(REIT) Financial Report for Fiscal Period Ended July 31, 2016
September 14, 2016
Stock Exchange Listing: Tokyo Stock Exchange
URL: http://starasia-reit.com

REIT Securities Issuer:
Securities Code:
Representative:

Star Asia Investment Corporation
3468
Atsushi Kato, Executive Director

Asset Management Company:
Representative:
Contact:

Star Asia Investment Management Co., Ltd.
Atsushi Kato, President and CEO
Toru Sugihara, Director and CFO
TEL: 03-5425-1340

Scheduled date of commencement of cash distribution payment:
Scheduled date of submission of securities report:

October 17, 2016
October 28, 2016

Preparation of supplementary financial results briefing materials:
Holding of financial results briefing session:

Yes
Yes (for institutional investors and analysts)(Amounts are rounded down to the nearest million yen)
1. Status of Management and Assets for Fiscal Period Ended July 31, 2016 (from December 1, 2015 to July 31, 2016)(1) Management Status(% figures are the rate of period-on-period increase (decrease))
Fiscal period
Operating revenue
Operating income
Ordinary income
Net income
million yen%
million yen%
million yen%
million yen%
Ended July 2016
1,859
1,147
335
333

－

Net income
per unit－－－

Ratio of ordinary income Ratio of ordinary income
to total assets
to operating revenue
yen
%
%
%
Ended July 2016
1,813
1.5
0.6
18.0
(Note 1) The calculation period for the fiscal period ended July 31, 2016 of Star Asia Investment Corporation is a period of 244 days
from December 1, 2015 to July 31, 2016, but the actual asset management period is a period of 200 days from January 14,
2016 to July 31, 2016.
(Note 2) Net income per unit is calculated by dividing net income by the daily weighted average number of investment units (184,092
units).
(Note 3) Ratio of net income to equity and ratio of ordinary income to total assets are calculated based on the weighted average
equity and total assets, respectively, with the actual asset management period commencement date January 14, 2016
deemed as the beginning of the period.
Fiscal period(2) Status of Cash Distribution
Total
Cash
cash
distribution
distribution
per unit
Fiscal period(not including(not including
cash distribution
in excess ofearnings)

cash distribution
in excess ofearnings)

Ratio of net income
to equity

Cashdistribution
in excess ofearnings
per unit

Total
cash
distribution
in excess ofearnings

Cashdistribution
per unit

Total
cash
distribution(including
cash distribution
in excess ofearnings)(including
cash distribution
in excess ofearnings)

Ratio ofCash
cash
distribution distribution
payout ratiotonet assets

yen million yen
yen million yen
yen million yen%%
Ended July 2016
892
307
76
26
968
333
92.1
0.9
(Note 1) For the fiscal period ended July 31, 2016, of cash distribution in excess of earnings per unit of 76 yen, allowance for temporary
difference adjustment is 76 yen.
(Note 2) Cash distribution payout ratio is calculated by the following formula due to changes in the number of investment units during
the period following issuance of new investment units during the period:
Cash distribution payout ratio = Total cash distribution (not including cash distribution in excess of earnings) ÷ Net income × 100(Note 3) Ratio of cash distribution to net assets is calculated based on the weighted average net assets per unit with the actual asset
management period commencement date January 14, 2016 deemed as the beginning of the period.
(3) Financial Position
Fiscal period

Total assets
million yen
68,636

Net assets
million yen
33,848Net cashprovided by (used in)operating activities
million yen(397)

Net cashprovided by (used in)investing activities
million yen(61,010)

Ended July 2016

Equity ratio%
49.3

Net assets per unit
yen
98,197(4) Status of Cash Flows
Fiscal period

Ended July 2016

－ 1 －Net cashprovided by (used in)financing activities
million yen
65,972

Cash and cash equivalents
at end of period
million yen
4,564

2. Management Status Forecast for Fiscal Period Ending January 31, 2017 (from August 1, 2016 to January 31, 2017) andFiscal Period Ending July 31, 2017 (from February 1, 2017 to July 31, 2017)(% figures are the rate of period-on-period increase (decrease))
Cash distribution
per unit
Cash distribution
Fiscal period
Operating revenue
Operating income
Ordinary income
Net income
in excess of earnings(not including
per unit
cash distribution
in excess of earnings)
million yen% million yen% million yen% million yen
%
yen
yen
Ending Jan. 2017
1,987
6.9
1,169
1.9
1,051
213.4
1,050
214.5
3,046
0
Ending July 2017
2,000
0.7
1,052
(10.0)
940(10.5)
939(10.5)
2,726
0(Reference) Forecast net income per unit (fiscal period ending January 31, 2017) 3,047 yen
Forecast net income per unit (fiscal period ending July 31, 2017)
2,726 yen

* Other(1) Changes in Accounting Policies, Changes in Accounting Estimates, and Retrospective Restatement① Changes in accounting policies accompanying amendments to accounting standards, etc.: No② Changes in accounting policies other than ①:No③ Changes in accounting estimates:
No④ Retrospective restatement:No(2) Total Number of Investment Units Issued and Outstanding① Total number of investment units issued and outstanding (including treasury units) at end of period
Fiscal period ended July 31, 2016
344,700 units② Number of treasury units at end of period
Fiscal period ended July 31, 2016
0 units(Note) For the number of investment units serving as the basis for calculation of net income per unit, please see “Notes on
Per Unit Information” on page 24.

* Presentation of Status of Implementation of Audit Procedures
At the time of disclosure of this financial report, audit procedures for financial statements pursuant to the Financial Instruments andExchange Act have not been completed.
* Explanation of Appropriate Use of Management Status Forecast, and Other Matters of Special Note
The management status outlook and other forward-looking statements contained in this document are based on information thatare currently available and certain assumptions that are deemed reasonable by Star Asia Investment Corporation. Accordingly, theactual management status, etc. may differ materially due to various factors. In addition, the forecast figures are the current figures
calculated under the assumptions described in “Assumptions Underlying Management Status Forecast for Fiscal Period Ending
January 31, 2017 and Fiscal Period Ending July 31, 2017” on page 8. Accordingly, the actual operating revenue, operating income,ordinary income, net income, cash distribution per unit (not including cash distribution in excess of earnings) and cash distribution
in excess of earnings per unit may vary due to acquisition/disposition of real estate, etc., trends of the real estate market, etc.,
fluctuations in interest rates or other changes in the circumstances surrounding Star Asia Investment Corporation, etc. in the future.
In addition, the forecast is not a guarantee of the amount of cash distribution.

－ 2 －

1.

Related Parties of the Investment Corporation
Disclosure is omitted because there is no significant change from “Structure of the Investment Corporation” in the securities
registration statement (submitted on March 16, 2016, as amended).

2.

Management Policies and Management Status(1) Management Policies
Disclosure is omitted because there is no significant change from “Investment Policies,” “Investment Targets” and “CashDistribution Policies” in the securities registration statement (submitted on March 16, 2016, as amended).
(2) Management Status① Overview of the Fiscal Period Under Review(a) Brief History of the Investment Corporation
Star Asia Investment Corporation (“SAR”) was established under the Act on Investment Trusts and Investment Corporations(Act No. 198 of 1951, as amended; the “Investment Trusts Act”) with Star Asia Investment Management Co., Ltd. (the “AssetManagement Company”) as the organizer and Star Asia Management Limited as the sponsor on December 1, 2015
(investments in capital: 200 million yen; number of investment units issued: 2,000 units).
In the fiscal period under review (1st fiscal period), additional issuance of new investment units through private placementof 95,000 units, procurement from the sponsor group of 9,500 million yen, borrowing of 31,756 million yen and issuance ofinvestment corporation bonds of 4,574 million yen followed in January 2016, along with acquisition of 11 properties (sumtotal of acquisition price: 43,740 million yen).
These were followed by additional issuance of new investment units through public offering of 235,900 units on April 19,
2016, and listing on the Real Estate Investment Trust Securities Market of Tokyo Stock Exchange, Inc. (“Tokyo Stock
Exchange”) on the next day. (Securities Code: 3468)
At the same time as the listing were repayment of the entire amount of existing loans, redemption by purchase of all
investment corporation bonds already issued and new borrowing of 32,555 million yen, by which 7 properties (sum total ofacquisition price: 17,753 million yen) were additionally acquired that brought the asset size to a total of 18 properties (sumtotal of acquisition price: 61,493 million yen).
Later, 11,800 units were issued through third-party allotment, resulting in a total number of investment units issued andoutstanding of 344,700 units as at the end of the 1st fiscal period.
(b) Investment Environment and Management Performance
Investment Environment:
The Japanese economy in the fiscal period under review saw many negative factors to economic growth, such as Chinese
economic stagnation, slowing down of emerging economies with the depreciation of resources, the UK’s decision to exit
the EU, and these leading to progress in the appreciation of the yen. Nevertheless, with introduction of the negative interest
rate policy and revitalization of the investment market as represented by listed REITs and private REITs, Japan’s real estatemarket is stable. In addition, when seen from a medium-term perspective, Japan’s real estate market is thought to remain
steady due to various factors, such as acceleration of infrastructure and facility development for the 2020 Tokyo Olympic
Games, greater real estate investment demand owing to cash management difficulty with the extension of the negativeinterest rate policy, and “to double the REIT, etc. asset size to approximately 30 trillion yen by around 2020” being set as areal estate investment market growth target by the Ministry of Land, Infrastructure, Transport and Tourism.
In the recent real estate transaction market, supply-demand remains in a tight state due to there being many market
participants, such as listed REITs, private REITs, private funds and business companies. This state is forecast to continue forthe time being and the market cap rate, too, is a stable low. Concerning investment area, reflecting the tight supply-demand,the investment demand is active not only for the Greater Tokyo area but also core cities as represented by Osaka, Nagoya
and Fukuoka. SAR thinks that such trends will continue.

