welcome to this presentation of mcubs midcity's …...financial summary fiscal period ended...

27 th Period

Fiscal Period ended December 31, 2019

INVESTOR PRESENTATION

https://www.midcity-reit.com/en/Securities Code 3227

Welcome to this presentation of MCUBS MidCity's financial results for the 27th period, the six months from July 1, 2019 to December 31, 2019.

This presentation’s speakers are below.Katsuji Okamoto, President & CEO of Mitsubishi Corp.- UBS Realty Inc.Katsura Matsuo, Head of the Office Division of Mitsubishi Corp.- UBS Realty Inc.

3227

Strengthening the investment structure through the merger of asset management companiesCapital increase through public offering taking advantage

of opportunitiesSteady internal growth backed by favorable office market

conditionsContinue active ESG initiatives

Highlights of 27th Fiscal Period (Fiscal Period Ended December 31, 2019)

Hello everyone.This is Okamoto, President & CEO of Mitsubishi Corp.- UBS Realty Inc.

Please refer to page 1 of the MCUBS MidCity's financial results briefing materials.The four highlights for the 27th fiscal period are summarized here. During the fiscal period under review, we were able to implement measures that would lead to future growth.

1

2

Asset management company merged with MC-UBS (Mitsubishi Corp. - UBS Realty Inc.)

Asset management company merger (July 1, 2019)

Sponsors

Industrial & Infrastructure fundInvestment Corporation

Change in MC-UBS organizational structure (January 2020)

• Re-established fund divisions which can comprehensively examine acquisitions, asset management, and disposition through integrating investment activities with internal growth strategies from a long-term perspective

• The Sustainability Committee originally established in 2013 has been re-organized into the new Sustainability Committee which not only shares information and reviews initiatives but also makes decisions in order to further promote sustainability initiatives.

Apr. 2019: MC-UBS acquired all shares of MCUBS MidCity Inc.

Jul. 2019: MC-UBS absorbed the asset management company

Total AuM

1.4 trillion yen

Retail Division Industrial Division Office Division

Transferred the functions of the acquisition division, which had been conducting investment activities.

Planning & Coordination Dept.

Asset Management Dept.

Acquisition Dept.

Kansai Team(Kansai Branch Office)

Japan Retail FundInvestment Corporation

MCUBS MidCityInvestment Corporation

Newly established

(Focusing on Office properties)(Specialized in industrial properties)(Specialized in retail properties)

Asset management company

Please see page 2. Regarding the structure, there are three points.As reported in the previous meeting, Mitsubishi Corp.- UBS Realty Inc. ("MC-UBS") integrated MCUBS MidCity Inc. into the system on July 1, 2019. As shown in the figure below, the three front divisions were established, and the teams of the former MCUBS MidCity Inc. were reorganized into new Office Division under MC-UBS. Already, MCUBS MidCity Inc. had access to and shared MC-UBS platforms for corporate functions such as acquisition functions, finance, human resources and general affairs, and IT. However, by merging and becoming an integrated management company, we have been able to smoothly manage assets and further streamline human resources by sharing information with other fund divisions.Two, in January of this year, the acquisition division was disassembled, and the acquisition function was restored to the system that existed in each division. Prior to the announcement of its capital participation in MCUBS MidCity Inc. in 2015, the Acquisition Division was established to strengthen property information capabilities, streamline acquisition processes, and improve the accuracy of risk analyses. While this initial objective has been achieved over the past five years, we have judged it desirable to aim for portfolio growth and expansion in line with the internal and external growth strategies of each fund by integrating investment, management, and sales amid a growing sense of overheating in the real estate acquisition environment in recent years. Third, in light of the fourth highlight on the previous page, we developed the ESG-related Sustainability Committee, which was established in 2013, and reorganized it into the new Sustainability Committee in January this year. This committee is responsible for resolving and approving MC-UBS Group's ESG policies and specific initiatives. We appointed Deputy President Mr. Suzuki as CSO (Chief Sustainability Officer). Last January, we published the “ESG Report January 2020” and held the first joint ESG presentation for three funds. You can find the joint ESG presentation on our website of each fund, so if you are unable to participate, please visit it at some time.MC-UBS will further strengthen its asset management system. We would like to ask for your continued support.

Now, MCUBS MidCity's financial results for the 27th fiscal period, including the second highlights on the previous pages, a capital increase through public offering and the third internal growth, will be explained by Matsuo, Head of the Offices Division.

2

Financial summary

Fiscal period ended Jun. 2019

(26th Period)

Fiscal period ended Dec.2019

(27th Period)

Difference from

26th Period

Difference from

forecasts*

Operating revenue(Gain on asset disposition)

10,279 mn.yen(1,938 mn.yen)

8,569 mn.yen -16.6% +0.6%

Operating income(Gain / Loss on asset disposition)

5,638 mn.yen(1,938 mn.yen)

3,983 mn.yen -29.4% +2.4%

Net income 4,994 mn.yen 3,388 mn.yen -32.1% +3.0%

Total distributions(Reserves for reduction entry of property)(Reversal of reserve for reduction entry of property)

4,520 mn.yen(474 mn.yen)

(−)

3,487 mn.yen(−)

(98 mn.yen)

-22.8% −

Distribution per unit(excluding gain on asset disposition, etc.)

2,751 yen(1,935 yen)

1,955 yen -28.9%(+1.0%)

−

＊Compared with forecasts in “Notice regarding Revision of Business Outlook and Distributions Forecast for the 27th Period Ending December 31, 2019 and the 28th Period Ending June 30, 2020” released on November 5, 2019.

