Nippon Prologis REIT : SUMMARY OF FINANCIAL RESULTS (REIT) For the 18th Fiscal Period Ended Nov. 30, 2021

Nippon Prologis REIT, Inc. (3283) SUMMARY OF FINANCIAL RESULTS (REIT)

For the 18th Fiscal Period Ended Nov. 30, 2021

SUMMARY OF FINANCIAL RESULTS (REIT)

For the 18th Fiscal Period Ended Nov. 30, 2021

Jan. 17, 2022

Name of Issuer:	Nippon Prologis REIT, Inc. ("NPR")
Stock Exchange Listing:	Tokyo Stock Exchange
Securities Code:	3283
Website:	https://www.prologis‐reit.co.jp/en/
Representative	Masahiro Sakashita, Executive Director
Name of Asset Manager:	Prologis REIT Management K.K.
Representative:	Masahiro Sakashita, President and CEO
Inquiries:	Atsushi Toda, Director and Chief Financial Officer
	TEL: +81‐3‐6867‐8585

Scheduled Date of Filing of Securities Report:	Feb. 25, 2022
Scheduled Date for Commencement of Distributions Payments:	Feb. 15, 2022
Supplementary Materials for Financial Results:	Yes	・ No
		・ No
Investors & Analysts Meeting:	Yes

1. Financial Results for the Fiscal Period ended Nov. 30, 2021 (18th Fiscal Period) (June 1, 2021 to Nov. 30, 2021)

									(Values are rounded down to the nearest million yen)
(1) Operating Results					(Percentages indicates percentage change from the previous	period)
	Operating revenues		Operating income		Ordinary income	Net income
Period ended	Millions of yen	%	Millions of yen	%		Millions of yen	%	Millions of yen		%
Nov. 30, 2021	25,410	3.5		11,748	1.8		10,844		2.5	11,003		3.7
May 31, 2021	24,554	4.0		11,539	2.7		10,576		1.4	10,611		(23.9)
	Net income per unit		Return on	Ratio of ordinary income to	Ratio of ordinary income
		unit holders' equity		total assets	to operating revenues
Period ended			Yen			%				%				%
Nov. 30, 2021			4,261			2.5				1.4				42.7
May 31, 2021			4,176			2.5				1.5				43.1
(2) Distributions
		Distributions				Total of
	Distributions				Total of					Ratio of
		per unit	per unit	SCD		distributions	distributions
		(including		(including		Total of SCD	Payout ratio	distributions
		SCD)	(excluding	per unit		SCD)		(excluding				to net assets
		SCD)					SCD)
Period ended		Yen		Yen	Yen		Millions of	yen	Millions of yen	Millions of yen	%			%
Nov. 30, 2021		4,945	4,262	683		12,767	11,003		1,763	100.0			2.5
May 31, 2021		4,847	4,110	737		12,514	10,611		1,902	100.0			2.4

• "SCD" stands for the "Surplus Cash Distributions".

(Note 1) Total of SCD is the return of invested capital, which falls under the distributions through the reduction in unit holders' capital for tax purposes.

(Note 2) The ratios of net asset value attributable to a reduction in unit holders' paid‐in capital for the fiscal periods ended Nov. 30, 2021 and May 31, 2021 are 0.004 and 0.005, respectively. The payment of SCD is deemed a return of capital. This calculation methodology is pursuant to Article 23, Paragraph 1, Item 4 of the Act on Special Measures Concerning Taxation.

Nippon Prologis REIT, Inc. (3283) SUMMARY OF FINANCIAL RESULTS (REIT)

For the 18th Fiscal Period Ended Nov. 30, 2021

(3) Financial Position

	Total assets	Net assets	Ratio of unit holders' equity	Net asset per unit
	to total assets
Period ended	Millions of yen	Millions of yen	%	Yen
Nov. 30, 2021	752,324	438,844	58.3	169,972
May 31, 2021	752,998	440,355	58.5	170,558
(4) Cash Flows
	Cash flows from	Cash flows from	Cash flows from	Cash and cash equivalents
	at the end
	operating activities	investing activities	financing activities
	of the fiscal period
Period ended	Millions of yen	Millions of yen	Millions of yen	Millions of yen
Nov. 30, 2021	23,831	(1,215)	(14,512)	40,916
May 31, 2021	10,388	(61,833)	49,606	32,813

