"Financial Results for the 2nd Fiscal Period Ended January 2017"

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

1

Contents
1

Initiatives after the 2nd Fiscal Period
①
②

2

3

Public Offering in March 2017
New Asset Acquisition

4
6

Performance of the 2nd Fiscal Period ended January 2017 and Future Measures①

Change in Cash Distribution per Unit

8②③

Cash Distribution Forecast and Factors for Changes
Change in Business Results

9
10

④

Forecast

11⑤⑥

Occupancy Rate Status
Office - Closing rent gap -

12
13

⑦
⑧

Residence - Implementing Strategic Renovation Work Logistic/Hotel - Enhancing Stability through New Acquisition –

14
15

⑨

Status of the Sponsor Group

16

⑩
⑪

Financial Standing
Strategies for maximization of unitholders’ value

17
18

⑫

Future Growth Strategy

19

Appendix
Period-end Appraisal Value and Indicators
Balance Sheet for the 2nd Fiscal Period

21
22Statement of Income for the 2nd Fiscal Period

23

Portfolio List
Portfolio List

24
25

Newly Acquired Properties
Balance of Payments of Individual Properties

28
32

About Sponsor

35

Organizational Structure of Asset Manager
Status of Unitholders at the End of 2nd Fiscal Period

3637* In this material, amounts less than specified units are rounded off while ratios
are rounded to a specified unit.
*Terms used in this material are defined as below.
“The Initiative”:“The Initiative” refers to the asset replacement involving
acquisition of six assets acquired through PO, transfer of
Oak Minami-Azabu and acquisition of Baraki Logistics.

“Tokyo area”:“Tokyo area” refers to Tokyo’s 23 wards and the cities ofKawasaki and Yokohama for office properties and retailfacilities, and Tokyo and the three prefectures of
Kanagawa, Saitama and Chiba for residential properties,
logistics facilities and hotels.

2

1. Initiatives after the 2nd Fiscal Period31. Initiatives after the 2nd Fiscal Period① Public Offering in March 2017

 Conducted public offering (PO) after about one year after listing. Strengthened and expanded the portfolio
through asset replacement and new asset acquisition
Overview of Public Offering

Offering highlights

Offering Format

Domestic Offering

Newly Issued Units

69,600 units(Including O.A.)

Amount of offering

6,731 million yen

Offer price

96,720 yen

Issuance resolution date

March 17, 2017

Price determination date

March 28, 2017

Payment date

April 4, 2017

Number of investment units issued and outstanding after PO

414,300 units

Number of investment units held by the Sponsor Group (ratio)

97,000 units(23.4%)

Changes in market price(Indexed with the price on the listing date set as 100)
(Pt)

*Change in relative up-down ratios with the figure on the listing date
set as 100, prepared by Nomura Securities using Quick

１
２

Expansion of portfolio through acquisition
of “Tokyo area” x “middle-sized assets”
Expansion of asset size to 75,350 million yen

Pursuant of property acquisition by utilizing theSponsor Group’s “property acquisition capability”
x the asset manager’s “unique network”
Utilization of diversified property acquisition methods

３
４

Speedy implementation of “valueenhancement” and “asset replacement”
Active portfolio management

Pursuant of “growth potential” and securementof “stability” of cash distribution
Implementation of measures to pursue maximization ofunitholders’ value
41. Initiatives after the 2nd Fiscal Period① Public Offering in March 2017

 Expansion of the asset size from 61,490 million yen to 75,350 million yen
Asset replacement １

Asset replacement 2

 Returning gain on sale from the transfer
with a price exceeding the appraisal value
to unitholders
 Realizing enhancement of stability of
portfolio income

 Returning gain on sale from the transfer
with a price exceeding the appraisal value
to unitholders
 Improving portfolio quality by improving the
average building age

Transfer

Acquisition

Transfer

Acquisition

Urban Park
Yoyogikoen

Urban Park
Gokokuji

Oak Minami-Azabu
Building

Baraki Logistics

Changes in the portfolio
End of 2nd
FP (As of Jan.
31, 2017)

After theInitiative

No. of properties

18 properties

23 properties

Total acquisition
price

61.49 billionyen

75.35 billion
yen

Average appraisal
NOI yield

5.2％

5.1%

Number of tenants

388

532

Ratio of Tokyo area

78.4%

79.4%

LTV (based on total
assets)

44.8%

45.1%
107,644

NAV per unit
Appraisal value

Appraisal value

1,480 million
yen

3,470 million
yen

4,860 million
yen

Acquisition
price1,460 million
yenTransfer price

Acquisition
price
4,700 million
yenAppraisal value

Appraisal value

1,000 million
yenTransfer price
1,100 million
yen
Acquisition
price
875 million yen
Gain on sale
153 million yen

5,020 million
yen
Acquisition
price3,271 million
yen
Expected gainon sale1,504 million
yen110,887 yen
Reflecting
return of gainon sale109,727 yen

Return of gain on sale(yen)Appraisal unrealized gain per unit for Oak Minami-Azabu
Appraisal unrealized gain per unit for Urban Park Yoyogikoen

Gain on sale per unit for Oak Minami-Azabu
Gain on sale per unit for Urban Park Yoyogikoen

162
282

3,365

369
NAV per unit as of the end of 2nd
FP (as of Jan. 31, 2017)

Unitholders’ profit per unit withreturn of gain on sale reflected5

1. Initiatives after the 2nd Fiscal Period② New Asset Acquisition

 List of assets acquired (properties in red boxes are properties acquired using preferential negotiation rights)
Baraki Logistics

Emphasizing stability

Use

Logistics facility

Location
Acquisition priceIchikawa, Chiba
4,700 million yen

Appraisal NOI yield

4.5％

Tokorozawa Logistics

Emphasizing stability

Use
Location

Logistics facility
Tokorozawa, Saitama

Acquisition priceAppraisal NOI yield

1,300 million yen
6.0％

Urban Park Kashiwa

Residence
Kashiwa, Chiba

Acquisition priceAppraisal NOI yield

1,186 million yen
5.1％

Urban Park Gokokuji

Emphasizing stability

Location
Acquisition priceAppraisal NOI yield

Location
Acquisition priceAppraisal NOI yield

Fukuoka, Fukuoka
2,286 million yen
5.2％

BEST WESTERN Tokyo
Emphasizing growth potential
Nishikasai
Use
Hotel
Location
Acquisition priceAppraisal NOI yield

Edogawa Ward, Tokyo
3,827 million yen
4.8%

Emphasizing stability

Use
Location

Use

Hakata-eki East Place Emphasizing growth potential
Use
OfficeResidence
Toshima Ward,Tokyo
1,460 million yen
5.2％

Use

Emphasizing growthpotential
Hotel

Location

Yokohama, Kanagawa

Acquisition priceAppraisal NOI yield

3,248 million yen
4.8%

BEST WESTERN Yokohama

Properties acquired on April 6, 2017

Tokorozawa Logistics, Urban
Park Kashiwa and Urban
Park Gokokuji were acquired
utilizing the unique networkof the asset manager
62. Performance of the 2nd Fiscal Period
ended January 2017 and Future Measures72. Performance of the 2nd Fiscal Period ended January 2017 and Future Measures① Change in Cash Distribution per Unit
 Returning gain on sale of properties accompanying asset replacement to unitholders as cash distribution
 To secure stability of future cash distribution by internally reserving fund in the 4th fiscal period
(yen)
5,000

4,340

Plan to distribute gain onsale from asset replacement(transfer of Urban Park
Yoyogikoen)

4,000Internal reserve in the
4th FP: 110 million yen
Per unit: 266 yen

4,039

Aim for 5th FP
2,750～2,800

3,120

3,112
3,000

Plan to distribute gain on salefrom asset replacement in the
3rd and 4th FPs ((planned)transfer of Oak Minami-Azabu)

2,726

2,740

2,000
Cash distribution forecast asof the financial result
announcement for the 1st
FP (ended July 2016)
1,000

0
2nd
FP actual
第2期実績(ended January（平成29年１月
2017)期）

3rd第3期予想
FP forecast(平成29年7月期)(ending① July2017) ①

3rd第3期予想
FP forecast②②

3rd第3期予想
FP forecast③③

4th第4期予想
FP forecast(ending January（平成30年1月期）
2018)

売却益を除くExpected
cash
distribution
見込分配金
excluding gainon saleAim更なる向上for further
improvementを目指す incash distribution8

2. Performance of the 2nd Fiscal Period ended January 2017 and Future Measures② Cash Distribution Forecast and Factors for Changes
 Change in cash distribution and factors for changes

Expenses related
to rent businesswill increase as
fixed property
taxes, etc. forproperties
acquired in the 1st
FP will start to be
expensed.