Fiscal period ending Jun. 2020

(28th Period)

Difference from

27th Period

Fiscal period ending Dec. 2020

(29th Period)

Difference from 28th

period

9,109 mn.yen +6.3% 9,138 mn.yen +0.3%

4,246 mn.yen +6.6% 4,256 mn.yen +0.2%

3,623 mn.yen +6.9% 3,641 mn.yen +0.5%

3,621 mn.yen +3.8% 3,639 mn.yen +0.5%

2,030 yen +3.8% 2,040 yen +0.5%

3

I am Matsuo, Head of the Office Division.We are pleased to explain the MCUBS MidCity's financial results for the 27th fiscal period ended December 31, 2019.In the 26th fiscal period of the previous fiscal period, a gain on sales of real estate of ¥1,938 million was recorded, which resulted in a one-time increase in earnings from the gain on the property disposition. However, in the 27th fiscal period of the current fiscal period, the extraordinary gain on sales of real estate disappeared, resulting in a period-on-period decrease in revenues and profits. During the fiscal period under review, we conducted a capital increase through a public offering in November. We will use this capital to acquire three new properties and continue internal growth of existing properties, as will be explained in detail later. As a result of these factors, operating revenue and net income for the 27th period were ¥8,569 million and ¥3,388 million, respectively. Although the number of investment units increased by approximately 8.6% as a result of the issuance of new investment units, distributions per unit for the period were set at ¥1,955, in line with the initial forecast, as a result of distributing to investors a portion of the accumulated reserve for reduction entry of property of ¥98 million.In the ongoing 28th period of June 2020, revenue and profit will grow due to internal growth in the existing portfolio and the full-period contribution from the three newly acquired properties. Distribution per unit is expected to be ¥2,030, up 3.8% from the previous period. For the period ending December 2020, we expect a 0.5% growth in DPU to ¥2,040 compared with the fiscal year ending June 2020, due to an increase in rent revenue and other factors that offset the expensing of property taxes on the four properties acquired in 2019.

3

Net income for the 26th Period

ended Jun. 2019

Net gains from asset

dispositions and related

expenses

Properties disposed in 26th period

Properties acquired in 26th period

Properties acquired in 27th period

Offices in Tokyo area

Offices in Osaka area

Other properties

Others Net income for the 27th Period

ended Dec. 2019

NOI after depreciation

Profit growth continued due to the effects of newly acquired assets

4

(Unit: mn.yen)

*

～～

Matsushita IMPBldg.

<Chuo-ku, Osaka>

Property disposedin the 26th Period

(Mar. 2019)

Reversal of reserve for reduction entry

of property98.6

Total distributions3,487

-2-1,815

Property acquired inthe 26th Period: 4.0 bn. yen (Mar. 2019)

M-City EdogawabashiBldg.

<Bunkyo-ku, Tokyo>

34

-92

94 23 27

3,388vs. 26th Period

-1,605

125

Properties acquired in the 27th Period: Total 27.01 bn. yen(Nov. 2019)

Hotel Vista Premio Tokyo

Osaka YM Bldg.

East Square Tokyo

<Fukushima-ku, Osaka>

<Koto-ku, Tokyo> <Minato-ku, Tokyo>

4,994

Breakdown of Net Income Changes between 27th Period and 26th Period

＊ Including dividends received from SPC backed by Nagoya Lucent Tower

Real estate taxesvs. 26th Period

+ 58


ended Jun. 2019

Property disposed in 26th Period

Properties acquired in 26th Period

Properties acquired in 27th Period


ended Dec. 2019

Let me explain changes in profit for the 27th fiscal period under review.Excluding the ¥1,815 million gain on the disposition of property in the previous period shown in blue, net income increased ¥209 million from the previous period. This was mainly due to the revenue contribution from newly acquired properties in the 26th and 27th fiscal periods and the revenue increase from revisions to in-place rents. In the middle, the gray bar shows a decline of ¥92 million for Tokyo. This was due to an increase in property taxes and repair expenses compared to the previous fiscal period. The underlying trend of rent growth in the Tokyo portfolio continues. We took a reversal of reserve for reduction entry of ¥98 million at the public offering in November, much smaller than the originally expected ¥200 million

4

2020 Fiscal Year Ended June (28th fiscal period) Net

income

27th period Newly acquired

Tokyo area Offices

Osaka area Offices

Others Existing properties

Others 2020 Dec. (29th fiscal period) Net

income

Steady profit growth driven by internal growth of existing properties

5

2019 Dec. (27th period) Net

income

27th period Newly acquired

Tokyo area OfficesOsaka area Offices Others Existing properties

Others 2020 Fiscal Year Ended June (28th fiscal period) Net

income

vs 27th

Period+234


3,388

3,62344 56

～～～～

Jun. 2020 (28th Period) Forecast(Unit : mn.yen)

Dec. 2020 (29th Period) Forecast

-23 3,6233

63,641

～～～～

vs 28th

Period+17

284

54

-124 -65

16

Real estate taxesvs 27th Period

+ 35

*

Breakdown of Net Income Changes for 28th and 29th Periods Forecasts

＊ Including dividends received from SPC backed by Nagoya Lucent Tower

Jun. 2020(28th Period)net income

Offices inOsakaarea

Otherproperties

Offices inTokyoarea

Dec. 2019(27th Period)net income

Properties acquired in 27th

Period

Real estate taxesvs 28th Period

+ 35

Offices inOsakaarea

Otherproperties

Offices inTokyoarea

Others Dec. 2020(29th Period)net income

Jun.2020(28th Period)net income


(Unit : mn.yen)

Others＊＊Properties acquired in 27th

Period

For the fiscal period ending June 30, 2020, net income is expected to be ¥3,623 million, up ¥234 million from the fiscal period ended December 2019, mainly due to the full-period contribution of the three new properties, an increase in rent income from other existing properties, and a seasonal decrease in utilities expenses.For the period ending December 31, 2020, a main tenant will vacate M-City Edogawabashi Bldg. at the end of August, resulting in a decline in profits. However, net income is forecast to be ¥3,641 million, an increase of ¥18 million compared to the fiscal period ending June 30, 2020, mainly due to decreases in repair expenses and utility expenses.

