interest-bearing debt	(Million yen)		77,700	75,700	78,700	78,700	84,000
Unitholders' capital (Note 3)	(Million yen)		73,516	73,516	73,516	73,516	78,499
Total number of outstanding investment units	(Units)		1,662,240	1,662,240	1,662,240	1,662,240	1,771,440
Net assets per unit	(Yen)		45,464	45,377	45,186	45,305	45,580
Total distributions	(Million yen)		2,594	2,375	2,072	2,142	2,244
Distributions per unit	(Yen)		1,561	1,429	1,247	1,289	1,267
Of which, profit distribution per unit	(Yen)		1,561	1,429	1,238	1,289	1,267
Of which, distributions in excess of earnings per unit	(Yen)		-	-	9	-	-
Ordinary income to total assets (Note 4)	(%)		1.7	1.5	1.3	1.3	1.3
Net income to net assets (Note 4)	(%)		3.5	3.1	2.8	2.8	2.9
Net assets to total assets at end of period (Note 4)	(%)		46.9	47.4	46.4	46.7	46.9
[Changes from the previous period]	(%)		[0.6]	[0.4]	[(1.0)]	[0.3]	[0.2]
Payout ratio (Note 4)	(%)		100.0	99.9	99.3	100.0	100.0

(Note 1) The fiscal period of MIRAI is six months from May 1 to October 31 and from November 1 to April 30 of the following year.

(Note 2)	Unless otherwise stated, all figures are rounded down to the nearest million yen, and percentages are rounded to the first decimal place.
(Note 3)	Unitholders' capital does not take into account changes in unitholders' capital due to the implementation of distributions in excess of earnings related to the reserve for adjustment of temporary differences, etc.
(Note 4)	Calculated based on the following formula.
Ordinary income to total assets	Ordinary income / {(Total assets at beginning of period + Total assets at end of period) / 2} * 100
Net income to net assets	Net income / {(Net assets at beginning of period + Net assets at end of period) / 2} * 100
Net assets to total assets at end of period (%)	Net assets at end of period / Total assets at end of period * 100
Payout ratio	Total distributions (excluding distributions in excess of earnings) / Net income * 100

1. Summary of Operating Results for the Fiscal Period under Review
   (i) Main History of MIRAI

MIRAI is diversified J-REIT. Based on the Act on Investment Trusts and Investment Corporations of Japan (Act No. 198 of 1951; including revisions enforced thereafter) (hereinafter "AITIC"), MIRAI was founded on December 4, 2015 with a capital contribution of 150 million yen (750 units), by Mitsui Bussan & IDERA Partners Co., Ltd. (hereinafter the "Asset manager") as the founding planner and was listed on the REIT section of the Tokyo Stock Exchange on December 16, 2016 (securities code: 3476). During the fiscal period under review, MIRAI conducted a public offering in December 2021 and a third-party allotment in January 2022. As of April 30, 2022, the total number of outstanding investment units are 1,771,440 and MIRAI owns 38 properties (total acquisition price of 164,554 million yen).

MIRAI positions assets located in the three major metropolitan areas of Japan with high population concentrations as its main investment targets and aims to obtain mid-to-long term stable cash flows and sustained growth in unitholders' value by building a portfolio centered on its "Core Assets" (Note).

(Note) "Core Assets" means the assets that constitute the core of MIRAI's portfolio. Specifically, among traditional investment properties such as offices, retail properties, hotels, residential and logistics properties. Occupancy rates of 80% or more must be secured in principle (including cases where such occupancy rates are expected) with MIRAI to determine a stable rental income to be expected.

(ii) Operating Environment and Business Performance

During the fiscal period under review, the Japanese economy continued to be affected by COVID-19. Occupancy rates in the hotel sector have been affected by the spread of infection, MIRAI must continue to monitor the future trend. In the retail sector, although operational methods in COVID-19 crisis are becoming established, the negative impact of the increasing number of infections continues. Even in this environment, various measures to improve attractiveness have been effective at Mi-Nara, a retail complex in Nara Prefecture. In the office leasing market, cancellations due to changes in work styles, such as teleworking, and deterioration in corporate performance continue to be apparent in some properties, while the vacant spaces are being backfilled.

Under such circumstances, MIRAI acquired 4 properties in total: "Ehime Building/Hiroshima (acquisition price: 2,780 million yen)",

"Tsurumi Fuga 1 (acquisition price: 5,300 million yen)" , "BIGMOTOR Ginan (land) (acquisition price: 1,080 million yen)" on January

12, 2022, and "Yokohama-Daikokucho Maintenance Center (land) (acquisition price: 1,490 million yen)" on March 25, 2022. As a result,

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as of the end of the 12th fiscal period, MIRAI had 38 properties under management, with a total acquisition price of 164,554 million yen, a total leasable area of 372,290.09 sqm, and occupancy rate of 98.1%.

