"Financial Results for the 7th Fiscal Period Ended July 2019"

Star Asia Investment Corporation(Securities CODE 3468)
Star Asia Investment Management0Contents

0. Overview of Star Asia Group2

Characteristics of Star Asia Investment Corporation (SAR)

1. Executive summary

5

Portfolio developed with diversified assets located mainly in the Tokyo Area (Note2)

9Pursuit of internal growth by the Asset Manager with abundant experience andknow-how as well as external growth based on asset managed performed by theStar Asia Group

1. A diversified REIT
2. Steady growth

2. Actual and forecasted distribution

3. Initiatives focusing on unitholder value
3. Operating results forthe 7th fiscal period ended July 2019

Constant, “out-of-the-box” active management

13
Investment policy

4. Future Initiatives

21

5. Appendix

31

6. Notes

56

Prioritized, focusedinvestment in theTokyo Area (Note 2)
Investment ratio of 70%
of higher in theTokyo Area

Achieving income
stability and growththroughdiversification ofasset type

Investment primarily
in middle-size
assets (Note 2)

1

Overview of Star Asia GroupStar Asia Group, which is a sponsor of Star Asia Investment Corporation (“SAR”) , is a privately owned, independent
investment group focused on delivering superior investment returns to its clients by investing primarily in Japanesereal estate related opportunities•

Star Asia Group was conceptualized in 2006 and founded in 2007, and has made investments exceeding 661 billion yen since
its foundation. Current balance of assets under management exceeds 172 billion yen 1•

Of the total of 392 officers of employees, more than 40 staff work in the investment and management division. The Grouphas offices in Tokyo and New Jersey1•

While sharing a long-term perspective and constantly observing the code of conduct, the Group will make continuous efforts
to become, and continue to be, one of the top real estate investment management groups in Japan•

Given its excellent track record and aspiration to foster a long-term relationship with investors, the Group has been supported
by top U.S. university endowments and foundations, pension funds in Japan, the U.S., and Europe, asst managementcompanies of the super-wealthy in the U.S. and Asia, and other real estate investors from around the world, and has invested
assets of such sophisticated investors•

The Group intends to strictly adhere to its investment philosophy, and SAR's largest objective for asset management is tomeet the expectations of unitholders and continue to exceed such expectations

Taro Masuyama
Co-founder of Star Asia andManaging Partner

Malcolm F. MacLean Ⅳ
Co-founder of Star Asia andManaging Partner

1. As of the end of June 2019

2. As of September 6, 2019

Star Asia Group
Asset Manager of
Listed REIT

Star Asia
Investment
Management Co.,
Ltd.
•

Asset manager
of SAR

Asset Manager ofPrivate FundStar Asia
Management Limited

Star Asia Asset
Advisors Co., Ltd.

• Registered with U.S.
SEC as an
Investment Advisor• Conducts asset
management,
brokerage of realestates / real estate
trust beneficiaryrights and property
management etc.
for private
placement funds• Manages several
private placement
funds through othergroup companies

As SAR’s sponsor,
provides know-how
contributing to its internal/ external growthStar Asia
Investment
Corporation(SAR)

Private Placement AssetManagement Company• Construction
Management
Department• Abundant experience
in real estate-related
debt investment• Provides of additional
human resource
if necessary

Supports asset
management of
warehousing funds
and formation ofbridge funds

Private Placement
Fund

Unlisted Investment Company
Star Asia Capital Corp Limited• Outstanding assets under management is 19.7 billion yen1
Star Asia Sogo
Kaihatsu Co., Ltd.
Lion Partners GK

Holds SAR’s investment
units(97,000
units(17.9%))/Investment
amount 11 billion yen)2
Silent partnershipinvestment in properties
with preferential negotiationrights owned by SAR⚫

Urban Park Mitsuike
Koen⚫

Urban Park
Tokiwadai Koen⚫

OHA building

Holds 16,896
investment units(5.1%) of Sakura
Sogo REIT
Corporation, which isequivalent to 1.6
billion yen• Real estatedevelopment
company of Star Asia
Group

Star Asia Japan
Special Situations
Fund• Main fund of Star
Asia Group• Has investment
capacity and isactively conducting
investment
activities• Several properties areunder development• Outstanding assets
under management
is 39.6 billion yen1

Develops properties
with preferential
negotiation rights
owned by SAR

Provided SAR with 28
properties from thetime of SAR’s listing

Development, Operation andManagement ofStudent Accommodation

GSA Star Asia
• A 50:50 joint venturecompany with GSA
Group which (thepioneer of Purpose
Built Student
Accommodation(PBSA)) andconducts
development /operation of new
generation type
PBSA

• Manages properties
with preferential
negotiation rights
owned by SAR• Hakusan House•

Nishi-Sugamo
Project• Shimotakaido
Project

Listed Hospitality,
Development andManagement Company

KACHIKAIHATSU
CO.LTD.
• Hotel development /operation company
listed on the 2nd
section of Tokyo
Stock Exchange• Star Asia Group
became a sponsor
in Nov.2018 andholds 75.53%
sharesAs a hotel
development/operationcompany, it has signed
a Strategic Business
Partnership Agreementwith Star Asia Group
which prescribes that it
will provide SAR withinformation aboutproperties for saleStar Asia Group expanding its business supports SAR’s growth powerfully2

Guiding Principles of Star Asia Group

While sharing a long-term perspective and constantly observing the code of conduct, the Group will makecontinuous efforts to become, and continue to be, one of the top real estate investment management groups in
Japan

1

Client FirstWe are rewarded only when
we consistently meet and exceed ourinvestor clients’ expectations for the
mandates they have given to us.

5

Collaborative andCooperative
CultureWe succeed only when we work
together as one-group by fully utilizing
our collective strengths in a cooperative
manner to serve our investor clients. The
group’s performance always exceeds
the sum of our individual performances.

2

Highest EthicalStandards andIntegrity

We always abide by the highest ethicalstandards and integrity. Unethicalactions by an employee could easily
destroy the group’s long-standing
reputation and trust.

6

Adaptability

We stay nimble, proactive and critical,
allowing us to adjust quickly as themarket environment changes in order tocontinue to be a successful leader in themarket we do business.

3

Creativity

We utilize our experience, persistence,and creativity to identify and monetize
investment opportunities which may not
be immediately apparent to ourcompetitors.

7

Meritocracy

We reward our employees for their
specific personal performance as well as
their contribution to the group and to theinvestor client performance.

4

Respect for Others

We treat our investor clients, employees,
trade counterparties, and vendors withthe utmost respect, and always strive to
be trustworthy partner.

8Endless PursuitofExcellence

We will tirelessly pursue excellence not
only for our investor clients but also for
ourselves.

3Investment Philosophy of Star Asia GroupThe Group intends to strictly adhere to its investment philosophy, and to meet the expectations of investors andcontinue to exceed such expectations. This is our largest objective
1

Research Focus

We believe that consistent outperformance canonly be achieved when investment opportunities
identified through our rigorous origination process
are validated against the comprehensive
understanding of the ever-changing market
environment. Government policies, macroeconomic
environment, state of capital markets, trends in
demographics,
realestatesupply/demand
dynamics, status of the real estate market cycle,
outlook and appetite by potential tenants, as wellas anticipated behavior of other market participants
are only a few of the critical inputs we analyze. In
order to formulate and continually update ourunderstanding of the current market environment,
we run iterative processes of gathering feedback
from our day-to-day investment and asset
management activities, which are supplemented byvarious third-party research reports and data that isfurther investigated and verified by us to generate
our unbiased view.

4

Specialization

We believe deliberate specialization and a flatorganization allow us to identify, properly structure,and dependably execute attractive, but often
complex,investment
opportunities.
This
specialization leads us to more predictable successand sets us apart from our competitors. Our seniorprofessionals have years of hands-on experience
in real estate deal sourcing, underwriting,structuring, asset management, financing, capital
markets, and securitization. Star Asia’s seniorprofessionals have developed deep-rooted local
relationships over multiple real estate cycles, andhave executed some of the most creative andcomplex investment opportunities in the market.

2

Market Inefficiencies

Unlike highly efficient foreign exchange, interest
rate and public equity markets, the Japanese andother Asian private real estate markets are
inherently inefficient. Although Tokyo is the world’s
largest metropolis in terms of population(approximately 35 million), GDP, and real estate
capital values, in our opinion, it is significantly lessefficient than the U.S. or U.K. markets. The
Japanese real estate market has high barriers-toentry, asymmetric information flows, a lessdeveloped securitization market, and a limited
universe of well-capitalized opportunistic market
participants, which together creates market
inefficiencies. We believe that thorough robust
analysis and deep local relationships combinedwith our significant hands-on experience allow us
to identify and capitalize on these market
inefficiencies that are not obvious to ourcompetitors.

5

Risk Control

Our objective is to achieve consistent and superiorrisk-adjusted returns by only assuming wellcalculated risks. When a potentially attractive
investment opportunity is identified, we examine all
the risks associated with the potential opportunity
through our rigorous review process. We thennegotiate with the counterparties to determine afair risk-sharing arrangement while formulating
structural solutions to eliminate or mitigate otherrisks, where possible. Concurrently, we conduct
quantitative and qualitative analyses to evaluate
the viability of the potential investment opportunity
against our strict underwriting criteria.

3

Maximizing and Unlocking Value

The real estate properties that we evaluate forinvestment are typically not operated to theirmaximum potential at the time of our investment.
Some owners are not professional real estate
investors, failed to invest necessary capital
expenditures, and/or had poorly managed leasing
strategies. Some real estate properties havecertain compliance issues that can be cured withlimited cost and time, or have potential to generatehigher net operating income if repositioned or
repurposed properly. We utilize our own
experience along with technical advice from thirdparty professionals, as necessary, to formulate andexecute the optimal asset management, capital
expenditures, renovation, and repositioning plans.
Implementation of these plans will maximize andunlock the property’s intrinsic value in the mostefficient manner from a cost and time perspective.

6

Dependability, Transparency andDecisive Action

Our trade counterparties know that they candepend on us when they need to sell their realestate related assets quickly, discreetly and/or
through a complex structure that others may not beable to handle or understand. We are always
candid and transparent by clearly explaining ourrequirements up front including expected deal
economics, our strict due diligence process, andthen work tirelessly and creatively to meet thecounterparty’s specific objectives and timing. Ourflat organization and highly efficient, decisionmaking process allows us to be very flexible,
tactical and decisive. This philosophy andexecution style are valued by our trade
counterparties who repeatedly bring attractive
investment opportunities that reward our clientswith outsized returns.

4

1．Executive summary5

1. Executive summary (1)Steps towards the merger with Sakura Sogo REIT in cooperation with Star Asia Group
Background to holding of two SSR General Unitholders’ Meeting
The "Notice Concerning Proposal for Merger between Sakura Sogo REIT Investment Corporation and Star Asia Investment
Corporation" was announced by Star Asia Group to unitholder of Sakura Sogo REIT (hereinafter "SSR")

May 10, 2019

Request made by SSR unitholder to hold SSR General Meeting of Unitholders
May 16, 2019

Application for Permission of Holding SSR’s Unitholders’ Meeting by Star Asia Group

June 28, 2019

Approval for Lion Partners to hold SSR’s Unitholders’ Meeting (from the Director-General of the Kanto Local Finance Bureau)

August 30, 2019

SSR's General Unitholders Meetings held
<General unitholders' meeting convened by Star Asia Group (Lion Partners GK (hereinafter "LPGK") from 10 a.m.>- Toru Sugihara was elected to be Executive Director of SSR, and cancellation of the asset management entrustment agreement between
SSR and Sakura Real Estate Funds Management, Inc. and signing of an asset management entrustment agreement between SSR and Star
Asia Investment Management Co., Ltd. were approved, resulting in Star Asia Group (LPGK)'s proposals being adopted as proposed<General unitholders' meeting convened by SSR from 4 p.m.>- SSR-side's proposal to sign a merger agreement with MIRAI Corporation was not approved

Star Asia Group is of the view that the proposal for a merger "of unitholders, by unitholders, for unitholders"which was promoted by Star Asia Group was approved by SSR unitholders

Expected Shortest Schedule
Negotiation Regarding theConditions of Merger
Agreement-

The final merger ratio will be determined after conducting due diligence at both investment companies
Independent advisors will be appointed at both investment companies, in order to ensure fairness towards
unitholders

About
Oct/Nov
2019

Merger Agreement-

The merger ratio and other terms and conditions of the merger will be disclosed at the time of entering into
the merger agreement
Sufficient time for consideration by unitholders will be provided prior to entering into the merger agreement

About
Nov/Dec
2019

General Unitholders Meeting
to approve the proposed
merger(SSR/SAR)-

A general meeting of unitholders for approving the merger will be held at both the SSR and SAR sides
Approval of the merger shall be determined by judgment of the unitholders (by special resolution)

Merger6

1. Executive summary (2)Steady expansion of asset size
—To increase asset size by 1.6 times to more than 100 billion yen from the time of listing—
Change in Asset Size
Billion yen

Asset size

2,000

Number of properties

Number ofproperties

2,000

40
33

1,800
1,400

23

1,200

800

18

614

18

614

30

1,013
753

614

Merger with
SSR

23

18

753

35

1,599

29

1,600

1,000

34

1,023

860

25
20
15

600

10

400

5

200
0

0

Upon listing
Apr. 2016

1st FP Jul.
2016

2nd FP Jan.
2017

3rd FP Jul.
4th FP Jan.
2017 (Note3)
2018

5th FP Jul.
2018

7th FP(Jul. 2019)

Number of properties

18

34

Total acquisition price

61.4
billion yen

102.3
billion yen

Total appraisal value

65.1
billion yen

112.2
billion yen

Number of tenants

390

646

of 200 billion yen by 2020

Status of portfolio after merger with SSR

Status of Portfolio (as of July 31, 2019)
Upon listing(Apr. 2016)

Aim for an asset size

6th FP Jan.
7th FP Jul.
2019(Note3)
2019(Simple Summation)

Ratio of Tokyo area: 74.0%
Stability-driven
45.1%

Growth potential-driven
54.9%

Logistics
30.2%

102.3
billion yen

Retail14.0%
Simple34
properties
Residence
14.9%

Ratio of Tokyo
area： 67.6%

Other: 26.0%

Summation

Office
34.8%
Hotel
20.1%

Others, 2 silent partnership investments, 3 mezzanine loan investments

Of Assets

Residence
13.6%

Logistics
19.4%

Others：32.4%
Others1.5%

52Properties
159.9
billion yen

Office
38.6%

Hotel
12.8%

7

1. Executive summary (3)⚫ 7th Fiscal Period (ending July 2019) Upward revision of distributions 3,625 yen (up 125 yen: 3.6% increase compared to forecast）

Distribution⚫ Also in the 7th Fiscal Period, gain-on-sale from asset replacements have been added on to distributions⚫ Forecasted distributions for the 8th fiscal period ending January 2020 : 2,770 yen⚫ Forecasted distributions for the 9th fiscal period ending July 2020