5

Continued growth in distribution per unit

6

Distribution per unit

Dec.2014

Jun. 2015

Dec.2015

Jun. 2016

Dec.2016

Jun.2017

Dec. 2017

Jun. 2018

Dec. 2018

Jun.2019

Dec.2019

Jun. 2020

Dec.2020

(17th) (18th) (19th) (20th) (21st ) (22nd) (23rd) (24th) (25th ) (26th) (27th) (28th ) (29th )Actual Forecast Forecast

1,191 yen

1,580 yen

1,622 yen

1,684 yen

Gain on sales, etc.

762 yen

1,783 yen

2,030 yen2,040 yen

(17th Period vs 27th Period)

+64.1%

1,935 yen

1,955 yen2,545 yen

2,751 yen

～～

Gain on sales, etc.

816 yen

～～

Jun.2018

Dec.2018

Jun.2019

Dec.2019

183

622

1,097

Retained earnings per unit 559.7 yen (as of the end of Dec. 2019)

Appropriation of retained earnings of 98.6 mn.yen to cope with the temporary dilution of distributions accompanying capital increase during the period(55.2 yen per unit)

998

Retained earnings (Unit : mn.yen)

■ Retained earnings from sales with asset replacement program for the 25th and 26th

fiscal periods

*Retained earnings are calculated by adding the amount of reserves for reduction entry and deducting the amount of reversal of reserves for reduction entry on the accumulated reserve on the balance sheet at the end of each period.

Since participation in capital in April 2015, MCUBS MidCity has steadily grown in dividends.Over the past five years, we have achieved a 64.1% growth in dividends, and we will continue to aim for solid growth in the future. In addition, we have secured approximately ¥1.0 billion (equivalent to ¥559 per unit) of retained earnings even after this reversal, and we believe that we will be able to pay stable distributions even in the event of a temporary decline in distributions in the future.

6

Public offering for three consecutive years

7

Selective investments in favorable locations with

value enhancement potential

Strengthening profitability through solid internal growth

Development of a strong financial base

and securing flexibility in acquisition capacity

Date of resolution of issuance November 5, 2019

Total Procurement Amount (including third-party allotment) 15,088 mn.yen

Number of investment units offered (including third-party allotment) 141,000 units

Number of investment units outstanding (before the Offering) 1,643,125 units

Number of investment units outstanding (after the Offering) 1,784,125 units

Continuous improvement of unitholder value

Overview of the Fourth Public Offering

Next, I would like to explain the public offering implemented during the fiscal period under review.This was the fourth public offering, and 141,000 units were newly issued, including investment units through third-party allotment, resulting in the total number of investment units issued and outstanding being 1,784,125 units. Procurement amount was ¥15.1 billion and new borrowings were ¥11.0 billion, and three properties were acquired at ¥27.0 billion using these procurements and existing cash. Since we were able to acquire properties with the potential to increase value in this public offering, we believe that this public offering will contribute to the continuous improvement of the investor’s value by generating portfolio income in the future.

7

8

Osaka YM Bldg. East Square Tokyo Hotel Vista Premio Tokyo

Date of acquisition November 20, 2019 November 20, 2019 November 22, 2019Application Office building Office building HotelLocation Fukushima-ku, Osaka Koto-ku, Tokyo Minato-ku, Tokyo

Acquisition price 6.31 bn. yen 9.50 bn. yen 11.20 bn. yenAppraised value 7.06 bn. yen 10.20 bn. yen 12.00 bn. yenUnrealized gain (ratio) +0.75 bn. yen (+11.9%) +0.70 bn. yen (+7.4%) +0.80 bn. yen (+7.1%)

NOI yield (after depreciation) 5.0%(4.7%) 4.9%(4.2%) 3.9%(3.5%)

Acquired 3 properties through exclusively negotiated transactions

Acquisition price Appraised value Unrealized gains NOI yield NOI yield after depreciation

Total of 3 properties/Average 27.01 bn. yen 29.26 bn. yen +2.25 bn. yen 4.5% 4.0%

UPSIDE due to rent gaps UPSIDE due to improved occupancy rateSteady demand for tenants

UPSIDE by improving ADR*2

by employing specialists

Exclusive Negotiation

< At the time of publication *1 >

* 1 Appraisal value, unrealized gain (ratio) and NOI yield (after depreciation) as of November 5, 2019 are shown.* 2 ADR (Average Daily Rate) = Average guest room rate per guest room (Average guest room rate)



We were able to acquire all three newly acquired properties through exclusive negotiated transactions. All of these transactions are leveraged MC-UBS's deal sourcing capabilities. The average NOI yield and NOI yield after depreciation for the appraisal base of the three properties are 4.5% and 4.0%, respectively. All of these properties were acquired in accordance with the acquisition policy with an emphasis on location, specification, and profitability. Osaka YM Bldg. has the potential to improve its rent gap, East Square Tokyo has the potential to increase its occupancy rate, and Hotel Vista Premio Tokyo has the potential to improve its ADR.

8

Achieve internal growth of newly acquired properties-Osaka YM Bldg.

9

Characteristics of the property

Close to Umeda area, where redevelopment is underway

The rent gap is large and has the potential for internal growth in the future

New supply of office buildings in the Osaka area is limited for the time being

Early refill of vacant space by notice of cancellation from large tenants, etc.