Temporary fundprocurement
expenses in the
3rd FP will beabsent.

Gain on sale ofUrban Park
Yoyogikoen andOak MinamiAzabu (49%quasi coownershipinterests) will be
returned.

- 42

(yen)

+ 295

- 180

+ 186

- 266

Incomecontribution
from properties
acquired in the
3rd FP will
increase due to4,340 an increase in
the number ofoperation days.

- 377
- 181
- 316

3,112

2nd FP
actualTaxes andpublic dues

Other leasebusiness
revenue- 48

Tax expense
will arise in linewith internal
reserve.

+ 2,144

Rent
revenues/expens
es per unit will be
diluted due toissuance ofinvestment units
and property
acquisition in the
3rd FP.

- 287

Although sale of Oak
Minami-Azabu (51%quasi co-ownershipinterests) is planned
for the 4th FP, gainon sale will decrease
compared to 3rd FP.

Internal
reserve will be
implemented toprepare forstable cash
distribution in
the future.

- 1,856+ 446

Gain on
sale

+ 10

4,039

Fund procurement
expenses will arise
temporarily in linewith issuance of
new investment
units and new
borrowings.

Nonoperating
expenses+ 101

Reference figure of cash distribution
forecast in which the effect ofproperty sales at the beginning of
the fiscal period has been eliminatedfrom the 4th FP forecast. The 4th FP
will be the first fiscal period in which
the 23 properties after the Initiatives
are operated full year.

Other

3rd FP
forecast

Rent
revenues/ex
pensesNonoperating
expensesGain onsale

Tax
expenseInternal
reserveOther

4th FP
forecast

Gain onsaleInternal
reserveadjustment

SGA

Other

2,740

4th FP
forecast
after
adjustment

92. Performance of the 2nd Fiscal Period ended January 2017 and Future Measures③ Change in Business Results
 Cash distribution per unit for the 2nd fiscal period was 3,112 yen (+2.2% compared to forecast)(Unit: million yen)

1st FP(ended July2016) actual

2nd FP (ended
Jan. 2017)
2nd FP
Comparison
forecast(ended Jan.
with forecast(disclosed on 2017) actual
Sept. 14, 2016)

Major factors for the difference from the forecast

Operating revenue

1,859

1,987

2,017

+29

Office rent

634

798

802

+4

Residence rent

325

351

349

-2

Logistics rent

581

530

530

+0

Hotel rent

142

140

120

-20

Downward swing in guestroom revenues

Other

174

167

215

+47

Mainly increase in utilities expenses

Operating expenses

711

817

826

+8

Expensesrelated to rent
business

568

615

624

+9

SGA

143

202

202

-0

1,147

1,169

1,190

+20

0

+0

Operating income
Non-operating
incomeNon-operating
expenses

37

-

812

118

117

-0

Ordinary income

335

1,051

1,073

+22

Net income

333

1,050

1,072

+22

968 yen3,046 yen

3,112 yen

+66 yen

NOI

1,538

1,618

1,636

+18

Rent
revenues/expenses

1,291

1,372

1,392

+20

Cash distribution
per unit

Mainly increase in tenant solicitation expenses and repair expenses upon tenant replacement102. Performance of the 2nd Fiscal Period ended January 2017 and Future Measures④ Forecast

Due to materialization of unrealized gain from transfer of owned assets, cash distributions are forecast tobe; 3rd FP: 4,340 yen(Unit: million yen)

2nd FP(ended Jan.
2017) actual(A)

3rd FP(ending July
2017)
forecast (B)

4th FP(ending Jan.
2018)
forecast (C)

2,017

3,135

3,103

Rent
revenues/expenses

2,017

2,246

2,334 ①Gain on sales of realestate properties

-

888

769 ②

Operating revenue

Operating expenses

826

1,063

Increase/decrease
(B-A)

1,093

Expenses related torent business

624

804

814 ③

SGA

202

259

279 ④

1,190

2,071

2,009

-

-

Operating income
Non-operating income0

Increase/decrease(C-B)-31

Factors for increase/decrease in 3rd FP(compared to 2nd FP actual)

Factors for increase/decrease in 4th FP(compared to 3rd FP forecast)+229 ①+87+888 ②-119① Rent revenues/expenses +229
Assets acquired in 3rd FP+340
Assets sold in 3rd FP -56① Rent revenues/expenses +87
Assets acquired in 3rd FP+168
Assets sold in 4th FP-88

+236

+30

+179 ③+10② Gain on sales of real estate properties 119
Sale of Oak Minami-Azabu (51%)

+57 ④

+19

② Gain on sales of real estate properties+888
Sales of Urban Park Yoyogikoen and Oak
Minami-Azabu (49%)

+880

-61

+1,117-0-

Non-operating
expenses

117

272

Ordinary income

1,073

1,798

1,859

0

0

75

1,072

1,798

1,783

+725

-14

3,112 yen

4,340 yen

4,039 yen

+1,228-301 yen

NOI

1,636

1,733

1,832

+96

+98

Rent
revenues/expenses

1,392

1,442

1,519

+49

+77

Income taxes
Net income
Cash distribution per
unit

150 ⑤

Major factors for the increase/decrease+154 ⑤

-122

+725

+60

0 ⑥

③ Expenses related to rent business +179
Start of expensing of fixed property taxes,
etc. for assets acquired in 1st FP＋156
Assets acquired in 3rd FP＋86
Assets sold in 3rd FP -17④ SGA +57
Asset management fee +39+75⑤ Non-operating expenses +154
Investment unit issuance expenses ＋50
Borrowing related expenses ＋82③ Expenses related to rent business +10
Assets acquired in 3rd FP+33
Assets sold in 4th FP-42④ SGA +19
Asset management fee +14⑤ Non-operating expenses -122
Investment unit issuance expenses -50
Borrowing related expenses -76⑥Income taxes +75
Increase due to internal reserve112. Performance of the 2nd Fiscal Period ended January 2017 and Future Measures⑤ Occupancy Rate Status■ Period-end occupancy rate: 96.8%

Portfolio occupancy rate steadily increased as a result of leasing activities incollaboration with leasing agents based on leasing strategies which take into
account the features of each property.

