"Financial Results for the 1st Fiscal PeriodEnding July 2016"

Star Asia Investment Corporation (Securities CODE 3468)
Star Asia Investment Management

Contents

Contents
1.IPO Summary・ ・ ・ ・ ・ ・ ・ 2
2.Features of Star Asia
・・・3
Investment Corporation
3.Executive Summary・ ・ ・ ・ 6
4.Performance Highlights ・ ・ 7
5.Future Growth Strategy ・・・ 1 1
6.Appendix・ ・ ・ ・ ・ ・ ・ ・ 22

For Investors
A diversified REIT developing its

portfolio with diversified assets mainlyin Greater Tokyo

1

1.IPO Summary
Overview of offering

Changes in market price

Offering Format

Domestic Offering

110

Offer Price

JPY100,000

105

Offering Size ( incl. OA)

JPY24,770 mil

100

Newly Issued Units

247,700 units

Listing Date

April 20, 2016

90

Securities CODE

3468

85

Bookrunners

Nomura ／Mizuho

80

Issued Units 344,700 units( incl. OA)

Same-boat investmentby the Star Asia Group ：1.5

28.1 %

Changes in P/NAV

1.25

1.3

TSE JREIT Index

75

16/05/20

16/06/20

16/07/20

1st Fiscal Period 4 3 %P / N AV : 0 . 8 2 D i s c o u n t

1.1
1.0

Changes in Cash Distribution Yield
8%

6.8%

Changes in Cash Distribution Yield

6%

Yi e l d G a p
330bp

4%

3.5%

3%

0.9

2%

0.8

Star Asia Investment Management

0.82

JREIT average

0.7

16/04/20

16/05/20

16/06/20

16/07/20

Calculation method: JREIT average is the average of the results of JREITs
that have settled their accounts for a fiscal period

16/08/20

16/08/20(1) TSE JREIT Index and SAR's closing price indexed to 100 at April 20, 2016

5%

1.2

0

90.4

August 31 closing price: 88,400 yen

Star Asia Investment Corporation

16/04/20

7%

1.4

97.0

95

Changes in P/NAV NAV/Unit:107,492yen(x) 1.6c h a n g e i n m a r k e t p r i c e (1）Star Asia Investment Corporation
JREIT average

1%
0%

16/04/20

16/05/20

16/06/20

16/07/20

16/08/20

Calculation method: SAR's yield is based on the assumed yield for the 2nd fiscal period.
JREIT average is calculated by: (Forecast cash distribution for period under review + Forecast cash
distribution for next period) / Investment unit price.

2

Features of Star Asia
2. Investment
Corporation

About Sponsor

Steady Growth

Utilizing Star Asia's know-how and abundant assets under management
against the backdrop of its real estate investment strategy

About Star Asia GroupManaging Partner

Managing Partner"Malcolm F. MacLean Ⅳ ""Taro Masuyama"

Received a bachelor's degreefrom Trinity College"Received a bachelor’s degree fromWaseda University Received a master’s
degree from Columbia University"

Taro Masuyama is a founder of Star Asia and currently serves as its managing
partner. He formerly served as Managing Director and Head of the AsiaPacific region’s Structured Credit Products and Japan Credit Sales and Marketing at Merrill Lynch and managed the origination, structuring, trading andmarketing of all structured credit as well as fund products in the Asia-Pacificregion in addition to sales marketing of Japanese credit products. During his seven-year stint at
Merrill Lynch, his team was involved in securitizations with over 2.8 trillion yen in underlying
assets including securitizations of major Japanese banks’ loan portfolios that won several awards
from various media. Before joining Merrill Lynch in April 1999, he provided various structuredbalance sheet solutions primarily to Japanese banks as Vice President of Global Credit Derivatives at Bankers Trust. Prior to that, he was involved in the streamlining of headquarters functions at various international companies as a consultant at Andersen Consulting in Tokyo, Chicago and Los Angeles. Masuyama obtained a bachelor’s degree from Waseda University and an
MBA from Columbia Business School.

Malcolm MacLean is a founder of Star Asia and currently serves as its
Managing Partner. He is also co-founder of Mercury Real Estate Advisor
LLC and formerly served as its Portfolio Manager and Head Trader. He
has an abundance of experience, including over 24 years in real estate
related asset investment and involvement in establishing listed and nonlisted real estate securities and real estate investment in the U.S., Europe
and Asia. Prior to that, he advised listed and non-listed companies on the issuance ofstocks and bonds as well as M&As while working at the Real Estate Investment Banking
Groups of Paine Webber Incorporated and Kidder, Peabody & Co., Inc. (current UBS AG)
and closed many transactions as the team leader of origination, structuring and execution.
MacLean studied economics at Cambridge University in the U.K. and obtained a bachelor's
degree in economics and law from Trinity College in Hartford, Connecticut, U.S.A.

Star Asia Group’s investment track record in Japan（100mil）
3,500

Period of steep rise, adjustment and stagnation in thereal estate market conditions
Make investment centering on real estate-related debts

3,000Real estate etc.(left axis)
TSE REIT Index(right axis)

2,500

Period of recovery in the real estate market conditions
Make speedy investment in real estate, etc.

2,978Real estate-related debts and other assets
related to real estate,etc.(left axis)

2,000

1,000
500
0

511
511

588
588

588
588

2007

2008

2009

+1 9

607
588
19 +104

2010

711
588

123 +239

2011

965
603
362

2012

652

1,325
617
+ 346

708
2013

+367

+922
1,075
2014

676

2,670
673

1,727

1,500

（pt）
3,000

1,997

+305

2,302

2,000

1,000

0

2015

Julr 20163

Features of Star Asia
2. Investment
Corporation

Features and Strategy

Investment Policy• Prioritized, focused investment in the Tokyo area

1.A Diversified REIT
A diversified REIT building its portfolio withdiversified assets located mainly in Greater Tokyo

2.Steady growthTokyo area with a 70% or higher• Gaining income stability and growth through diversificationof asset types
Investment ratio for each asset type shall be 50% or less in principle.

Steady growth utilizing Star Asia’s deep andexperience team, strong and long-term relationships,
and superior track record which support
SAR’s investment strategy

3.Unitholders’ interest-firstMaximization of unitholders’ interests throughthorough implementation of “unitholders’interest-first” mindset as well as strong financialalignment• Investment primarily in middle-size assets
Less than 10 billion yen.

• Strategic investment in large-size assets exclusively
in 5 central wards of Tokyo
More than 10 billion yen or higher

Developing its portfolio with diversified assets mainly in Greater Tokyo
Total
Acquisition Price

61.5 billion
yen

Number ofaquired properties

18

Tokyo Area

78.4 ％NOI yield (%)

4.8 ％Occupancy Rate
As of July 31, 201695.9 ％

In case Property taxes
are expensed
4

Features of Star Asia
2. Investment
Corporation

Prioritized, focused investmentin the Tokyo area

Achieving a portfolio with both“stability” and “growth” of income(Composition ratio by investment target area )(Composition ratio by asset type)
As of July 31, 2016

As of July 31.2016

Tokyo area
78.4%
Central wards of
Other areas inTokyo 34.2%
Greater Tokyo 44.3%

Focus onincome stability

Other
21.6%

Focus onincome growthTokyo area 88.8%

Tokyo area 69.5%

Average time to theclosest station on foot:approx. 6 min.

Smile Hotel Namba

R&B Hotel Umeda East
Honmachibashi Tower

Iwatsuki Logistics

Hakata-eki Higashi
113 Building（5 central wards of Tokyo 45.2%）

Tenants with 5% orless rent ratio is 79.4%

Residence
21.6%

Office42.4%

Funabashi Logistics

Urban Park Namba

Urban Park Shin-Yokohama
Yokohama Logistics

Nishi-Shinjuku Matsuya Building
Shibuya MK Building
Alphabet Seven
Urban Park Yoyogikoen

Urban Park Daikanyama
Minami-Azabu Shibuya Building

Urban Park Azabujuban
Oak Minami-Azabu

Asahi Building

Logistics
29.9%
Tokyo area 100.0%

Average distance fromthe closest IC: approx. 3.3 km

Hotel
6.2%

Floating rent 38.6%
Average time to theclosest station on foot:approx. 4 min.

