Contents. 4. Portfolio overview. 5. Appendix. 1. Overview of FRI. 2. Financial results and forecasts. 3. Management highlights.

Transcription

1

2 Contents 1. Overview of FRI Overview of FRI 3 Management strategy 4 Portfolio map 5 Portfolio asset categories 6 Track record since listing 7 Five-year summary 8 2. Financial results and forecasts Summary 11 Steady distribution growth 12 28th period results 13 29th period forecast Management highlights Management highlights 16 FRI and the retail market 20 Sound balance sheet 21 Internal growth financial 22 Sustainability Portfolio overview Portfolio summary 27 Rent revision and lease maturity schedules 29 FRI s portfolio in graphs Appendix Disclaimer All content in this document is provided solely for informational purposes and is not intended to serve as an inducement or solicitation to trade in any product offered by FRI. Investment decisions are made at the investors discretion and risk. FRI disclaims any responsibility or liability for the consequences of investing in FRI. Investment units issued by FRI are subject to price fluctuations due to various factors, including: (1) volatility in the J-REIT market, interest rates and the real estate market; (2) fluctuations in rental revenues from properties; and (3) the occurrence of unexpected losses due to natural disasters. Accordingly, investment in FRI entails the risk of incurring a loss. For more details, please also refer to a section titled Investment Risk presented in the Securities Registration Statement (Prospectus) and the Securities Report issued by FRI. Information provided in this document contains such forward-looking statements as business forecasts, which should not be construed as commitment to or guarantee of future performance. The information provided in this document was originally published in Japanese language form and has been translated for reference purposes only. FRI guarantees neither the completeness nor the accuracy of this English translation. Please be advised that all information provided herein may be subject to change without prior notice. Duplication or reproduction of any content presented herein without the prior consent of FRI or its authorized representative is strictly prohibited. Asset management company: Mitsui Fudosan Frontier REIT Management Inc. (Financial Instruments Business Registration No. 395; issued by Director-General of the Kanto Finance Bureau based on the Financial Instruments and Exchange Law) 1

3 1. Overview of FRI

4 Overview of FRI Corporate profile Name Frontier Real Estate Investment Corporation ("FRI") TSE Listing August 9, 2004 Securities code: 8964 Sponsor Mitsui Fudosan Co., Ltd. Changed from Japan Tobacco Inc. as of March 2008 Area 4 Kyushu/ Okinawa 9.0% Chugoku 10.9% Tokyo Metropolitan Area 51.2% Investment target Retail facilities Fiscal period ends June 30, December 31 Kansai 13.2% Investment units issued 496,000 Asset management company Mitsui Fudosan Frontier REIT Management Inc. (Wholly owned subsidiary of Mitsui Fudosan Co., Ltd.) Chubu 15.8% Portfolio Property type 4 Asset size (based on acquisition prices) billion; 35 properties Geographic distribution Urban areas: 51.2%; Other: 48.8% Occupancy rate 100% Total leasable floor space 1 1,442,351 m 2 Financial indicators LTV % Interest-bearing 32.2% debt ratio 2 Land interests 8.7% Urban retail facilities 19.6% Medium-scale shopping centers 26.7% Large-scale shopping centers 45.0% 38.6% Inner ring 7.0% Regional SCs 11.2% 6.4% Outlet malls 8.5% Neighborhood SCs GMSs Supermarkets/other Ratings Distributions 28th period (June 2018) 29th period (Dec. 2018) forecast 3 JCR: AA Stable; R&I: AA- Stable; S&P: A+ Stable 10,194 per unit 10,180 per unit Key properties 1. Loan-to-value ratio = (Borrowings and bonds + Leasehold and security deposits - Unrestricted cash and deposits ) / (Balance of total assets - Unrestricted cash and deposits); same shall apply to all succeeding occurrences of LTV 2. Interest-bearing debt ratio = (Borrowings and bonds - Unrestricted cash and deposits) / (Balance of total assets - Unrestricted cash and deposits); same shall apply to all succeeding occurrences of interest-bearing debt ratio 3. The distribution forecast for the 29th period given here is as announced in Summary of Financial Results for the 28th Fiscal Period, published August 15, Calculated based on the annualized fixed rent (excluding common area maintenance charges) of lease contracts valid as of June 30, Variable rent is not taken into account. Unrestricted cash and deposits = Cash and cash equivalents at the end of the period - distributions for the period The same applies hereinafter. Mitsui Shopping Park LaLaport SHIN-MISATO Mitsui Outlet Park IRUMA Mitsui Shopping Park LaLagarden KASUKABE SAKAE GLOBE 3

5 Management strategy Turning fluctuating real estate revenue into steady distribution growth over the long term External growth Fully utilize the sponsor s pipeline to continue acquiring excellent properties Selectively invest in non-sponsor properties utilizing the Asset Management Company s unique network, keeping a close eye on risk Carefully select properties for investment considering the certainty of cash flows and growth potential of the surrounding retail zone Make acquisitions with an eye to maintaining the whole portfolio s ratio of asset value to yield after depreciation Internal growth Secure a foundation for stable earnings based on long-term fixed rent Adjust to changes in the environments surrounding properties, maintaining and enhancing competitiveness through such measures as additional investment and tenant replacement Consider replacing properties that pose future uncertainties in order to further enhance portfolio quality Financial strategy Maintain sound financial standing through LTV control Execute capital procurement flexibly and strategically based on careful monitoring of the procurement environment Level out repayment periods and amounts to increase financial stability 4

6 Portfolio map 35 properties Asset size: billion (as of August 15, 2018) Kyushu/ Okinawa area Don Quijote Fukuoka Tenjin VIORO Kansai area 29 2 Shinsaibashi Square AEON MALL Ibaraki Large-scale SCs Medium-scale SCs Urban retail facilities Land interests Regional SC Outlet mall Neighborhood SC General merchandise store Supermarket/other Urban retail facilities Land interest A large-scale shopping center that houses multiple specialty stores A large-scale shopping center in which multiple outlet stores are concentrated A medium-scale shopping center where the main tenants are a supermarket and specialty shops A medium-scale shopping center where the main tenant typically stocks general merchandise and groceries A retail outlet that sells mainly food products or other facility A store that faces onto a main street or a specialty store building in a prime urban location Land interest in retail facilities 3 9 Papillon Plaza Frespo Tosu (land interest) 5 24 Belltown Tambaguchi Eki-Mae Store QANAT Rakuhoku 32 KOJIMA x BIC CAMERA Naha Store Chubu area Omiya 34 SAKAE GLOBE AEON MALL NAGOYADOME-Mae Mitsui Shopping Park LaLaport IWATA Tachikawa 35 JR Yamanote Line Tokyo metropolitan area Yokohama 34 Tokyo Saitama Kanagawa Chugoku area Mitsui Shopping Park ALPARK (East Building) Home Center Kohnan Hiroshima Minami-Machi (land interest) You Me Town Hiroshima Ito-Yokado Higashi- Yamato AEON TOWN Tanashi-Shibakubo Queen s Isetan Suginami- Momoi Summit Store Higashi- Nagasaki (land interest) Shimura Shopping Center Summit Store Takinogawa Momiji-Bashi Ikebukuro Square Desigual Harajuku GINZA GLASSE AEON STYLE Shinagawa Seaside Kamiikedai Tokyu Store Costco Wholesale Warehouse Iruma (land interest) 33 Mitsui Outlet Park IRUMA 22 Mitsui Shopping Park LaLagarden KASUKABE 27 Costco Wholesale Warehouse Shin-Misato (land interest) Mitsui Shopping Park LaLaport SHIN-MISATO Mitsui Shopping Park LaLaport SHIN-MISATO Annex Super Viva Home Zama and Super Sanwa Zama Higashihara (land interest) Summit Store Yokohama Okano (land interest) Kohnan Kawasaki- Odasakae Mall (land interest) 5

7 Portfolio asset categories Large-scale shopping centers (regional SCs, outlet malls) Regional SCs Total acquisition price: billion Outlet mall 8 properties Average acquisition price: 16.2 bn NOI yield: 5.8% NOI yield after depreciation: 4.0% AEON MALL Ibaraki AEON MALL NAGOYADOME-Mae You Me Town Hiroshima Mitsui Shopping Park LaLaport IWATA Mitsui Shopping Park ALPARK (East Building) Mitsui Shopping Park Mitsui Shopping Park LaLaport SHIN-MISATOAnnex LaLaport SHIN-MISATO Mitsui Outlet Park IRUMA Medium-scale shopping centers (neighborhood SCs, GMSs, supermarkets, other) Neighborhood SCs 74.9 billion GMSs 12 properties 12 物件 Average acquisition 平均取得価格 price: 億円 bn NOI yield: NOI 5.8% 利回り :5.6% NOI yield after 償却後利回り depreciation: :3.5% 4.1% Papillon Plaza QANAT Rakuhoku Mitsui Shopping Park LaLagarden KASUKABE AEON STYLE Shinagawa Seaside Ito-Yokado Higashi-Yamato Supermarkets/other Kamiikedai Tokyu Store Belltown Tambaguchi Eki-Mae Store Summit Store Takinogawa Momiji-Bashi Queenʼs Isetan Suginami-Momoi AEON TOWN Tanashi-Shibakubo Shimura Shopping Center KOJIMA x BIC CAMERA Naha Store Urban retail facilities 7 properties Average acquisition price: 9.8 bn Urban retail facilities 68.8 billion NOI yield: 4.4% NOI yield after depreciation: 3.6% Desigual Harajuku Don Quijote Fukuoka Tenjin GINZA GLASSE VIORO Ikebukuro Square Shinsaibashi Square SAKAE GLOBE Land interests Land interests 30.5 billion 8 properties Average acquisition price: 3.8 bn NOI yield: 5.1% NOI yield after depreciation: 5.1% Home Center Kohnan Hiroshima Minami-Machi (land interest) Frespo Tosu (land interest) Costco Wholesale Warehouse Iruma (land interest) Summit Store Yokohama Okano (land interest) Kohnan Kawasaki- Costco Wholesale Warehouse Odasakae Mall (land interest) Shin-Misato (land interest) Super Viva Home Zama and Super Sanwa Zama Higashihara (land interest) Summit Store Higashi- Nagasaki (land interest) * NOI yield is calculated by dividing NOI (property leasing operating income + depreciation) excluding extraordinary factors, by acquisition prices. Figures used in this calculation are as of June 30,