: 2,770 yen⚫ Occupancy rate as of the end of the 7th fiscal period (overall average):

97.6% (△0.5% from the end of the 6th fiscal period)

Internal
Growth⚫ Office:

Focused on resolving rent gaps. Rent increases (revisions) for 7 properties(an 11.4% increase (revision) compared to before)⚫ Residence :Succeed in increasing monthly rent per tsubo unit for all properties (7 properties)(Increases ranging between plus 28 yen to plus 331 yen per tsubo)⚫ Stable contribution towards distributable profits for mezzanine loans⚫ Expanded asset size through property acquisition: 102.3 billion yen(1.6 times the asset size as of listing/based on acquisition price/as of July 31, 2019)

External
Growth⚫ Obtained preferential negotiation rights to secure sources of future external growth.
4 properties newly added, to make for total of 10 properties⚫ Execution of silent partnership (Tokumei Kumiai) investments: one new transaction (OHA Building) executed,
to make for total of 3 TK investments<Implementing process towards the merger>
Implementing procedures for due diligence towards the merger with SSR

FutureKey Issues<Logistics facility>
Responding to decrease in rents due to leasing activities and rent holidays* arising from tenant departure (end of August 2019).
<Office>
Increase in occupancy rates together with rent increases achieved, following the tenant departure from Higashi Kobe Center Building*Rent holiday means theperiod during which payment of rent is partially waived for certain months during the lease period（※）賃貸借契約期間中の特定の月の賃料の支払いを免除することをいいます。

8

2. Actual and forecasted distribution

9

2. Actual and forecasted distribution (1)Change in actual distribution and distribution excluding transient factors
2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP

8th FP forecast

9th FP forecast

Forecasted
distribution

3,046 yen

4,340 yen

4,039 yen

2,750 yen

3,580 yen

3,500 yen

2,770 yen

2,770 yen

Actualdistribution

3,112 yen

4,423 yen

4,077 yen

2,773 yen

3,720 yen

3,625 yen

※Forecast distribution of SAR alone,
without including effects of the merger

NAV per unit

109,727 yen

111,884 yen

112,412 yen

112,965 yen

112,537 yen

114,361 yen

1stAsset replacement

2nd
Asset replacement

3rd
Asset replacement

4th
Asset replacement

Gain on sale:
150 million yen

Gain on sale:
1,510 million yen

Gain on sale:
820 million yen

Gain on sale:
190 million yen

Total gain on sale

2.69 billion yen
Transfer
Urban Park
Yoyogikoen

Transfer
Oak
Minami-Azabu

Acquisition
Baraki
Logistics

Transfer
Hakata-eki
Higashi 113
Building

Internal reserves
113 million yen

Average DPU
since listing（Note4）：

3,138 yen

Acquisition
Urban Park
Gokokuji

1,799 yen

Acquisition
Hotel WBF
FukuokaTenjin Minami

Transfer
Urban Park
Shin-Yokohama

Acquisition
GlansitAkihabaraInternal reserves
37 million yen

1,313 yen
811 yen659 yen448 yen2,664 yen

108 yen2,624 yen

2,764 yen

2,931 yen

2,909 yen

2,966 yen

2,662 yen

2,812 yen

-42 yen-158 yen

2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP

8th FP

9th FP

第2期実績
Actual

第3期実績
Actual

第4期実績
Actual

第5期実績
Actual

第6期実績
Actual

第7期実績
Actual

第8期予想
Forecast

第9期予想
Forecast

Cashdistribution per unit after adjustment
一過性要因調整後1口当たり分配金

Cashdistribution per unit with transient factors
一過性要因

10

2. Actual and forecasted distribution (2)Factors for increase/decrease compared with forecast/actual results for the 7th fiscal period ended July 2019
Net income was 1,964 million yen (+3.8% compared to initial forecast) and distribution per unit was 3,625 yen (+3.6% compared to initial forecast)in the 7th fiscal period ended July 2019
(Unit: million yen)
7th FP(ended Jul. 2019)
forecast*

7th FP(ended Jul. 2019)
Actual

3,268

3,334

+66

2.0%

1,127

1,134

+7

0.7%

Residence rent

437

438

+0

0.2%

Logistics rent

911

910

△0

0.0%

Hotel rent

497

500

+3

0.6%

294

349

+54

18.6%

793

798

+5

0.7%

2,475

2,535

+60

2.4%

419

415

△3

△0.8%

2,055

2,119

+64

3.1%

Mezzanine

20

20

+0

1.4%

TK dividend

2

7

+4

170.4%

Gain on sale of real estate property

422

422

-

0.0%

SGA

345

344

△1

△0.3%

2,155

2,225

+70

3.2%

Non-operating income

-

0

+0

-%

Non-operating expenses

Lease business revenue
Office rent

Other
Expenses related to rent business (Depreciation is
excluded)
NOI
Depreciation
Rent revenues/expenses

Operating income

Factors forthe increase/decrease

Comparison with forecast

261

261

△0

△0.1%

Ordinary income

1,893

1,965

+71

3.8%

Net income

1,893

1,964

+71

3.8%

Cash distribution per unit

3,500 yen

3,625 yen+125 yen

3.6%

FFO per unit

3,494 yen

3,620 yen+126 yen

3.6%

151

155

+3

Balance of Internal reserves＜Lease business revenue＞+ 66 million yen
Office rents：
Higashi Kobe Center Building+ 5 million yen
Hotel rents：
Upper swing in floating rents
Other：
Insurance revenues (24 million yen),renewal fee revenues (9.3 million yen),amortization of lease deposits（8.7
million yen), revenues from restoration
to original state（10 million yen) etc.
＜Expenses related to rent business＞+ 5 million yen
increase in repair expense+ 9.7 million yen

2.5%*Announced in 6th FP closing of accounting report (March 15, 2019 )11

2. Actual and forecasted distribution (3)Forecast of business results for the 8th fiscal period ending January 2020 and 9th fiscal period ending July 2020
(Unit: million yen)
Actual for the 7th
FP ending July
2019
(A)

Current forecast
for the 8th FP
ending January
2020
(B)

Lease business revenue

3,334

3,173

①

△161 Factors for increase/decrease in 8th FP

Expenses related to rent
business(Depreciation is excluded)

798

785

②

△13

Increase/decrease

Major factors for the increase/decrease

(B-A)

△147

415

422

+6

2,119

1,966

△153 •

Gain on sale of realestate properties

422-

Mezzanine

20

20

Rent revenues/expenses

Dividends in silent
partnership investment
SGA
Operating income

7

5

344

321

2,225

1,670

③

△422

△161 million yen
•

④

△23
△555

Removal of temporary profit increase factors(insurance premium revenues, cancellation
penalty fees) in the 7th Fiscal Period

3,240

①

+67 Factors for increase/decrease in 9th FP

765

②

△19

(Comparison with 8th FP forecast)••① Lease business revenue

2,475

+86

428

+6

△13 million yen

20△0

Decrease in repair expense, leasing costetc.

5

③ Gain on sale of real estate properties•

Decrease in rent holidays in logistics
facilities etc.

△19 million yen-

Renewal fee for leased land of Higashi Kobe
Center Building+67 million yen+80 ② Expenses related to rent business

2,046
-

② Expenses related to rent business+0△2

Tenant departure and rent holiday atlogistics facility

Major factors for the increase/decrease(C-B)① Lease business revenue

2,388

Depreciation

Forecast for the 9th FP
Forecast for the 8th FP
Increase/decrease(Comparison with 7th FP actual)

2,535

NOI

Forecast for the
9th FP ending
July 2020(C)•③ Non-operating expenses +39 million yen

- •

319

△1

1,752

+82

-

-

Decrease in renewal fee for leased landof Higashi Kobe Center Building etc.

Increase in temporary expenses uponrefinancing△422 million yen△0 •Non-operating income0-

Non-operating expenses

261

228

Ordinary income

1,965

1,441

△523 •Net income

1,964

1,441

△523

Cash distribution per unit

3,625

2,770

⑤

△33

△855

Removal of gain-on-sale of Hakata-eki
Higashi 113 Building④ SGA △23 million yen
Decrease in AM fee etc.

⑤ Non-operating expenses △28 million yen
•

267

③

+39

1,484

+42

1,483

+42

2,770

-

Decrease in temporary expenses uponrefinancing

123. Operating results for the 7th fiscal period
ended July 201913

3. Operating results for the 7th fiscal period ended July 2019 (1)Occupancy rate status
Occupancy rate as of the end of the 7th fiscal period: 97.6% ~ Due to effects of decrease in the occupancy rate of Higashi Kobe Center Building
Aiming to stabilize occupancy rate by grasping tenant needs and the situation of properties through intimate on-site collaboration and other carefulmeasures100%

Hotel, 100.0%

Logistics facility, 97.8%

98%

TOTAL, 97.6%

96%【Total】
Occupancy rates for the 7th Fiscal
Period was 97.6%, mainly due toeffects of decrease in theoccupancy rates of offices(Higashi Kobe Center Building)Residence, 97.3%

94%
92%

Office, 96.4%【Office】
Focus on improving the occupancy
rate of Higashi Kobe Center
Building at an early stage

90%【Residence】
Although occupancy rates during
the period declined, it recovered to
97.3% at the end of the period.
Stabilization of the occupancy rate
is recognized as an issue

88%

オフィス
Office

住宅
Residence

Logistics
物流施設 facility

ホテル
Hotel

全体
TOTAL

1st FP

2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP

Office

95.8％

99.2％

98.8％

99.7％

98.6％

98.8％

96.4％

Residence

92.5％

92.6％

94.2％

97.1％

94.0％

96.2％

97.3％

Logistics

96.3％

96.3％

96.9％

96.9％

97.8%

97.8％

97.8％

Hotel

100.0％

100.0％

100.0％

100.0％

100.0％

100.0％

100.0％

TOTAL

95.9％

96.8％

97.3％

97.8％

97.7％

98.1％

97.6％

【Logistics Facility】
Attract tenants to cancelled floor
space of Baraki Logistics at an
early stage【Hotel】
Occupancy is 100% with full leaseto the hotel operator

14

3. Operating results for the 7th fiscal period ended July 2019 (2)Office —Status of rent gap and change in tenant as of the end of the 7th FP (Ended July 2019)—
Change in tenants in the 7th fiscal period (Note7) (Note8)

Rent gap as of the end of the period (Note5)

14,000.00 ㎡

Rent Unit Price and Rent Gap

Tenants renewed in 7th FP：34(yen per tsubo)

12,000.00 ㎡

Increase in rent, 7
10,000.00 ㎡

No change, 26

8,000.00 ㎡
6,000.00 ㎡

Rate of rent
growth whenrent increases

13,00011.4％

12,500100.0%

12,789Rent gap
1,116 yen

70.0%

per tsubo

50.0%(9.6%)

2,000.00 ㎡

Early cancellation, 8

60.0%

10.0%

621.89㎡

0.0%
11,000

Nearby Market
Rent Unit Price

周辺相場賃料単価-2,000.00 ㎡

42.4%

20.0%

4 New Contracts

Vacant at beginning of period

24.0%Less than 0%
0%未満
0% to less than 10%
0%以上10%未満
10%以上
10% or more

Contracted

契約賃料単価Rent
Unit PriceContract Rent Periods of Office Portfolio

Average Rent per Tsubo since the 1st FP (Note6)(Figures in parenthesis indicate the number of cases)

115.0

Shibuya MK Building, 115.0

113.0

111.0

(㎡)

Nishi-Shinjuku Matsuya
Building, 113.7

18,000Nihonbashi Hamacho Park
Building, 107.0

16,000Asahi Building, 105.7

14,00012,000

109.0
Hakata-eki East Place, 105.5

10,000

Honmachibashi Tower, 102.1

8,000

107.0
105.0

Amusement Media Gakuin
Shinkan, 100.0

103.0

Alphabet Seven, 100.0
Minami-Azabu Shibuya Building,
100.0

101.0

Amusement Media Gakuin
Honkan, 100.0

99.0
End of 3rdFP

End of 4thFP

End of 5thFP

End of 6thFPRent gap
exists at
76.9% ofthe total

30.0%

11,5000.00 ㎡

34.4%

40.0%

11,6734,000.00 ㎡

End of 1st FP End of 2nd
FP

90.0%
80.0%

12,000Cancelled,1Diversification Status of Rent Gap
as of End of the Period (Based on Area)

End of 7th
FP

Higashi Kobe Center Building,
99.8

(46)
(34)
(37)

(31)

6,000
4,000
2,000
0

8th
FP
第8期
rent gap

第9期
9th
FP

10th
FP
第10期

0%未満
Less
than 0% 10％未満0％以上
0% to less than 10%

11th
FP onward
第11期以降10% or more
10%以上

15

3. Operating results for the 7th fiscal period ended July 2019 (3)Residences — Increased rents through control of appropriate rent settings —Change in Total Monthly Rent and Average Occupancy Rate (Note9)(Unit : thousand yen)

Average Rent per Tsubo since the 1st FP (Note10)
104.0%

Urban Park Azabujuban,
103.9%

Monthly rent unit price
Average occupancy rate

69,00098.0%

Urban Park Namba,
102.2%

97.8%
103.0%

68,500Urban Park Gokokuji,
102.0%

97.0%

96.0%

68,00067,50096.0%

102.0%

Urban Park Ryokuchikoen, 101.7%

67,00066,500

93.7%

95.0%

66,000Urban Park Kashiwa,
101.21%101.0%

94.0%

65,50065,000Urban Park Koenji,
101.0%

93.0%
100.0%

64,50064,00092.0%

End of 5th FP

End of 6th FP

End of 7th FP

Urban Park
Daikanyama, 100.9%

99.0%

1st FP

2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP[Results]■ Occupancy rate : 1.8% increase (compared with 6th FP / excluding Urban Park Shin-Yokohama (sold property))■ Total monthly rent : Approximately 3.2% increase
・Urban Park Koenji, which successfully achieved increase in average rent levels after conducting strategic renovations aiming for "improvement in convenience" and"consideration for the environment" during the preceding period, achieved 100% occupancy rate (as of the end of this fiscal period).
・Achieved improvement in occupancy rates and increase in rents by gathering more detailed information such as the status of competing surrounding properties etc., and by
adjusting the aggregate rent amounts for individual residences.

[Future Policy]
We will continue to make efforts to maintain and improve the competitiveness of the properties held by SAR and aim to stabilize occupancy rates and increase rents, bygathering information of the status of competing surrounding properties and implementing appropriate capital expenditures and renovation works.

16

3. Operating results for the 7th fiscal period ended July 2019 (4)Logistics facility/hotel■ Logistics facility ■ Diversification of Current Contract Renewal Period (based on floor area)
80,000.00(5)leased area (㎡)
契約面積(㎡)

7th Fiscal Period (ended July 2019): 2 contract renewals
1 tenant is expected to renew contract at a 5% reduction in the rent amount⇒ already reflected in business forecast.
1 tenant is expected to renew contract under the same conditions as before.

70,000.00
60,000.00

8th Fiscal Period (ended January 2020): 1 contract renewal
Expected to be renewed under the same conditions as before.

