Message from Executive Director

Kazuyoshi Kashiwazaki
Executive Director
TOKYU REIT, Inc.

　On behalf of TOKYU REIT, I would like to express my sincere appreciation to all of you, our unitholders, for your continued support and patronage to us.
　I hereby report our operating environment and results for the fiscal period ended January 2021.
　First, concerning the impact of COVID-19, there has been almost no increase in the number of tenants that have requested rent reductions or exemptions since the declaration of a state of emergency in April and May 2020 was lifted for Tokyo, and the revenue decrease due to rent reduction or exemption, etc. was ¥5 million for the fiscal period ended January 2021, which is ¥109 million less of a decrease than the previous forecast, and revenue decrease is projected to be ¥89 million in the fiscal period ending July 2021 and ¥32 million in the fiscal period ending January 2022.
　In the fiscal period ended January 2021, revenue from property leasing increased by ¥346 million from the previous fiscal period and NOI from property leasing increased by ¥218 million from the previous fiscal period due to the property replacement, in which OKI Business Center No. 5 was acquired and 40% of co-ownership interest in OKI System Center (land with leasehold interest) was disposed, and an increase in revenue due to rent revisions at Tokyu Toranomon Building. In addition, gain on sale of real estate of ¥764 million and provision of reserve for reduction entry of ¥407 million were posted from the disposal of OKI System Center (land with leasehold interest). The above resulted in operating income of ¥4,538 million (increase of ¥213 million from the previous fiscal period), net income of ¥4,083 million (increase of ¥227 million from the previous fiscal period) and net income per unit of ¥4,176 (increase of ¥232 from the previous fiscal period). After retaining a portion as provision of reserve for reduction entry, distribution per unit will be ¥3,760 (increase of ¥209 from the previous fiscal period).
　From the next fiscal period ending July 2021 until the fiscal period ending July 2022, the impact of COVID-19 and the extension work at Tokyu Toranomon Building are expected to contribute to decreased revenue, but given the gain on sale of real estate of OKI System Center (land with leasehold interest) and a partial reversal of the reserve for reduction entry, the outlook of distribution remains one that will strive for continued distribution growth, and the minimum distribution per unit is projected to be ¥3,360 for the fiscal period ending July 2021.
　Aiming for further distribution growth, TOKYU REIT will continue to expand its asset size through property acquisitions, return gain on sale through property replacements, and promote the reduction of interest expenses through refinancing, and will respond to downward swings in distributions by reversing reserve for reduction entry. (See figure below)
　TOKYU REIT will continue to strive to maximize unitholder value through “investment in highly competitive properties in areas with strong growth potential.”
　TOKYU REIT greatly appreciates your continued support.

March 2021