Ntt Ud Reit Investment CorporationTSE: 8956

Earnings Presentation for the Fiscal Period 45

· Issued by Ntt Ud Reit Investment Corporation

Fiscal Period

45

(6-month Period

Ended April 2025)

(Ticker Symbol: 8956)

Earnings Presentation

Fiscal Period 45 Earnings Presentation

  • Financial Summary

P.02

  • Residential: Rent Revision Trends

P.19

  • Aiming to Maximize Unitholder Value

P.03

  • Residential: Rent Analysis

P.20

  • Approach to Asset Replacement

P.04

  • Status of Renovation Work and Investment in Value Enhancement, Etc.

P.21

  • Details of Asset Replacement Initiatives

P.05

  • Financial Initiatives (Interest Rate and LTV)

P.22

  • Property Acquired in FP 45

P.06

  • Repayment Schedule

P.23

  • Initiatives to Improve Profitability

P.07

  • Status of Interest-Bearing Liabilities and Maintaining High Credit Rating

P.24

  • Aiming for Stable DPU and EPU Growth

P.08

  • Changes in Unrealized Gains or Losses

P.25

  • Changes in Investment Unit Price

P.09

  • Analysis of Period-end Appraisal Values

P.26

  • FP 45 Financial Results and Results Forecast

P.10

  • ESG Initiatives (Environment 1)

P.27

  • Factors Behind Cash Distribution Change: FP 45 (ended April 2025)

P.11

  • ESG Initiatives (Environment 2)

P.28

  • Factors Behind Cash Distribution Change:

FP 46 (ending October 2025) and FP 47 (ending April 2026)

P.12

  • ESG Initiatives (Social)

P.29

  • Office: Tenant Turnover and Occupancy Rates

P.13

  • ESG Initiatives (Governance)

P.30

  • Office: Rent Revision Trends

P.14

  • ESG Initiatives (Materiality)

P.31

  • Office: Rent Analysis

P.15

  • Increase Opportunities for External Growth by Strengthening Ties with NTT UD

P.32

  • Office: Contract Renewal Schedule

P.16

  • NTT UD’s Business Trends

P.33

  • Office: Status of Tenants

P.17

  • NTT UD’s Extensive Portfolio of Properties (5 Central Wards of Tokyo)

P.34

  • Residential: Tenant Turnover and Occupancy Rates

P.18

  • NTT UD’s Extensive Portfolio of Properties (Nationwide)

P.35

  • Conducted transfer of three office buildings with increased business risk and careful acquisition of recently constructed residential properties via the sponsor

  • With unitholder return and improved capital efficiency in mind, conducted acquisition of own investment units using funds from transfers

External Growth Capital Policy

FP 44

FP 45

Change

Office

96.5%

97.1%

+ 0.6 pt

Residential

96.0%

97.0%

+ 1.0 pt

Entire portfolio

96.3%

97.1%

+ 0.8 pt

At tenant turnover

At contract renewal

Office

+ 2.1%

+ 0.6%

Residential

+ 8.0%

+ 1.1%

Entire portfolio

+ 5.1%

+ 0.7%

  • Maintained a high leverage given the current environment, in which active property acquisition is difficult for the time being

    • Average remaining maturity of interest-bearing liabilities: 4.1 years (- 0.2 years from FP 44)/Average interest rate on interest-bearing liabilities: 0.81% (+ 0.06 pt from previous period)

    • LTV (total assets basis): 48.0% (+ 0.2 pt from previous period)

Financial Strategy

  • The occupancy rate for offices increased substantially due to the progress of leasing activities and the effect of property transfers, and the rent change rate also started to trend upward

  • For residential properties, both occupancy rate and rents remained favorable

    • Average occupancy rate during FP 45 Rate of increase or decrease in monthly rent

Internal Growth

Cash Distributions

  • From FP 45 to FP 47, EUP will decrease due to concentrated implementation of large-scale renovations, but DPU will increase due to recording gain on sale of Landic Shimbashi 2 Building

    • DPU (FP 45 actual): 3,104 yen (+ 165 yen period on period)

    • DPU (FP 46 forecast): 3,140 yen (+ 36 yen period on period)

    • DPU (FP 47 forecast): 3,140 yen (- yen period on period)

    • EPU (FP 45 actual): 2,671 yen (- 268 yen period on period)

    • EPU (FP 46 forecast): 2,557 yen (- 114 yen period on period)

    • EPU (FP 47 forecast): 2,548 yen (- 9 yen period on period)

      • The investment unit price of J-REITs continues to be at a low level, and the gap with NAV remains large for a long period. NUD’s NAV multiple decreased to a level of around 0.8.

