NIPPON REIT Investment : Summary of Financial Results for the Fiscal Period Ended December 31, 2021 (REIT)

(Description of % is indicated as the change rate compared with the prior period)

February 17, 2022

		Summary of Financial Results
	for the Fiscal Period Ended December 31, 2021 (REIT)
Name of issuer:	NIPPON REIT Investment Corporation
URL:	https://www.nippon-reit.com/
Listed Stock Exchange:	Tokyo Stock Exchange
Securities Code:	3296
Representative:	Toshio Sugita, Executive Officer
Asset Management Company:	Sojitz REIT Advisors K.K.
Representative:	Toshio Sugita, President & CEO
Contact Information:	Takahiro Ishii, General Manager, Corporate Planning Dept.
	TEL	[phone]
Scheduled filing date of securities report:	March 29, 2022
Scheduled date of delivery of distributions:	March 25, 2022
Supplementary materials for the financial results: Yes
Investor conference for the financial results:	Yes (for analysts and institutional investors, in Japanese)
		（Amount of less than one million yen is	omitted）

1. Financial Results for the Fiscal Period Ended December 31, 2021 (July 1, 2021 - December 31, 2021) (1）Operating Results

		Operating Revenues	Operating Income			Ordinary Income		Net Income
For the fiscal period ended		Yen in millions			%	Yen in millions		%		Yen in millions		%		Yen in millions		%
December 31, 2021		10,041			6.7	6,043		9.9		5,390		10.9		5,335		9.8
June 30, 2021		9,410			(7.1)	5,499		(9.7)		4,859		(10.7)		4,858		(10.7)
		Net Income per Unit	Return on Equity			Return on Assets		Ordinary Income to
					Operating Revenues
For the fiscal period ended						Yen			%				%					%
December 31, 2021					11,859			4.1				2.0					53.7
June 30, 2021				10,798			3.7				1.8					51.6
(2）Distributions
		Cash Distributions			Total Cash Distributions
		per Unit			Cash Distributions
				(excluding cash		Total Cash Distributions					Cash Distributions
		(excluding cash			in Excess of Earnings			Payout Ratio
				distributions in		in Excess of Earnings			Ratio to Net Assets
		distributions in excess				per Unit
			excess of earnings)
		of earnings per unit)
For the fiscal period ended		Yen			Yen in millions			Yen		Yen in millions		%			%
December 31,		11,665					5,248		-				-		98.4			4.0
2021
June 30, 2021		10,800					4,859		-				-		100.0			3.7
(3）Financial Position
		Total Assets	Total Net Assets			Equity Ratio		Net Assets per Unit
For the fiscal period ended		Yen in millions		Yen in millions				%						Yen
December 31,		276,577			131,869				47.7					293,089
2021
June 30, 2021		276,120			131,393				47.6					292,029
(4）Cash Flows
		Cash Flows from	Cash Flows from			Cash Flows from		Cash and Cash
					Equivalents at End of
		Operating Activities	Investing Activities			Financing Activities
						Period
For the fiscal period ended		Yen in	millions		Yen	in millions			Yen	in millions				Yen	in millions
December 31, 2021		12,981			(8,303)				(4,871)					16,059
June 30, 2021		11,220			(5,944)				(5,437)					16,253

2. Forecast of management status for the Fiscal Period Ending June 2022 (from January 1, 2022 to June 30, 2022) and the Fiscal Period Ending December 2022 (from July 1, 2022 to December 31, 2022)

(Description of % is indicated as the change rate compared with the prior period)

											Cash
											Distributions
											per Unit	Cash
											(excluding	Distributions
		Operating Revenues	Operating Income	Ordinary Income	Net Income	excess	in Excess of
											of	Earnings
											earning	per Unit
											s
											per Unit)
For the fiscal period		Yen in	%	Yen in	%	Yen in	%	Yen in		%	Yen	Yen
	millions	millions	millions	millions
ending
June 30, 2022		8,519	(15.2)	4,495	(25.6)	3,863	(28.3)	3,863		(27.6)	8,586	-
December 31, 2022		8,346	(2.0)	4,343	(3.4)	3,671	(5.0)	3,671		(5.0)	8,159	-
(Reference)	(Forecasted Net Income / Forecasted Number of Investment Units at end of the period)

Forecasted Net Income per unit for the fiscal period ending June 30, 2022: 8,586 yen

Forecasted Net Income per unit for the fiscal period ending December 31, 2022: 8,159 yen