50,000.00(2)40,000.00

9th Fiscal Period (ended July 2020): 2 contract renewals
Commence negotiations of lease conditions with tenants approaching
contract renewal.
Coordinate with on-site staff and grasp tenant needs, and respond to them.
Construct a favorable relationship with tenants.

30,000.00
20,000.00

(1)

(1)

(1)

10,000.00※In the current fiscal period (ending January 2020), focus on tenant leasing
activities for Baraki Logistics facility which was cancelled at the end of August
2019.

0.00

8th FP
8期
Jan. 2020

9th
9期FP
Jul. 2020

10th FP
10期
Jan. 2021

11th
FP
11期
Jul. 2021

12th
FP
12期
Jan. 2022

13th FP
13期以降
onwards

0.0%

20.0%

■ Hotels ■ Change in rent system and rent ratio
Acquisition
PeriodFixed
Rent

Floating
rent

R&B Hotel Umeda East

2016.4○－

2nd FP

Smile Hotel Namba

2016.4○○

3rd FPBest Western Tokyo Nishi-kasai

2017.3○○

Best Western Yokohama

2017.3○○

Property name

Hotel WBF Fukuoka Tenjin
Minami2018.8○○(Note11)○－2018.8○○2018.8○○Glansit Akihabara

2018.8

Best Western Tokyo Nishikasai
GrandeHotel WBF Artstay Namba

軸ラベル

1st FP

4th FP
5th FP

40.0%

60.0%

62.0%

80.0%

100.0%

38.0%

71.6%

28.4%

84.9%

15.1%

89.1%

10.9%

86.2%

13.8%

95.2%

4.8%

7th FP

92.4%

7.6%

8th FP(forecast)
9th FP(forecast)

94.7%

5.3%

92.4%

7.6%

6th FP

Fixed

Upon listing: 2 properties
3rd FP:
Additional acquisition of 2 properties
6th FP:
Additional acquisition of 4 properties
Currently managing a total of 8 properties
The floating rent ratio decreased, due toadditional acquisition of a hotel with a highfixed rent ratio.
Floating rent ratio:
Average of approximately 6.5%.
The tenant with the earliest timing ofcontract renewal is expected to beduring the 10th Fiscal Period.
Therefore, stable rent revenues is
expected.

Floating

17

3．Operating results for the 7th fiscal period ended July 2019 (5)Future Key Issues ～ Current leasing status of Baraki Logistics etc.
Current Status of Baraki Logistics
Company A：
Temporary decrease in rent revenue
due to rent holiday*(August 2019 – May 2020)

Factors for
decrease inrevenue*Exemption of payment of rent for a specific month
during the period of lease agreement.

Company B：
Vacancy is likely to occur due totenant departure

Factors forincrease inrevenue

Current Status of Leasing Activities etc. for Baraki Logistics
Off-set reduced
revenue portion by
utilizing internal
reserves
Focus on leasing
activities of new
tenants

Company B：
Revenue from cancellation penalty fees

33.1
%

70.0%

・Decrease in rent revenue due to rent holidays will be
offset by internal reserves
・Company A can’t terminate the contract up to July 2023
⇒ It is recognized to become a stable revenue source after
the rent holiday is over

50.0%
40.0%

41.6
%

Decrease in revenue due to cancellation
by Company B : 41.6%⇒ Vacancy is likely to occur

16.7%

70.0%

5.6%

50.0%

Decreasein rent compared with the previous period
従前と比較した場合の賃料減
Reduction
in revenue due to the vacancy period of cancelled portion of floor space
解約された床部分の空室期間による収入減

27.7%

25.2
%

Company A’s rent (excluding the rent holiday)
Company B’s rent (1 month rent before cancellation)

0.0%
The index is prepared assuming that the aggregate rent amount during normal periods (for 6 months) is 100

Decreasein revenue due to the rent holiday
レントホリデーによる収入減

40.0%

20.0%

20.0%

Company
B’s rent (excluding the rent holiday)
B社賃料（レントホリデーを除く）
Rent
revenue from a new tenant
新規テナントからの賃料収入

80.0%

30.0%

30.0%

10.0%

90.0%

11.7%

60.0%

60.0%

<Baraki Logistics>

Forecast Assumptions (9th FP)
100.0%

100.0%

80.0%

Leasing activities for the cancelled floor space of Company B• This property is very close to Tokyo which is a super
consumption region, and it is also within walking distance fromthe nearest train station, so there are many potential tenants• A preview event was held at the time of restoration of theproperty to its original state towards cancellation by Company
B at the end of August 2019
• Currently negotiating with multiple tenant candidates.
• Business forecast has been conservatively prepared⇒18 million yen （recorded in 7th FP)

Forecast Assumptions (8th FP)

90.0%

Company A Rent holiday (8th Fiscal Period - 5 months, 9th Fiscal Period - 4 months)• To be off-set by using the internal reserves up to the 7th Fiscal Period, excluding revenue
reduction factors• The lease is non-cancellable up to July 2023, and it is recognized to become a stablerevenue source after the rent holiday is over

10.0%

38.3%

<Forecast Assumption>
As for the cancelled floor space of Company B, rent
will be generated from April 2020
(Rent estimates have been conservatively prepared)

0.0%
The index is prepared assuming that the aggregate rent amount during normal periods (for 6 months) is 100

18

3．Operating results for the 7th fiscal period ended July 2019 (6)Future Key Issues ～ Leasing activities for Higashi Kobe Center Building
Current Status of Higashi Kobe Center Building and Efforts towards 7th FP➢ New tenants found after property acquisition: 3 tenants (579.86㎡)

The occupancy rate at time of property acquisition (September 2018) was 95.4%
The occupancy rate as of the end of the 6th Fiscal Period (ended January 2019) was 96.1%
The occupancy rate as of the end of the 7th Fiscal Period (ended July 2019) was 89.6%⇒ The occupancy rate has declined due to multiple cancellations

Leasing
Activities

Use

OfficeLocation

Kobe-shi, Hyogo

Acquisition price

7,440 million yen

Appraisal value

7,470 million yen

Structure

Steel-framed / Steel-framed
reinforced concrete structure 14
floors above groundTotal floor areas

25,740.46 m²

Use

OfficeRent Revenue from Higashi Kobe Center Building (Actual/Forecast)
ActualForecast

100.0%
99.0%
98.0%
97.0%
96.0%

➢ Provides convenient access to office and commercial areas since the building is centrally
located between Osaka and Kobe, with an 11-minute ride to Sannomiya Station and 17minute ride to Osaka Station from Settsu Motoyama, the closest station to the property

95.0%➢ The property has specifications satisfying a wide range of tenant needs and is competitive
amongst properties in the surrounding area at a certain degree.

93.0%➢ There is parking space for 180 cars on the premises and for 112 cars off the premises,
which is very appealing to a wide range of retail tenants and stores seeking to attract
customers across a wide area.

92.0%➢ The standard office floor area is 1,042.44 m2. Units can be divided based on tenant needs(existing tenants rent rooms of 57.42 m2 - 1,387.82 m2). The property has competitive
specs such as 8 elevators, ceiling height of 2,500 mm, individual air conditioning, OA
floors, etc. and can satisfy demand from tenants in various industries.

90.0%➢ The building is in the same region as Ashiya, Nishinomiya, Okamoto, and other such
luxury residential areas, and includes community-based tenants (mobile phone shops,
photo studios, etc.) who emphasize easy access to residential areas(15 companies 40 persons/ 5 companies 8 persons)➢ Leasing activities are being conducted aiming for early recovery of theoccupancy rate, by directly approaching potential tenant candidates etc.

- We will aim for early recovery of the occupancy rate

Property features of Higashi Kobe Center Building➢ A preview event was held to allow candidates to get a sense of the user
friendliness as office space

94.0%

91.0%

7th FP

8th FP

9th FP（※）The index is prepared assuming that the aggregate rent amount on Jan. 2019 is 100

19

3. Operating results for the 7th fiscal period ended July 2019 (7)Financial standing
Refinance risk and interest rate increase risk are reduced by deconcentrating the repayment dates of borrowings and selecting fixed-rate interest rates
Balance of borrowings

End of 7th FP(Unit: million yen)Longterm

Diversification of repayment dates (as of July 31, 2019)
FP of
the repayment date

Interest rate

Term

7,300

0.4830% (Note12)

4.0 years

9th FP

7,300

0.6250% (Note12)

5.0 years

11th FP

2,400

0.5300% (Note12)

3.5 years

10th FP

4,150

0.7100% (Note12)

5.0 years

13th FP

1,600

0.5300% (Note12)

3.5 years

10th FP

4,690

0.7300% (Note12)

5.0 years

15th FP

7,300

Base rate (Note13)+0.45%

3.5 years

12th FP

4,000

0.6095% (Note12)

3.5 years

13th FP

4,840

0.8120% (Note12)

5.0 years

16th FP

8,000

0.7532% (Note12)

5.0 years

17th FP51,580■ Adjustable

8,000

6,000

4,000

7,300

7,300

7,300

8,150

8,000

4,000

2,000

4,690

4,840

15th FPJul 2023

16th FPJan 2024

0
9th FP
Jul 2020

10th FPJan 2021

11th FPJul 2021

12th FPJan 2022

13th FPJul 2022

14th FPJan 2023

17th FPJul 2024

Main financial indicators

Bank formation (as of July 31, 2019)
Mizuho Trust & Banking, 1.6%

■ Fixed(Unit: million yen)

10,000The Dai-ichi Life Insurance
Company, 1.0%

End of 6th FP

End of 7th FP

LTV (based on total assets)

47.1%

46.8%

Balance of borrowings

52,340 million yen

51,580 million yen

Long-term debt ratio

99.1%

100.0%

Average remaining
period to maturity

2.3 years

2.6 years

Average borrowing period

4.0 years

4.4 years

Average interest rate

0.568%

0.635%

Fixed interest rate ratio

83.3%

85.8%

The Nishi-Nippon City Bank, 1.9%
The Bank of Fukuoka, 2.2%
MUFG Bank, 2.7%

Sumitomo Mitsui Banking, 25.3%

Resona Bank, 9.3%

Aozora Bank, 9.3%

Mizuho Bank, 22.4%
Shinsei Bank, 9.7%
Sumitomo Mitsui Trust Bank, 14.6%

20

4. Future Initiatives

21

4. Future Initiatives (1)Actual results of active management and change in investment unit price from the time of listing (Note14)
Investment

Investment

Investment
in mezzanine
loan debt 3
December 20, 2018

in mezzanine
Implementation of Continuous in mezzanine
loan debt 1
loan debt 2
Active Management
October 25, 2017 December 20, 2017

1st asset
replacement
December 5, 2016

2nd asset
replacement
February 28, 2017

3rd asset
replacement
July 23, 2018

1st follow-on
offering
March 17, 2017
Offer price: ¥96,720

IPO
April 20, 2016(¥)

4th asset
replacement
August 21, 2018

1st acquisition ofsilent partnership
equity interest
November 28, 2018

1st acquisitionof real estate
January 24, 2019

2nd follow-on
offering
January 12, 2018
Offer price: ¥106,724

Investment
in mezzanine
loan debt 4
January 24, 2019

2nd acquisition of silent
partnership equity interest
February 26, 2019

Proposal for Merger
by Star Asia Group

3rd follow-on
offering
August 21, 2018
Offer price: ¥101,985

May 10, 2019(¥100mn)

1,200

120,000

SAR’s unit price (left)
110,000900

TSE REIT index

SAR’s AUM (right)

Offer price at IPO:
¥100,000

100,000

600

300

90,000End of 1stFP¥61.4bn

80,000
16/4

16/6

16/8

End of 2ndFP¥61.4bn
16/10

16/12

17/2

End of 3rd
FP (Note15)¥75.3bn
17/4

17/6

17/8

17/10

End of 4thFP¥75.3bn
17/12

18/2

End of 5thFP¥86.0bn
18/4

18/6

18/8

End of 6th
FP (Note15)¥101.3bn
18/10

18/12

19/2

End of 7thFP¥102.3bn 0
19/4

19/6

19/8

22

4. Future Initiatives (2)Points of focus in management etc. from the 8th FP
Points of focus from the 8th FP⚫ Resolve rent gaps within the office portfolio

Internal
Growth⚫ Maintain and improve appeal towards tenants by implementing appropriate capital expenditures and renovations(utilize sponsor support)⚫ Attract new tenants at an early stage for the cancelled floor space of Baraki Logistics/ Higashi Kobe Center
Building⚫ Focus on securing external sources of growth, by increasing properties for which preferential negotiation rights are
held

External
Growth⇒ Acquire preferential negotiation rights from sponsor group⇒ Search for properties using Star Asia Investment Management's own unique network⚫ Continue to consider various measures (mezzanine loan debt investments/ asset replacement/ silent partnershipinvestments)

Financial
Strategy⚫ Continue deliberations on obtaining a credit rating⚫ Enhancement of bank formation (inviting new lenders)⚫ Utilize internal reserves with the intent to stabilize cash distributions⚫ Execute practical procedures towards signing of the merger agreement with SSR

For Merger⚫ Prepare a growth strategy for post-merger, and consider detailed action plans⚫ Structure an operational system assuming the merger

234. Future Initiatives (3)SAR’s Abundant Pipeline of Properties: Enable Us to Conduct Various Action Plans
Properties with Preferential Negotiation Rights and Star Asia Group’s Pipeline

Future Action Plans➢ Properties in (1) are stable and have set minimum selling prices and yields exceeding SAR’s current portfolio.
➢ Properties in (2) are still in development or lease-up and will be considered for acquisition once the revenue stabilizes

Total Appraisal Value： ¥13.6bn(Note16)(1) SAR has Preferential Negotiation Rights
Tachikawa OHA bldg.
Greater Tokyo
Area

Nishi-Ikebukuro 1-Chome bldg.
Tokyo
area

OfficeRetailUrban Park Tokiwadai Koen

Urban Park Mitsuike Koen
Tokyo
area

Tokyo
area

Residence

Residence

Chrysantheme-Ichigao
Tokyo
area

Residence< Expansion of AUM >➢ SAR will leverage its preferential
negotiation rights and the sponsor’s
abundant pipeline to steadily grow its
asset base and seek to improve theprofitability and stability of its portfolio➢ There is a group of properties which
can be acquired immediately, andthis allow us to flexibly implement
plans for expanding AUM< Consideration of Replacing Assets >Avg. appraised cap rate:4.9% (Note17)

Avg. cap rate after depreciation：4.3% (Note18)
Total Appraised Value： ¥17.6bn(Note19）(2) SAR has Preferential Negotiation Rights
HAKUSAN HOUSE

Shimotakaido Project

Nishi-Sugamo Project

Hakata Office Project

Under development by
GSA Star Asia

Under development by
GSA Star Asia

Under development byStar Asia Sogo Kaihatsu

Under development byStar Asia Sogo Kaihatsu

Other Properties Managed by the Sponsor Group
28.7%
35.1%

OfficeURBAN CENTER Midosuji

Owned by theSponsor’s fundTotal Appraised Value： ¥31.3bn(Note20)

20.0%

Tokyo area

RetailOther

Residence
17.7%
12.9%

Logistics
Hotel

5.6%

80.0%

Example of the properties
Managed by Star Asia Group
Higashiougijima Center (Logistics)➢ It will actively consider replacing
assets where management foresees
a decrease in future competitiveness< Feasibility of Gains on Sales >➢ When replacing assets, SAR willseek to secure gains on sales ofproperties to pursue themaximization of unitholder value
through special dividends• Depending on the circumstances,properties can be sold to Star
Asia Group for flexible asset
replacement• Star Asia Group evaluates SAR’s
portfolio as having 11.0 % (Note22)
in unrealized gains compared tothe bookvalue as of the end of
fiscal period ended January
2019(Note21)
24

4．Future Initiative (4)Continuous implementation of active management which seeks to maximize unitholders' interests- Asset Replacement
Unrealized gains (appraisal value at end of period - book value at end of period) is steadily increasing due to strengthening of theportfolio, and we will continue to consider return of gains on sale to unitholders, through practicing active management such as
asset replacements etc. going forward as well

Asset Replacement
To date, we have enhanced our portfolio by implementing asset replacement 4 times, andwe have generated gain on sale through disposition of assets in connection with such replacements.
Appraisal values and unrealized gains and losses at SAR

Implementation policy for asset replacement(Unit: million yen)

⚫ Degree of future revenue contribution of theAcquisitionPriceassets to be replaced (Strengthening of the portfolio)

①

②

③

Period-end

Appraisal Value

Unrealized
gains (loses)

Book ValueAt end of 7th FP②－①⚫ Real estate market conditions by asset type

Office35,66436,06841,170

5,101⚫ Level of SAR's investment unit price

Residence

15,213

15,571

17,510

1,938※ Based on the above implementation policy, asset replacements will be

Logistics

30,95330,87732,782

1,904

Hotel

20,544

20,634

20,760125

Total

102,374

103,151

112,222

9,070

considered taking into account the assumed gain on sale of the assets
to be replaced.