(Note) “Tokyo area” refers to Tokyo’s 23 wards, Kawasaki city and
Yokohama city for office properties and retail facilities,
and Tokyo and three prefectures of Kanagawa, Saitama andChiba for residential properties, logistics facilities and hotels.
5

3．Executive Summary
Cash Distribution Per Unit andYield Results and Forecasts
1st Fiscal Period Results
Cash Distribution per Unityield

968 yen

3.90 %

Forecast cash distributions(2nd Fiscal Period Ending January 2017)

JPY
yield

3,046

6.87 %

Forecast cash distributions(3rd Fiscal Period Ending July 2017)

JPY
yield

2,726

6.25 %

Expensing of fixed property taxes, city planning taxes, etc.
starting from 3rd fiscal period (approx. 166 million yen)
*Monetary figures are rounded down to the nearest specified unit,
and percentage figures are rounded to the second decimal place.
*Yield for the 1st fiscal period is calculated based on the numberof days from the date of listing (April 20, 2016).
*Yield is calculated based on the investment unit price at the endof the 1st fiscal period (87,900 yen as of July 29, 2016).

Highlights of 1st Fiscal Period
External
GrowthStrategyInternal
GrowthStrategy
Financial
Strategy

・ Commenced asset management with acquisition of 11 properties in January 2016
・Additionally acquired 7 properties upon listing in April 2016
(Total: 18 properties; Asset size: approx. 61.5 billion yen)・ Obtained preferential negotiation rights (2 properties: 6,160 million yen)・ Realization of early lease-up

・Implementation of renovation work to make more attractive to tenants
・ Unsecured and unguaranteed debt financing

・Conversion of interest rates into long-term fixed rates through interest rate swaps
・Same-boat investment by the Sponsor: 28.1%

Initiatives for 2nd and Subsequent Fiscal Periods
External
GrowthStrategy

・ Securing of room for external growth through obtainment of preferential
negotiation rights
・Strategic investment by identifying trends of asset types
・ External growth target: "200 billion yen by 2020"

Internal
GrowthStrategy

・ Promotion of further lease-up

Financial
Strategy・ Partial loan repayment using consumption tax refund as source of funds

・Realization of increase in amount of rent to reach market level・ Implementation of strategic renovation work with occupancy rate and rent
increase in mind
・Assumed LTV at end of 2nd fiscal period: 45.2%

6

4．Performance Highlights
1st Fiscal Period Results
2nd Fiscal Period and 3rd Fiscal Period Performance Forecasts
Forecast cash distributions(2nd Fiscal Period Ending January 2017)
1st Fiscal Period

Ended July 31,2016
Results

JPY3,046

2nd Fiscal PeriodEnding Jan. 31, 2017 Period-on-Period
Forecasts

Growth Rate
(Rate of Increase)

Forecast cash distributions(3rd Fiscal Period Ending July 2017)
3rd Fiscal Period
Forecasts

Growth Rate
(Rate of Increase)

1,859

Operatingincome

1,147

1,169

+21

1,052

△117

Ordinary
income

335

1,051

+715

940

△110

Net
income333

Cash
Distribution
per Unit

2,000

+12

・Expects increase in rent revenue mainly due to lease-up
of office buildings in 2nd through 3rd fiscal periods.
・Implement enhancement of value in 2nd fiscal period thatwill lead to increase in revenue in 3rd fiscal period; however, expects
increase in operating expenses for that reason.
・Operating expenses to increase by 166 million yen in 3rd fiscal period
due to expensing of fixed property taxes, city planning taxes, etc.
starting from 3rd fiscal period.
・Recorded the following in 1st fiscal period

968 yen

Yield

1,050
3,046 yen+716
+2,078 yen

6.87%(calculated based on
July 29, 2016 closing
price: 87,900 yen)

Operation
Days

+128

(Unit: million yen))Ending July 31, 2017 Period-on-Period

Operatingrevenue

1,987

JPY2,726

200 d

939
2,726 yen

△110
△320 yen

Organization expenses

62million

Investment unit issuance expenses

111million

Investment corporation bond issuance expenses

12million

Borrowing related expenses

453million

・3rd fiscal period cash distribution per unit to be 2,726 yen,
the level that SAR expects to attain under normal operations

6.25%
184 d

181 d

7

4．Performance Highlights
1st Fiscal Period Results: Status of Occupancy Rate
Occupancy rate at end of period: 95.9%
Portfolio occupancy rate increased to 94.8%-95.9%
100.0%

Office occupancy rate

Up 4.2% from that at end of November 2015
(when held by previous owner
Leased up 8 tenants(Rent space: 2,228.88㎡) during our operation

94.8%
95.0%

Residential occupancy rate

・Hovered at around 93%
・Contract renewals and new contracts with increase in amount of rent
<Upon renewal>
Number of contracts with increase in amount of rent:
4 contracts / 24 contracts
Number of contracts with no change in amount of rent:20 contracts / 24 contracts<New> (comparison with previous tenant)Number of contracts with increase in amount of rent:
9 contracts / 24 contracts
Number of contracts with no change in amount of rent: 1 contracts / 24 contracts
Number of new contracts of units that were vacant:
10 contracts / 24 contracts
Number of contracts with decrease in amount of rent: 4 contracts / 24 contracts

95.9%
90.0%

85.0%

80.0%

1
20

5/

11

1
20

5/

12

Total(%)

Office(%)

Hotel(%)

Logistics(%)

20

16

/1

20

16

/2

20

16

/3

20

16

/4

Logistics facility and hotel occupancy rate

Residence(%)

20

16

/5

20

16

/6

20

16

Stable occupancy due to long-term contracts(ratio of logistics facilities on fixed-term building lease contracts: 92.4%)/7

Information presented is that from at the end of November 2015
received from the previous owners.

84．Performance Highlights
1st Fiscal Period Results:Realization of Lease-Up
Oak Minami - Azabu
Lease-Up Performance

Shibuya MK Building:Lease-Up and Rent Revision Performance
POINT

・Cooperation with brokerage companies
・Collaboration with property
management companies
・Holding of property viewings

POINT
Rent revision

Upon periodic building lease contract
renewal,renewed at approx. 16% higher
rent than previous rent

New lease-up

After tenant exit and without downtime,
contracted at 15% higher rent thanprevious rent

Lease-up of 3 contracts(contract area totaling 1,103.57 ㎡ )Occupancy rate up 11.7%(77.9% ⇒ 89.6%)

Contributed to increase in rent
revenue for 1st fiscal period

94．Performance Highlights
1st Fiscal Period Results:Implementation of Value Enhancement, etc.
Alphabet Seven・Value-Up

R&B Hotel Umeda East・Large-scale repair

Implemented period：Feb, 2016
Construction costs：77million
Construction details：
Air-conditioning equipment
upgrading work on all 219 guest
rooms and common-use areas

Implemented period：Jul 2016
Construction costs：4.5 million
Construction details：
Value enhancement work
(including restoration work)
Flooring, lighting andbalcony renovations

Enhanced tenant satisfactionMore attractive to new tenantsin leasing

Lower maintenance costs
Greater air-conditioning efficiency
Degree of reduction in tenants'
electricity and gas use：△35.3%compared with same period from March toJuly of previous year10

5．Future Growth Strategy
Future Internal Growth Strategy:Office
Office building rent gap ※１ approx. 7.6% at end of 1st fiscal period.
Rent gap seen to exist for approx. 74.1% of total,
meaning there is plenty of room for upward revision in amount of rent
※1 Market rent refers to the median of each property's expected new contract rent (range) assessed as at the endof the period by CBRE K.K., and rent gap refers to the disparity between the market rent and each tenant's contract rent.

■ Status of Distribution of Rent Gap as at End of Period (on area basis)
75%
50%
more than 10%

74.1%

25%

less than 0-10%

For tenants with rent gap of 10% or more, the plan is to pursue active
negotiations for upward revision in the amount of rent at the time of contract renewal.

35.5%

For tenants with rent gap of 0% to 10%, or less, the plan is to hold negotiations for
upward revision in the amount of rent based on a comprehensive consideration ofalso other leasing terms and conditions, etc. at the time of contract renewal.
For tenants with rent gap of less than 0%, the plan is to keep engaging in a relationshipwith tenants on a regular basis to enhance tenant satisfaction in an aim to extend
tenancy and maintain the current rent level.