100%

100%

99.2%

96.8%
96.3%

96.3%

95.2%

93.3%
92.9%

92.6%

第2期末

OfficeResidence
Logistics facility
Hotel
Total

Jan. 2016
92.9%
93.3%
96.3%
100.0%
95.2%

Feb. 2016
93.6%
92.9%
96.3%
100.0%
95.3%

Mar. 2016
95.0%
93.2%
96.3%
100.0%
95.7%

Apr. 2016
95.8%
92.9%
96.3%
100.0%
95.9%

May 2016
96.7%
92.6%
96.3%
100.0%
96.1%

Jun. 2016
95.8%
93.8%
96.3%
100.0%
96.0%

Jul. 2016
95.8%
92.5%
96.3%
100.0%
95.9%

Aug. 2016
96.4%
91.0%
96.3%
100.0%
95.9%

Sep. 2016
95.5%
90.5%
96.3%
100.0%
95.6%

Oct. 2016
95.5%
90.7%
96.3%
100.0%
95.6%

Nov. 2016
95.1%
94.4%
96.3%
100.0%
95.9%

Dec. 2016
94.5%
94.5%
96.3%
100.0%
95.8%

Jan. 2017
99.2%
92.6%
96.3%
100.0%
96.8%

12

2. Performance of the 2nd Fiscal Period ended January 2017 and Future Measures⑥ Office - Closing rent gap With focused efforts to resolve rent gap, the gap decreased from 7.6% to 6.5% in the 2nd fiscal period.
Rent gap expanded due to new property acquisition and asset replacement, leaving plenty of room for upward rent revision.

* Market rent refers to the median of each property's expected new contract rent (range) assessed as at the end of the period by CBRE K.K., and rent gap refers to the disparity between themarket rent and each tenant's contract rent.

■Status of Distribution of Rent Gap as at End of Period (based on areas)

80.0%

72.9%

35.5%

30.9%

38.6%

42.0%

25.9%

27.1%

第1期末

第2期末

60.0%
40.0%
20.0%
0.0%

0%未満

0～10%未満

76.6%

After addition acquisition of one officeproperty/asset replacement

74.1%

100.0%

40.3%

Planning to hold negotiations for upward
rent revision considering comprehensively
other leasing terms and conditions, etc. at
the time of contract renewal.

36.3%

23.4%

10％以上

＜After PO＞ Rent gap
10%～

0%～10%

～0%

120

120

30.0%

20.0%

■Change in total of rent and others (monthly)(million yen)
122

8.0%

10.7%

116

115

0.0%

3.0%
4.9%

7.0%

3期

4期

5期

10.6% 1.5%
6期

7期

1.9%
8期

9期

10期以降

3,332 thousand
yen

Total rent
after revision

3,682 thousandyen
Increase rate

114

2.3%
3.9%

Sum of 1st and 2nd FPs

Total rent
beforerevision

116

18.6% 10.0%
10.0%

Actual rent revision at the timeof leasing contract renewal(monthly)(5 tenants renewing leasing contract)

118

2.0%

15.7%

Although 74.1% of all properties had rent gap at the end of the
1st FP, the figure decreased to 72.9% by the end of 2nd FP due
to measures such as soliciting new tenants, raising rents upontenant replacement, and revising rent upward at the time ofleasing contract renewal. The gap expanded to 76.6% due toincorporation of newly acquired properties. Will focus on closing
the rent gap going forward by negotiating for upward rent revisionat the time of contract renewal, etc.

Aims to extend tenancy and maintaincurrent rent levels by regularly contacting
tenants to improve their satisfaction level.

平成29年4月時点■Distribution of Contract Renewal Periods (based on rents)

40.0%＜Rent gap of office buildings＞
As of end of 1st FP: 7.6%
As of end of 2nd FP: 6.5%
As of April 2017: 7.8%

Planning to pursue active negotiations for
upward rent revision at the time of contract
renewal.

112
平成28年4月末

第1期末

第2期末

* The graph is based on all rent up for contract renewal in the 3rd fiscal period and onward as the denominator, and does not factor in the second contract renewal.

10.5%

13

2. Performance of the 2nd Fiscal Period ended January 2017 and Future Measures⑦ Residence - Implementing Strategic Renovation Work ■ <Measure taken in the 2nd FP>

Urban Park Daikanyama: Implementation of large-scale
repair/renovation work in common-use areas＜After renovation＞

Implementation period:

From September 2016 to December 2016

Costs:

Approximately 27 million yen

Details:

Exterior wall tile sealing replacement work, renovation work in common-use areas

・Enhanced tenant satisfaction
・More attractive to potential new tenants in leasing ＜Initiative in the 3rd FP＞

Urban Park Azabujuban: Implementation of strategic renovation work

・For units that have become vacant, implemented renovation workfor the purpose of maintaining competitiveness and increasing
rents depending on the interior conditions of the units＜After renovation＞＜After renovation＞＜Before renovation＞

Implementation
period:From January 2017 to February 2017

Costs:

Approximately 1.9 million yen

Details:

Major renovation work along with work
to restore the unit to its original state14

2. Performance of the 2nd Fiscal Period ended January 2017 and Future Measures⑧ Logistics facility/Hotel - Enhancing Stability through New Acquisition –Distribution of contract renewals for logistics facilities (based on areas)<2nd FP Results>
・No tenants with a contract ending or subject to renewal in or before the 4th FP ending
January 2018
・Stable income is expected as many of the tenants have a fixed-term building lease contract
40%
30%

40%

35%

34%

<After PO>・Long-term lease contracts have been concluded for the two newly
acquired properties
・Incorporation of the two new properties into the portfolio has further
diversified tenants (areas on lease) with contracts ending/subject torenewal, and thus contributed to improving the stability.

28%

30%

23%

20%

29%
19%

20%

12%

12%

7%
10%

10%

0%

0%
3期

4期

5期

6期

7期

8期

9期

10期以降

3期

4期

5期

6期

7期

8期

9期

10期以降

 Ratios of fixed rent and floating rent for hotels
・Ratio of fixed rent to the total rent of hotels in the past one year (fromFebruary 2016 to January 2017) was 67.0%

Floating
rent
33.0%

Fixed rent
67.0%

・Incorporation of the two new properties into the portfolio in the 3rd FP
increased the ratio of fixed rent to 84%

Floating rent
16%

Fixed rent
84%

15

2. Performance of the 2nd Fiscal Period ended January 2017 and Future Measures⑨ Status of the Sponsor Group Overview of assets operated by Star Asia Group＜Overview of assets operated by Star Asia Group＞(as of December 31, 2016)
Asset type (use)
8.0%

6.9%

Asset type
(Use)

6.0%

Office

7.3%

71.8%

オフィス

商業施設

物流施設

ホテル



＜Major pipeline (*) properties＞

Investment Areas
13.

住宅

Total appraisal
value(million yen)
58,109

Ratio

7%

71.8%

Retail facility

5,880

7.3%

Residence

4,848

6.0%

Logistics facility

6,510

8.0%

Hotel

5,590

6.9%

Total

80,937100.0%

86.
東京圏

3%
その他

Location

Total
appraisalvalue(million yen)

Tokyo area

69,810

86.3%

Other

11,127

13.7%

Total

80,937 100.0%

Ratio
Toranomon Hills

Lei’s Umeda

Matsubushi Logistics

Funabashi Nishiura
Logistics* There is no fact that SAR has decided to acquire any of theseproperties, and there is no guarantee that these properties
will be incorporated into the portfolio in the future.

