"Financial Results for the 5th Fiscal Period Ended July 2018"

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

Contents

1. History of active management since listing2

Characteristics of Star Asia Investment Corporation (SAR)

1. A diversified REIT
2. Change in distribution since listing

Portfolio developed with diversified assets located mainly in the Tokyo Area (Note 2)5

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

3. Performance of the 5th Fiscal Period
Ended July 201810

4. Future Initiatives

18

5. Appendix

26

3. Initiatives focusing on unitholder value
Constant, “out-of-the-box” active management

Investment policy

Prioritized, focusedinvestment in theTokyo Area
6. Notes48

Investment ratio of 70%
of higher in theTokyo Area

Achieving income
stability andgrowth throughdiversification ofasset type

Investment primarily
in middle-size
assets (Note 2)1

1. History of active management
since listing2

1. History of active management since listingContinuing implementation of active management in pursuit of maximizing unitholder value
The asset size has been increased four times through asset replacement which enhanced the portfolio and generated gain on sale, investment
in mezzanine loan debt that boosted distributable profits, and property acquisition alongside three instances of public offering.
Investment in mezzanine loan debt 1
Announced on Oct 25, 2017
Activemanagement
implemented
to date1st asset replacement
Announced in Dec 5, 2016
IPO
Announced on Apr 20, 2016

2nd asset replacement
Announced in Feb 28, 2017
1st PO
Announced on Mar 17, 2017

Investment in mezzanine loan debt 2
Announced on Dec 20, 2017

3rd asset replacement
Announced in Jul 23, 2018
2nd PO
Announced on Jan 12, 2018

4th asset replacement
Announced in Aug 21, 2018

Activemanagement will
be continued
hereafter

3rd PO
Announced on Aug 21, 2018

120,000
Investment unit price (yen)118,000

116,000
114,000
112,000
110,000
108,000
106,000
104,000
102,000
100,000
98,00096,00094,00092,00090,00088,00086,00084,000

本投資法人投資口価格

東証リート指数(Note 4)82,0003

1. History of active management since listing
Achievement of asset size in excess of 100 billion yen: The asset size has grown to 101.3 billion yen
through acquisition of properties alongside the three instances of public offering

Asset standpoint: Effects of diversification from increase in number of properties and tenants and the accompanying improvement of stability in revenue
Procurement standpoint: LTV control that considers borrowing capacity, increase of liquidity of investment units and increase of market cap
1st FP(As of July 2016)

After the Initiative

Number of properties

18 properties

33 properties

Total acquisition price61.4 billion yen

101.3 billion yen

Total appraisal value

66.0 billion yen

109.4 billion yen

Unrealized gain/loss

3.5 billion yen

7.3 billion yen

Number of tenants (note5)
Ratio of largest tenant(note6)390643

10.00%

6.26%

Appraisal NOI yield

5.2%

5.1%

Appraisal NOI Yield after
depreciation

4.4%

4.2%

20.9 years

20.1 years

Average building age

1st FP End(As of July 31, 2016)

After the Initiative

LTV(based on total assets)

47.4%

46.7%

Balance of borrowings

32,555 million yen

50,880 million yen

Number of lender banks

７ banks

11 banks

Average interest rate

0.428%

0.575%

Average borrowing period

3.24 years

4.13 years

Unitholders’ capital

33,541 million yen

52,745 million yen

Market cap (note7)30,299 million yen

55,596 million yen

107,492 yen

111,173 yen

NAV per unit

Seeking to construct a portfolio that incorporates stability of revenues and growth potential
End of 1st FP
Asset Type Composition Ratio
Residence
21.6%

Office42.4%

Asset size
61.4 billion yen

Logistics, 29.9%

After the Initiative*Revenue ratio was implemented for the 2nd FP

Hotel, 6.2%

Asset Type Composition Ratio

Revenue Ratio by Type

Residence
18.9%

Logistics
28.7%

OfficeRent revenues/
2,017 million
yen

Residence,
15.0%

Asset size(planned)
101.3 billion yen

46.4%

Hotel 6.0%

*Revenue ratio is predicted for the 7th FP

Logistics
30.5%

Office,
34.2%

Hotel
20.3%

Revenue Ratio by Type

Residence,
13.8%

Logistics
29.3%

Rent revenues/(predicted)
3,263 million
yen

Office,
41.4%

Hotel
15.5%

4

2. Change in distribution since listing5

2. Change in distribution since listing
Cash distributions are expected to increase due to gain on sale from the transfer of assets generated
in the four cases of asset replacement
Total gain on sale of 2.66 billion yen is expected to be realized by the 7th fiscal period
Asset replacements which contribute to strengthening the portfolio will continue to be deliberated as part of active management
1st asset replacement

2nd asset replacement

3rd asset replacement

4th asset replacement

Gain on sale:
150 million yen

Gain on sale:
1.5 billion yen

Gain on sale:
820 million yen

Gain on sale:
170 million yen

Internal reserves
113 million yen

調整後1口当たり分配金
Cash distribution per unit after adjustment

4,423 yen
Cash distribution per unit with transient
一過性要因による1口当たり分配金
factors
Average DPU
since listing(Note 8):3,112 yen

3,190 yen

448 yen968 yen

4,077 yen
3,580 yen
1,799 yen

1,313 yen

3,400 yen

2,773 yen

2,664 yen

2,624 yen

2,764 yen

2,931 yen

2nd FP
第2期
Ended January 20172017年1月期

3rd FP
第3期
Ended July 20172017年7月期

4th FP
第4期
Ended January 20182018年1月期

5th FP
第5期
Ended July 20182018年7月期

834 yen569 yen

2,746 yen

2,831 yen

968 yen-158 yen
1st FP
第1期
Ended July 20162016年7月期

6th FP
第6期
Ending January 20192019年1月期

7th FP
第7期
Ending July 20192019年7月期

Change indistribution

1st FP

2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP

Forecast

829 yen3,046 yen

4,340 yen

4,039 yen

2,750 yen

3,580 yen

3,400 yen

Actual968 yen

3,112 yen

4,423 yen

4,077 yen

2,773 yen6

2. Change in distribution since listing
Total return since listing is 8.6%, with the increase of cash distribution per unit through management focusing on
investment unit price levels and generation of gain on sale
SAR’s total return since listing is 8.6%

(Reference)<Reference> Total Return of J-REITs (Note 9)

Total return per unit through long-term investment(yen)

140,000

120,000
15,353

Total received cash
distributions
1st FP actual:
2nd FP actual:
3rd FP actual:
4th FP actual:
5th FP actual:

968 yen
3,112 yen
4,423 yen
4,077 yen
2,773 yen

Total: 15,353 yen
100,000+
80,000Appraisal gain:
7,600 yen

Offer price
100,000

Investment unit
price
107,600

60,000↓40,00020,0000
2016年4月20日上April 20, 2016
Upon 場時
listing2018年7月31日
July 31, 2018
Total
received
受取分配金総額
cash distributions

Appraisal
評価益
gain

Total:
22,953 yen
Annual rate:
8.6 %(Total return from April 20, 2016 to July 31, 2018)
IOJ
NRT
ONE
HFR
MID
SAR
KDR
SHR
NAF
CRR
JRH
IOR
LLR
HCM
KDO
SRR
DHR
ADR
GOR
TSR
SPR
HRI
DOI
TRE
OJR
UUR
IIF
NMF
JEI
HLC
GLP
JLF
NBF
FRC
ARI
NHI
KRR
IHR
API
NPR
MHR
JRE
JHR
FRI
HRR
JPR
PIC
MTR
JRF
(%)
INV
(20)

18
16
16
15
12
11
10
10

SAR
9
8
8
8
7
7
7
7
7
6
5
5
5
4
4
3
3
2
2
2
2
1
0
0
(0)
(0)
(0)
(1)
(1)
(1)
(2)
(2)
(2)
(2)
(3)
(3)
(3)
(3)
(5)
(6)
(7)

Source: Bloomberg

(14)
(15)

(10)

(5)

0

5

10

15

20

7

2. Change in distribution since listing① Change in business results since listing
Net income in the 5th fiscal period (ended July 2018) was 1,305 million yen (+6.1% compared to initial forecast)
The reversal of internal reserves which was planned was not implemented, and cash distribution per unit was 2,773 yen*Mar. 17, 2018(+0.8% compared to forecast)
Announced in 4th FP closingof accounting report(Unit: million yen)

1st FP(ended July 2016)
actual

2nd FP(ended Jan. 2017)
actual

3rd FP(ended July 2017)
actual

4th FP(ended Jan 2018)
actual

5th FP(ended July 2018)
forecast

5th FP(ended July 2018)
actualComparison
with forecast

1,859

2,017

2,312

2,408

2,733

2,791

+58

Office rent

634

802

822

795

855

862

+6

Residence rent

325

349

391

410

489

500

+10

Logistics rent

581

530

642

696

903

906

+3

Hotel rent

142

120

220

282

292

287

-5

Other

174

215

235

223

192

235

+42

321

380

549

536

620

607

-12

1,538

1,636

1,763

1,871

2,113

2,184

+71

246

244

287

305

356

355

-0

1,291

1,392

1,476

1,566

1,756

1,828

+71

Mezzanine

-

-

-

14

18

18

+0

Gain on sale of real estate property

-

-

898

771

-

-

-

143

202

276

300

269

270

+0

1,147

1,190

2,098

2,051

1,504

1,576

+71

Non-operating income

0

0

0

0

-

0

+0

Non-operating expenses

812

117

264

176

273

270

-3

Ordinary income

335

1,073

1,833

1,876

1,231

1,305

+74

Net income

333

1,072

1,832

1,802

1,230

1,305

+74

968 yen

3,112 yen

4,423 yen

4,077 yen

2,750 yen

2,773 yen

+23 yen

1,684 yen

3,820 yen

2,948 yen

3,224 yen

3,372 yen

3,529 yen+157 yen

0

0

0

113

49

113

+63

Lease business revenue

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

SGA
Operating income

Cash distribution per unit
FFO per unit
Balance of Internal reserves82. Change in distribution since listing② Forecasts for the 6th Fiscal Period Ending January. 2019 and the 7th Fiscal Period Ending July 2019
Cash distribution per unit is forecasted to be 3,580 yen for the 6th FP and 3,400 yen for the 7th FP with the generation of gain on sale fromasset transfer from the 3rd and 4th asset replacements
29 properties

34 properties

33 properties

5th FP (ended
July 2018)
actual (A)

6th FP (ending
Jan 2019)
forecast (B)

7th FP(ending July
2019)
forecast(C)Lease business revenue

2,791

3,196

Expenses related to rent
business(Depreciation is excluded)

607(Unit: million yen)
Increase/decrease(B-A)

Increase/decrease
(C-B)

3,263

①

+404

①

+67

Factors for increase/decrease in 6th FP(compared to 5th FP actual)

Factors for increase/decrease in 7th FP(compared to 6th FP forecast)