8 Track record since listing Japan Tobacco Mitsui Fudosan Public offerings per unit (yen) 1 Asset size Distribution August 2004 Listing 10,000 4,771 9,000 5,622 6,045 7,218 8,648 July 2008 First March 2008 Third-party allotment 8,846 8,922 8,980 9,220 9,274 9,368 July 2010 Second 9,294 9,097 9,239 9,299 July 2012 Third 9,991 March 2013 Fourth 9,191 9,173 9,405 10,211 9,707 9,360 9,695 9,694 10, ,903 10,022 10,146 10, % LTV (million yen; acquisition price basis) 40.0% 9.3% 8.3% Acquisitions スポンサー from the からの取得 sponsor 14.3% 41.0% 34.0% 35.2% 35.9%37.5% 41.0% 45.5% 46.2% 46.8% 49.6% 45.7% 46.3% 44.1% 43.6% 42.5% 41.0% 39.2% 41.7% 42.3% 41.2% 41.6% 42.2% 37.6% 38.0% 39.1% Acquisitions スポンサー外 not from the からの取得 sponsor Reached asset size of billion Property sales Reached asset size of billion ,231 1,596 1,743 1,780 1,780 2,068 2,212 2,212 2,370 2,458 2,716 2,592 2,678 2,659 2,831 2,831 2,739 2,890 2,890 2,934 3,047 3,047 3 Property sale Approx. 44% 3 1st 第 1 期 (04/12 期 ) 2nd 第 2 期 (05/6 期 ) 3rd 第 3 期 (05/12 期 ) 4th 第 4 期 (06/6 期 ) 5th 第 5 期 (06/12 期 ) 6th 第 6 期 (07/6 期 ) 7th 第 7 期 (07/12 期 ) 8th 第 8 期 (08/6 期 ) 9th 第 9 期 (08/12 期 ) 10th 第期 (09/6 期 ) 11th 第期 (09/12 期 ) 12th 第期 (10/6 期 ) 13th 第期 (10/12 期 ) 14th 第期 (11/6 期 ) 15th 第期 (11/12 期 ) 16th 第期 (12/6 期 ) 17th 第期 (12/12 期 ) 18th 第期 (13/6 期 ) 19th 第期 (13/12 期 ) 20th 第期 (14/6 期 ) 21st 第期 (14/12 期 ) 22nd 第期 (15/6 期 ) 23rd 第期 (15/12 期 ) 24th 第期 (16/6 期 ) 25th 第期 (16/12 期 ) 26th 第期 (17/6 期 ) 27th 第期 (17/12 期 ) 28th 第期 (18/6 期 ) 第期 *2 29th ( 予想 ) Dec. 04 Jun. 05 Dec. 05 Jun. 06 Dec. 06 Jun. 07 Dec. 07 Jun. 08 Dec. 08 Jun. 09 Dec. 09 Jun. 10 Dec. 10 Jun. 11 Dec. 11 Jun. 12 Dec. 12 Jun. 13 Dec. 13 Jun. 14 Dec. 14 Jun. 15 Dec. 15 Jun. 16 Dec. 16 Jun. 17 Dec. 17 Jun. 18 Dec. 18 (18/12 期 ) 1. FRI implemented a two-for-one split of its investment units effective January 1, Distributions before the split have been divided by two and truncated to the nearest yen. 2. The distribution per unit (DPU) forecast for the 29th period given here is as announced in Summary of Financial Results for the 28th Fiscal Period, published August 15, The same applies hereinafter. 3. The LTV and asset size forecasts for the 29th period given here are as presented under Pre-Conditions and Assumptions for Operating Forecasts for the 29th Fiscal Period (July 1, 2018 to December 31, 2018) in Summary of Financial Results for the 28th Fiscal Period. 7

9 Five-year summary Property types DPU Large-scale SCs Medium-scale SCs GMSs Urban retail facilities Land interests (yen) 11,000 Distribution growth 3.8% 8.7% 10, % 18.6% 37.3% bn sold 2 Urban retail facilities 7.3 bn GMSs 20.3 bn 19.6% 26.7% 9,000 8,000 9,173 10,194 GMSs 20.8% 40.3% bn acquired Large-scale SCs 23.7 bn Urban retail facilities 17.9 bn Mediumscale SCs 1.8 bn Land interests 17.1 bn GMSs 11.2% 45.0% 7,0000 NAV per unit (yen) 450, ,000 第 18th 18 期第 28th 28 期 (13/6 (June 月 13) ) (18/6 (June 18) 月 ) NAV growth +19.1% 18th 28th (June 13) (June 18) 350, , , , billion 1. The percentage of property types are calculated based on the annualized fixed rent (excluding common area maintenance charges) of lease contracts valid as of the end of each periods. Variable rent is not taken into account. 2. The sum of the acquisition prices of properties sold. Asset size billion 250,000 0 第 18th 期 第 28th 期 (13/6 月 ) (June 13) (18/6 月 ) (June 18) 8

10

11 2. Financial results and forecasts

12 Summary 1 Steady distribution growth 23 Initiatives to strengthen the portfolio 28th Paid a distribution per unit (DPU) of over 10,000 for a third consecutive period 27th 10,146 28th 10,194 29th 10,180 (forecast) (up 48 from the 27th period; 114 above forecast) 28th Reached 300 billion in asset size through new property acquisitions Acquired SAKAE GLOBE (60% quasi co-ownership) from the sponsor in March 2018 (Nagoya City, Aichi) Acquisition price: 9,300 million Appraisal value: 9,300 million Acquired Summit Store Higashi-Nagasaki (land interest) from a third party in June 2018 (Toshima City, Tokyo) Acquisition price: 2,022 million Appraisal value: 2,330 million 28th Renovations undertaken by master lessees Mitsui Shopping Park LaLaport SHIN-MISATO (Begun March 2018) Mitsui Outlet Park IRUMA (Begun May 2018) SAKAE GLOBE (60% quasi co-ownership) Summit Store Higashi-Nagasaki (land interest) 3 28th Maintained conservative financial operations Conservative financial operations LTV 28th period end: 44.1% (including leasehold and security deposits) Interest-bearing debt ratio 28th period end: 32.2% (excluding leasehold and security deposits) 29th Simultaneously issued two series of bonds with maturities of over ten years, a first for a J-REIT 3rd Investment Corporation Bonds 4th Investment Corporation Bonds Amount: 1.0 billion Amount: 1.0 billion Period: 12 years Period: 20 years Annual interest rate: 0.68% Annual interest rate: 1.00% 11 0

13 Steady distribution growth Distribution per unit LTV and asset size (acquisition price basis) (yen) 11,000 (%) 4, LTV ,500 10,000 9,694 9,903 10,022 10,146 10,194 10,180 3, ,500 9,000 8, th 25th 26th 27th 28th 29th forecast June 16 Dec. 16 June 17 Dec. 17 June 18 Dec. 18 (billion ( yen) 億円 ) 3, Asset size NAV per unit 2, (yen) 450, , , , , , , ,681 2, ,000 1, , , th 25th 26th 27th 28th 1, th 25th 26th 27th 28th (10.0) June 16 Dec. 16 June 17 Dec. 17 June 18 June 16 Dec. 16 June 17 Dec. 17 June 18 12

14 28th period results 27th period (July 1, 2017 to December 31, 2017) 28th period (January 1, 2018 to June 30, 2018) Change Major factors in changes Operating revenue 10,135 10, % Expenses related to rent business (excluding depreciation) 2,090 2, NOI 8,044 8, Depreciation 2,072 2, Property leasing operating income Selling, general and administrative expenses* 5,971 6, Operating income 5,331 5, % Non-operating income Non-operating expenses Ordinary income 5,033 5, % Extraordinary losses Note 1 Note 2 Note 2 Note 2 Note 3 Note 1. Operating revenue Operation of 28th period acquisitions (SAKAE +122 GLOBE and Summit Store Higashi-Nagasaki) and full-period operation of 27th period acquisition (Super Viva Home Zama and Super Sanwa Zama Higashihara) Sales-linked rent +14 Income from utility expenses -24 Tenant change at Don Quijote Fukuoka Tenjin -20 (previously TSUTAYA BOOK STORE TENJIN) Tenant change at VIORO (including lump-sum +12 payment) Note 2. Operating expenses Property management expenses +20 Utility expenses, etc. -27 Repairs and maintenance +1 Property tax, city planning tax, etc. +20 Depreciation and amortization +6 Selling, general and administrative expenses +2 Net income 5,032 5, % Distribution per unit (yen) 10,146 10, % Note 3. Extraordinary losses Provision for loss on disaster due to Northern Osaka Earthquake +74 Investment units issued and outstanding (units) 496, ,000 LTV at period-end 42.2% 44.1% +1.9 pt Interest-bearing debt ratio 29.8% 32.2% +2.4 pt Number of properties * Selling, general and administrative expenses = Asset custody fee + Administrative service fees + Directors compensation + Other operating expenses 13

15 29th period forecast 28th period results (January 1, 2018 to June 30, 2018) 29th period forecast* (July 1, 2018 to December 31, 2018) Change Operating revenue 10,240 10, % Operating income 5,411 5, % Ordinary income 5,131 5, % Net income 5,056 5, % Distribution per unit (yen) 10,194 10, % Assumptions underlying operating results forecasts 28th period results 29th period forecast* Investment units issued and outstanding (units) 496, ,000 Note 1 Note 2 Major factors in changes Note 1. Operating revenue Full-period operation of 28th period acquisitions +125 (SAKAE GLOBE and Summit Store Higashi- Nagasaki) Sales-linked rent -15 Income from utility expenses +25 Land rent revisions +4 Tenant change at VIORO (absence of lump-sum payment) -20 Note 2. Operating income (excluding difference in operating revenue) Utility expenses -18 Repairs and maintenance -116 Depreciation and amortization -2 LTV at period-end 44.1% Approx. 44% Number of properties Property tax, city planning tax, etc. 1,063 1,062 ( 単位 : 百万円 ) Repairs and maintenance Depreciation and amortization 2,078 2,081 Non-operating expenses Capital expenditures * Forward-looking figures given here are as announced in Summary of Financial Results for the 28th Fiscal Period, published August 15,