Through asset replacements conducted 4 times since becoming listed, total
gains on sale of 2.69 billion yen was realized and returned to unitholders

To Seek To Maximize Unitholders’ Interests25

4．Future Initiatives (5)Post-Merger Portfolio Management Strategy
Investment Policy (Post-merger)

SAR’s Views on Each Asset TypeSpecific Management Policy

OfficeOfficeMiddle-sized office buildings are lesssusceptive to oversupply of office buildings
expected in the future, and SAR forecasts that
supply and demand will continue to remain
tight

Focuses on middle-sized office buildings inurban areas with high population density
predominantly in the Tokyo metro area, andseeks growth through aggressively increasing
rent

RetailRetailPost-merger portfolio

There are increasing concerns over deteriorating
business environment for primarily suburban brickand-mortar stores selling non-essential goods on theback of the rise of e-commerce and the shift inconsumer values towards services and experiences
over material goods

Not an investment target for the time being. Intends toreplace suburban and regional retail facilities in the future,and focuses on urban retail facilities after conducting
analyses of trade areas to assess their growth potential,
etc. based on factors such as population in the trade areaand demographics

Post-merger portfolio

Residential

Residential

This is the most stable asset type, and has
growth potential as rents have been increasingin the current environment

Invests in competitive properties in light ofstrong demographic fundamentals based on
the mid-to-long-term macroeconomic
environment. Increasing rent levels

Logistics

Logistics

SAR predicts stable revenue from logistics
facilities with high tenant demand in the Tokyo
metro area bordering strong population
centers

Continue to focus on logistics facilities in theTokyo metro area (in particular, within
30km of Tokyo Station) which are easy tofind new tenants◼

A portfolio predominantly in Tokyo metro area◼

Focus on middle-sized assets◼

Stability and growth through diversification ofasset types◼ Commitment of the Star Asia Group(Star Asia Group’s estimated ownership in post-merger
Entity: c. 13.4％ (Note23))

Total assets of ¥159.9bn (based on acquisition price)
Assets in the Tokyo area: 67.6%
Other:¥2.4bn, 1%
Logistics:¥22.5bn,
14%

Residence:¥21.8bn, 14%

Office:¥61.8bn, 39%

Logistics:¥31.0bn, 19%
Hotel:¥20.5bn,
13%

Hotel

Hotel

While both business and tourism demand can be
captured in urban centers, the primary demand forhotels in regional cities is tourism, so there is a risk offluctuation in revenue due to changes in the tourism
environment, and supply of new hotels

Invests solely in urban hotels geared towards
business travelers, and prioritizes the stabilityof the portfolio, keeping the ratio of variable
lease contracts at 10% or lower (Note24) inprinciple

26

4. Future Initiatives (6)Initiatives on sustainability◼ SAR recognizes its position in society as a listed real estate investment corporation and will implement operation that is considerate towards ESG
as an initiative on sustainability◼ SAR will enhance corporate value in pursuit of long-term sustainability and gain comprehensive competitiveness◼ SAR believes that such efforts are in line with the basic principle of “Unitholders’ interest-first”

Basic principle “Unitholders’ interest-first”

Enhancing the possibility oflong-term sustainability

Enhancing corporate value

E

S

G

Environment

SocialGovernance• Environment-friendly real estate
operation• Establishment of relationshipwith stakeholders• Transparency of management• Alignment of interest withunitholders
27

5. Future Initiatives (7)Initiatives on sustainability
Environmental initiatives

E◼ Acquisition of environmental certification and DBJ Green Building Certification for 4 properties

Property nameIwatsuki Logistics

Property nameBaraki Logistics

Property name

Honmachibashi Tower

Property nameUrban Park Daikanyama

Asset type

Logistics facility

Asset type

Logistics facility

Asset type

OfficeAsset type

Residence

Location

Saitama-shi, Saitama

Location

Ichikawa-shi, Chiba

Location

Osaka-shi, Osaka

Location

Shibuya Ward, Tokyo

Properties with excellent environmental &social awareness

S

Properties with high environmental & social
awareness

Properties with satisfactory environmental &social awareness

Properties with satisfactory environmental &social awarenessSocial initiatives◼ Establishing relationship with various stakeholders
Local community:
Aim to contribute to the local community
through owned properties and tenants

Clients:
Establish mutual trust based on fairtransaction

Lenders:
Strive to share information to establish arelationship of mutual trust

Stakeholders
surrounding
SAR

Local
community

Lenders

Clients

Unitholders

Unitholders:
Aim to maximize unitholder value based on
the “Unitholders’ interest-first” mindset

Employees

Employees:
Support the growth of each employee by accepting various
employees regardless of gender, nationality, ethnic group,
race and generation
Ratio of female employees: 41.7%

28

5. Future Initiatives (8)Initiatives on sustainability
G

Governance◼ Implement decision-making with high transparency by complying
with laws and regulations◼ Maintain a high sense of ethics and execute operations as amanager of investors’ funds<Decision-making process>◼ Aligning the interests of the Sponsor Group with those of theunitholders by holding 17.9% of the investment units of theSponsor Group◼ Members of the Asset Manager also hold investment units
Sponsor Group

Department

Total: 96,780 units held by 4 unitholders
Proposal

Number ofinvestment units held insame-boat investment:

Founder of Star Asia 2 individuals

Compliance Officer

97,000 units

Total: 220 units

Review and approval

ReturnHolding ratio:

17.9 %

Investment Committee (including external directors)
Review and resolution

Rejected

Compliance Committee (including external directors)
Review and resolution

Management team of the Asset Manager
Rejected

Board of Directors

Holding SAR’s investment units through the cumulative investment systemfor employees
High commitment by management

Rejected
Items that do not need tobe discussed at theCompliance Committee

Items that need to be
discussed at theCompliance Committee

ReviewAnd
approval

SAR’s Board of
Directors Meetings

Employees of Star Asia Investment Management Co., Ltd.
Unapproved

Holding SAR’s investment units through the cumulative investment system
29
for employees

5. Future Initiatives (9)Initiatives on sustainability
G

GovernanceStar Asia, the sponsor of Star Asia Investment Corporation, is a non-listed independent investment management group which invests mainly inJapanese real estate-related assets and whose main goal is supplying investors with excellent returns
Star Asia Investment Corporation and Star Asia shall share the same long-term vision in accordance with the Star Asia Group’s Code of Conduct, shallbe a leading Real estate investment management group in Japan and shall persistently endeavor to continue to be such
The Code of Conduct is as follows:1

Client FirstWe are rewarded only when we
consistently meet and exceed ourinvestor clients’ expectations for the
mandates they have given to us.

5

Collaborative
andCooperative Culture

We succeed only when we work
together by fully utilizing our collective
strengths in a cooperative manner toserve our investor clients. The group’s
performance always exceeds the sum of
our individual performances.

2

Highest EthicalStandards andIntegrity

We always abide by the highest ethicalstandards and integrity. Unethicalactions by an employee could easily
destroy the group’s long-standing
reputation and trust.

6

Adaptability

We stay nimble, proactive and critical,
allowing us to adjust quickly as themarket environment changes in order tocontinue to be a successful leader in themarket where we do business.

3

Creativity

We utilize our experience, persistence,and creativity to identify and monetize
investment opportunities which may not
be immediately apparent to ourcompetitors.

7

Meritocracy

We reward our employees for their
specific personal performance as well as
their contribution to the group and toinvestor client performance.

4

Respect for Others

We treat our investor clients, employees,
trade counterparties, and vendors withthe utmost respect, and always strive to
be trustworthy partner.

8Endless PursuitofExcellence

We will tirelessly pursue excellence not
only for our investor clients but also for
ourselves.

30

5. Appendix

31Change in distribution since listing
Change in business results since listing
1st FP(ended Jul.
2016) actual

Lease business revenue(Unit: million yen)

2nd FP(ended Jan.
2017) actual

3rd FP(ended Jul.
2017) actual

4th FP(ended Jan.
2018) actual

5th FP(ended Jul.
2018) actual

6th FP(ended Jan.
2019) actual

7th FP(ended Jul.
2019) forecast*

7th FP(ended Jul.
2019) actualComparison
with forecast

1,859

2,017

2,312

2,408

2,791

3,224

3,268

3,344

+66

Office rent

634

802

822

795

862

1,104

1,127

1,134

+7

Residence rent

325

349

391

410

500

458

437

438

+0

Logistics rent

581

530

642

696

906

912

911

910

△0

Hotel rent

142

120

220

282

287

447

497

500

+3

Other

174

215

235

223

235

302

294

349

+54

321

380

549

536

607

678

793

798

+5

1,538

1,636

1,763

1,871

2,184

2,545

2,475

2,535

+60

246

244

287

305

355

409

419

415

△3

1,291

1,392

1,476

1,566

1,828

2,135

2,055

2,119

+64

Mezzanine

-

-

-

14

18

22

20

20

+0

TK distribution

-

-

-

-

-

-

2

7

+4

Gain on sale of real estate
property

-

-

898

771

-

598

422

422

-

143

202

276

300

270

349

345

344

△1

1,147

1,190

2,098

2,051

1,576

2,406

2,155

2,225

+70

Non-operating income

0

0

0

0

0

0

-

0

+0

Non-operating expenses

812

117

264

176

270

333

261

261

△0

Ordinary income

335

1,073

1,833

1,876

1,305

2,073

1,893

1,965

+71

Net income

333

1,072

1,832

1,802

1,305

2,049

1,893

1,964

+71

968 yen

3,112 yen

4,423 yen

4,077 yen

2,773 yen

3,720 yen

3,500 yen

3,625 yen+125 yen

1,684 yen

3,820 yen

2,948 yen

3,224 yen

3,529 yen

3,440 yen

3,494 yen

3,620 yen+126 yen

0

0

0

113

113

151

151

155

+3

Expenses related to rent
business(Depreciation is excluded)
NOI
Depreciation
Rent revenues/expenses

SGA
Operating income

Cash distribution per unit
FFO per unit
Balance of Internal reserves* Mar 15, 2019 Announced in 6th FP closing of accounting report32Balance Sheets for the 7th Fiscal Period ended July 31, 2019
(Unit: thousand yen)
6th FP(As of January 31, 2019)

7th FP(As of July 31, 2019)

6th FP(As of January 31, 2019)

AssetsCurrent assets

Liabilities
Current liabilities

Cash and deposits

2,310,545

1,743,631

Cash and deposits in trust

3,953,328

3,940,970

52,56855,906

Prepaid expenses

120,684

132,744

Consumption taxes receivable

184,863-

7,153

11,2986,629,144

5,884,550

Operating accounts receivable

Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings in trust

Operating accounts payable291,171

Short-term loans payable

460,000-

8,300,000

7,300,000

Accounts payable - other335,845

293,558

Accrued expenses

10,017

10,030

Income taxes payable

22,611

605-

199,468

Advances received

624,323

517,389

Other

14,11930,552

10,058,089

8,606,243

43,580,000

44,280,000

Current portion of long-term loans payable

Accrued consumption taxes

33,050,199

33,118,834

Accumulated depreciation△1,712,512△2,106,616

Buildings in trust, net

31,337,686

31,012,218

11,621

15,784

Tenant leasehold and security deposits△1,423△1,893Tenant leasehold and security deposits in trust

Structures in trust, net

10,19813,890Other

Machinery and equipment in trust

45,723

46,680Total non-current liabilities

Accumulated depreciation△4,982△7,236

Machinery and equipment in trust, net

40,741

39,444Structures in trust
Accumulated depreciation

7th FP(As of July 31, 2019)

Total current liabilities

254,637

Non-current liabilities
Long-term loans payable

Total liabilities

6,669

6,669

2,514,819

2,478,925

79,644

128,960

46,181,133
56,239,222

46,894,554
55,500,798

Net assets

Tools, furniture and fixtures in trust

30,82833,338

Accumulated depreciation△5,807△8,460Unitholders’ capital

52,745,966

52,745,966

Tools, furniture and fixtures in trust, net

25,02024,877

68,467,885
222

68,602,052

Surplus
Unappropriated retained earnings(undisposed loss)
Total surplus

2,163,215

2,115,855

99,881,755

99,692,483

2,163,215

2,115,855

Total unitholders’ equity

54,909,181

54,861,822

Leasehold rights in trust

3,459,138

3,459,138

Total intangible assets

Deferred gains or losses on hedges

3,459,138△69,303△122,065

3,459,138

Total valuation and translation adjustments△69,303△122,065

54,839,877

54,739,757

111,079,100

110,240,555

Land in trust
Construction in progress in trust

Total property, plant and equipment-

Intangible assets

Valuation and translation adjustments

Investments and other assets

Total net assets

Investments securities

628,893723,220

Long-term loans receivable

300,000

300,000

Long-term prepaid expenses

160,951

168,174

Lease and guarantee deposits

10,962

10,962

Other

8,255

2,024

1,109,062

1,204,382

104,449,955

104,356,004

111,079,100

110,240,555

Total investments and other assets
Total non-current assets
Total assets

Unitholders’ equity

Total liabilities and net assets

33

Statement of Income for the 7th Fiscal Period (From February 1, 2019 to July 31, 2019)(Unit: thousand yen)
6th FP
From: August 1, 2018
To: January 31, 2019