New business development by Star Asia
~Development of global-standard purpose built student accommodation and advancement into operational management business incollaboration with GSA~

■ In 2017, Star Asia formed a business alliance with GSA, which is engaged in investment in,development of, and operational management of purpose-built student accommodationworldwide, with an aim to build a portfolio with global-standard, purpose-built student
accommodation.
■ Star Asia made a joint investment in GSA Star Asia KK with GSA to collaborate inacquisition of new development sites, land and buildings for conversion and existing
student accommodations and such.
■ GSA Star Asia KK has already launched its first development project in Hakusan, Bunkyoku (175 rooms with 364 beds), which is scheduled for completion in 2018.
■ Aiming to supply20,000 beds for university students (including foreign students) studying
in Japan＜Rendering of the Bukyo-ku Hakusan project (tentative) ＞

16

2. Performance of the 2nd Fiscal Period ended January 2017 and Future Measures⑩ Financial Standing Diversified repayment dates to prepare for refinancing risk
＜Balance of borrowings as of today (April 26, 2017)＞
・ After settling accounts for the 2nd FP,
took out loans of 600 million yen (shortterm) on February 1, 2017.
・ Took out loans of 8,230 million yen in
total (short-term: 1,680 million yen/longterm: 6,550 million yen) on April 6, 2017.
・ Repaid short-term loans of 1,600 million
yen in total and took out new loans of
1,600 million yen (long-term) on April 20,
2017.
As a result of the above, the balance ofborrowings as of today (April 26, 2017) is
as follows.
(*1) To be repaid in installment with funds
expected to be procured through third-party
allotment in the 3rd FP; and proceeds fromsale and consumption tax refund expected in
the 4th FP.
(*2) Current portion of long-term loans payable.

AmountShort-term

FP of therepayment
date(million yen)

7,300
Apr. 20, 2018(*2)

5th FP

7,300 Apr. 20, 2019

7th FP

7,300 Apr. 20, 2020

9th FP

7,300 Apr. 20, 2021

11th FP2,400 Oct. 20, 2020

10th FP

4,150 Apr. 20, 2022

13th FP1,600 Oct. 20, 2020

10th FP

45.1%(*) To be repaid in installment with funds expected to be procured through thirdparty allotment announced on April 20, 2017; and proceeds from sale andconsumption tax refund expected in the 4th FP.

39,030■Reference＜Status of Borrowings as of the end of 2nd FP＞
Category＜LTV (based on total assets)＞

1,680 Apr. 20, 2018 5th FP (*1)

Longterm

Total

Repayment
date＜Diversification of repayment dates＞

LenderShort-term A syndicate of lenders with Sumitomo Mitsui
Banking Corporation and Mizuho Bank, Ltd.
Long-term as arrangers
・Sumitomo Mitsui Banking Corporation
・Mizuho Bank, Ltd.
Long-term ・Sumitomo Mitsui Trust Bank, Ltd.
・Mitsubishi UFJ Trust and Banking
Long-term Corporation
・Aozora Bank, Ltd.
・Shinsei Bank, Ltd.
Long-term ・Resona Bank, Ltd.

Balance(million yen)

＜LTV (based on total assets)＞
Interest rate

Repayment date

1,000

Base rate (Note 1)＋0.20％

Apr. 20, 2017

7,300

Base rate (Note 1)＋0.30％

Apr. 20, 2018

7,300

0.36400% (Note 2)

Apr. 20, 2019

7,300

0.48300% (Note 2)

Apr. 20, 2020

7,300

0.62500％ (Note 2)

Apr. 20, 2021

44.8%

17

2. Performance of the 2nd Fiscal Period ended January 2017 and Future Measures⑪ Strategies for maximization of unitholders’ value
Discuss and implement specific measures responding to the financial environment and real estate market
Swiftly implement measures that would lead to maintenance/improvement of cash distribution per unit while taking into account real estate and J-REIT
market conditions

Internal growthPursuit of optimum portfolio
management
・ Asset replacement aiming to enhance
portfolio quality, income and stability・ Asset transfer that materializes unrealized
gain after reviewing value of owned assets
・ Closing of rent gap

Achievements

Measures

Closing of rent gap
Reduction of costs
Closing of rent gap
Strategic leasing
Reduction of costs

External growth
Realizing
maximization ofunitholders’ value

Promotion of proactive
financial management
・ Reduction of fund procurementcosts
・ Early repayment of borrowings
・ Introduction of the cumulative
investment system by officers andemployees
・ Consideration of acquisition of
credit rating
・ Consideration of acquisition of own
investment units

Maintenance/
improvement of cash
distribution per unit

Securement of future
external
growth/investment
opportunities
・ Acquisition of preferential
negotiation rights andutilization of sponsor support(warehousing function)
・ Diversification of income
earning opportunities(mezzanine loan debt)

Achievements

Acquisition of preferential
negotiation rights~Property acquisition~Asset replacement

Measures

Gaining opportunities forproperty acquisition by
utilizing the sponsor
support (owned
properties, warehousing
function) and the asset
manager’s unique route

Financial strategy
Achievements

Measures

Reduction of fund procurement
costs
Introduction of the cumulative
investment program by officers
and employees
Acquisition of credit rating
Investment mezzanine loan
debt

18

2. Performance of the 2nd Fiscal Period ended January 2017 and Future Measures⑫ Future Growth Strategy

 Future Growth Strategy: Expand asset size to 200 billion yen by 2020

Growth Phase

Stable Growth

2,000
1,800
Asset
replacement ①

1,600
At the time of listing
Additional property
acquisition worth
11.7 billion yen
Total: 61.4 billion

1,400
1,200
1,000
800

Transfer
Urban Park
Yoyogikoen

Asset of 437 billion
yen
Began operations withprivate placement

Acquisition
Urban Park
Gokokuji

Asset replacement ②＋
Acquisition of 6 properties

Transfer
Oak
Minami-Azabu

Acquisition goal
30 – 35 billion yen per year

Acquisition
Baraki
Logistics

600
400
200
平成26年1月 平成26年4月 平成26年7月 平成27年1月
私募時

上場時

第1期末

第2期末

平成29年

平成29年

2月1日

4月6日

本日時点

平成30年

平成31年

平成32年

Realization of speedy and steady external growthby sponsor support and asset management company's own route19

3. Appendix

20Period-end Appraisal Value and Indicators
Period-end appraisal value:

66,640 million yen

Total book value:

62,518 million yen

Period-end unrealized gains(losses):

4,231 million yen

Net assets per unit:

100,592 yen

Unrealized gains per unit:

12,247 yen

NAV per unit (*1):

109,727 yen

P/NAV per (*2):0.90(*1) NAV per unit = (Period-end net assets + Periodend unrealized gains – Total cash distribution) /Total number of investment units issued andoutstanding(*2) P/NAV＝Investment unit price / NAV per unit
(Investment unit price on April 25, 2017: 98,300
yen)(*3) Transfer price is used for the appraisal value at
end of 2nd fiscal period for Urban Park
Yoyogikoen.

Property name

OfficeResidence

Logistics

Hotel

Acquisition
price① Period-end
book value②Appraisal
value at end of
2nd fiscal
periodUnrealized
gains (losses)②－①

Minami-Azabu Shibuya Building

2,973

2,998

3,040

41

Oak Minami-Azabu

3,271

3,413

3,470

56

Honmachibashi Tower

6,065

6,113

6,830

716

Nishi-Shinjuku Matsuya Building

1,763

1,787

2,290

502

Alphabet Seven

1,725

1,760

2,270

509

Shibuya MK Building

2,042

2,068

2,530

461

Hakata-eki Higashi 113 Building

1,885

1,957

1,960

2

Asahi Building

6,320

6,356

6,470

113

Subtotal

26,04426,45728,8602,402

Urban Park Azabujuban

2,045

2,090

2,140

49

Urban Park Daikanyama

6,315

6,441

7,120

678

Urban Park Yoyogikoen (*3)

875

902

1,100

197

Urban Park Shin-Yokohama

2,528

2,611

2,580

(31)

