August 2019 Fiscal Period Presentation Material...Code ：3492. August 2019 Fiscal Period ....

Code：3492

August 2019 Fiscal Period Presentation MaterialOctober 2019

Contents

Executive Summary1. Public Offering Summary

• Public Offering Highlight• Summary of Assets Acquired• Portfolio Summary• DPU and NAV Growth

2. 3rd Fiscal Period Results• 3rd Fiscal Period Financial Results Highlight• Results of Asset Management• Internal Growth Initiatives• Financial Highlights• LTV Control• Unitholders’ Composition• ESG Initiatives

3. 4th and 5th Fiscal Period Forecasts• Financial Forecasts for 4th and 5th Fiscal

Period • Action Plans• Pipeline from Takara Leben• Portfolio Quality Improvement• Current Status on Mid-Term DPU Target

4. Appendix• Occupancy Rates• Appraisal Value (As of August 31, 2019)• 3rd Fiscal Period Balance Sheets• 3rd Fiscal Period Statements of

Income/Statements of Cashflow• Profit and Loss by Property• New Acquisitions• Financial Summary

82,000

86,000

90,000

94,000

98,000

102,000

106,000

110,000

114,000

118,000

122,000

126,000

130,000

134,000

2018/7/26 2018/9/14 2018/11/3 2018/12/23 2019/2/11 2019/4/2 2019/5/22 2019/7/11 2019/8/31 2019/10/20

3

Executive Summary – Continuously Implemented Initiatives

Consistently implemented initiatives since the listing The Initiatives for portfolio quality improvement

Continuously Implemented Initiatives

PO Price：117,000 JPY

TSE REIT Index

TLR’s Unit price

By leveraging its unique multi-sponsor formation, TLR consistently implemented measures to improve unitholder value

Asset Replacement1 4 6

321

4

5

6

Continuous implementation based on the mid-to long-term strategy, and portfolio quality

improvement and expansion

Acquired the silent partnership equity interest (100 million yen) to expand external growth opportunities Almost Blue Kaden Sumairu Kan

YAMADA Matsuyama Toiyacho

Kaden Sumairu Kan YAMADA Kobe Tarumi (Land)

Acquisition of the silent partnership

equity interest(April 24, 2019)

Acquired Dormy Inn Morioka for 2.5 billion yen

Acquisition of a new property(June 28, 2019)

Alliance with Kasumigaseki Capital Co., Ltd. based on the strategic partnership Diversification of

asset classes Diversification of

property developers Expansion of external

growth opportunities

Conclusion of a pipeline support

contract(April 12, 2019)

Acquired TA ShonanKugenumakaigan for 500 million yen

Acquisition of a new property

(March 28, 2019)

3 4

Disposed TTS Minami Aoyama Building (sale price: 5.3 billion yen)

Disposition of a property

(August & September)

21 Acquisition of environmental

certification(July & August)

Acquired DBJ Green Building certification for NT Building (July)

5 6

Acquired BELS for Dormy Inn Morioka and Dormy Inn Matsuyama (August)

Assets Acquired (September 3, 2019)

LUXENA HEIWADAI LUXENA KACHIDOKI

Arietta Hotel Nagoya

Kaden Sumairu Kan YAMADAMatsuyama Toiyacho

Kaden Sumairu Kan YAMADAKobe Tarumi (Land)

Almost Blue

＜Acquisition＞

TA ShonanKugenumakaigan

Dormy Inn Morioka

＜Disposition＞

TTS Minami Aoyama Building

77

IPO Price ： 96,000 JPY

4

Business Strategy Summary of the Initiatives

Consistent implementation based on the mid- to long-term strategy Increased diversification of portfolio and earnings stability based on

external growth and asset replacement Development of a well-balanced portfolio and growth in assets under

management, driven primarily by acquiring assets developed by Takara Leben

1

Improvement of portfolio quality Achieving a more balanced portfolio in terms of

asset allocation and building age Focusing more on assets developed by Takara

Leben Improving portfolio quality by asset replacement

1

Clarification of each Sponsor’s role Purchasing stable, high-quality and newly

developed assets from Takara Leben Selectively purchasing assets from PAG in order

to complement assets from Takara Leben in terms of location and size

Involvement of all 4 Sponsors in New Acquisitions 3 of 6 Assets Acquired are developed by Takara Leben Acquired “Almost Blue”, located in Minami-Aoyama, Minato-ku through

PAG Acquired Dormy Inn Morioka with Kyoritsu Maintenance, a highly

experienced hotel operator, as a tenant Acquired assets with Yamada Denki as a tenant

22

Internal growth and other initiatives Obtaining credit rating Aligning the interests of unitholders with those

of the officers and employees of the Asset Manager by introducing an employee unit purchase plan

Taking proactive ESG initiatives including participation in GRESB Certification

Consistent implementation of internal growth strategy and ESG initiatives Enhanced profitability by improving occupancy rates, increasing rents

and reducing costs Improvement of unitholder value and promotion of social interests by

implementing environmental, social and governance measures Acquired DBJ Green Building Certification

33

Executive Summary – Continuously Implemented Initiatives

LUXENA HEIWADAI

1. Public Offering Summary

Office81%

Office56%

Residence9%

Residence13%

Hotel7%

Hotel11%

Retail and other assets3%

Retail and other assets

20%

Building Age of Portfolio

20.9 years

Structure Domestic offering

Units Issued 117,000 units

Payment Date September 2, 2019

Issued Price 117,000 JPY per unit

Amount to be paid 112,800 JPY per unit

Total amount to be paid 13,197 million JPY

Usage Acquisition of 6 properties and repayment of loan

Public Offering Highlight – First Offering Since IPO

Offering Summary

6

Proceed from debt finance, equity finance, and disposal asset was used for acquisition of properties, repayment of debt and distribution. Remaining is planned to use for another acquisition

Debt Finance13.4 billion JPY

Equity Finance13.1 billion JPY

Repayment of Loan5.9 billion JPY

Proceed from Disposal of Asset

5.3 billon JPY

Acquisition of 6 properties

（Total 22.3 billon JPY）

<Finance> <Usage>

Usage of Fund

Acquisition Effect on Portfolio Diversification of Portfolio

26.3 yearsLowering av rage

building ge

IPO

PO

Investment for Growth

3rd Period Distribution1.6 billon JPY

7

Summary of Assets Acquired TLR acquired 6 assets, all developed or operated by the Sponsors, for 22.3 billion JPY through the Initiatives 3 assets out of the 6 assets acquired are developed by Takara Leben, the main Sponsor, and are expected to improve the

portfolio quality by lowering average building age and improving NOI yield

Assets Acquired

Kaden Sumairu Kan YAMADAMatsuyama Toiyacho

Kaden Sumairu Kan YAMADAKobe Tarumi (Land)

Almost BlueArietta Hotel Nagoya

LUXENA HEIWADAI LUXENA KACHIDOKI

RetailRetail

RetailHotel

ResidenceResidence 22.3 billion JPY

Total acquisition price

100%

Sponsor involvement ratio

3 assets(out of 6 assets)

# of assets developed by Takara Leben

24.2 billion JPY 7.9 years4.8% / 4.4%

Total appraisal value Average building ageAverage appraisal NOI /

Average appraisal NOI yield after depreciation

Building name Acquisition price Asset type Acquisition route Tenant / Operator

Assetsto be

Acquired

LUXENA HEIWADAI 3,910 million JPY Residence Takara Leben Individual, etc.

LUXENA KACHIDOKI 1,120 million JPY Residence Takara Leben Individual

Arietta Hotel Nagoya 2,500 million JPY Hotel Takara Leben RENAISSANCE CO.,LTD.

Almost Blue 6,520 million JPY Retail PAG ARFLEX JAPAN LTD. , etc.

Kaden Sumairu Kan YAMADAMatsuyama Toiyacho 4,030 million JPY Retail Asset Manager YAMADA DENKI

Co.,LTD.