16 3. Management highlights

17 Management highlights Large-scale shopping centers リニューアル Renovation LaLaport ららぽーと新三郷 SHIN-MISATO ( リージョナル (regional SC) SC) リニューアル Renovation 三井アウトレットパーク入間 Mitsui Outlet Park IRUMA ( アウトレットモール (outlet mall) ) Renovated by master lessee Mitsui Fudosan 23 new stores and 11 remodeled stores opened, all aimed at being the No. 1 entertainment mall in the region, surpassing customer expectations NEW! 2-stage opening in March and April 2018 Renovated by master lessee Mitsui Fudosan Openings from May to July new stores and 15 remodeled stores opened, including well-known Japanese and overseas manufacturers, brands and curated shops, to mark the facility s 10th anniversary in April 2018 NEW! etc. Train-themed food sample cart by the kids space (part of renovated common areas) etc. Events to celebrate the property s 10th anniversary Remodeled break room, part of efforts to improve employee satisfaction Location 3 Shin-Misato LaLaCity, Misato City, Saitama Opened September 2009 Stores Approx. 180 Retail zone population* 3 km radius: 105,000; 5 km radius: 319,000 Leased floor space 142, m 2 *Calculated using Basic Resident Register data as of April 1, 2016 LaLaCity Shin-Misato Sta. JR Musashino Line LaLaport Costco SHIN-MISATO IKEA Shin-Misato Annex FRI properties Commercial zone Logistics zone Residential zone Among the largest outlet malls in the Tokyo metropolitan area, with a large retail zone (237,000 people within a 5 km radius, 1,154,000 within 10 km, and 2,737,000 within 15 km) Generates sales-linked rent every period Iruma Station To Chichibu Bushi Station Ken-O Expressway Iruma IC To Ome Otsuma Women s Univ. Inariyama Koen Station Iruma City Hall Seibu Ikebukuro Line Musashi Fujisawa Station Costco Wholesale Warehouse Iruma (land interest) Mitsui Outlet Park IRUMA 16

18 Management highlights Medium-scale shopping centers 内部成長 Internal growth カナート洛北 QANAT Rakuhoku ( ネイバーフッド (neighborhood SC) SC) Internal growth Papillon Plaza (neighborhood SC) We have been examining internal growth opportunities since the master lessee (H 2 O Asset Management) acquired an adjacent lot in August 2016 Reached a basic agreement with the master lessee on additional construction in May 2018 FRI to invest in the existing building, and moderate rent increase expected; agreed to leave rent unchanged at January 2018 rent revision Working with the tenant to enhance the entire facility s competitiveness Schedule of construction of new building th period 30th period 31st period 32nd period (Jul. Dec.) (Jan. Jun.) (Jul. Dec.) (Jan. Jun.) December: August: Construction of new building begins Construction ends January: Remodeling of existing building begins Opened in 1993 to take advantage of a favorable location boasting direct access to main roads Contract to reach maturity in April 2019 Now looking into future internal growth opportunities Radius Population* growth 1 km 33, % 3 km 214, % 5 km 522, % *Calculated using Basic Resident Register data as of April 1, 2016 Yoshizuka Sta. 3 min. to Hakata station Papillon Plaza (Approx. 44,000m 2 ) Hakata Sta. Concept illustration of the new building 2018 ZENRIN 17

19 Management highlights Urban retail facilities External growth SAKAE GLOBE (60% quasi co-ownership) Features of FRI s urban retail facilities FRI owns stores with street level access and buildings that house specialty stores in prime urban locations with high liquidity FRI maintains a good balance of acquisitions from the sponsor (sponsor-developed properties) and from third parties Growing demand from foreign tourists is positively affecting store sales Acquired from the sponsor Ginza Ikebukuro Acquired from third parties Harajuku Tenjin Shinsaibashi Sakae Acquired using the sponsor s pipeline Street-level store on a corner lot on Nagoya s Otsu-dori, the only street lined with major fashion brand stores in the Chubu region Entire building leased by globally popular fashion brand ZARA Cutting-edge store features a interior and exterior with a bright and open design Location Acquisition price 3 Sakae, Naka-ku, Nagoya City, Aichi 9,300 million Acquisition date March 28, 2018 (thousand yen/m 2 ) 25,000 20,000 15,000 10,000 GINZA GLASSE roadside land price Contract type Leased floor space 4, m 2 Fixed-term building lease 5, Source: National Tax Agency

20 Management highlights Land interests External growth Summit Store Higashi-Nagasaki (land interest) Internal growth Costco Wholesale Warehouse Shin-Misato (land interest) Acquired through the Asset Management Company s unique network Faces a major road in a residential area, presenting unusual advantages as a roadside retail facility Long term lease contract, providing stable revenue Retail trading area population (2015 population census): Within 500 m: 15,000; 1 km: 62,000 Agreed on new leasing contract for part of the property in May 2018 Costco Wholesale Japan Inc. to open a gas station Land rent to increase 6.1% after gas station opening Site of gas station Location 500 m Higashi- Nagasaki Sta. 1 km 3 km Ikebukuro Sta. Grid-square population analysis 14,000 5,000 3,000 2,000 1, Sources: The Regional Economy and Society Analyzing System(RESAS)and Grid Square Statistics of Population Census undertaken by Statistics Japan, the Ministry of Internal Affairs and Communications Acquisition price 5 Nagasaki, Toshima City, Tokyo 2,022 million Acquisition date June 8, 2018 Contract period Leased floor space 3, m 2 Apr Apr (fixed-term business-use land lease contract) Location Site of gas station 2018 ZENRIN Period-end book value Costco Shin-Misato LaLaport SHIN-MISATO 3 Shin-Misato LaLaCity, Misato City, Saitama 3,854 million Scheduled opening September 2018 Shin-Misato Sta. Annex 19

21 FRI and the retail market Annual retail product sales by region Consumption by overseas tourists visiting Japan Hokkaido Tohoku Tokyo metropolitan area Chubu Kansai 北海道東北首都圏中部関西中国四国九州 沖縄 Chugoku Shikoku Kyushu/Okinawa 5.6% 12.1% 4.8% 3.2% 6.4% 17.9% Annual retail product sales by region 39.0% 10.9% 13.2% 9.0% Distribution of FRI properties* 51.2% (trillion yen) Government target: 8 trillion 11.0% 15.8% * Calculated based on the annualized fixed rent (excluding common area maintenance charges) of lease contracts valid as of June 30, Variable rent is not taken into account. Source: Data on 2017 retail sales volumes by regional Bureau of Economy, Trade and Industry, Ministry of Economy, Trade and Industry Year-on-year comparison of monthly sales at FRI properties Source: Consumption Trend Survey for Foreigners Visiting Japan, Japan Tourism Agency BtoC e-commerce market size and e-commerce adoption rate (product sales) 30% 20% 10% 0% -10% SC FRI (trillion yen) % 6 E-commerce market size E-commerce adoption rate EC (left 市場規模 axis) ( 左目盛 ) EC (right 化率 axis) ( 右目盛 ) 5.79% 5.43% 4.75% 4.37% 7% 6% 5% 4% 3% -20% -30% 2017/ / / / / / / / / / / /06 * Calculated based on sales at properties for which comparisons with the previous year are possible. Source: SC sales statistics report, Japan Council of Shopping Centers 2% 3 1% % Source: Ministry of Economy, Trade and Industry FY2017 E-Commerce Market Survey 20

22 Sound balance sheet Key financial indicators Unrealized gain based on appraisal value and NAV Balance of borrowings and bonds Balance of leasehold and security deposits* LTV ratio 42.2% 44.1% Interest-bearing debt ratio 27th (December 31, 2017) 28th (June 30, 2018) 85,400 million 93,400 million 33,105 million 33,027 million Total balance of liabilities 118,505 million 126,427 million 29.8% 32.2% Long-term debt ratio 86.3% 91.5% * For an overview of leasehold and security deposits, please see p billion (Appraisal value) Total assets: billion (as of June 30, 2018) Cash and deposits, etc billion Book value of assets under management billion Unrealized gain 62.7 billion Borrowings and bonds 93.4 billion Leasehold and security deposits 33.0 billion Other liabilities 2.6 billion Net assets billion billion billion (NAV) NAV per unit 432,681 (billion yen) Unrealized gain based on appraisal value 62.7 billion (up 5.1 billion from 27th period) (billion yen) NAV NAV growth +19.1% over five years st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 21

23 Internal growth financial Refinancing to reduce debt cost (excluding short-term loans) (%) (years) % % Average interest rate of repayments in each period % 0.98 Average period of repayments in each period % 第 25th 期第 26th 期第 27th 期第 28th 期第 29th 期第 30th 期第 31st 期第 32nd 期第 33rd 期 Distribution of maturity dates Average interest rate of new loans/bonds in each period Average period of new loans/bonds in each period (billion yen) (as of August 15, 2018) Commitment line Long-term borrowings Security deposits 投資法人債短期借入金 Investment corporation bonds Short-term borrowings Long-term funding 第 28 期の長期借入分 procured in 28th Long-term 第 29 funding 期の長期借入分 procured in 29th Average remaining loan/bond period and debt cost (at each period end) (years) Years 残存年数 remaining ( 左軸 )(left axis) 調達コスト Debt cost (right ( 右軸 axis) ) (%) % Average, including leasehold and security deposits: 1.00% %1.09% 0.40% 1.07%1.05% 0.98% 0.72%0.69% 0.92%0.84% 0.62% 0.80% ,000 90,000 80, % Average, including leasehold and security deposits: 5.99 years 第 18th 期第 19th 期第 20th 期第 21st 期第 22nd 期第 23rd 期第 24th 期第 25th 期第 26th 期第 27th 期第 28th 期 Balance of borrowings and bonds and interest paid Balance of borrowings Interest paid and 借入金等残高 bonds (left axis) ( 左軸 ) 支払利息額 (right axis) ( 右軸 ) Impact on DPU: % 0.40% 0.20% 0.00% -0.20% , 第 29 期第 30 期第 31 期第 32 期第 33 期第 34 期第 35 期第 36 期第 37 期第 38 期第 39 期第 40 期第 41 期第 42 期第 43 期第 44 期第 45 期第 46 期第 47 期第 48 期第 49 期第 50 期第 51 期第 52 期第 53 期第 54 期第 55 期第 56 期第 57 期第 66 期第 67 期第 68 期第 69 期 29th 30th 31st 32nd 33rd 34th 35th 36th 37th 38th 39th 40th 41st 42nd 43rd 44th 45th 46th 47th 48th 49th 50th 51th 52nd 53rd 54th 55th 56th 68th 69th 60,000 50,000 40, 第 18th 19th 期第 19th 20th 期第 20th 21st 期第 21st 22nd 期第 22nd 23rd 期第 23rd 期 24th 第 24th 期 25th 第 25th 期 26th 第 26th 期第 27th 期第 28th 期