7th FP
From: February1, 2019
To: July 31, 2019

Operating revenue
Lease business revenue

3,028,065

3,092,125

Other lease business revenue

196,270

242,455

Gain on sale of real estate property

598,163422,504

Others

22,092

28,185

3,844,592

3,785,271

Total operating revenue
Operating expenses
Expenses related to rent business

1,088,373

1,214,656

Asset management fee

260,206

251,121

Asset custody and administrative service fees

22,377

23,583

Directors’ compensation

2,400

2,400

Other operating expenses

64,94567,548

Total operating expenses

1,438,302

1,559,310

2,406,289

2,225,961

Operating income
Non-operating income
Interest income

2430Interest on refund

848

883

Total non-operating income

872

913

Interest expenses

145,156

155,935

Borrowing related expenses

150,949

105,827

Investment unit issuance expenses

37,238-

Total non-operating expenses

333,344

261,763

Ordinary income

2,073,818

1,965,111

Income before income taxes

2,073,818

1,965,111

Income taxes - current

24,172605

Total income taxes

24,172605

2,049,646

1,964,506

Non-operating expenses

Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

113,568

151,349

2,163,215

2,115,855

34

Investment
ratio
(%)

Appraisal
NOI yield(%)

Investment
ratio
(%)

Appraisal
NOI yield
(%)

3,070

2.9

4.7

Urban Park Azabujuban

Minato-ku, Tokyo

2,045

2,370

2.0

4.4

6,065

6,950

5.9

5.2

Urban Park Daikanyama

Shibuya-ku, Tokyo

6,315

8,000

6.2

4.7

Shibuya-ku, Tokyo

1,763

2,490

1.7

6.4

Urban Park Namba

Osaka-shi, Osaka

1,490

1,610

1.5

5.4

Alphabet Seven

Minato-ku, Tokyo

1,725

2,530

1.7

5.9

Urban Park Gokokuji

Toshima-ku, Tokyo

1,460

1,530

1.4

4.9

Shibuya MK Building

Shibuya-ku, Tokyo

2,042

3,190

2.0

5.9

Urban Park Kashiwa

Kashiwa-shi, Chiba

1,186

1,190

1.2

5.0

Asahi Building

Yokohama-shi,
Kanagawa

6,320

7,610

6.2

5.0

Urban Park Ryokuchi-koen

Suita-shi, Osaka

1,550

1,630

1.5

5.7

Hakata-eki East Place

Fukuoka-shi, Fukuoka

2,286

2,570

2.2

5.4

Urban Park Koenji

Suginami-ku, Tokyo

1,167

1,180

1.1

4.7

Nihonbashi Hamacho Park
Building
Amusement Media Gakuin
HonkanChuo-ku, Tokyo

1,450

1,510

1.4

4.7

Subtotal

15,213

17,51014.9

4.9

Shibuya-ku, Tokyo

2,580

2,660

2.5

4.0

Iwatsuki Logistics

Saitama-shi, Saitama

6,942

7,150

6.8

4.8

Higashi Kobe Center
Building

Kobe-shi, Kobe

7,440

7,470

7.3

5.8

Yokohama Logistics

Yokohama-shi,
Kanagawa

3,560

4,060

3.5

5.7

Amusement Media Gakuin
Shinkan

Shibuya-ku, Tokyo

1,020

1,120

1.0

3.9

Funabashi Logistics

Funabashi-shi, Chiba

7,875

8,650

7.7

5.5

35,664

41,170

34.8

5.2

Baraki Logistics

Ichikawa-shi, Chiba

4,700

4,860

4.6

4.4

Tokoyozawa Logistics

Tokorozawa-shi,
Saitama

1,300

1,350

1.3

5.7

Funabashi Nishiura
Logistics I

Funabashi-shi, Chiba

3,000

3,020

2.9

5.1

Funabashi Nishiura
Logistics II

Funabashi-shi, Chiba

821

842

0.8

7.0

Matsubushi Logistics

Kita-Katsushika-gun,
Saitama

2,755

2,850

2.7

5.5

30,95332,78230.2

5.2

Minami-Azabu Shibuya
Building

Minato-ku, Tokyo

2,973

Honmachibashi Tower

Osaka-shi, Osaka

Nishi-Shinjuku Matsuya
Building

R&B Hotel Umeda East

Osaka-shi, Osaka

2,069

2,310

2.0

5.6

Smile Hotel Namba

Osaka-shi, Osaka

1,750

1,610

1.7

4.7

Best Western Tokyo Nishikasai

Edogawa-ku, Tokyo

3,827

3,860

3.7

4.5

Best Western Yokohama

Yokohama-shi,
Kanagawa

3,248

3,250

3.2

4.6

Hotel WBF Fukuoka Tenjin
MinamiFukuoka-shi, Fukuoka

1,970

2,010

1.9

4.6

GLANSIT Akihabara

Chiyoda-ku, Tokyo

2,500

2,520

2.4

3.9

Best Western Tokyo
Nishikasai Grande

Edogawa-ku, Tokyo

3,180

3,210

3.1

4.0

Hotel WBF Art Stay
Namba

Osaka-shi, Osaka

2,000

1,990

2.0

4.5

Subtotal

Property nameResidence

Location

Subtotal

Hotel

Acquisition Appraisal
price
value
(million yen) (million yen)

Property name

Logistics

OfficePortfolio List (as of July 31, 2019)

Subtotal

20,544

20,760

20.1

4.5

Location

Acquisition Appraisal
price
value
(million yen) (million yen)

* “Appraisal value” is the value stated in the real estate appraisal report with July 31, 2019 as the date of valuation.

Total

Acquisition price(million yen)

102,374

Appraisal value(million yen)

112,22235

Appraisal Value and Indicators at the End of 7th Fiscal Period ended July 2019
Period-end appraisal value:

112,222 million yen

Total book value:

103,151 million yen

Period-end unrealized gains (losses):

9,070 million yen

Net assets per unit:

101,215 yen

Unrealized gains per unit:

Property nameAcquisition
price

(1)
Period-end
book value(2)
Appraisal value at
end of
7th FP(3)
Unrealized
gains(losses)(2)-(1)

2,069

2,131

2,310

178

Smile Hotel Namba

1,750

1,695

1,610

△85

16,771 yen

Best Western Tokyo Nishi-kasai

3,827

3,866

3,860

△6

114,361 yen

3,248

3,264

3,250

△14

NAV per unit (*1):

1,970

1,974

2,010

35

P/NAV per (*2):

1.03Best Western Yokohama
Hotel WBF Fukuoka Tenjin
Minami
GLANSIT Akihabara

2,500

2,513

2,520

6

Best Western Tokyo Nishikasai
Grande

3,180

3,186

3,210

23

Hotel WBF Art Stay Namba

2,000

2,003

1,990

△13

Subtotal

20,544

20,634

20,760125

Urban Park Azabujuban

2,045

2,089

2,370

280

Urban Park Daikanyama

6,315

6,393

8,000

1,606

Urban Park Namba

1,490

1,520

1,610

89

Urban Park Gokokuji

1,460

1,511

1,530

18

Urban Park Kashiwa

1,186

1,249

1,190

△59

Urban Park Ryokuchi-koen

1,550

1,615

1,630

14

Urban Park Koenji

1,167

1,191

1,180

△11

Hotel

R&B Hotel Umeda East(*1) NAV per unit = (Period-end net assets + Period-end unrealized gains – Total cash distribution)/ Total number of investment units issued and outstanding(*2) P/NAV per ＝Investment unit price / NAV per unit (Investment unit price on July 31, 2019: 117,300 yen)

Acquisition
price

(1)
Period-end
book value(2)
Appraisal value at
end of
7th FP

Minami-Azabu Shibuya Building

2,973

2,974

3,070

95

Honmachibashi Tower

6,065

5,905

6,950

1,044

Subtotal

15,213

15,571

17,5101,938

Nishi-Shinjuku Matsuya Building

1,763

1,829

2,490

660

Iwatsuki Logistics

6,942

6,693

7,150

456

Alphabet Seven

1,725

1,839

2,530

690

Yokohama Logistics

3,560

3,786

4,060

273

Shibuya MK Building

2,042

2,095

3,190

1,094

Funabashi Logistics

7,875

7,836

8,650

813

Asahi Building

6,320

6,344

7,610

1,265

Baraki Logistics

4,700

4,675

4,860

184

Hakata-eki East Place

2,286

2,310

2,570

259

Tokoyozawa Logistics

1,300

1,355

1,350

△5

1,450

1,461

1,510

48

Funabashi Nishiura Logistics I

3,000

2,952

3,020

67

2,580

2,596

2,660

63

Funabashi Nishiura Logistics II

821

832

842

9

7,440

7,679

7,470

△209

Matsubushi Logistics

2,755

2,745

2,850

104

1,020

1,031

1,120

88

Subtotal

30,95330,87732,782

1,904

102,374

103,151

112,2229,070

Nihonbashi Hamacho Park
Building
Amusement Media Gakuin
HonkanHigashi Kobe Center
Building
Amusement Media Gakuin
ShinkanSubtotal

35,66436,06841,1705,101

Logistics

OfficeProperty name(3)
Unrealized
gains(losses)(2)-(1)

Residence(Unit: million yen)

Total

36

Portfolio List

Asset type

OfficeOfficeOfficeOfficeOfficeOfficeProperty nameMinami-Azabu Shibuya
Building

Honmachibashi Tower

Nishi-Shinjuku Matsuya
Building

Alphabet Seven

Shibuya MK Building

Asahi Building

Acquisition price

2,973 million yen

6,065 million yen

1,763 million yen

1,725 million yen

2,042 million yen

6,320 million yen

Appraisal value

3,070 million yen

6,950 million yen

2,490 million yen

2,530 million yen

3,190 million yen

7,610 million yen

Structure/Floors

SRC B1/7F

S/SRC B1/21F

SRC B1/9F

RC B1/6F

S 6F

S/SRCB2/12F

Location

Minato Ward, Tokyo

Osaka City, Osaka

Shibuya Ward, Tokyo

Minato Ward, Tokyo

Shibuya Ward, Tokyo

Yokohama City, Kanagawa

Lot area

766.11 m²

1,274.37 m²

589.94 m²(surface right)

1,286.45 m²

620.42 m²(of which 2.62 m²
leasehold)1,906.86 m2

Total floor areas

4,137.21 m²

15,407.83 m²

5,117.80 m²

4,132.80 m²

1,982.86 m²

12,353.83 m2

Construction
completion

June 15, 1993

February 8, 2010

May 28, 1987

January 6, 1990

July 31, 1993

November 25, 1994

Property Features⚫ Located in Minami-Azabu, a well⚫ Located in the Yodoyabashi /known, high-class residential area
Hommachi area, one of Osaka’sthat is also home to embassies ofleading office districts.
various countries.
⚫ Situated near facilities such as the⚫ In addition to access by train, theOsaka Chamber of Commerce andarea is well served by bus routes
Industry, MyDome Osaka, and Cityand provides convenient access to
Plaza Osaka, the area has a highvarious locations within central
concentration of office buildings.
Tokyo.
⚫ The residences on the upper floors of⚫ The area is highly appealing to
the building offer excellent views
companies in fashion, mass media,
overlooking landmarks such as Osakaand IT-related fields.
Castle.

⚫ Located in the Nishi-Shinjuku area,⚫ Located in the Akasaka area, one ⚫ Located in the Shibuya area, one ⚫ Located in the Yokohama Station
which has a high concentration ofof central Tokyo’s leadingof Japan’s leading commercial
West Exit area where there is a highoffice buildings.
office/commercial districts.
districts, the property has aconcentration of commercial andstrong appeal for fashion and IToffice buildings.
⚫ In addition to access by train, the area ⚫ The property is expected torelatedcompanies.
is well served by bus routes andattract strong demand from⚫ The floors can be subdivided into
provides convenient access to various
affiliated companies of tenants of ⚫ Following the completion of thesmaller spaces, enabling the building
locations within central Tokyo.
the TBS building, Akasaka Biz
Shibuya Station area
to flexibly accommodate demand fromTower, etc.
redevelopment project, further
branch offices of companies in⚫ The property is expected to attractdevelopment is expected going
various fields.
strong demand from affiliated⚫ Thanks to the popularity of theforward.
companies of tenants of large-scalearea, location conditions, etc.,⚫ With the completion of the Yokohamabuildings located in Shinjuku subthere is also strong demand for
Station area redevelopment project
center or its surrounding area.
the residential units of theand the Excite Yokohama 22 project,
property.
further development is expectedgoing forward.

37

Portfolio List

Asset type

OfficeOfficeOfficeOfficeOfficeResidence

Property nameHakata-eki
East Place

Nihonbashi Hamacho Park
Building

Amusement Media Gakuin
HonkanHigashi Kobe Center
Building

Amusement Media Gakuin
ShinkanUrban Park Azabujuban

Acquisition price

2,286 million yen

1,450 million yen

2,580 million yen

7,440 million yen

1,020 million yen

2,045 million yen

Appraisal value

2,570 million yen

1,510 million yen

2,660 million yen

7,470 million yen

1,120 million yen

2,370 million yen

Structure/Floors

SRC 9F

SRC 11FSRC S 8F/B1F

SRC 14F

RC 7F

SRC with slate roofing
B1/12F

Location

Fukuoka City, Fukuoka

Chuo Ward, Tokyo

Shibuya Ward, Tokyo

Kobe City, Hyogo

Shibuya Ward, Tokyo

Minato Ward, Tokyo

Lot area

1,129.86 m2

319.04 m2

433.21 m²

8,488.11 m²

203.43 m²

417.67 m2

Total floor areas

6,243.13 m2

2,383.76 m2

1,892.18 m²

25,740.46 m²

913.71 m²

2,564.94 m2

Construction
completion

February 24, 1986

July 13, 1992

November 2, 1994

January 6, 1992

January 25, 1999

November 29, 1999

Property
Features⚫ Located in the Hakata Station East ⚫ Located in Nihonbashi Hamacho⚫ Stable revenue is expected since a ⚫ Provides convenient access to⚫ Stable revenue is expected since it ⚫ Located in Azabu-Juban, an area
vocational school has rented theoffice and commercial areas sincearea, which has a higherarea, allowing easy access to
has the same tenant as that ofwith an elegant image that also
entire building for many years since
the building is centrally locatedconcentration of offices after the
major business areas in Central
Amusement Media Gakuin Honkan.
boasts popular appeal.
the completion.
between Osaka and Kobe, with an ⚫ The building is appealing tocompletion of redevelopment
Tokyo and use of various railways.
⚫ In addition to a stately tiled facade,11-minute ride to Sannomiya
projects in front of the station.
⚫ A number of major companies have ⚫ The building is appealing tocompanies as the property is
the property is fully equipped withcompanies as the property is
Station and 17-minute ride to⚫ Even more vitalization is expected
their head offices in this area, as it
located in an office area with many
premium household facilities.
located in an office area with many
Osaka Station from Settsu
for the Fukuoka (Hakata) area withis a very attractive area forforeign-affiliated companies, IT⚫ Adjacent to the Roppongi area, aforeign-affiliatedcompanies
and
ITMotoyama,
thecloseststationtothe start of “Tenjin Big Bangcompanies in various fields and of
related firms as well as companies
leading shopping spot in central
related firms as well as companies
the property.
Project” and the extension of somevarious sizes.
in the creative sector such as
Tokyo.
in the creative sector such as⚫ There is parking space for 180 cars
Fukuoka City Subway lines.
advertisingandcontent
creation⚫ Further development of the area isadvertising and content creationon the premises and for 112 cars
firms.
expected considering that it not
firms.
off the premises, which is very
only has characteristics of an office ⚫ Further development of the area isappealing to a wide range of retail ⚫ Further development of the area isarea, but also has characteristics of
expected considering that it is notexpected considering that it is not
tenants, particularly stores seeking
residential and tourism areas.
only an office area, but also has
only an office area, but also has
to attract customers.
elements of residential and tourism
elements of residential and tourism
areas.
areas.