Kaden Sumairu Kan YAMADAKobe Tarumi (Land) 4,250 million JPY Retail Asset Manager YAMADA DENKI

Co.,LTD.

8

Portfolio Summary

Expand AUM to 85.6 billion JPY through the Initiatives

Improve portfolio quality by Asset Replacement

Enhance unitholder value by acquiring highly profitable assets

As of the end of the FP # 2019/2

(2nd FP)

The InitiativesAfter the InitiativesAssets Acquired

in the 3rd FPAsset

DisposedAssets

Acquired

Number of assets 27 2 1 6 34

Total cquisition price (100 mn JPY) 643 30 40 223 856

Total appraisal value (100 mn JPY) 692 31 44 242 922

Unrealized gain (100 mn JPY) 42 1 3 18 58

(Average) Appraisal NOI yield (%) 5.1 5.2 3.9 4.8 5.1

(Average) Appraisal NOI yield after depreciation (%) 4.4 3.3 3.8 4.4 4.4

(Average) Occupancy rate (%) 98.3 100.0 100.0 99.8 98.1

(Average) Building age (years) 26.3 0.7 35.2 7.9 20.8

Appraisal LTV (%) 48.0 47.0

NAV per unit (yen) 104,710 109,987

9

DPU and NAV Growth

DPU of 4th Fiscal Period and 5th Fiscal Period are expected to be 3,600 JPY per unit and 3,100 JPY per unit, respectively NAV per unit is expected to increase up to 109,987 JPY

August 2019（3rd FP）Actual

August 2020（5th FP）Forecast

February 2020（4th FP）Forecast

3,047JPY

1,646JPY

4,693JPY

3,066JPY

86JPY

448JPY

3,100JPY

3,600JPY

DPU Trend NAV trend

101,345 JPY

104,710JPY

Effect of Disposition of TTS Minami

Aoyama529 JPY

109,987JPY

104,180JPY

August 2018（1st FP）Actual

February 2019（2nd FP）Actual

August 2019（3rd FP）Actual

After PO(Forecast）

February 2019（2nd FP）

Assumption

104,539JPY

DPU excluding gain from disposal of assetDPU impact from property tax and city planning taxDPU of gain from disposal of asset

Stabilized DPU is expected to increase due to the acquisition of 6 properties instead of the disposition of asset

＋0.6％

＋1.1％

＋5.5％

LUXENA KACHIDOKI

2. 3rd Fiscal Period Results

3rd period

Forecast Actual Difference Factors

Actual asset management period (days) 184 184 －－

Operating revenue （million JPY） 2,866 2,916 +49+31 Change in disclosure method of disposal gain+ 7 Increased in restoration revenue+10 Others

Operating income (million JPY) 1,733 1,760 +26 +49 Increased in operating revenue▲23 Increased in operating expenses

Ordinary income (million JPY) 1,590 1,620 +29 +26 Increased in operating income+3 Decreased in finance cost

Net income (million JPY) 1,589 1,619 +29Distribution per unit (including distribution in excess of earnings）(JPY) 4,600 4,693 +93 Number of unit outstanding：345,500 units

(Note1) Distributions in excess of earnings consist only of allowance for temporary difference adjustment, such as valuation losses on interest rate swaps, and excess of depreciation allowance, not the refund of investment for tax purposes

3rd fiscal period net income forecast vs actual analysis

3rd Fiscal Period Financial Results Highlight

11

① Diff. in operating revenue ＋49＋31 Effect of gross up of gain of disposal of asset by

reclassification of the disposition related expense to SGA＋ 7 Increased in restoration revenue＋10 Dividend from investment in bridge SPC

② Diff. in operating expenses ▲23▲16 Increased in rental expenses▲31 Change in disclosure method on disposal related expenses＋24 Decreased in non-deductible consumption tax

③ Diff. in non-operating income ＋ 3＋ 3 Decreased in finance cost

Major factors of difference between forecast and actual①

②③

3rd fiscal period forecast vs actual analysis

Actual

2nd FP 3rd FP Difference Factors

Actual asset management period (days) 184 184 －－

Operating revenue （million JPY） 2,129 2,916 +787 +46 Effect of properties acquired in 3rd FP+738 Gain from disposal asset

Operating income (million JPY) 1,311 1,760 +448+787 Increased in operating revenue▲293 Increased in operating expenses▲ 46 Increased in SGA

Ordinary income (million JPY) 1,172 1,620 +447

Net income (million JPY) 1,171 1,619 +447Distribution per unit (including distribution in excess of earnings）(JPY) 3,398 4,693 +1,295 Number of unit outstanding：345,500 units

(Note1) Distributions in excess of earnings consist only of allowance for temporary difference adjustment, such as valuation losses on interest rate swaps, and excess of depreciation allowance, not the refund of investment for tax purposes

2nd fiscal period vs 3rd fiscal period net income actual analysis

3rd Fiscal Period Financial Results Highlight

12

① Diff. in operating revenue ＋787＋46 Effect of properties newly acquired in 3rd FP＋738 Gain from disposal asset (TTS Minami Aoyama)

+2 Dividend from investment in bridge SPC② Diff. in operating expenses ▲293

▲167 Started booking property tax as expenses▲95 Increased in repair expense in advance of schedule▲18 Increased in depreciation of newly acquired properties▲13 Others

③ Diff. in SGA ▲46▲25 Increased in AM fee▲17 Increased in non-deductible consumption tax▲4 Others

④ Diff. in non-operating income ▲1

Major factors of difference between 2nd FP and 3rd FP①

②

③

2nd fiscal period vs 3rd fiscal period actual analysis

④

Rent Trend

Occupancy Rates

Results of Asset Management ～ Stable Occupancy/Rent Raise

13

Increase

OfficeRenewal New Renewal New Renewal New

Residence Retail

Increase

Increase IncreaseIncrease

DecreaseDecrease Decrease

Residence: After moving season of March, occupancy rate recovered and stays steadily

Average Occupancy Rate of 3rd FP was 97.9％

16 million JPY per period of rent increase from office, residence, and retail new contract is expected

Rent increase still in trend

working

98.3% 98.1% 97.8% 97.7% 98.0% 97.6%

90.0%91.0%92.0%93.0%94.0%95.0%96.0%97.0%98.0%99.0%

100.0%

March April May June July August

Office Residence Hotel Retail Portfolio

Property number

Acquisition date 賃料 March April May June July August Note

Dormy Inn Matsuyama H-01 July 2018 Fixed 95.2% 92.7% 91.1% 92.3% 91.0% 96.8%

Hotel Sunshine Utsunomiya H-02 July 2018 Fixed 81.1% 80.1% 66.5% 69.5% 78.5% 68.1%

Dormy Inn Morioka H-03 June 2019 Fixed 92.9% 97.7% Opened in April 2019

Arietta Hotel Nagoya H-04 September 2019

Fixed and commission

Opened in April 2019

Results of Asset Management ～ Hotels

14

Dormy Inn MatsuyamaAcquired at IPO

Hotel Sunshine UtsunomiyaAcquired at IPO

Dormy Inn MoriokaAcquired in3rd FP（June 28, 2019）

Arietta Hotel NagoyaAcquired in 4th FP（September 3, 2019）

Dormy Inn Matsuyama, Dormy Inn Morioka and Arietta Hotel Nagoya were developed by Takara Leben.