38.6%

0%

25.9%

less than 0%-25%

Jul 2016■Distribution of Contract Renewal Periods (on rent basis)
35％

Contract up for renewal at many properties
between 2nd fiscal period and 6th fiscal period

30％

25％

Opportunities to close rent gap

20％

15％

10％

5％

0％

2n

i
dF

sc

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pe

ri

o

d,

3n

i
dF

sc

al

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d,

4t

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hF

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d,

5t

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sc

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d,

6t

h

Fi

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d,

7t

h

Fi

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d,

8t

h

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d,

9t

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Fi

sc

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d,

10

th

Fi

sc

al

pe

ri

,
od

※The graph is based on all rent up for contract renewal between the 2nd fiscal
period and 10th fiscal period as the denominator, and does not factor in the second contract renewal.

115．Future Growth Strategy
Future Internal Growth Strategy:Residence
Increase in Occupancy Rate and Enhancement of Revenue• Even if occupancy is stable, aim for further increase in occupancy rate

• Property management approach based on the situation on a property-by-property basis• Maintain and enhance occupancy rate through cooperation with property management companies• Increase amount of rent upon contract renewal and upon tenant replacement

Urban Park Daikanyama

Implementation of Renovation Work on Common-Use Areas
Implemented Period : Sep,2016 – Dec, 2016
Construction Costs : 27mil
Construction details : Exterior wall tile sealing replacement work

・Enhanced tenant satisfaction
・More attractive to potential new tenants in leasing

Urban Park Azabujuban

Consideration of Renovation Work on Exclusive Elements

For units that have become vacant, depending on
the interior state of the units, consider renovation
work for the purpose of maintaining competitivenessand increasing the amount of rent

12

5．Future Growth Strategy
Future Internal Growth Strategy : Logistics & HotelHigh ratio of fixed-term building
lease contracts securing stable
cash flows and opportunities forrent revision

Logistics
Ratio of Fixed-Term Building
Lease Contracts (on area basis)

Distribution of Contract Renewals(on area basis)(㎡)

40,00030,000

Ratio of fixed-termbuilding lease contracts

92.4%

Periodic building
lease contracts

20,00010,000

0

2n

dF

c
is

al

pe

ri

3n

od

,

dF

c
is

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4t

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hF

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sc

lp

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d,

5t

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6t

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8t

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9t

h

,

F

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ri

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・Enhancing hotel revenue through collaboration with hotel
operators, and maintaining and enhancing facility competitivenessthrough strategic capital expenditures

,

200%

150%

123 ％（Rent Fee）
118 ％（ADR）

100%

50%
ADR
Rent Fee

/6

/7

16

16

20

/5
16

20

/4
16

20

/3

20

/2

16

20

/1

16

ADR ave..
Rent Fee ave.

16

/12
15

20

20

/11
15

20

20

/10
15

/9
15

20

/8
15

0%
20

Smile Hotel Namba, which has sales-linked rent setting,has ADR and rent of approx. 120% in comparison withsame month of previous year on average (chart to right)

20

Hotel

lease for years

Staggering of contract renewal
periods enabling risk
diversification and agile
recontract negotiations

13

5．Future Growth Strategy
External Growth Strategy・preferential negotiation rights ①

Logistics

Hotel

Baraki Logistics
Address：Ichikawa Chiba
Minimum purchase price：4,700 million
Total Floor areas：12,471.50 ㎡

BEST WESTERNTokyo Nishikasai

Address：Edogawa Tokyo
Minimum purchase price：3,805million
Total Floor areas：5,293.88 ㎡

Residence

BEST WESTERN Yokohama
Address：Yokohama Kanagawa
Minimum purchase price：3,185million
Total Floor areas：4,686.09 ㎡

Urban Park Kashiwa

Address：Kashiwa Chiba
Minimum purchase price：1,186million
Total Floor areas：4,243.71 ㎡

Obtained preferential negotiation rights in total amount of 16,591 million yen

Joytel Gokokuji

Address：Toshima Tokyo
Minimum purchase price：1,460million
Total Floor areas：2,451.72 ㎡

OfficePoints to Investment

OfficeBenefit from stability andgrowth by investing in
offices for which tenant
demand is steady within
the Fukuoka (Hakata) area
where further
revitalization is expected

Hotel

Benefit from stability
and growth by investingin business hotels in
Greater Tokyo where
accommodation demand(both business andtourism) is steady

Logistics

Benefit from stability by
investing instate-of-the-art logistics
facilities in the Ichikawa,
Chiba area where access tocentral Tokyo is favorable(within 30km of Tokyo
Station)Residence

Benefit from stability by
investing in family-type
and single-type
residential properties inGreater Tokyo that is
highly attractive totenants

Hakata-eki East Place

Address：Hakata, Fukuoka
Minimum purchase price：2,255million
Total Floor areas：6,243.13 ㎡

14

5．Future Growth Strategy
External Growth Strategy・preferential negotiation rights ②◇ Office

Baraki Logistics

Hakata-eki East Place

Minimum purchase price：4,700 million
Asset type：Logistics
Structure/Floor：RC S 9F
Address：Ichikawa Chiba
Lot area：6,240.96 ㎡
Total floor areas：12,471.50 ㎡Completion：2015.8

o

Ba

y

Ke

iyo

Li

M

Hakata Sta.

aki
B a rg i s t i c s
Lo

T A S ta .
I
AMA
FUT MACHS H IM

neMarket analysis(2005＝100)

140

Asking Rent Index(変動率)(Chiba Prefecture;medium to large buildings)※1 15.0%

120
100
80
60

0

100

5.0%

80

0.0%

60

-10.0%

20

2007 2008 2009 2010 2011 2012 2013 2014 15Q1 15Q2 15Q3 15Q4
Asking rent index

120

10.0%

-5.0%

40

Population analysis(2005年＝100)-15.0%

Fluctuation rate (right scale)

Asking Rent Index (Chiba bay zone) ※2

40
20
0

2007 2008 2009 2010 2011 2012 2013 2014 15Q1 15Q2 15Q3 15Q4

Asking rent index

20.0%
15.0%

350,000

10.0%

300,000

5.0%

250,000

0.0%

200,000-5.0%

150,000-10.0%

100,000-15.0%

50,000-20.0%

Fluctuation rate (right scale)

The rent index has remained almost flat and stable since 2014 and it is expected to remain solid going forward.

0

2006

2009

2012

2014

A

Higa shihi e Sta.
irp

or

t

Li

ne

Hakata-eki East Place

Rent Index and Vacancy Rate※4110.0025,000100.005.00%

20,000

90.00

4.00%

15,000

Employees 80.00

3.00%

10,000

Numberof Oﬃces

2.00%

0

Although both numbers of offices and employees
temporally decreased, they have turned to increases
again during 2016.

70.00

50.00

6.00%

1.00%

60.00

2011 1H 2011 2H 2012 1H 2012 2H 2013 1H 2013 2H 2014 1H 2014 2H 2015 1H 2015 2H

Rent Index（left axis）

0.00%

Vacancy Rate（right axis）

Rent has been on a recovering trend since 2014.
Vacancy rate has been less than 1% since 2015,
indicating that tenant demand is strong.

*1, *2 Source: CBRE K.K.

*3 Source: Statistics Bureau, Ministry of Internal Affairs and Communications - "Economic Census for Business Frame"*4 Source: Prepared by the Japan Real Estate Institute based on data publicized by listed J-REITs (Fukuoka City, 21 to
35 year old office buildings with total floor area of 1,500 to 5,000 tsubos)

The Asset Manger’s own analysis

The Asset Manger’s own analysis

Located in Chiba-Ichikawa Area (within 30km zone from Tokyo Station) andcan be reached on foot from the nearest railway station; therefore, it is a
cutting-edge logistics facility with strong appeal to tenants also in terms of
securing a workforce.

ro

30,000

5,000
2001

et

Market analysis

Hakata-ku, Fukuoka City - Number of Offices and Employees ※3

400,000

se n

ok

R

gan
Wan awa
Ic h ik

Sh ink an

ut

re

e

Kagoshima Line

Sy

o
sh

t
ou

Minimum purchase price：2,255 million
Asset type：office
Structure/Floor：SRC 9F
Address：Hakata, Fukuoka
Lot area：1,129.86 ㎡
Total floor areas：6,243.13 ㎡
Completion：1986.2

Ky us hu

◇ Logistics

An office building with steady tenant demand located in Fukuoka (Hakata)
Area expected to be further vitalized by the completion of the Hakata Station
area redevelopment project and the start of the "Tenjin Big Bang Project,"etc.
15

5．Future Growth Strategy
External Growth Strategy・preferential negotiation rights ③◇ Hotel BEST WESTERN Yokohama

BEST WESTERN Tokyo Nishikasai
Minimum purchase price：3,805 million
Asset type：hotel
Structure/Floor：SRC B1/9F
Address：Edogawa Tokyo
Lot area：1,418.00 ㎡
Total floor areas：5,293.88 ㎡
Completion：1991.3
Ka sa i Sta .