2. Earnings Forecasts for the Fiscal Period ending May 31, 2022 (19th Fiscal Period) (from Dec. 1, 2021, to May 31, 2022) and Nov. 30, 2022 (20th Fiscal Period) (from June 1, 2022, to Nov. 30, 2022)

(Percentages indicate change from the previous period)

Distributions

Operating

Distributions

Operating income

Ordinary income

Net income

per unit

per unit

revenues

(including

SCD

(excluding

SCD)

SCD)

Period ending

Millions of yen

%

Millions of y

%

Millions of

%

Millions of

%

Yen

Yen

Yen

en

yen

yen

May 31, 2022

26,793

5.4

11,990

2.1

10,919

0.7

11,058

0.5

4,869

4,141

728

Nov. 30, 2022

27,484

2.6

12,003

0.1

11,002

0.8

11,111

0.5

4,901

4,161

740

(Reference)

Forecasted net income per unit for the fiscal period ending May 31, 2022:

4,148 yen

Forecasted net income per unit for the fiscal period ending Nov. 30, 2022:

4,161 yen

3. Other

(1) Changes in Accounting Policies, Accounting Estimates or Restatements

(a) Changes in Accounting Policies due to Revisions to Accounting Standards

Yes

and Other Regulations

(b) Changes in Accounting Policies due to Other Reasons

None

(c) Changes in Accounting Estimates

None

(d) Restatements

None

(2) Number of Investment Units Issued and Outstanding

Number of investment units issued and outstanding at the end of the fiscal period including treasury units:

As of Nov. 30, 2021	2,581,850 units
As of May 31, 2021	2,581,850 units
Number of treasury units at end of period:
As of Nov. 30, 2021	0 units
As of May 31, 2021	0 units

* The Implementation Status of Statutory Audit

Summary of financial results is not inside the scope of audit procedure by certified public accountants or audit corporations.

* Special Note

The forward‐looking statements in this material are based on information currently available to us and on certain assumptions that we believe are reasonable. Actual operating performance may differ substantially due to various factors. Furthermore, those statements shall not be deemed a guarantee or any commitment of the amount of future distributions and surplus cash distributions. Please refer to "Assumptions for the forecasts for the fiscal periods ending May 31, 2022 (19th Fiscal Period) and Nov. 30, 2022 (20th Fiscal Period)" on page 10‐12 for assumptions regarding forward‐looking statements.

Nippon Prologis REIT, Inc. (3283) SUMMARY OF FINANCIAL RESULTS (REIT)

For the 18th Fiscal Period Ended Nov. 30, 2021

Index
1. Results of Operations
(1)	Results of Operations
(I) Overview of the 18th Fiscal Period ended Nov. 30, 2021
(i) Major Operational Results of NPR...............................................................................................................................................	2
(ii) Operational Results of the 18th Fiscal Period ended Nov. 30, 2021 ........................................................................................	2
(iii) Overview of Financing .............................................................................................................................................................	2
(iv) Overview of Financial Results and Distributions ......................................................................................................................	3
(II) Outlook for Next Fiscal Period
(i) Future Management Policies and Issues ...................................................................................................................................	4
(ii) Significant Subsequent Events ..................................................................................................................................................	6
(iii) Earnings Forecast .....................................................................................................................................................................	9
2. Financial Statements
(1) Balance Sheet ..............................................................................................................................................................................	13
(2) Statement of Income .................................................................................................................................................................	15
(3)	Statement of Unit Holders' Equity .............................................................................................................................................	16
(4)	Statement of Cash Distribution .................................................................................................................................................	18
(5)	Statement of Cash Flows ...........................................................................................................................................................	20
(6) Notes Concerning Going Concerns Assumption ........................................................................................................................	22
(7)	Notes Concerning Significant Accounting Policies .....................................................................................................................	22
(8)	Notes on Changes in Accounting Policies ..................................................................................................................................	23
(9)	Notes to Financial Statements.....................................................................................................................................................	24
(10) Change in Number of Investment Units Issued and Outstanding..............................................................................................	38
3. Reference Information
(1)	Composition of NPR's Assets .......................................................................................................................................................	41
(2)	Overview of the Portfolio
(I) Overview of Assets Held
(acquisition price, book value, appraisal value as of the end of the reporting fiscal period and others) .......................................	42
(II) Overview of Assets Held (property age, occupancy rate and annual rent) .................................................................................	46
(3)	Capital Expenditures for Owned Properties
(I) Future Plans for Capital Expenditure............................................................................................................................................	49
(II) Capital Expenditure Incurred for the Reported Fiscal Period......................................................................................................	49
(4)	Information Concerning Major Tenants
(I) Major Tenants
(tenants accounting for more than 10 percent of aggregate leased area).......................................................................................	49
(II) Information Related to Major Properties
(properties accounting for more than 10 percent of aggregate property‐related revenue) ............................................................	49
(5)	Overview of Property Leasing and Status of Operating Income..................................................................................................	50