715

785

②

+107

②

+70

① Lease business revenues +404

① Lease business revenues +67

2,184

2,481

2,478

+297

-3

355

415

427

+59

+11

Rent revenues/expenses

1,828

2,065

2,050

+237

-15

Gain on sale of real estate
properties

-

579

418

Mezzanine

18

18

18

SGA

270

365

356

1,576

2,298

2,130

NOI
Depreciation

Operating income
Non-operating income

Non-operating expenses

0

-

③

④

-

+579

③

+0

-0

+95

-9

+721

-167

-0

⑤

-161

+90

-

④

Major factors for the increase/decrease

・Property acquisitions in the 6th FP +518

・Property acquisitions in the 6th FP +131

・Property sales in the 6th and 7th FP -62

・Property sales in the 6th and 7th FP -89

・Revenue from cancelation penalty fees,
renewal fees and restoration work fees -28

・Other properties +24② Expenses related to rent business +107
・Assets acquired in 6th FP +127
・Property sales in the 6th and 7th FP -16③ Gain on sale of real estate properties +579
・Sale of UP Shin-Yokohama and Hakata-eki
Higashi 113 (49%)④ SGA+95
・Asset management fee +53

270

361

290

-70

Ordinary income

1,305

1,936

1,839

+630

-97

Net income

1,305

1,936

1,838

+630

-97

・Non-deductible consumption tax +24⑤ Non-operating expenses +90
・Interest expenses +37② Expenses related to rent business +70

・Property acquisitions in the 6th FP +75
・Property sales in the 6th and 7th FP -26
・Fixed property taxes of properties
acquired in the 5th FP +22③ Gain on sale of real estate properties -161
・Sale of Hakata-eki Higashi 113 (51%)④ Non-operating expenses -70
・Interest expenses +6
・Investment unit issuance expenses -50
・Borrowing related expenses -27

・Investment unit issuance expenses +42

Cash distribution per unit

2,773 yen

3,580 yen

3,400 yen+807 yen-180

・Borrowing related expenses +11

9

3. Performance of the 5th Fiscal Period
Ended July 201810

3. Performance of the 5th Fiscal Period Ended July 2018
① Occupancy rate status
Period-end occupancy rate: 97.7%
Portfolio occupancy rate has been maintained at around 98% as a result of grasping tenant needs and the situation of properties
through intimate on-site collaboration and other careful measures
5th FP

Hotel
100.0%

100.0%
Office98.6%
Logistics
97.8%

98.0%

Total
97.7%

96.0%

Residence
94.0%

94.0%

92.0%
OfficeResidence

Hotel

Logistics

Total

90.0%
Apr.
2016

Jun.
2016

Aug.
2016

Oct.
2016

Dec.
2016

Feb.
2017

Apr.
2017

Jun.
2017

Aug.
2017

Oct.
2017

Dec.
2017

Feb.
2018

Apr.
2018

Jun.
2018

1st (18 properties)

2nd FP(18 properties)

3rd FP (24 properties)

4th FP (23 properties)

5th FP (29 properties)

Office

95.8%

99.2%

98.8%

99.7%

98.6%

Residence

92.5%

92.6%

94.2%

97.1%

94.0%

Logistics

96.3%

96.3%

96.9%

96.9%

97.8%

Hotel

100.0%

100.0%

100.0%

100.0%

100.0%

Total

95.9%

96.8%

97.3%

97.8%

97.7%

【Total】
The occupancy rate for the 5th FP
was maintained at around 98%【Office】
The occupancy rate fell due to thetemporary factor of tenant
departure but the average for the
5th FP was 99.1%【Residence】
The occupancy rate decreased
due to cancellations at someproperties but it is recovering: Theaverage occupancy rate in the 5th
FP was 95.7%.
【Logistics】
Stable occupancy has been
maintained with no tenant
relocations and some tenants
have renewed fixed-term building
lease contracts【Hotel】
Occupancy is 100% with full leaseto the hotel operator

11

3. Performance of the 5th Fiscal Period Ended July 2018
② Offices: Change in rents since listing
Rents are being increased as there are many latent leasing needs when it comes to medium-sized offices and the relationship between
supply and demand is tight
Change in Rate of Increase of Rents with New Lease Contracts (Note 10)
増額件数
Increaseof rent(Cases)

10
9
8
7
6
5
4
3
2
1
0
-1

減額件数
Decreaseof rent

新規契約時の賃料上昇率
Rate of increase of rent

115.0

18.6%

Minami-Azabu Shibuya Building

23.0%
17.38%

15.0%

114.0
18.0%

10

15.0%

Average Rent per Tsubo since the 1st FP (Note 12)

Shibuya MK Building,
113.8

Honmachibashi Tower
Nishi-Shinjuku Matsuya Building

113.0
Alphabet Seven

13.0%
5.8%

112.0

4

8.0%

5

4

1

Nishi-Shinjuku Matsuya
Building, 111.9

Shibuya MK Building

111.0

Hakata-eki Higashi 113 Building

110.0

Asahi Building

109.0

Hakata-eki East Place

108.0

Nihonbashi Hamacho
Park Building

3.0%

1st FP

2nd FP

3rd FP-1
4th FP

The numberof new(1)
contract

(4)

(11)

(5)

5th FP
(6)

-1

-2.0%

Hakata-eki Higashi 113
Building, 109.3

107.0

Change in Rate of Increase of Rent with Leasing Contract Renewals (note 11)
Increase of
増額件数
rent

(Cases)7

10.7%

更新時の賃料上昇率
Rate of increase of rent

10.3%

5

8.5%

4
3
2

6

5

4

2.7%

1

1

2

0
-1

-1

The number 第1期
of renewals(1)contract

1st FP

Hakata-eki East Place, 105.3

105.0
Decrease
減額件数
of rent

16.1%

6

106.0

2nd
FP
第2期

3rd
FP
第3期

4th
FP
第4期

(5)

(5)

(13)

5th第5期
FP
(30)

18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%

104.0
103.0

Asahi Building, 102.4

102.0

Honmachibashi Tower,
102.1

101.0
Minami-Azabu Shibuya Building,

100.0

Alphabet Seven,100
Nihonbashi Hamacho Park Building

99.0
第1期末
End of
1st FP

第2期末
End of
2nd FP

第3期末
End of
3rd FP

第4期末
End of
4thFP

第5期末End of
5th FP

12

3. Performance of the 5th Fiscal Period Ended July 2018
③ Offices: Rent gap as of the end of the 5th Fiscal Period (Ended July 2018)

Rent Unit Price and Rent Gap (Note 13)

Contract Rent Periods of Office Portfolio (Note 14)(yen per tsubo)

13,20016,000.00
16,000.00㎡m2

13,00012,80012,60012,983

12,400Rent gap
661 yen per tsubo(5.4%)

Area
面積

Cases
件数

44

5050件
cases

47

4545件
cases

14,000.00
14,000.00㎡m2

4040件
cases

12,20012,322

12,00012,000.00
12,000.00㎡m2

30
3535件
cases

11,800
Nearby Market
Rent Unit PriceContracted Rent
Unit Price

Diversification Status of Rent Gap as of End of the Period (Based on Area)

10,000.00
10,000.00㎡m2

3030件
cases

26
8,000.00
8,000.00㎡m2

25件

25 cases

2020件
cases

6,000.00
6,000.00㎡m2

100.0%

1515件
cases

34.79%

80.0%

73.36%

60.0%

38.57%

40.0%

Rent gap exists at
73.36% of the total

4,000.00
4,000.00㎡m2

82,000.00
2,000.00㎡m2

10,177.01

20.0%

14,497.29

11,510.41

12,463.43

3,693.28

1010件
cases

5 5件
cases

26.64%
0.00
0,00㎡m2

0.0%

5th FP
ended July 2018
Less than 0%
0%未満

0% to less than 10%
0%以上10%未満

0 0件
cases

6th FP

7th FP

8th FP

9th FP

10th FP
onward

10% or more
10%以上

13

3. Performance of the 5th Fiscal Period Ended July 2018
④ Residences: Increased rents through renovation of exclusive areas

Change in Monthly Rent Unit Price, Total Monthly Rent and Average Occupancy Rate (Note 15)(yen)

Total monthly rent
66,201 thousand yen

11,000100.0%

92.9%

96.3%

10,95095.0%

10,90010,850[Results]

Total monthly rent
65,070 thousand yen

Monthly rent unit price
167 yen per tsubo

90.0%

10,80010,75010,70085.0%

10,782

10,94910,650

80.0%
As of end of Feb.

2018年2月末現在
2018

Monthly rent
月額賃料単価unit priceEnd of 5th FP

第5期末Monthly rent unit price: Increase of 167 yen per tsubo (1.55%)
Total monthly rent: Decrease of approx. 1,131 thousand yen
Occupancy rate: Stability of the occupancy rate, its maintenance and increase is key
Latent tenant needs are scooped out through intimate local collaboration andrenovation work, etc. was implemented to increase appeal to potential tenants.
Occupancy rates decreased at some properties due to repeated cancellations but
measures to increase occupancy rates are being deployed such as enhancing
collaboration with leasing agents.
[Future Policy]
Increase appeal to potential tenants such as with appropriate capital expenditure(added appeal to exclusive areas and common spaces) and aim to maintain an
increase the competitiveness of properties.

平均稼働率
Averageoccupancy rate

Increase of Rent and Appeal to Potential Tenants through Strategic Renovations●Urban Park Kashiwa●Urban Park Gokokuji
Latent tenant needs were scooped up and work
to change layouts (3LDK to 2LDK) as well as forrenovation was implemented for strengthening
housing functions:Appeal to potential tenants was increased morethan other similar rooms that aim to enhance
residential facility functions, and an increase ofrent was implemented (up by 11% from before).

In this property which primarily targets single households,
tenants are very interested in security and so it wasdeemed that a digital lock should be adopted at theentrance of rooms, also in view of convenience, and sowork was implemented at all units.
Increased security and appeal to potential tenants.