24 Sustainability Environmental initiatives External recognitions related to environmental initiatives DBJ Green Building Certification Mitsui Shopping Park LaLaport SHIN-MISATO VIORO GRESB Real Estate Assessment AEON MALL Ibaraki Mitsui Shopping Park LaLaport IWATA Mitsui Outlet Park IRUMA East Asia / Retail / Listed 2nd (of 6 entities) Global 156th (of 823 entities) SMBC Environmental Assessment GINZA GLASSE Ikebukuro Square AEON MALL NAGOYADOME-Mae Mitsui Shopping Park LaLagarden KASUKABE Percentage of portfolio that is DBJ Green Building certified:* 62.2% * Calculated on a floor area basis (excluding land interest properties), as of December 31, AA: Implementing excellent environmental consideration 23

25 Sustainability Environmental and Social Initiatives Reducing environmental burden Initiatives for employees Per-unit reductions from fiscal 2013 (Apr Mar. 2014) levels Skill development 110% 100% * Fiscal 2013 levels = 100% Energy Water Greenhouse gases Waste Feedback Supporting the long-term growth of Asset Management Company employees Evaluation 90% 80% 70% FY2013 FY2014 FY2015 FY2016 FY2017 Qualifications held by employees Real estate broker ARES Certified Master Tax accountant Securities analyst etc. Certified silver under Health and Productivity Management Organization Recognition Program* (June 2018) 認定 健銀第 312 号 * Certified by the Tokyo Association, National Federation of Health Insurance Societies Energy Fiscal 2013 fiscal 2017 average annual reductions Greenhouse 3.8% Water gases 5.8% Waste 5.4% 6.8% Initiatives for local communities Results of events at FRI properties (May Jun. 2018) Fiscal 2017 per-unit consumption/emissions and data coverage Per-unit consumption/ emissions % of previous year Coverage* Energy kwh/ m2 96.0% 98% Water m 2 /m % 98% Greenhouse gases t-co 2 /m % 98% Waste kg/m % 90% * Floor area basis, as of December 31, 2017, excluding land interest properties and properties for which data is unavailable. Facility Participants Clothing collected Additional donations LaLagarden KASUKABE 284 1,543 kg 15,501 LaLaport IWATA 335 1,835 kg 11,285 LaLaport SHIN-MISATO 242 1,038 kg 13,180 ALPARK 636 2,913 kg 34,247 Total 1,497 7,329 kg 74,213 Asset Management Company employees also take part in running the project. 24

26 Sustainability Governance Initiatives Corporate Governance Investment Corporation/Asset Management Company Framework Investment management decision-making processes Decision-making process for establishing and changing management guidelines and asset management plans Investment Corporation Asset Management Company Mitsui Fudosan Frontier REIT Management Inc. General Meeting of Shareholders Proposal from relevant divisions Compliance Division General Manager: Screening Management Committee: Screening, approval Board of Directors: Deliberation, approval General Meeting of Unitholders Board of Directors Executive Director Takao Iwadou Supervisory Directors Takaaki Ochiai Toshio Suzuki Asset Management Agreement Corporate Auditor Board of Directors CEO and Representative Director Compliance Committee Compliance Division Asset acquisition/disposition decision-making process Relevant divisions: Selection, proposal Compliance Division General Manager: Screening Management Committee: Consideration, approval Compliance Committee: Consideration, approval Approval from FRI s Board of Directors (for transactions involving related parties) Board of Directors: Consideration, approval Management Committee Accounting Auditor Compliance Committee Ernst & Young ShinNihon Investment Division Finance Division Planning and Administration Division Committee chair: Other members: CEO & Representative Director Two external expert members Compliance Division General Manager Ensuring appropriate asset management Protects unitholders 25

27 4. Portfolio overview

28 Portfolio summary No. Property name Acquisition date Seller 1 Acquisition price Book value Appraisal value Total leasable floor space 2 Occupancy Age 3 rate 2 PML (years) 4 1 AEON STYLE Shinagawa Seaside Aug JT 20,100 15,035 19,100 77,547 m 2 100% % 2 AEON MALL Ibaraki 5 Aug JT 18,100 14,159 23, ,092 m 2 100% % 3 Papillon Plaza Aug JT 4,810 4,488 5,560 17,095 m 2 100% % 4 Kamiikedai Tokyu Store Aug JT 1,490 1,230 1,870 6,640 m 2 100% % 5 Belltown Tambaguchi Eki-Mae Store Aug JT 2,130 1,862 2,950 11,176 m 2 100% % 6 AEON MALL NAGOYADOME-Mae Mar JT 24,800 20,674 25, ,766 m 2 100% % 7 Summit Store Takinogawa Momiji-Bashi Sep JT 3,100 2,836 3,770 6,455 m 2 100% % 8 Home Center Kohnan Hiroshima Minami-Machi (land interest) 6 Apr JT 1,940 1,754 2,540 6,055 m 2 100% 9 Frespo Tosu (land interest) Nov JT 3,178 3,256 3,130 79,447 m 2 100% 10 You Me Town Hiroshima Feb JT 23,200 19,861 21, ,169 m 2 100% % 11 Queen s Isetan Suginami-Momoi Jul MF, etc. 3,560 3,355 4,190 5,212 m 2 100% % 12 Mitsui Outlet Park IRUMA Jul MF, etc. 19,900 15,957 22,800 98,714 m 2 100% % 13 Costco Wholesale Warehouse Iruma (land interest) Jul MF, etc. 2,600 2,626 2,790 24,019 m 2 100% 14 Desigual Harajuku 7 Oct Non-sponsor 3,100 2,898 3,500 1,149 m 2 100% % 15 Ito-Yokado Higashi-Yamato Jan Non-sponsor 11,600 9,729 11,200 53,374 m 2 100% % 16 AEON TOWN Tanashi-Shibakubo Feb MF, etc. 3,100 2,813 3,300 8,785 m 2 100% % 17 Don Quijote Fukuoka Tenjin Dec Non-sponsor 3,700 3,307 4,390 4,532 m 2 100% % 18 Mitsui Shopping Park LaLaport IWATA Jul MF, etc. 15,200 11,273 15, ,136 m 2 100% % 19 GINZA GLASSE Jul MF, etc. 13,600 12,849 15,500 5,174 m 2 100% % 20 Shimura Shopping Center Jan Non-sponsor 4,430 4,184 5,790 17,126 m 2 100% % 21 Mitsui Shopping Park LaLagarden KASUKABE Feb MF, etc. 10,000 8,605 11,400 63,415 m 2 100% % 22 Summit Store Yokohama Okano (land interest) Feb Non-sponsor 5,700 5,945 6,960 14,394 m 2 100% 23 VIORO Feb Non-sponsor 10,100 9,631 11,900 5,839 m % % 24 QANAT Rakuhoku Jul MF, etc. 8,800 7,889 8,640 48,303 m 2 100% % 25 Ikebukuro Square Feb MF, etc. 20,400 19,240 25,000 8,863 m 2 100% % 27

29 Portfolio summary No. Property name Acquisition date Seller 1 Acquisition price Book value Appraisal value Total leasable floor space 2 Occupancy Age 3 rate 2 PML (years) 4 26 Mitsui Shopping Park ALPARK (East Building) Feb MF, etc. 5,400 4,827 5,550 65,603 m 2 100% % 27 Kohnan Kawasaki-Odasakae Mall (land interest) Jan Non-sponsor 7,000 7,069 9,160 23,393 m 2 100% Mitsui Shopping Park LaLaport 28 SHIN-MISATO Annex Mar MF, etc. 3,930 3,683 3,820 6,714 m 2 100% % 29 Shinsaibashi Square Mar MF, etc. 8,620 8,652 10,000 1,750 m 2 100% 3.8 7% 30 Mitsui Shopping Park LaLaport SHIN-MISATO 8 Apr Aug MF, etc. 19,840 19,366 20, ,315 m 2 100% % Costco Wholesale Warehouse Shin-Misato 31 (land interest) Apr MF, etc. 3,810 3,854 4,210 30,292 m 2 100% 32 KOJIMA x BIC CAMERA Naha Store Jan Non-sponsor 1,850 1,913 2,500 7,301 m 2 100% % 33 Super Viva Home Zama and Super Sanwa Zama Higashihara (land interest) Jul Non-sponsor 4,320 4,385 4,580 28,926 m 2 100% 34 SAKAE GLOBE 9 Mar MF, etc. 9,300 9,354 9,540 4,613 m 2 100% 1.0 9% 35 Summit Store Higashi-Nagasaki (land interest) Jun Non-sponsor 2,022 2,130 2,340 3,952 m 2 100% Total (35 properties, as of June 30, 2018) 304, , ,480 1,442,351m 2 100% % 1. MF, etc. represents Mitsui Fudosan and its consolidated subsidiaries as well as special purpose companies in which Mitsui Fudosan has invested. 2. For properties for which pass-through type master lease contracts are concluded, the figures are as at June 30, 2018, calculated on an end tenant basis. 3. With the exclusion of land interests, the determination of property age is calculated using the weighted average method based on acquisition price. 4. PML represents the probable maximum loss in earthquake risk analysis. The values stated for AEON MALL Ibaraki and Mitsui Outlet Park IRUMA are for the store buildings. The figure for Desigual Harajuku includes the portion of the building that was demolished as of October 29, The figure for Shinsaibashi Square is for the north tower. The value listed under Total represents the PML value at June 30, 2018 of the entire portfolio as a whole (properties from No. 1 to No. 35), not the average value of the properties in the portfolio. 5. The acquisition price is as at the time of acquisition and includes the price of a part of land sold to Ibaraki City on October 12, 2010 (Space: m 2 ; book value: 15 million; sales price: 19 million) 6. The acquisition price is as at the time of acquisition and includes the price of the building on the property at the time ( 208 million). Said building was demolished as announced on December 2, The value given for book value is that after the building s demolition. 7. The acquisition price is as at the time of acquisition and includes a portion of the site sold on July 30, 2012 (cost of sales: 259 million). 8. FRI acquired a 16% co-ownership stake on April 1, 2015, and an additional 50% co-ownership stake on August 10, 2016, but the total leasable floor space presented here is that for the entire property. The acquisition price presented is the total after the additional acquisition. 9. FRI acquired a 60% quasi co-ownership stake on March 28, 2018, but the total leasable floor space presented here is that for the entire property. 28