Occupancy Rates

15

Internal Growth Initiatives – Capital Expenditure and Cost Reduction

List of assets with LED lighting installed in common areas (16 assets)

NT Building Sendai Nikko Building

Higashi-Ikebukuro Central Place Morioka Ekimae-dori Building

Nagoya Center Plaza Building EME Koriyama Building

Amare Tokaidori Yamagata Ekimae-dori Building

SAMTY Shin-Osaka Center Building Benefis Hakata-Minami Grand Suite

Hakata Gion Building LUXENA HIGASHI KOENJI

Chuo Bakuromachi Building Alpha Space Toritsudai

L.Biz Sendai J City Hatchobori

Investment into LED instruments and switching electric power supplier bear fruits Utility expenses decreased by 13 million JPY since 2nd FP

Internal growth by installing LED lighting in common areas Internal growth by switching to a New Power supplier

Installing LED lighting in common areas: NT Building Switching to a New Power supplier: Hakata Gion Building

List of assets which have switched toa New Power supplier (16 assets)

NT Building Sendai Nikko Building

Higashi-Ikebukuro Central Place Morioka Ekimae-dori Building

Nagoya Center Plaza Building Nagano Central Building

Omiya NSD Building EME Koriyama Building

SAMTY Shin-Osaka Center Building Utsunomiya Central Building

Hakata Gion Building Yamagata Ekimae-dori Building

Shinsaibashi Building Prio Daimyo II

L.Biz Sendai TA Shonan Kugenumakaigan

Financial Highlights

16

Maturity Ladder

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

第1期第2期第3期第4期第5期第6期第7期第8期第9期第10期第11期第12期第13期

（ JPY million ）

Repaid borrowing

Balance as of September 30,2019

Longer maturityfor 4years and

5years

Lenders syndicated by Sumitomo Mitsui Banking Corporation (as of October 15, 2019)

Total borrowing

amount43,400

million JPY

1st FP 2nd FP 3rd FP 4th FP 5th FP 6th FP 7th FP 8th FP 9th FP 10th FP 11th FP 12th FP 13th FP

Short-term borrowing

5,980 million JPY

LTV Control ～ Accelerate Growth by Flexible Financial Strategy

17

LTV trend

⑤

⑦

The end of the 2nd FP

The end of the 3rd FP

As of October 15,2019

Interest-bearingdebt 33,260 million JPY 35,980 million JPY 43,400 million JPY

Appraisal LTV 48.0% 51.9% 47.0%

Average interest rate 0.49% 0.47% 0.57%

Fixed interest rate ratio 90.2% 83.4% 98.8%

Long-term loans ratio 90.2% 83.4% 100.0%

Using fund flexibly, acquired properties to increase DPUAcquired TA Shonan Kugenumakaigan with cash on hand (March) → Acquired Dormy Inn Morioka with 100% leverage (June) → Acquired 6 properties with equity finance

Aiming LTV level around middle of 40%

Accelerate external growth with strategic financing

Transition of financial index

48.0%

47.6%

49.7%

47.0%

45.5%

46.0%

46.5%

47.0%

47.5%

48.0%

48.5%

49.0%

49.5%

50.0%

2019/2/28 2019/3/28 2019/6/28 2019/10/15

Acquired Dormy Inn Morioka with 100% leverage

2nd FP end

Acquired TA Shonan Kugenumakaigan with cash on hand After Public Offering

Breakdown by unitsName Units

Owned

% of units

issued

1 The Master Trust Bank of Japan (Trust Account) 24,043 7.0

2 Japan Trustee Services Bank, Ltd. (Trust Account) 19,533 5.7

3 Takara Leben Co., Ltd 18,700 5.4

4 PAG JREIT CO-INVEST LIMITED 10,400 3.0

5 The Nomura Trust and Banking Co., Ltd. (Trust Account) 7,710 2.2

6 Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. 6,923 2.0

7 Kinki Sangyo Credit Union 5,590 1.6

8 MLI STOCK LOAN 5,357 1.6

9 Leben Community Co., Ltd. 5,200 1.5

10 Trust & Custody Services Bank, Ltd (Trust Account) 4,502 1.3

Major Unitholders（Top 10）

Unitholders’ Composition

18

Number of unitholders by owner1st period 2nd period 3rd period

Individuals 12,291 96.5% 14,827 97.1% 15,084 97.4%

Financial Institutions 33 0.3% 35 0.2% 40 0.3%

Brokerage firms 20 0.2% 26 0.2% 25 0.2%

Other domestic corporation 359 2.8% 335 2.2% 260 1.7%

Foreign corporation 36 0.3% 50 0.3% 74 0.5%

Total 12,739 100.0% 15,273 100.0% 15,483 100.0%

202,206

201,764

175,908

22,516

59,202

80,143

20,170

3,922

16,622

57,407

51,626

39,632

43,201

28,986

33,195

0% 20% 40% 60% 80% 100%

1st period

2nd period

3rd period

Individuals Financial Institutions Brokerage firmsOther domestic corporation Foreign corporation

Dormy Inn Morioka (August 8, 2019)

19

ESG Initiatives （Environment）

Acquisition of DBJ Green Building Certification Saving energy by adopting LED lighting in common areas(NT Building)

Environmental Measures

GRESB Real Estate Assessment 「Green Star」

Active efforts to save energy and resources by adopting LED lighting in common areas, installing automatic faucets and reuse of rainwater, etc.

Realize a pillar-free space without installing a pillar inside, and consider the convenience and comfort of the office user, such as exclusive part securing a sufficient ceiling height and excellent in transportation convenience

Evaluation Points

NT Building

Acquisition of BELS

Dormy Inn Matsuyama (August 9, 2019) Takara Leben Real Estate Investment Corporation (the “Investment

Corporation”) announces that it has received a “Green Star” rating in the 2019 GRESB Real Estate Assessment. The GRESB ‘Green Star’ is a rating for entities who achieved high performance of the environment, society, and governance (ESG) both in “Management and Policy” and “Implementation & Measurement” dimensions of the Assessment.

20

ESG Initiatives （Society）

Installation of free footbath for guests, tourists and local residents in Dormy Inn Matsuyama

Open space for surrounding communities ( Nagoya Center Plaza Building)

Invite mobile bento stores to improve convenience in surrounding office areas (Omiya NSD Building)

Social Initiatives Dormy Inn Matsuyama

Nagoya Center Plaza Building

Omiya NSD Building

21

TLR will further strive to enhance governance aiming to maximize unitholder value

TLR does not pay any disposition fee to the Asset Manager in connection

with a property disposition on the basis that capital gains from a property

disposition, if any, reflected in our net income before taxes, which increases

the asset management fee, should provide sufficient compensation to the

Asset Manager for its assistance on the disposition of assets

TLR accepts same boat investment from the Sponsors mentioned below

PAG Group:approx. 998 million JPY

Takara Leben Group:approx. 1,880 million JPY

Yamada Denki:approx. 96 million JPY

Management fee structure to maximize investors' interests Same boat investment

Fee structure Calculation method Maximum

Asset management

fee I

Total assets for the preceding fiscal year ×Annual rate of 0.3% (maximum rate)

Total assets×

Annual rate of 0.5%Asset

managementfee II

Net income before taxes and deduction of asset management fee × 10%(maximum rate)

Acquisition fee Acquisition price ×1.0% (maximum rate) -

Total: approx. 2,974 million JPY

ESG Initiatives （Disclosure/Governance)

Disclosure/Communication Roadshow at the public offering: Held 49 meeting with domestic/overseas

institutional investors

Access to individual investors through net roadshow tools


3. 4th and 5th Fiscal Period Forecasts

Financial Forecasts for 4th and 5th Fiscal Periods

3rd FP Forecasts

Actual 4th FP Difference Factors

Asset management period (days) 184 182 -

Operating revenue（million JPY） 2,916 3,025 +109 ▲420 Decreased in gain from disposal property＋531 Effect of acquisitions of properties, etc.

Operating income (million JPY) 1,760 1,878 +118＋109 Increased in operating revenue▲72 Effect of acquisitions of properties, etc.

＋135 Decreased in operating expenses▲64 Increased in non-deductible consumption tax+10 Others

Ordinary income (million JPY) 1,620 1,666 +46＋118 Increased in operating income▲65 Increased in financial cost▲ 6 Increased in amortization of issuance costs

Net income (million JPY) 1,619 1,665 +45

DPU (including distribution in excess of earnings)(JPY) 4,693 3,600 ▲1,093 Number of unit outstanding：345,500 units

Attribution analysis of Net income

3rd period actual and 4th fiscal periods forecasts

23

(Note) Distributions in excess of earnings consist only of allowance for temporary difference adjustment, such as valuation losses on interest rate swaps, and excess of depreciation allowance, not the refund of investment for tax purposes.