      • The office leasing market has entered a recovery phase, and NUD’s office rent gap has almost disappeared as well. Rent for residential properties continues to trend upward.

      • Expectations for a policy interest rate hike for the end of FY2024 increased, and the basic interest rate rose.

Recognition of environment as of the end of FP 44

Asset

Debt

Equity

Improvement of portfolio quality

① Transfer of properties

with issues

④ Acquisition of prime residential properties

⑤ Initiatives to improve

profitability

③ Acquisition of own investment units

② Materialization of unrealized gains (increase in DPU)

Unitholder return

Improvement of capital efficiency

Unrealized gains

① Transfer of properties with issues

Transfer of Landic Shimbashi 2 Building, NTT CRED Okayama Building, and The Kanagawa Science Park R&D Building (total of 18.5 billion yen)

② Materialization of unrealized gains

Gain or loss on sale (total for three transferred properties: 1.98 billion yen)

③ Acquisition of own investment units

Acquisition/cancelation of 13,800 investment units in FP 45 (1.65 billion yen) / considering use of unused portion of funds in FP 46 and after based on investment unit price trends

④ Acquisition of prime residential properties

Acquisition of Wellith IVY Hatanodai and Wellith IVY Mondoyakujin (total of 4.0 billion yen)

⑤ Initiatives to improve profitability

Total monthly rent excluding monthly rent of replaced properties:

1,607 million yen at end of FP 44 → 1,638 million yen at end of FP 45 (+1.9%)

  • Portfolio quality is improved by replacing office and residential properties, focusing on the transfer of properties with issues whose profitability and CF is expected to decline

  • Based on the situation, optimal use of funds that will contribute to unitholder return and improved capital efficiency is considered

*1

Total acquisition price: 97.5 billion yen Total transfer price: 57.2 billion yen

  1. Improving unitholder value and generating funds as source of growth investment

    High

    Targets with considerations given to EPU growth

    B8

    B1 A3

    B7

    A7 A8

    A11

    A5

        • Properties acquired in FP 45

          Generating funds through property transfers *2

Method of using cash on hand

① Acquisition of new properties

② Acquisition of own investment units

③ Investment in value enhancement of owned properties

④ Repayment of loans

8.5 billion yen

      • Previously acquired properties

      • Properties transferred in FP 45 – 47

      • Transferred properties

A6

B2 A9

B6

B4

B5

Yield

B3

(Average building age)

3.3 years

(Average building age)

37.9 years

Target for transfer to reduce risks

A10

A1

A2 A4

Targets with considerations given to portfolio stability

  1. Improving residential property ratio

    End of FP 44

    (ended October 2024)

After the replacement

Acquired assets

Transferred assets

28.9 %

26.3 %

  1. Younger building age *3

Quality

High

A1： Otemachi Financial City Grand Cube A2: Shinagawa Season Terrace A3: Tokyo Opera City A4: Urbannet

Uchisaiwaicho A5: Urbannet Nakano A6: Urbannet Shijo Karasuma

A7

： Urbannet Fushimi A8: Granpark A9: Garden Itabashi A10: Wellith IVY Hatanodai A11: Wellith IVY Mondoyakujin B1： Urbannet Ichigaya B2: Urbannet Kojimachi B3: Bureau Kioicho B4: Sphere Tower Tennozu B5: Rokubancho Building B6： Landic Shimbashi 2 B7: NTT CRED Okayama B8: Kanagawa Science Park

*1 “Yield” refers to the NOI yield calculated based on the most recent operating conditions and “Quality” is calculated by points in consideration of location, size, and building age. The size of the bubble also represents the size of the asset (acquisition price).

*2 This is the amount obtained by deducting the FP 45 property acquisition funds, forecast dividend amount based on gain or loss on sale and reversal of reserve for reduction entry in FP 45 to FP 47, FP 45 own investment unit acquisition funds, and FP 46 loan repayment amount from the property transfer proceeds in FP 45 onward.