30 Rent revision and lease maturity schedules Property name Main tenant 1 Contract type 2 Saleslinked rent Percentage of total annual rent th 29th 30th 31st 32nd 33rd 34th 35th 36th 37th 1 AEON STYLE Shinagawa Seaside AEON Retail ML T 7.4% Maturity Oct-22 2 AEON MALL Ibaraki AEON Retail ML F 7.6% Apr-35 3 Papillon Plaza Royal Home Center M/P 4 F/T 2.0% Maturity Apr-19 4 Kamiikedai Tokyu Store Tokyu Store ML F 0.5% Maturity Mar-22 5 Belltown Tambaguchi Eki-Mae Store Matsumoto ML F 0.9% Aug-25 6 AEON MALL NAGOYADOME-Mae AEON Retail ML F 7.8% Mar-26 7 Summit Store Takinogawa Momiji-Bashi Summit S F 1.0% Sep-26 8 Home Center Kohnan Hiroshima Minami- Machi (land interest) Kohnan Shoji S F 9 Frespo Tosu (land interest) Daiwa Lease S F 1.2% Nov You Me Town Hiroshima Izumi ML F 7.5% Feb Queen s Isetan Suginami-Momoi IM Food Style ML F 1.1% Dec Mitsui Outlet Park IRUMA Mitsui Fudosan ML F 6.4% Jul-38 Costco Wholesale Warehouse Iruma 13 (land interest) Costco S F 0.8% Apr Desigual Harajuku INTS S F 0.7% Maturity Sep Ito-Yokado Higashi-Yamato Ito-Yokado ML T 3.8% Revision Revision Nov-23 Undisclosed 16 AEON TOWN Tanashi-Shibakubo AEON Town ML T 1.2% Mar Don Quijote Fukuoka Tenjin Don Quijote S F Undisclosed Mar Mitsui Shopping Park LaLaport IWATA Mitsui Fudosan ML F 6.0% Jun GINZA GLASSE 5 P F/T 3.5% 20 Shimura Shopping Center Summit ML T 1.6% Revision Maturity Nov-20 Mitsui Shopping Park LaLagarden 21 KASUKABE Mitsui Fudosan ML T 3.7% Feb-31 Summit Store Yokohama Okano (land 22 interest) Summit S F 1.6% Nov VIORO 5 P F 4.0% 24 QANAT Rakuhoku H 2 O Asset Management ML T 2.8% Revision Maturity Nov Ikebukuro Square Round One M F 6.4% Dec-32 Lease maturity Jul-37 29

31 Rent revision and lease maturity schedules Property name Main tenant 1 Contract type 2 Saleslinked rent Percentage of total annual rent th 29th 30th 31st 32nd 33rd 34th 35th 36th 37th Lease maturity Mitsui Shopping Park ALPARK (East 26 Building) Mitsui Fudosan ML T 2.7% Feb-33 Kohnan Kawasaki-Odasakae Mall (land 27 interest) Kohnan Shoji S F 2.1% Jan-36 Mitsui Shopping Park LaLaport SHIN- 28 MISATO Annex FOREVER21 P F/T 1.2% Maturity Apr Shinsaibashi Square Burberry Japan M F Undisclosed Undisclosed Mitsui Shopping Park LaLaport SHIN- 30 MISATO Mitsui Fudosan ML T 5.9% Mar-35 Costco Wholesale Warehouse Shin-Misato Undisclosed 31 Costco S F (land interest) Undisclosed 32 KOJIMA x BIC CAMERA Naha Store Kojima S F Undisclosed May-27 Super Viva Home Zama and Super Sanwa Sumitomo Mitsui Undisclosed 33 S F Zama Higashihara (land interest) Finance and Leasing Jul SAKAE GLOBE Zara Japan S F Undisclosed Undisclosed Summit Store Higashi-Nagasaki 35 Undisclosed 6 Undisclosed S F (land interest) Apr For multi-tenant properties and properties for which pass-through type master lease contracts are concluded, the end tenant that leases the largest leased floor space is shown if they lease over 30% of the total. 2. ML: Master lease contract; P: Pass-through type master lease contract (in which the amount of rent that the master lessee pays FRI is the same as the amount of rent that end tenants are contracted to pay the master lessee); S: Contract with a single tenant; M: Contract with multiple tenants; F: Fixed-term lease; T: Traditional lease 3. Figures are calculated based on the annualized fixed rent (excluding common area maintenance charges) of lease contracts valid as of June 30, FRI has a direct lease contract with Royal Home Center and pass-through type master lease contracts with the other end tenants. 5. The main tenant and the rent revision and lease maturity schedules are not disclosed as the status of contracts with end tenants varies significantly. 6. Undisclosed, as FRI has not received permission from the tenant. 30

32 FRI s portfolio in graphs Land interests 8.7% Large-scale SCs 45.0% Over 20 years 3.7% 5 years or less 6.5% Other 39.3% Mitsui Fudosan % Multi-tenant contracts 8.9% Urban retail facilities 19.6% Property type 38.6% Building age 2 5 to 10 years 21.7% Tenants Pass-through master lease contracts 10.2% Contract type 7.0% 11.2% Medium-scale 8.5% SCs 26.7% Inner ring Regional SCs Outlet malls Neighborhood SCs 6.4% GMSs Supermarkets/other 10 to 20 years 68.1% Average building age: 11.8 years Summit 4.1% Izumi 7.5% AEON Group 24.4% Single-tenant contracts 14.2% Master lease contracts 66.7% 5 years or less 2.8% 5 to 10 years 7.0% Over 10 years 90.3% 5 years or less 25.0% 3 years or less 24.7% Over 10 years 17.0% Sales-linked rent 1.1% Contract term Remaining contract term Over 10 years 46.8% Period remaining until rent revision 4 Ratio of fixed rent and saleslinked rent Average contract term: 19.0 years 5 to 10 years 28.2% Average remaining contract term: 10.7 years 3 to 5 years 17.1% 5 to 10 years 41.1% Fixed rent 98.9% 1.All figures are calculated based on the annualized fixed rent (excluding common area maintenance charges) of lease contracts valid as of June 30, Variable rent is not taken into account. The ratio of fixed rent and sales-linked rent is that of the 28th fiscal period. 2.Based on acquisition price, excluding properties operated as land interests. 3.Excluding tenants under pass-through master lease contracts. 4.Balance of time remaining until the next rent revision date or contract maturity date, whichever is earlier. 31

33 5. Appendix

34 Statement of income 27th period (July 1, 2017 to December 31, 2017) 28th period (January 1, 2018 to June 30, 2018) Change Amount % of total Amount % of total Amount % change Operating revenue 1 10, % 10, % % Rent revenue real estate 10,110 10, Rent revenue other Operating expenses 4, % 4, % % Expenses related to rent business 4,163 4, Property management expenses Property and other taxes 1,042 1, Casualty insurance Repairs and maintenance Depreciation 2,072 2,078 6 Other expenses Selling, general and administrative expenses Asset management fee Asset custody fee Administrative service fees Directors' compensations 6 6 Other Operating income 5, % 5, % % Non-operating income Non-operating expenses Interest expenses Other Ordinary income 5, % 5, % % Extraordinary losses % 74 Income before income taxes 5, % 5, % % Income taxes (after net adjustment) Net income 5, % 5, % % Unappropriated retained earnings 5, % 5, % % Major factors in changes 1 Operation of 28th period acquisitions (SAKAE +122 GLOBE and Summit Store Higashi-Nagasaki) and full-period operation of 27th period acquisition (Super Viva Home Zama and Super Sanwa Zama Higashihara) Sales-linked rent +14 Income from utility expenses -24 Tenant change at Don Quijote Fukuoka Tenjin -20 (previously TSUTAYA BOOK STORE TENJIN) Tenant change at VIORO Utility expenses, etc Provision for loss on disaster due to Northern Osaka Earthquake

35 Balance sheet (assets) 27th Period (as of Dec. 31, 2017) 28th Period (as of June 30, 2018) Change Major factors in changes Amount % of total Amount % of total Amount % change Current assets 11, % 10, % -1, % Cash and deposits 1 7,623 5,975-1,648 Cash and deposits in trust 1 3,683 4, Other Non-current assets (including deferred assets) 261, % 270, % 9, % Property, plant and equipment 2 261, ,736 9,480 Buildings 36,987 35,982-1,004 Structures Tools, furniture and fixtures Borrowings +8,000 Cash and deposits matching depreciation +2,078 Property acquisitions during 28th period -11,492 (SAKAE GLOBE and Summit Store Higashi- Nagasaki) 28th period capital expenditures -47 Tenant leasehold and security deposits +383 Partial return of security deposits -460 Accrued consumption tax Property acquisitions during 28th period +11,492 (SAKAE GLOBE and Summit Store Higashi- Nagasaki) 28th period capital expenditures +47 Depreciation and amortization -2,078 Land 72,924 75,054 2,130 Buildings in trust 32,595 32, Structures in trust Machinery and equipment in trust Tools, furniture and fixtures in trust Land in trust 117, ,449 8,704 Construction in progress in trust Intangible assets Investments and other assets Total assets 272, % 280, % 8, % 34

36 Balance sheet (liabilities and net assets) 27th Period (as of Dec. 31, 2017) 28th Period (as of June 30, 2018) Change Major factors in changes Amount % of total Amount % of total Amount % change Current liabilities 18, % 13, % -5, % Short-term loans payable 1 16,200 10,700-5,500 Operating accounts payable Accrued expenses Advances received 1,073 1, Provision for loss on disaster Other Non-current liabilities 102, % 115, % 13, % Long-term loans payable 3 66,200 79,700 13,500 Investment corporation bonds 3,000 3,000 Tenant leasehold and security deposits 4 17,491 17, Tenant leasehold and security deposits in trust 4 15,613 15, Other Loan repayment -2,500 Extension of short-term loans -5,500 Current portion of long-term loans payable +2, Accrued consumption tax Borrowings +10,500 Extension of short-term loans +5,500 Current portion of long-term loans payable -2, Tenant leasehold and security deposits +383 Partial return of security deposits Net assets per unit (yen): At the end of 27th period 306,072 At the end of 28th period 306,120 Total liabilities 120, % 129, % 8, % Unitholders capital 146, % 146, % Total surplus 5, % 5, % 23 Reserve for reduction entry Unappropriated retained earnings 5,032 5, Total net assets 5 151, % 151, % % Total liabilities and net assets 272, % 280, % 8, % 35