14

3. Performance of the 5th Fiscal Period Ended July 2018
⑤ Logistics facility/hotel
Logistics Facilities: Renewal of Contracts with
Increased Rent

Logistics Facilities: Diversification of Current Contract Renewal Period(based on floor area)

Since listing, contracts have been renewed for 3 tenants as of the endof the 5th fiscal period
With all renewals the rent has been increased from the previous level

Contract renewal periods going forward are diversified(Thousand yen)

51,500100,000
100,000 ㎡
m2

(1)

(２)

(5)

80,00080,000 ㎡
m2

51,000(1)50,50050,000Range of increase
1,774 thousand yen(２)(２)(3.6%)

60,00060,000 ㎡
m2
40,00040,000 ㎡m2(1)49,50049,56949,00020,00020,000 ㎡
m2

51,344

(2)

(2)

(1)

0,000
0,000 ㎡
m2

48,500
Before renewal

6th FP

After renewal

7th FP

8th FP

9th FP

10th FP

11th FP

12th FP
onwards

Hotels: Change in Floating Rent

Hotels: Rent System

0%

20%

40%

60%

80%

100%

Fixed
rent

Floating
rent

第1期
1st FP

R&B Hotel Umeda East

○

－

第2期
2nd FP

Smile Hotel Namba

○

○

第3期
3rd FPBest Western Tokyo Nishi-kasai○○

4th FP
第4期

89.13%

10.87%

Best Western Yokohama○○

5th FP
第5期

86.15%

13.85%

Hotel WBF Fukuoka Tenjin Minami○○

Forecast for第6期予想
6th FP

93.35%

6.65%

Glansit Akihabara

○

－

第7期予想
Forecast for

91.37%

8.63%

Best Western Tokyo Nishikasai Grande○○

Hotel WBF Artstay Namba○○

Property name

7th FP

62.03%

37.97%

71.62%

28.38%

84.91%

Fixed
固定

15.09%

Floating
変動15

3. Performance of the 5th Fiscal Period Ended July 2018
⑥ Initiatives for environmental real estate: acquired Green Building Certification for 3 properties
SAR promotes management that is considerate towards the environment as is its obligation as a listed investment corporation. Also, SAR
constantly deliberates and implements measures that seek to maximize unitholder value.
During the 5th fiscal period ended July 2018, SAR acquired DBJ Green Building Certification for the following 3 properties it owns.
SAR will continue to contribute to society from an ESG (environment, social and governance) perspective.
Property name
(Asset type)

Location

Property Photo

Certification Rank

Iwatsuki Logistics(Logistics)

719-1 Mizuhokami,
Oaza Nagamiya
Aza, Iwatsuki-ku,
Saitama-shi, Saitama

Properties with excellent
environmental & social
awareness

Baraki Logistics(Logistics)

2526-42
Baraki, Ichikawa-shi,
Chiba

Properties with highenvironmental & social
awareness

1-5 Honmachibashi,
Chuo-ku, Osaka-shi, Osaka

Properties with satisfactory
environmental & social
awareness

Honmachibashi Tower(Office)16

3. Performance of the 5th Fiscal Period Ended July 2018
⑦ Financial standing
Inviting new lenders and enhancing the bank formation
Refinancing risk and the risk of rising interest rates is reduced by diversifying repayment dates of loans and fixing interest rates

Balance of borrowings (As of September 6, 2018)
Balance ofborrowings(unit: million yen)
3,500

ShorttermLongterm

Interest rate

Term

FP of therepayment
date

Base rate (note 16)+0.20%

0.3 years

6 FP

790

Base rate (note 16)+0.20%

1.0 years

8 FP

7,300

0.364%(note 17)

3.0 years

7 FP

7,300

0.483%(note 17)

4.0 years

9 FP

7,300

0.625%(note 17)

5.0 years

11 FP

2,400

0.530%(note 17)

3.5 years

10 FP

4,150

0.710%(note 17)

5.0 years

13 FP

1,600

0.530%(note 17)

3.5 years

10 FP

1,190

Base rate (note16)+0.20%

1.1 years

7 FP

4,690

0.730%(note 17)

5.1 years

15 FP

7,300

Base rate (note 16)+0.20%

3.5 years

12 FP

4,000

0.6095%(note 17)

3.5 years

13 FP

4,840

0.812%(note 17)

5.0 years

16 FP

Diversification of repayment dates (As of September 6, 2018)
Scheduled to be repaid by the end of the 7th FP through progress of the Initiative
本取組の進捗により、第7期末までに返済予定(Million yen)

10,000

固定利率
Fixed interest rate

8,000

変動利率
Floating interest rate

6,000

4,000
2,000
0
6th FP
EndingJan. 2019

7th FP
EndingJul. 2019

8th FP
EndingJan. 2020

9th FP
EndingJul. 2020

10th FPEndingJan. 2021

11th FPEndingJul. 2021

12th FPEndingJan. 2022

13th FPEndingJul. 2022

14th FPEndingJan. 2023

15th FPEndingJul. 2023

16th FPEndingJan. 2024

56,360Main financial indicators

Bank formation (Note 18)
The Nishi-Nippon City Bank 2.0%
The Bank of Fukuoka 2.3%

The Dai-ichi Life Insurance Company 1.0%
Mizuho Trust & Banking
0.8%

MUFG Bank 4.1%
Resona Bank 9.2%

Sumitomo
Mitsui Banking
25.1%

Aozora Bank 9.2%

Shinsei Bank 9.6%

Sumitomo Mitsui Trust Bank 14.4%

Mizuho Bank
22.2%

5th FP

After the Initiative (Note 18)

LTV (based on total assets)

46.2 %

46.7 %

Balance of borrowings

43,230 million yen

50,880 million yen

Long-term debt ratio

100.0%

100.0%

Average remaining
period to maturity

2.5 years

2.8 years

Average borrowing period

4.0 years

4.1 years

Average interest rate

0.537%

0.575%

Fixed interest rate ratio

80.4%

85.7%

17

4. Future Initiatives

18

4. Future Initiatives① Continuous implementation of active management that seeks to maximize unitholder value

Currently, measures in pursuit of maximization of unitholder value are being implemented continuously such as the decision to implement 2
asset replacements and implementation of property acquisitions alongside public offering

Points of focus in and after the 6th Fiscal Period Elimination of the rent gap in the office portfolio

Internal
growth Stabilization of residential portfolio occupancy rate and challenge of increasing rent
(strengthening competitiveness through renovation, etc.)
 Maintaining and improving appeal to potential tenants through appropriate capital expenditure and repair(utilization of sponsor support)

 Further enhancement of on-site collaboration such as grasping of tenants needs and the situation of properties

External
growth Expansion of property pipeline from the Star Asia Group which has been expanding its business line
⇒ Of the 6 new property acquisitions, 5 are from the Sponsor Group⇒ Acquisition of preferential negotiation rights for a total of 4 properties
 Continuous investment in mezzanine loan debt
 Ongoing deliberation of asset replacements that enhance the portfolio

 Continued deliberation on the acquisition of ratings

Financialstrategy Fix interest of borrowings for hedging the risk of interest rate fluctuation⇒ fixed 6th September, 2018
 Enhancement of the bank formation (inviting new lenders)194. Future Initiatives② Conclusion of preferential negotiation contracts for future external growth■ Acquired preferential negotiation rights for 4 properties from the Star Asia Group which has been expanding its business line
■ Positioning student accommodation as an asset type targeted for investment
Property nameNishi-Sugamo Project

Property name

HAKUSAN HOUSE

Asset type

Residence

Asset type

Student accommodation

Location

Takinogawa, Kita-ku,
Tokyo

Location

Hakusan, Bunkyo-ku,
Tokyo

Scheduledcompletion period

April 2020

CompletedFebruary 2018

Other

Access to city center is
excellent with the Mita
subway line
RC, 16F
Total of 44 units
scheduled

Other

8F, 175 rooms, 364 beds

Property nameAmusement Media
Gakuin Shinkan[Residence]
Nishi-Sugamo Project(Star Asia Sogo Kaihatsu’sFirst development project)[Student accommodation]

HAKUSAN HOUSE(GSA Star Asia’s second
development project)

Property name

Shimotakaido Project

Asset type

OfficeAsset type

Student accommodation

Location

Location

Shimo-Takaido,
Suginami-ku, Tokyo

Higashi, Shibuya-ku,
TokyoCompleted

January 25, 1999

Scheduledcompletion period

December 2019

Other

Other

RC, B1F/8F
144 rooms and 326 beds
scheduledRC, 7F
Operated together with
Amusement Media
Gakuin Honkan which has
already been acquired[Student accommodation]

Shimotakaido Project(GSA Star Asia’s second
development project)■ Change in management guidelines
Student accommodation whose presence is expected to increase in theportfolio going forward has been positioned as an asset type. The
management guidelines, which are internal rules of the asset manager Star
Asia Investment Management Co., Ltd., were changed and student
accommodation was added as an asset type targeted for investment.

[Office]
Amusement Media Gakuin
Shinkan■ Overview of assets managed by the Sponsor Group
Appraisal value basis
As of end of April 2018
Excluding properties already acquired by
SAR and properties for which an
agreement for preferential negotiationrights has been concluded

45.3 billion yen(Excluding assets scheduled for acquisition
and assets for which preferential negotiationrights were acquired)

Office
34.2%

Hotel
24.3%

Asset type
Logistics
4.1%
Residence
7.4%(Usage)Retail30. 0 %

Other
12.2%
Investment
target area

The Tokyo area
87.8%

20

4. Future Initiatives③ Continued deliberation of asset replacement that promotes the maximization of unitholder value
Articulated the implementation policy for asset replacement as a part of active management pursuing maximization of unitholder value

Future revenue contribution of the assets to be replaced (strengthen SAR’s portfolio)
•

1
•
•

Periodic evaluation of future revenue contribution for all owned assets (i.e. stability andgrowth potential of earnings, future estimate of the life-cycle costs, such as repair costs and. sales price)
capital expenditures, and balance between
Comparison of assets available for acquisition and future revenue contribution of currently
owned assets
Existence of real estate investors with different valuation bases for owned assets

Real Estate Market Conditions by Asset Type2••

Evaluation of investment environment for each investment asset type given the macro
economic environment and analyzing which. asset types are most attractive forinvestment based on such evaluation
Detailed consideration of asset type exposures that should be increased or decreased in
the portfolio

Maximizationof unitholder
value by asset
replacement

Level of the investment unit price of SAR

3

•
•
•

Comparison between market indices such as the Tokyo Stock Exchange REIT Index and.
the trend of the investment unit price of SAR
Comparison between the level of investment unit prices and NAV per unit, etc. of SAR
Calculation of gains and losses on sales of assets through asset replacement and theimpact of the return to existing unitholders

21

4. Future Initiatives④ Continued deliberation of asset replacement that promotes the enhancement of the portfolio
 Since its listing, SAR has implemented 2 asset replacements (announced December 5, 2016 and February 28, 2017) as part of its active
management that contributes to maximizing unitholder value, enhancing the portfolio as well as realizing gain on sale and generating returns for its
unitholders.
 Enhancement of the portfolio and realization of gain on sale are expected for the 3rd and 4th asset replacements as well.
 SAR will continue to deliberate the implementation of asset replacements as an important active management measure that seeks to maximize
unitholder value.
Deliberation based on implementation
policy of asset replacements.
Replace with assets that
contribute to stability of revenue

Existence of real estate investors
with different appraisal standards

Replacement with assets withexpected growth of revenue

Replacement with assets whose
NOI yield after depreciation is
expected to recover

1st asset replacement

2nd asset replacement

3rd asset replacement

4th asset replacement

Transfer

Acquisition

Transfer

Acquisition

Scheduled fortransfer

Scheduled for
acquisition

Urban Park
Yoyogikoen

Urban Park
Gokokuji

Oak Minami-Azabu

Baraki Logistics

Hakata-eki Higashi
113 Building

Hotel WBF Fukuoka
Tenjin Minami

Scheduled fortransfer

Scheduled for
acquisition

Urban Park ShinYokohama

GlansitAkihabara

Total gain on sale: 820 million yen

Total gain on sale: 177 million yen(expected amount)(expected amount)

6th FP

Gain on sale in 6th FP: Approx. 400
million yen (expected amount) (Note 20)
Gain on sale per unit (Note 19): 742 yen

Gain on sale in 6th FP: Approx. 170
million yen (expected amount) (Note 20)
Gain on sale per unit (Note 19): 328 yen

7th FP

Gain on sale in 7th FP: Approx. 410
million yen (expected amount) (Note 20)
Gain on sale per unit (Note 19): 773 yen

3rd FP

4th FP

Gain on sale: 150 million yen

Total gain on sale: 1.51 billion yen

Gain on sale in 3rd FP: 150 million yen
Gain on sale per unit (Note 19): 367 yen

Gain on sale in 3rd FP: 740 million yen
Gain on sale per unit (Note 19): 1,801 yen

Gain on sale in 4th FP: 770 million yen
Gain on sale per unit (Note 19): 1,862 yenInternal reserves in 4th FP: 110 million yen

～
～

22

4. Future Initiatives⑤ Continued deliberation of mezzanine loan debt investment
SAR will continue to deliberate investment in mezzanine loan debt, something unseen in other listed REITs, as part of its active managementthat seeks to maximize unitholder interest

Investment Projects

1

Attractive investment alternative
when real estate equity prices are
expensive

Star Asia Mezzanine Loan Debt Investment Series 1
Haneda Hotel Development GK
Senior loan
1,840 million yen

Underlying
asset HOTELRELIEF
Premium
Haneda2

Increased revenue due to higher
after-amortization yields of realestate portfolios

Star Asia Mezzanine
Acquired by third
Loan Debt
parties
Investment Series 1(Subordinated(Subordinatedbonds)
bonds)
Appraisal Value
301 million yen
400 million yen
4,080 million
yen(Note 21)Return: Base rate +5.0%

34Judged likely to assure repaymentof principal and interest, thus
typically considered lower risk thaninvestment in real estate

Revenue: Approx. 18 million yen
Effect on cash distribution per unit:
Approx. 38 yen(Note 24)

(Equity)
Silent partnership investment, etc.