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St

a.

Toyoko Inn

ta
S

e

su

or

ya

sh

ra

ay

Population analysis(People)35,000,000

Market analysis

Number of Visitors toTokyo Disney Resort(TDR) by Fiscal Year※1

125

Market analysis

Change in ADR / Operation Rate
(5 central wards of Tokyo)※2

120

30,000,000

100
95

10,000,000

ADR

90

5,000,000

Operation

85

0

2011

2012

2013

2014

2015

Since 2011, visitors to TDR have increased
year-on-year, reaching 30 million in 2013.
The number of visitors is likely to remain solid
as one of Japan's leading theme parks going forward.

80

270,000

um
ts
yu
ik
Ke

Change in Number of Lodgers
in Minato Mirai & Sakuragicho Area※42,000,000

1,500,000

250,000

昼間人口245,000

夜間人口240,000

2012

2013

2014

2015

While ADR is on an increasing trend,
it maintains a high operation rate, indicatinga strong demand for lodging
accommodations in the 5 central wards of Tokyo.

LocA business hotel with high demand capable of taking in not only businessdemand but also tourist demand as it is located close to Tokyo Disney Resort,a theme park boasting to have Japan's strongest class of visitor attracting
capabilities, in addition to its good access to central Tokyo.

225,000

1,000,000

500,000

235,000
230,000*1 Source: Website of Oriental Land Co., Ltd. The number of visitors is the total of visitors to the two parks*2 Source: Japan Hotel Appraisal Co., Ltd.

The Asset Manger’s own analysis

2,500,000

255,000

105

15,000,000

Tsurumi-ku, Yokohama City- Day and Night Population※3

APA Hotel

260,000

110

20,000,000

275,000

265,000

115

25,000,000

ta

.

ur

e
e

yo

ku L inei

BEST
WESTERN
Yokohama

iS

hi
S
K

Sta

Toho

ma

ne
m i li n

ih a

LiT su ru

Ma

Tokyo
DisneyResort

.

nu

B
ko
to
yu
S

Kasai
Seasid e
Park

Tsurumi Sta .

.

R

ou

a
Ur

te

BEST
WESTERN
Tokyo Nishikasai

Minimum purchase price：3,185 million
Asset type：hotel
Structure/Floor：SRC B1/9F
Address：Yokohama Kanagawa
Lot area：782.66 ㎡
Total floor areas：4,686.09 ㎡
Completion：1987.9

K e ih in◇ Hotel

0
平成7年

平成12年

平成17年

平成22年

Day population temporally decreased in 2000,
but turned to an increase in 2005 and onwards.
Night population is also on an increase since 1995.

2005

2006

2007

2008

2009

2010

2011

2012

2013

After hitting the bottom in 2010, the number oflodgers turned to an increase partly due to the impact
of inbound tourists, and is particularly showing large
an increase in recent years.

*3 Source: Statistics Bureau, Ministry of Internal Affairs and Communications - "National census"*4 Source: Prepared by the Japan Real Estate Institute based on the Yokohama City Statistics Book and Yokohama City's website

The Asset Manger’s own analysis

A business hotel with high demand capable of taking in high demand frominbound tourists as it is closely located to Yokohama area where lodgers havebeen on an increase recently, and has good access to Tokyo International
Airport (Haneda).
16

5．Future Growth Strategy
External Growth Strategy・preferential negotiation rights ④◇ Residence◇ Residence

Joytel Gokokuji

Urban Park Kashiwa
Minimum purchase price：1,186 million
Asset type：residence
Structure/Floor：SRC B1/8F
Address：Kashiwa Chiba
Lot area：1,597.85 ㎡

ta .

Minimum purchase price：1,460 million
Asset type：residence
Structure/Floor：RC B1/5F
Address：Toshima Tokyo
Lot area：942.66 ㎡
Total floor areas：2,451.72 ㎡Completion：1990.2
Zōshigaya Sta .
e

ro S

lin

Gakushuin

Joytel Gokokuji

SOGO

in

M e ji

Total floor areas：4,243.71 ㎡Completion：1997.8

Fu

kut

osh

Japan
Women's
University

Kashiwa Sta.

Urban Park Kashiwa

Kashiwa Marui
Chinzanso
To

za

i li

ne

51

Waseda University

Population analysis
120,000

275,000
270,000
265,000

80,000260,0,00

60,00040,000Single2010

2015

Kashiwa City, Chiba Prefecture - Population /Number of Households※3

100.00

5.00%

90.00

4.00%

80.00

3.00%

300,000

70.00

2.00%

200,000

Only total population
on right axis

60.00

1.00%

100,000

The number of single households turned to a significant
increase from 2005 through 2010.
Furthermore, the population has been increasing since 2000,
and is particularly showing large increases in and after 2005.

50.00

2011 1H 2011 2H 2012 1H 2012 2H 2013 1H 2013 2H 2014 1H 2014 2H 2015 1H 2015 2H

Rent Index（left axis）

0.00%

Vacancy Rate（right axis）

Rent has remained stable since 2011.
Although the vacancy rate temporally increasedin the latter half of 2015, it shows the solidnessof the tenant demand.

Number of Households

400,000

DINKS

230,000

Population

500,000

250,000

235,000
2005

6.00%

Family240,0002000

110.00255,000

245,000

20,000Market analysis

Rent Index and Vacancy Rate※2

280,000

100,000

0Market analysis

Toshima-ku - Number of Households
by Family Type and Total Population ※1

0

Rent Index and Vacancy Rate※4110.006.00%

100.00

5.00%

90.00

4.00%

80.00

3.00%

70.00

2.00%
1.00%

60.00

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Population and the number of households are
increasing every year, indicating rapid population
inflow to Kashiwa City.

50.00

2011 1H

2011 2H2012 1H

2012 2H2013 1H

Rent Index（left axis）

2013 2H2014 1H

2014 2H2015 1H

0.00%

Vacancy Rate（right axis）

Rent has remained stable since 2011 and the vacancy
rate turned to a decrease since the latter half of 2014,indicating the solidness of tenant demand.

*1 Source: Statistics Bureau, Ministry of Internal Affairs and Communications - "National census," Toshima-ku - "Population & households in Toshima-ku"*2 Source: Prepared by the Japan Real Estate Institute based on data publicized by listed J-REITs (Toshima-ku; 21 years or older single-type residences)*3 Source: Kashiwa City's website - "Change in population and number of households by year"*4 Source: Prepared by the Japan Real Estate Institute based on data publicized by listed J-REITs (Funabashi, Urayasu, Ichikawa and Matsudo Cities - Family-type residences)

The Asset Manger’s own analysis

The Asset Manger’s own analysis

A single-type residence with high tenant demand due to such area characteristics as many universities and colleges in the vicinity and the increase inpopulation and single households in Toshima-ku.

Residence with high appeal for family households due to living convenienceowing to the Kashiwa Station area project and characteristics as an academic
city centering on "Kashiwa-no-ha campus area"
175．Future Growth Strategy
External Growth Strategy・preferential negotiation rights⑤
78,074 million asset size with possible 16,591 million growth brought by purchaseof all assets with Preferential Negotiation Rights at the lowest priceEnhanced portfolio with diversified assets
80.1% Tokyo-area investment ratio (1.7 % increased)(unit:mil)officeResidence

Logistics

Hotel

Total

Acquisition
price

preferential
negotiationrightsTokyo area

18,094ー

18,094

other

7,950

2,255

10,205sub total

26,0442,255

28,299

Tokyo area

11,763

2,646

14,409

other

1,490

ー

1,490

sub total

13,253

2,646

15,899

Tokyo area

18,377

4,700

23,077

other

ー

ー

ー

sub total

18,377

4,700

23,077

Tokyo area

ー

6,990

6,990

other

3,819

ー

3,819

sub total

3,819

6,990

10,809

Tokyo area

48,234

14,336

62,570other

13,2592,255

15,514

sub total

61,493

16,591

78,084Total

1st Fiscal Period
Ended Jul 31, 2016
Focus onincomestability

Focus onincomegrowthFocus onincomestability

51%

49%

50%

Residence
21.6%

Logistics
29.9%

Office42.4%

Composition ratio
by investment target area(based on acquisition price)