Done

Operating Income

Decreased in gain from disposition

Effect of newly acquired properties

Decreased in profit due to disposition of property

Increased in profit of existing properties

Increased in SGA+64 Increased in non-deductible consumption

tax+65 Increased in financial cost + 6 Increased in amortization of issuance

cost

Due to the sales of property, including non-consumption taxable sales of land, decreased taxable revenues in 3rd and 4th period

Decreased in taxable revenue decreased in deductible consumption tax paid → Increased in non-deductible consumption tax

Raised consumption tax rate is one of the factors

Factors of increase in non-deductible consumption taxUnit: mn JPY

Forecasts

4th FP 5th FP Difference Factors

Asset management period (days) 182 184 －

Operating revenue（million JPY） 3,025 2,729 ▲296 ▲319 Decreased in disposal of property＋23 Increased in rent revenue

Operating income (million JPY) 1,878 1,640 ▲237▲296 Decreased in operating revenue＋82 Decreased in non-deductible consumption tax▲40 Start to book property tax of newly acquired properties＋13 Decreased in repair expenses＋４ Others

Ordinary income (million JPY) 1,666 1,435 ▲231 ▲237 Decreased in operating income＋6 Decreased in non-operating expenses

Net income (million JPY) 1,665 1,433 ▲231

DPU (including distribution in excess of earnings)(JPY) 3,600 3,100 ▲500 Number of unit outstanding：345,500 units

Unit: mn JPY

4th and 5th fiscal periods forecasts

24

Financial Forecasts for 4th and 5th Fiscal Periods

Attribution analysis of Net income

(Note) Distributions in excess of earnings consist only of allowance for temporary difference adjustment, such as valuation losses on interest rate swaps, and excess of depreciation allowance, not the refund of investment for tax purposes.

Decreased in disposal property

Increased in rent revenue

Changes in rental expenses▲40 Effect of property tax+13 Decreased in repair expenses

+4 Others

Decreased in non-deductible consumption tax

+6 Decreased in financial cost

Operating Income

－ Aiming at More Balanced Portfolio－ Focusing More on Properties from Takara Leben－ Expansion of Pipeline Support Agreement with New Support Company－ Enhancing Portfolio Quality by Replace Assets

1． Improvement of Portfolio Quality

2． Clarify Each Sponsor’s Role

3． Other Initiatives－ Improve profitability through Improvement in occupancy rate, Raise rent and Cost

reduction－ Credit Rating－ Same Boat Investment by Officers and Employees－ ESG Actions

－ Purchase from Newly Developed Properties from Takara Leben－ Strictly Select Properties from PAG such as located in where or Size Not

developed by Takara Leben

Action Plans

25

26

Pipeline from Takara LebenSolid external growth opportunities supported by Takara Leben

Usage Building name Location Completion Number of areas and rooms

Office (Tentative) L.Biz Suidobashi Chiyoda-ku Tokyo January 2020 9 areas

Residence

LUXENA NAGAREYAMA OHTAKANOMORI Nagareyama Chiba Completed 80 rooms + Shop

(Tentative) LUXENAMONZENNAKACHO Koto-ku Tokyo July 2020 85 rooms + Shop

(Tentative) LUXENA HIGASHIKANAGAWA Yokohama Kanagawa September 2020 90 rooms

(Tentative) LUXENAITABASHI Itabashi-ku Tokyo August 2020 36 rooms

(Tentative) LUXENA KADOMA Kadoma Osaka December 2020 154 rooms

(Tentative) LUXENA OKACHIMACHI Taito-ku Tokyo March 2021 57 rooms

(Tentative) LUXENA TODAKOEN Toda Saitama March 2021 50 rooms

HotelDormy Inn Mito Mito Ibaraki October 2019 264 rooms

Kyoto Gojo Horikawa Hotel PJ Kyoto Kyoto December 2019 118 rooms

Retail and

others

Onomichi PJ Onomichi Hiroshima 2020 Fall -

Gokiso PJ Nagoya Aichi October 2023 1 area

LUXENA NAGAREYAMA OHTAKANOMORI

(Tentative) LUXENA MONZENNAKACHO

(Tentative) L.Biz Suidobashi Dormy Inn Mito

30.1billion yen

100billion yen

5.2billion yen

50billion yen

64.8billion yen

150billion yen

End of March 2019 Midterm target

Infrastructure fund Private J-REIT

Takara Leben Group’s AUM targetPipeline under development by Takara Leben (as of October 15, 2019)

Note1:TLR has obtained the preferential negotiation rights with respect to assets, however, there is no guarantee that those assets will be actually purchased. The number of units, rooms or areas is subject to change in the future.

Note2: The illustration is based on the assumed state of the new buildings and may differ from actual appearance of property following completion.

7

8

18

Under 10 years

Over 10 to 20years

Over 20 years

16

8

4

6

Office

Residential

Hotel

Retail

17

15

6

8

Office

Residential

Hotel

Retail

18

7

20

Under 10 years

Over 10 to 20years

Over 20 years

Achieving a more balanced portfolio Focusing more on assets developed by Takara Leben

Current (34 properties)

Asset Allocation Average Portfolio Building AgeCurrent (Portfolio average

19.4 years)(Note)

After the initiatives(Portfolio average 18.0 years)(Note)

After the initiatives(46 properties)

Portfolio Quality Improvement

(Note) Calculated based on average of number of properties 27

Mid-term distribution target: 3,500 JPY

3,398JPY

3,500JPY

Mid-term Target

479JPY

（Property tax effect）

Current Status on Mid-Term DPU Target

3,300 JPY generated solely from Internal Growth Targeted 3,500 JPY with External Growth in addition to internal growth External Growth aiming at expansion of unitholders’ value

28

Improvement of Distribution

Internal Growth

Filling Rent Gap Improve

Occupancy Operation Cost

Reduction

Other Cost Reduction

＋External Growth

86JPY

448JPY

4,693JPY

1,646JPY

3,600JPY

Property tax effect

Disposal property effect

3,300JPY

3,100JPY

3,066JPY

3,047JPY2,919

JPY

2nd period(actual)

3rd period (actual)

4th period(forecast)

5th period(forecast)

Dormy Inn Morioka

4. Appendix

Usage Property number Property name 2nd period

endEnd of March

End of April

End of May

End of June

End of July

3rd period end

Office

O-01 NT Building 97.3 100.0 100.0 100.0 100.0 100.0 100.0O-02 Higashi-Ikebukuro Central Place 100.0 100.0 100.0 100.0 100.0 100.0 100.0O-03 Nagoya Center Plaza Building 100.0 100.0 100.0 100.0 100.0 99.7 99.7 O-04 TTS Minami Aoyama Building 100.0 100.0 89.3 100.0 100.0 100.0 100.0 O-05 Omiya NSD Building 100.0 100.0 97.8 97.8 97.8 97.8 97.8O-06 SAMTY Shin-Osaka Center Building 100.0 100.0 100.0 100.0 100.0 100.0 100.0 O-07 Hakata Gion Building 100.0 100.0 100.0 100.0 100.0 100.0 100.0 O-08 Chuo Bakuromachi Building 97.6 100.0 100.0 100.0 100.0 100.0 97.6 O-09 L.Biz Jimbocho 100.0 100.0 100.0 100.0 100.0 100.0 100.0 O-10 Shinsaibashi Building 100.0 83.3 83.3 83.3 83.3 100.0 100.0 O-11 L.Biz Sendai 97.8 100.0 100.0 100.0 100.0 100.0 100.0 O-12 Sendai Nikko Building 100.0 100.0 100.0 100.0 100.0 100.0 87.7 O-13 Morioka Ekimae-dori Building 95.0 95.0 95.0 95.0 95.0 95.0 95.0 O-14 Nagano Central Building 94.4 94.4 90.3 90.3 90.3 90.3 85.8O-15 EME Koriyama Building 93.3 93.3 93.3 93.3 93.3 93.3 93.3 O-16 Utsunomiya Central Building 90.3 90.3 94.8 94.8 94.8 90.7 98.0 O-17 Yamagata Ekimae-dori Building 93.3 93.3 83.3 76.9 76.9 72.9 72.9