37 Statement of cash flows Cash flows from operating activities 27th period (July 1, 2017 to December 31, 2017) 28th period (January 1, 2018 to June 30, 2018) Income before income taxes 5,033 5,056 Depreciation and amortization 2,072 2,078 Other Net cash provided by (used in) operating activities 6,788 7,430 Cash flows from investing activities Purchase of property, plant and equipment -8-2,137 Purchase of property, plant and equipment in trust -4,497-9,483 Purchase of intangible assets -0 Repayments of tenant leaseholds and security deposits Proceeds from tenant leasehold and security deposits Repayments of tenant leasehold and security deposits in trust Proceeds from tenant leasehold and security deposits in trust Payments of restricted bank deposits in trust Proceeds from reversal of restricted bank deposits in trust 216 Net cash provided by (used in) investment activities -5,179-11,716 Cash flows from financing activities Proceeds from short-term loans payable 31,500 30,000 Repayment of short-term loans payable -30,000-28,500 Proceeds from long-term loans payable 3,500 16,000 Repayment of long-term loans payable -6,000-9,500 Dividends paid -4,968-5,027 Net cash provided by (used in) financing activities -5,968 2,972 Net increase (decrease) in cash and cash equivalents -4,359-1,313 Cash and cash equivalents at beginning of period 15,194 10,834 Cash and cash equivalents at end of period 10,834 9,521 36

38 Key indicators NOI yield * Yield after depreciation * 7.0% 6.3% 6.2% 6.3% 6.2% 6.1% 7.0% 6.0% 5.0% 4.0% 5.7% 5.6% 5.6% 5.2% 5.2% 5.2% 5.5% 5.4% 5.0% 4.9% 6.0% 5.0% 4.0% 4.6% 4.5% 4.6% 4.6% 4.5% 4.2% 4.1% 4.1% 4.1% 4.0% 3.0% 2.0% Book 帳簿価額ベース value Acquisition 取得価格ベース Appraisal 鑑定価額ベース basis price basis value basis 3.0% 2.0% 3.8% 3.8% 3.8% 3.7% 3.7% Book 帳簿価額ベース value 取得価格ベース Acquisition Appraisal 鑑定価額ベース basis price basis value basis 第 24th 期 (16/6 (June 16) 月 ) 第 25th 期 (16/12 (Dec. 16) 月 ) 第 26th 期 (17/6 (June 17) 月 ) 第 27th 期 (17/12 (Dec. 17) 月 ) 第 28th 期 (18/6 (June 18) 月 ) 第 24th 期 (June (16/6 16) 月 ) 第 25th 期 (16/12 (Dec. 16) 月 ) 第 26th 期 (17/6 (June 17) 月 ) 第 27th 期 (17/12 (Dec. 17) 月 ) 第 28th 期 (18/6 (June 18) 月 ) LTV / Interest-bearing debt ratio NAV per unit / BPS per unit 50% 40% 30% 39.1% 25.5% 42.3% 41.6% 42.2% 29.6% 28.8% 29.8% 44.1% 32.2% (yen) 450, , , , , , , , , , , , ,120 20% 300,000 10% 0% LTV 有利子負債比率 Interest-bearing debt ratio 250, ,000 一口当たり NAV per NAV unit 一口当たり BPS per BPS unit 第 24th 期 (16/6 (June 16) 月 ) 第 25th 期 (16/12 (Dec. 16) 月 ) 第 26th 期 (17/6 (June 17) 月 ) 第 27th 期 (17/12 (Dec. 17) 月 ) 第 28th 期 (18/6 (June 18) 月 ) 第 24th 期 (16/6 (June 16) 月 ) 第 25th 期 (16/12 (Dec. 16) 月 ) 第 26th 期 (17/6 (June 17) 月 ) 第 27th 期 (17/12 (Dec. 17) 月 ) 第 28th 期 (18/6 (June 18) 月 ) * The above figures are calculated excluding extraordinary factors. 37

39 Leasing income and expenses by property AEON STYLE Shinagawa Seaside AEON MALL Ibaraki Papillon Plaza Kamiikedai Tokyu Store Belltown Tambaguchi Eki-Mae Store AEON MALL NAGOYADOME-Mae Summit Store Takinogawa Momiji-Bashi Home Center Kohnan Hiroshima Minami-Machi (land interest) Frespo Tosu (land interest) You Me Town Hiroshima Queen s Isetan Suginami-Momoi Mitsui Outlet Park IRUMA Costco Wholesale Warehouse Iruma (land interest) Real estate rent revenue Expenses related to rent business Property leasing Rent Rent Property Property Casualty Repairs and Total operating revenue revenue Total and other management insurance maintenance Depreciation Other expenses real estate other taxes expenses income NOI 1 NOI yield 2 (to acquisition price) 27th % 7.2% 28th % 7.5% 27th % 9.2% 28th % 7.6% 27th % 6.6% 28th % 6.7% 27th % 7.5% 28th % 7.5% 27th % 7.9% 28th % 7.9% 27th % 6.4% 28th % 6.4% 27th % 6.4% 28th % 6.4% 27th Not 3 disclosed % 7.6% 28th Not 3 disclosed % 7.6% 27th % 6.2% 28th % 6.3% 27th % 6.4% 28th % 6.5% 27th % 4.2% 28th % 4.1% 27th % 7.5% 28th % 8.0% 27th % 5.6% 28th % 5.7% (to book value) 38

40 Leasing income and expenses by property Desigual Harajuku Ito-Yokado Higashi-Yamato AEON TOWN Tanashi-Shibakubo Don Quijote Fukuoka Tenjin Mitsui Shopping Park LaLaport IWATA GINZA GLASSE Shimura Shopping Center Mitsui Shopping Park LaLagarden KASUKABE Summit Store Yokohama Okano (land interest) VIORO QANAT Rakuhoku Ikebukuro Square Mitsui Shopping Park ALPARK (East Building) Real estate rent revenue Expenses related to rent business Property leasing Rent Rent Property Property Casualty Repairs and Total operating revenue revenue Total and other management insurance maintenance Depreciation Other expenses real estate other taxes expenses income NOI 1 NOI yield 2 (to acquisition price) 27th % 3.9% 28th % 3.9% 27th % 6.7% 28th % 6.6% 27th % 6.9% 28th % 7.0% 27th Not 3 disclosed % 5.5% 28th Not 3 disclosed % 5.8% 27th % 8.6% 28th % 8.7% 27th % 3.7% 28th % 3.8% 27th % 6.6% 28th % 6.6% 27th % 6.4% 28th % 7.4% 27th % 4.9% 28th % 4.8% 27th % 5.3% 28th % 4.8% 27th % 4.6% 28th % 5.7% 27th % 5.7% 28th % 5.6% 27th % 8.0% 28th % 8.3% (to book value) 39

41 Leasing income and expenses by property Kohnan Kawasaki- Odasakae Mall (land interest) Mitsui Shopping Park LaLaport SHIN-MISATO Annex Shinsaibashi Square Mitsui Shopping Park LaLaport SHIN-MISATO Costco Wholesale Warehouse Shin-Misato (land interest) KOJIMA x BIC CAMERA Naha Store Super Viva Home Zama and Super Sanwa Zama Higashihara (land interest) SAKAE GLOBE Summit Store Higashi- Nagasaki (land interest) Total Real estate rent revenue Expenses related to rent business Property leasing Rent Rent Property Property Casualty Repairs and Total operating revenue revenue Total and other management insurance maintenance Depreciation Other expenses real estate other taxes expenses income NOI 1 NOI yield 2 (to acquisition price) 27th % 5.3% 28th % 5.3% 27th % 5.6% 28th % 5.7% 27th Not 3 disclosed % 4.0% 28th Not 3 disclosed % 4.0% 27th % 5.1% 28th % 5.2% 27th Not 3 disclosed % 4.5% 28th Not 3 disclosed % 4.5% 27th Not 3 disclosed % 7.3% 28th Not 3 disclosed % 7.2% 27th Not disclosed th Not 3 disclosed % 3.6% 27th 28th Not disclosed th 28th Not disclosed th 10,135 10, ,163 1, , ,972 8, % 6.2% 28th 10,240 10, ,185 1, , ,055 8, % 6.1% (to book value) 1. NOI = Property leasing operating income + Depreciation 2. NOI yield is not shown for the properties acquired in the 27th and 28th period. Total NOI yield are calculated excluding extraordinary factors. 3. Only NOI is disclosed, as FRI has not obtained the permission of the lessee to disclose other information. 40

