Nippon Prologis REIT : SUMMARY OF FINANCIAL RESULTS (REIT) For the 19th Fiscal Period Ended May 31, 2022

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

For the 19th Fiscal Period Ended May 31, 2022

SUMMARY OF FINANCIAL RESULTS (REIT)

For the 19th Fiscal Period Ended May 31, 2022

Jul. 15, 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:	Satoshi Yamaguchi, President and Chief Executive
Officer
Inquiries:	Atsushi Toda, Deputy President and Chief Financial Officer
	TEL: [phone]

Scheduled Date of Filing of Securities Report:	Aug. 30, 2022
Scheduled Date for Commencement of Distributions Payments:	Aug. 15, 2022
Supplementary Materials for Financial Results:	Yes	・ No
		・ No
Investors & Analysts Meeting:	Yes

1. Financial Results for the Fiscal Period ended May 31, 2022 (19th Fiscal Period) (from Dec. 1, 2021 to May 31, 2022)

									(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		%
May 31, 2022	26,859	5.7		12,077		2.8		11,006		1.5	11,329		3.0
Nov. 30, 2021	25,410	3.5		11,748		1.8		10,844		2.5	11,003		3.7
	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				%				%				%
May 31, 2022			4,250				2.5				1.4				41.0
Nov. 30, 2021			4,261				2.5				1.4				42.7
(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	%			%
May 31, 2022		4,906	4,243	663	13,100	11,330		1,770	100.0			2.4
Nov. 30, 2021		4,945	4,262	683	12,767	11,003		1,763	100.0			2.5

• "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 May 31, 2022 and Nov. 30, 2021 are both 0.004. 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 19th Fiscal Period Ended May 31, 2022

(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
May 31, 2022	802,253	468,372	58.4	175,397
Nov. 30, 2021	752,324	438,844	58.3	169,972
(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
May 31, 2022	10,798	(63,147)	39,441	28,008
Nov. 30, 2021	23,831	(1,215)	(14,512)	40,916

2. Earnings Forecasts for the Fiscal Period ending Nov. 30, 2022 (20th Fiscal Period) (from June 1, 2022, to Nov. 30, 2022) and May 31, 2023 (21st Fiscal Period) (from Dec. 1, 2022, to May 31, 2023)

(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

Nov. 30, 2022

27,534

2.5

11,875

(1.7)

10,865

(1.3)

10,974

(3.1)

4,908

4,109

799

May 31, 2023

27,540

0.0

11,958

0.7

10,919

0.5

10,918

(0.5)

4,910

4,089

821

(Reference)

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

4,109 yen

Forecasted net income per unit for the fiscal period ending May 31, 2023:

4,088 yen

3. Other

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

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

None

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 May 31, 2022	2,670,350 units
As of Nov. 30, 2021	2,581,850 units
Number of treasury units at end of period:
As of May 31, 2022	0 units
As of Nov. 30, 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 Nov. 30, 2022 (20th Fiscal Period) and May 31, 2023 (21st Fiscal Period)" on page 6-7 for assumptions regarding forward-looking statements.

	Nippon Prologis REIT, Inc. (3283) SUMMARY OF FINANCIAL RESULTS (REIT)
	For the 19th Fiscal Period Ended May 31, 2022
Index
1. Results of Operations
(1)	Results of Operations
(I) Overview of the 19th Fiscal Period ended May 31, 2022
(i) Major Operational Results of NPR...............................................................................................................................................	2
(ii) Operational Results of the 19th Fiscal Period ended May 31, 2022 .........................................................................................	2
(iii) Overview of Financing .............................................................................................................................................................	3
(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 ..................................................................................................................................................	5
(iii) Earnings Forecast .....................................................................................................................................................................	5
2. Financial Statements
(1)	Balance Sheet ................................................................................................................................................................................	8
(2) Statement of Income .................................................................................................................................................................	10
(3)	Statement of Unit Holders' Equity .............................................................................................................................................	11
(4)	Statement of Cash Distribution .................................................................................................................................................	12
(5)	Statement of Cash Flows ...........................................................................................................................................................	14
(6) Notes Concerning Going Concerns Assumption ........................................................................................................................	15
(7)	Notes Concerning Significant Accounting Policies .....................................................................................................................	15
(8)	Notes to Financial Statements.....................................................................................................................................................	17
(9) Change in Number of Investment Units Issued and Outstanding................................................................................................	28
3. Reference Information
(1)	Composition of NPR's Assets .......................................................................................................................................................	31
(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) ....................................	32
(II) Overview of Assets Held (property age, occupancy rate and annual rent) ..............................................................................	36
(3)	Capital Expenditures for Owned Properties
(I) Future Plans for Capital Expenditure.........................................................................................................................................	39
(II) Capital Expenditure Incurred for the Reported Fiscal Period...................................................................................................	39
(III) Reserved Amount for Long-Term Repairs, Maintenance and Renovation Plans ...................................................................	39
(4)	Information Concerning Major Tenants
(I) Major Tenants
(tenants accounting for more than 10 percent of aggregate leased area).......................................................................................	39
(II) Information Related to Major Properties
(properties accounting for more than 10 percent of aggregate property-related revenue)............................................................	39
(5)	Overview of Property Leasing and Status of Operating Income..................................................................................................	40

1

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

For the 19th Fiscal Period Ended May 31, 2022

1. Results of Operations

(1) Results of Operations

1. Overview of the 19th Fiscal Period ended May 31, 2022

(i) 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 55 properties (aggregate acquisition price(*2) : 821,983 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).