38

Portfolio List

Asset type

Residence

Residence

Residence

Residence

Residence

Residence

Property nameUrban Park Daikanyama

Urban Park Namba

Urban Park Gokokuji

Urban Park Kashiwa

Urban Park Ryokuchi-koen

Urban Park Koenji

Acquisition price

6,315 million yen

1,490 million yen

1,460 million yen

1,186 million yen

1,550 million yen

1,167 million yen

Appraisal value

8,000 million yen

1,610 million yen

1,530 million yen

1,190 million yen

1,630 million yen

1,180 million yen

Structure/Floors

RC, B1/3F
RC, B1/9F

RC 14FRC B1F/5F

SRC B1F/8F

RC 8F

RC 4F

Location

Shibuya Ward, Tokyo

Osaka City, Osaka

Toshima Ward, Tokyo

Kashiwa City, Chiba

Suita City, Osaka

Suginami Ward, Osaka

Lot area

2,469.06 m2

670.39 m2(Of which, 50.85 m2 is contributed to
Toshima Ward as road)

1,597.85 m2

2,804.56 m2

988.26 m2

Total floor areas

8,261.29 m2(for 2 buildings combined)

2,776.87 m2

2,451.72 m2

4,243.71 m2

5,854.64 m2

1,524.34 m2

Construction
completion

1: November 15, 1982
2: May 30, 2006

January 9, 2013

February 28, 1990

August 28, 1997

March 10,1989

October 13, 1987

Property Features

942.66 m2⚫ Located in the Daikanyama area,⚫ Located near Namba, one of⚫ Located in an area with strong
which produces the latest trends.
Osaka’s leading commercial areas.
demand from various tenant groups
for single-type residences, due to the⚫ In addition to a stately tiled facade, ⚫ In addition to an elegant facade, thelocation characteristics of having
the property is fully equipped withbuilding is fully equipped withconcentration of universities andpremium household facilities.
premium household facilities.
junior colleges as well as Toshima⚫ Adjacent to the Shibuya and Ebisu ⚫ The influx of population into central
ward having a relatively high ratio ofareas, which are leading shopping
Osaka due to the impact of strong
single households.
spots in central Tokyo.
in-bound demand has had astabilizing effect on occupancy
rates.

⚫ Located in the Kashiwa area, aleading bed town in Chiba, withan excellent access to Central
Tokyo.
⚫ Further medium- to long-term
growth is expected in the area,with completion of various
redevelopment plans in front of
Kashiwa Station.

⚫ Located in the Ryokuchi-koen⚫ Located in the Koenji area, whicharea, with good traffic
allows for easy access to major areas
accessibility, providing a lushin the Tokyo metropolitan area.
greenery living environment such ⚫ With many shopping areas, discountas “Hattori Ryokuchi-koen”.
supermarkets, restaurants and pubs,⚫ Popular residential area primarily
having a high appeal to young singlefor families since it is located inperson households of businessthe Hokusetsu area, which has aperson and students.
high level of education.
⚫ Very popular residential area with its⚫ Appealing primarily for families
own unique culture, which can besince some of the units haveseen in its cafes, vintage clothing
been renovated and since it isshops, and clubs with live music,
equipped with substantial grade
among other locations.
household equipment.

39

Portfolio List

Asset type

Logistics

Logistics

Logistics

Logistics

Logistics

Logistics

Property nameIwatsuki Logistics

Yokohama Logistics

Funabashi Logistics

Baraki Logistics

Tokorozawa Logistics

Funabashi Nishiura Logistics I

Acquisition price

6,942 million yen

3,560 million yen

7,875 million yen

4,700 million yen

1,300 million yen

3,000 million yen

Appraisal value

7,150 million yen

4,060 million yen

8,650 million yen

4,860 million yen

1,350 million yen

3,020 million yen

Structure/Floors

Steel construction, zincplated steel roofing, 5 floors

RC 8F

Building 1: Steel construction, flat roof, zinc-plated
steel roofing, 8 floors
Building 2: Reinforced concrete structure

RC S 5F

S 2F

R 2F

Location

Saitama City, Saitama

Yokohama City, Kanagawa

Funabashi City, Chiba

Ichikawa City, Chiba

Tokorozawa City, Saitama

Funabashi City, Chiba

Lot area

15,623.14 m2

10,565.95 m2

19,858.00 m2

6,240.96 m2

8,645.63 m2

7,142.00 m2

Total floor areas

29,729.72 m2

18,387.89 m2(including 256.15 m2 breakareas etc.)

38,871.45 m2(two buildings combined)

12,471.50 m2

5,994.75 m2

14,018.82 m2

Construction
completion

October 29, 2014

October 1, 1994

1: September 25, 1992
2: August 5, 1997

August 14, 2015

April 30, 1999

October 11, 1985

Property Features⚫ A multi-tenant logistics facility⚫ Located in the Iwatsuki area, which ⚫ Located in the Yokohama bay area, ⚫ Located in the Chiba bay area, where ⚫ A multi-tenant logistics facility⚫ Appealing from a standpoint oflocated near the Wangan Ichikawa
used also as a warehouse,
offers access to the central Tokyo,
where there are many logistics
there are many logistics facilities.
securing workforce, as it is
IC
of
the
East
Kanto
Expressway.
locatedaround
8.7
km
from
the
northern Kanto, and Tohoku areas.
facilities.
conveniently located in the Chiba Bay⚫ Equipped with specifications that offer⚫ Enjoys good access to Central
Tokorozawa IC on the Kan-Etsu
area, where there are many logistics⚫ Equipped with specifications that⚫ Equipped with specifications thata high level of versatility, such as
Tokyo as well as the consumption
Expressway.
facilities, and it is located at approx.
offer a high level of versatility, suchoffer a high level of versatility, suchvehicle berths, floor height, andareas throughout Chiba, allowing⚫ Good access to Central Tokyo,
1.4km from the closest train station.
as the vehicle berths, floor height,
as vehicle berths, floor height, andcolumn interval.
tenants to respond to the needs ofand also capable of covering ae-commerce operators.
and column interval.
column interval.
⚫ In addition to access to Central⚫ In addition to accessing Central
wide range of destinations for⚫ Located within approx. 5-minuteTokyo, the location allows easy
consumption in the Tokyo⚫ The property is situated in a zone
⚫ In addition to accessing Central
Tokyo, it is possible to access thewalk from Futamata-Shinmachi
access to wide range of areas
Metropolitan area with theof Saitama City that offers
Tokyo, it is possible to access thewider Tokyo area thanks to thestation on the JR Keiyo Line,
openingoftheGaikanthroughout Tokyo via partial opening
incentives for logistics facilities andwider Tokyo area thanks to the
opening of the Tokyo Gaikan
allowing for securement ofExpressway
andtheMetropolitanof the Gaikan Expressway.
therefore benefits from
opening of the Shinagawa section
Expressway.
employees.
Inter-City Expressway.
considerable government support.
of the Shuto Expressway Central⚫ The facility is provided with highly⚫ Property with highly versatile⚫
Property
withhighlyversatile
specifications, including one
Circular Route.
versatile specifications such as highspecifications, including two
passenger elevator, two freightceiling floors and a pillar span.
freight elevators, a floor height ofelevators, a floor height of approx.
approx. 5.5 m-6.0 m, and a pillar
6.5 m and a pillar span of approx. 9span of approx. 9.5 m.
m-11 m.

40

Portfolio List

Asset type

Logistics

Logistics

Hotel

Hotel

Hotel

Hotel

Property name

Funabashi Nishiura
Logistics II

Matsubushi Logistics

R&B Hotel Umeda East

Smile Hotel Namba

Best WesternTokyo Nishi-kasai

Best Western Yokohama

Acquisition price821 million yen

2,755 million yen

2,069 million yen

1,750 million yen

3,827 million yen

3,248 million yen

Appraisal value

842 million yen

2,850 million yen

2,310 million yen

1,610 million yen

3,860 million yen

3,250 million yen

Structure/Floors

R 4F

RC 3F

RC 9F

S 9F

SRC B1F/9F

SRC B1F/9F

Location

Funabashi City, Chiba

Kita-Katsushika-gun,
SaitamaOsaka City, Osaka

Osaka City, Osaka

Edogawa Ward, Tokyo

Yokohama City,
Kanagawa

Lot area

3,964.00 m2

11,580.65 m2

730.26 m2

285.28 m2

1,418.00 m2

782.66 m2

Total floor areas

6,316.32 m2

19,833.47 m2

3,945.65 m2

1,711.42 m2

5,293.88 m2

4,686.09 m2

Construction
completion

Warehouse: Mar. 20, 1991
Plant: May 15, 1972
Office: May 13, 1986

March 31, 1997

October 20, 2000

February 6, 2008

March 19, 1991

September 21, 1987

Property Features⚫ A business hotel located within⚫ Appealing from a standpoint of⚫ Located in Matsubushi area, with
⚫ Located near Umeda, one of⚫ Located near Namba, one of⚫ A business hotel located withinapprox. 4-minute walk fromsecuring workforce, as it iseasy access to nearby areas such
Osaka’s leading office andOsaka’s leading commercial areas.
approx. a 2-minute walk from
“Tsurumi” Station on the JR Keihin
conveniently located in the Chiba
as Saitama Prefecture and Chiba
commercial areas.
Nishikasai
Station
of
Tokyo
Metro
⚫ In addition to excellent access to
Tohoku Line and a 3-minute walk
Bay area, where there are many
Prefecture, in addition to Kita-Kanto, ⚫ With over 200 single-occupancy
Tozai Line.
Namba, located near Kyocera
from “Keikyu Tsurumi” Station on
logistics facilities, and it is locatedJoban, and Tohoku areas.
rooms, the hotel is able toDome Osaka, addressing multiple⚫ Excellent location characteristics that
the Keihin Kyuko Line.
at approx. 1.1km from the closest⚫ Provided with versatileaccommodate significant businessbusiness- and tourism-based
can attract a fair amount of Tokyo⚫ Excellent location characteristics thattrain station.
specifications, such as loading
and tourism-based demand.
demand.
Disney Resort-related leisure
can attract both business travelers⚫ In addition to access to Central
berths, cargo elevators, hightravelers, as it stands in a straight-line⚫ Due to the impact of strong in⚫ Due to the impact of strong inboundand leisure travelers, as its location
Tokyo, the location allows easy
ceiling, and a pillar span.
distanceof
approx.
4
km
away
from
bound demand in Osaka, further
demand in Osaka, further hotel
has good access to the major areas
access to wide range of areas
Tokyo Disney Resort.
⚫ Back ups from the local governmentin Kanagawa including Yokohama
hotel demand is expected.
demand is expected.
throughout Tokyo via partial
and Kawasaki as well as to Haneda
through activities by Saitama⚫ A hotel with great appeal to a variety
Airport.
opening of the Gaikan Expressway.
Prefecture to attract companies (theof guests with various types of guest⚫ A hotel with great appeal to a variety⚫ The facility is provided with highly“Chance Maker Saitama Strategy”).
rooms depending on the intendedof guests with various types of guest
versatile specifications such asuse.
rooms depending on the intended
high-ceiling floors and a pillar span.
use.

41

Portfolio List

Asset type

Hotel

Hotel

Hotel

Hotel

Property name

Hotel WBF
Fukuoka Tenjin Minami

GLANSIT Akihabara

Best WesternTokyo Nishikasai Grande

Hotel WBF Art Stay Namba

Acquisition price

1,970 million yen

2,500 million yen

3,180 million yen

2,000 million yen

Appraisal value

2,010 million yen

2,520 million yen

3,210 million yen

1,990 million yen

Structure/Floors

RC 10F

SRC 10F/B1F

S 8F

RC9F

Location

Fukuoka City, Fukuoka

Chiyoda Ward, Tokyo

Edogawa Ward, Tokyo

Osaka City, Osaka

Lot area

534.94 m2

167.74 m2

657.00 m2

335.31 m2

Total floor areas

2,281.49 m2

1,081.97 m2

2,755.19 m2

2,061.38 m2

Construction
completion

February 20, 2017

September 20, 2017

February 7, 2017

April 7, 2017

Property Features⚫ The hotel is centrally located⚫ Located in the Akihabara area, one ⚫ Located in the Nishi Kasai area,
between Tenjin and Nakasu, thus itof the largest tourism spots in Tokyo. which provides the easy access tois expected to attract tourists and⚫ Appealing to guests for the purpose
main business and tourism areas inbusiness guests.
of business and tourism as it isTokyo.
⚫ Demand for hotels is expected tolocated in a highly convenient and⚫ The hotel flexibly responds to theincrease with a rising number offlourishing area.
needs of many business people andpassengers using the Fukuoka⚫ Offers three types of capsules,
tourists as it provides various room
Airport and development of
attracting various customers.
types in accordance with purpose ofadditional runways.
⚫ Completed relatively recently inuse.
⚫ Completed relatively recently in
September 2017.
⚫ Completed relatively recently in
February 2017.
February 2017.

⚫ Located in the Namba area, one of thelargest commercial areas in Osaka.
⚫ Good access from sightseeing spots
and business district, thereby
expected to meet huge business andtourism demand.
⚫ Demand for hotels is expected toincrease as inbound demand rises in
Osaka.
⚫ Completed relatively recently in April
2017..

42

Properties owned by the Sponsor Group
Overview of HAKUSAN HOUSE<Attractiveness of HAKUSAN HOUSE>⚫ Arrival of revenue-generating opportunities against the backdrop of “Super Global University Creation Support Project” promoted by the government⚫ Expansion of “UNINEST”, a brand for global student accommodations, into Japan for the first time
⚫ Enabling international exchange at global student accommodations targeting international and Japanese students⚫ Provision of residential space and common space (study room, cinema room and kitchen) to form an active community for students⚫ Monthly fees are all inclusive (utilities expenses, usage fee of furniture and home appliances, internet fee, security costs)⚫ Safe security system with staff onsite 24 hours a day⚫ Provision of multilingual concierge service

Share Nest

Common Space

Rooftop Terrace

Kitchen Space■ Nearby universities with many international students
Rikkyo Univ.
Ikebukuro campus

Toyo Univ.
Hakusan campus

Ochanomizu Univ.
Gakushuin Univ. Japan Women’s Univ.
Mejiro campus Mejiro campus
Waseda Univ.
Waseda campus

Concierge service

External appearance(Note 9) As of the date of this material, Hakusan House has not been acquired by SAR and there is no
guarantee that SAR will acquire the above property.