－ 3 －(Office leasing market)
According to market research by CBRE K.K., as of the end of July 2016, the vacancy rate for office buildings in Tokyo’s 23
wards was at a low level of approximately 2.4%, suggesting active demand for office floor space. With also assumed
achievable rent for Grade A office buildings (Note) increasing (approximately 35,000 yen per tsubo in July 2016), theleasing market is in a steady state. Other regional areas (Osaka, Nagoya and Fukuoka), too, are showing similar trends.
The steady trends are thought to continue in the office leasing market, centering on the Tokyo area.
(Note) Grade A office buildings refer to, as a general rule, buildings located in regions with a high concentration of officebuildings (where regions with a high concentration of office buildings in the case of Tokyo are centered on thecentral 5 wards, in the case of Osaka are centered on Kita Ward, Chuo Ward and Yodogawa Ward, and in the caseof Nagoya are centered on Nakamura Ward, Naka Ward, Higashi Ward and Nishi Ward) that have a typical floor
plate of 350 tsubos or more (500 tsubos or more in the case of Tokyo), net leasable area of 6,500 tsubos or more,total floor area of 10,000 tsubos or more, and building age of less than 11 years.
(Residential leasing market)
According to the “2013 Housing and Land Survey” by the Ministry of Internal Affairs and Communications, households
living in rental apartments, which were 3.34 million households (approximately 8% of all households) in 1988, increased
by approximately 3.3 times to 9.96 million households (approximately 20% of all households) in 2013, showing thatleasing is becoming entrenched as a living style. In addition, with the increase in one-person households due to age ofmarriage being on an increasing trend, aging society, etc. also standing out, demand for rental housing is thought to behigh.
Both rent and vacancy rate are stable, regardless of geographic area, according to CBRE K.K.’s rent index and vacancy rateindex concerning rental housing independently obtained by the Asset Management Company, and SAR thinks that thesteady performance will continue.
(Logistics facility leasing market)
According to CBRE K.K.’s market report independently obtained by the Asset Management Company, Japan’s electroniccommerce (EC) market size (net sales) continues to expand, growing by approximately triple the size in 2006, which wasapproximately 4.4 trillion yen, to approximately 12.8 trillion yen in 2014. In addition, the market size (net sales) of thirdparty logistics (3PL), which are logistics specialists to which companies entrust their logistics function in whole or in part,is also expanding, growing by approximately 2.2 times the size in 2005, which was approximately 1.0 trillion yen, toapproximately 2.2 trillion yen in 2014. These are thought to lead to diversifying needs and also mounting demand forlogistics facilities.
According to the report, the vacancy rate for the Greater Tokyo area in the fourth quarter of 2015 was at a low level ofslightly more than 5% or so and is recently at a similar vacancy rate. In addition, the rent index, too, is stable for theGreater Tokyo area. Considering the mounting demand and rent and vacancy rate trends for logistics facilities, the stableperformance is thought to continue.
(Hotel market)
As part of Japan’s policies and measures to aim to become a tourism nation, international route arrival and departureslots are being increased at Tokyo International Airport (Haneda Airport), new LCC entries being made at KansaiInternational Airport, etc., along with identifying and developing tourism resources, etc. There is also the added effect of
the announcement that Tokyo will host the Olympic Games in 2020. Due to these various factors, the number of travelers
from overseas continues to be on an increasing trend and is expected to continue to increase further. According to Japan
Hotel Appraisal’s market report independently obtained by the Asset Management Company, ADR and occupancy rate
are both on the rise for the Tokyo area and other regional areas (Osaka, Nagoya, Fukuoka and Sapporo) and, coupled withJapan’s policies and measures, the steady performance is thought to continue.
Management Performance:
In the fiscal period under review under the environment described above, asset management commenced with theacquisition of 3 office properties, 3 residential properties, 3 logistics facility properties and 2 hotel properties for a total of
11 properties (sum total of acquisition price: 43,740 million yen) in January 14, 2016, and this was followed by additional
acquisition of 5 office properties and 2 residential properties for a total of 7 properties (sum total of acquisition price: 17,753
million yen) in April 20, 2016. As of the end of the fiscal period under review, investment assets amounted to 61,493 million
yen (sum total of acquisition price) and had occupancy rate of 95.9%.

－ 4 －(c) Overview of Fund Procurement
In the fiscal period under review, 200 million yen was procured from issuance of 2,000 investment units upon theestablishment of SAR in December 2015, 9,500 million yen from additional issuance of new investment units of 95,000 units
upon the acquisition of 11 properties in January 2016, 22,705 million yen from additional issuance of new investment unitsof 235,900 units upon the listing in April 2016 and 1,135 million yen from additional issuance through third-party allotmentof 11,800 units in May 2016 for a total of 33,541 million yen (total number of investment units issued and outstanding:344,700 units) procured from the capital market.
In addition, upon the acquisition of 11 properties in January 2016, simultaneously procured were 31,756 million yen fromborrowing from Sumitomo Mitsui Banking Corporation and Mizuho Bank, Ltd., and 4,574 million yen from issuance ofinvestment corporation bonds. Concerning these debt financing and investment corporation bonds, part of the funds
procured from issuance of new investment units and the 32,555 million yen newly borrowed from a loan syndicate with
Sumitomo Mitsui Banking Corporation and Mizuho Bank, Ltd. as arrangers upon the listing in April 2016 were used for
repayment of the entire amount of the 31,756 million yen borrowed and redemption by purchase of the entire amount of
the investment corporation bonds. As a result, as of the end of the fiscal period under review (July 31, 2016), the balanceof loans outstanding was 32,555 million yen and the ratio of interest-bearing liabilities to total assets (LTV) was 47.4%.
(d) Overview of Business Performance and Cash Distributions
As a result of the management described above, SAR recorded operating revenue of 1,859 million yen, operating income of
1,147 million yen, ordinary income of 335 million yen and net income of 333 million yen as business performance in thefiscal period under review.
Concerning cash distribution, pursuant to the cash distribution policies provided in SAR’s Articles of Incorporation, theintention is to have cash distribution of earnings included in deductible expenses by application of Article 67-15 of the Act
on Special Measures Concerning Taxation (Act No. 26 of 1957, as amended; the “Act on Special Measures Concerning
Taxation”). Accordingly, the decision was made to distribute 307,472,400 yen, which is the entire amount of the earnings
provided in Article 136, Paragraph 1 of the Act on Investment Trusts and Investment Corporations but excluding the portion
where cash distribution of earnings per unit becomes a fractional amount of less than 1 yen. In addition, SAR shall makecash distribution in excess of earnings in an amount that it determines as the amount equivalent to the items of deduction
from net assets (those provided in Article 2, Paragraph 2, Item 30 (b) of the Ordinance on Accountings of Investment
Corporations) with due consideration of the impact of the items of deduction from net assets on cash distribution.
Accordingly, in the fiscal period under review, the decision was made to distribute 26,197,200 yen, which is calculated as
the amount equivalent to deferred losses on hedges of 26,238,915 yen but excluding the portion where cash distribution inexcess of earnings per unit becomes a fractional amount of less than 1 yen, as cash distribution attributable to allowancefor temporary difference adjustment (those provided in Article 2, Paragraph 2, Item 30 of the Ordinance on Accountings ofInvestment Corporations). As a result of the above, cash distribution per unit declared for the fiscal period under review
was 968 yen.

－ 5 －

② Outlook for the Next Fiscal Period
The outlook for the Japanese economy is fluctuation due to external factors, such as trends of the Chinese and emerging
economies, the U.S. interest rate policy, and exchange rate fluctuation owing to these, and due to internal factors, such as theJapanese government’s fiscal policies and Bank of Japan’s monetary policies.
Although there are also negative factors to global economic trends and Japanese economic trends, Japan’s and notably Tokyo’sreal estate market is thought to be steady due to inflow of investment funds eyeing the disparity in interest rates on loans andreal estate cap rates, economic revitalization led by infrastructure and facility development for Tokyo’s hosting of the Olympic
Games in 2020, and other factors. In addition, lodging facilities are in a state of shortage due in part to increase in travelers
from overseas, and finding solutions for this is thought to be an urgent task.
Future Management Policy and Challenges to Address(a) External Growth Strategy
SAR is a diversified REIT investing in office, retail, residential, logistics and hotel properties, with maximization of unitholders’interests set as a principle and income “stability” and “growth” at the core. SAR aims to develop a portfolio that can gain
income “stability” and “growth” by making selective investment based on an assessment of the features of the investment
asset types and detailed market analysis of the investment areas.
The thinking for the time being is to focus on “office” for which tenant demand is robust, “residence” for which demand isstable due to increase in households choosing to rent and “logistics facility” for which the EC market and 3PL market sizeare growing in recent years, centering on the “5 central wards of Tokyo,” and make the most of their respective
characteristics under the intention of gaining income stability and growth. In addition, with “hotel” for which lodging
demand is expected to continue to grow, backed by Japan’s policies and measures, regarded as an asset type on which
efforts should be placed in particular, investments will be made by carefully selecting properties that have the potential tosecure income stability and growth over the medium to long term based on detailed analysis of the investment properties
and areas and consideration of future hotel development and private lodging facility trends and other various factors.
Despite the recent harsh property acquisition environment, SAR managed to conclude a “Sale Preferential Negotiation Right
Agreement” with special purpose companies belonging to the sponsor group for the properties listed in the following tablein order to realize speedy and steady external growth based on the investment strategy described above.
SAR intends to continue accelerating the acquisition of properties that contribute to income stability and growth by fully
leveraging the sponsor group’s and the Asset Management Company’s own networks.
Properties for which preferential negotiation rights have been obtained
Property name