(*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. With respect to Prologis Park Iwanuma, from the reporting fiscal period, the acquisition price includes the acquisition price of its land and the construction cost of the building for its redevelopment project. In addition, NPR has changed its name from the former "Prologis Park Iwanuma 1" to "Prologis Park Iwanuma" upon the completion of the redevelopment project and the acquisition of the subject building as of April 28, 2022.

(*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.

(ii) Operational Results of the 19th Fiscal Period ended May 31, 2022

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 started 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 as of the end of Mar. 2022 demonstrated marginal increase but was still continuously at relatively low levels at 4.4% in the greater Tokyo market and 2.1% in the greater Osaka market, respectively (*1). While we will continue to closely monitor the status of supply and demand of the leasing market, we believe that the long-term supply and demand balance for modern logistics properties will likely be solid, backed by the fundamental demand arising from the structural reconfiguration of logistics industry in Japan.

Under these circumstances, the occupancy rate of NPR's portfolio remained high at 98.0% 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.

During the reporting fiscal period, in an attempt to further enhance its unit holder value, NPR acquired Prologis Park Inagawa 2, Prologis Park Kobe 5 and Prologis Park Ebina 2 (the "Acquisitions in the 19th Fiscal Period") (total acquisition price: 57,700 million yen), all of which are Class-A logistics facilities developed by the Prologis Group, at fair value with an average NOI yield of 4.4%. This continuous external growth has further enhanced NPR's portfolio diversification and cashflow stability. Besides, the construction work of the redevelopment project of Prologis Park Iwanuma (the "Redevelopment Project"), which NPR commenced in the fiscal period ended May 2021, has been completed in April 2022 as scheduled. Accordingly, NPR has acquired the subject redeveloped building (acquisition price: 5,934 million yen) on Apr. 28, 2022.

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

For the 19th Fiscal Period Ended May 31, 2022

(*1) Source: CBRE

(iii) Overview of Financing

(a) Issuance of New Investment Units

NPR issued new investment units through its public follow-on offering (84,290 units) (the "Offering"), with a payment date of Dec. 10, 2021 and through a third-party allotment (4,210 units) with a payment date of Jan. 5, 2022, with an aim to procure funds to be used for the repayment of the Bridge Loans described below in "(b) Borrowings" upon the Acquisitions in the 19th Fiscal Period. As a result of these offerings, NPR successfully raised 30,964 million yen equity capital, and the balance of NPR's unit holders' capital has increased to 457,041 million yen and the total number of units issued and outstanding has increased to 2,670,350 as of the end of the reporting fiscal period.

(b) Borrowings

NPR borrowed short-term loans of 57,100 million yen (the "Bridge loans") on Dec. 1, 2021 for the purpose of funding the Acquisitions in the 19th Fiscal Period. These Bridge loans were subsequently prepaid with the net proceeds from a short-term loan of 7,300 million yen (the "Short-Term Loan") and long-term loans of 14,000 million yen borrowed on Dec. 13, 2021, the net proceeds from the Offering described above in "(a) Issuance of New Investment Units" and cash on hand. Additionally, NPR borrowed long- term loans of 6,000 million yen on Feb. 15, 2022, long-term loans of 14,000 million yen on Mar. 31, 2022 and 10,000 million yen on Apr. 28, 2022, respectively, for the purpose of repaying existing long-term loans in the total amount of 30,000 million yen at their maturities. Besides, NPR borrowed a long-term loan of 2,000 million yen on May 30, 2022 for the purpose of partial repayment of the Short-Term Loan in the amount of 2,000 million yen. As a result, the balance of NPR's interest-bearing debt was 303,800 million yen, out of which bank borrowings accounted for 267,800 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 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 37.9% as of the end of the reporting fiscal period.

(c) Credit Rating

NPR's credit ratings as of the end of the reporting fiscal period (May 31, 2022) were as follows:

Rating Agency	Rating Object	Rating	Outlook
Japan Credit Rating Agency, Ltd.	Long-term issuer rating	AA	Positive
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 26,859 million yen, operating income of 12,077 million yen and ordinary income of 11,006 million yen. In addition, NPR recorded an extraordinary income of 324 million yen from the profit insurance payment of 148 million yen covering Prologis Park Iwanuma and the compensation income of 175 million yen by former tenants of Prologis Park Iwanuma 1 (the "Compensation Income"). As a result, NPR generated net income of 11,329 million yen for the reporting fiscal period. The amount of NPR's distributions for the reporting period was 11,330 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 4,243 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 1,770 million yen, which is the amount equivalent to 30 percent of NPR's depreciation expense of 6,488 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 663 yen from the Regular Surplus Cash Distributions.

3