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Nippon Prologis REIT, Inc. (3283) SUMMARY OF FINANCIAL RESULTS (REIT)

For the 18th Fiscal Period Ended Nov. 30, 2021

1. Results of Operations

(1) Results of Operations

1. Overview of the 18th Fiscal Period ended Nov. 30, 2021

1. Major Operational Results of NPR

NPR was established on Nov. 7, 2012 based on the Act on Investment Trust and Investment Corporation (investment trust law) and was listed on the REIT Securities Market (J‐REIT Market) of the Tokyo Stock Exchange ("TSE") on Feb. 14, 2013 (securities code: 3283).

NPR has strategically focused on investment for Class‐A logistics facilities from its inception backed by the Prologis Group's(*1) strong sponsor support and has increased unit holders' value by maintaining a portfolio that generates stable income. As a result of such investment management, NPR owned 52 properties (aggregate acquisition price(*2) : 758,349 million yen), all of which are Class‐A logistics facilities(*3) developed by the Prologis Group, as of the end of the reporting fiscal period(*4) (*5).

(*1) The Prologis Group is a group of Prologis, Inc. and its affiliates, which include Prologis K.K., a Japanese subsidiary.

(*2) "Acquisition price" does not include national or local consumption taxes or expenses which were incurred in connection with the acquisition of the properties. Figures are rounded down to millions of yen. With respect to Prologis Park Zama 1, the acquisition price is as of the date of the initial acquisition and does not reflect the partial disposition and acquisition of land on Oct. 3, 2018.

(*3) "Class‐A logistics facilities" are our target logistics properties that meet the demands of logistics companies and other end‐users with respect to operational efficiency and fulfill certain criteria with respect to size, location, state‐of‐the‐art equipment, convenience and safety.

(*4) Prologis Park Funabashi 5 and the Annex to Prologis Park Funabashi 5 are deemed a single property; the Annex to Prologis Park Funabashi 5 was not developed by the Prologis Group and is considered by itself not to qualify as a Class‐ A logistics facility.

(*5) The aggregate acquisition price and the number of owned properties include Prologis Park Iwanuma 1 (the "PP Iwanuma"). At PP Iwanuma, all tangible assets in trust, excluding land in trust, were burned down by the fire (the "Fire") that occurred during the fiscal period ended May 31, 2020.

(ii) Operational Results of the 18th Fiscal Period ended Nov. 30, 2021

In the Japanese logistics real estate market, we believe that the fundamental demand for Class‐A logistics facilities continues to increase as NPR's customers (logistics space users) move from older and smaller buildings to larger/ more advanced facilities. In our view, this shift is a result of the ongoing reconfiguration of Japan's supply chain, triggered by (i) the transition from manufacturing to services, migration of manufacturing to overseas locations, continuous expansion in global trade and economic, industrial and social structural changes inside and outside of Japan, and (ii) the expansion of e‐commerce ("EC") and third‐party logistics ("3PL") providers.

The COVID‐19 pandemic in 2020 has further accelerated expansion of EC‐related consumption and the amount of companies' inventories, and therefore, the demand for modern logistics properties has further increased. On the other hand, such business environment and continued monetary easing policy has motivated various real estate developers and investors to enter into the modern logistics properties development business, and resulted in continuous increase in the volume of new supply of properties. Under such environment, the vacancy rate of large multi‐tenant logistics properties was continuously low at 2.6% in the greater Tokyo market and 1.6% in the greater Osaka market respectively as of the end of Sep. 2021 (*1). As a whole, we believe that the supply and demand balance of the leasing market for modern logistics properties is solid.

Under these circumstances, the occupancy rate of NPR's portfolio remained high at 98.5% as of the end of the reporting fiscal period, backed by the competitive advantages of our portfolio and the strong leasing support from the sponsor, the Prologis Group.

Besides, the construction work of the redevelopment project of PP Iwanuma (the "Redevelopment Project") which NPR commenced in the fiscal period ended May 2021 is in progress as scheduled with the expected completion in April 2022.