Asset type

Location

Minimum purchase price

Baraki Logistics

Logistics facility

Ichikawa-shi, Chiba

4,700 million yen

Joytel Gokokuji

Residence

Toshima-ku, Tokyo

1,460 million yen

Hakata-eki East Place

OfficeFukuoka-shi, Fukuoka

2,255 million yen

Urban Park Kashiwa

Residence

Kashiwa-shi, Chiba

1,186 million yen

BEST WESTERN Tokyo Nishikasai

Hotel

Edogawa-ku, Tokyo

3,805 million yen

BEST WESTERN Yokohama

Hotel

Yokohama-shi, Kanagawa

3,185 million yen

Total

16,591 million yen(b) Internal Growth Strategy
The internal growth strategy is to thoroughly ensure “operational management with emphasis on unconditional fairness”
by leveraging the strengths as an independent REIT without affiliated companies in Japan in an aim to optimize management
and operational expenses. Specifically, operational management that thinks of the interests of the investment asset firstwill be conducted by assessing the features of the investment asset and selecting the optimal property managementcompany (the “Property Management Company”) and building management company (the “Building Management
Company”) suited to the concerned features, and appropriately monitoring based on the PDCA system (system of plan, do,check and action) so that the optimal Property Management Company and Building Management Company continues tobe consistently in place. The following is the internal growth strategy by real estate sector.
(Office / Residence)－ 6 －In order to maintain and enhance the occupancy rate, property information will be provided widely to not only leading
brokerage companies but also local brokerage companies in line with the features of the investment asset in an effort toswiftly secure and contract several potential tenants. In addition, upon leasing contract renewals, negotiations will be
pursued to increase the amount of rent in the case of tenants with a disparity between market rent and the actually paidrent.
In addition, in order to enhance the attractiveness to tenants, not only repairs and maintenance from a defensive
approach in view of functional maintenance, but also renovation of common-use areas and other repairs andmaintenance from an aggressive approach will be implemented.
(Logistics facility / Hotel)
Considering that the state for logistics facilities and hotels is that these are leased to a single tenant or a small number oftenants, communication with tenants will be pursued on a regular basis for timely grasping of requests, etc. By striving
to enhance tenant satisfaction through meticulously addressing such requests, etc., long-term tenancy and increase in
the amount of rent will be aimed.
(c) Financial Strategy
SAR seeks to establish a stable and sound financial base with an aim to achieve maintenance/expansion of income over the
medium- to long-term as well as growth of the managing asset size.
(Equity finance)
The purpose of issuing new investment units is to achieve growth of the managing asset size and value, and due
consideration will be given to dilution of existing unitholders’ rights, trend of the unit price in line with the dilution, etc.,
while comprehensively taking into account the timing of new acquisition of real estate, etc., possibility of utilizing
warehousing function of the sponsor, the LTV level, financial environment, economic market trends, etc., in deciding on
issuance of new investment units.
(Note) LTV refers to the ratio of interest-bearing liabilities to total assets of SAR.
(Debt finance)
Upon making borrowings and issuing investment corporation bonds (including short-term investment corporation bonds),
due consideration will be given to the balance between the mobility of fund procurement and financial stability.
Specifically, the ratio of long-term loans, ratio of loans with fixed interest rates, diversification of maturity, fundprocurement means (loans/investment corporation bonds), lender diversification, setting of commitment lines, etc. will
be discussed.
(LTV)
LTV will be controlled with consideration to available fund capacity mainly for making new property acquisitions. A
targeted ceiling for LTV is set at 60% under the asset management guidelines.
(d) Management Status Outlook
SAR’s management status expected for the fiscal period ending January 31, 2017 and the fiscal period ending July 31, 2017is as follows:
Cash distribution
per unit

Cash distribution(not including

in excess of earnings

cash distribution

per unit

OperatingOperating

Ordinary

revenueincomeincomemillion yen

million yen

million yen

million yen

yen

yen

Ending Jan. 2017

1,987

1,169

1,051

1,050

3,046

0

Ending July 2017

2,000

1,052

940

939

2,726

0

Fiscal period

Net income

in excess of earnings)

This outlook is based on information that are currently available and certain assumptions that are deemed reasonable bySAR. Accordingly, the actual management status, etc. may differ materially due to various factors. In addition, the forecast
is not a guarantee of the amount of cash distribution. For the assumptions underlying this outlook, please refer to“Assumptions Underlying Management Status Forecast for Fiscal Period Ending January 31, 2017 and Fiscal Period Ending
July 31, 2017” on page 8.
③ Significant Subsequent Events
Not applicable.

－ 7 －Assumptions Underlying Management Status Forecast for
Fiscal Period Ending January 31, 2017 and Fiscal Period Ending July 31, 2017
Item
Calculation period

Assumptions
Fiscal period ending January 31, 2017: August 1, 2016 – January 31, 2017 (184 days)
Fiscal period ending July 31, 2017: February 1, 2017 – July 31, 2017 (181 days)
From the real estate beneficiary interest in trust of the 18 properties held by SAR as of the date of thisInvestment assets

document (referred to as the “Existing Properties” hereinafter in these assumptions), it is assumed
there will be no change (new property acquisitions, sales of the Existing Properties, etc.) to theinvestment assets through the end of the fiscal period ending July 31, 2017.
In practice, they may vary due to changes in investment assets.

Operating revenue

Rental revenues from the Existing Properties are calculated based on the rent stated in the leaseagreements that are effective as of the date of this document, etc.
As to operating revenue, it is assumed no rent payments will be behind or declined by tenants.
Among expenses related to rent business of the Existing Properties, which are the principal operating
expenses, expenses excluding depreciation are calculated on the basis of historical data, reflecting
variable factors of expenses.
Fixed property taxes, city planning taxes and other public charges in fiscal 2016 are settled on a pro rata
basis based on the number of days of ownership with the seller at the time of acquisition of the Existing
Properties. However, in case of SAR, the settled amount is included in the acquisition cost and thus is
not recorded as expenses in the fiscal period ending January 31, 2017. In addition, fixed property taxes,
city planning taxes and other public charges in fiscal 2017 will be recorded as expenses starting fromOperating expenses

the fiscal period ending July 31, 2017, and is expected to be 166 million yen in the fiscal period ending
July 31, 2017 and 166 million yen in the fiscal period ending January 31, 2018.
For the expenditures for repair and maintenance of buildings, 51 million yen is expected for the fiscal
period ending January 31, 2017 and 45 million yen for the fiscal period ending July 31, 2017 based on
repair and maintenance plans drawn up by the Asset Management Company. However, theexpenditures for repair and maintenance for the fiscal periods could differ significantly from theestimated amounts, as expenditures may arise urgently due to damage to buildings and such caused by
unexpected factors, and because the variance in amounts generally tends to be significant from year toyear and repair and maintenance expenses do not arise regularly.
Depreciation is calculated using the straight line method, including incidental expenses and others, andis expected to be 246 million yen for the fiscal period ending January 31, 2017 and 255 million yen for
the fiscal period ending July 31, 2017.

Non-operating expenses

Interest expense and financial expenses are expected to be 118 million yen for the fiscal period ending
January 31, 2017 and 109 million yen for the fiscal period ending July 31, 2017.
Of the balance of loans outstanding as of the end of the fiscal period ended July 31, 2016 (short-termloans payable: 3,355 million yen; long-term loans payable: 29,200 million yen), there are no loans due
for repayment in the fiscal period ending January 31, 2017. However, of short-term loans payable, it isassumed that, in addition to the early repayment of 1,137 million yen made on August 22, 2016, early
repayment of 1,218 million yen will be made using consumption tax refund as the source of funds.

Debt financing

It is assumed that the short-term loans payable due for repayment in the fiscal period ending July 31,2017 will be refinanced under the same terms and conditions. There are no long-term loans payabledue for repayment in that fiscal period.
LTV is expected to be around 45.2% at the end of the fiscal period ending January 31, 2017 and at theend of the fiscal period ending July 31, 2017.
LTV is calculated by using the following calculation method.
LTV = Interest-bearing liabilities ÷ Total assets × 100
The total number of investment units issued and outstanding as of the date of this document, which isInvestment units

344,700 units, is assumed.
It is assumed that there will be no changes in the number of investment units due to additional issuanceof new investment units and such through the end of the fiscal period ending July 31, 2017.

－ 8 －

Item

Assumptions
Cash distribution per unit (not including cash distribution in excess of earnings) is calculated on theassumption described in the monetary cash distribution policy stipulated in SAR’s Articles ofIncorporation.
For the fiscal period ending January 31, 2017 and the fiscal period ending July 31, 2017, it is assumed

Cash distributionthat derivative transactions (interest rate swaps) will continue to be conducted. However, deferredlosses on hedges, which is an item of deduction from net assets (those provided in Article 2, Item 30

per unit(not including(b) of the Ordinance on Accountings of Investment Corporations), is expected to be the same amountas the fiscal period ended July 31, 2016 of 26 million yen, and the assumption is that cash distribution

cash distribution
in excess of earnings)

per unit (not including cash distribution in excess of earnings) will not be affected by changes in itemsof deduction from net assets in the calculation.
It is possible that the cash distribution per unit (not including cash distribution in excess of earnings)
could change due to various factors, including changes in investment assets, changes in rental revenue
accompanying changes in tenants, etc., and unexpected repair and maintenance, etc. In addition, cash
distribution per unit (not including cash distribution in excess of earnings) may be affected by changes
in items of deduction from net assets.

Cash distribution
in excess of earnings
per unit

For the fiscal period ending January 31, 2017 and the fiscal period ending July 31, 2017, it is assumed
that there will be no changes in deferred losses on hedges, which is an item of deduction from net
assets, as described above. Of cash distribution in excess of earnings, that attributable to allowance fortemporary difference adjustment is not scheduled at this point in time.
In addition, of cash distribution in excess of earnings, that falling under the category of cash distribution
accompanying decrease in capital, etc. under tax law is not scheduled at this point in time.
Forecasts are based on the assumption that revisions will not be made to laws and regulations, tax
systems, accounting standards, listing rules, rules of The Investment Trusts Association, Japan that

Other

impact forecast figures.
Forecasts are based on the assumption that there will be no major unforeseen changes to general
economic trends, real estate market conditions, etc.

－ 9 －

3.

Financial Statements(1) Balance Sheet(Unit: thousand yen)
1st fiscal period(As of July 31, 2016)
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
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land 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
Total investments and other assets
Total non-current assets
Total assets

2,006,136
2,557,948
52,69596,63832
1,259,266
7,175
5,979,894

20,056,951(246,543)
19,810,407
4,396
(141)
4,255
39,208,659
59,023,323
3,459,138
3,459,138
164,478
10,000174,478
62,656,940
68,636,834－ 10 －

(Unit: thousand yen)
1st fiscal period(As of July 31, 2016)
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Accounts payable - otherAccrued expenses
Income taxes payable
Advances received
Other
Total current liabilities
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
Surplus
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets－ 11 －

76,381
3,355,000
319,0115,286
1,490
265,383
12,875
4,035,429
29,200,000
1,526,363
26,23830,752,602
34,788,032

33,541,125
333,916
333,916
33,875,041*1(26,238)(26,238)
33,848,802
68,636,834

(2) Statement of Income(Unit: thousand yen)
1st fiscal period
From: Dec. 1, 2015
To: July 31, 2016
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
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
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Net income
Unappropriated retained earnings (undisposed loss)*1 1,737,036*1 122,389

1,859,425*1

568,022103,104
12,7183,200
24,681
711,726
1,147,698
37
0
37
133,353
38,052
12,604453,952
62,950111,40934
812,356
335,379
335,379
1,496
(32)
1,463
333,916
333,916－ 12 －

(3) Statement of Unitholders’ Equity
1st fiscal period (from December 1, 2015 to July 31, 2016)(Unit: thousand yen)
Valuation and translation
adjustments

Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning

Unappropriatedretained earnings(undisposed loss)-of period-

Total
surplus-Total
unitholders’equityDeferred
gains or losses
on hedges

Totalvaluation andtranslation
adjustments

-

-

-

Total
net assets-

Changes of items
during period
Issuance of new

33,541,125

investment units
Net income

333,916

333,916

33,541,125

33,541,125

333,916

333,916

Net changes of
items other than

(26,238)(26,238)(26,238)

unitholders' equity
Total changes of
items during period
Balance at end of
period*1

33,541,125

333,916

333,916

33,875,041(26,238)(26,238)

33,848,802

33,541,125

333,916

333,916

33,875,041(26,238)(26,238)

33,848,802－ 13 －

(4) Statement of Cash Distributions(Unit: yen)
1st fiscal period
From: Dec. 1, 2015
To: July 31, 2016
I.
II.