Star Asia Mezzanine Loan Debt Investment Series 2

Serves as an effective investmentusing current cash on hand (cashand deposits) for accretion

Contribution to 5th FP Performance andEffects on Cash Distributions(Results)

GK Japan B Asset
Non-recourse
loan (loanreceivable)

Underlying
asset
Sasazuka Shinsei Trust& Banking Co.,
South
Ltd.
Building
1,948 million
Appraisalyen
Value
2,870 million(Equity)yen
Silent(Note 22)
partnershipinvestment,
etc.

Shinsei Trust & Banking

Contribution to 6th FP Performance andEffects on Cash Distributions(Forecast)(Note 23)

Preferential beneficiaryinterest
Shinsei Bank Co., Ltd.
1,614 million yen
Star Asia Mezzanine Loan
Debt Investment Series 2(Subordinate BeneficiaryInterest)
334 million yen

Revenue: Approx. 18 million yen
Effect on cash distribution per unit:
Approx. 34 yen(Note 24)

Return: Base rate +5.0%

23

4. Future Initiatives⑥ Aiming for an asset size of 200 billion yen by 2020 through continuous active management

Pursuing an increase of the asset size based on assets managed by the Star Asia Group(100 million yen)

Aim for an
asset size of
200 billion yen
by 2020

1,400

Achieved 100
billion yen

1,200

1,013
1,000
860
800

614

614

614

Upon listing

End of 1st FP

End of 2nd FP

770

753

End of 3rd FP(Note 25)

End of 4th FP

600

400

200

End of 5th FP

After the Initiative

2020

24

4. Future Initiatives⑦ Improvement of position from increase of asset size and the expected effects
Ever since its listing SAR has steadily increased its asset size through property acquisition accompanying public offering.
Going forward, SAR aims for expansion of asset size under the support of the Star Asia Group.

(100 million yen)

Asset
size
資産規模

Yields
利回り

4000
Aiming for further increase of theasset size in the long term

Target for asset size
200 billion yen by 2020

Achievement of
200 billion yen

3500

3000

Achievement of
100 billion yen

2500

2000

1500

Steady growthsince listing

Anticipated results ofexpanding asset size throughthese follow-on offerings

2.50%◆Improved stability throughportfolio diversification◆Reduced fixed cost ratio
through economies of scale◆Growth in market cap◆Improved liquidity in theinvestment unit market◆Diversifying investor base◆Greater likelihood of being
included in indices◆Increased probability of rating
acquisition

3.00%

3.50%

4.00%

4.50%

5.00%

5.50%
1000
6.00%

500

6.50%

●

TSE REIT Core●AA rating (JCR)●●

AA- rating (JCR)

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●
●

●

●

●
●
●

A+ rating(JCR)(Note 26)

●

●

●

●
●

●

●
●

●

●
●

●

●

●
●

●

●

Upon being listed

FTSE EPRA

End of 5th FP

7.00%
After the Initiative

025

5. Appendix

26

Balance Sheets for the 5th Fiscal Period ended July 31, 2018
(Unit: thousand yen)
４ｔｈ fiscal period(As of January 31, 2018)

４ｔｈ fiscal period(As of January 31, 2018)

5th fiscal period(As of July31, 2018)

Assets

5th fiscal period(As of July31, 2018)

Liabilities

Current assets

Current liabilities

Cash and deposits

1,667,713

2,000,005

Operating accounts payable

Cash and deposits in trust

3,153,262

3,118,735

Current portion of long-term loans payable292,304

190,118

7,300,000

8,490,000

Operating accounts receivable

44,66950,970Accounts payable - other289,696

251,986

Prepaid expenses

90,216

118,176

Accrued expenses

6,054

8,643

-

210,713

Income taxes payable

74,345605

5,354

16,157

Accrued consumption taxes

126,003

21,0004,961,216

5,514,759

Advances received

338,283

594,306

Other

10,925

9,842

8,437,613

9,566,503

Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment

Buildings in trust

Total current liabilities

24,909,318

28,549,452

Non-current liabilities

Accumulated depreciation-1,055,284-1,407,469

Long-term loans payable

Buildings in trust, net

30,050,000

34,740,000

23,854,033

27,141,983

Tenant leasehold and security deposits in trust

1,794,980

1,959,368

9,606

9,606

Other

-733

-1,070Total non-current liabilities

Structures in trust
Accumulated depreciation
Structures in trust, net

8,872

8,536

Machinery and equipment in trust

20,70745,901

Total liabilities

493

31,846,487
40,284,100

36,699,861
46,266,365

40,031,185

45,832,670

1,802,393

1,418,609

Net assets

Accumulated depreciation-1,240-2,718

Machinery and equipment in trust, net

19,46743,183Unitholders’ capital

20,20722,442

SurplusTools, furniture and fixtures in trust

1,507

Unitholders’ equity

Accumulated depreciation-2,314-4,123

Unappropriated retained earnings

Tools, furniture and fixtures in trust, net

17,892

18,318(undisposed loss)

Land in trust

48,929,717

56,437,510

Total surplus

Total property, plant and equipment

1,802,393

1,418,609

72,829,984

83,649,531

Total unitholders’ equity

41,833,579

47,251,279

Leasehold rights in trust

3,459,138

3,459,138

Deferred gains or losses on hedges

Total intangible assets

36,96635,8893,459,138

3,459,138

Total valuation and translation adjustments

36,96635,88941,870,546

47,287,168

82,154,646

93,553,534

Intangible assets

Valuation and translation adjustments

Investments and other assets

Total net assets

Investments securities

734,500

734,500

Long-term prepaid expenses

121,333

155,717

Lease and guarantee deposits

10,00010,000Other

38,47329,887

Total investments and other assets

904,307930,105

77,193,430

88,038,774

82,154,646

93,553,534

Total non-current assets
Total assets

Total liabilities and net assets

27

Statement of Income for the 5th Fiscal Period(From February 1, 2018 to July 31, 2018)(Unit: thousand yen)
4th fiscal period
From: August 1, 2017
To: January 31, 2018

Operating revenue
Lease business revenue
Other lease business revenue
Gain on sale of real estate property
OthersTotal operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody and administrative service fees
Directors’ compensation
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Interest on refund
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing related 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
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

5th fiscal period
From: February 1, 2018
To: July 31, 2018

2,255,617

2,631,029

152,654

160,946

771,663－

14,412

18,476

3,194,348

2,810,451

841,650

963,758

211,612

193,319

19,51520,323

2,400

2,400

67,331

54,427

1,142,509

1,234,229

2,051,838

1,576,222

24

26

771

－

795

26

92,575112,385

55,587

149,537

27,928

7,405

－

1,000

176,091

270,327

1,876,542

1,305,921

1,876,542

1,305,921

74,348605

20－74,369605

1,802,173

1,305,316

220

113,292

1,802,393

1,418,609

Amounts less than specified units are rounded down.

28Period-end Appraisal Value and Indicators(Unit: million yen)

Period-end appraisal value:② Appraisal
value at endof 5th fiscal
periodUnrealized
gains(losses)
②－①

2,098

2,230

131

6,315

6,408

7,500

1,091

Urban Park Shin-Yokohama

2,528

2,562

2,580

17

94,291 million yen
Property nameAcquisition
price

Urban Park Azabujuban

2,045

Urban Park Daikanyama① Periodend bookvalue

Total book value:

87,108 million yen

Period-end unrealized gains (losses):

7,182 million yen

Net assets per unit:

100,477 yen

Unrealized gains per unit:

15,261 yen

Urban Park Namba

1,490

1,535

1,610

74

NAV per unit (*1):

112,965 yen

Urban Park Gokokuji

1,460

1,512

1,510

-2

P/NAV per (*2):

0.95

Urban Park Kashiwa

1,186

1,257

1,190

-67

Urban Park Ryokuchi-koen

1,550

1,613

1,570

-43

Residential(*1) NAV per unit = (Period-end net assets + Period-end unrealized gains –Total cash distribution) / Total number of investment units issued and outstanding(*2) P/NAV per ＝Investment unit price / NAV per unit (Investment unit price on July 31,
2018: 107,600 yen)
Logistics