Total of Office 97.7 97.8 97.7 97.5 97.5 97.5 96.7

Residence

R-01 Amare Tokaidori 94.4 94.8 94.8 96.8 93.8 97.0 96.0 R-02 Dormy Ukimafunado 100.0 100.0 100.0 100.0 100.0 100.0 100.0 R-03 Benefis Hakata-Minami Grand Suite 97.5 96.3 94.2 91.7 95.4 94.6 94.6R-04 LUXENA HIGASHI-KOENJI 98.2 100.0 96.5 94.0 90.3 97.0 97.0R-05 Alpha Space Toritsudai 100.0 100.0 100.0 100.0 100.0 100.0 100.0R-06 J City Hatchobori 98.0 100.0 100.0 95.9 93.6 94.7 99.0

Total of Residence 96.4 98.0 97.2 96.1 95.3 96.8 97.5

Hotel

H-01 Dormy Inn Matsuyama 100.0 100.0 89.3 100.0 100.0 100.0 100.0 H-02 Hotel Sunshine Utsunomiya 100.0 100.0 100.0 100.0 100.0 100.0 100.0 H-03 Dormy Inn Morioka 100.0 100.0 100.0

Total of Hotel 100.0 100.0 100.0 100.0 100.0 100.0 100.0Retail and

other assets

C-01 Prio Daimyo II 100.0 100.0 89.3 100.0 100.0 100.0 100.0 C-02 Co-op Sapporo Shunko 100.0 100.0 100.0 100.0 100.0 100.0 100.0 C-03 TA Shonan Kugenumakaigan 100.0 89.3 100.0 100.0 100.0 100.0

Total of Retail and Other assets 100.0 100.0 100.0 100.0 100.0 100.0 100.0Total of the Portfolio 98.3 98.3 98.1 97.8 97.7 98.0 97.6

(Unit：％)

Occupancy Rates

30TLR acquired Dormy Inn Morioka at June 28, 2019.

Usage Property number Property name

Acquisition price

（in million）

Period end book value（in million）

Appraisal value

（in million）

Direct Income Method Discounted Cash FlowAppraisal

NOI（in million）

Appraisal value

Period Aug. 2018

（in million）

Revenue Price

（in million）

Cap rate（％）

Revenue Price

（in million）

Discountrate（％）

Terminal cap rate（％）

Office

O-01 NT Building 12,350 12,437 13,300 13,600 4.0 13,000 3.7 4.2 565 13,300O-02 Higashi-Ikebukuro Central Place 9,780 9,889 10,400 10,600 4.0 10,200 3.8 4.2 430 10,400O-03 Nagoya Center Plaza Building 4,870 4,977 4,910 4,970 5.0 4,840 4.8 5.2 269 4,890O-04 TTS Minami Aoyama Building 1,227 1,241 1,290 1,320 3.6 1,280 3.7 3.8 48 1,320O-05 Omiya NSD Building 3,493 3,529 3,840 3,950 4.7 3,790 4.5 4.9 193 3,820O-06 SAMTY Shin-Osaka Center Building 3,450 3,450 3,620 3,750 4.4 3,570 4.2 4.6 178 3,620O-07 Hakata Gion Building 2,500 2,512 2,620 2,650 4.4 2,600 4.2 4.6 119 2,600O-08 Chuo Bakuromachi Building 1,485 1,487 1,900 1,930 4.3 1,890 4.1 4.5 91 1,900O-09 L.Biz Jimbocho 1,006 1,016 1,140 1,170 3.8 1,130 3.9 4.0 45 1,140O-10 Shinsaibashi Building 772 764 805 829 4.3 795 4.1 4.5 40 805O-11 L.Biz Sendai 1,680 1,681 1,770 1,810 4.8 1,730 4.6 5.0 93 1,770O-12 Sendai Nikko Building 1,740 1,771 1,790 1,850 4.4 1,770 4.5 4.6 88 1,790O-13 Morioka Ekimae-dori Building 1,480 1,489 1,680 1,680 5.8 1,680 5.6 6.0 104 1,680O-14 Nagano Central Building 898 933 1,060 1,080 5.7 1,050 5.5 5.9 69 1,070O-15 EME Koriyama Building 900 913 1,030 1,020 5.7 1,030 5.5 5.9 65 1,030O-16 Utsunomiya Central Building 771 785 988 1,010 5.5 979 5.3 5.7 67 988O-17 Yamagata Ekimae-dori Building 600 610 748 768 5.7 739 5.5 5.9 49 783

Total / Average of Office 49,003 49,484 52,891 53,987 - 52,073 - - 2,522 52,906

Residence

R-01 Amare Tokaidori 1,100 1,099 1,240 1,250 4.6 1,230 4.7 4.8 60 1,240R-02 Dormy Ukimafunado 1,080 1,092 1,120 1,130 4.6 1,100 4.4 4.8 57 1,120R-03 Benefis Hakata-Minami Grand Suite 1,032 1,034 1,100 1,110 4.7 1,090 4.8 4.9 55 1,100R-04 LUXENA HIGASHI-KOENJI 1,060 1,069 1,080 1,100 4.0 1,070 4.1 4.2 45 1,070R-05 Alpha Space Toritsudai 589 597 608 619 4.0 603 3.8 4.2 27 608R-06 J City Hatchobori 1,200 1,209 1,330 1,340 4.8 1,320 4.9 5.0 66 1,360

Total / Average of Residence 6,061 6,100 6,478 6,549 - 6,413 - - 312 6,498

HotelH-01 Dormy Inn Matsuyama 2,427 2,406 2,550 2,510 5.0 2,560 4.8 5.2 131 2,500H-02 Hotel Sunshine Utsunomiya 2,000 2,030 2,100 2,090 4.9 2,100 4.7 5.1 113 2,100H-03 Dormy Inn Morioka 2,520 2,548 2,550 2,580 4.9 2,530 4.7 5.1 129 -

Total / Average of Hotel 6,947 6,984 7,200 7,180 - 7,190 - - 374 4,600Retail and

other assets

C-01 Prio Daimyo II 980 993 1,090 1,120 4.1 1,080 3.9 4.3 46 1,090C-02 Co-op Sapporo Shunko 1,036 1,034 1,100 1,100 6.2 1,100 6.0 6.4 70 1,100C-03 TA Shonan Kugenumakaigan 500 511 573 581 4.7 569 4.5 4.9 27 -

Total / Average of Retail and Other assets 2,516 2,538 2,763 2,801 - 2,749 - - 144 2,190Total of the Portfolio 64,527 65,118 69,332 70,517 - 68,425 - - 3,355 66,194

Appraisal Value（As of August 31, 2019）

31

Assets 2nd Period 3rd PeriodCurrent assets

Cash and deposits 3,238,605 6,081,427Cash and deposits in trust 954,028 1,006,748Operating accounts receivable 74,832 75,299Prepaid expenses 82,983 82,656Consumption tax receivable - 144,784Other current assets 1,624 14,602Total current assets 4,352,074 7,405,518

Fixed assetsProperty and equipment

Building, net - 2,254,133Structures, net - 9,582Land - 795,779Building in trust, net 16,689,967 16,489,335Structures in trust, net 20,269 21,756Tools, furniture and fixtures in trust 4,668 14,088Land in trust 48,291,144 45,529,850Construction in progress in trust 10,692 4,000Total property and equipment, net 65,016,742 65,118,526

Intangible assetsSoftware 5,225 4,675

Intangible assets, net 5,225 4,675Investment and other assets

Investment securities - 103,043Long-term prepaid expenses 78,921 46,912Deferred tax assets 16 21Security deposits 11,000 11,000Other assts 10 10Total Investment and other assets 89,947 160,986