Unappropriated retained earnings
Addition of cash distribution in excess of earnings

333,916,519
26,197,200

Of which, allowance for temporary difference adjustment

26,197,200

III. Cash distribution

333,669,600[Cash distribution per unit][968]

Of which, cash distribution of earnings[Of which, cash distribution of earnings per unit]

307,472,400[892]

Of which, allowance for temporary difference adjustment[Of which, cash distribution in excess of earnings per unit

26,197,200[76](attributable to allowance for temporary difference adjustment)]
IV.

Retained earnings carried forward

26,444,119

Method of calculation of amount of cash distribution

Pursuant to the cash distribution policy provided in Article
35, Paragraph 1 of SAR’s Articles of Incorporation, Star Asia
Investment Corporation( hereinafter ”SAR”) shall distributein excess of the amount equivalent to 90% of the amountof distributable earnings of SAR as defined in Article 67-15,
Paragraph 1 of the Act on Special Measures Concerning
Taxation. In accordance with such policy, concerning cash
distribution of earnings (not including cash distribution inexcess of earnings), the decision was made to distribute
307,472,400 yen, which is the entire amount of theearnings provided in Article 136, Paragraph 1 of the Act on
Investment Trusts and Investment Corporations but
excluding the portion where cash distribution of earnings
per unit becomes a fractional amount of less than 1 yen, as
cash distribution of earnings.
In addition, pursuant to the policy on cash distribution inexcess of earnings provided in Article 35, Paragraph 2 ofSAR’s Articles of Incorporation, SAR shall make cash
distribution in excess of earnings in an amount that it
determines as the amount equivalent to the items of
deduction from net assets (those provided in Article 2,
Paragraph 2, Item 30 (b) of the Ordinance on Accountingsof Investment Corporations) with due consideration of the
impact of the items of deduction from net assets on cash
distribution. Accordingly, in the fiscal period, the decision
was made to distribute 26,197,200 yen, which is calculated
as the amount equivalent to deferred losses on hedges of
26,238,915 yen but excluding the portion where cash
distribution in excess of earnings per unit becomes afractional amount of less than 1 yen, as cash distribution
attributable to allowance for temporary difference
adjustment (those provided in Article 2, Paragraph 2, Item
30 of the Ordinance on Accountings of Investment
Corporations). As a result of the above, the amount of cash
distribution declared for the fiscal period was 333,669,600
yen.

－ 14 －

(5) Statement of Cash Flows(Unit: thousand yen)
1st fiscal period
From: Dec. 1, 2015
To: July 31, 2016
Cash flows from operating activities
Income before income taxes
Depreciation
Investment unit issuance expenses
Investment corporation bond issuance costs
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund receivable
Decrease (increase) in prepaid expenses
Decrease (increase) in long-term prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable - other
Increase (decrease) in advances received
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment in trust
Purchase of intangible assets in trust
Repayments of tenant leasehold and security deposits in trust
Proceeds from tenant leasehold and security deposits in trust
Payments for lease and guarantee deposits
Net cash provided by (used in) investing activities
Cash flows from financing activities
Increase in short-term loans payable
Decrease in short-term loans payable
Proceeds from long-term loans payable
Proceeds from issuance of investment corporation bonds
Redemption of investment corporation bonds
Proceeds from issuance of investment units
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period－ 15 －

335,379
246,684
111,40912,604(37)
171,405(52,695)(1,259,266)(96,638)(164,478)
52,772
139,865
265,3836,628(230,982)
37(166,820)(5)(397,771)(59,067,252)(3,459,138)(19,378)
1,545,515(10,000)(61,010,253)
35,111,000(31,756,000)
29,200,000
4,562,083(4,574,688)
33,429,715
65,972,111
4,564,085*1 4,564,085

(6) Notes on the Going Concern Assumption
Not applicable.
(7) Notes on Matters Concerning Significant Accounting Policies
1. Method of
Property, plant and equipment (including trust assets)
depreciation of
The straight-line method is adopted. The useful life of primary property, plant and equipment is as
non-current assets
follows:
Buildings
5-67 years
3-6 years
Tools, furniture and fixtures
2. Accounting for(1) Deferred organization expenses
deferred assets
The entire amount is expensed as incurred.
(2) Investment unit issuance expenses
The entire amount is expensed as incurred.
(3) Investment corporation bond issuance costs
The entire amount is expensed as incurred.
3. Standards for
Accounting for fixed property tax, etc.
revenue and expense
Accounting for fixed property tax, city planning tax, depreciable asset tax, etc. (“fixed property tax,etc.”) on real estate or beneficiary interest in trust for real estate held is that, of the tax amountrecognitionassessed and determined, the amount corresponding to the concerned calculation period is expensed
as expenses related to rent business.
The amount equivalent to fixed property tax, etc. in the initial fiscal year borne by SAR uponacquisition of real estate or beneficiary interest in trust for real estate is not recognized as expenses
but included in the cost of acquisition of the concerned real estate, etc. In the fiscal period underreview, the amount equivalent to fixed property tax, etc. included in the cost of acquisition of realestate, etc. was 290,383 thousand yen.
4. Method of(1) Hedge accounting approachhedge accounting
Deferral hedge accounting is adopted.
(2) Hedging instruments and hedged items
Hedging instruments:
Interest rate swap transaction
Hedged items: Interest on loans(3) Hedging policy
SAR conducts derivative transactions for the purpose of hedging the risks provided in its Articles
of Incorporation pursuant to rules and regulations.
(4) Method of assessing the effectiveness of hedging
The effectiveness of hedging is assessed by comparing the cumulative change in cash flows of
the hedging instruments with the cumulative change in cash flows of the hedged items andverifying the ratio of the amount of change in the two.
5. Scope of funds
The funds (cash and cash equivalents) in the statement of cash flows comprise cash on hand and cashin the statement ofin trust, demand deposits and deposits in trust, and short-term investments with a maturity of three
cash flows (cash andmonths or less from the date of acquisition that are readily convertible to cash and that are subject
cash equivalents)
to an insignificant risk of changes in value.
6. Other significant(1) Accounting for beneficiary interest in trust for real estate, etc.
matters serving as theConcerning beneficiary interest in trust for real estate, etc. held, all accounts of assets andbasis for preparation
liabilities within trust assets as well as all accounts of revenue and expenses from the trust assetsof financial statements
are recognized in the relevant account item of the balance sheet and the statement of income.
The following material items of the trust assets recognized in the relevant account item areseparately listed on the balance sheet.
① Cash and deposits in trust② Buildings in trust; Tools, furniture and fixtures in trust; Land in trust③ Leasehold rights in trust④ Tenant leasehold and security deposits in trust(2) Accounting for consumption tax, etc.
The accounting for consumption tax and local consumption tax is the taxes are excluded from thetransaction amounts.
Non-deductible consumption tax on acquisition of assets is included in the cost of acquisition ofeach asset.

－ 16 －

(8) Notes to the Financial Statements[Notes to the Balance Sheet]*1

Minimum net assets as provided in Article 67, Paragraph 4 of the Act on Investment Trusts and Investment Corporations(Unit: thousand yen)
1st fiscal period(As of July 31, 2016)
50,000[Notes to the Statement of Income]*1 Breakdown of operating income (loss) from real estate leasing(Unit: thousand yen)
1st fiscal period
From: Dec. 1, 2015
To: July 31, 2016
A. Operating revenue from real estate leasing
Lease business revenue
Rental revenue
Common area maintenance revenue

1,573,988
110,796

Parking revenue
Facility use revenue

44,911
5,417

Other rental revenue

1,923

1,737,036

109,039
13,350122,389

Other lease business revenue
Utilities reimbursement
Other revenue
Total operating revenue from real estate leasing

1,859,425

B. Operating expenses from real estate leasing
Expenses related to rent business
Management fee
Utilities expenses

104,636
114,990

Repair expenses
Trust fee

44,106
6,519

Insurance premium
Depreciation

3,015
246,684

Other expenses

48,070Total operating expenses from real estate leasing
C. Operating income (loss) from real estate leasing

－B]

[A

－ 17 －

568,022
1,291,403

[Notes to the Statement of Unitholders’ Equity]*1 Total number of investment units authorized and total number of investment units issued and outstanding
1st fiscal period
From: Dec. 1, 2015
To: July 31, 2016
Total number of investment units authorized

10,000,000 units

Total number of investment units issued and outstanding

344,700 units[Notes to the Statement of Cash Flows]*1 Reconciliation of cash and cash equivalents at end of period to the amount of balance sheet items(Unit: thousand yen)
1st fiscal period
From: Dec. 1, 2015
To: July 31, 2016
Cash and deposits

2,006,136

Cash and deposits in trust

2,557,948

Cash and cash equivalents

4,564,085[Notes on Lease Transactions]Operating leases (as lessor)
Future minimum lease payments(Unit: thousand yen)
1st fiscal period
As of July 31, 2016
Not later than 1 year

1,280,165

Later than 1 year

2,711,014

Total

3,991,179－ 18 －

[Notes on Financial Instruments]
1. Matters concerning status of financial instruments(1) Policy for handling financial instruments
SAR shall procure funds to allocate to acquisition of real estate related assets, repayment of interest-bearing liabilities,
etc. through mainly issuance of investment units, borrowing from financial institutions, issuance of investment
corporation bonds, etc. Upon procuring funds through interest-bearing liabilities, due consideration shall be given tofund procurement agility and financial stability.
(2) Description of financial instruments and associated risks, and risk management system
The funds procured through loans, which shall be for the purpose of mainly acquisition of assets, are exposed to liquidity
risk until the repayment date, but the concerned risks are managed by taking such measures as lengthening the
procurement periods and staggering the maturities. In addition, loans with floating interest rates are exposed to interest
rate fluctuation risk, but derivative transactions (interest rate swap transactions) are utilized as hedging instruments to,in effect, convert interest rates to fixed rates in order to mitigate that risk. For the hedge accounting approach, hedging
instruments, hedged items, hedging policy and method of assessing the effectiveness of hedging, please refer to “4.
Method of hedge accounting” described under “Notes on Matters Concerning Significant Accounting Policies” earlier inthis document.
(3) Supplementary explanation to matters concerning fair value, etc. of financial instruments
Not applicable.
2.