Improve earnings by closing the rent gap

Enhance the value of the Fukushima area through redevelopment of the Umeda area

Location 7-chome, Fukushima, Fukushima-ku, Osaka

Access

JR Osaka Loop LineApprox. 3 minutes walk from Fukushima StationHanshin Electric Railway main lineApprox. 6 minutes walk from Fukushima Station

Total floor space 16,533.95m2

Number of tenants 25

Occupancy rate 100.0%

Completion date

March, 1991(Renewal of common area in 2008)

Future Internal Growth Potential

Nov. 2019At the time of acquisition

Tenants scheduled to vacate

From May 2020 onwards

Existing tenants

Rent gapelimination byrent revision

Rent gapeliminationby tenant

replacement

Scheduled vacancy area: 36.1%

Scheduled occupancy area: 26.5%

Internal growth potential

A large tenant (scheduled at the end of April 2020) and other cancellation notices

Concluded new contracts and received applications

* As of the end of January 2020

Rent increaseby tenant

replacementApprox. 83%

increase

Among these, Osaka YM Bldg. was the first among the three properties where the action to improve the value is making the effect. Osaka YM Bldg. is located in an area close to Umeda, where redevelopment is underway, and we confirmed that there was a large gap between the rent of existing tenants and the market rent and decided to acquire this property. By chance, we have already received cancel notifications from large tenant, and when combined with other tenants scheduled to vacate, 36.1% of the entire building is expected to be vacant. Already, we are close to backfilling 26.5% of the building at rents about 83% higher than previous tenants, driving up NOI substantially.

9

7.0%0%

5%

10%

15%

20% Vacancy rate Grade AVacancy rate Grade B

10

The current and future Osaka market

Vacancy Rate and Supply Volume at Osaka Office Buildings

Source: Graphs of vacancy rates and supply volumes are based on data from CBRE K.K. Outline of development plans is prepared by the asset management company based on materials issued by CBRE and related press releases.

18.2%

0.2%

2013Q1

0.5%

2019Q4

Umeda area

Yodoyabashi area

● Properties owned

Yodoyabashi Twin RedevelopmentWest: Approx. 39,325 tsuboEast: Approx. 22,264 tsubo(Office space undecided)[Scheduled for completion in 2025]

Higobashi Station

Yodoyabashi Station

Kitahama Station

Hommachi Station

Midosuji

Sakaisuji

Yotsubashisuji

Chuo Odori

Umeda Station

JR Osaka Station

HanshinUmeda Station

JR Fukushima Station

JR Shin-FukushimaStation

Osaka YM Bldg.

JR UmekitaUnderground stations (Osaka)

Scheduled to open in spring 2023New ticket gate

Naniwasuji

Hommachi area0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

新規供給⾯積新規需要⾯積(tsubo)

Umekita Phase 2 AreaNorth area: Approx. 44,437 tsubo/South area: Approx. 113,335 tsubo(Office space undecided) [Scheduled for completion in summer 2024]

Development of new station building at Osaka StationApprox. 17,847 tsubo(approximate office space of 6,957 tsubo)[Scheduled for completion in autumn 2024]

Jan. 2020OBIC MIDOSUJI BUILDApprox. 16,799 tsubo(approximate office space of 6,250 tsubo)

Aug. 2021Hommachi Sankei BuildingApprox. 9,100 tsubo (office space undecided)

Spring 2022OSAKA UMEDATWIN TOWERS SOUTHApprox. 78,650 tsubo(approximate office space of 29,680 tsubo)

1

2

1

2

3

Grand Front Osaka, etc.

Hanshin Fukushima Station

Umeda 3-chome ProjectApprox. 68,668 tsubo(approximate office space of 20,570 tsubo)[Scheduled for completion in March 2024]

3

Osaka Station

* The total floor area is indicated.

New supply New demand

The office market in Osaka is extremely strong. Vacancy rates have fallen to unprecedented levels, and new office supply is expected to be extremely limited in the future. The development of the Umeda area, where Osaka YM Bldg. is adjacent, is scheduled to proceed smoothly.

10

97.5% 97.0%98.1% 98.5%

99.4%98.6%

97.5%

Continues high occupancy and upward rent revisions

11

Tokyo: 1Others: 1

17Tokyo: 4

Osaka: 12Others: 1

20 Tokyo: 13Osaka: 7

Jun.2017

Dec.2017

Jun.2018

Dec.2018

Jun.2019

Dec.2019

Jun.2020

(22nd) (23rd) (24th) (25th) (26th) (27th) (28th)

■ Tokyo ■ Osaka ■ Others(Upper: Upward revision, Lower: Downward revision)

Occupancy rate

Contractedat Dec. 2019

Number of rent revisions

19Tokyo: 4Osaka: 8Others: 7


Osaka: 1

40 Tokyo: 4

Osaka: 20Others: 16

Tokyo 98.7% (↓ 0.9pt)Osaka 98.8% (↓ 0.6pt)

vs Jun. 2019

Occupancy Rates and Rent Revisions for Leases Rent Revision Rate (Dec. 2019 results)

12.3%9.5%

16.3%

28.9% 28.4% 30.2%

Portfolio Tokyo area Osaka area and Others

Weighted average rent revision rate with existing tenants

Weighted average rent increase rate with new tenants

12Tokyo: 1

Osaka: 11


Next, I will explain the leasing status of our portfolio.The occupancy rate at the end of the fiscal period under review declined from the previous fiscal period to 98.6%, but we continued to maintain a high occupancy rate. The number of upward rent revisions during the fiscal period under review was 27, a high level that continued from the previous fiscal period. Yokohama Creation Square (5 revisions) in the Tokyo area and Twin 21 (8 revisions) in the Osaka area account for half of the total rent increase. The revision rate for the rent increase with existing tenants is higher in the Osaka area than in the Tokyo area, where the contract has been revised repeatedly. The market rent is rising in the Tokyo, Osaka, and all other areas, and the vacancy rate is extremely low in all areas. Regarding the revision of the rent increase due to replacement, there are more opportunities to contract rents that exceed the market rent. The graph on the right-hand side of page 11 shows this trend remarkably.