Urban Park Namba

1,490

1,557

1,610

52

Subtotal

13,253

13,603

14,450946

Iwatsuki Logistics

6,942

6,924

7,000

75

Yokohama Logistics

3,560

3,687

3,880

192

Funabashi Logistics

7,875

7,950

8,240

289

Subtotal

18,377

18,562

19,120557

R&B Hotel Umeda East

2,069

2,149

2,250

100

Smile Hotel Namba

1,750

1,744

1,960

215

Subtotal

3,819

3,894

4,210

315

61,49362,51866,640

4,231

Total

21

Balance Sheets for the 2nd Fiscal Period ended January 31, 2017
(Unit: thousand yen)

AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Deferred tax assets
Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust,net
Land in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets
Leasehold rights in trust
Total intangible assets
Investments and other assets
Long-term prepaid expenses
Lease and guarantee deposits
Other
Total investments and other assets
Total non-current assets
Total assets

Liabilities
1,839,594
2,659,211
50,08988,27911
8,650
4,645,837

20,317,871(490,008)
19,827,862
9,606
(61)
9,545
6,282
(137)
6,144
7,628
(731)
6,896
39,208,659
2,161
59,061,270
3,459,138
3,459,138
127,156
10,00060,135
197,292
62,717,701
67,363,539

Current liabilities
Operating accounts payable
Short-term loans payable
Accounts payable - otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Other

245,1311,000,000
246,508
5,336
844
76,405319,180
6,574

Total current liabilities

1,899,981

Non-current liabilities
Long-term loans payable
Tenant leasehold and security deposits
in trust
Other
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital

29,200,000
1,589,434
30,789,434
32,689,416

33,541,125

Capital deduction
Allowance for temporary difference(26,197)
adjustment(26,197)
Total capital deduction
Unitholders’ capital, net
33,514,927
Surplus
Unappropriated retained earnings
1,099,059(undisposed loss)
Total surplus
1,099,059
Total unitholders’ equity
34,613,987
Valuation and translation adjustments
Deferred gains or losses on hedges
60,135
Total valuation and translation
60,135adjustments
Total net assets
34,674,123
Total liabilities andnet assets
67,363,539
Amounts
below the specified unit are rounded down.

22

Statement of Income for the 2nd Fiscal Period(From August 1, 2016 to January 31, 2017)(Unit: thousand yen)
Operating revenue
Lease business revenue
Other lease business revenue
Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody and administrative service fees
Directors’ compensations
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Interest on refund
Other
Total non-operating income
Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds
Investment corporation bond issuance costs
Borrowing related expenses
Deferred organization expenses
Investment unit issuance expenses
Other

1,865,642
151,743
2,017,386
624,655
146,714
14,792
2,400
38,230826,793
1,190,592
17
745
762
68,522
49,349-Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Net income
Retained earnings (deficit) brought forward
Unappropriated retained earnings (undisposed loss)

117,871
1,073,483
1,073,483
847
21
868
1,072,615
26,444
1,099,059

Amounts below the specified unit are rounded down.

23

Portfolio List
Portfolio list after the Initiatives
Property nameLocation

Acquisition
price(million yen)Appraisalvalue(million yen)

Investment ratio

Appraisal NOI yield

OFC-01

Minami-Azabu Shibuya Building

Minato Ward, Tokyo

2,973

3,040

3.9%

4.8%

OFC-03

Honmachibashi Tower

Osaka City, Osaka

6,065

6,830

8.0%

5.2%

OFC-04

Nishi-Shinjuku Matsuya Building

Shibuya Ward, Tokyo

1,763

2,290

2.3%

6.4%

OFC-05Alphabet Seven

Minato Ward, Tokyo

1,725

2,270

2.3%

5.8%

OFC-06

Shibuya MK Building

Shibuya Ward, Tokyo

2,042

2,530

2.7%

5.2%

OFC-07

Hakata-eki Higashi 113 Building

Fukuoka City, Fukuoka

1,885

1,960

2.5%

5.8%

OFC-08Asahi Building

Yokohama City, Kanagawa

6,320

6,470

8.4%

4.8%

OFC-09Hakata-eki East Place

Fukuoka City, Fukuoka

2,286

2,370

3.0%

5.2%

RSC-01

Urban Park Azabujuban

Minato Ward, Tokyo

2,045

2,140

2.7%

4.5%

RSC-02

Urban Park Daikanyama

Shibuya Ward, Tokyo

6,315

7,120

8.4%

4.8%

RSC-04

Urban Park Shin-Yokohama

Yokohama City, Kanagawa

2,528

2,580

3.4%

4.8%

RSC-05

Urban Park Namba

Osaka City, Osaka

1,490

1,610

2.0%

5.4%

RSC-06

Urban Park Gokokuji

Toshima Ward, Tokyo

1,460

1,480

1.9%

5.2%

RSC-07

Urban Park Kashiwa

Kashiwa, Chiba

1,186

1,190

1.6%

5.1%

LGC-01

Iwatsuki Logistics

Saitama City, Saitama

6,942

7,000

9.2%

4.8%

LGC-02

Yokohama Logistics

Yokohama City, Kanagawa

3,560

3,880

4.7%

5.7%

LGC-03

Funabashi Logistics

Funabashi City, Chiba

7,875

8,240

10.5%

5.4%

LGC-04

Baraki Logistics

Ichikawa City, Chiba

4,700

4,860

6.2%

4.5%

LGC-05Tokorozawa Logistics

Tokorozawa City, Saitama

1,300

1,360

1.7%

6.0%

HTL-01R&B Hotel Umeda East

Osaka City, Osaka

2,069

2,250

2.7%

5.4%

HTL-02

Smile Hotel Namba

Osaka City, Osaka

1,750

1,960

2.3%

6.7%

HTL-03

BEST WESTERN Tokyo
Nishikasai

Katsushika Ward, Tokyo

3,827

3,890

5.1%

4.8%

HTL-04

BEST WESTERN Yokohama

Yokohama City, Kanagawa

3,248

3,270

4.3%

4.9%

75,35480,590100.0%

OfficeResidence

Logistics

Hotel

Total

24

Portfolio List (at the end of the 2nd Fiscal Period)
To be sold in the 3rd and 4th FPs
Asset type

OfficeOfficeOfficeOfficeOfficeOfficeProperty nameMinami-Azabu Shibuya
Building

Oak Minami-Azabu

Honmachibashi Tower

Nishi-Shinjuku Matsuya
Building

Alphabet Seven

Shibuya MK Building

Acquisition price

2,973 million yen

3,271 million yen

6,065 million yen

1.763 million yen

1,725 million yen

2,042 million yen

Appraisal value

3,040 million yen

3,400 million yen

6,830 million yen

2,290 million yen

2,270 million yen

2,530 million yen

Structure/Floors

SRC B1/7F

SRC B1/14F

S/SRC B1/21F

SRC B1/9F

RC B1/6F

S 6F

Location

Minato Ward, Tokyo

Minato Ward, Tokyo

Osaka City, Osaka

Shibuya Ward, Tokyo

Minato Ward, Tokyo

Shibuya Ward, Tokyo2

Lot area

766.11 m

Total floor areas

4,137.21 m2

Property Features

2,471.14 m

2

10,454.93 m2(including 7.41 m2
storehouse)

2

589.94 m2(surface right)