Matters concerning fair value, etc. of financial instruments
The carrying amount and fair value as of July 31, 2016, and the amount of difference between these, are as follows:(Unit: thousand yen)
Carrying amount

Fair value

Amount of difference(1) Cash and deposits

2,006,136

2,006,136-(2) Cash and deposits in trust

2,557,948

2,557,948-

4,564,085

4,564,085-(3) Short-term loans payable

3,355,000

3,355,000-(4) Long-term loans payable

29,200,000

29,200,000-

32,555,000

32,555,000-(26,238)(26,238)-

Assets total

Liabilities total(5) Derivative transactions (*)(*)

Assets and liabilities arising from derivative transactions are offset and presented in the net amount, with the balance shown in parentheses ( )when in a net liability position.

(Note 1) Method of calculation of the fair value of financial instruments(1) Cash and deposits; (2) Cash and deposits in trust; (3) Short-term loans payable
Because these are settled in a short period of time, the fair value is approximately the same as the book value and thus stated at that bookvalue.
(4) Long-term loans payable
Because long-term loans payable are all with floating interest rates under terms and conditions that interest rates be reviewed every set periodof time, the fair value is approximately the same as the book value and thus stated at that book value.
(5) Derivative transactions
Please refer to “Notes on Derivative Transactions” later in this document.
(Note 2) Financial instruments for which estimation of fair value is recognized to be difficult
Tenant leasehold and security deposits in trust are not subject to valuation at fair value, because a reasonable estimation of cash flows isrecognized to be extremely difficult due to there being no market price and difficulty of calculating the actual deposit period from when lessees
move in to when they move out.
(Unit: thousand yen)
Category
Tenant leasehold and security deposits in trust

Carrying amount

1,526,363－ 19 －

(Note 3) Amount of redemption of monetary claims scheduled to be due after the date of settlement of accounts (July 31, 2016)(Unit: thousand yen)
Later than 1 year Later than 2 years Later than 3 years Later than 4 years
Not later thanand not later than and not later than and not later than and not later than Later than 5 years
1 year
2 years
3 years
4 years
5 years
Cash and deposits

2,006,136

-

-

-

-

-

Cash and deposits in trust

2,557,948

-

-

-

-

-

Total

4,564,085

-

-

-

-

-

(Note 4) Amount of repayment of loans scheduled to be due after the date of settlement of accounts (July 31, 2016)(Unit: thousand yen)
Later than 1 year Later than 2 years Later than 3 years Later than 4 years
and not later than and not later than and not later than and not later than Later than 5 years
2 years
3 years
4 years
5 years

Not later than
1 yearShort-term loans payable

3,355,000

-

-

-

-

-

Long-term loans payable-

7,300,000

7,300,000

7,300,000

7,300,000-

3,355,000

7,300,000

7,300,000

7,300,000

7,300,000

-

Total

[Notes on Securities]
1st fiscal period (as of July 31, 2016)
Not applicable.
[Notes on Derivative Transactions]
1st fiscal period (as of July 31, 2016)1.

Derivative transactions to which hedge accounting is not applied
Not applicable.

2.

Derivative transactions to which hedge accounting is applied
The following is the contract amount or the amount equivalent to the principal provided in the contract as of the date ofsettlement of accounts for each hedge accounting approach.
(Unit: thousand yen)Hedge
accounting
approach

Type, etc. of derivative transactionMainhedged item

Principle
accounting

Interest rate swap transaction(floating receivable; fixed payable)

Long-termloans payable

Contract amount, etc. (Note 1)
Of which,later than 1 year
21,900,000(Note 1) Contract amount, etc. is based on notional principal.
(Note 2) Fair value is calculated based on the price quoted by lending financial institutions, etc.

[Notes on Retirement Benefits]
1st fiscal period (as of July 31, 2016)
Not applicable.

－ 20 －

21,900,000

Fair value(Note 2)
(26,238)

[Notes on Tax-Effect Accounting]
1. Breakdown of main causes for occurrence of deferred tax assets and deferred tax liabilities(Unit: thousand yen)
1st fiscal period
As of July 31, 2016
Deferred tax assets
Non-deductible accrued enterprise tax
Deferred gains or losses on hedges

32
8,288

Subtotal
Valuation allowance

8,321(8,288)Total

32

Deferred tax assets, net
2.

32

Breakdown of major components that caused any significant differences between the statutory tax rate and the effective
income tax rate after application of tax-effect accounting(Unit: %)1st fiscal period
As of July 31, 2016
Statutory tax rate

32.31

[Adjustments]
Deductible distributions payable(32.15)

Other

0.27

Effective income tax rate
after application of tax-effect accounting

0.44[Notes on Share of Profit (Loss) of Entities Accounted for Using Equity Method, etc.]
1st fiscal period (as of July 31, 2016)
Not applicable.

－ 21 －

[Notes on Related-Party Transactions]
1. Parent company, major corporate unitholder, etc.
1st fiscal period (from December 1, 2015 to July 31, 2016)
Not applicable.
2.

Affiliated company, etc.
1st fiscal period (from December 1, 2015 to July 31, 2016)
Not applicable.

3.

Fellow subsidiary, etc.
1st fiscal period (from December 1, 2015 to July 31, 2016)
Not applicable.

4.

Director, major individual unitholder, etc.
1st fiscal period (from December 1, 2015 to July 31, 2016)

Type

Name ofCapital stock

Description

company,orof business

investmentsorin capital

occupation

etc. or

Address

personPercentage
of votingrights, etc.
held by (in)Balance atTransaction
Description ofamountAccounttransaction(thousand

item

yen)

SAR

end ofperiod(thousandyen)

Payment of
asset
management

Director,or close
relativeof

AtsushiKato－－director

Executive

fee to the

Director of

Asset

SAR, andManagement

President
and CEO of－

410,569

Accounts(Note 3)

payable -(Note 4)other－111,352(Note 4)Company(Note 1)the Asset

Payment ofManagement

organizer fee

Company

to the Asset

50,000Management(Note 4)－Company(Note 2)
(Note 1)

The transaction is one that was conducted by Atsushi Kato as President and CEO of a third party (the Asset Management Company), andthe transaction amount is based on the terms and conditions provided in the Articles of Incorporation of SAR.

(Note 2)
(Note 3)

Payment of the organizer fee is based on the terms and conditions provided in the Articles of Incorporation of SAR.
Asset management fee includes the property acquisition incentive portion included in the book value of individual real estate, etc. in theamount of 307,465 thousand yen.

(Note 4)Of the amounts above, the transaction amount does not include consumption tax, while the balance at the end of the period includes
consumption tax.

[Notes on Asset Retirement Obligations]
1st fiscal period (as of July 31, 2016)
Not applicable.

－ 22 －

[Notes on Investment and Rental Properties]
SAR owns rental real estate, etc. for the purpose of earning revenue from leasing. The carrying amount, amount of increase(decrease) during the period and fair value of these investment and rental properties are as follows:(Unit: thousand yen)
1st fiscal period
From: Dec. 1, 2015
To: July 31, 2016
Carrying amount
Balance at beginning of period-

Amount of increase (decrease) during period

62,482,461

Balance at end of period

62,482,461

Fair value at end of period

66,020,000(Note 1) Carrying amount is the amount of the cost of acquisition, less accumulated depreciation.
(Note 2) Of the amount of increase (decrease) in investment and rental properties, the amount of increase is mainly attributable to acquisition of realestate beneficiary interest in trust of 18 properties (62,599,154 thousand yen), while the amount of decrease is mainly attributable toaccumulated depreciation (246,684 thousand yen).
(Note 3) Fair value at the end of the period is the appraisal value by an outside real estate appraiser.

The income (loss) concerning investment and rental properties for the fiscal period ended July 31, 2016 (1st fiscal period) is as
stated in “Notes to the Statement of Income” earlier in this document.

－ 23 －

[Notes on Segment Information]
1. Segment information
Segment information is omitted because SAR operates a single segment, which is the real estate leasing business.
2.

Related information
1st fiscal period (from December 1, 2015 to July 31, 2016)(1) Information about products and services
Information about products and services is omitted because net sales to external customers for a single products andservices category are in excess of 90% of operating revenue on the statement of income.
(2) Information about geographic areas① Net sales
Information about net sales is omitted because net sales to external customers in Japan are in excess of 90% of
operating revenue on the statement of income.
② Property, plant and equipment
Information about property, plant and equipment is omitted because the amount of property, plant and equipment
located in Japan is in excess of 90% of the amount of property, plant and equipment on the balance sheet.
(3) Information about major customers
Information about operating revenue to a single external customer is omitted because consent has not been obtained
from the tenant.

[Notes on Per Unit Information]
1st fiscal period
From: Dec. 1, 2015
To: July 31, 2016
Net assets per unit

98,197 yen

Net income per unit

1,813 yen

(Note 1) Net income per unit is calculated by dividing net income by the daily weighted average number of investment units. In addition, diluted net income
per unit is not stated, because there are no diluted investment units.
(Note 2) The basis for calculation of net income per unit is as follows:

1st fiscal period
From: Dec. 1, 2015
To: July 31, 2016
Net income (thousand yen)

333,916

Amount not available to common unitholders (thousand yen)-

Net income attributable to common investment units(thousand yen)

333,916

Average number of investment units during period (units)

184,092[Notes on Significant Subsequent Events]
Not applicable.

－ 24 －

(9) Changes in Total Number of Investment Units Issued and Outstanding
The following are the changes in unitholders’ capital and total number of investment units issued and outstanding since theestablishment of SAR.