Unrealized
gains(losses)②－①

Acquisition
price① Period-end
book value

Minami-Azabu Shibuya
Building

2,973

2,996

3,150

153

Honmachibashi Tower

6,065

5,985

6,940

954

Nishi-Shinjuku
Matsuya Building

1,763

1,838

2,430

591

Alphabet Seven

1,725

1,799

2,390

590

Shibuya MK Building

2,042

2,092

2,890

797

Hakata-eki Higashi 113
Building

1,885

1,954

2,090

135

Asahi Building

6,320

6,375

7,090

714

Hakata-eki East Place

2,286

2,313

2,480

166

Nihonbashi Hamacho
Park Building

1,450

1,467

1,520

52

subtotal

26,50926,82430,9804,155Property name

Office② Appraisal
value at endof 5th fiscal
periodHotel

Urban Park Koenji

1,167

1,194

1,170

-24

subtotal

17,741

18,181

19,3601,178

Iwatsuki Logistics

6,942

6,786

7,140

353

Yokohama Logistics

3,560

3,824

4,060

235

Funabashi Logistics

7,875

7,886

8,650

763

Baraki Logistics

4,700

4,706

4,930

223

Tokoyozawa Logistics

1,300

1,347

1,350

2

Funabashi Nishiura Logistics I

3,000

2,970

3,020

49

Funabashi Nishiura Logistics II

821

839

841

1

Matsubushi Logistics

2,755

2,775

2,850

74

subtotal

30,95331,137

32,841

1,703

R&B Hotel Umeda East

2,069

2,125

2,310

184

Smile Hotel Namba

1,750

1,717

1,720

2

Best Western Tokyo Nishi-kasai

3,827

3,857

3,830

-27

Best Western Yokohama

3,248

3,264

3,250

-14

subtotal

10,894

10,965

11,110144

86,097

87,10894,291

7,182

Total

29

Portfolio List (at the end of the 5th Fiscal Period)
Property name

OfficeLocation

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

OFC-01

Minami-Azabu Shibuya Building

Minato Ward, Tokyo

2,973

3,150

Investment ratio

Appraisal NOI yield

3.5%

4.9%

OFC-03

Honmachibashi Tower

Osaka City, Osaka

6,065

6,940

7.0%

5.2%

OFC-04

Nishi-Shinjuku Matsuya Building

Shibuya Ward, Tokyo

1,763

2,430

2.0%

6.4%

OFC-05Alphabet Seven

Minato Ward, Tokyo

1,725

2,390

2.0%

5.9%

OFC-06

Shibuya MK Building

Shibuya Ward, Tokyo

2,042

2,890

2.4%

5.6%

OFC-07

Hakata-eki Higashi 113 Building

Fukuoka City, Fukuoka

1,885

2,090

2.2%

5.9%

OFC-08Asahi Building

Yokohama City, Kanagawa

6,320

7,090

7.3%

4.9%

OFC-09Hakata-eki East Place

Fukuoka City, Fukuoka

2,286

2,480

2.7%

5.2%

OFC-10Nihonbashi Hamacho Park Building

Chuo Ward, Tokyo

1,450

1,520

1.7%

4.7%

RSC-01

Urban Park Azabujuban

Minato Ward, Tokyo

2,045

2,230

2.4%

4.4%

RSC-02

Urban Park Daikanyama

Shibuya Ward, Tokyo

6,315

7,500

7.3%

4.8%

RSC-04

Urban Park Shin-Yokohama

Yokohama City, Kanagawa

2,528

2,580

2.9%

4.8%

RSC-05

Urban Park Namba

Osaka City, Osaka

1,490

1,610

1.7%

5.4%

RSC-06

Urban Park Gokokuji

Toshima Ward, Tokyo

1,460

1,510

1.7%

5.0%

RSC-07

Urban Park Kashiwa

Kashiwa, Chiba

1,186

1,190

1.4%

5.0%

RSC-08

Urban Park Ryokuchi-koen

Suita City, Osaka

1,550

1,570

1.8%

5.7%

RSC-09Urban Park Koenji

Suginami Ward, Osaka

1,167

1,170

1.4%

4.8%

LGC-01

Iwatsuki Logistics

Saitama City, Saitama

6,942

7,140

8.1%

4.8%

LGC-02

Yokohama Logistics

Yokohama City, Kanagawa

3,560

4,060

4.1%

5.8%

LGC-03

Funabashi Logistics

Funabashi City, Chiba

7,875

8,650

9.1%

5.5%

LGC-04

Baraki Logistics

Ichikawa City, Chiba

4,700

4,930

5.5%

4.4%

LGC-05Tokorozawa Logistics

Tokorozawa City, Saitama

1,300

1,350

1.5%

5.7%

LGC-06

Funabashi Nishiura Logistics I

Funabashi City, Chiba

3,000

3,020

3.5%

5.1%

LGC-07

Funabashi Nishiura Logistics II

Funabashi City, Chiba

821

841

1.0%

7.1%

LGC-08

Matsubushi Logistics

Kita Katsushika-gun, Saitama

2,755

2,850

3.2%

5.5%

HTL-01R&B Hotel Umeda East

Osaka City, Osaka

2,069

2,310

2.4%

5.6%

HTL-02

Smile Hotel Namba

Osaka City, Osaka

1,750

1,720

2.0%

5.3%

HTL-03

BEST WESTERN Tokyo Nishi-kasai

Edogawa Ward, Tokyo

3,827

3,830

4.4%

4.7%

HTL-04

BEST WESTERN Yokohama

Yokohama City, Kanagawa

3,248

3,250

3.8%

4.7%

86,097

94,291

Residence

Logistics

Hotel

Total

100.0%

5.1%

30

Portfolio List (at the end of the 5th Fiscal Period)
Property scheduled for salein 6th-7th FP
Asset type

OfficeOfficeOfficeOfficeOfficeOfficeProperty nameMinami-Azabu Shibuya
Building

Honmachibashi Tower

Nishi-Shinjuku Matsuya
Building

Alphabet Seven

Shibuya MK Building

Hakata-eki Higashi 113
Building

Acquisition price

2,973 million yen

6,065 million yen

1.763 million yen

1,725 million yen

2,042 million yen

1,885 million yen

Appraisal value

3,150 million yen

6,940 million yen

2,430 million yen

2,390 million yen

2,890 million yen

2,090 million yen

Structure/Floors

SRC B1/7F

S/SRC B1/21F

SRC B1/9F

RC B1/6F

S 6F

SRC 8F

Location

Minato Ward, Tokyo

Osaka City, Osaka

Shibuya Ward, Tokyo

Minato Ward, Tokyo

Shibuya Ward, Tokyo

Fukuoka City, Fukuoka

620.42 m2(of which 2.62 m2
leasehold)950.75 m2

Lot area

766.11 m2

2

Total floor areas

4,137.21 m

Construction
completion

June 15, 1993

Property Features

1,274.37 m2

589.94 m2(surface right)

1,286.45 m2

2

2

4,132.80 m

2

May 28, 1987

Jan. 6, 1990

15,407.83 m

Feb. 8, 2010

5,117.80 m

1,982.86 m

2

July 31, 1993

4,888.70 m2(including 17.25 m2pump room)
Oct. 3, 1987

●Located in Minami-Azabu, a●Located in the Yodoyabashi / ●Located in the Nishi-Shinjuku●Located in the Akasaka●Located in the Shibuya area, ●Located in the Hakata-ekiwell-known, high-class
Hommachi area, one ofarea, which has a higharea, one of central Tokyo’s
one of Japan’s leading
higashi area where there is a
residential area that is also
Osaka’s leading office districts.
concentration of office buildings.
leading office/commercial
commercial districts, thehigh concentration of officehome to embassies of various ●Situated near facilities such as ●In addition to access by train,
districts.
property has a strong appeal
buildings.
countries.
for fashion and IT-related●The property is expected to●Thanks to the renovatedthe Osaka Chamber of
the area is well served by bus
companies.
●In addition to access by train,
Commerce and Industry,
routes and provides convenient
attract strong demand fromentrance hall and common●Following the completion of
the area is well served by bus
MyDome Osaka, and City
access to various locations
affiliated companies ofareas on each floor, it appealsroutes and provides
Plaza Osaka, the area has a
within central Tokyo.
tenants of the TBS building,the Shibuya Station area
to tenant companies from a wide
convenient access to various
high concentration of office
Akasaka Biz Tower, etc.
redevelopment project,
range of fields.
●The property is expected tolocations within central Tokyo.
buildings.
further development is●Thanks to the popularity of●With the completion of theattract strong demand fromexpected going forward.
●The area is highly appealing to ●The residences on the upper
affiliated companies of tenants
the area, location conditions,Hakata Station area
companies in fashion, mass
floors of the building offer excellent of large-scale buildings locatedetc., there is also strong
redevelopment project, further
media, and IT-related fields.
views overlooking landmarks such in Shinjuku sub-center or its
demand for the residential
development is expected goingas Osaka Castle.
surrounding area
units of the property.
forward.

31

Portfolio List (at the end of the 5th Fiscal Period)
Asset type

OfficeOfficeOfficeProperty name

Asahi Building

Hakata-eki
East Place

Nihonbashi Hamacho Park
Building

Acquisition price

6,320 million yen

2,286 million yen

1,450 million yen

Appraisal value

7,090 million yen

2,480 million yen

1,520 million yen

Structure/Floors

S/SRCB2/12F

SRC 9F

SRC 11F

Location

Yokohama City, Kanagawa

Fukuoka City, Fukuoka

Chuo Ward, Tokyo

Lot area

1,906.86 m2

1,129.86 m2

319.04 m2

Total floor areas

12,353.83 m2

6,243.13 m2

2,384.03 m2

Construction
completion

Nov. 25, 1994

Feb. 24, 1986

July 13, 1992

Property Features●Located in the Yokohama Station●Located in the Hakata Station●Located in Nihonbashi Hamacho area,
West Exit area where there is a highEast area, which has a higher
allowing easy access to major
concentration of commercial and officeconcentration of offices after thebusiness areas in Central Tokyo andbuildings.
completion of redevelopmentuse of various railways
projects in front of the station.
●The floors can be subdivided into
●A number of major companies havesmaller spaces, enabling the building ●Even more vitalization istheir head offices in this area, as it is a
to flexibly accommodate demand fromexpected for the Fukuoka
very attractive area for companies inbranch offices of companies in various(Hakata) area with the start ofvarious fields and of various sizes“Tenjin Big Bang Project” and the ●Further development of the area isfields.
extension of some Fukuoka City
●With the completion of the Yokohama
expected considering that it not only
Subway lines.
Station area redevelopment project
has characteristics of an office area,
and the Excite Yokohama 22 project,
but also has characteristics offurther development is expected going
residential and tourism areas
forward32

Portfolio List (at the end of the 5th Fiscal Period)
Properties scheduled
for sale in 6th FP
Asset type

Residence

Residence

Residence

Residence

Residence

Residence

Property nameUrban Park Azabujuban

Urban Park Daikanyama

Urban Park ShinYokohama

Urban Park Namba

Urban Park Gokokuji

Urban Park Kashiwa

Acquisition price

2,045 million yen

6,315 million yen

2,528 million yen

1,490 million yen

1,460 million yen

1,186 million yen

Appraisal value

2,170 million yen

7,310 million yen

2,590 million yen

1,610 million yen

1,510 million yen

1,190 million yen

Structure/Floors

SRC with slate roofing
B1/12F

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

S
B1/10FRC 14FRC B1F/5F

SRC B1F/8F

Location

Minato Ward, Tokyo

Shibuya Ward, Tokyo

Yokohama City,
Kanagawa

Osaka City, Osaka

Toshima Ward, Tokyo

Kashiwa City, Chiba

942.66 m

2

Lot area

417.67 m2

2,469.06 m2

862.00 m2

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

1,597.85 m2

Total floor areas

2,564.94 m2

8,261.29 m2(for 2 buildings combined)

5,171.12 m2

2,776.87 m2

2,451.72 m2

4,243.71 m2

Construction
completion

Nov. 29, 1999

1:Nov 15, 1987
2:May 30, 2006

May 30, 2009

Jan. 9, 2013

Feb. 28, 1990

Aug. 28, 1997

Property Features●Located in Azabu-Juban, an ●Located in the Daikanyama ●Located in the Shin●Located near Namba, one of ●Located in an area with strong ●Located in the Kashiwa area,
area with an elegant image
area, which produces the
Yokohama area, which
Osaka’s leading commercial
demand from various tenanta leading bed town in Chiba,that also boasts popular
latest trends.
provides convenientareas.
groups for single-type
with an excellent access toappeal.
transportation access.
residences, due to the location Central Tokyo.
●In addition to a stately tiled●In addition to an elegant
characteristics of having●In addition to a stately tiled●Further medium- to long-term
facade, the property is fully ●In addition to an elegant
facade, the building is fully
concentration of universities
facade, the property is fully
equipped with premium
facade, the building is fully
equipped with premium
growth is expected in the area,
and junior colleges as well as
equipped with premium
household facilities.
equipped with premium
household facilities.
with completion of various
Toshima ward having ahousehold facilities.
household facilities.
redevelopment plans in front●Adjacent to the Shibuya and●The influx of population into
relatively
high
ratio
of
singleof Kashiwa Station.
●Adjacent to the Roppongi●Access to central Tokyo willEbisu areas, which arecentral Osaka due to thehouseholds.
area, a leading shopping spot
leading shopping spots inimprove considerably with
impact of strong in-boundin central Tokyo.
central Tokyo.
the opening of direct
demand has had aservices linking the Sagami
stabilizing effect on
and Tokyu railway lines.
occupancy rates.