1,286.45 m

15,407.83 m2

5,117.80 m2

4,132.80 m2

1,274.37 m

2

620.42 m2(of which 2.62 m2
leasehold)1,982.86 m2●Located in Minami-Azabu, a●Located in Minami-Azabu, a●Located in the Yodoyabashi ●Located in the Nishi●Located in the Akasaka●Located in the Shibuya
well-known, high-classwell-known, high-class/ Hommachi area, one of
Shinjuku area, which has aarea, one of central Tokyo’s area, one of Japan’s
residential area that is also
residential area that is also
Osaka’s leading officehigh concentration of officeleading office/commercial
leading commercial
home to embassies of various
home to embassies of various
districts.
buildings.
districts.
districts, the property has acountries.
countries.
strong appeal for fashion●Situated near facilities such ●In addition to access by●The property is expected toand IT-related companies.
●In addition to access by train, ●In addition to access by train,
as the Osaka Chamber oftrain, the area is wellattract strong demand from
●Following the completion of
the area is well served by bus
the area is well served by bus
Commerce and Industry,
served by bus routes andaffiliated companies ofroutes and provides
routes and provides
MyDome Osaka, and City
provides convenient accesstenants of the TBS building, the Shibuya Station area
convenient access to various
convenient access to various
Plaza Osaka, the area has
to various locations within
Akasaka Biz Tower, etc.
redevelopment project,locations within central Tokyo.
locations within central Tokyo.
a high concentration ofcentral Tokyo.
further development is●Thanks to the popularity ofoffice buildings.
expected going forward.
●The area is highly appealing to ●The area is highly appealing to●The property is expected tothe area, location●The residences on thecompanies in fashion, masscompanies in fashion, mass
attract strong demand fromconditions, etc., there ismedia, and IT-related fields.
media, and IT-related fields.
upper floors of the building
affiliated companies ofalso strong demand for theoffer excellent views
tenants of large-scale
residential units of theoverlooking landmarks
buildings located inproperty.
such as Osaka Castle.
Shinjuku sub-center or its
surrounding area

25

Portfolio List (at the end of the 2nd Fiscal Period)
Sold in the 3rd FP
Asset type

OfficeOfficeResidence

Residence

Residence

Residence

Property nameHakata-eki Higashi 113
Building

Asahi Building

Urban Park Azabujuban

Urban Park Daikanyama

Urban Park Yoyogikoen

Urban Park ShinYokohama

Acquisition price

1,885 million yen

6,320 million yen

2,045 million yen

6,315 million yen

875 million yen

2,528 million yen

Appraisal value

1,960 million yen

6,470 million yen

2,140 million yen

7,120 million yen

1,000 million yen

2,580 million yen

Structure/Floors

SRC 8F

S/SRCB2/12F

SRC with slate roofing
B1/12F

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

RC
B1/4F

S
B1/10F

Location

Fukuoka City, Fukuoka

Yokohama City,
Kanagawa

Minato Ward, Tokyo

Shibuya Ward, Tokyo

Shibuya Ward, Tokyo

Yokohama City, Kanagawa

Lot area

950.75 m2

1,906.86 m2

417.67 m2

2,469.06 m2

894.46 m2

862.00 m2

Total floor areas

4,888.70 m2(including 17.25 m2pump room)

12,353.83 m2

2,564.94 m2

8,261.29 m2(for 2 buildings combined)

2,155.28 m2

5,171.12 m2●Located in the Hakata-eki●Located in the Yokohama●Located in Azabu-Juban,●Located in the Daikanyama ●Located in the Yoyogi●Located in the Shinhigashi area where there is a
Station West Exit area
an area with an elegant
area, which produces the
Koen/Yoyogi-Uehara area
Yokohama area, whichhigh concentration of officewhere there is a highimage that also boasts
latest trends.
among streets lined with
provides convenientbuildings.
concentration of commercial
popular appeal.
luxury condominiums andtransportation access.
●In addition to a stately tiled
and office buildings.
mansions.
●Thanks to the renovated●In addition to a stately tiled●In addition to an elegant
facade, the property is fully●In addition to a sophisticatedentrance hall and common areas ●The floors can befacade, the property is fully
equipped with premium
facade, the building is fullyon each floor, it appeals to
subdivided into smaller
equipped with premium
household facilities.
facade, the building’s units
equipped with premium
tenant companies from a wide
spaces, enabling thehousehold facilities.
are fully equipped withhousehold facilities.
●Adjacent to the Shibuya
range of fields.
building to flexibly
multiple restrooms and●Adjacent to the Roppongi●Access to central Tokyo will
and Ebisu areas, which are
Property Features
accommodate demand frompremium household facilities.
●With the completion of thearea, a leading shopping
leading shopping spots inimprove considerably with
branch offices of companies●The property is adjacent to
Hakata Station area
spot in central Tokyo.
central Tokyo.
the opening of direct services
in various fields.
redevelopment project, further
Yoyogi Park and Shibuya,linking the Sagami and Tokyu
development is expected going ●With the completion of theone of the leading shopping
railway lines.
forward.
Yokohama Station area
spots in central Tokyo,
redevelopment project andthereby combining
the Excite Yokohama 22
convenience with a highproject, further development
quality residential
is expected going forward
environment.

26

Portfolio List (at the end of the 2nd Fiscal Period)
Asset type

Residence

Logistics

Logistics

Logistics

Hotel

Hotel

Property nameUrban Park Namba

Iwatsuki Logistics

Yokohama Logistics

Funabashi Logistics

R&B Hotel Umeda East

Smile Hotel Namba

Acquisition price

1,490 million yen

6,942 million yen

3,560 million yen

7,875 million yen

2,069 million yen

1,750 million yen

Appraisal value

1,610 million yen

7,000 million yen

3,880 million yen

8,240 million yen

2,250 million yen

1,960 million yen

Structure/Floors

RC 14F

Steel construction, zincplated steel roofing, 5floorsRC 8F

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

RC 9F

S 9F

Location

Osaka City, Osaka

Saitama City, Saitama

Yokohama City,
Kanagawa

Funabashi City, Chiba

Osaka City, Osaka

Osaka City, Osaka

Lot area

670.39 m2

15,623.14 m2

10,565.95 m2

19,858.00 m2

730.26 m2

285.28 m2

3,945.65 m2

1,711.42 m2

Total floor areas

Property Features

2,776.87 m2

29,729.72 m2

18,387.89 m2
38,871.45 m2(including 242.25 m2
break areas and 13.90 m2 （two buildings combined）
pump room)●Located near Namba, one of●Located in the Iwatsuki area, ●Located in the Yokohama ●Located in the Chiba bay●Located near Umeda, one ●Located near Umeda, one
Osaka’s leading commercial
which offers access to thebay area, where there arearea, where there are many of Osaka’s leading officeof Osaka’s leading officeareas.
central Tokyo, northern
many logistics facilities.
logistics facilities.
and commercial areas.
and commercial areas.
Kanto, and Tohoku areas.
●In addition to an elegant facade,●Equipped with
●Equipped with
●With over 200 single●In addition to excellent
the building is fully equipped with ●Equipped with specifications
specifications that offer a
specifications that offer aoccupancy rooms, the hotel
access to Namba, locatedpremium household facilities.
that offer a high level ofhigh level of versatility,
high level of versatility,
is able to accommodate
near Osaka Dome,versatility, such as the
such as vehicle berths,
such as vehicle berths,
significant business- andaddressing multiple●The influx of population into
vehicle berths, floor height,
floor height, and column
floor height, and column
tourism-based demand.
business- and tourismcentral Osaka due to the impact
and column interval.
interval.
interval.
based demand.
●Due to the impact of strongof strong in-bound demand has●The property is situated in a ●In addition to accessing●In addition to accessing
had a stabilizing effect on
in-bound demand in Osaka, ●Due to the impact of strong
occupancy rates.
zone of Saitama City thatCentral Tokyo, it is possible
Central Tokyo, it is possible
further hotel demand isin-bound demand in Osaka,
offers incentives for logistics
to access the wider Tokyo
to access the wider Tokyo
expected.
further hotel demand isfacilities and therefore
area thanks to the opening
area thanks to the opening
expected.
benefits from considerableof the Shinagawa section of of the Gaikan Expressway
government support.
the Shuto Expressway
Central Circular Route.