Date

Event

Unitholders’ capital(thousand yen)
Increase(Decrease)

December 1, 2015
January 14, 2016
April 19, 2016
May 17, 2016

Establishment throughprivate placement
Capital increase throughprivate placement
Capital increase throughpublic offering
Capital increase throughthird-party allotment

Balance

Total number of investment units
issued and outstanding(units)Increase
Balance(Decrease)

Remarks

200,000

200,000

2,000

2,000

(Note 1)9,500,000

9,700,000

95,00097,000(Note 2)

22,705,375

32,405,375

235,900

332,900(Note 3)

1,135,750

33,541,125

11,800344,700(Note 4)(Note 1) Investment units were issued at a paid-in amount of 100,000 yen per unit upon the establishment of SAR.
(Note 2) Investment units were issued at a paid-in amount of 100,000 yen per unit.
(Note 3) New investment units were issued through public offering at an issue price of 100,000 yen (paid-in amount of 96,250 yen) per unit for the
purpose of procuring funds for acquisition of new properties, etc.
(Note 4) New investment units were issued through third-party allotment at a paid-in amount of 96,250 yen per unit for the purpose of procuring funds
for acquisition of new properties, etc.

－ 25 －

4.

Changes in Directors(1) Directors of the Investment Corporation
There were no changes in directors in the fiscal period under review.
(2) Directors of the Asset Management Company
There were no changes in directors in the fiscal period under review.

5.

Reference Information(1) Investment Status
1st fiscal period(As of July 31, 2016)
Type of asset

Geographic area

Primary use(Note 1)

Total amount held(million yen)
(Note 2)

As a percentage of
total assets(%)(Note 3)

Greater Tokyo

18,31926.7

Other than Greater Tokyo

8,116

11.8

Greater Tokyo

12,045

17.5

Other than Greater Tokyo

1,564

2.3

Logistics facility

Greater Tokyo

18,522

27.0

Hotel

Other than Greater Tokyo

3,914

5.7

62,482

91.0

Deposits and other assets

6,154

9.0

Total amount of assets

68,636100.0

OfficeReal estatein trust

Residence

Subtotal

Amount(million yen)

As a percentage of
total assets(%)

Total amount of liabilities (Note 4)

34,788

50.7

Total amount of net assets (Note 4)

33,84849.3(Note 1) “Greater Tokyo” refers to Tokyo’s 23 wards, Yokohama City and Kawasaki City in the case of the office asset type, andTokyo, Kanagawa Prefecture, Saitama Prefecture and Chiba Prefecture in the case of other asset types (residence,logistics facility and hotel). The same shall apply hereinafter.
(Note 2) “Total amount held” is the carrying amount as at the date of settlement of accounts (in the case of real estate in trust,then the depreciated book value), rounded down to the nearest million yen.
(Note 3) “As a percentage of total assets” is the carrying amount of the concerned assets expressed as a percentage of the total
amount of assets, rounded to the first decimal place.
(Note 4) “Total amount of liabilities” and “Total amount of net assets” are according to total liabilities and total net assets on
the balance sheet.

－ 26 －

(2) Invested Assets① Overview of Investment Assets
PropertyUse

no.

Property name(Note 1)

OFC-01

OFC-02

OFC-03

Office

OFC-04

Minami-Azabu Shibuya
Building
Oak Minami-Azabu
Building
Honmachibashi Tower
Nishi-Shinjuku Matsuya
Building

Acquisition

Share of

Location

price

investment(Note 2)

(million yen)(%)

(Note 3)(Note 4)

Real estateappraisalvalue, etc.

Acquisition date(million yen)
(Note 5)

Minato-ku, Tokyo

2,973

4.8

3,020

January 14, 2016

Minato-ku, Tokyo

3,271

5.3

3,400

January 14, 2016

6,065

9.9

6,700

January 14, 2016

Shibuya-ku, Tokyo

1,763

2.9

2,230

April 20, 2016

Chuo-ku,
Osaka-shi, Osaka

OFC-05Alphabet Seven

Minato-ku, Tokyo

1,725

2.8

2,250

April 20, 2016

OFC-06

Shibuya MK Building

Shibuya-ku, Tokyo

2,042

3.3

2,330

April 20, 2016

1,885

3.1

1,950

April 20, 2016

6,320

10.3

6,390

April 20, 2016

26,04442.4

28,270－

OFC-07

Hakata-eki Higashi 113
Building

Hakata-ku,
Fukuoka-shi,
Fukuoka
Kanagawa-ku,

OFC-08Asahi Building

Yokohama-shi,
Kanagawa

Residence

Subtotal
RSC-01

Urban Park Azabujuban

Minato-ku, Tokyo

2,045

3.3

2,130

January 14, 2016

RSC-02

Urban Park Daikanyama

Shibuya-ku, Tokyo

6,315

10.3

7,120

January 14, 2016

RSC-03

Urban Park Yoyogikoen

Shibuya-ku, Tokyo

875

1.4

1,000

January 14, 2016

RSC-04

Urban Park Shin-Yokohama

2,528

4.1

2,560

April 20, 2016

1,490

2.4

1,590

April 20, 201613,25321.6

14,400

－

6,942

11.3

7,000

January 14, 2016

3,560

5.8

3,860

January 14, 2016

7,875

12.8

8,210

January 14, 2016

18,37729.9

19,070

－

2,069

3.4

2,220

January 14, 2016

1,750

2.8

2,060

January 14, 2016

3,819

6.2

4,280

61,493100.0

66,020Kanagawa-ku,
Yokohama-shi,
Kanagawa
RSC-05

Urban Park Namba

Naniwa-ku,
Osaka-shi, Osaka

Subtotal
Iwatsuki-ku,
LGC-01

Iwatsuki Logistics

Saitama-shi,

Logistics facility

Saitama
Kanagawa-ku,
LGC-02

Yokohama Logistics

Yokohama-shi,
Kanagawa

LGC-03

Funabashi Logistics

Funabashi-shi,
Chiba

Hotel

Subtotal
HTL-01R&B Hotel Umeda East

HTL-02

Smile Hotel Namba

Kita-ku,
Osaka-shi, Osaka
Naniwa-ku,
Osaka-shi, Osaka

Subtotal
Total－ 27 －－－

(Note 1) “Property no.” is that assigned to SAR’s investment assets by grouping into office (OFC), retail facility (RTL), residence (RSC), logistics facility(LGC) and hotel (HTL), and numbering in order group by group. The same shall apply hereinafter.
(Note 2) “Location” is the smallest independent administrative zone of the geographic area where the investment asset is located.
(Note 3) “Acquisition price” is, with the exception of Minami-Azabu Shibuya Building and Oak Minami-Azabu Building, the sale and purchase pricestated in the sale and purchase agreement for the investment asset, rounded to the nearest million yen. The sale and purchase price does
not include consumption tax, local consumption tax and various expenses required for the acquisition. In the case of Minami-Azabu Shibuya
Building and Oak Minami-Azabu Building, because the price is not set per investment asset on the sale and purchase agreement, theacquisition price is the pro rata portion of the total sale and purchase price of the concerned investment assets in proportion to each of theconcerned investment assets’ appraisal value at the time of acquisition.
(Note 4) “Share of investment” is the acquisition price of the investment asset expressed as a percentage of the sum total amount of acquisition price,rounded to the first decimal place.
(Note 5) Appraisals are entrusted to Daiwa Real Estate Appraisal Co., Ltd. and Japan Real Estate Institute, and real estate appraisal values are theopinions of value stated in the real estate appraisal report with July 31, 2016 as the date of value, each rounded to the nearest million yen.
For details, please refer to “④ Summary of appraisal report.”② Portfolio Summarya.

By Geographic Area
Geographic area

GreaterTokyo

Acquisition price(million yen)

Share
(%)
(Note 1)

5 central wards of Tokyo (Note 2)

21,00934.2

Other areas in Greater Tokyo

27,225

44.3

78.4

Other than Greater Tokyo

13,259

21.6

Total

61,493100.0(Note 1) “Share” is calculated on an acquisition price basis, rounded to the first decimal place. Accordingly, the shares may
not add up to 100%. The same shall apply hereinafter in “c. By Asset Type (Use).”(Note 2) “5 central wards of Tokyo” refers to Chiyoda Ward, Chuo Ward, Minato Ward, Shinjuku Ward and Shibuya Ward.
The same shall apply hereinafter.
(a) OfficeGeographic area

Acquisition priceShare(million yen)(%)

Greater

5 central wards of Tokyo

11,774

45.2

Tokyo

Other areas in Greater Tokyo

6,320

24.3

69.5

Other than Greater Tokyo

7,950

30.5

Total

26,044100.0(b) Residence
Geographic area
GreaterTokyo

Acquisition priceShare(million yen)(%)

5 central wards of Tokyo

9,235

69.7

Other areas in Greater Tokyo

2,528

19.1

88.8

Other than Greater Tokyo

1,490

11.2

Total

13,253100.0－ 28 －

(c) Logistics facility
Acquisition price(million yen)

Geographic area
Greater

5 central wards of Tokyo

Tokyo

Other areas in Greater Tokyo－

0.0

18,377

100.0

100.0

－

0.0

18,377

100.0

Other than Greater Tokyo
Total

Share
(%)

(d) Hotel
Acquisition price(million yen)

Geographic areab.

Greater

5 central wards of Tokyo

Tokyo

Other areas in Greater Tokyo

－
－

0.0

0.0

0.0

Other than Greater Tokyo

3,819

100.0

Total

3,819

100.0

By Size
Acquisition price

Number ofproperties

Share
(%)
(Note)

5 billion yen or more
but less than 10 billion yen

5

27.8

1 billion yen or more
but less than 5 billion yen

12

66.7

Less than 1 billion yen

1

5.6

Total

18

100.0

(Note)
c.

Share
(%)

“Share” is calculated on a number of properties basis.

By Asset Type (Use)Use

Number of

Acquisition priceShareproperties(million yen)(%)

Office8

26,044

42.4

Residence

5

13,253

21.6

Logistics facility

318,377

29.9

Hotel

2

3,819

6.2

Total

18

61,493100.0－ 29 －

③ Status of Leasing

Propertyno.