Total fixed assets 65,111,915 65,284,188Deferred assets

Investment unit issuance costs 59,811 46,994Total deferred assets 59,811 46,994

Total assets 69,523,801 72,736,701

Liabilities 2nd Period 3rd PeriodCurrent liabilities

Operating accounts payable 133,538 350,998Short-term loans 3,260,000 5,980,000Current portion of long-term loans - 15,000,000Accounts payable 129,366 163,964Accrued expenses 11,853 13,167Income tax payable 939 1,035Accrued consumption tax 107,459 -Advances received 23,507 12,744Other current liabilities 632 4,631Total current liabilities 3,667,298 21,526,540

Non-current liabilitiesLong-term loans 30,000,000 15,000,000Tenant leasehold and security deposits - 90,552Tenant leasehold and security deposits in trust 2,603,603 2,422,827Asset retirement obligations 89,338 88,015Derivatives liabilities 80,286 82,588Total non-current liabilities 32,773,227 17,683,984

Total liabilities 36,440,526 39,210,524Net assets 2nd Period 3rd PeriodUnitholders’ equity

Unitholders' capital 31,991,672 31,991,672Deduction from unitholders' capital

Allowance for temporary difference adjustment △14,165 △ 82,574Total deduction from unitholders' capital △14,165 △ 82,574

Unitholders' capital, net 31,977,506 31,909,097Surplus

Retained earnings 1,186,054 1,699,667Total surplus 1,186,054 1,699,667

Total unitholders’ equity 33,163,561 33,608,765Valuation and translation adjustments

Deferred gain or (loss) on hedges △80,286 △ 82,588Total valuation and translation adjustments △80,286 △ 82,588

Total net assets 33,083,275 33,526,176Total liabilities and net assets 69,523,801 72,736,701

32

August 2019 Period (3rd fiscal period) Balance Sheets(Unit: thousands JPY)

Statement of Income（Unit: JPY thousands） 2nd Period 3rd PeriodOperating revenues

Rental revenues 1,969,097 2,010,180Other rental revenues 160,250 165,226Dividend income from investments in securities - 2,043Gain on sales of real estate properties - 738,901Total operating revenues 2,129,347 2,916,352

Operating expensesExpenses related to property rental business 651,681 944,320Asset management fee 112,685 137,894Asset custody fee 12,828 13,631Directors’ compensation 2,400 2,400Taxes and dues 1,977 19,822Other operating expenses 35,995 38,203Total operating expenses 817,568 1,156,271

Operating income 1,311,778 1,760,080Non-operating income

Interest income 18 19Interest on refund of consumption taxes 731 -Insurance income - 212Other - 0Total non-operating income 749 232

Non-operating expensesInterest expenses 82,035 83,538Borrowing related expenses 44,718 43,711Amortization of investment unit issuance costs 12,816 12,816Total non-operating expenses 139,570 140,066

Ordinary income 1,172,957 1,620,246Income before income taxes 1,172,957 1,620,246Income taxes

Income taxes-current 942 1,038Income taxes-deferred 22 ▲ 4Total income taxes 965 1,033

Net income 1,171,992 1,619,213Retained earnings brought forward 14,062 80,454

Unappropriated retained earnings 1,186,054 1,699,66733

（単位：千円）Statements of Cashflow（Unit: JPY thousands） 2nd Period 3rd PeriodCashflow from operating activities

Income before income taxes 1,172,957 1,620,246Depreciation 240,391 259,440Amortization of investment unit issuance costs 12,816 12,816Borrowing related expenses 40,255 38,716Interest income ▲18 ▲19Interest expenses 82,035 83,538Decrease (Increase) in operating accounts receivable ▲43,557 ▲111Decrease (Increase) in consumption tax receivable 1,389,734 ▲144,784Decrease (increase) in accrued consumption taxes 107,459 ▲107,459Decrease (Increase) in prepaid expenses 5,523 ▲7,808Decrease (Increase) in long-term prepaid expenses 3,834 3,655Increase (Decrease) in operating accounts payable ▲5,424 92,531Increase (Decrease) in accounts payable 115,432 34,607Increase (Decrease) in advances received 7,466 ▲10,763Decrease in disposal of plant and equipment in trust - 2,895,401Other, net ▲20,561 ▲10,987Subtotal 3,108,346 4,759,020Interest income received 18 19Interest expenses paid ▲84,152 ▲82,224Income taxes paid ▲1,922 ▲942Net cash used in operating activities 3,022,289 4,675,872

Cashflow from investing activitiesPurchase of property, plant and equipment - ▲3,063,103Purchase of property, plant and equipment in trust ▲175,422 ▲90,083Purchase of intangible assets ▲5,500 -Payment of tenant leasehold and security deposits ▲1,000 -Proceeds from tenant leasehold and security deposits - 27,165Proceeds from tenant leasehold and security deposits in trust 37,363 57,283Repayments of tenant leasehold and security deposits in trust ▲23,777 ▲91,558Payment for purchase of investment securities - ▲103,053Net cash used in investing activities ▲168,335 ▲3,263,350

Cashflow from financing activitiesProceeds from short-term loans - 5,977,773Repayment of short-term loans ▲1,340,000 ▲3,260,000Payments for investment unit issuance expenses ▲2,812 -Distributions paid ▲33,555 ▲1,171,597Net cash provided by financing activities ▲1,376,367 1,546,175Net increase in cash and cash equivalents 1,477,586 2,958,698Cash and cash equivalents at beginning of period 892,525 2,370,111Cash and cash equivalents at end of period 2,370,111 5,328,810

August 2019 Period (3rd fiscal period) Statements of Income/ Statements of Cashflow

(Unit: thousands JPY)

Property nameO-01 O-02 O-03 O-04 O-05

NT Building Higashi-Ikebukuro Central Place

Nagoya Center Plaza Building

TTS Minami Aoyama Building (Note2) Omiya NSD Building

① Lease business revenue 344,766 231,417 199,386 101,691 121,086Lease business revenue 315,591 210,052 177,733 96,673 114,643Other lease business revenue 29,174 21,364 21,652 5,018 6,442

② Operating expenses from realestate leasing 97,470 78,847 68,585 23,281 40,585

Management fee 20,560 39,367 24,093 3,854 15,537Utilities expenses 29,782 15,804 24,669 3,322 6,635Taxes and dues 27,807 14,458 15,504 7,698 7,854Insurance premium 521 307 472 74 163Repair expenses 18,351 8,190 3,192 7,880 10,023Trust fee 400 375 300 373 300Other expenses 46 345 352 76 71

③ NOI(①-②) 247,296 152,569 130,800 78,410 80,500④ Depreciation 34,452 24,463 18,358 3,676 6,588⑤ Operating income (loss) from

real estate leasing (③-④) 212,843 128,106 112,442 74,734 73,912

⑥ Acquisition price 12,350,000 9,780,000 4,870,000 4,090,000 3,493,000

Profit and Loss by Property

(Note1) TTS Minami Aoyama Building were disposed at August 30,2019 and September 2, 2019.