11

0%

25%

50%

75%

100%

Tokyo area Osaka area

+10%超 +10%以内 -10%以内 -10%超

Continuing Steady Internal Growth

12

2.2%

8.8%

4.0%

6.1%

3.5% 4.0%

2.8%

19th to 27th PeriodsAverage 3.4 %

Rent gaps (contract rent-based *)

Dec.2017

Jun2018

Dec.2018

Jun.2019

Dec.2019

Jun.2020

Dec.2020

(23rd) (24th) (25th) (26th) (27th) (28th)Estimate

(29th)Estimate

Annualized LFL NOI Growth*

Rent level higher than market rent

Rent level lower than

market rent

Rent gap-4.7% -8.6%

24%

76%

18%

82%

* Market rent refers to estimated contract rent of standard floor of each property assessed by CBRE K.K as of December 2019. The rent equal to the market rent is included in “Less than 10%”.

-6.4%

More than 10% Less than 10% More than -10%Less than -10%

* LFL (like-for-like) NOI Growth is an annualized change of total NOI from all properties owned for past two full periods.Unrecognized real estate taxes are adjusted for newly acquired properties.

I will explain about the rent gap on page 12.The rent gap, which will serve as a reference for achieving internal growth in the future, was-4.7% in the Tokyo area, -8.6% in the Osaka area, and-6.4% in the overall portfolio. These figures tend to be larger than the previous year's figures. We will work on further rent revisions with tenants and will continue to strive to improve NOI. Against this backdrop, the NOI growth rate on existing properties basis was 3.5% for the fiscal period under review. For the next two fiscal periods, we are forecasting growth of 4.0% and 2.8%, respectively, and we expect to maintain growth of 3% to 4%.The outlook for the fiscal period ending December 2020 does not include the re-tenants of M-City Edogawabashi Bldg. and Osaka YM Bldg., which I mentioned earlier. If Osaka YM Bldg. operates successfully under the current favorable leasing conditions, we expect further upside.

12

Example of internal growth: M-City Akasaka 1-chome Bldg.

13

Higher average rent than expected at the time of acquisition

March2018

Jun.2018

Dec.2018

Jun.2019

Dec.2019

Jun.2020

Dec.2020

(24th) (25th) (26th) (27th) (28th)Forecast

(29th)Forecast

Trends in Average Rent Unit Price

Acquired in March 2018

At the time of acquisitionRent gap was about 10%

Within two years of acquisitionSucceeded in raising average rent unit price by 19.8%

120

100

Up 19.8% from March 31, 2018

Renewal in December 2019

Improved leads and visibility to offices

Light and sophisticated entrance renovation

Renewal of entrance and common areas

Main entrance approach

Entrance hall

First floor entrance

AfterBefore

Page 13 provides examples of internal growth in existing properties.M-City Akasaka 1-chome Bldg. was acquired in 2018. We liked the acquisition for the upside potential, estimating the rent gap to be about 10%. In the two years since, average rent unit price has actually grown 20%. This is thanks to a strong office market and response to tenant requests. In December of last year, we renewed the main entrance approach and entrance hall to create a bright and sophisticated image for the building.

13

Example of internal growth: AEON MALL Tsudanuma

14

Content of the current contract Details of New PoliciesForm of contract Fixed-term building lease contract Fixed-term building lease contract

Contract term September 30, 2003 to September 29, 2023 (20 years)

September 30, 2023 to September 29, 2043 (20 years)

Annual rent 1,452 mn.yen 1,524.6 mn.yen (+72.6 mn.yen/year)

Rent revision Discussions held every three years No revision for 10 years (to be discussed every 3 years from the 10th year)

Early cancellation

Setting of a penalty according to the number of years elapsed

No cancellation for 10 years(From the tenth year onward, the surrender penalty is set according to the number of years elapsed.)

Leased area 101,210.44㎡(28.7% of total leased floor space)

96,033.49㎡* The contracted area is changed from the actual measurement to the public ledger at the time of the contract.

20-year extension of contract period

Achieve an annual rent increase of 5%→ Effect on distribution per unit +40 yen/year

Points of Conclusion of Agreement

Background to the Conclusion of a New Fixed-Term Building Lease Agreement Aeon Retail has positioned this property as a flagship store

Prior to the redevelopment plan for the area around Tsudanuma Station,Aeon Retail plans to schedule and implement a large-scale renewal of this property

New policies from 2023 onward concluded in September 2019

JR TsudanumaStation

ShinTsudanuma Station

Chiba Institute of Technology Univ

Morishia Tsudanuma

LoharuTsudanuma

Ito-YokadoTsudanuma Store

MinaTsudanuma

TsudanumaPARCO

JR Tsudanuma Station

Shin-Tsudanuma Station (Shin-Keisei Line)

AEON MALL Tsudanuma

AEON MALL Tsudanuma is a retail property in front of a terminal station directly connected to Shin- Tsudanuma Station of Shin-Keisei Line, which has been owned since the IPO. Tenant, AEON RETAIL Co., Ltd., has positioned this property as a flagship store. The 20-year lease on the building expires at the end of September 2023. This time, we received a renewal agreement from the tenants without the expiration of the contract period and concluded the renewal agreement with the contract period of 20 years and an annual rent increase of 5%. As of September 2023, the property will continue to enjoy stable revenues, with an additional benefit of approximately ¥20 per unit, as well as non-cancellation agreements covering a period of 10 years.