OFC-01

Property nameMinami-Azabu Shibuya
Building

OFC-02

Oak Minami-Azabu Building

OFC-03

Honmachibashi Tower

OFC-04

Nishi-Shinjuku Matsuya
Building

OFC-05Alphabet Seven

OFC-06

Shibuya MK Building

OFC-07

Hakata-eki Higashi 113
Building

Number ofConstruction

tenants

completion(Note 1)

Operating

Security andrevenueguarantee

from leasing

deposits(thousand(thousand

yen)

yen)

(Note 2)

(Note 3)

Leased area Leasable area
(m2)

(m2)

(Note 4)(Note 5)

Occupancy
rate(%)(Note 6)

June 1993

4

98,909107,636

3,263.08

3,263.08

100.0

April 1985

10

120,886

193,711

5,831.96

6,511.77

89.6

235,320

194,964

10,489.58

10,489.58

100.0

5

February 2010

(Note 7)

May 1987

8

50,71389,4493,293.01

3,512.19

93.8

January 1990

8

38,15291,0152,265.59

2,464.59

91.9

July 1993

5

34,40273,927

1,612.88

1,612.88

100.0

October 1987

32

39,75588,7303,600.44

3,600.44

100.0

OFC-08Asahi Building

November 1994

18

113,250

221,275

8,101.80

8,684.30

93.3

RSC-01

Urban Park Azabujuban

November 1999

41

57,705

11,686

1,956.15

1,986.76

98.5

RSC-02

Urban Park Daikanyama

64

200,635

84,4955,569.45

5,977.18

93.2

RSC-03

Urban Park Yoyogikoen

July 1998

4

23,90816,9001,214.28

1,545.36

78.6

RSC-04

Urban Park Shin-Yokohama

May 2009

70

42,93010,4003,697.74

3,989.11

92.7

RSC-05

Urban Park Namba

January 2013

111

27,767100

2,436.82

2,584.81

94.3

LGC-01

Iwatsuki Logistics

October 2014

3

220,889

97,01430,190.81

30,190.81

100.0

LGC-02

Yokohama Logistics

October 1994

1

18,135.34

100.0① November 1982
② May 2006

Not

Not

Not

disclosed

disclosed

disclosed(Note 9)(Note 9)(Note 9)Building 1:
LGC-03

Funabashi Logistics

September 1992
Building 2:

4

280,746

83,426

34,633.37

37,818.26

91.6

August 1997
HTL-01R&B Hotel Umeda East

October 2000

1

70,359106,661

3,940.93

3,940.93

100.0

HTL-02

Smile Hotel Namba

February 2008

1

72,938-

1,711.42

1,711.42

100.0

390

1,859,425

1,526,363

141,944.65

148,018.81

95.9

Total (18 properties)(Note 1) “Number of tenants” is the number of tenants (excluding parking) under the lease agreement stated in the leaseagreement for the investment asset as of July 31, 2016. If a single tenant is leasing multiple rental units in an
investment asset, the tenant is counted as 1 tenant for the concerned investment asset. If a single tenant is leasing
rental units across multiple investment assets, the tenant is counted as separate tenants and the sum total numberof tenants is stated in the total column. Furthermore, in cases where a pass-through type master lease agreement
under which rent from end-tenants is received as is in principle (“pass-through type master lease”) has beenconcluded for the concerned investment asset, the total number of end-tenants is stated. In cases where a master
30

－

－

lease agreement agreeing to the effect that the rent under the master lease agreement shall be a fixed rent (“rentguaranteed type master lease”) has been concluded for the concerned investment asset, the number of tenants is 1
and the sum total of these is stated.
(Note 2) “Operating revenue from leasing” is rental revenue, common area maintenance revenue, parking revenue and otherrevenue from real estate held generated during the fiscal period under review (including other lease businessrevenue).
(Note 3) “Security and guarantee deposits” is the sum total amount of tenant security and guarantee deposits required basedon the lease agreement (including deposits based on parking, antenna, rooftop and other agreements; the amountafter amortization) for the investment asset as of July 31, 2016 (limited to those occupied as of said date).
Furthermore, in cases where a pass-through type master lease agreement has been concluded for the concerned
investment asset, it is the sum total amount of tenant security and guarantee deposits under lease agreements
concluded with end-tenants.
(Note 4) “Leased area” is the sum total of the leased area stated in the lease agreement for the investment asset as of July
31, 2016. Furthermore, in cases where a master lease agreement has been concluded for the concerned investment
asset, it is the sum total of the leased area under lease agreements concluded with end-tenants for properties undera pass-through type master lease, and it is the leased area under the master lease agreement for properties undera rent-guaranteed type master lease.
(Note 5) “Leasable area” is the floor area regarded as being available for leasing based on the lease agreement or building
drawing, etc. of the building for the investment asset as of July 31, 2016.
(Note 6) “Occupancy rate” is the ratio of leased area to leasable area for the investment asset as of July 31, 2016, rounded to
the first decimal place. In addition, in the total column, it is the ratio of the sum total of leased area to the sum totalof leasable area for the investment asset, rounded to the first decimal place.
(Note 7) Of the tenants of the property, a single company leases all 36 units of the residential portion, of which 30 units areunder a rent-guaranteed type master lease agreement and 6 units are under a pass-through type master leaseagreement.
(Note 8) In the table, “Number of tenants,” “Security and guarantee deposits,” “Leased area” and “Occupancy rate” are basedon lease agreements valid as of July 31, 2016, even if there is a notice of cancellation or termination of leaseagreements with end-tenants or unpaid rent.
(Note 9) Not disclosed, because consent for disclosure has not been obtained from the tenant.

－ 31 －

④ Summary of Real Estate Appraisal Report, etc.
Summary of appraisal report

Use

Propertyno.

Appraisal
Property namefirm
(Note 1)

Income approachAppraisal
value

DCF

methodmethod(million yen)
(Note 2)

Indicated(million yen)(%)

Cap rate(%)

Indicated

Discount

Terminal

value

rate

cap rate(million yen)

(%)

(%)

(Note 4)(Note 3)

OFC-01

Minami-Azabu Shibuya Building

Daiwa

3,020

3,120

4.2

2,980

3.8

4.4

145

4.9

OFC-02

Oak Minami-Azabu Building

JREI

3,400

3,440

4.4

3,360

4.2

4.6

165

5.0

OFC-03

Honmachibashi Tower

Daiwa

6,700

6,870

4.4

6,620

4.2

4.6

314

5.2

OFC-04

Nishi-Shinjuku Matsuya Building

Daiwa

2,230

2,250

4.4

2,220

4.2

4.6

111

6.3

OFC-05Alphabet Seven

JREI

2,250

2,280

4.3

2,210

4.1

4.5

101

5.9

OFC-06

Shibuya MK Building

JREI

2,330

2,370

4.1

2,290

3.9

4.3

100

4.9

OFC-07

Hakata-eki Higashi 113 Building

Daiwa

1,950

2,050

4.9

1,910

4.7

5.1

111

5.9

OFC-08Asahi Building

JREI

6,390

6,420

4.3

6,360

4.0

4.4

303

4.8

28,27028,800―27,950

―

―

1,350

5.2

RSC-01

Urban Park Azabujuban

JREI

2,130

2,170

4.1

2,090

3.9

4.3

91

4.5

RSC-02

Urban Park Daikanyama

JREI

7,120

7,240

4.0

6,990

3.8

4.2

300

4.8

RSC-03

Urban Park Yoyogikoen

JREI

1,000

1,020

4.3

979

4.1

4.5

46

5.2

RSC-04

Urban Park Shin-Yokohama

Daiwa

2,560

2,610

4.6

2,540

4.4

4.8

124

4.9

RSC-05

Urban Park Namba

Daiwa

1,590

1,620

4.9

1,580

4.7

5.1

81

5.4

14,40014,660－14,179

－

－

642

4.8

Daiwa

7,000

7,130

4.6

6,950

4.4

4.8

333

4.8

Subtotal

Residence

NOI yield
NOI(million yen)value

OfficeAppraisal

Direct capitalization

Subtotal
LGC-01

Iwatsuki Logistics

Logistics

LGC-02

Yokohama Logistics

Daiwa

3,860

3,950

4.5

3,820

4.3

4.7

204

5.7

facility

LGC-03

Funabashi Logistics

Daiwa

8,210

8,330

4.5

8,160

4.3

4.7

427

5.4

19,07019,410－18,930

－

－

965

5.2

2,220

2,240

4.7

2,210

4.5

4.9

113

5.5

5.7

2,050

5.5

5.9

123

7.0

－
－

－
－

236

6.2

3,193

5.2

Subtotal

Hotel

HTL-01R&B Hotel Umeda East

Daiwa

HTL-02

Smile Hotel Namba

Daiwa

2,060

2,070

Subtotal

4,280

4,310

Total

66,02067,180－－4,260
65,319(Note 1) “Appraisal firm” is shown as “Daiwa” to stand for Daiwa Real Estate Appraisal Co., Ltd. and “JREI” to stand for Japan
Real Estate Institute.
(Note 2) “Appraisal value” is as of July 31, 2016 as the date of value.
(Note 3) “NOI” is the net operating income by the direct capitalization method stated in the appraisal report, rounded to thenearest million yen.
(Note 4) “Appraisal NOI yield” is based on the NOI found in the indication of value by the direct capitalization method in thereal estate appraisal report and expressed as a percentage of acquisition price, rounded to the first decimal place.