University

Tsukuba Univ.
Tokyo campus

HAKUSAN
HOUSE

Ueno
StationThe Univ. of
Chuo Univ. Tokyo
Hongo campus
Korakuen campus

Housei Univ.
Ichigaya campus

Meiji Univ.
Surugadai campus
Sensyu Univ.
Kanda campus

No. ofinternational
students (Note)

1

Waseda University

4,767

2

The University of Tokyo

3,260

3

Tokyo University of Social Welfare

3,000

4

Ritsumeikan Asia Pacific University

2,818

5

Japan University of Economics

2,708

6

University of Tsukuba

2,326

7

Osaka University

2,184

Source: JASSO Japan Student Services Organization(Note) Number of international students for universities provided above is the total for all the campuses
combined in “Result of Annual Survey of International Students in Japan 2018”43

Balance of Payments of Individual Properties(Unit: thousand yen)
OFC-01

OFC-03

OFC-04

OFC-05

OFC-06

Minami-Azabu Shibuya Building

Honmachibashi Tower

Nishi-Shinjuku Matsuya Building

Alphabet Seven

Shibuya MK Building

6th FP

7th FP

6th FP

7th FP

6th FP

7th FP

6th FP

7th FP

6th FP

7th FP

Total of revenue real estate
lease

95,78997,124

217,594

223,750

101,028

105,81376,465

73,11976,07676,567

Lease business revenue

88,39988,502

191,695

192,776

92,493

98,57571,074

66,44070,77871,149Other lease businessrevenue

7,390

8,621

25,89830,974

8,535

7,237

5,391

6,679

5,298

5,417

25,602

25,20762,473

66,29034,04834,42718,36328,031

17,49018,521PM fees

6,067

5,874

13,44013,860

6,717

6,774

4,814

4,858

4,896

4,921

Trust fees

400

400

400

400

400

400

400

400

350

350

Utilities expenses

7,038

6,943

25,17924,361

9,081

8,454

4,715

4,350

3,918

3,946

Insurance expenses

116

114

358

352

129

126

99

98

45

44

Repair expenses

1,077

103

1,746

5,166

1,408

1,915

669

10,971

2,131

434

Taxes and public dues

4,572

4,563

19,766

19,730

3,434

3,426

6,219

6,213

4,316

4,322

Other

6,330

7,208

1,583

2,420

12,877

13,329

1,443

1,139

1,832

4,502

NOI

70,187

71,916

155,120

157,459

66,98071,385

58,10245,08758,58658,046

Depreciation

11,546

11,55544,98945,048

8,192

8,288

4,568

4,717

3,218

3,317

Income from real estate
property leasing

58,64060,361

110,131

112,41158,78763,09753,53440,37055,36754,728

-

824

-

9,869

1,553

5,525

-

48,786

8,641

1,107

70,18771,092

155,120

147,590

65,42665,86058,102△3,69849,94456,939Total of expenses - realestate lease

Capital expenditures
NCF

44

Balance of Payments of Individual Properties(Unit: thousand yen)
OFC-07

OFC-08

OFC-09OFC-10

OFC-11

Asahi Building

Hakata-eki East Place

Nihonbashi Hamacho
Park Building

Amusement Media Gakuin
Honkan6th FP

6th FP

6th FP

7th FP※※

Hakata-eki Higashi 113 Building(51% of quasi co-ownership interest)(Sold Property)

6th FP

7th FP

6th FP

7th FP

7th FP

7th FP

Total of revenue real estate
lease

67,760445

215,210

221,972

97,76099,44843,682

43,928

Lease business revenue

60,927

1

197,652

205,477

87,75989,287

43,682

43,928Other lease businessrevenue

6,832

444

17,557

16,495

10,00010,161--22,052

61

56,89857,07332,582

26,5707,622

15,349PM fees

6,339-

15,78015,674

7,944

7,936

717

779

Trust fees

295

-

400

400

400

400

400

400

Utilities expenses

6,723

-

18,805

18,954

8,724

8,455

-

-

Insurance expenses

123

34

357

351

167

165

123

121

Repair expenses

2,296

43

3,611

3,129

6,264

2,047

-

150

Taxes and public dues

5,341

0

15,994

16,195

6,582

6,801

0

4,299

931

△15

1,948

2,368

2,498

764

6,381

9,598

NOI

45,708383

158,311

164,898

65,17772,87836,05928,578Depreciation

5,524

-

25,39525,672

6,830

7,121

2,837

2,837

Income from real estate
property leasing

40,184383

132,916

139,226

58,34665,75733,222

25,741

Capital expenditures

285

-

2,868

16,897

5,804

5,425

-

-

45,422

383

155,442

148,001

59,37367,452

36,05928,578

Total of expenses - realestate lease

Other

NCF

(*) Not disclosed as consent for disclosure has not been obtained from the tenant45

Balance of Payments of Individual Properties(Unit: thousand yen)
OFC-12

OFC-13

Higashi Kobe Center Building

Amusement Media Gakuin
Shinkan

6th FP

7th FP

6th FP

7th FP

OfficeTotal
6th FP

7th FP

RSC-01

RSC-02

Urban Park Azabujuban

Urban Park Daikanyama

6th FP

6th FP

7th FP

7th FP

Total of revenue real estate
lease

263,133

312,718

1,305,280

1,341,598

56,91256,356

187,182

195,825

Lease business revenue

231,637

279,751

1,184,218

1,217,653

55,26753,422

177,059

182,487

Other lease businessrevenue

31,49532,966

121,062

123,945

1,645

2,934

10,123

13,337

77,475150,830

358,793435,998

8,438

13,19145,72235,695PM fees

22,45623,447

90,531

86,476

2,246

2,091

8,605

8,718

Trust fees

321

400

4,089

4,346

350

350

350

350

Utilities expenses

28,02041,521

114,278

121,760

592

555

4,996

4,779

Insurance expenses

528

645

2,092

2,128

57

56

196

193

Total of expenses - realestate lease※Repair expenses

※

9,819

33,64629,221

58,914

1,004

4,168

12,1194,710

1029,15066,24998,917

2,784

2,831

11,218

11,39916,31822,01752,331

63,455

1,402

3,137

8,236

5,544

NOI

185,657

161,887

946,487

905,599

48,474

43,165

141,459

160,129

Depreciation

23,97732,124140,456

145,940

4,810

4,815

12,353

12,502

Income from real estate
property leasing

161,680

129,762806,030

759,659

43,66338,349129,105

147,626

Capital expenditures

149,810

38,781

168,964

128,087

-

702

6,568

3,741

NCF

35,847

123,105

777,522

777,511

48,474

42,463

134,891

156,388

Taxes and public dues
Other(*) Not disclosed as consent for disclosure has not been obtained from the tenant46

Balance of Payments of Individual Properties(Unit: thousand yen)
RSC-04

RSC-05

RSC-06

RSC-07

RSC-08

Urban Park Shin-Yokohama(Sold Property)

Urban Park Namba

Urban Park Gokokuji

Urban Park Kashiwa

Urban Park Ryokuchi-koen

6th FP

7th FP

6th FP

7th FP

6th FP

7th FP

6th FP

7th FP

6th FP

7th FP

Total of revenue real estate
lease

28,529-51,25150,752

51,541

53,38337,17937,10054,27657,413

Lease business revenue

27,946-

48,13847,79150,40649,12036,55035,46351,601

54,979

583

-

3,113

2,961

1,134

4,263

628

1,636

2,675

2,433

6,434

-

13,072

16,147

11,935

24,104

7,670

11,005

15,731

16,441PM fees

1,777

-

2,547

2,573

4,107

3,854

1,890

2,060

2,415

2,305

Trust fees

136

-

350

350

400

400

350

350

650

350

Utilities expenses

449

-

493

450

2,567

2,664

897

893

2,355

2,260

Insurance expenses

102

-

63

62

53

52

85

83

119

117

Repair expenses

1,068

-

3,307

3,679

1,979

6,898

464

2,649

5,544

3,532

Taxes and public dues

2,600

-

2,791

2,820

1,838

1,855

2,954

2,952

-

3,578

298

-

3,519

6,211

989

8,379

1,027

2,016

4,647

4,298

NOI

22,095-38,17934,60539,60529,27929,50826,09438,54440,971

Depreciation

8,221

-

7,515

7,515

5,002

5,156

6,918

7,012

7,227

7,711

Income from real estate
property leasing

13,874-30,66327,08934,60324,122

22,59019,08231,31733,259

-

-

-

-

-

9,072

-

6,232

6,471

10,85522,095-38,17934,60539,60520,20729,50819,862

32,072

30,115

Other lease businessrevenue
Total of expenses - realestate lease

Other

Capital expenditures
NCF

47

Balance of Payments of Individual Properties(Unit: thousand yen)
RSC-09Residence
Total

Urban Park Koenji

6th FP

7th FP

6th FP

7th FP

LGC-01

LGC-02

LGC-03

Iwatsuki Logistics

Yokohama Logistics

Funabashi Logistics

6th FP

7th FP

6th FP

7th FP

6th FP

7th FP

Total of revenue real estate
lease

33,54536,200500,419

487,031203,920

202,082

261,582

273,565

Lease business revenue

31,41633,311

478,386

456,576

187,713

187,738

241,779

241,755

Other lease businessrevenue

2,129

2,888

22,03330,454

16,207

14,34419,802

31,810

9,528

9,481

118,533

126,068

36,42936,03454,02569,266PM fees

1,744

1,822

25,33523,427

5,650

5,650

11,308

12,178Trust fees

400

400

2,986

2,550

350

350

400

400

Utilities expenses

1,494

1,612

13,846

13,215

16,125

14,344

17,737

14,513

Insurance expenses

36

36

715

602

275

271

397

390

Total of expenses - realestate lease※Repair expenses

※

3,614

2,098

29,101

27,736

192

1,531

1,450

17,880-962

24,187

26,39913,835

13,72922,70923,055

2,237

2,549

22,35932,136

-

157

22

848

NOI

24,017

26,718381,885

360,963

167,491

166,048

207,556

204,299

Depreciation

2,425

2,474

54,47447,18846,532

46,532

26,836

26,859

Income from real estate
property leasing

21,591

24,244327,411313,774

120,958

119,515

180,720

177,439

Capital expenditures

1,877

246

14,91830,850

-

-

-

3,112

NCF

22,13926,471

366,967

330,112167,491

166,048

207,556

201,186

Taxes and public dues

Other(*) Not disclosed as consent for disclosure has not been obtained from the tenant48

Balance of Payments of Individual Properties(Unit: thousand yen)
LGC-04

LGC-05

LGC-06

LGC-07

LGC-08Baraki Logistics

Tokorozawa Logistics

Funabashi Nishiura LogisticsⅠ

Funabashi Nishiura LogisticsⅡ

Matsubushi Logistics

6th FP

7th FP

6th FP

7th FP

6th FP

7th FP

6th FP

7th FP

6th FP

7th FP

※

※

※

※

※

※

※

※

※

※

Total of revenue real estate
lease
Lease business revenue
Other lease businessrevenue
Total of expenses - realestate lease
PM fees
Trust fees
Utilities expenses
Insurance expenses
Repair expenses
Taxes and public dues
Other
NOI
Depreciation
Income from real estate
property leasing
Capital expenditures
NCF(*) Not disclosed as consent for disclosure has not been obtained from the tenant49

Balance of Payments of Individual Properties(Unit: thousand yen)
Logistics facility
Total
6th FP

7th FP

HTL-01

HTL-02

HTL-03

HTL-04R&B Hotel Umeda East

Smile Hotel Namba

Best WesternTokyo Nishi-kasai

Best Western
Yokohama

6th FP

7th FP

6th FP

7th FP

6th FP

7th FP

6th FP

7th FP

Total of revenue real estate
lease

970,091

1,004,948

65,56565,392

42,69040,25885,061

99,87980,73180,400

Lease business revenue

918,040

916,892

65,45265,39242,471

40,25884,60099,87980,40080,400

Other lease businessrevenue

52,05088,055

112

-

219

-

461

-

331

-

159,785

185,780

12,975

7,412

4,913

5,042

11,754

9,926

7,801

7,990

PM fees

29,83531,125

742

742

660

660

1,200

1,200

1,200

1,200

Trust fees

3,050

3,050

350

350

550

550

400

400

400

400

Utilities expenses

50,32544,360

13

10

-

-

-

-

-

-

Insurance expenses

1,438

1,413

113

111

53

53

126

124

106

105

Repair expenses

8,940

24,717

5,210

722

1,223

798

2,049

208

1,408

1,555

Taxes and public dues

62,947

77,142

5,431

5,450

2,282

2,281

7,954

7,971

4,659

4,706

Other

3,247

3,970

1,113

24

143

699

23

22

26

23

NOI

810,306

819,168

52,58957,98037,77735,21673,307

89,952

72,93072,409Depreciation

143,764

144,051

9,411

9,777

12,177

12,237

10,234

11,789

11,621

12,052

Income from real estate
property leasing

666,542

675,116

43,17848,20325,59922,97863,072

78,16361,30860,356

Capital expenditures

11,082

16,982

23,792

560

2,114

-

29,464

1,318

11,991

11,397

NCF

799,223

802,185

28,79757,42035,66235,216

43,842

88,63460,93861,011

Total of expenses - realestate lease50

Balance of Payments of Individual Properties(Unit: thousand yen)
HTL-05

HTL-06

HTL-07

HTL-08

Hotel WBF
Fukuoka Tenjin Minami

GLANSIT Akihabara

Best WesternTokyo Nishikasai Grande

Hotel WBF Art Stay Namba

6th FP

7th FP

6th FP

7th FP

6th FP

7th FP

6th FP

7th FP

Hotel
Total
6th FP

7th FP

Total of revenue real estate
lease

56,39070,002448,544

501,002

Lease business revenue

56,39070,002447,420

501,002

-

-

1,124

-

1,186

6,767

41,79450,979PM fees

797

990

6,716

7,419

Trust fees

321

400

2,923

3,183

-

-

13

10

51

63

555

582

Other lease businessrevenue
Total of expenses - realestate lease

Utilities expenses
Insurance expenses
※

※

※

※

※

※

Repair expenses

-

-

9,891

3,285

Taxes and public dues

9

5,294

20,35135,641

Other

5

19

1,342

856

NOI

55,204

63,234

406,750

450,022

Depreciation

9,047

10,857

70,77278,648

Income from real estate
property leasing

46,15652,377335,978

371,374--

67,363

13,27555,204

63,234

339,386

436,747

Capital expenditures
NCF(*) Not disclosed as consent for disclosure has not been obtained from the tenant51

Balance of Payments of Individual Properties(Unit: thousand yen)Total

6th FP

7th FP

Total of revenue real estate
lease

3,224,335

3,334,581

Lease business revenue

3,028,065

3,092,125

196,270

242,455

678,906

798,827

PM fees

152,418

148,449

Trust fees

13,04913,129

Utilities expenses

178,464

179,347

Insurance expenses

4,801

4,727

Repair expenses

77,155

114,653

Taxes and public dues

173,735

238,101

Other

79,280100,418

2,545,429

2,535,753

409,467

415,829

Income from real estate
property leasing

2,135,962

2,119,924

Capital expenditures

262,328

189,197

2,283,100

2,346,556

Other lease businessrevenue
Total of expenses - realestate lease

NOI
Depreciation

NCF

52

Other assets under management (as of July 31, 2019)<Mezzanine loan debt investment>
NumberType

Underlying asset, etc.