27

Newly Acquired Properties
Medium-sized logistics facilities located within a radius of 30 km from Tokyo Station
Baraki Logistics

Logistics facility

Negotiation-basedtransaction

Tokorozawa Logistics

Logistics facility

Negotiationbased transaction

Acquisition price

4,700 million yen

Acquisition price1,300 million yen

Appraisal value

4,860 million yen

Appraisal value

1,360 million yen

Appraisal NOI
yield

4.5%

Appraisal NOI yield

6.0%

Structure/Floors

Steel-framed
structure, 2F

Location

Tokorozawa City,
Saitama

Total floor areas

5,994.75 m2

Structure/Floors

Reinforced concrete/steelframed structure, 5F

Location

Ichikawa City, Chiba

Total floor areas

12,471.50 m2

 A multi-tenant logistics facility located near the Wangan Ichikawa ICof the East Kantō Expressway.
 Enjoys good access to Central Tokyo as well as the consumption
areas throughout Chiba, allowing tenants to respond to the needs of
e-commerce operators.
 Located within approx. 5-minute walk from Futamata-Shinmachi
station on the JR Keiyo Line, allowing for securement of employees.
 Property with highly versatile specifications, including one
passenger elevator, two freight elevators, a floor height of approx.
6.5 m and a pillar span of approx. 9 m-11 m.
 Fully occupied by foreign companies and foreign 3PL companies.

 A multi-tenant logistics facility used also as a warehouse,located around 8.7 km from the Tokorozawa IC on the KanEtsu Expressway.
 Good access to Central Tokyo, and also capable of covering
a wide range of destinations for consumption in the Tokyo
Metropolitan area with the opening of the Gaikan Expressway
and the Metropolitan Inter-City Expressway.
 Property with highly versatile specifications, including two
freight elevators, a floor height of approx. 5.5 m-6.0 m, and apillar span of approx. 9.5 m.
28

Newly Acquired Properties
Hotels capable of taking in both business and leisure demands
BEST WESTERNTokyo Nishikasai

HotelSponsor fundAcquisition price

3,827 million yen

Appraisal value

3,890 million yen

Appraisal NOI
yield

4.8%

Structure/Floors

Steel-framed reinforced
concrete structure, B1F/9F

Location

Edogawa Ward, Tokyo

Total floor areas

5,293.88 m2

 A business hotel located within approx. a 2-minute walk from
Nishikasai Station of Tokyo Metro Tozai Line.
 Excellent location characteristics that can attract a fairamount of Tokyo Disneyland-related leisure travelers, as it
stands in a straight-line distance of approx. 4 km away from
Tokyo Disneyland.
 A hotel with great appeal to a variety of guests with various
types of guest rooms depending on the intended use.

BEST WESTERN
Yokohama

Hotel

Sponsor fundAcquisition price

3,248 million yen

Appraisal value

3,270 million yen

Appraisal NOI yield

4.8%

Structure/Floors

Steel-framed reinforced
concrete structure, B1F/9F

Location

Yokohama City, Kanagawa

Total floor areas

4,686.09 m2

 A business hotel located within approx. 4-minute walk from
“Tsurumi” Station on the JR Keihin Tohoku Line and a 3minute walk from “Keikyu Tsurumi” Station on the Keihin
Kyuko Line.
 Excellent location characteristics that can attract bothbusiness travelers and leisure travelers, as its location has
good access to the major areas in Kanagawa including
Yokohama and Kawasaki as well as to Haneda Airport.
 A hotel with great appeal to a variety of guests with various
types of guest rooms depending on the intended use.
29

Newly Acquired Properties
Properties acquired utilizing preferential negotiation rights
Hakata-eki East Place

OfficeSponsor fund

Urban Park Kashiwa

Residence

Warehousing

Acquisition price

2,286 million yen

Acquisition price

1,186 million yen

Appraisal value

2,370 million yen

Appraisal value

1,190 million yen

Appraisal NOI yield

4.5%

Appraisal NOI yield

5.1%

Structure/Floors

Steel-framed reinforced
concrete structure, 9F

Structure/Floors

Steel-framed reinforced
concrete structure, B1F/8F

Location

Fukuoka City, Fukuoka

Location

Kashiwa City, Chiba

Total floor areas

6,243.13 m2

Total floor areas

4,243.71 m2

 Located in the Hakata Station East area, which has a higher
concentration of offices after the completion of redevelopment
projects in front of the station.
 Even more vitalization is expected for the Fukuoka (Hakata)area with the start of “Tenjin Big Bang Project” and theextension of some Fukuoka City Subway lines.

 Located in the Kashiwa area, a leading bed town in Chiba,with an 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.

30

Newly Acquired Properties
Acquisition through asset replacement on February 1, 2017
Urban Park Gokokuji

Residence

Warehousing

Acquisition price

1,460 million yen

Appraisal value

1,480 million yen

Appraisal NOI yield

5.2%

Structure/Floors

Reinforced concrete
structure, B1F/5F

Location

Toshima Ward, Tokyo

Total floor areas

2,451.72 m2

 Located in an area with strong demand from various tenantgroups for single-type residences, due to the location
characteristics of having concentration of universities andjunior colleges as well as Toshima ward having a relatively
high ratio of single households.

31

Balance of Payments of Individual Properties for the 2nd Fiscal Period(Unit: thousand yen)

OFC-01
MinamiAzabu
Shibuya
Building
Total of revenue realestate lease
Lease businessrevenue
Other lease businessrevenue
Total of expenses - realestate lease

OFC-02

OFC-03

Oak Minami- Honmachibas
Azabu
hi Tower

OFC-04

OFC-05

NishiShinjuku
Matsuya
Building

Alphabet
Seven

OFC-06

OFC-07

Hakata-eki
Shibuya MK
Higashi 113
Building
Building

OFC-08Asahi
Building

OfficeTotal

94,224

118,870

214,884

102,964

69,774

61,98173,083

199,630

935,41287,967

111,483

189,365

82,65466,01756,19566,972

183,425

844,082

6,257

7,386

25,51920,309

3,756

5,785

6,111

16,204

91,33021,15742,536

39,58430,757

15,542

16,472

16,57540,964

223,590

PM fees

5,708

15,015

13,440

6,539

4,837

4,794

7,389

15,40073,124

Trust fees

400

400

400

400

400

350

350

400

3,100

Utilities expenses

6,722

13,16923,501

7,958

4,545

3,960

7,471

17,532

84,861

Insurance expenses

128

251

393

140

109

47

136

390

1,599

2,105

6,351

165

1,769

3,430

1,581

933

2,779

19,117

－

－

－

－

－

－

－

－

－

6,091

7,347

1,685

13,949

2,219

5,738

294

4,461

41,787

NOI

73,06776,334

175,299

72,20754,23145,50856,507

158,666

711,822

Depreciation

9,911

6,867

44,750

5,565

2,437

2,377

5,347

21,27098,528

Income from real estate
property leasing

63,156

69,466

130,548

66,641

51,793

43,131

51,159137,395

613,293

Capital expenditures

13,77969,238

1,966

10,542

6,657

7,457

3,111

7,995

120,748

NCF

59,287

7,095

173,332

61,66447,57338,05153,396150,670591,073

Repair expenses
Taxes and public dues
Other

32

Balance of Payments of Individual Properties for the 2nd Fiscal Period(Unit: thousand yen)