Central wardsof Tokyo
34.2%

Other areasin Greater Tokyo
44.3%

Residence
20.4% Office
36.2%

Logistics
29.6%

Hotel
6.2%

Tokyo area
78.4%

After theproperty acquisition

Other
21.6%

Focus onincomegrowth

50%

Hotel
13.8%

Composition ratio
by investment target area(based on acquisition price)

Tokyo area
80.1%
Central wardsof Tokyo
26.9%

Other areasin Greater Tokyo
53.2%

Other
19.9%

18

5．Future Growth Strategy
Financial Strategy
Borrowings were made from loan syndicateswith Sumitomo Mitsui Banking Corporation and Mizuho Bank, Ltd. as arrangers.
Diversification of repayment dates: Terms of 1, 2, 3, 4 and 5 years
SAR plans to repay part of borrowings prior to the repayment date using consumption tax
refunds during the 2nd fiscal period.
Ratio of Long-term
Borrowings (As of July 31,2016)
Status of Diversification of Repayment Dates
Short-term(Repaid）

Bank Formation

After the end of the fiscal period,
we repaid part of borrowings prior
to the repayment date.
Repayment amount: 1,137 million
yen

Resona Bank, Ltd.

7.37％

Shinsei Bank, Ltd.

8,000,000,000

7.37％

Aozora Bank, Ltd.,

7.37％

Sumitomo Mitsui
Banking Corporation
30.93％

Mitsubishi UFJ Trustand Banking Corporation

Sumitomo Mitsui
Trust Bank, Ltd.,12.90％

Long-term
89.7％

7,000,000,000
6,000,000,000
5,000,000,000

Ratio of Fixed-rate
Borrowings (As of July 31,2016)

4,000,000,000

8.60％

3,000,000,000

Mizuho Bank, Ltd.,
25.45％

Short-term

During the 2nd fiscal period, SAR plans to
repay part of borrowings prior to therepayment date after receipt of the consumption tax refund.Repayment amount(planned): 1,218 million yen

Floating rate（ Repaid）

2,000,000,000
1,000,000,000
0Repaid

3nd Fiscal Period

2017/45th Fiscal Period

2018/4

7th Fiscal Period

2019/4

9th Fiscal Period

2020/4

Floating rate

11th Fiscal Period

2021/4

Fixed rate
67.3％

19

5．Future Growth Strategy
Financial Strategy
LTV at the end of 1st fiscal period is 47.3%.。
After the end of the fiscal period, part of borrowings were repaid prior to the repayment date.
The balance as of the date of announcing the financial results (Aug 31) is 31,418 million yen.
Status of Borrowings
Lender
Short
term
Long
term

<A syndicate of lenders with
Sumitomo Mitsui Banking
Corporation and Mizuho Bank,
Ltd. as arrangers>

Balance (million yen)Interest rate

Repayment date

Base rate(Note 1) + 0.20%

Apr 20, 2017

End of the fiscal period

Amount repaid
on August 22

Balance asof Aug 31

Amount of planned
repayment in 2nd
fiscal period

Planned balance asof end of 2nd
fiscal period

3,355

1,137

2,218

1,218

1,000

7,300

−

7,300

−

7,300

7,300

−

7,300

−

7,300

0.36400%(Note 2)

7,300

−

7,300

−

7,300

Sumitomo Mitsui Banking Corporation,
Mizuho Bank, Ltd.,
Sumitomo Mitsui Trust Bank, Ltd.,
Mitsubishi UFJ Trust and Banking Corporation,
Aozora Bank, Ltd.,
Shinsei Bank, Ltd.
and Resona Bank, Ltd.

Total
LTV

(assumed LTV for the end of the fiscal period and after)

7,300
32,555
47.4%

1,137

31,418
46.5%

−
1,218

7,300

Apr 20, 2018

0.48300%(Note 2)

Apr 20, 2020

0.62500％(Note 2)

Apr 20, 2021

Apr 20, 201930,20045.2%(Note 1) JBA 1 month JPY TIBOR(Note 2) Interest rate taking into account the effect of interest rate swaps (fixing of interest rates) is indicated.

Forecast Change in LTV
Change in LTV (forecast) withconsideration of planned
repayment of borrowings is asindicated on the right.

7,300

−

Base rate(Note 1) + 0.30％

50.00%
48.00%

47.4%

46.5%

46.00%
44.00%

45.2%

1st Fiscal Period

As of Aug 31, 2016

2nd Fiscal Period( Forecast)(Note) LTV after the end of 1st fiscal period has
been calculated using "Total amount of borrowings /(Total assets at the end of the 1st fiscal period Cash and deposits expected to decrease due torepayment of borrowings)."
20

5．Future Growth Strategy
Future Growth Strategy

Goal: Expand asset size to 200 billion yen by 2020
2500

2000

1500

dy extern
a
e
t
s
d
n
a
y
n of speed
o
i
t
a
z
i
and asset
l
t
a
r
e
o
R
p
p
u
s
sponsorwn routeogrowth by
's
y
n
a
p
nt commanageme

0

Acquisition goal
30 billion yen per year

200 billion yen
by 2020

Secured opportunity to expand asset size by
78.0 billion yen or more by obtaining
preferential negotiation right for 6 properties with value totaling 16.5 billion yen

1000

500

al

Addition of 7 properties
About 61.5 billion yen
About 437 billion yen

At time of private placement

At time of listing

Growth Phase

preferential negotiation rights

2020

Stable Growth

Realization of speedy and steady external
growth by sponsor support and asset management company's own route21Appendix.

Appendix.
Financial Statements Fiscal Period Ended July 31, 2016
Balance Sheet(Unit: thousand yen)

Statement of Income

1st fiscal period (As of July 31, 2016)

Assets

1st fiscal period
From: Dec. 1, 2015 To: July 31, 2016

Liabilities

Operating revenue

Liabilities

AssetsLease business revenue

Current liabilities

Current assets
Cash and deposits

2,006,136

Operating accounts payable

76,381

Cash and deposits in trust

2,557,948

Short-term loans payable

3,355,000

Operating accounts receivable

52,695

Accounts payable - other

319,011

Prepaid expenses

96,638

Accrued expenses

5,286

Deferred tax assets

32

Income taxes payable

1,490

Advances received

265,383

Other

12,875

1,259,266

Consumption taxes receivable

7,175

Other

5,979,894

Total current assets

Total current liabilities

4,035,429

Non-current liabilities

Non-current assets

Long-term loans payable

29,200,000

Tenant leasehold and security deposits in trust

1,526,363

Accumulated depreciation（246,543）

Other

Buildings in trust, net

19,810,407

Buildings in trust

4,396

Tools, furniture and fixtures in trust（141）

Accumulated depreciation
Tools, furniture and fixtures in trust, net

4,255

Total non-current liabilities
Total liabilities

26,23830,752,602
34,788,032

Net assets
Unitholders’ equity

Land in trust

39,208,659

Unitholders’ capital

Total property, plant and equipment

59,023,323

Surplus33,541,125

Unappropriated retained earnings (undisposed loss) 333,916

Intangible assets
Leasehold rights in trust

3,459,138

Total intangible assets

3,459,138

Investments and other assets

Total surplus
Total unitholders’ equity

333,916
33,875,041

Valuation and translation adjustments

Long-term prepaid expenses

164,478

Deferred gains or losses on hedges

Lease and guarantee deposits

10,000Total valuation and translation adjustments （26,238）

Total investments and other assets

174,478

Total non-current assets
Total assets

62,656,940
68,636,834

Total net assets
Total liabilities and net assets

Other lease business revenue
Total operating revenue（26,238）
33,848,802
68,636,834

1,737,036
122,389
1,859,425

Operating expenses
Expenses related to rent business

568,022

Asset management fee

103,104

Asset custody and administrative service fees

12,718

Directors’ compensations

3,200

Other operating expenses

24,681

Total operating expenses
Operating income

20,056,951

Property, plant and equipment(Unit: thousand yen)711,726
1,147,698

Non-operating income
Interest income

37

Other

0

Total non-operating income

37

Non-operating expenses
Interest expenses

133,353

Interest expenses on investment corporation bonds

38,052

Investment corporation bond issuance costs

12,604

Borrowing related expenses

453,952

Deferred organization expenses

62,950Investment unit issuance expenses

111,409

Other
Total non-operating expenses

34
812,356

Ordinary income

335,379

Income before income taxes

335,379

Income taxes - current

1,496

Income taxes - deferred(32)