14

Lenders Amount Period Interest rate

Sumitomo Mitsui Trust Bank 1.6 bn. yen 9 years Fixed(Interest swap)

Shinkin Central Bank,The Nishi-Nippon City Bank 2.6 bn. yen 7.5 years Fixed

Sumitomo Mitsui Banking 1.5 bn. yen 7 years Fixed(Interest swap)

The Hyakugo Bank 0.75 bn. yen 6.5 years Fixed

Sumitomo Mitsui Trust Bank,Sumitomo Mitsui Banking 2.1 bn. yen 4.5 years Floating

Total / Weighted Average 8.55 bn. yen 6.9 years 0.502%

(Reference) Pre-borrowing conditions 3.5 years 0.375%

Further Strengthening the Financial Base

15

Credit ratings

Jun 2020 (28th)

Dec 2020 (29th)

Jun 2021 (30th)

Dec 2021 (31st)

Jun 2022 (32nd)

Dec 2022 (33rd)

Jun 2023 (34th)

Dec 2023 (35th)

Jun 2024 (36th)

Dec 2024 (37th)

Jun 2025 (38th)

Dec 2025 (39th)

Jun 2026 (40th)

Dec 2026 (41st)

Jun 2027 (42nd)

Dec 2027 (43rd)

Jun 2028 (44th)

Dec 2028 (45th)

Jun 2029 (46th)

Dec 2029 (47th)

■ Existing Borrowings (Fixed) ■ Existing Borrowings (Floating) ■Investment Corporation Bonds ■Borrowings in Nov. 2019 (11.0 bn. yen) ■Borrowings in Jan. 2020 (8.55 bn. yen)

4.85 bn.yen(Fixed)

8.55 bn.yenRefinancing

(January, 2020)

14.3 bn.yen

5.9 bn.yen

1.95 bn.yen 2.9 bn.yen

4.7 bn.yen

4.0 bn.yen

Commitment line limit of 15.0 bn. yen

1.5 bn.yen

Debt Maturity Ladder

Rating/announcement date

Rating and Investment Information, Inc. (R&I)

A+ (Stable) <September 2019>

Japan Credit Rating Agency, Ltd. (JCR)

AA-(Stable) <March 2019>

5.3 bn.yen

8.95 bn.yen

1.0 bn.yen

4.0 bn.yen

0.75 bn.yen

3.9 bn.yen

1.5 bn.yen

1.5 bn.yen

2.1 bn.yen

3.7 bn.yen(Float)

5.3 bn.yen 5.775 bn.yen

2.7 bn.yen 6.6 bn.yen4.9 bn.yen3.4 bn.yen

2.0 bn.yen

4.9 bn.yen

1.05 bn.yen

New borrowings and refinancing of borrowings

Lenders Amount Period Interest rate

Mizuho Bank 1.7 bn. yen 10 years Fixed

MUFG Bank 1.3 bn. yen 10 years FixedDevelopment Bank of Japan,The Nishi-Nippon City Bank,The Bank of Fukuoka

3.1 bn. yen 9.5 years Fixed

Sumitomo Mitsui Trust Bank 2.0 bn. yen 6.5 years Fixed(Interest swap)

Sumitomo Mitsui Banking 2.0 bn. yen 4.5 years FloatingMizuho Bank, MUFG Bank 0.9 bn. yen 4.0 years Floating

Total / Weighted Average 11.0 bn. yen 7.7 years 0.578%

■ New borrowings in November 2019 ■ Refinancing in January 2020

0.9 bn.yen2.0 bn.yen 2.0 bn.yen

2.0 bn.yen

4.0 bn.yen

4.9 bn.yen

2.6 bn.yen3.1 bn.yen

3.0 bn.yen

1.6 bn.yen

Next, I will explain our financial base.In March last year, we received an AA- rating from JCR, and in the fiscal period under review, we received a notice from R&I that our rating was raised to A+. We were able to obtain the support of our lenders for new borrowings conducted at the time of public offering and refinancing at the end of January 2020. As a result, we have been able to lengthen the remaining borrowing period and lower borrowing rates, and we believe that we have further strengthened our financial base.

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Reinforcement of robust financial base

16

LTVAverage Remaining Years and Average Interest Rate of Debts

2.3 years

3.5 years

4.3 years1.38%

0.99%0.95%

Average remaining years of debts

Interest rate of debts

2014年12⽉期

2015年6⽉期

2015年12⽉期

2016年6⽉期

2016年12⽉期

2017年6⽉期

2017年12⽉期

2018年6⽉期

2018年12⽉期

2019年6⽉期

2019年7⽉末

（17期）（18期）（19期）（20期）（21期）（22期）（23期）（24期）（25期）（26期）借換後

＊ All-in-cost including debts-related expenses

＊

Dec.2014(17th)

Jun.2015(18th)

Dec.2015(19th)

Jun.2016(20th)

Dec.2016(21st)

Jun.2017(22nd)

Dec.2017(23rd)

Jun.2018(24th)

Dec.2018(25th)

Jun.2019(26th)

Dec.2019(27th)

47.7%

39.8%39.1%38.7%

42.2% 42.2%

Interest-bearing debt Total assets

LTV (Appraisal basis) LTV (book value basis)

65.3

168.8

274.7

301.0

115.9 126.9

(bn. yen)

Dec.2014(17th)

Jun.2015(18th)

Dec.2015(19th)

Jun.2016(20th)

Dec.2016(21st)

Jun.2017(22nd)

Dec.2017(23rd)

Jun.2018(24th)

Dec.2018(25th)

Jun.2019(26th)

Dec.2019(27th)

The average remaining years of debts at the end of the fiscal period was 4.3 years, and the average interest rate was 0.95%. The appraisal basis of LTV has declined further due in part to an increase in appraisal value of the property, and the borrowing capacity has increased further.

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Evaluation of continuous efforts for ESG

17

• Included in MSCI Japan ESG Select Leaders Index (December 2018)

• Acquired J-REIT's only "AA" ESG rating (March 2019)

* Index in which GPIF makes passive investments linked to the index

Green Star in the GRESB for 4 consecutive years

• Acquired the highest Green Star for the fourth consecutive years

• Acquired the highest rating of 5 stars for two consecutive years

CASBEE Certification

Stocks included in J-REIT as of December 2019 ESG rating

MCUBS MidCity Investment Corporation AAJapan Retail Fund Investment Corporation AIndustrial & Infrastructure Fund Investment Corporation AComforia Residential REIT, Inc. ANippon Prologis REIT, Inc. ANomura Real Estate Master Fund, Inc. AORIX JREIT Inc. BBBHulic Reit, Inc. BBBAEON REIT Investment Corporation BB

Only AA rated J-REIT by MSCI Japan ESG Rating

• G-Square Shibuya Dogenzaka

Acquired "CASBEE for Smart Wellness Office” certification for the first time in J-REIT which comprehensively evaluates next-generation office models by acquiring both "CASBEE for Real Estate” certification and "CASBEE for Wellness Office” certification. (November 2019)

• TOYOTA MOBILITIY SERVICE Bldg.