(iii) Overview of Fund Procurement

During this fiscal period under review, MIRAI raised 4,746 million yen by issuance of new investment units through a public offering (104,000 units) on December 24, 2021 and 237 million yen by a third-party allotment (5,200 units) on January 25, 2022. As a result, the balance of unitholders' capital as of the end of the 12th fiscal period was 78,499 million yen and the total number of outstanding investment units was 1,771,440 units. MIRAI borrowed long-term borrowings of 8,800 million yen and issued #5th Investment Corporation Bond of 1,200 million yen on November 30, 2021 to repay borrowings of 10,000 million yen maturing on the same day. In addition, MIRAI borrowed 4,000 million yen in long-term borrowings on January 12, 2022 and 1,300 million yen in long-term borrowings on March 25, 2022 to fund the acquisition of real estate trust beneficiaries. The balance of borrowings and investment corporation bonds as of the end of the 12th fiscal period was 84,000 million yen (of which 7,000 million yen was current portion of long- term borrowings, 70,800 million yen was long-term borrowings, and 6,200 million yen was investment corporation bonds).

For the purpose of securing flexible and stable fund procurement and structuring an even stronger financial base, MIRAI has established a commitment line with a maximum borrowing amount of 3,000 million yen (the balance of unexercised credit line as of the date of this document is 3,000 million yen).

(iv) Operating Results and Distributions

As a result of the above operation, MIRAI recorded operating revenue of 5,275 million yen, operating income of 2,547 million yen, ordinary income of 2,245 million yen, and net income of 2,244 million yen for the 12th fiscal period.

Profit distributions for the current fiscal period (excluding distributions in excess of earnings) shall be made in accordance with the distribution policy set forth in the Articles of MIRAI and in accordance with Article 67.15 of the Act on Special Measures Concerning Taxation (Law No. 26 of 1957, including subsequent amendments. hereinafter the "Act on Special Measures Concerning Taxation"), MIRAI decided to distribute 2,244,414,480 yen, which is the entire amount after deducting the reversal of the provision for adjustment of temporary differences, etc. (as defined in Article 2, Paragraph 2, Item 30 of the Rules of Account Settlement of Investment Corporations) from the income as defined in Article 136, Paragraph 1 of the AITIC, except for fractions of less than one yen, in an attempt to make profit distributions tax-deductible. As a result of the above, the distributions per investment units for the fiscal period under review (excluding distributions in excess of earnings) was 1,267 yen.

(3) Status of Capital Increase, etc.

Changes in the total number of outstanding investment units and unitholders' capital over the past five years are as follows.

									Total number of outstanding investment units				Unitholders' capital (Thousand yen) (Note 1)
	Date				Summary					(units)				Remarks
							Changes							Changes				Balance
											Balance
	May 23, 2018			Capital increase through public offering		43,300		337,050			7,395,250			59,287,585				(Note 2)
	June 12, 2018				Capital increase through third-party allotment				2,160			339,210				368,908				59,656,493				(Note 3)
	November 1, 2018			Capital increase through public offering		53,500		392,710			8,965,583			68,622,077				(Note 4)
	November 27,				Capital increase through third-party allotment				2,700			395,410				452,468				69,074,546				(Note 5)
	2018
	May 1, 2019			Split of investment units		1,186,230		1,581,640			-			69,074,546				(Note 6)
	December 24,				Capital increase through public offering				76,500			1,658,140				4,215,609				73,290,155				(Note 7)
	2019
	January 21, 2020			Capital increase through third-party allotment		4,100		1,662,240			225,934			73,516,089				(Note 8)
	December 24,				Capital increase through public offering				104,000			1,766,240				4,746,456				78,262,545				(Note 9)
	2021
	January 25, 2022			Capital increase through third-party allotment		5,200		1,771,440			237,322			78,499,868				(Note 10)

(Note 1) Changes in unitholders' capital due to the implementation of distributions in excess of earnings related to the reserve for adjustment of temporary differences, etc. have not been taken into account.

(Note 2) New investment units were issued at the price of 176,962 yen per unit (paid-in amount: 170,791 yen) through a public offering for the acquisition of new properties, etc.

(Note 3) New investment units were issued at the price of 170,791 yen per unit through third-party allotment in connection with a public offering for the acquisition of new properties, etc.

(Note 4) New investment units were issued at the price of 173,452 yen per unit (paid-in amount: 167,581 yen) through a public offering for the acquisition of new properties, etc.

(Note 5) New investment units were issued at the price of 167,581 yen per unit through third-party allotment in connection with a public offering for the acquisition of new properties, etc.

(Note 6) MIRAI conducted a four-for-one unit split with April 30, 2019 as the record date and May 1, 2019 as the effective date.

(Note 7) New investment units were issued at the price of 57,037 yen per unit (paid-in amount of 55,106 yen) through a public offering for the acquisition of new properties, etc.

(Note 8) New investment units were issued at the price of 55,106 yen per unit through third-party allotment in connection with a public offering for the acquisition of new properties, etc.

(Note 9) New investment units were issued at the price of 47,238 yen per unit (paid-in amount of 45,639 yen) through a public offering for the acquisition of new properties, etc.

(Note 10) New investment units were issued at the price of 45,639 yen per unit through third-party allotment in connection with a public offering for the acquisition of new properties, etc.

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