Total income taxes

1,463

Net income

333,916

Unappropriated retained earnings (undisposed loss)

333,91623

Appendix.
Portfolio List
Asset type

OfficeOfficeOfficeOfficeOfficeOfficeProperty

Minami-Azabu
Shibuya Building

Oak Minami-Azabu

Honmachibashi Tower

Nishi-Shinjuku
Matsuya Building

Alphabet Seven

Shibuya MK Building

Acquisition price

2,973 mil yen

3,271 mil yen

6,065 mil yen

1,763 mil yen

1,725 mil yen

2,042 mil yen

Appraisal value

3,020 mil yen

3,400 mil yen

6,700 mil yen

2,230 mil yen

2,250 mil yen

2,330 mil yen

Structure/Floors

SRC

B1/7F

SRC B1/14F

S/SRC B1/21F

SRC B1/9F

RC B1/6F

S 6F

Address

Minato , Tokyo

Minato , Tokyo

Osaka, Osaka

Shibuya , Tokyo

Minato , Tokyo

Shibuya , Tokyo

Lot area

766.11㎡(leasehold)2,471.14㎡

1,274.37㎡

1,286.45㎡

10,454.93㎡ (including
7.41㎡ storehouse)589.94㎡(surface right)（of which 2.62㎡s leasehold)

15,407.83㎡

5,117.80㎡

4,132.80㎡

1,982.86㎡

Total floor areas

Property Features

4,137.21㎡◉ Located in Minami-Azabu, a◉ Located in Minami-Azabu, a◉ Located in the Yodoyabashi◉ Located in the Nishi-Shinjuku area,◉ Located in the Akasaka area, one ofwell-known high-class residential
well-known high-class residential/Hommachi area, one of Osaka’s
which has a high concentration ofcentral Tokyo’s leading
area that is also home to embassies ofarea that is also home to embassies ofleading office districts.
office buildings.
office/commercial districts.
various countries.
various countries.
◉ Situated near facilities such as the◉ In addition to access by train, the area ◉ The property is expected to attract
Osaka Chamber of Commerce andis well served by bus routes andstrong demand from affiliated◉ In addition to access by train, the area ◉ In addition to access by train, the area
is well served by bus routes andis well served by bus routes andIndustry, MyDome Osaka, and City
provides convenient access to various
companies of tenants of the TBS
provides convenient access to various
provides convenient access to various
Plaza Osaka, the area has a highlocations within central Tokyo.
building, Akasaka Biz Tower, etc.
locations within central Tokyo.
locations within central Tokyo.
concentration of office buildings.
◉ The property is expected to attract◉ Thanks to the popularity of the area,strong demand from affiliatedlocation conditions, etc., there is◉ The area is highly appealing to◉ The area is highly appealing to◉ The residences on the upper floors ofcompanies in fashion, mass media,
companies in fashion, mass media,
the building offer excellent views
companies of tenants of large-scalealso strong demand for theand IT-related fields.
and IT-related fields.
overlooking landmarks such as Osakabuildings located in Shinjuku
residential units of the property.
Castle.
sub-center or its surrounding area

620.42㎡◉ Located in the Shibuya area, one ofJapan’s leading commercial
districts, the property has a strong
appeal for fashion and IT-relatedcompanies.
◉ Following the completion of the
Shibuya Station area
redevelopment project, further
development is expected going
forward.

24

Appendix.
Portfolio List
Asset type

OfficeOfficeProperty

Hakata-eki Higashi
113 Building

Asahi Building

Acquisition price

1,885mil yen

6,320mil yen

Appraisal value

1,950mil yen

Structure/Floors

Residence

Residence

Residence

Residence

Urban Park Azabujuban Urban Park Daikanyama Urban Park Yoyogikoen

Urban Park
Shin-Yokohama

2,045mil yen

6,315mil

875mil

2,528mil

6,390mil yen

2,130mil yen

7,120mil yen

1,000mil yen

2,560mil yen

SRC 8F

S/SRC B2/12F

SRC with slate roofing B1/12F

RC, B1/3F・RC, B1/9F

RC B1/4F

S B1/10F

Address

Fukuoka, Fukuoka

Yokohama, Kanagawa

Minato , Tokyo

Shibuya , Tokyo

Shibuya , Tokyo

Yokohama, Kanagawa

Lot area

950.75㎡

1,906.86㎡

417.67㎡

894.46㎡

862.00㎡

4,888.70㎡ (including

2,469.06㎡

12,353.83㎡

2,564.94㎡

8,261.29㎡（for2 buildings combined)

2,155.28㎡

5,171.12㎡◉ Located in the
Yoyogi-Koen/Yoyogi-Uehara area
among streets lined with luxury
condominiums and mansions.
◉ In addition to a sophisticatedfacade, the building’s units are fully
equipped with multiple bathrooms
and premium household facilities.
◉ The property is adjacent to Yoyogi
Park and Shibuya, one of theleading shopping spots in central
Tokyo, thereby combining
convenience with a high-quality
residential environment.

◉ Located in the Shin-Yokohama
area, which provides convenienttransportation access.
◉ In addition to an elegant facade, thebuilding is fully equipped withpremium household facilities.
◉ Access to central Tokyo will
improve considerably with the
opening of direct services linking
the Sagami and Tokyu railway
lines.

Total floor areas

Property Features

17.25㎡ pump room)◉ Located in the Hakata-eki-higashi◉ Located in the Yokohama Station◉ Located in Azabu-Juban, an area
West Exit area where there is a higharea where there is high concentration
with an elegant image that also
concentration of commercial andof office buildings.
boasts popular appeal.
office buildings.
◉ In addition to a stately tiled facade,◉ Thanks to the renovated entrance hall ◉ The floors can be subdivided into
smaller spaces, enabling the building
and common areas on each floor, it
the property is fully equipped withto flexibly accommodate demand
appeals to tenant companies from a
premium household facilities.
from branch offices of companies inwide range of fields.
Adjacent to the Roppongi area, avarious fields.
◉ With the completion of the◉ leading shopping spot in central◉ With the completion of the Hakata
Yokohama Station area
Station area redevelopment project,Tokyo.
redevelopment project and the Excite
further development is expected
Yokohama 22 project, further
going forward.
development is expected going
forward◉ Located in the Daikanyama area,
which produces the latest trends.
In addition to a stately tiled facade,◉ the property is fully equipped withpremium household facilities.
◉ Adjacent to the Shibuya and Ebisu
areas, which are leading shopping
spots in central Tokyo.

25

Appendix.
Portfolio List
Asset type

Residence

Logistics

Logistics

Logistics

Hotel

Hotel

Property

Urban Park Namba

Iwatsuki Logistics

Yokohama Logistics

Funabashi Logistics

R&B Hotel Umeda East

Smile Hotel Namba

Acquisition price

1,490mil yen

6,942mil yen

3,560mil yen

7,875mil yen

2,069mil yen

1,750mil yen

Appraisal value

1,590mil yen

7,000mil yen

3,860mil yen

8,210mil yen

2,220mil yen

2,060mil yen

RC 9F

S 9F

Building 1: Steel construction, flat roof,
zinc-plated steel roofing, 8 floors
Building 2: Reinforced concrete structure,flat roof, 5 floors

Structure/Floors

RC 14F

Steel construction, zincplated steel roofing, 5 floors

RC 8F

Address

Osaka, Osaka

Saitama, Saitama

Yokohama, Kanagawa

Funabashi, Chiba

Osaka, Osaka

Osaka, Osaka

Lot area

670.39㎡

15,623.14㎡

10,565.95㎡

19,858.00㎡

730.26㎡

285.28㎡

Total floor areas

2,776.87㎡

29,729.72㎡(including 256.15㎡ of break areas, etc.)（two buildings combined）

3,945.65㎡

1,711.42㎡◉ Located in the Yokohama bay area,
where there are many logistics
facilities.
◉ Equipped with specifications thatoffer a high level of versatility, suchas vehicle berths, floor height, andcolumn interval.
◉ In addition to accessing Central
Tokyo, it is possible to access thewider Tokyo area thanks to the
opening of the Shinagawa section of
the Shuto Expressway Central
Circular Route.