Acquired CASBEE for Real Estate Certification (December 2019)

Acquisition CASBEE appraisal certification forthe fourth property

As in the past, we have been actively engaged in ESG initiatives, and has received the highest appraisal. We received the highest ranking “Green Star” for four consecutive years and the highest ranking “5 stars” for two consecutive years in the rating based on the relative rating from the GRESB. Furthermore, MSCI Japan ESG Select Leaders Index includes nine J-REITs, but MCUBS MidCity is the only one to receive the highest “AA” ESG rating.During the fiscal period under review, we became the first J-REIT to acquire “CASBEE for Smart Wellness Office Certification”, which was newly established in November 2019. In addition, the TOYOTA MOBILITY SERVICE Bldg. has received a “CASBEE for Real Estate Certification”.

As a member of Mitsubishi Corp.- UBS Realty, MCUBS MidCity Investment Corporation is committed to investing in assets with the aim of increasing unitholder value. We look forward to the continued guidance and encouragement of our investors.I would like to conclude my financial statement for the 27th fiscal period.

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APPENDIX

18

18

19

2015年4⽉2015年5⽉2015年6⽉2015年7⽉2015年8⽉2015年9⽉2015年10⽉2015年11⽉2015年12⽉2016年1⽉2016年2⽉2016年3⽉2016年4⽉2016年5⽉2016年6⽉2016年7⽉2016年8⽉2016年9⽉2016年10⽉2016年11⽉2016年12⽉2017年1⽉2017年2⽉2017年3⽉2017年4⽉2017年5⽉2017年6⽉2017年7⽉2017年8⽉2017年9⽉2017年10⽉2017年11⽉2017年12⽉2018年1⽉2018年2⽉2018年3⽉2018年4⽉2018年5⽉2018年6⽉2018年7⽉2018年8⽉2018年9⽉2018年10⽉2018年11⽉2018年12⽉2019年1⽉2019年2⽉2019年3⽉2019年4⽉2019年5⽉2019年6⽉2019年7⽉2019年8⽉2019年9⽉2019年10⽉2019年11⽉2019年12⽉2020年1⽉

Unit prices of MCUBS MidCity Investment Corporation

TSE REIT Index

2015 2016 2017 2018 2019 2020

Actions

Evaluations

• Strategic asset replacement completed (March)

• Merger of Asset Management Companies (July)

• Fourth Public Offering (November)

Source: Bloomberg* The Tokyo Stock Exchange REIT Index (TSE) index is calculated by comparing the closing price (1,917.7 pt) of the TSE REIT Index on April 10, 2015, with the closing price of MCUBS MidCity‘s investment units as of April 10, 2015, which is 58,480 yen.

• JCR rating A+ → AA-(March)

• MSCI ESG rating AA, only in J-REIT (March)

• R&I ratingA → A+ (September)

• Five-for-one split of the investment units

• Third Public Offering• Issuance of investment

corporation bonds for three consecutive years

• Strategic asset replacement executed

• MC-UBS takes part in equity of AM company

• Changed investment policy to 3 major metropolitan areas from Osaka

• First Public Offering

• First issuance of investment corporation bonds

• Setting commitment lines

• Asset replacement• Second Public Offering• Issuance of investment

corporation bonds for two consecutive years

• Conclusion of green lease agreement and memorandum of amendment to increase in rent with a large tenant

• R&I Rating A- > A• Participation in GRESB

and obtain the Green Star

• Obtain the Green Star from GRESB for two consecutive years

• Newly acquired JCR Rating A+

• Obtain the Green Star from GRESB for three consecutive years and the first five-star

• Inclusion into FTSE EPRA/NAREIT Index

• Inclusion into MSCI Japan ESG Select Leaders Index

Achievements and evaluations after MC-UBS participation

19

Growth after MC-UBS participation

20

Prior to MC-UBS participation(Dec. 2014 (17th Period))

Dec. 2019 (27th Period)

GRESB −

MSCI



−

Asset Profitability and stability enhanced through portfolio expansion

ESG Active efforts toward sustainability

Equity Unitholder value enhanced

Debt Successfully established strong financial base

Number of properties

Assets

Average NOI Yield

Average NOI Yield after depreciation

Unrealized gain / loss

12 properties

157.6 bn.yen

4.0%

2.6%

- 32.0 bn.yen

（Acquisition value basis）

26 properties

287.6 bn.yen

4.5%

3.6%

+ 23.8 bn.yen


Green Star (4 consecutive years)

5star (2 consecutive years)

MSCI Japan ESG Select Leaders Index

∕AA

LTV (Appraisal Value Basis)

Average interest-bearing liability cost

Average year remaining in interest-bearing liabilities

Issuers' ratings

47.7%

1.38%

2.3 years

R&I：A-

39.1%

0.95%

4.3 years

R&I：A+（Stable）

JCR：AA-（Stable）



Market Cap

DPU

P/NAV

53.6 bn.yen

1,191 yen

63,504 yen

227.4 bn.yen

98,857 yen

(January 31, 2020)(April 10, 2015)

Key Index FTSE EPRA/NAREITGlobal Real Estate Index

Voluntary reserve 998 mn.yen−

−

1,955 yen


20

List of portfolios

21

* Information is as of the end of December 2019.