33

Portfolio List (at the end of the 5th Fiscal Period)
Asset type

Residential

Residential

Property nameUrban Park Ryokuchi-koen

Urban Park Koenji

Acquisition price

1,550 million yen

1,167 million yen

Appraisal value

1,570 million yen

1,170 million yen

Structure/Floors

RC 8F

RC 4F

Location

Suita City, Osaka

Suginami Ward, Osaka

Lot area

2,804.56 m2

988.26 m2

Total floor areas

5,854.64 m2

1.524.34 m2

Construction completion

Mar. 10,1989

Oct. 13, 1987

Property Features●Located in the Ryokuchi-koen●Located in the Koenji area,
area, with good traffic
which allows for easy access toaccessibility, providing a lush
major areas in the Tokyo
greenery living environment such
metropolitan areaas “Hattori Ryokuchi-koen”●With many shopping areas,●Popular residential area primarily
discount supermarkets,for families since it is located inrestaurants and pubs, having a
the Hokusetsu area, which has ahigh appeal to young singlehigh level of education
person households of businessperson and students●Appealing primarily for families●Very popular residential area
since some of the units havebeen renovated and since it iswith its own unique culture,equipped with substantial grade
which can be seen in its cafes,
household equipment.
vintage clothing shops, andclubs with live music, among
other locations

34

Portfolio List (at the end of the 5th Fiscal Period)
Logistics

Logistics

Logistics

Logistics

Logistics

Logistics

Tokorozawa Logistics

Iwatsuki Logistics

Yokohama Logistics

Funabashi Logistics

Baraki Logistics

Tokorozawa Logistics

Acquisition price

6,942 million yen

3,560 million yen

7,875 million yen

4,700 million yen

1,300 million yen

Appraisal value

7,010 million yen

3,950 million yen

8,380 million yen

4,890 million yen

1,400 million yen

Structure/Floors

Steel construction, zincplated steel roofing, 5floorsRC 8F

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

RC S 5F

S 2F

Location

Saitama City, Saitama

Yokohama City, Kanagawa

Funabashi City, Chiba

Ichikawa City, Chiba

Tokorozawa City, Saitama

Lot area

15,623.14 m2

10,565.95 m2

19,858.00 m2

6,242.76 m2

8,645.63 m2

18,395.07 m2(including 263.33 m2 breakareas etc.)

38,871.45 m2(two buildings combined)

12,471.50 m2

5,994.75 m2

Oct. 1, 1994

1: Sept. 25, 1992
2: Aug. 5, 1997

Aug. 14, 2015

Apr. 30, 1999

2

Total floor areas

29,729.72 m

Construction completion

Oct. 29, 2014

Property Features●Located in the Iwatsuki area, ●Located in the Yokohama bay ●Located in the Chiba bay
which offers access to thearea, where there are many
area, where there are many
central Tokyo, northernlogistics facilities.
logistics facilities.
Kanto, and Tohoku areas.
●Equipped with specifications ●Equipped with specifications●Equipped with specifications
that offer a high level ofthat offer a high level ofthat offer a high level ofversatility, such as vehicle
versatility, such as vehicle
versatility, such as theberths, floor height, andberths, floor height, andvehicle berths, floor height,
column interval.
column interval.
and column interval.
●In addition to accessing●In addition to accessing●The property is situated in aCentral Tokyo, it is possible toCentral Tokyo, it is possiblezone of Saitama City thataccess the wider Tokyo area
to access the wider Tokyo
offers incentives for logistics
thanks to the opening of thearea thanks to the opening
facilities and therefore
Shinagawa section of theof the Tokyo Gaikan
benefits from considerable
Shuto Expressway Central
Expressway
government support.
Circular Route.

●A multi-tenant logistics facility located near the●A multi-tenant logistics facility used also as a
Wangan Ichikawa IC of the East Kantō Expressway.
warehouse, located around 8.7 km from theTokorozawa IC on the Kan-Etsu Expressway.
●Enjoys good access to Central Tokyo as well as the●Good access to Central Tokyo, and also
consumption areas throughout Chiba, allowing
tenants to respond to the needs of e-commercecapable of covering a wide range of
operators.
destinations for consumption in the Tokyo
Metropolitan area with the opening of the●Located within approx. 5-minute walk from
Gaikan Expressway and the Metropolitan
Futamata-Shinmachi station on the JR Keiyo Line,Inter-City Expressway.
allowing for securement of employees.
●Property with highly versatile specifications,●Property with highly versatile specifications,
including two freight elevators, a floor height
including one passenger elevator, two freightof approx. 5.5 m-6.0 m, and a pillar span ofelevators, a floor height of approx. 6.5 m and a pillar
approx. 9.5 m.
span of approx. 9 m-11 m.
●Fully occupied by foreign companies and foreign
3PL companies.

35

Portfolio List (at the end of the 5th Fiscal Period)
Asset type

Logistics

Logistics

Logistics

Property name

Funabashi Nishiura Logistics I

Funabashi Nishiura Logistics II

Matsubushi Logistics

Acquisition price3,000 million yen

821 million yen

2,755 million yen

Appraisal value

3,010 million yen

833 million yen

2,850 million yen

Structure/Floors

R 2F

R 4F

RC 3F

Location

Funabashi City, Chiba

Funabashi City, Chiba

Kita-Katsushika-gun,Saitama

Lot area

7,142.00 m2

3,964.00 m2

11,580.65 m2

Total floor areas

14,018.82 m2

6,316.32 m2

19,833.47 m2

Construction completion

Oct. 11, 1985

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

Mar. 31, 1997

Property Features●Located in Matsubushi area, with
●Appealing from a standpoint of securing ●Appealing from a standpoint ofworkforce, as it is conveniently located in securing workforce, as it iseasy access to nearby areas such
the Chiba Bay area, where there areconveniently located in the Chiba
as Saitama Prefecture and Chiba
many logistics facilities, and it is locatedBay area, where there are many
Prefecture, in addition to Kitaat approx. 1.4km from the closest train
logistics facilities, and it is locatedKanto, Joban, and Tohoku areas
stationat approx. 1.1km from the closest ●Provided with versatiletrain station
specifications, such as loading●In addition to Access to Central Tokyo,
the location allows easy access to wide ●In addition to Access to Central
berths, cargo elevators, highrange of areas throughout Tokyo via
Tokyo, the location allows easy
ceiling, and a pillar spanpartial opening of the Gaikan
access to wide range of areas●Back ups from the local
Expressway
throughout Tokyo via partial
government through activities by
opening of the Gaikan Expressway
Saitama Prefecture to attract●The facility is provided with highly
versatile specifications such as highcompanies (the “Chance Maker●The facility is provided with highly
ceiling floors and a pillar spanversatile specifications such as
Saitama Strategy”)
high-ceiling floors and a pillar span

36

Portfolio List (at the end of the 5th Fiscal Period)
Asset type

Hotel

Hotel

Hotel

Hotel

Property nameR&B Hotel Umeda East

Smile Hotel Namba

Best Western Tokyo Nishi-kasai

Best Western Yokohama

Acquisition price

2,069 million yen

1,750 million yen

3,827 million yen

3,248 million yen

Appraisal value

2,300 million yen

1,750 million yen

3,890 million yen

3,270 million yen

Structure/Floors

RC 9F

S 9F

SRC B1F/9F

SRC B1F/9F

Location

Osaka City, Osaka

Osaka City, Osaka

Edogawa Ward, Tokyo

Yokohama City, Kanagawa

Lot area

730.26 m2

285.28 m2

1,418.00 m2

782.66 m2

Total floor areas

3,945.65 m2

1,711.42 m2

5,293.88 m2

4,686.09 m2

Construction
completion

Oct. 20, 2000

Feb. 6, 2008

Mar. 19, 1991

Sept. 21, 1987

Property Features●Located near Umeda, one of ●Located near Namba, one
Osaka’s leading office andof Osaka’s leading
commercial areas.
commercial areas.
●With over 200 single●In addition to excellent
occupancy rooms, the hotel
access to Namba, locatedis able to accommodate
near Osaka Dome,significant business- andaddressing multiple
tourism-based demand.
business- and tourismbased demand.
●Due to the impact of strong
in-bound demand in Osaka, ●Due to the impact of strong
further hotel demand isinbound demand in Osaka,
expected.
further hotel demand is
expected.

●A business hotel located within●A business hotel located within approx.
approx. a 2-minute walk from
4-minute walk from “Tsurumi” Station
Nishikasai Station of Tokyo Metroon the JR Keihin Tohoku Line and a 3Tozai Line.
minute walk from “Keikyu Tsurumi”●Excellent location characteristics that Station on the Keihin Kyuko Line.
●Excellent location characteristics that
can attract a fair amount of Tokyo
Disney Resort-related leisure
can attract both business travelers andtravelers, as it stands in a straightleisure travelers, as its location has
line distance of approx. 4 km awaygood access to the major areas infrom Tokyo Disney Resort.
Kanagawa including Yokohama andKawasaki as well as to Haneda Airport.
●A hotel with great appeal to a variety
of guests with various types of guest ●A hotel with great appeal to a variety
rooms depending on the intendedof guests with various types of guestuse.
rooms depending on the intended use.