◉ Located in the Chiba bay area,
where there are many logistics
facilities.
◉ Equipped with specifications thatoffer a high level of versatility,
such as vehicle berths, floor height,
and column interval.
◉ In addition to accessing Central
Tokyo, it is possible to access thewider Tokyo area thanks to the
opening of the Tokyo Outer Ring
Road.

Property Features◉ Located near Namba, one of Osaka’s ◉ Located in the Iwatsuki area, whichleading commercial areas.
offers access to the central Tokyo,
northern Kanto, and Tohoku areas.
◉ In addition to an elegant facade, the◉ Equipped with specifications thatbuilding is fully equipped withpremium household facilities.
offer a high level of versatility, such
◉ The influx of population into central
as the vehicle berths, floor height,
Osaka due to the impact of strong
and column interval.
◉ The property is situated in a zone ofin-bound demand has had astabilizing effect on occupancy rates.
Saitama City that offers incentives
for logistics facilities and therefore
benefits from considerable
government support.

18,387.89㎡

38,871.45㎡◉ Located near Umeda, one of Osaka’s ◉ Located near Umeda, one of Osaka’s
leading office and commercial areas.
leading office and commercial areas.
◉ With over 200 single-occupancy◉ With over 200 single-occupancy
rooms, the hotel is able torooms, the hotel is able toaccommodate significant businessaccommodate significant businessand tourism-based demand.
and tourism-based demand.
◉ Due to the impact of strong in-bound ◉ Due to the impact of strong in-bounddemand in Osaka, further hotel
demand in Osaka, further hotel
demand is expected.
demand is expected.

26

Appendix.
Balance of Payments of Individual Properties
Name of property

Minami-Azabu
Shibuya Building

Oak Minami-Azabu Honmachibashi Tower(unit : thousand yen)

Nishi-Shinjuku
Matsuya Building

Alphabet Seven

Shibuya MK Building

Hakata-eki Higashi
113 Building

Asahi Building

Oﬃce

Total

Total of revenue
real estate lease

98,909120,886

235,320

50,71338,152

34,40239,755113,250

731,392

Rent revenue
real estate

92,286

113,515

207,469

46,737

34,58331,56837,318103,158

666,639

Other leasebusiness revenue

6,622

7,370

27,850

3,975

3,569

2,833

2,436

10,09264,752

Total of expenses real estate lease

23,25043,49045,633

14,036

8,940

9,125

8,478

19,874

172,829

PM fees

6,224

16,342

15,572

3,652

2,853

2,556

4,145

8,645

59,993

Trust fees

439

436

436

225

225

197

197

225

2,384

Utilities expenses

7,725

14,392

26,674

3,040

2,185

1,788

2,328

9,635

67,770Insurance expenses

139

272

424

77

61

26

76

217

1,295

Repair expenses

81

3,420

1,437

225

2,101

17

1,592

629

9,503

Taxes and public
dues

14

44

24

19

18

8

29

48

208

8,626

8,581

1,063

6,795

1,494

4,530

109

472

31,673

NOI

75,65977,396

189,687

36,677

29,212

25,27731,276

93,376558,563

Depreciation

10,855

6,645

53,153

3,585

1,522

1,530

3,504

13,433

94,231

Income from realestate property leasing

64,80370,751

136,534

33,091

27,68923,746

27,771

79,942

464,331

Capital expenditures

1,240

24,527

3,587

0

3,780

0

880

606

34,620NCF

74,41952,869186,100

36,67725,432

25,27730,396

92,770523,942

Others27

Appendix.
Balance of Payments of Individual Properties(unit : thousand yen)

Urban Park
Azabujuban

Urban Park
Daikanyama

Urban Park
Yoyogikoen

Urban Park
Shin-Yokohama

Urban Park
Namba

Total of revenue
real estate lease

57,705

200,635

23,90842,93027,767352,946

Rent revenue
real estate

56,163

192,371

23,90839,50327,362

339,308

Other leasebusiness revenue

1,541

8,264

0

3,427

405

13,638

Total of expenses real estate lease

9,174

25,441

11,481

7,330

3,567

56,995PM fees

2,250

9,285

4,326

2,630

1,401

19,894

Trust fees

382

382

436

197

197

1,596

Utilities expenses

479

5,058

812

380

203

6,934

Insurance expenses

68

232

54

102

38

496

Repair expenses

3,518

5,639

3,899

2,397

714

16,169Taxes and public
dues

1

0

2

14

6

25

2,473

4,842

1,949

1,608

1,005

11,879NOI

48,530175,193

12,42635,60024,199295,951

Depreciation

4,439

13,4882,000

10,907

4,847

35,682

Income from realestate property leasing

44,090161,705

10,426

24,692

19,352

260,268

Capital expenditures

245

287

923

1,886

311

3,654

48,285

174,906

11,50333,71323,888292,296

Name of property

OthersNCF

Residence

Total

28

Appendix.
Balance of Payments of Individual Properties
Name of property

Iwatsuki Logistics

Yokohama Logistics

Funabashi Logistics(unit : thousand yen)

Logistics

Total

R&B Hotel
Umeda East

Smile Hotel Namba

Hotel Total

Total of revenue
real estate lease

220,889

280,746

70,35972,938143,298

Rent revenue
real estate

206,079

261,051

70,35972,938143,298

Other leasebusiness revenue

14,81019,694000

Total of expenses real estate lease

22,12436,77910,497

2,945

13,422PM fees

6,091

12,426

814

723

1,538

Trust fees

482

436

482

700

1,182

Utilities expenses

14,81015,8246

0

6Insurance expenses

321

134

63

198

Repair expenses

0

7,310

6,468

1,064

7,533

Taxes and public
dues

10

44

8

4

13

Others

408

271

2,582

388

1,970

NOI

198,765

243,967

59,862

69,992

129,855

Depreciation

51,861

29,856

9,976

13,82323,800

Income from realestate property leasing

146,903214,11049,88656,169106,055

06,204

72,861072,861

198,765

237,763-12,999

69,992

56,994

Capital expenditures
NCF

non-disclosure466

non-disclosure29

Appendix.
Period-End Appraisal Value and Index
Name of property

Appraisal value at end: 66,020 million yenof 1st fiscal period

Total book value : 62,482 million yen
Unrealized gains : 3,537 million yen

officeP/NAV per : 0.82

Net assets per unit : 98,197 yen

Unrealized gains per unit : 10,263 yen

NAV/Unit :107,492 yen

Residence

Logistics

Hotel
Total

Acquisition
priceAppraisal value attime of acapuisition

Appraisal value at endof 1st fiscal period

Increase/decrease

Minami-Azabu Shibuya Building

2,973

3,000

3,020

20

Oak Minami-Azabu

3,271

3,300

3,400

100

Honmachibashi Tower

6,065

6,530

6,700

170

Nishi-Shinjuku Matsuya Building

1,763

2,120

2,230

110

Alphabet Seven

1,725

2,240

2,250

10

Shibuya MK Building

2,042

2,150

2,330

180

Hakata-eki Higashi 113 Building

1,885

1,920

1,950

30

Asahi Building

6,320

6,370

6,390

20

subtotal

26,044

27,63028,270640

Urban Park Azabujuban

2,045

2,130

2,130

0

Urban Park Daikanyama

6,315

7,120

7,120

0

Urban Park Yoyogikoen

875

1,040

1,000

-40

Urban Park Shin-Yokohama

2,528

2,540

2,560

20

Urban Park Namba

1,490

1,560

1,590

30

subtotal

13,253

14,39014,40010

Iwatsuki Logistics

6,942

7,000

7,000

0

Yokohama Logistics

3,560

3,840

3,860

20

Funabashi Logistics

7,875

8,200

8,210

10

subtotal

18,377

19,04019,07030

R&B Hotel Umeda East

2,069

2,210

2,220

10

Smile Hotel Namba

1,750

1,860

2,060

200

subtotal

3,819

4,070

4,280

210

61,493

65,13066,020890※unit price｛（Net asset + Appraisal value - FAbook value - retained earings) ÷ Number of issued units｝
30

Appendix.
Status of Unitholders
Number of Investment Units by Unitholder Type:
Total 344,700 units
Financial institutions
20.6% 71,071 units

Individuals / others

38.0% 131,038 units

Securities companies
2.8% 9,705 units

Other domestic corporations
Foreign corporations / individuals
3.3%

Number of Unitholders by Unitholder Type:
Total 10,934
0.2% (27)Financial institutions

Other domestic corporations
3.3% (362)

Number ofinvestment
units

Unitholding
ratio

1

SA1 Investment Business Limited Partnership
Unlimited Liability Partner General Incorporated
Association SA Holding 1

47,00013.6%

2

SA3 Investment Business Limited Partnership
Unlimited Liability Partner, General Incorporated
Association SA Holding 3

25,620

7.4%

3

Japan Trustee Services Bank, Ltd.
(Trust account)

25,1857.3%

4

SA4 Investment Business Limited Partnership
Unlimited Liability Partner, General Incorporated
Association SA Holding 4

22,380

6.5%

5

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

11,856

3.4%

6

Trust & Custody Services Bank, Ltd.
(Securities investment trust account)

11,195

3.2%

7

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

10,751

3.1%

8

UBS Securities LLC - HFS
Customer Segregated Account

6,374

1.8%

9

Matsui Securities Co., Ltd.