Area PropertyNo. Property name Location Acquisition price

(mn.yen)Appraised value

(mn.yen)Book value

(mn.yen)Appraisal vs book value

Leasable space(㎡)

Occupancy rate(%)

No. of tenants

■ Office

Tokyo area

OT-1 Sumitomo Fudosan Ueno Bldg. No. 6 Taito-ku, Tokyo 7,460 8,710 7,522 15.8% 6,858.16 100.0 2OT-2 G-Square Shibuya Dogenzaka Shibuya-ku, Tokyo 12,220 16,500 12,125 36.1% 5,049.36 100.0 9OT-3 Shibuya Sakuragaoka Square Shibuya-ku, Tokyo 17,130 19,500 17,304 12.7% 6,379.66 100.0 4OT-4 Yokohama Creation Square Kanagawa-ku, Yokohama 7,080 8,400 6,991 20.2% 12,704.18 100.0 43OT-5 Cube Kawasaki Kawasaki-ku, Kawasaki 20,050 23,300 20,397 14.2% 24,494.06 100.0 10OT-6 Higashi Nihombashi Green Bldg. Chuo-ku, Tokyo 2,705 3,190 2,837 12.4% 3,254.77 100.0 7OT-7 Sasazuka Center Bldg. Shibuya-ku, Tokyo 8,700 9,360 9,056 3.3% 8,240.30 100.0 9OT-8 USC Bldg. Koto-ku, Tokyo 10,800 11,500 11,068 3.9% 12,489.08 93.9 9OT-9 Yoshiyasu-Kanda Bldg. Chiyoda-ku, Tokyo 4,000 4,280 4,203 1.8% 3,149.39 100.0 7

OT-10 TOYOTA MOBILITY SERVICE Bldg. Chuo-ku, Tokyo 9,200 10,500 9,601 9.4% 6,123.81 100.0 1OT-11 M-City Akasaka 1-chome Bldg. Minato-ku, Tokyo 4,205 4,470 4,368 2.3% 2,581.79 100.0 12OT-12 Yokohama i-land Tower Naka-ku, Yokohama 22,100 23,900 23,346 2.4% 25,460.50 100.0 7OT-13 M-City Edogawabashi Bldg. Bunkyo-ku, Tokyo 4,070 4,240 4,131 2.6% 3,472.70 100.0 2OT-14 East Square Tokyo Koto-ku, Tokyo 9,500 10,200 9,916 2.9% 12,208.42 81.0 13

Osaka area

OO-1 Twin 21 Chuo-ku, Osaka 68,700 61,400 65,808 - 6.7% 82,304.83 98.2 109OO-5 MID Imabashi Bldg. Chuo-ku, Osaka 3,270 2,590 3,060 - 15.4% 4,277.63 100.0 21OO-7 Kitahama MID Bldg. Chuo-ku, Osaka 10,800 11,100 10,235 8.5% 10,189.49 100.0 11OO-8 MID NishiHommachi Bldg. Nishi-ku, Osaka 3,550 2,570 3,316 - 22.5% 3,881.74 100.0 18OO-9 Higobashi MID Bldg. Nishi-ku, Osaka 3,000 4,070 2,756 47.6% 4,655.57 100.0 12

OO-10 Osaka YM Bldg. Fukushima-ku, Osaka 6,310 7,650 6,589 16.1% 9,957.53 100.0 25Others OR-1 Sendai Capital Tower Aoba-ku, Sendai 5,500 6,900 5,640 22.3% 12,997.43 93.0 74

Subtotal (Office/21 properties) 240,350 254,330 240,279 5.8% 260,730.40 97.9 405■ Other than officeTokyo area

RT-1 AEON MALL Tsudanuma Narashino-city, Chiba 26,100 29,200 23,387 24.9% 101,210.44 100.0 1HT-1 Hotel Vista Premio Tokyo Minato-ku, Tokyo 11,200 12,000 11,683 2.7% 4,236.46 100.0 2

Osaka area RO-1 Konami Sports Club Kyobashi Miyakojima-ku, Osaka 2,780 3,440 2,320 48.2% 9,586.26 100.0 1

Others HR-1 Dormy Inn Hakata Gion Hakata-ku, Fukuoka 2,280 4,600 2,062 123.0% 5,554.91 100.0 2Subtotal (Other than office/4 properties) 42,360 49,240 39,454 24.8% 120,588.07 100.0 6

Subtotal 282,710 303,570 279,734 8.5% 381,318.47 98.6 411■ TK interest for officeNagoya

area TK-1 Nagoya Lucent Tower(Equity Investments in Silent Partnership) Nishi-ku, Nagoya 4,919 - - - - - -

Total 287,629 303,570 279,734 8.5% 381,318.47 98.6 411

21

Memo

22

22

Disclaimer

• This material main contain forward-looking statements regarding results, plans, managerial targets and strategies. These forward-looking statements are based on current assumptions and preconditions for future events and trends of business circumstances, which are not necessarily correct. Actual results may vary widely from such statements according to various factors

• This material is prepared subject to the accounting principles generally accepted in Japan, unless otherwise stated

• This material is about analyses of financial results of MCUBS MidCity Investment Corporation (the “Investment Corporation”), and is not prepared for the purpose of inducement or invitation for any acquisition of investment securities of the Investment Corporation nor any execution of other financial transaction contracts. Investment decisions are to be made at investors’ sole discretion and responsibility

• The Investment Corporation is a publicly-offered real estate investment corporation (J-REIT) investing in real estate and related assets the prices of which may fluctuate. Unitholders of the Investment Corporation may suffer loss when unit prices decline in the market or an amount of distributions declines, according to economic and interest rate circumstances, a balance of supply and demand for units, real estate market environment, fluctuations of prices of, and rent revenues from real estate properties under management, disasters, aggravation of financial status of the Investment Corporation and other reasons. For detail, please see “Investment Risk” stated in the Securities Registration Statement (offering circular) and the Securities Report of the Investment Corporation.

Asset Management Company: Mitsubishi Corp.- UBS Realty Inc. (Certified Financial Instruments Business Operator: Director of Kanto Local Financial Bureau (Kinsho) Registration No. 403, and Member of The Investment Trusts Association, Japan)

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