(*1) Source: CBRE

(iii) Overview of Financing

(a) Borrowings

NPR did not conduct any new borrowing during the reporting period. The balance of NPR's interest‐bearing debt was 282,500 million yen, out of which bank borrowings accounted for 246,500 million yen and investment corporation bonds accounted for 36,000 million yen as of the end of the reporting fiscal period. NPR's loan‐to‐value ratio (the ratio of aggregate balance of interest‐bearing

2

Nippon Prologis REIT, Inc. (3283) SUMMARY OF FINANCIAL RESULTS (REIT)

For the 18th Fiscal Period Ended Nov. 30, 2021

debt, including bank loans and the outstanding balance of long‐term and short‐term investment corporation bonds, to NPR's total assets, hereinafter "LTV") was 37.6% as of the end of the reporting fiscal period.

(b) Credit Rating

NPR's credit ratings as of the end of the reporting fiscal period (Nov. 30, 2021) were as follows:

Rating Agency	Rating Object	Rating	Outlook
Japan Credit Rating Agency, Ltd.	Long‐term issuer rating	AA	Stable
Ratings on bonds	AA	‐
Rating and Investment	Issuer rating	AA	Stable
Information, Inc.	Ratings on bonds	AA	‐

(iv) Overview of Financial Results and Distributions

As a result of aforementioned activities, NPR generated operating revenues of 25,410 million yen, operating income of 11,748 million yen and ordinary income of 10,844 million yen. In addition, NPR recorded an extraordinary income of 159 million yen from the profit insurance payment of 129 million yen covering PP Iwanuma and the compensation income of 29 million by former tenants of PP Iwanuma (the "Compensation Income"). As a result, NPR generated net income of 11,003 million yen for the reporting fiscal period. The amount of NPR's distributions for the reporting period was 11,003 million yen, being determined to distribute all unappropriated retained earnings for the reporting period, excluding fractions less than 1 yen. Consequently, the distributions per unit (excluding Surplus Cash Distributions ("SCD")) for the reporting fiscal period was 4,262 yen.

In addition, NPR intends to regularly distribute cash in excess of the amount of retained earnings ("Regular Surplus Cash Distributions") in each fiscal period in accordance with a distribution policy set forth in its articles of incorporation of NPR (*1). Furthermore, to maintain the stability of NPR's distributions per unit ("DPU") in the event that DPU is expected to decline to a certain degree as a result of certain events, NPR may make additional distributions as one‐time surplus cash distributions ("One‐time Surplus Cash Distributions") (*2) in an amount determined by NPR.

For the reporting fiscal period, the total amount of NPR's Regular Surplus Cash Distributions is 1,763 million yen, which is the amount equivalent to 30 percent of NPR's depreciation expense of 5,977 million yen for the reporting fiscal period, deducting the amount of the Compensation Income. Consequently, the total amount of SCD per unit for the reporting fiscal period was determined at 683 yen from the Regular Surplus Cash Distributions.

(*1) In general, NPR intends to distribute Regular Surplus Cash Distributions on a regular basis in an amount no higher than 60 percent (however, if the result, calculated based on the rules of The Investment Trusts Association, Japan, etc., indicates lower amount, the amount should be adopted) of its depreciation expense for an applicable fiscal period, while pursuing other uses of capital such as maintenance expenses, capital expenditures, repayment of borrowings and funding of new acquisitions. In the meantime, NPR intends to regularly distribute approximately 30 percent of depreciation expense for an applicable fiscal period. However, NPR may adjust, reduce, or suspend the amount of SCD for a particular fiscal period, as a whole or partially, with considerations toward a level of NPR's profitability for a particular fiscal period which reflects NPR's net income and one‐time profits arising as capital gains from asset disposition and/or penalties received from lease contract cancellations, etc., the total amount of distributions which include SCD, NPR's LTV ratio, credit rating, and financial conditions as well as macroeconomic and real estate market conditions.

NPR estimates that the total amount of anticipated semi‐annual average of imminent or short‐term repair and maintenance expenses and medium‐ to long‐term repair and maintenance expenses is 633 million yen except for those for PP Iwanuma.

(*2) In general, NPR intends to maintain the maximum amount of the sum of the Regular Surplus Cash Distributions and the One‐time Surplus Cash Distributions, in an amount no higher than 40 percent of its depreciation expense for an applicable fiscal period.

3