－ 32 －

⑤ Information on Major Real Estate Properties
Of investment assets, the following are those that fall under the category of major real estate properties (thosebuildings/facilities pertaining to land recognized to be used collectively of which total rental revenue accounts for 10% or moreof the sum total of total rental revenue of investment assets) and the top five properties in terms of total rental revenue as ofJuly 31, 2016.
Funabashi
Logistics(Note 1)

Honmachibashi
Tower

Asahi Building

Iwatsuki
Logistics

Urban Park
Daikanyama

July 31, 2016

91.6%

100.0%

93.3%

100.0%

93.2%

June 30, 2016

91.6%

100.0%

93.3%

100.0%

96.4%

Changes in

May 31, 2016

91.6%

100.0%

93.3%

100.0%

94.5%

occupancy
rate

April 30, 2016

91.6%

100.0%

93.3%

100.0%

93.6%(Note 2)

March 31, 2016

91.6%

100.0%

93.3%

100.0%

96.4%

February 29, 2016

91.6%

100.0%

93.3%

100.0%

97.3%

January 31, 2016

91.6%

100.0%

93.3%

100.0%

97.4%(Note 1) The property falls under the category of major real estate properties as defined above.
(Note 2) “Changes in occupancy rate” is based on information received from the seller of the investment asset and is the ratioof leased area to leasable area for the investment asset as of the record date, rounded to the first decimal place.
⑥ Top End-Tenants in Terms of Leased Area
The following table lists the tenants ranking in the top ten tenants in terms of leased area of investment assets.
Leased area
Name of tenant

Name of property occupied(m2)(Note 1)

As a percentage of
total leasable area(%)
(Note 2)

1

Not disclosed (Note 3)

Iwatsuki Logistics

Not disclosed (Note 3)

20.1

2

Not disclosed (Note 3)

Funabashi Logistics

Not disclosed (Note 3)

14.6

3

Not disclosed (Note 3)

Yokohama Logistics

Not disclosed (Note 3)

12.3

4

Not disclosed (Note 3)

Funabashi Logistics

Not disclosed (Note 3)

4.8

5

Ricoh Japan Corporation

Honmachibashi Tower

6,044.70

4.1

6

Kao Corporation

Funabashi Logistics

5,888.87

4.0

7

Washington Hotel Corporation

R&B Hotel Umeda East

3,940.93

2.7

8

Not disclosed (Note 3)

Honmachibashi Tower

2,505.12

1.7

9

TYO Technical Ranch Inc.

Minami-Azabu Shibuya Building

2,015.50

1.4

10

Tricor K.K.

Oak Minami-Azabu Building

1,860.71

1.3

98,828.44

66.8

Total of the top 10 tenants(Note 1) “Leased area” is the sum total of the leased area stated in the lease agreement for the investment asset as of July
31, 2016.
(Note 2) “As a percentage of total leasable area” is the area leased to the tenant expressed as a percentage of the sum totalof leasable area of all investment assets, rounded to the first decimal place.
(Note 3) Not disclosed, because consent for disclosure has not been obtained from the end-tenant, etc.

－ 33 －

⑦ Capital expenditures
a. Schedule of Capital Expenditures
Of capital expenditures associated with renovation work, etc. in the 2nd fiscal period currently planned for assets heldby SAR as of July 31, 2016, the following are the major estimated amounts. The estimated construction costs below
include the portion separately charged to expenses in accounting.

Name of real estate, etc.
(Location)

Scheduled period

Yokohama Logistics

Upgrading of

From: Dec. 2016

(Yokohama-shi, Kanagawa)

air-conditioning equipment

To:

Funabashi Logistics(Funabashi-shi, Chiba)

Upgrading of
air-conditioning equipment

From: Sept. 2016To:
Oct. 2016

Urban Park Daikanyama

Exterior wall tile sealing
and renovation of(Shibuya-ku, Tokyo)b.

Purposecommon-use areas

Jan. 2017

From: Oct. 2016
To:

Dec. 2016

Estimated construction costs(thousand yen)Amount of Total
Total
payment amountamountduringalready
periodpaid
76,000－－25,000－－25,000－－

Oak Minami-Azabu Building(Minato-ku, Tokyo)

Upgrading of automatic
fire alarm equipment

From: Dec. 2016
To:
Jan. 2017

15,000－－Asahi Building(Yokohama-shi, Kanagawa)

Upgrading ofrefrigerant pipe

From: Oct. 2016To:
Nov. 2016

13,000－－Capital expenditures during period
The following is an outline of the major construction work, etc. falling under the category of capital expenditures
conducted in the fiscal period under review for assets held by SAR as of July 31, 2016. The fiscal period under review’s
capital expenditures Construction work falling under the category of capital expenditures in the fiscal period underreview amounted to 129,991 thousand yen and repair expenses separately charged to expenses in the fiscal period
under review amounted to 44,106 thousand yen for a combined total of 174,098 thousand yen of construction work
implemented.
Name of real estate, etc.
(Location)

Purpose

PeriodR&B Hotel Umeda East
(Osaka-shi, Osaka)

Upgrading of
air-conditioning equipment

From: Jan. 2016
To:
Feb. 2016

Yokohama Logistics

Upgrading of indoor unit
and outdoor unit of(Yokohama-shi, Kanagawa)

air-conditioning equipment

－

Other
Total

From: July 2016
To:

July 2016－

Construction costs(thousand yen)
72,356

7,200
50,435
129,991－ 34 －

⑧ Individual Property Income Statements(Unit: thousand yen)

Property no.
Property name

OFC-01

OFC-02

OFC-03

OFC-04

OFC-05

Minami-Azabu

Oak Minami-Azabu

Honmachibashi

Nishi-Shinjuku

Shibuya Building

Building

Tower

Matsuya Building

Alphabet Seven① Total operating revenue
from real estate leasing

98,909120,886

235,320

50,71338,152

Lease business revenue

92,286

113,515

207,469

46,737

34,583

Other lease business revenue

6,622

7,370

27,850

3,975

3,569

23,25043,49045,633

14,036

8,940

6,224

16,342

15,572

3,652

2,853

② Total operating expenses
from real estate leasing
Management fee
Trust fee

439

436

436

225

225

Utilities expenses

7,725

14,392

26,674

3,040

2,185

Insurance premium

139

272

424

77

61

Repair expenses

81

3,420

1,437

225

2,101

Property taxes

14

44

24

19

18

Other

8,626

8,581

1,063

6,795

1,494

③ NOI
(①－②)

75,65977,396

189,687

36,677

29,212④ Depreciation

10,855

6,645

53,153

3,585

1,522

⑤ Operating income (loss)
from real estate leasing(③－④)

64,80370,751

136,534

33,091

27,689⑥ Capital expenditures

1,240

24,527

3,587

-

3,780

⑦ NCF
(③－⑥)

74,41952,869186,100

36,67725,432

Property no.
Property name

OFC-06

OFC-07

Shibuya MK

Hakata-eki Higashi

OFC-08

Building

113 Building

Asahi Building

RSC-01

RSC-02

Urban Park

Urban Park

Azabujuban

Daikanyama① Total operating revenue
from real estate leasing

34,40239,755113,250

57,705

200,635

Lease business revenue

31,56837,318103,158

56,163

192,371

Other lease business revenue

2,833

2,436

10,092

1,541

8,264

9,125

8,478

19,874

9,174

25,441

2,556

4,145

8,645

2,250

9,285

197

197

225

382

382

Utilities expenses

1,788

2,328

9,635

479

5,058

Insurance premium

26

76

217

68

232

Repair expenses

17

1,592

629

3,518

5,639

② Total operating expenses
from real estate leasing
Management fee
Trust fee

Property taxes

8

29

48

1

0

Other

4,530

109

472

2,473

4,842

③ NOI
(①－②)

25,27731,276

93,376

48,530175,193④ Depreciation

1,530

3,504

13,433

4,439

13,488⑤ Operating income (loss)
from real estate leasing(③－④)

23,746

27,771

79,94244,090161,705

-

880

606

245

287

25,27730,396

92,77048,285

174,906⑥ Capital expenditures
⑦ NCF
(③－⑥)

－ 35 －

(Unit: thousand yen)

Property no.
Property name

RSC-03

RSC-04

RSC-05

LGC-01

LGC-02

Urban Park

Urban Park

Yoyogikoen

Shin-Yokohama

Urban Park

Iwatsuki

Yokohama

Namba

Logistics

Logistics① Total operating revenue
from real estate leasing

23,90842,93027,767

220,889

Lease business revenue

23,90839,50327,362206,079

-

3,427

405

14,810

11,481

7,330

3,567

22,124
6,091

Other lease business revenue② Total operating expenses
from real estate leasing
Management fee

4,326

2,630

1,401

Trust fee

436

197

197

482

Utilities expenses

812

380

203

14,810Insurance premium

54

102

38

321

Repair expenses

3,899

2,397

714

-

2

14

6

10

Other

1,949

1,608

1,005

408

③ NOI
(①－②)

12,42635,60024,199198,765④ Depreciation

2,000

10,907

4,847

51,861⑤ Operating income (loss)
from real estate leasing(③－④)

10,426

24,692

19,352

146,903⑥ Capital expenditures

923

1,886

311

-

11,50333,71323,888

198,765

Property taxes

⑦ NCF
(③－⑥)

(Note) Not disclosed, because consent for disclosure has not been obtained from the tenant.

Property no.
Property name

LGC-03

HTL-01

HTL-02

Funabashi

R&B Hotel

Smile Hotel

Logistics

Umeda East

Namba

① Total operating revenue
from real estate leasing

280,746

70,35972,938

Lease business revenue

261,051

70,35972,938Other lease business revenue

19,694--36,77910,497

2,945

12,426

814

723

436

482

700

15,8246-② Total operating expenses
from real estate leasing
Management fee
Trust fee
Utilities expenses
Insurance premium

466

134

63

Repair expenses

7,310

6,468

1,064

Property taxes

44

8

4

Other

271

2,582

388

③ NOI
(①－②)

243,967

59,862

69,992④ Depreciation

29,856

9,976

13,823⑤ Operating income (loss)
from real estate leasing(③－④)

214,11049,88656,169⑥ Capital expenditures

6,204

72,861-

237,763(12,999)

69,992

⑦ NCF
(③－⑥)

－ 36 －

Not disclosed(Note)

(Unit: thousand yen)

Property name

OfficeResidence

Logistics facility

HotelPortfolio

total

total

total

total

total

① Total operating revenue
from real estate leasing

731,392352,946

631,788

143,298

1,859,425

Lease business revenue

666,639

339,308

587,789

143,298

1,737,036

Other lease business revenue

64,752

13,63843,998-122,389

172,829

56,99578,07013,442

321,338

23,2091,538

104,636② Total operating expenses
from real estate leasing
Management fee

59,99319,894

Trust fee

2,384

1,596

1,355

1,182

6,519

Utilities expenses

67,7706,934

40,278

6

114,990

Insurance premium

1,295

496

1,024

198

3,015

Repair expenses

9,503

16,16910,9007,533

44,106

Property taxes

208

25

79

13

326

Other

31,673

11,879

1,221

2,970

47,743

③ NOI
(①－②)

558,563

295,951

553,717

129,855

1,538,087④ Depreciation

94,23135,682

92,97023,800246,684⑤ Operating income (loss)
from real estate leasing(③－④)

464,331260,268

460,747

106,055

1,291,403⑥ Capital expenditures

34,6203,654

18,85572,861

129,991

⑦ NCF
(③－⑥)

523,942

292,296

534,861

56,994

1,408,095－ 37 －