日本房地产信托行业：维持吸引力评级

Investor Presentation| Japan J-REIT: Our industry view remains Attractive As long-term interest rates rise, we think DPS growth will become more important Key debates: Present state and outlook for TSE REIT Index: Why do we see the index as undervalued?Investment strategy: We think individual stock selection will be increasingly important given changes in the external environment.Outlook for companies under our coverage: What are the focus points for each stock? Key points J-REITIndustry View:Attractive Drivers of share price performance 1)Inflation-beating rent/DPS growth: DPS growth prospects from sustainable sales gains, use of internal reserves2)Capital efficiency: Effective use of cash, incl. on acquisition of properties with growth potential and share buybacks3)Improved supply/demand: Inflows on expectations of stable domestic demand and earnings amid geopolitical risk Risk factors 1)Real estate market downturn: Reduced liquidity amid rising interest rates, tighter financing, economic slowdown2)Inflation-lagging rent/DPS growth: Entrenched valuation discounts due to low growth Top picks 1)Inflation-beating growth potential: GLP, Japan Metropolitan Fund, Orix JREIT,ActiviaProperties2)Capital efficiency: LaSalle Logiport3)Re-rating potential: Hoshino Resorts REIT, Invincible Investment, Daiwa Office Investment, Japan Excellent TSE REIT Index: Present situation and outlook TSE REIT index & dividend yield ・The yield spreadis ~2.6%, which is below the 3.2% avg. (excl. the 2008 Financial Crisis)Since the GFC, the yield has been below 3.0% in Mar 2013-Dec 2015 (~2.3% using the 10yr JGB forward rate).・The trend in growth in total dividends has changed, and expectations of dividend growth are increasing.・We do not believe that J-REITs look overvalued due to narrowing of spreads. TSE REIT Index: Present situation and outlook TSE REIT index & P/NAV ・Assuming the J-REIT appraisal value/NAV is around 1.5x and the average appraisal cap rate is 4.0%, P/NAV of 0.86x reflects anapprox. 14% decrease in NAV, approx. 9% drop in appraisal value, and approx. 0.4% rise in cap rate. ・With appraisal cap rates shifting from a decline to roughly flat and CF continuing to grow, appraisal values are trending upward.・We continue to view P/NAV levels below 1x as undervalued. TSE REIT Index: Present situation and outlook TSEREIT index & 10yr JGB yield ・The high correlation between the TSE REIT index and 10yr JGB yield since 2022 has broken down since May 2025.・With TOPIX up as well, the TSE REIT index/TOPIX multiple is not greatly changed, and the correlation with the 10yr JGB yieldpersists.・Therisein the TSE REIT index may be partly due to rising Japan stocks in general and the relationship with TOPIX Real Estate, inaddition to REIT-specific factors. JGB10yryield (%) & TSE REIT index TSE REIT Index: Present situation and outlook TSE REIT Index and US 10yr Treasury yield ・The correlation between the TSE REIT Index and the US 10yr Treasury yield has been weaker than for the JGB 10yr yield since 2022.・However, correlation has been high in the past, so we think US interest rate cuts will continue to have an effect on J-REITs. TSE REIT Index: Present situation and outlook Interest rate hikes to increase borrowing costs ・According to data we compiled, ~¥1.67trn in interest-bearing debt will come up for refinancing over the next year・With the 10yr JGB 1yr forward rate having risen to 2.3% and avg. remaining debt at ~4yrs, we assume an increase in the base rate.・J-REIT industry borrowing costs have risen ~¥17.8bn, and the avg. interest rate ~17% from 0.92% to 1.08%.・J-REITs are likely to mitigate short-term impacts by shortening duration and switching to variable rates (fixed rate ratio ~83%currently). TSE REIT Index: Present situation and outlook NOI growth outpacing inflation ・Logistics facility market conditions are slightly weak, but rents continue to rise across all J-REIT owned asset types.・Real estate leasing expenses are also increasing, but rental income is rising, driven by rising rents.・NOI growth is outpacing growth in inflation (nationwide Core CPI +1.6% YoY in Feb). TSE REIT Index:Real estate transactions market Real estate sales reach record high in 2025, real estate acquisition levels also high ・Increase infunding raised through the sale of properties with likely declining profitability or with low inflation resistance, and reinvestmentactivity. ・Acquisitions of properties in asset classes that can improve portfolio profitability or offer growth potential are progressing as reinvestmenttargets for capital. ・There remains ample room to improve building age profiles and strengthen inflation resistance, and we expect property sales tocontinue. In addition, as capital costs and borrowing rates are rising, funding through property sales will remain an effectiveoption. ・A softening of the real estate market is a potential risk, so we plan to monitor real estate financing trends closely. TSE