37

Portfolio List (properties acquired in the 6th Fiscal Period)
Asset type

OfficeOffice

Hotel

Hotel

Hotel

Hotel

Property nameAmusement Media Gakuin
HonkanHigashi Kobe Center
Building

Hotel WBF Fukuoka
Tenjin Minami

GLANSIT Akihabara

Best Western Tokyo Nishikasai
GrandeHotel WBF Art Stay Namba

Acquisition price

2,580 million yen

7,440 million yen

1,970 million yen

2,500 million yen

3,180 million yen

2,000 million yen

Appraisal value

2,660 million yen

7,470 million yen

1,990 million yen

2,520 million yen

3,200 million yen

2,030 million yen

Structure/Floors

SRC S 8F/B1F

SRC 14F

RC 10F

SRC 10F/B1F

S 8F

RC9F

Location

Shibuya Ward, Tokyo

Kobe City, Hyogo

Fukuoka City,
FukuokaChiyoda Ward, Tokyo

Edogawa Ward, Tokyo

Osaka City, Osaka

Lot area

433.21 m2

8,488.11 m2

534.94 m2

167.74 m2

657.00 m2

335.31 m2

Total floor areas

1,892.18 m2

25,740.46 m2

2,281.49 m2

1,081.97 m2

2,755.19 m2

2,061.38 m2

Construction
completion

Nov 2, 1994

Jan 6, 1992

Feb 20, 2017

Sep 20, 2017

Feb 7, 2017

Apr 7, 2017

Property Features●Stable revenue is expected since ●Provides convenient access ●The hotel is centrally●Located in the Akihabara●Located in the Nishi Kasai area, whicha vocational school has rented
to office and commercial
located between Tenjin area, one of the largest
provides the easy access to main
the entire building for many years
areas since the building isand Nakasu, thus it istourism spots in Tokyo
business and tourism areas in Tokyo.
●Appealing to guests for the ●The hotel flexibly responds the needs ofsince the completion
centrally located between
expected to attract●The building is appealing toOsaka and Kobe, with an
tourists and businesspurpose of business andmany business people and tourists as itcompanies as the property is
11-minute ride to Sannomiya
gueststourism as it is located in aprovides various room types inlocated in an office area with
Station and 17-minute ride to ●Demand for hotels ishighly convenient andaccordance with purpose of use.
●Completed relatively recently inmany foreign-affiliated companies
Osaka Station from Settsu
expected to increase
flourishing area
and IT-related firms as well as
Motoyama, the closest
with a rising number of ●Offers three types ofFebruary 2017.
companies in the creative sector
station to the property
passengers using thecapsules, attracting various
such as advertising and content ●There is parking space for
Fukuoka Airport andcustomers●Completed relatively recently
creation firms
180 cars on the premises
development of●Further development of the areaand for 112 cars off theadditional runways
in September 2017.
●Completed
relatively
is expected considering that it ispremises, which is very
not only an office area, but also
appealing to a wide range ofrecently in February
has elements of residential andretail tenants, particularly
2017.
tourism areas.
stores seeking to attract
customers●Located in the Namba area,
one of the largest commercial
areas in Osaka●Good access fromsightseeing spots andbusiness district, thereby
expected to meet hugebusiness and tourism demand●Demand for hotels is
expected to increase as
inbound demand rises in
Osaka●Completed relatively recently
in April 2017.

38

Balance of Payments of Individual Properties for the 5th Fiscal Period
Properties
scheduled forsale in 6th-7th FP
OFC-01

OFC-03

OFC-04

OFC-08

OFC-09MinamiAzabu
Shibuya
Building

Honmachibashi
Tower

NishiShinjuku
Matsuya
Building

Asahi
Building

Nihonbashi
Hakata-eki
HamachoEast Place
Park Building

94,929216,674

98,43675,40675,39275,784

218,872

100,791

45,0841,001,373

88,351

190,425

87,42071,05370,43570,325202,101

81,50845,084

906,707

6,577

26,24911,015

4,352

4,957

5,459

16,771

19,282-

94,66524,52762,89934,096

18,541

18,507

22,616

61,82329,009

10,160282,181

PM fees

5,707

13,860

6,549

4,916

4,819

7,719

15,6097,930

769

67,881

Trust fees

398

396

396

396

346

346

396

396

394

3,467

Utilities expenses

6,793

25,070

7,251

4,333

3,288

6,454

17,292

8,124-

78,609Insurance expenses

114

352

126

98

44

121

351

165

121

1,496

Repair expenses

969

582

1,520

1,205

4,825

1,251

6,007

4,919

63

21,345

Taxes and public dues

4,575

19,767

3,434

6,219

4,316

5,294

15,9956,582

066,185

Other

5,969

2,869

14,817

1,372

865

1,428

6,169

890

8,811

43,195NOI

70,401

153,775

64,34056,86456,88553,168157,049

71,781

34,924

719,191

Depreciation

11,45844,986

8,043

4,517

3,108

5,995

24,244

6,528

2,837

111,719

Income from real estate
property leasing

58,942

108,788

56,29752,34753,77747,172

132,805

65,25332,087

607,472

Capital expenditures

2,897

2,241

22,451

2,031

10,8092,671

45,286

8,905-

97,293

NCF

67,504

151,533

41,88954,83346,07650,496

111,763

62,87634,924

621,898

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

OFC-05Alphabet
Seven

OFC-06

OFC-07(Unit: thousand yen)

Hakata-eki
Shibuya MK
Higashi 113
Building
Building

OFC-10
OfficeTotal

39

Balance of Payments of Individual Properties for the 5th Fiscal Period
Properties
scheduled forsale in 6th FP(Unit: thousand yen)

RSC-01

RSC-02

RSC-04

RSC-05

RSC-06

RSC-07

RSC-08

RSC-09Urban Park
Azabujuban

Urban Park
Daikanyama

Urban Park ShinYokohama

Urban Park
Namba

Urban Park
GokokujiUrban Park
Kashiwa

Urban Park
Ryokuchi-koen

Urban Park
Koenji54,003

189,587

76,112

51,932

51,64536,332

54,66135,241

549,51452,538181,165

73,36749,37848,48835,26951,44331,801

523,452

1,465

8,421

2,745

2,553

3,156

1,063

3,217

3,439

26,062

11,75834,81919,718

11,951

21,743

11,133

15,07011,599137,794

PM fees

2,085

8,594

4,771

2,566

3,852

1,851

2,201

1,741

27,665

Trust fees

346

346

346

346

396

346

344

394

2,869

Utilities expenses

503

4,630

911

482

2,589

799

1,967

1,321

13,204

Insurance expenses

56

193

147

62

52

83

116

36

749

Repair expenses

3,021

4,422

2,580

1,680

4,268

4,318

5,221

5,719

31,232

Taxes and public dues

2,784

11,218

4,719

2,791

1,838

2,954

10

-

26,317

Other

2,959

5,413

6,241

4,021

8,745

779

5,208

2,387

35,756

NOI

42,245

154,767

56,39339,98029,901

25,19839,59023,641

411,720

Depreciation

4,749

12,233

16,442

7,515

4,332

6,763

6,864

2,416

61,318

Income from real estate
property leasing

37,496

142,533

39,95032,46425,56918,43532,726

21,225350,401

Capital expenditures

3,917

243

-

-

21,126

12,162

5,918-

43,369NCF

38,327

154,523

56,39339,9808,775

13,03533,672

23,641

368,350

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

Residence
Total

40

Balance of Payments of Individual Properties for the 5th 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

LGC-04

LGC-05

LGC-06

LGC-07

LGC-08

Iwatsuki
Logistics

Yokohama
Logistics

Funabashi
Logistics

Baraki
Logistics

Tokorozawa
Logistics

Funabashi
Nishiura
Logistics I

Funabashi
Nishiura
Logistics II

Matsubushi
Logistics

Logistics facility
Total

200,802

255,664

953,094

187,713240,079

912,876

13,08815,58540,21733,79955,782

157,170

PM fees

5,987

11,90830,961

Trust fees

346

396

3,015

13,08814,156

39,174

Utilities expenses
Insurance expenses

271

Not

390

Not

Not

Not

Not

Not

1,406

Repair expenses

70

disclosed

5,764

disclosed

disclosed

disclosed

disclosed

disclosed

11,534

13,83522,70962,936

200

455

8,141

NOI

167,002

199,882795,923

Depreciation

46,467

26,695

140,437

Income from real estate
property leasing

120,535

173,187

655,486

1,955

4,744

120,566

165,046

195,138

675,356

Taxes and public dues
Other

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

41

Balance of Payments of Individual Properties for the 5th Fiscal Period(Unit: thousand yen)
HTL-01

HTL-02

HTL-03

HTL-04R&B Hotel Umeda
East

Smile Hotel
Namba

Best Western
Tokyo
Nishi-kasai

Best Western
Yokohama

Hotel
Total

Total

Total of revenue real estate lease65,572

43,197

98,82980,393287,993

2,791,975

Lease business revenue

65,572

43,197

98,82980,393287,993

2,631,029

-

-

-

-

-

160,946

7,076

4,530

10,7688,428

30,803607,950

PM fees

742

660

1,200

1,200

3,802

130,310

Trust fees

346

544

396

396

1,684

11,036

Utilities expenses

8

-

-

-

8

130,997

Insurance expenses

111

53

124

105

394

4,046

Repair expenses

410

755

1,070

2,042

4,277

68,389

5,431

2,283

7,955

4,659

20,329

175,769

25

234

22

24

306

87,399NOI

58,496

38,66788,06071,965257,189

2,184,025

Depreciation

9,203

12,064

9,781

11,28342,333355,808

Income from real estate property leasing

49,293

26,602

78,27860,682214,856

1,828,216

-

5,279

4,913

9,757

19,951

281,180

58,49633,387

83,146

62,207237,238

1,902,844

Other lease business revenue
Total of expenses - real estate lease

Taxes and public dues
Other

Capital expenditures

NCF

42

Overview of 3rd and 4th Asset Replacements
1 Future revenue contribution of assets 2 Real estate market conditions

Asset replacement policies

subject to replacement

Third asset replacement
Achieving profit growth and gain on sale across two consecutive
fiscal periods
Property to be transferred
Transfer at a price 37.7% higher
than appraisal value andachieve gain on sale across twoconsecutive fiscal periods
Hakata-eki Higashi
113 Building
Scheduledtransfer price

Property to be acquired
Gain onsale(expected)

Acquire a hotel with both fixed andvariable rent, contributing toportfolio earnings growth

Property to be transferred
Achieve gain on sale bytransferring at a price 7.6%
higher than appraisal value

Property to be acquired
Gain onsale(expected)

Acquire a hotel with fixed rent,
raising the fixed rent ratio of theportfolio

177
Hotel WBF Fukuoka
Tenjin Minami

Urban Park
Shin-Yokohama

millionAcquisition price

Scheduledtransfer price

yen

yen

1,970 million yen

2,850 million yen(Appraisal value:2,070 million yen)

Level of the investment
Unit price of SAR

Forth asset replacement
Replacement with property expected to improve portfolio NOI yield after
depreciation and generate gain on sale820
million3

by asset type

Acquisition price2,500 million yen

2,775 million yen(Appraisal value:
1,990 million yen)Assetreplacement

GLANSIT
Akihabara(Appraisal value:
2,580 million yen)(Appraisal value:
2,520 million yen)Assetreplacement

NOI yield after
depreciation

3.0%

Appraisal NOI yield
after depreciation

3.8%

Actual NOI yield
after depreciation

2.6%

Appraisal NOI yield
after depreciation

3.3%

Building age
rounded down to
the nearest year

30 years

Building age (rounded
down to the nearestyear)

1 yearBuilding age(rounded down to
the nearest year )9 years

Building age (rounded
down to the nearestyear)

0 yearAnticipated 5year repair costs

172 million yen

Anticipated 5-year
repair costs0

Approach based on asset replacement policies
1 ■Based on future expected income and payout and the potential for securing gain on sale, we
determined that transferring Hakata-eki Higashi 113 Building would contribute more to theportfolio revenue than holding it.
■We also determined that revenue from Hotel WBF Fukuoka Tenjin Minami, the property to
be acquired, is very likely to grow in the future since the property is located in a region
where inbound demand is expected to increase and since we signed a fixed rent + variable
rent agreement with the tenant (Note 27).
2 ■We expect to see growth in earnings from hotel assets due to the tightening of
supply/demand for lodging facilities resulting from the reduction in illegal private residence
lodging facilities following enforcement of the Private Residence Lodging Business Act.
■We determined that inbound demand is expected to continue to increase in the central Tenjin
area of Fukuoka Prefecture which enjoys geographical proximity to Asian countries driving
inbound demand and provides easy access to Fukuoka Airport and the Port of Hakata.
3 ■We determined that the asset transfer within asset replacement would bring in gain on saleacross two consecutive fiscal periods which is expected to be contributing to maximizing
unitholder return.