RSC-01

RSC-02

RSC-03

RSC-04

RSC-05

Urban Park
Azabujuban

Urban Park
Daikanyama

Urban Park
Yoyogikoen

Urban Park
Shin-Yokohama

Urban Park
Namba

53,629183,506

26,697

69,714

48,611

382,158

52,132

172,630

26,69766,802

46,637364,899

1,497

10,875

－

2,911

1,974

17,2597,146

30,206

8,713

13,551

7,632

67,250PM fees

2,150

8,475

4,014

4,643

2,528

21,812Trust fees

350

350

400

350

350

1,800

Utilities expenses

487

4,098

553

730

485

6,356

Insurance expenses

63

215

50

183

69

582

2,384

9,344

969

2,927

1,588

17,213

－

－

－

－

－

－

1,709

7,723

2,726

4,717

2,610

19,486

NOI

46,482

153,299

17,98356,162

40,978314,908

Depreciation

3,933

11,8101,885

16,442

7,494

41,566

Income from real estate
property leasing

42,549141,489

16,09839,72033,484273,341

Capital expenditures

1,350

31,811

2,158

－

－

35,319NCF

45,132

121,488

15,82556,162

40,978279,588

Total of revenue realestate lease
Lease businessrevenue
Other lease businessrevenue
Total of expenses - realestate leaseRepair expenses
Taxes and public dues
Other

Residence
Total

33

Balance of Payments of Individual Properties for the 2nd Fiscal Period(Unit: thousand yen)

Total of revenue realestate lease
Lease businessrevenue
Other lease businessrevenue
Total of expenses - realestate lease

LGC-01

LGC-02

LGC-03

Iwatsuki
Logistics

Yokohama
Logistics

Funabashi
Logistics

Logistics
facility
Total

HTL-01

HTL-02

R&B Hotel Smile Hotel
Umeda East
Namba

Hotel
Total

Total

201,052

259,436

64,29756,499120,797

2,017,386

187,713238,076

64,29756,499120,797

1,865,642

13,33821,359000151,743

21,22435,341

1,247

1,619

2,866

380,400

PM fees

5,716

11,308

742

660

1,402

117,629

Trust fees

550

400

350

550

900

7,150

Utilities expenses

12,836

17,9136－

6

130,204

Insurance expenses

297

124

59

183

3,312

not
disclosed431

notdisclosed

1,004

3,997

－

262

262

55,038

Taxes and public dues

－

－

－

－

－

－

Other

820

1,290

24

88

112

67,064

NOI

179,827

224,094

63,05054,879117,930

1,636,985

Depreciation

46,17925,483

9,071

11,845

20,917244,255

Income from real estate
property leasing

133,648

198,61153,97843,034

97,013

1,392,730

Capital expenditures

9,000

28,619

－

704

704

280,041

170,827

195,474

63,05054,175

117,226

1,356,944

Repair expenses

NCF

34

About Sponsor
Founders and Investment Track Record
About the founders

Managing Partner"Malcolm F. MacLean IV "Received a bachelor's degree from Trinity College

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 andnon-listed 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 of stocks andbonds as well as M&As while working at the Real Estate Investment Banking Groups ofPaine 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 degreein economics and law from Trinity College in Hartford, Connecticut, U.S.A.

“Taro Masuyama”"Received a bachelor’s degree
Managing Partnerfrom Waseda University
Received a master’s degreefrom 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 Asia-Pacific region’s Structured Credit
Products and Japan Credit Sales and Marketing at Merrill Lynch and managed the origination,
structuring, trading and marketing of all structured credit as well as fund products in the AsiaPacific region in addition to sales marketing of Japanese credit products. During his sevenyear stint at Merrill Lynch, his team was involved in securitizations with over 2.8 trillion yen inunderlying 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 structured balance 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 degreefrom Waseda University and an MBA from Columbia Business School.

Star Asia Group’s investment track record in Japan (as of December 31, 2016)
Steadily making investments even amid
intensifying real estate acquisition competition.

Accumulated investment amount as ofDecember 31, 2016306 billion yen
35

Organizational Framework of Asset Manager(As of the End of 2nd Fiscal Period)
President and CEO
Atsushi Kato

Chief Compliance
Officer
Kazuaki Fujii

After entering Nomura Real
Estate Development Co.,
Ltd., he worked for Showa
Ota Ernst & Young, andthen entered Nomura
Securities Co, Ltd. Afterbeing involved in the asset
finance business including
support in establishing JREITs, he joined Star Asia
Investment Management
Co., Ltd.

Investment Management Division
Director and CIO
Yoshikuni Taguchi

Manager(Male)

Manager(Male)
Manager(Female)Manager(Female)Real 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.)
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.
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 in chargeof acquisitions, AM and finance tasks at a foreign-affiliated real estate investmentcompany.
As a member of a startup team for a property management (PM) company, she
was involved in PM tasks for office and commercial facilities with a total value ofover 30 billion yen entrusted by private placement funds, individual owners, etc.
Played an active role as a leader of AM middle-back tasks using experience fromformer duties,
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.

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

Finance Management Division
Director and CFO
Toru Sugihara

Manager(Female)Manager(Male)

Manager(Female)Associate(Female)After being involved in the investment banking
business at Nomura Securities Co., Ltd., heworked 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
construction industry. Using experience obtained thereafter in startup
work for an overseas base of a different business, is currently in chargeof general financial management tasks while primarily working in IR.
Certified Public Accountant After gaining experience as a member of anaudit team of a REIT at an accounting office, he was involved in tasks ofthe planning department at a leading investment advisory company.
Using his expert knowledge, he also contributes to the formulation ofmanagement strategies.
After gaining experience in conducting duties at a leading bank andforeign-affiliated financial institute, gained experience in PM tasks forover 50 properties in total of REITs, private placement and individualowners at a leading PM company, and using such experience, conducts
property cash management in cooperation with the Investment
Management Division. She also contributes in other administrative tasks.
In charge of a wide range of work as an assistant, using abundant
experience from various duties.

36

Status of Unitholders at the End of 2nd Fiscal Period ended January 2017
■Number of Investment Units by Unitholder Type:■List of major unitholders (Top 10)

Total 344,700 units
Category
Individual
Financial
institution
Domestic
corporation
Foreign
Securities
company

No. ofinvestment
units
38.3%
131,879

Unitholder name

Ratio

21.2%

73,021

17.1%

58,88921.1%

72,712

2.4%

8,199

Japan CRE Securitization Series I GK

39,480

11.5％

２

Japan Trustee Services Bank, Ltd(Trust account)

26,356

7.6％

３

STAR ASIA CAPITAL I LLC

14,325

4.2％

３STAR ASIA CAPITAL II LLC

14,325

4.2％

３STAR ASIA CAPITAL III LLC

14,325

4.2％

３STAR ASIA CAPITAL IV LLC

14,325

4.2％

７

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

12,941

3.8%

８

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

11,901

3.5%

９The Nomura Trust and Banking Co., Ltd.
(Trust account)

11,133

3.2%

10

UBS Securities LLC - HFS
Customer Segregated Account

6,204

1.8%

Total 12,453
Category

Individual
Financial
institutions
Domestic
corporation
Foreign
Securities
company

0.2%

27

2.4%

305

0.5%

59

0.2%

26

Unitholding
ratio

１

■Number of Unitholders by Unitholder Type:No. ofRatio persons/e
ntities
96.7%
12,036

Number ofinvestment
units

Total

165,315

48.0％* The ratio of investment units held expressed as a percentage of total number of investment units
issued and outstanding is rounded to the nearest first decimal place.
* Japan CRE Securitization Series I and Star Asia Capital I-IV LLC are the sponsor groupcompanies.

37

■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 bechanged 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.

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

38