34

Done（Unit: thousands JPY)


SAMTY Shin-Osaka Center Building Hakata Gion Building Chuo Bakuromachi

Building L.Biz Jimbocho Shinsaibashi Building

① Lease business revenue 113,018 90,089 65,842 26,913 28,904Lease business revenue 102,341 76,617 58,030 26,527 21,771Other lease business revenue 10,677 13,472 7,812 386 7,132


Management fee 8,612 9,171 6,091 1,780 8,113Utilities expenses 9,349 6,767 6,421 0 3,431Taxes and dues 9,417 7,124 7,912 1,738 4,424Insurance premium 189 140 148 26 72Repair expenses 2,338 5,789 2,777 382 4,532Trust fee 400 400 400 300 400Other expenses 41 39 43 33 42



⑥ Acquisition price 3,450,000 2,500,000 1,485,000 1,006,000 772,000


35

（Unit: thousands JPY)


L.Biz Sendai Sendai Nikko Building Morioka Ekimae-doriBuilding

Nagano Central Building

EME Koriyama Building

① Lease business revenue 68,825 65,175 80,389 48,002 53,255Lease business revenue 61,095 60,550 76,334 44,652 50,398Other lease business revenue 7,729 4,624 4,055 3,349 2,856


Management fee 8,055 5,907 10,998 7,257 7,586Utilities expenses 5,181 4,848 6,885 4,201 5,428Taxes and dues 4,879 7,374 4,969 4,551 2,898Insurance premium 151 116 206 146 125Repair expenses 2,228 3,380 6,431 5,291 894Trust fee 300 450 375 300 300Other expenses 38 88 53 44 60



⑥ Acquisition price 1,680,000 1,740,000 1,480,000 898,000 900,000


36


Property nameO-16 O-17 R-01 R-02 R-03

Utsunomiya Central Building

Yamagata Ekimae-dori Building Amare Tokaidori Dormy Ukimafunado Benefis Hakata-

Minami Grand Suite

① Lease business revenue 48,520 33,865 40,202 32,302 35,983Lease business revenue 45,222 30,235 38,296 31,836 34,675Other lease business revenue 3,297 3,630 1,906 466 1,308


Management fee 10,579 7,103 4,062 541 3,371Utilities expenses 4,073 4,372 248 - 260Taxes and dues 4,741 3,448 2,148 1,656 2,597Insurance premium 127 118 78 59 74Repair expenses 1,559 348 3,884 15,449 5,853Trust fee 300 300 300 300 300Other expenses 41 50 190 33 333



⑥ Acquisition price 771,000 600,000 1,100,000 1,080,000 1,032,000


37


Property nameR-04 R-05 R-06 H-01 H-02

LUXENA HIGASHI-KOENJI

Alpha Space Toritsudai J City Hatchobori Dormy Inn

MatsuyamaHotel Sunshine Utsunomiya

① Lease business revenue 29,992 17,728 43,254 76,629 64,263Lease business revenue 29,098 17,472 40,555 76,500 64,263Other lease business revenue 894 256 2,699 129 -


Management fee 4,102 1,517 5,265 765 364Utilities expenses 175 310 459 906 -Taxes and dues 1,538 981 2,868 6,883 6,776Insurance premium 38 28 75 144 162Repair expenses 15,552 197 2,012 - 8,524Trust fee 300 375 300 300 400Other expenses 35 37 50 41 39



⑥ Acquisition price 1,060,000 589,000 1,200,000 2,427,000 2,000,000


38


Property nameH-03 C-01 C-02 C-03

Dormy Inn Morioka Prio Daimyo II Co-op Sapporo Shunko

TA ShonanKugenumakaigan

① Lease business revenue 26,235 31,095 41,760 14,806Lease business revenue 26,235 27,485 41,760 13,529Other lease business revenue - 3,610 - 1,277

② Operating expenses from realestate leasing 339 7,513 5,245 2,258

Management fee 262 2,219 417 896Utilities expenses - 2,884 - 1,327Taxes and dues 14 1,776 3,940 4Insurance premium 60 18 96 12Repair expenses - 175 455 15Trust fee - 400 300 -Other expenses 1 39 35 3

③ NOI(①-②) 25,896 23,582 36,514 12,548④ Depreciation 13,561 1,103 7,059 1,365⑤ Operating income (loss) from

real estate leasing (③-④) 12,334 22,478 29,454 11,182

⑥ Acquisition price 2,520,000 980,000 1,036,000 500,000



39

40

New Acquisitions (1) ：Acquired at Public Offering

LUXENA HEIWADAI Residence<Design-Focused Condominium Complex Scarce in the Area> LUXENA HEIWADAI is a condominium complex that Takara Leben

developed and completed in March 2019. The complex has 9 stories above the ground level, 109 units, and one store inside. With the floor plan ranging from 1K to 3LDK units, its strong focus on design and comfortableness that its satisfactory facilities provide, the complex meets a variety of needs of tenants from singles living alone to families

LUXENA HEIWADAI is located in the area nearby Heiwadai Station on Yurakucho Line and Fukutoshin Line of Tokyo Metro. The area offers good access to Ikebukuro Station, which is one of major terminal stations, such as Shinjuku Station and Shibuya Station. The complex is conveniently located in the area with many stores and supermarkets, including Life Heiwadai, and is also comfortable to live in because of its good accessibility to medical institutions, parks, and educational institutions

Property ProfileAcquisition price 3,910 million JPY

Appraisal value 4,330 million JPY

Total floor area 6,403.50㎡

Appraisal NOI yield 4.6%

Appraisal NOI yield after dep. 4.0%

Address 4-19-10 Heiwadai, Nerima-ku, Tokyo

Access 6 minutes walk from Heiwadai Station on Tokyo Metro Yurakucho Line and Fukutoshin line

Usage Residential Building / Retail

Date of construction March 2019 (0.4 years old)

Seller Takara Leben

Acquisition date September 3, 2019

Occupancy rate 98.8% (As of September 30,2019)LUXENA

HEIWADAI

41


LUXENA KACHIDOKI Residence

LUXENA KACHIDOKI

<Located in an Urban Waterfront Area with Highly Convenient Setting> LUXENA KACHIDOKI is a condominium complex that Takara Leben

developed and completed in May 2019. The complex has 10 stories above the ground level and 26 units. It is a compact-type residence with five floor plans ranging from 40㎡ to 58.10㎡. With its strong focus on design and comfortableness that its satisfactory facilities provide, the complex meets the needs mainly of singles and DINKS(Note) who prefer to living closer to their workplace

LUXENA KACHIDOKI is located in the area nearby Kachidoki Station on the Metropolitan Subway Oedo Line. The area is an urban waterfront area in the Chuo Ward of Tokyo with many office buildings, commercial buildings and apartment complexes. The complex is conveniently located with many retail stores, such as Tobu Store, and restaurants and is comfortable to live in because of its good accessibility to medical institutions and parks






Address 3-16-2 Kachidoki, Chuo-ku, Tokyo

Access 5 minutes walk from Kachidoki Station on Metropolitan Subway Oedo Line

Usage Residential Building

Date of construction May 2019 (0.2 years old)

Seller Takara Leben


Occupancy rate 100.0% (As of September 30,2019)

42


Arietta Hotel Nagoya Hotel

Arietta Hotel Nagoya is a hotel specializing in lodging(Note) that Takara Leben developed and opened in April 2019. The hotel has 14 stories above the ground level and 139 rooms. The hotel features modern appearance is comprised of seven types of design-focused rooms and provides users with a wide varieties of welcome drinks and breakfast for free. These characteristics differentiate the hotel from competitors in both hard and soft aspects. The hotel operator manages design-focused and modern hotels specializing in lodging in major cities, which should generate consistent returns

Nagoya City, where Arietta Hotel Nagoya is located, is known as a central city in the Chubu region with excellent traffic infrastructure, including the Tokaido Shinkansen, and forms a stable hotel and accommodation market based mainly on business demand. As the number of travelers using the Chubu International Airport has been on increase backed by the increasing number of LCC flights and foreign travelers to Japan, an increase in leisure demand can be also expected. Arietta Hotel Nagoya is located in the Sakae Area in Nagoya City, which is as busy a central downtown area as the area around Nagoya Station and satisfies the need of both business and leisure




Number of rooms 139 Rooms



Address 1-9-22 Higashisakura, Higashi-ku, Nagoya, Aichi

Access 8 minutes walk from Sakae Station of Nagoya Municipal Subway

Usage Hotel

Date of construction February 2019 (0.5 years old)

Seller Takara Leben




<Located in the Sakae Area as Convenient as the Area around Nagoya Station>

43


Almost Blue Retail and other assets<Design-focused Appearance and Location with Great Visibility> Almost Blue is an urban-type commercial complex(Note1) comprised of three

buildings with three stories above and one story below the ground level. The complex has design-focused appearance and a storefront with sufficient width, which should attract fashion-conscious tenants who want to open their stores and other tenants with various needs. Even with the current makeup of tenants, the complex is expected to generate consistent returns, incorporating the characteristics of the local communities