42 Appraisal value Area Tokyo metropolitan area Chubu Kansai Chugoku Kyushu/ Okinawa Property name Book value 28th period 27th period Acquisition Acquisition Changes at end of (June 30, 2018) (December 31, 2017) date price 28th period Appraisal value CR 1 Appraisal value CR 1 Appraisal value CR 1 AEON STYLE Shinagawa Seaside Aug ,100 15,035 19, % 19, % 0 0.0% Kamiikedai Tokyu Store Aug ,490 1,230 1, % 1, % % Summit Store Takinogawa Momiji-Bashi Sep ,100 2,836 3, % 3, % % Queen s Isetan Suginami-Momoi Jul ,560 3,355 4, % 4, % % Mitsui Outlet Park IRUMA Jul ,900 15,957 22, % 22, % % Costco Wholesale Warehouse Iruma (land interest) Jul ,600 2,626 2, % 2, % % Desigual Harajuku Oct ,100 2,898 3, % 3, % % Ito-Yokado Higashi-Yamato Jan ,600 9,729 11, % 11, % % AEON TOWN Tanashi-Shibakubo Feb ,100 2,813 3, % 3, % 0 0.0% GINZA GLASSE Jul ,600 12,849 15, % 15, % % Shimura Shopping Center Jan ,430 4,184 5, % 5, % % Mitsui Shopping Park LaLagarden KASUKABE Feb ,000 8,605 11, % 11, % % Summit Store Yokohama Okano (land interest) Feb ,700 5,945 6,960 (4.5%) 4 6,800 (4.6%) % Ikebukuro Square Feb ,400 19,240 25, % 24, % % Kohnan Kawasaki-Odasakae Mall (land interest) Jan ,000 7,069 9,160 (4.4%) 4 8,950 (4.5%) % Mitsui Shopping Park LaLaport SHIN-MISATO Annex Mar ,930 3,683 3, % 3, % % Mitsui Shopping Park LaLaport SHIN-MISATO 2 Apr Aug ,840 19,366 20, % 20, % % Costco Wholesale Warehouse Shin-Misato (land interest) Apr ,810 3,854 4, % 3, % % Super Viva Home Zama and Super Sanwa Zama Higashihara (land interest) Jul ,320 4,385 4,580-4, Summit Store Higashi-Nagasaki (land interest) Jun ,022 2,130 2,340 (4.3%) 4 2,330 5 (4.3%) 4, AEON MALL NAGOYADOME-Mae Mar ,800 20,674 25, % 25, % % Mitsui Shopping Park LaLaport IWATA Jul ,200 11,273 15, % 15, % % SAKAE GLOBE 3 Mar ,300 9,354 9, % 9, % % AEON MALL Ibaraki Aug ,100 14,159 23, % 23, % % Belltown Tambaguchi Eki-Mae Store Aug ,130 1,862 2, % 2, % % QANAT Rakuhoku Jul ,800 7,889 8, % 8, % 0 0.0% Shinsaibashi Square Mar ,620 8,652 10, % 9, % % Home Center Kohnan Hiroshima Minami-Machi (land interest) Apr ,940 1,754 2, % 2, % 0 0.0% You Me Town Hiroshima Feb ,200 19,861 21, % 21, % % Mitsui Shopping Park ALPARK (East Building) Feb ,400 4,827 5, % 5, % % Papillon Plaza Aug ,810 4,488 5, % 5, % % Frespo Tosu (land interest) Nov ,178 3,256 3, % 3, % % Don Quijote Fukuoka Tenjin Dec ,700 3,307 4, % 4, % % VIORO Feb ,100 9,631 11, % 11, % 0 0.0% KOJIMA x BIC CAMERA Naha Store Jan ,850 1,913 2, % 2, % % Total 304, , , ,530 +2,950 Unrealized gain: 62.7 billion (up 5.1 billion from 27th period) 41

43 Appraisal value (supplement) Area Tokyo metropolitan area Chubu Kansai Chugoku Kyushu/ Okinawa Property name Appraisal value 28th period (June 30, 2018) 27th period (December 31, 2017) Direct reduction Discounted cash flow Direct Appraisal approach approach reduction value approach Discounted cash flow approach CR 1 DR 6 TCR 7 CR 1 DR 6 TCR 7 AEON STYLE Shinagawa Seaside 19, % 5.6% 6.1% 19, % 5.6% 6.1% Kamiikedai Tokyu Store 1, % 4.3% 4.7% 1, % 4.4% 4.8% Summit Store Takinogawa Momiji-Bashi 3, % 4.4% 4.9% 3, % 4.5% 5.0% Queen s Isetan Suginami-Momoi 4, % 4.5% 4.9% 4, % 4.6% 5.0% Mitsui Outlet Park IRUMA 22, % 5.2% 5.6% 22, % 5.2% 5.6% Costco Wholesale Warehouse Iruma (land interest) 2, % 4.8% 5.7% 2, % 4.8% 5.7% Desigual Harajuku 3, % 2.9% 3.3% 3, % 3.0% 3.4% Ito-Yokado Higashi-Yamato 11, % 5.3% 5.7% 11, % 5.3% 5.7% AEON TOWN Tanashi-Shibakubo 3, % 5.3% 5.7% 3, % 5.3% 5.7% GINZA GLASSE 15, % 2.7% 3.1% 15, % 2.8% 3.2% Shimura Shopping Center 5, % 4.6% 4.7% 5, % 4.6% 4.7% Mitsui Shopping Park LaLagarden KASUKABE 11, % 5.0% 5.4% 11, % 5.1% 5.5% Summit Store Yokohama Okano (land interest) 6,960 (4.5%) 4 4.3% 6,800 (4.6%) 4 4.4% Ikebukuro Square 25, % 4.0% 4.4% 24, % 4.1% 4.5% Kohnan Kawasaki-Odasakae Mall (land interest) 9,160 (4.4%) 4 4.2% 8,950 (4.5%) 4 4.3% Mitsui Shopping Park LaLaport SHIN-MISATO Annex 3, % 5.2% 5.6% 3, % 5.0% 5.4% Mitsui Shopping Park LaLaport SHIN-MISATO 2 20, % 4.5% 4.9% 20, % 4.5% 4.9% Costco Wholesale Warehouse Shin-Misato (land interest) 4, % 4.5% 4.3% 3, % 4.5% 4.3% Super Viva Home Zama and Super Sanwa Zama Higashihara (land interest) 4, % 4, % Summit Store Higashi-Nagasaki (land interest) 2,340 (4.3%) 4 3.8% 2,330 5 (4.3%) 4, 5 3.8% 5 AEON MALL NAGOYADOME-Mae 25, % 4.9% 5.3% 25, % 4.9% 5.3% Mitsui Shopping Park LaLaport IWATA 15, % 5.9% 6.3% 15, % 5.9% 6.3% SAKAE GLOBE 3 9, % 3.4% 3.8% 9, % 5 3.5% 5 3.9% 5 AEON MALL Ibaraki 23, % 5.0% 5.4% 23, % 5.0% 5.4% Belltown Tambaguchi Eki-Mae Store 2, % 4.5% 4.9% 2, % 4.6% 5.0% QANAT Rakuhoku 8, % 4.5% 4.9% 8, % 4.5% 4.9% Shinsaibashi Square 10, % 3.1% 3.5% 9, % 3.3% 3.7% Home Center Kohnan Hiroshima Minami-Machi (land interest) 2, % 4.8% 2, % 4.8% You Me Town Hiroshima 21, % 6.0% 6.4% 21, % 6.0% 6.4% Mitsui Shopping Park ALPARK (East Building) 5, % 6.3% 6.8% 5, % 6.2% 6.7% Papillon Plaza 5, % 4.5% 4.9% 5, % 4.6% 5.0% Frespo Tosu (land interest) 3, % 7.2% 3, % 7.2% Don Quijote Fukuoka Tenjin 4, % 3.9% 4.3% 4, % 4.0% 4.4% VIORO 11, % 3.9% 4.0% 11, % 3.9% 4.0% KOJIMA x BIC CAMERA Naha Store 2, % 5.3% 5.7% 2, % 5.4% 5.8% 1. CR = Cap rate determined by the direct reduction approach 2. The values shown are for FRI s 66% co-ownership stake. 3. The values shown are for FRI s 60% quasi co-ownership stake. 4. The cap rate for these properties is calculated using the residual land method. 5. The values shown for properties acquired in the 28th period are based on appraisal value determined at the time of acquisition. 6. DR = Discount rate determined by the discounted cash flow approach 7. TCR = Terminal cap rate determined by the discounted cash flow approach 42

44 Borrowings and bonds Short-term borrowings Short-term borrowings Total amount Long-term borrowings Lender No. Amount Interest rate Drawdown date Maturity date Loan period (approximate) Remarks 1,000 Mizuho Bank, Ltd. 1 1, % 7/19/2018 8/20/ month Unsecured/ 1,000 The 77 Bank, Ltd. 2 1, % 6/19/2018 8/20/ months Unguaranteed Total short-term borrowings 2,000 Long-term borrowings Total amount Lender No. Amount Interest rate Drawdown date Maturity date Loan period (approximate) 15,500 Sumitomo Mitsui Banking Corporation 1 2 2,000 3, % % 7/2/2015 2/20/2012 7/2/2019 2/20/ years 8.0 years 3 1, % 8/20/2012 8/20/ years 4 1, % 5/19/ /19/ years 5 2, % 6/20/2017 6/21/ years 6 1, % 8/29/2017 8/30/ years 7 2, % 6/20/2018 6/20/ years 8 3, % 2/1/2013 2/1/ years 14,000 MUFG Bank, Ltd. 9 1, % 2/24/2012 2/22/ years 10 1, % 8/19/2011 8/19/ years 11 2, % 2/1/2013 2/1/ years 12 2, % 7/20/2018 7/20/ years 13 1, % 3/2/2015 3/4/ years 14 2, % 2/19/2015 2/19/ years 15 1, % 3/2/2015 3/3/ years 16 1,000 Note % 7/2/2015 7/2/ years 17 1, % 3/9/2016 3/9/ years 10,500 Development Bank of Japan Inc. 18 2, % 8/19/2013 8/21/ years 19 1, % 3/17/2014 5/19/ years 20 2, % 3/9/2016 3/9/ years 21 1, % 4/19/2016 7/20/ years 22 4, % 8/9/2016 2/9/ years 9,300 Mizuho Bank, Ltd. 23 1, % 7/19/2017 1/19/ years 24 1, % 3/15/2013 3/15/ years 25 1,300 Note % 7/22/2014 7/19/ years 26 1, % 2/28/2018 9/19/ years 27 2, % 2/28/2018 3/19/ years 28 1, % 5/21/ /24/ years Remarks Unsecured/ Unguaranteed 43