Name of the security（asset overview）

Acquisition
price(million yen)

Asset nameLocationInterest rate (Note25)

MEZ-01

Mezzanine(Subordinated bonds)

Star Asia Mezzanine Loan Debt
Investment Series 1

400

Relief Premium Haneda

Ota-ku, Tokyo

Base rate +5.0%

MEZ-03Mezzanine(Subordinated Beneficiary Interest)

Star Asia Mezzanine Loan Debt
Investment Series 3

126

The Royal Garden Residence
Shirokanedai

Minato-ku, Tokyo

Base rate +5.0%

MEZ-04

Mezzanine(Subordinated loan claims)

Star Asia Mezzanine Loan Debt
Investment Series 4300

Premier Kaigan Building

Minato-ku, Tokyo

Base rate +5.0%

Total

826

<Silent partnership equity interest>
Number

TKI-01

TKI-02

Investments securities

GK SAPR8 subordinated silent partnership equity interest

GK SAPR7 silent partnership equity interest

Total

Investment
amount(million yen)

Underlying asset, etc.
Property nameLocation

Urban Park Mitsuike Koen

Yokohama-shi, Kanagawa

Urban Park Tokiwadai Koen

Yokohama-shi, Kanagawa

OHA Building

Tachikawa-shi, Tokyo

100

100

200

53

Organizational Structure of Asset Manager
President and CEO
Atsushi Kato

After entering Nomura Real
Estate Development Co., Ltd.,he worked for Showa Ota
Ernst & Young, and thenentered Nomura Securities Co,
Ltd. After being involved in theasset finance businessincluding support inestablishing J-REITs, hejoined Star Asia Investment
Management Co., Ltd.

Shareholders’ Meeting

Board of Directors
Investment Committee

Compliance Committee
President and CEO
Compliance Officer

Investment Management
Division

Senior Manager(Male)

Joined Nissho Iwai Corporation (current: Sojitz Corporation).
After working in the condominium developer sector of the
Urban Development Department, engaged in acquisition
and asset management of private funds at Morgan Stanley
Capital K.K. Has been involved in business deals totaling
218 billion yen. Joined Hulic Co., Ltd. Engaged in IPO andfour POs at Hulic Reit Management Co., Ltd.

Assistant Real Estate Appraiser
Was in charge of the acquisition of a total of over 100 billion yen in properties,
asset management (AM) and finance tasks at a foreign-affiliated real estate
investment company, prior to which he supervised acquisitions, AM and financetasks at a REIT operating company.

Manager(Female)Was involved in contracting tasks and accounting tasks at a leading real estate
operating company. Currently conducts property cash management incooperation with the Finance Management Division.

Manager(Male)

Was involved in asset management at an overseas listed fund’s asset
management company, prior to which he was in charge of acquisitions, including
development projects, at a real estate asset management company.

Manager(Female)Was involved in acquisitions and interim investment management of various
asset types at an overseas listed fund’s asset management company and a JREIT operating company. Currently in charge of asset management.

Star Asia Management Japan Limited(Construction Management Department)
Tatsuji Ishii

Worked at Mizuho FG and its
affiliate companies. Holds
experience in a broad range ofon-site auditing, including theme
audits on risk management,internal control, compliance andothers.

Finance Management
Division

Finance Management Division

Investment Management Division
Director and CEO
Satoshi Obara

Chief Compliance
Officer
Kazuaki Fujii

Corporate Auditor

Director and CFO
Akiko Kanno

After entering Fujita Corporation, working at its IR, legal, andcorporate planning departments, , she joined a GMO Internet
Group company where she took on the position of General
Department Manager, and then became responsible forestablishing overseas offices and presided over business
management divisions of certain overseas affiliate companies.
She joined Star Asia Investment Management Co., Ltd. in2015.

Manager(Male)

Certified Public Accountant. After gaining experience as a member of an audit
team at an accounting office, he was involved in tasks of the planningdepartment at a leading investment advisory company. Is mainly in charge of
gain/loss management, settlement and disclosure of the investment corporation
also contributing to establishing internal infrastructure.

Manager(Female)After gaining experience in conducting duties at a leading bank and foreignaffiliated financial institute, gained experience in PM tasks for over 50 properties
in total of REITs, private placement and individual owners at a leading PM
company, and using such experience, conducts property cash management incooperation with the Investment Management Division. She also contributes inother administrative tasks.

Associate(Male)

Joined Star Asia Management Japan, Ltd. after having gained work experienceat a government-affiliated financial institution. He was then transferred to GSAStar Asia, where he was involved in the student residence project fromdevelopment stage, and then transferred to Star Asia Investment Management
Co., Ltd. from April 2019.

Associate(Female)In charge of a wide range of work as an assistant, using abundant experiencefrom various duties.

Was involved in ➀ proposals for implementing capital expenditure and repair plans with an aim to enhance value and maintain functions
upon acquisition of real estate and ② supervising construction work such as renewal and repair work after the acquisition of real estate
as well as advisory and support to help maintain building value at a foreign real estate fund.

54

Status of Unitholders at the End of 7th Fiscal Period ended July 2019

List of major unitholders (Top 10)

Number of investment units by attribute: Total 540,824 units
6th FP

Unitholder name (Note26)

Number ofinvestment units

Holdingratio

7th FP
0%

20%

40%

Individual

Financial institution

Domestic corporation

Ratio
Individual
Financial institution
Domestic corporation
Foreign

Securities company

34.4%
25.2%
10.8%
27.5%
2.1%

80%

Foreign100%

Unitholders' register
No. ofRatio
investment units

No. ofinvestment units

186,112
136,030
58,601
148,520
11,561

30.4%
26.7%
3.0%
35.9%
4.0%

1

The Master Trust Bank of Japan, Ltd.
(Trust account)

49,7999.2％

2

Japan Trustee Services Bank, Ltd(Trust account)

38,606

7.1％

3

Star Asia Capital I LLC

24,195

4.5％

3Star Asia Capital II LLC

24,195

4.5％

3Star Asia Capital III LLC

24,195

4.5％

3Star Asia Capital IV LLC

24,195

4.5％

7

Trust & Custody Services Bank, Ltd.
(Security Trust account)

16,2573.0％

8The Nomura Trust and Banking Co., Ltd.
(Trust account)

15,981

3.0％

9

NORTHERN TRUST CO. (AVFC) RE UKDU
UCITS CLIENTS NON LENDING 10PCTTREATY ACCOUNT

14,8022.7％

10SSBTC CLIENT OMNIBUS ACCOUNT

8,317

1.5％

240,542

44.5%

Securities company

End of 7th FP

End of 6th FP
Category

60%

Sponsor Group is excluded
No. ofRatio
investment units

37.1％
32.5％
3.6％
21.9％
4.8％

164,578
144,441
16,174
194,187
21,444

164,578
144,441
16,174
97,187
21,444

Number of unitholders by attribute: Total 17,778 units
6th FP
7th FP0%
Individual

20%

40%

Financial institution

Domestic corporation

End of 6th FP
Category
Ratio
Individual
Financial institution
Domestic corporation
Foreign
Securities company

97.4%
0.2%
1.6%
0.7%
0.1%

60%

No. ofpersons/entities

18,860
40
319
126
26

80%
Foreign100%

Securities company

End of 7th FP
Unitholders' register
No. ofRatio
persons/entities

97.1%
0.2%
1.7%
0.9%
0.1%

17,260
37
295
161
25

Sponsor Group is excluded
No. ofRatio
persons/entities

97.1％
0.2％
1.7％
0.9％
0.1％

17,260
37
295
155
25

Total

55

6. Notes

56

<Notes>
Note 1

Unless otherwise stated within this document, references to all monetary amounts have been rounded down to the nearest monetary unit described, and ratios have beenrounded to the decimal point described.

P1

Note 2“Tokyo area”: “Tokyo area” refers to Tokyo’s 23 wards and the cities of Kawasaki and Yokohama for office properties and retail facilities, and Tokyo and the three prefecturesof Kanagawa, Saitama and Chiba for residential properties, logistics facilities and hotels.
“Middle-size assets” are properties with acquisition prices of less than JPY10bn. The same applies hereafter.

P7

Note 3

Upon calculation (on acquisition price basis), of the properties held at the end of the period, those which were sold at the beginning of the following period have been
excluded.

P10

Note 4This is a calculation of the average from 1st fiscal period to the 9th fiscal period, where actual distributions per unit are used up to the 7th fiscal period, and the estimateddistributions per unit for the 8th and 9th fiscal periods are aggregated and then divided by 9.

P15

Note 5

The rent gap is the gap between market rent and contract rent with each tenant. The market rent has taken the intermediate value of the expected new contract rents(described as a range) for each property appraised by CBRE as of the end of the period. With respect to the main building and new building of Amusement Media Gakuin,
the net rentable area is used for calculation.

P15

Note 6For each property, the index of the historical trend has been prepared by assuming that the average tsubo unit price as of the period in which the property was acquired is"100".

P15

Note 7

Properties which were vacant at the beginning of the period or at the time of property acquisition for which contracts have been entered into with new tenants have beencounted as "Increased" within the number of new contracts. The increase ratio has been calculated by subtracting the aggregate amount of monthly rents from existing
tenants (i.e. before addition of new tenants) from the aggregate amount of monthly rent of newly contracted tenants, and then dividing such calculated amount by theaggregate amount of monthly rents from existing tenants (excluding warehouse portion). With respect to properties which were vacant at the beginning of the period orwhen acquired, and for which contracts have been newly signed with tenants, the rent unit price of surrounding properties at the bottom of the range have been used as
the assumed rent unit price of existing tenants (prior to addition of new tenants) for the purpose of calculating the aggregate amount of monthly rents of existing tenants.

P15

Note 8The ratio of the increased portion has been calculated using the aggregate amount of former rent amounts of renewing tenants.

P16

Note 9The calculation has been made by extracting just the residence portions.

P16

Note 10For each property, the index of the historical trend has been prepared by assuming that the average tsubo unit price as of the period in which the property was acquired is"100".

P17

Note 11

As of the current date, the rents are under a fixed rent system, however, it has been agreed that the rent system will be changed to fixed rents + floating rents commencing
from January 2020.

P20

Note 12The interest rates shown take into consideration the effects of interest rate swaps (fixing of interest rates).

P20

Note 13

JBA 1-month yen TIBOR

P22

Note 14

The index has been prepared by calculating the closing price of SAR investment units on the date of listing of SAR of 98,300 yen, by conversion from the closing price of the
TSE REIT Index on the same day (1,887.75).

P22

Note 15

Upon calculation (on acquisition price basis), of the properties held at the end of the period, those which were sold at the beginning of the following period have been
excluded.

P24

Note 16

The aggregate amount of the following: For properties for which a preferential negotiation price or desired purchase price is stated in the preferential negotiation agreement,such price is used. For properties which do not have such stated price, the purchase price at which Star Asia Group expects to purchase the property have been used.

57

<Notes>
P24

Note 17

The yield is calculated by dividing the aggregated amount of assumed NOI calculated by Star Asia Group based on the status of revenues and expenses of each property asof the end of June 2019, by the aggregate amount of the preferential negotiation price etc.

P24

Note 18

The yield calculated by dividing the amount obtained by subtracting the aggregated amount of depreciation expenses assumed by Star Asia Group with respect to each
property (preferential negotiation rights held properties ①), by the aggregate amount of the preferential negotiation price etc.

P24

Note 19

The aggregate amount of the following: If an appraisal report has been obtained, such appraisal value. If an appraisal has not been obtained, the amount at which Star Asia
Group is expecting to purchase the property.

P24

Note 20

The aggregate amount of the most recent appraisal values of each property managed by Star Asia Group (excluding those properties for which SAR holds preferential
negotiation rights).

P24

Note 21

For 1 property which was not held as of the end of January 2019, the appraisal value was used.

P24

Note 22

With respect to SAR's portfolio held, the figure is calculated by the amount obtained by subtracting the book value as of the end of January 2019 from the aggregate amountof the amounts at which Star Asia Group is able to purchase all of the properties, and then dividing such amount by the book value as of the end of the end of January 2019.

P26

Note 23

The amount calculated by adding the 97,000 investment units of SAR held by Star Asia Group as of August 6, 2019, and the
16,896 investment units (contact basis) of SSR held by Lion Partners GK after multiplying the assumed merger ratio to it (0.88), and then dividing such number by theassumed issued and outstanding number of investment units of the post-merger investment company.

P26

Note 24

The ratio of floating rents within the rent revenues to be obtained from the hotel portfolio of the post-merger investment company.

P53

Note 25

The base interest rate : JBA 3-month yen TIBOR

P55

Note 26

Star Asia Capital Ⅰ～Ⅳ LLC are Sponsor Group.

58

Disclaimer
This document has been prepared to provide information and is not for soliciting and inviting investment in or recommendingtransaction of certain products. SAR does not guarantee the accuracy or completeness of the information provided in thisdocument although effort has been made to provide correct information based on information available to SAR. Moreover,please note that the contents of this document are subject to change or removal without prior notice. Duplication andreproduction, etc. of the contents contained in this document without prior consent is prohibited. This document includes
graphs, data, etc. publicly disclosed by third parties. Furthermore, the document also includes analysis, judgement and other
opinions by Star Asia Investment Management, Co,. Ltd. concerning such information. This document discusses future
expectations, identifies strategies, contains projections of our results operations or financial condition, or states other forwardlooking information based on certain assumptions, estimates and projections, Known and unknown risks, uncertainties andother factors could cause our actual results, performance or achievements to differ materially from those contained or impliedin any forward-looking statement. We cannot give any assurances that the expectations expressed in these forward-looking
statements will turn out to be correct.
Copying, reprinting or any other use of the contents of this document without prior approval is strictly prohibited.

■ Contact regarding this material
Akiko Kanno, Director and CFO (General Manager of Finance Management Department)

Star Asia Investment Management Co., Ltd.
Atago Green Hills Mori Tower 18F, 2-5-1, Atago, Minato-ku, Tokyo 105-6218
Tel: +81-3-5425-1340
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