• Others
• 1. Changes in accounting policies, changes in accounting estimates and retrospective restatement
  2. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: Yes
     2. Changes in accounting policies due to reasons other than above (a): None
     3. Changes in accounting estimates: None
     4. Retrospective restatement: None

(note) Please refer to the "Changes in Accounting Policy" on page 18

1. Number of investment units issued and outstanding

1. Number of investment units issued and outstanding, including treasury units:

As of December 31, 2021	449,930 units	As of June 30, 2021	449,930	units
(b) Number of investment treasury units:
As of December 31, 2021	0 unit	As of June 30, 2021	0	unit

* The Status of Statutory Audit

This summary of financial results is not subject to audit procedures by certified public accountant or audit firm.

* Special matters

Forward-looking statements contained in this material are based on the information that NIPPON REIT has obtained as of the date hereof and certain assumptions that NIPPON REIT believes reasonable and the actual management status, etc. may significantly differ due to various reasons. In addition, the forecast is not a guarantee of the amount of distributions. For details of the assumptions underlying forecast of management status, please refer to the "Assumptions Underlying Forecast of Management Status for Fiscal Period Ending June 2022 (from January 1, 2022 to June 30, 2022) and Fiscal Period Ending December 2022 (from July 1, 2022 to December 31, 2022)" on page 7.

This document is the English language translation of the Japanese announcement of the financial statements ("Kessan Tanshin") and is provided solely for information purposes. There is no assurance as to the accuracy of the English translation. In the event of any discrepancy between this translation and the Japanese original, the latter shall prevail.

Contents
1. Management Status	2
(1)	Management Status	2
(2) Investment Risks	8
2. Financial Statements	9
(1)	Balance Sheets	9
(2)	Statements of Income and Retained Earnings	11
(3)	Statement of Change in Net Assets	12
(4)	Statements of Cash Distribution	13
(5)	Statements of Cash Flows	14
(6)	Notes to the Going Concern Assumption	16
(7)	Summary of Significant Accounting Policies	16
(8)	Notes to Financial Statements	19
(9)	Changes in Total Number of Investment Units Issued and Outstanding	32
3. Reference Information	33
(1)	Status of Value of Investment Assets	33
(2)	Status of Capital Expenditure	57

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1. Management Status

1. Management Status
   I. Overview of the Fiscal Period ended December 31, 2021

A. Brief History of NIPPON REIT

NIPPON REIT was established on September 8, 2010 by Polaris Investment Advisors K.K. (now Sojitz REIT Advisors K.K. (hereafter referred to as the "Asset Management Company")) as the founder under the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951, as amended). Registration with the Kanto Local Finance Bureau was completed on October 26, 2010 (registration number 72, filed with the Director of the Kanto Local Finance Bureau).

NIPPON REIT issued new investment units through a public offering (144,200 units) on April 23, 2014 as the payment date and listed on the J-REIT section of the Tokyo Stock Exchange (securities code: 3296) on April 24.

Furthermore, NIPPON REIT issued investment units through public offerings in February 2015, July 2015 and July 2018 and third-party allotments in March 2015, July 2015 and July 2018, and the total number of investment units issued and outstanding as of the end of the current period (December 31, 2021) is 449,930 units.

B. Investment Environment and Management Performance

(i) Investment Environment

The Japanese economy during the current period (the fiscal period ended December 31, 2021) saw a decrease of 0.9% (an annual decrease of 3.6%) in the real GDP growth rate (second preliminary figures) for the period from July to September 2021 compared to the same period of the previous year. As the Japanese Government declared the state of emergency regarding the spread of COVID-19 infection to 19 prefectures and quasi-emergency state to 8 prefectures until September 30, 2021, the consumer spending and capital spending decreased while the government expenditure increased consecutively from the prior period. Since October 2021, the consumer spending is recovering as people are returning to the street after the state of emergency was lifted, and production of corporates shows some signs of improvement. Revenues of corporates are recovering while weakness still remains in some part of the non-manufacturing sector. Recent business conditions improved as predicted by all enterprises of all industries in the Bank of Japan Tankan Survey (December 2021.) It is necessary to keep a close watch continuously on factors such as downward risk by the effect of the increase in COVID-19 infection cases on economy and society as the number of people infected with a variant of COVID-19 marked a record high, uncertainty in economic outlook by constraint in goods supply and trend of raw material prices as well as fluctuations in financial and capital markets.