The Shibuya and Omotesando area, where Almost Blue is located, has a strong brand power as a potential location for opening stores. Tenants can expect a boost in sales by appealing to various types of shoppers. In addition to that, the area attracts tenants with the needs of increasing their topicality and recognition. Almost Blue faces Aoyama Bijutsukan-dori Ave. connecting Miyuki-dori Ave. and Kotto-dori Ave. Stores and luxury condominium complexes are dotted around the area with relaxing ambianceProperty Profile

Acquisition price 6,520 million JPY





Address 6-4-6 Minami Aoyama, Minato-ku, Tokyo

Access 8 minutes walk from Omotesando Station on Tokyo Metro Ginza Line, Hanzomon Line and Chiyoda Line

Usage Retail / Office

Date of construction December 2001 (15.4 years old) (Note 2)

Seller Godo Kaisha Island Ship 2nd




44

Kaden Sumairu Kan YAMADA Matsuyama Toiyacho Retail and other assets

Kaden Sumairu Kan YAMADA KobeTarumi (Land) Retail and other assets

Kaden SumairuKan YAMADA

Matsuyama Toiyacho

Kaden SumairuKan YAMADA Kobe Tarumi

<Situated in the Location with Many Stores and Great Visibility> The property is a community-based facility(Note) with three stories above the ground level. It was

renovated to open in September 2018 as Kaden Sumairu Kan, which offers a wide variety of products and services, including not only home appliances but also household sundries, furniture / home interiors, new custom homes / renovation services, real estate rental services / services to buy and sell real estate, and will continue to generate consistent returns. In addition, a solar photovoltaic system is mounted on the roof of the property

The Matsuyamashi Toiyacho area, where the property is located, is in vicinity to the center of Matsuyama City. Many of residents living within a one kilometer radius of the area are in their 20s to 40s and the proportion of three- to four-person households is high. The property faces an arterial road and stores, majority of which are retail stores and restaurants

<Situated in the Location with Commercial Facilities, Stores, Apartment Complexes, and Great Visibility> The property is the limited proprietary right of a community-based commercial facility with three stories

above the ground level. It was renovated to open in March 2019 as Kaden Sumairu Kan, which offers a wide variety of products and services, including not only home appliances but also household sundries, furniture / home interiors, new custom homes / renovation services, real estate rental services / services to buy and sell real estate and will continue to generate consistent returns

The peripheral area of the property has been developed as a commuter town of the Kobe area. As residential development in the area is still ongoing, the population in the area is on the increase. The property has great transportation accessibility with being connected with Hanshin Express Kita-Kobe Route, Japan National Route 2, and Daini Shinmei Route. There are commercial facilities around the property






Address 9-30 Toiyacho, Matsuyama, Ehime

Access Approx. 3.0 km from Matsuyama Station on JR Yosan Line

Usage Retail / Warehouse

Date of construction October 2009(9.8 years old)




Property Profile

Acquisition price 4,250 million JPY


Land area 20,160.00㎡



Address 868-6 Aza Kozukayama, Tamoncho, Tarumi-ku, Kobe, Hyogo

Access 19 minutes walk from Gakuentoshi Station on Kobe Municipal Subway Seishin-Yamate Line



New Acquisitions (6) ：Acquired in 3rd Fiscal Period

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Dormy Inn Morioka TA Shonan Kugenumakaigan Retail and other assetsHotel

Dormy Inn Morioka

TA Shonan Kugenumakaigan

<Situated in the Location Adjacent to the Busiest Downtown Area in Iwate Prefecture and with Great Visibility> Dormy Inn Morioka is a hotel specializing in lodging that Takara Leben developed and completed in April

2019. The hotel has 10 stories above the ground level and 169 rooms. Its large hot spring facility differentiates the hotel from nearby competitors. The hotel should generate consistent returns because Kyoritsu Maintenance, which is a sponsor of TLR and has a great deal of experience as a hotel operator known as Dormy Inn brand, is the tenant of the property

Morioka Odori Shopping Street, which is in vicinity to the hotel, is the central downtown area of Iwate Prefecture. The area caters to travelers on both business and leisure because there are many stores and restaurants on the street

<Scarce Location within a Minute by Walk from the nearest station> The property is a compact community-based commercial facility with two stories above the ground level.

The first and second floors are rented to a drugstore and a medical clinic, respectively. The property should generate consistent returns because its tenants are better suited to the characteristics of the community and thus used by residents in the vicinity on a daily basis and by tourists

The peripheral area of Kugenumakaigan Station on Odakyu Enoshima Line, where the property is located, is part of the living area based on JR Fujisawa Station, the terminal station located in the vicinity. The Kugenumakaigan Station area has the both aspects of a quiet residential area mainly for single-family houses and a base for tourism and leisure activities as it provides an easy access to EnoshimaIsland and also serves as the base for marine leisure activities centering on surfing

Property ProfileAcquisition price 500 million JPY

Appraisal value 573 million JPY

Total floor area 694.84㎡



Address 2-3-13 Kugenumakaigan, Fujisawa, Kanagawa

Access 1 minute walk from Kugenumakaigan Station on Odakyu Enoshima Line

Usage Retail

Date of construction February 2017(2.5 years old)

Seller Takara Leben

Acquisition date March 28, 2019


Property ProfileAcquisition price 2,520 million JPYAppraisal value 2,550 million JPYTotal floor area 5,074.29㎡

Number of rooms 169 RoomsAppraisal NOI yield 5.1%

Appraisal NOI yield after dep. 3.0%Address 2-8-12 Chuodori, Morioka, Iwate

Access 12 minutes walk from Morioka Station on Tohoku Shinkansen Line

Usage HotelDate of construction March 2019(0.4 years old)

Seller Takara LebenAcquisition date June 28, 2019Occupancy rate 100.0% (As of September 30,2019)

Financial Summary

Benchmarks 1st period(August 2018)

2nd period(February 2018)

3rd period(August 2018)

Number of days of period 33 181 184NOI（JPY million） 314 1,717 1,489FFO(Funds from Operation/JPY million) 112 1,412 1,139FFO per unit （JPY） 324 4,087 3,299Interest-bearing debt (JPY million） 34,600 33,260 35,980Interest-bearing debt to total asset (%) 49.7 47.8 49.5Loan to appraisal value （%） 50.7 48.0 51.9Net Asset Value per unit (JPY) 101,345 104,710 104,539

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(Note)NOI ＝ Operating revenues – Operating expenses + DepreciationFFO ＝ Net income + Depreciation ± Loss (gain) on disposal of assetFFO per unit ＝FFO ÷The number of units outstanding at the end of periodInterest-bearing debt to total asset（LTV) ＝ The balance of interest-bearing-debt at the end of period ÷Total asset at the end of period×100Loan to appraisal value =Interest-bearing-debt at the end of period ÷ Total appraisal value of real estate × 100Net Asset Value per unit ＝（Book value of net asset at the end of period – total amount paid of dividend ＋ Total appraisal value of real estate – Book value of real estate) ÷The number of unit outstanding at the end of period

Contact

Takara PAG Real Estate Advisory LimitedTel：+81-3-6435-5264

・This document has been prepared for information purposes only and is not for soliciting and inviting investment or recommending transaction of specified products.

・This document does not constitute a disclosure document or a management report based on the Financial Instruments and Exchange Act, the Act on Investment Trusts and Investment Corporations or the listing regulations of the Tokyo Stock Exchange.

・This document includes forward-looking statements. The forward-looking statements are subject to various risks and uncertainties currently unknown since they are based on currently available information, certain assumptions and preconditions. The contents of forward-looking statements may be affected by these risks, uncertainties, assumptions and other factors. Therefore, such forward-looking statements do not guarantee future performance, management results, financial standing, etc. of TLR

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August 2019 Fiscal Period Presentation Material...Code ：3492. August 2019 Fiscal Period ....

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