4,694

1.4%

10

Yamato Shinkin Bank

3,000

0.9%

168,055

48.8%

35.2% 121,433 units

11,453 units

Securities companies

Unitholder's name

Foreign corporations / individuals
0.4% (42)0.2% (26)

Individuals / others
95.8% (10,477)

Total

31

Appendix.
Strategy to maximize unitholder’s interests
Employment of a management fee system linked to net income per unit
SAR aims to align interests of unitholders and the Asset Manager by introducing a management
fee system in which part of the fees is linked to net income per unit.

Interim fees I=

Interim fees II=

Whichever is lower of, the total acquisition
prices for operating assets or appraisal value of
operating assets at the end of the fiscal period×

Cash distribution per unit before
deduction of interim fees II

Number of days of retaining
operating assets
in relevant fiscal period

×

NOI

÷

Number ofdays inthe year

×

×

0.3%

0.0010％Investment in mezzanine loan debt
The Asset Manager determines its investment stance believed to be optimal by identifying future trends while analyzing real estate markets and discussing proper investment activities suitable to real estate prices. As part of suchan investment stance, the Asset Manager considers investment in mezzanine loan debt mortgaged/backed by realestate, etc. in order to diversify income opportunities and contribute to income stability and the growth of SAR in
the real estate market revolving due to economic changes and other factors. However, the Articles of Incorporation
stipulate that investment in mezzanine loan debt be always maintained at 5% or less of total assets of SAR.

32

Appendix.
About Star Asia Group
Build the relationship with sponsor group to access the information about salesof properties under their management and those held by third parties based on sponsor support contract.
Sponsor Support
Flow of information on properties managed by
the Sponsor Group
Sharing of information on properties held by
third-parties

Real Estate Market

Strong commitment to warehouse properties onbehalf of SAR

Assurance to provide all necessary humanresources
Large financial commitment by Star Asia Group（28.1％）

Unique network of theAsset Manager

Property Acquisition

Property Acquisition

Enhance property value throughimproved cash flows realized
by leasing, repairing, etc.

Acquisition of properties
that meet investment criteria(Sponsor Support Agreement)

Acquisition throughspecial situation investment

Property acquisition through investment business

Real estate-related
investment conductedby the Star Asia Group

Expansive relationshipof Star Asia

33

Appendix.

External Growth Strategy

Diversified property acquisition methods by Star Asia GroupAcquisition of preferential negotiation rights Total value: 16,591 million yen
Acquisition method

Properties acquired by SAR

Pipeline properties

Acquisition throughspecial situation investment

Nishi Shinjyuku
Matsuya Building

Minami-Azabu
Shibuya Building

Alphabet Seven

Toranomon Hills

Lei’s Umeda

Negotiation transaction

Acquisition throughnegotiation withinformation obtained
from overseas investors,
domestic financial
institutions, etc.

Expansive relationshipof Star Asia

Iwatsuki Logistics

Yokohama Logistics

Funabashi Logistics

Asahi Building

Joint bid

Acquisition throughjoint bids with Japanesereal estate companies

BEST WESTERN
Yokohama

BEST WESTERNTokyo Nishikasai

Properties for which preferential
negotiation rights are granted

Name of property

Minimum
acquisition
price

Asset

Haraki Logistics

4,700

Logistics

BEST WESTERN
Yokohama

3,185

Hotel

BEST WESTERNTokyo Nishikasai

3,805

Hotel

Joytel Gokokuji

1,460

Residence

Urban Park
Kashiwa

1,186

Residence

Hakata-eki
East Place

2,255

OfficeHakata-eki East PlaceUrban Park
Azabujuban

Urban Park
Daikanyama

Urban Park
Yoyogikoen

With regard to "Pipeline properties" and "Properties for which preferential negotiationrights are granted," as of today, there is no fact that SAR has decided to acquire any ofthese properties, and there is no guarantee that these properties will be incorporated into
the portfolio in the future.
34

Appendix.
Organizational Framework of Asset Manager

Organization Chart
Shareholder’s Meeting

Yukie

Corporate Auditor

Chief Compliance Officer
Board of Directors

Atsushi Kato

President and CEO
After entering Nomura Real Estate
Development Co., Ltd., he worked for
Showa Ota Ernst & Young, and thenentered Nomura Securities Co, Ltd. Afterbeing involved in the asset financebusiness including support in establishing
J-REITs, he joined Star Asia Investment
Management Co., Ltd.

Investment Committee

Compliance Committee

President and CEO
Compliance Officer
nvestment
Management Division

Finance
Management Division

Investment Management Division
Yoshikuni Taguchi
Director and CIO

OsonoeReal Estate Appraiser
Joined Star Asia Investment Management Co., Ltd. afterworking at Urban Development Real Estate Appraisers, Ken
Corporation Ltd., Canal Investment Trust Co., Ltd. (currently,
Heiwa Real Estate Asset Management Co., Ltd.) and
Prudential Real Estate Investors (Japan) K.K. (currently,
PGIM Real Estate (Japan) Ltd.).

Judicial Scrivener
While at a leading law firm, he received
many orders from real estate funds
regarding TMK and TK-GK matters.
Thereafter, he capitalized on such
experience while being involved incompliance-related tasks such as management of internal corporate regulations,advising on investment, maintenance andmanagement of agency registration on alegal compliance team of an LLC that hadforeign funds as clients.

Finance Management Division
Toru Sugihara

Director and CFO

RAfter being involved in the investment banking business at
Nomura Securities Co., Ltd., he worked at Barclays Securities
Japan Limited and Kenedix, Inc. and joined Star Asia
Management Japan, Ltd.
Involved in IR, management planning tasks, etc. in the general constructionindustry.
Using experience obtained thereafter in startup work for an overseas base of adifferent business, is currently in charge of general financial managementtasks while primarily working in IR.

Manager（male）

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

Manager（Famale）

Manager（male）

Was involved in asset management of a total of over 100 billion yen at an
operating company for a leading logistics REIT, prior to which he was incharge of acquisitions, AM and finance tasks at a foreign-affiliated real estate
investment company.

Manager（male）

Manager（Famale）

As a member of a startup team for a property
management (PM) company, he was involved in PM tasks for office andcommercial facilities with a total value of over 30 billion yen entrusted byprivate placement funds, individual owners, etc. Played an active role as aleader of AM middle-back tasks using experience from former duties,

Certified Public Accountant
After gaining experience as a member of an audit team of a REIT at an accounting office,he was involved in tasks of the planning department at a leading investment advisory
company. Using his expert knowledge, he also contributes to the formulation ofmanagement strategies.

Manager（male）

After gaining experience in conducting duties at a leading bank and foreign-affiliatedfinancial 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 in cooperation with the Investment
Management Division. He also contributes in other administrative tasks.

Manager（Famale）

Was in charge of cash management, leasing management, accounting,construction management tasks, etc. at an operating company of a leading
REIT. Is in charge of AM middle-back tasks using experience from former
duties.

Associate（male）In charge of a wide range of work as an assistant, using abundant experience from various
duties.

35

Disclaimer
This document has been prepared solely for the purpose of providing information, and not for offering, soliciting or selling any specific product.
We have taken all possible measures to ensure the accuracy of the information provided in this document, but do not guarantee its correctness or accuracy. Furthermore, please note that such information may be changed or deleted without any prior notice.

Copying, reprinting or any other use of the contents of this document without prior approval is strictly prohibited. This document includes charts,

graphs, data, etc. publicized by third parties. It also includes descriptions related to analysis, judgments and other opinions by Star Asia Investment
Management Co., Ltd.

36