45 Borrowings and bonds Long-term borrowings Total amount Lender No. Amount Interest rate Drawdown date Maturity date Loan period (approximate) 5,700 Sumitomo Mitsui Trust Bank, Limited ,200 1, % % 12/16/2011 7/2/ /14/2018 7/2/ years 4.0 years 31 2, % 11/30/ /30/ years 5,000 Shinkin Central Bank 32 2, % 3/27/2018 3/27/ years 33 2, % 3/27/2018 2/19/ years 4,400 Mizuho Trust & Banking Co., Ltd. 34 2, % 2/1/2013 2/3/ years 35 1, % 3/9/2016 3/11/ years 4,000 The Norinchukin Bank 36 2, % 7/18/2013 7/18/ years 37 1,000 Note % 1/7/2015 1/23/ years 38 1, % 1/23/2018 1/23/ years 4,000 The Bank of Fukuoka, Ltd. 39 1, % 2/1/2018 2/19/ years 40 1, % 11/21/ /24/ years 41 2, % 2/24/2017 2/24/ years 2,000 The Iyo Bank, Ltd. 42 1, % 11/21/ /22/ years 43 1,000 Note % 4/1/2015 5/14/ years 2,000 The Daishi Bank, Ltd 44 1,000 Note % 2/10/2016 2/10/ years 45 1, % 8/1/2017 2/19/ years 2,000 The Yamaguchi Bank, Ltd. 46 1, % 8/18/2014 8/19/ years 47 1, % 6/19/2017 6/19/ years 1,000 The Musashino Bank, Ltd. 48 1, % 3/25/2014 5/27/ years 1,000 The Gunma Bank, Ltd. 49 1,000 Note % 12/16/ /16/ years 1,000 The Hiroshima Bank, Ltd. 50 1,000 Note % 11/25/ /25/ years 1,000 The Hachijuni Bank, Ltd. 51 1,000 Note % 11/19/2015 5/19/ years 1,000 Resona Bank, Limited 52 1,000 Note % 3/2/2015 3/4/ years 1,000 The 77 Bank, Ltd. 53 1, % 12/22/ /22/ years 1,000 The Yamanashi Chuo Bank, Ltd. 54 1, % 6/19/ /20/ years 1,000 Sumitomo Life Insurance Company 55 1, % 5/21/2018 5/22/ years Total long-term borrowings 86,400 Remarks Unsecured/ Unguaranteed Investment corporation bonds Total amount Issue No. Amount Interest rate Issue date Maturity date Period Remarks Investment corporation bonds 5,000 2nd Investment corporation bonds 3rd Investment corporation bonds 4th Investment corporation bonds ,000 1,000 1, % 0.680% 1.000% 11/25/2016 7/10/2018 7/10/ /25/2031 7/10/2030 7/9/ years 12.0 years 20.0 years Total investment corporation bonds 5, All as of August 15, Repayment method is lump-sum repayment for all borrowings. 3. All interest rates on borrowings (except for those covered by note 4) are fixed rates. 4. These borrowings have been swapped into fixed rates to avoid the risk of interest rate fluctuations. The rates indicated are those at the time the rate swap contracts were formed. Unsecured/ Unguaranteed 44

46 Ratings and indices Ratings Inclusion in global REIT indices FRI maintains top-level ratings among J-REITs, making its investment units eligible for purchase by the Bank of Japan. (as of June 30, 2018) Rating Firm Category Rating Outlook Indices JCR Long-term issuer AA Stable FTSE EPRA/NAREIT Global Real Estate Index R&I Issuer AA- Stable Dow Jones Global Select REIT Index Long-term A+ Stable S&P Global REIT Index/S&P Developed REIT Index S&P Short-term A-1 Stable GPR 250 Index/GPR 250 REIT Index (The above logos are from the websites of the respective agencies) 45

47 Leasehold and security deposits and depreciation Leasehold and security deposit features Since FRI contracts long-term leases, it can use leasehold and security deposits to procure significant long-term funding. Since FRI holds many security deposits at zero interest, these deposits provide a source of low-cost funding. Remaining period until full repayment Schedule of security deposit repayment (billion yen) 20 億円 億円 1.0 Within 5 yrs 37.3% Over 5 years: Approx. 60% (As of June 30, 2018) Over 20 yrs 2.8% Over 10 years: Approx. 30% Average remaining years until full repayment of leasehold and security deposits: 8.7 years Repayment starts at You Me Town Hiroshima Over 5 yrs, up to 10 yrs 31.7% Repayment ends at AEON Shinagawa Seaside Over 10 yrs, up to 15 yrs 6.3% Repayment ends at NAGOYADOME-Mae Over 15 yrs, up to 20 yrs 21.9% Repayment ends at You Me Town Hiroshima Utilizing depreciation Utilizing capital equivalent to each period s depreciation enables aggressive strategic investment in addition to the repayment of security deposits. 2,000 1,500 1, Property acquisition, etc. Large-scale renovations 1, , , Ordinary capital expenditure 487 Return of security deposits 1, , ,003 1, ,001 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 33 1, , , , th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 29th Dec. 13 June 14 Dec. 14 June 15 Dec. 15 June 16 Dec. 16 June 17 Dec. 17 June 18 29th (forecast) (fore -cast) Dec 億円 年 2020年 2022年 2024年 2026年 2028年 46

48 Assets acquired from the sponsor (Mitsui Fudosan) Steady track record of property acquisitions via the sponsor s robust pipeline Properties acquired from Mitsui Fudosan Queen s Isetan Suginami-Momoi 3.5 billion AEON TOWN Tanashi-Shibakubo 3.1 billion GINZA GLASSE 13.6 billion Mitsui Shopping Park LaLagarden KASUKABE 10.0 billion QANAT Rakuhoku 8.8 billion Ikebukuro Square 20.4 billion Mitsui Shopping Park LaLaport SHIN-MISATO Annex 3.9 billion Shinsaibashi Square 8.6 billion Mitsui Shopping Park LaLaport SHIN-MISATO (50%) 15.1 billion SAKAE GLOBE (60%) 9.3 billion Acquisition resources Mitsui Outlet Park IRUMA 19.9 billion Costco Wholesale Warehouse Iruma (land interest) 2.6 billion Mitsui Shopping Park LaLaport IWATA 15.2 billion Mitsui Shopping Park ALPARK (East Building) 5.4 billion Mitsui Shopping Park LaLaport SHIN-MISATO (16%) 4.7 billion Costco Wholesale Warehouse Shinmisato (land interest) 3.8 billion Non-sponsor 17.7% 10 properties 53.8 bn JT 33.8% Mitsui Fudosan, etc. 48.6% Total acquisition 15 properties price: billion bn 10 properties bn Cumulative assets acquired from Mitsui Fudosan, etc. (As of August 15, 2018) Average annual acquisitions: 14,095 million 15,100 9,300 25,800 3,930 17,170 3,100 28,800 10,000 57,960 8,800 67,960 76, , , , , ,760 26,060 26,060 29, 年 6/12 期 年 6/12 期 年 6/12 期 年 6/12 期 年 6/12 期 年 6/12 期 年 6/12 期 年 6/12 期 年 6/12 期 年 6/12 期 年 6/12 期 (Jan.- June) 47

49 Mitsui Fudosan s retail facility development Breakdown of Mitsui Fudosan s inventory of property for sale to investors Overseas rental assets in operation 12% Logistics facilities in operation 7% Rental housing in operation 6% Office buildings in operation 16% Total: Approx billion Retail facilities in operation 13% Planned & under development 46% Mitsui Fudosan s model for joint value creation with investors Property sales to various investors Buyers commission property management As of March 31, 2018 REIT sponsored by the Mitsui Fudosan Group, etc. Institutional investors, corporations, etc. Prepared from data in Mitsui Fudosan s Investor Presentation August 2018 Main retail facility projects under development Opening year Project name Location LaLaterrace Musashikosugi Mitsui Outlet Park Sapporo Kita Hiroshima (2nd stage) Mitsui Outlet Park Kisarazu (2nd stage) LaLaport Kashiwanoha (north building) Akarenga TERRACE Iidabashi Sakura Terrace LaLaport Izumi Shin Kawasaki Square LaLaport Fujimi MITSUI OUTLET PARK KLIA SEPANG (1st stage) Mitsui Outlet Park Hokuriku Oyabe Mitsui Outlet Park Makuhari (3rd stage) LaLaport Ebina LaLaport EXPOCITY Mitsui Outlet Park LINKOU 2016 LaLaport SHONAN HIRATSUKA SAKAE GLOBE KICHIJOJI SQUARE MITSUI OUTLET PARK JAZZ DREAM NAGASHIMA (5th stage) MITSUI OUTLET PARK KLIA SEPANG (2nd stage) LaLaport NAGOYA minato AQULS MITSUI OUTLET PARK KISARAZU (3rd stage) Shinsaibashi-suji 1-chome Project MITSUI OUTLET PARK TAICHUNG PORT Kawasaki City, Kanagawa Kitahiroshima City, Hokkaido Kisarazu City, Chiba Kashiwa City, Chiba Sapporo City, Hokkaido Chiyoda City, Tokyo Izumi City, Osaka Kawasaki City Kanagawa Fujimi City, Saitama Selangor, Malaysia Oyabe City, Toyama Chiba City, Chiba Ebina City, Kanagawa Suita City, Osaka New Taipei, Taiwan Hiratsuka City, Kanagawa Nagoya City, Aichi Musashino City, Tokyo Kuwana City, Mie Selangor, Malaysia Nagoya City, Aichi Kisarazu City, Chiba Osaka City, Osaka Taichung, Taiwan 2019 LaLaport NUMAZU Numazu City, Shizuoka MITSUI OUTLET PARK YOKOHAMA BAYSIDE Reconstruction Plan MITSUI OUTLET PARK KLIA SEPANG (3rd stage) LaLaport Kuala Lumpur Yokohama City, Kanagawa Selangor, Malaysia Kuala Lumpur, Malaysia TBD Retail Facility Development Project in Togocho, Aichi Aichi-gun, Aichi Miyashita Park Project Shibuya City, Tokyo Prepared from data in Mitsui Fudosan s Investor Presentation August

50 Mitsui Fudosanʼs retail facility operation Mitsui Fudosanʼs retail facility operation Mitsui Fudosan owns and operates retail facilities across Japan, mainly in the Tokyo metropolitan and Kansai areas Hokkaido Tohoku Regional SC (LaLaport, etc.) Mitsui Outlet Park Lifestyle park Urban retail facility Other Hokuriku Tokyo metropolitan area LaLaport SHONAN HIRATSUKA MITSUI OUTLET PARK SAPPORO KITAHIROSHIMA LaLaport FUJIMI Chugoku Kansai Chubu Kyushu/ Okinawa Tokyo Midtown COREDO Muromachi 1 Number of facilities 115 Total floor space Approx. 5,400,000 m 2 Leased floor space Approx. 2,900,000 m 2 Tenant stores Approx. 7,800 Tenant companies Approx. 2,300 Source: Mitsui Fudosan. As of April 1, Includes properties operated and managed on a consignment basis as well as three overseas properties. 250, , , ,000 50,000 0 Rental revenue of Mitsui Fudosan s retail facilities (non-consolidated) 223, , , , , , , , , ,191 87,393 62,091 45,947 51,716 37,601 36,935 34, 年 2003 年 2004 年 2005 年 2006 年 2007 年 2008 年 2009 年 2010 年 2011 年 2012 年 2013 年 2014 年 2015 年 2016 年 2017 年 2018 年 月期 3 月期 3 月期 3 月期 3 月期 3 月期 3 月期 3 月期 3 月期 3 月期 3 月期 3 月期 3 月期 3 月期 3 月期 3 月期 3 月期 Source: Fact books for the years ended March 31, , Mitsui Fudosan 49