Approach based on asset replacement policies
1 ■We determined that Urban Park Shin-Yokohama, the property to be transferred, has a lower
Actual NOI yield after depreciation (Note 28) than the average for the portfolio and therefore
doesn’t strongly contribute to the portfolio revenue.
■We sought out a real estate investor with valuation standards for Urban Park Shin-Yokohama,
the property to be transferred, that differ from those of SAR (i.e., an investor with a valuationof standard emphasizing asset holdings in the Tokyo Metropolitan Area on the premise of
securing profit) and who offered a price above appraisal value.
2 ■We expect to see growth in earnings from hotel assets due to the tightening of
supply/demand for lodging facilities resulting from the reduction in illegal private residence
lodging facilities following enforcement of the Private Residence Lodging Business Act.
■We determined that inbound demand in Akihabara will likely continue to be strong since it ispopular amongst foreign tourists and provides convenient access to major tourist spots inTokyo.
3 ■We determined that flexible asset replacement would bring in gain on sale, support our
Initiatives and absorb financing costs while contributing to maximizing unitholder return.

43

Status of Unitholders at the End of 5th Fiscal Period ended July 2018

Number of Investment Units by Unitholder Type: Total

Category

Securities company 2.0%

Individual
35.5%

Ratio

166,88922.6%

106,301

12.2%

57,479Foreign

27.8%

130,607

Securities
company

2.0%

9,348

Financial
institution
Domestic
corporation

Financial
institute
22.6%

Domestic company
12.2%

Number of Unitholders by Unitholder Type: Total
Domestic
company 1.6%
Financial institute
0.2%

Foreign 0.7%
Securities company
0.1%

Category

Individual
97.3%

Ratio

No. ofpersons/
entities

17,039

0.2%

37

1.6%

281

Foreign

0.7%

124

Securities
company

0.1%

25

Financial
institutions
Domestic
corporation

Unitholder name(note 29)

Number ofinvestment units

Holding
ratio(note30)

1

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

43,992

9.3%

2Star Asia Capital Japan GK

39,480

8.4%

3

Japan Trustee Services Bank, Ltd(Trust account)

26,727

5.7%

4

Star Asia Capital I LLC

14,325

3.0%

4Star Asia Capital II LLC

14,325

3.0%

4Star Asia Capital III LLC

14,325

3.0%

4Star Asia Capital IV LLC

14,325

3.0%

8

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

12,000

2.5%

9NORTHERN TRUST CO. (AVFC) RE 10PCT TR
EATY ACCOUNT

11,694

2.5%

10SSBTC CLIENT OMNIBUS ACCOUNT

11,003

2.3%

17,506

97.3%

Individual

List of major unitholders (Top 10)

No. ofinvestment
units

35.5%

Individual

Foreign
27.8%

470,624 units

Total

202,19643.0%

44About the Sponsor GroupStar Asia Group’s Strategic Organizational Chart (by Function)
Malcolm F. MacLean IV
Managing Partner

Taro Masuyama
Managing Partner
Star Asia Group, LLC

OverseasStar Asia AssetManagement,
LLC

Star Asia
Management
Limited(Sponsor)

Domestic

Fund management

Star Asia
Investment
Management
Co., Ltd.

Star Asia
Management
Japan
Tokyo Branch

Development, operationand management ofstudent accommodation

Real estate
operation andmanagement

GSA
Star Asia Japan
Limited(50% investment)

Star Asia AssetManagement
II, LLCGSA Star Asia

Star Asia Asset
Advisors Co.,Ltd.

Development
functions

Warehousing,Same-boat
investment

Star Asia Capital Corp Limited

Star Asia Sogo
Kaihatsu Co.,
Ltd.

Asset owning
SPC

Sourcing
functionsStar Asia Japan
SpecialSituations
Fund

Asset owning
SPC

Star Asia Investment Corporation (REIT)

Relationship with the Star Asia Group’s investors centering on the U.S.
Overview of assets under management of
Hotel
the Sponsor Group
Office24.3%
34.2%(appraisal value basis)
Asset type(as of the end of April 2018)((Usage)
Logistics
4.1%

Location

Investment
ratio (%)

Total assets undermanagement(trillion yen)

1 A. Endowment fund

U.S.

18

2.2

2 B. Foundation

U.S.

10

2.6

3 C. Foundation

U.S.

7

5.6

45.3 billion yen

4 Real estate-related fund

Asia

6

1.4

(Excluding assets for which preferential
negotiation rights are acquired)

5 E. Foundation

U.S.

5

6.3

Investors(As of Sep 30, 2017)

Residence
7.4%

Retail30. 0 %

Other
12.2%
Investment
target area
The Tokyo area
87.8%

45

Organizational Structure of Asset Manager

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.

President and CEO
Atsushi Kato

Chief Compliance
Officer
Kazuaki Fujii

Investment Management Division
Director and CEO
Satoshi Obara

Senior Manager(Male)

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

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

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

Manager(Male)

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

Manager(Female)Was involved in acquisitions and interim investment management ofvarious asset types at an overseas listed fund’s asset managementcompany and a J-REIT operating company. Currently in charge ofasset management.

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

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

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.

Manager(Female)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.

Manager(Male)

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.

Manager(Female)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.

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

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

46

Star Asia Code of Conduct

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

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

52

Client First

Collaborative
andCooperative Culture

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

Highest EthicalStandards andIntegrity

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

6

Adaptability

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

3

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

7

4

Creativity

Meritocracy

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

Respect for Others

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

8Endless PursuitofExcellence

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

47

5. Notes

48

<Notes>

Note 1In this material, amounts less than specified units are rounded down while ratios are rounded to a specified unit

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

Note 3“The Initiative” refers to the initiative up to the completion of the issuance of all new investment units in public offering and third-party allotment announced August 21 and August 29,
2018 as well as the completion of allotment of the paid-in amount of third-party allotment to repayment of borrowings as scheduled and the repayment of borrowings by the end of the
7th fiscal period through progress of the Initiative, reflecting the 6 property acquisitions and 2 property transfers announced on July 23 and August 21, 2018.

p3

Note 4

Change in the closing value of the TSE REIT Index on the Tokyo Stock Exchange from April 20, 2016 to August 10, 2018 is relativized based on the assumption that closing value(1,887.75) of the TSE REIT Index on April 20, 2016 is the same as the closing investment unit price of SAR of ¥98,300 on the same date.

p4

Note 5The number of tenants after our Initiatives is based on effective lease contracts of 33 assets (to be) acquired excluding assets (to be) transferred as of the end of May 2018.

p4

Note 6“Ratio of the largest tenant” is calculated on the basis of adding rent to common service fees.

p4

Note 7“Market cap” after the initiative is calculated with the assumption of the closing price of 102,800 yen of September 12, 2018, that Nomura Securities Co., Ltd. purchases all 3,343 units
in the third-party allotment and that 540,824 investment units are issued.

p6

Note 8Calculated by dividing the sum of actual DPUs from the 1st to 5th fiscal periods and forecasted DPUs from the 6th to 7th fiscal periods by seven.

p7

Note 9Total return shown in the graph is the return in the case of assuming that reinvestment of received dividends is made on the good-till date and is Bloomberg’s own method of calculation.

p12

Note 10

For a case where there is no previous tenant, it is counted as “increase of rent” and the amount of increased rent is determined as “0.”Ratio of increased portions is calculated as a percentage of total of previous rents for sections with new tenants as the denominator.

p12

Note 11

Ratio of the increased portions is calculated as a percentage of total rent of tenants’ rents before renewal as the denominatorp12

Note 12

Indexed for each property with the average price per tsubo in the period pertaining to the date the property as 100.

p13

Note 13

Market rent refers to the median of each property's expected new contract rent (range) assessed as the end of the period by CBRE K.K., and rent gap refers to the disparity between
the market rent and each tenant's contract rent.
Hakata-eki Higashi 113 Building which is scheduled to be sold in the 6th fiscal period is excluded.

p13

Note 14

Hakata-eki Higashi 113 Building which is scheduled to be sold in the 6th fiscal period is excluded while Amusement Media Gakuin Honkan and Higashi-Kobe Center Building acquiredin the 6th fiscal period (September 6, 2018) are included.

p14

Note 15

Calculated by abstracting the residential section. The calculation used 7 owned assets and excluded Urban Park Shin-Yokohama which is scheduled to be sold.

P17

Note 16

JBA 1-month yen TIBOR

P17

Note 17

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

p17

Note 18

The main financial indices after the Initiative and concerning the bank formation are calculated by excluding the borrowings scheduled to be repaid by the end of the 7th fiscal period
through the progress of the Initiative from the borrowings as of September 6, 2018.

p1

49

<Notes>p22

Note 19

Gain on sale per unit for the 3rd and 4th fiscal periods are calculated by dividing using the total number of investment units issued as of the end of the period in which each gain on saleis recorded. Gain on sale per unit for the 6th fiscal period and 7th fiscal period are the expected gain on sale assuming Nomura Securities purchases all 3,343 investment units issued
on October 1, 2018 and 540,824 investment units are issued.

p22

Note 20

Gain on sale expected to be realized in the 6th fiscal period is due to the transfer of 49% quasi-co-ownership interest in the real estate trust beneficiary interest in Hakata-eki Higashi
113 and the remaining 51% of quasi-co-ownership interest in real estate trust beneficiary interest is scheduled to be transferred in the 7th fiscal period.

p23

Note 21

The appraisal value is as of the end of July 2018.

p23

Note 22

The appraisal value is as of the end of June 2018.

p23

Note 23

Trust with loan claims as asset in trust (trustee: Shinsei Trust & Banking Co. Ltd.) has been establishedp23

Note 24

The effect on cash distributions per unit in the 5th and 6th fiscal periods are calculated by dividing using the total number of investment units issued at the end of each period whererevenue is recorded. The number of investment units issued at the end of the 5th fiscal period was 470,624. For the 6th fiscal period, it is assumed that Nomura Securities Co., Ltd.
purchases all 3,343 units issued through third-party allotment and that 540,824 units are issued.

p24

Note 25

Includes 51% quasi-co-ownership interest in Oak Minami Azabu sold at the beginning of the 4th fiscal period.

p24

Note 26

Investment corporations with an asset size of 400 billion yen or more as of May 31, 2018 are shown. Asset sizes are as of May 31, 2018. Status of incorporation into indices and rating
status are as of April 20, 2018. Yields are as of July 31, 2018.

p43

Note 27

As of the date of this document rents are of a fixed rent system but it has been agreed that a change will be made to a fixed + floating rent system from January 2020.

p43

Note 28

Actual NOI yield after depreciation of assets scheduled to be transferred are calculated by dividing the NOI after depreciation of the assets scheduled to be transferred in the 3rd fiscal
period ended July 2017 or the 4th fiscal period ended January 2018 by the acquisition price and are rounded to the nearest first decimal place.

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Note 29

Star Asia Capital Japan and Star Asia Capital I-IV LLC are the sponsor group companies.

p44

Note 30

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.

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■ 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

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