In the office properties leasing market, the vacancy rate as of the end of December 2021 in Tokyo's five central wards (Chiyoda, Chuo, Minato, Shinjuku and Shibuya wards) announced by Miki Shoji Co., Ltd., was 6.33%, up 1.84% from the same month last year. Moreover, the average rent in the same area as of the end of December 2021 was 20,596 yen per tsubo, down 6.38% from the same month last year, as downward trend continues from August 2020. It is necessary to keep a close watch whether such trends will continue in future.

In terms of the residential properties leasing market, while the situation remains generally stable for both occupancy rate and rent level, it is necessary to keep a close watch on supply and demand conditions in the residential leasing properties including the demographic migration in the three major metropolitan areas because the effect caused by delayed change in residence of office workers and students due to increased remote working and remote lessons triggered by the spread of a variant of COVID-19 infection still remains.

In the leasing market of retail properties, although restriction of economic activities as prevention measure of spread of COVID-19 infection remains, there are some signs of recovery and consumption style is changing from consumption from staying at home in previous year. We saw a 9.4% year-on-year increase in retail sales announced by the Ministry of Economy, Trade and Industry in November 2021. While sales at supermarkets decreased by 1.1% year-on-year, sales at department stores showed 8.1% year-on-year increase.

As for short-term prospects, attention should be paid to range and degree of the impact of work style reform

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including remote working and changes in lifestyle on the leasing market caused by the spread of COVID-19 infection.

With regard to the real estate transaction market, expected yields of superior properties remain at a low level and transaction prices stay high, reflecting that the appetite for acquisition of properties by domestic investors such as listed REITs, private placement REIT, and real estate companies, as well as overseas investors is still high.

1. Management Performance a. External Growth
   NIPPON REIT owned 103 properties (with a total acquisition amounts of 255,083 million yen) and 2 equity interests in a silent partnership (investment amount 120 million yen, 14 real estate-backed properties) as of the end of the fiscal period ended June 2021.
   During the current period (fiscal period ended December 2021) NIPPON REIT transferred 4 properties (The transfer amounts of 8,630 million yen) and acquired 8 properties (Total acquisition amounts of 7,615 million yen) as follows, as asset replacement executed in August 2021.

			Transfer price or
Transaction	Property	Property name	Acquisition price	Transaction date
Number	（Yen in millions）
			(Note)
Transfer	A-35	Toshin Higashi Ikebukuro Building	1,480	August 26, 2021
Transfer	A-37	Itabashi Honcho Building	3,950	August 26, 2021
Transfer	A-40	East Side Building	1,800	August 26, 2021
Transfer	A-63	Esprit Kameido	1,400	August 26, 2021
Acquisition	A-74	REID-C Iidabashi Building	1,195	August 31, 2021
Acquisition	A-75	REID-C Gotenyama Building	1,040	August 31, 2021
Acquisition	B-38	Sylphide Higashi-shinagawa	961	August 31, 2021
Acquisition	B-39	Royal Bloom	1,100	August 31, 2021
Acquisition	B-40	Ever Square Doshin	609	August 31, 2021
Acquisition	B-41	Zeku Benten	506	August 31, 2021
Acquisition	B-42	Canis Court Kamishinjo	1,359	August 31, 2021
Acquisition	B-43	Imperial Otori	845	August 31, 2021

(Note ) The transfer prices and the acquisition prices represent amount of consideration stated in the purchase agreements of each of the trust beneficiary interests in real estate. The transfer prices and the acquisition prices do not include expenses related to the transfer or the acquisition, consumption taxes and local tax. Furthermore, the transfer price and the acquisition price of less than one million yen is omitted.

As a result, the portfolio as of the end of the current period consisted of 63 office properties (Note 1) with a total acquisition amount of 183,222 million yen, 42 residential properties (Note 2) with a total acquisition price of 64,592 million yen and 2 retail properties (Note 3) with a total acquisition amount of 8,120 million yen, totaling 107 properties with a total acquisition amount of 255,935 million yen, and 1 equity interest in a silent partnership (with a total investment amount of 50 million yen and total of 6 real estate-backed properties) with a total leased area of 309,188.54㎡ and 98.1% of average occupancy rate.

(Note 1) "Office Properties" refer to an office building whose primary use is the office. The same shall apply hereinafter.

(Note 2) "Residential Properties" refer to a rental housing whose primary use is a residence (including a dormitory, a company-

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