(REIT) Financial Report for the Fiscal Period Ended August 2023
October 16, 2023
Listing: Tokyo Stock Exchange
URL: https://www.s-reit.co.jp/en/

REIT Securities Issuer:
TSE Code:
Representative:

SANKEI REAL ESTATE Inc.
2972
Yuichi Ota, Executive Director

Asset Management Company:
Representative:
Contact:

Sankei Building Asset Management Co., Ltd.
Yuichi Ota, President and Chief Executive Officer
Atsushi Mukai, Director and Chief Finance & IR Officer
TEL: +81-3-5542-1316

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

November 29, 2023
November 22, 2023

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 the Fiscal Period Ended August 2023 (from March 1, 2023 to August 31, 2023)(1) Management Status(% figures are the rate of period-on-period increase (decrease))
Operating revenue
Operating income
Ordinary income
Net income
million yen%
million yen%
million yen%
million yen%
Fiscal period
2,751
(4.9)
1,334
7.3
1,130
4.9
1,129
4.9
ended Aug. 2023
ended Feb. 2023
2,891
(4.5)
1,243
(23.7)
1,077(27.0)
1,076(27.0)

yen%

Ratio of ordinary income
to total assets
%

2,418

2.2

1.0

41.1

2,304

2.1

1.0

37.3

Net income per unit
Fiscal period
ended Aug. 2023
ended Feb. 2023

Return on equity

Ratio of ordinary income
to operating revenue%(Note) Net income per unit is calculated by dividing net income by the daily weighted average number of investment units (fiscal period ended February 2023:
467,099 units, fiscal period ended August 2023: 467,099 units).

(2) Distribution
Distribution per
Total distribution
unit
Distribution in Total distribution(excluding(excludingexcess of earnings
in excess of
distribution in
distribution in
per unit
earnings
excess of earnings)
excess of earnings)
yenmillion yen
yenmillion yen
Fiscal period
ended Aug. 2023
ended Feb. 2023

Ratio ofdistribution
to net assets

Payout ratio

%

%

2,418

1,129

-

-

100.0

2.2

2,305

1,076

-

-

100.0

2.1

(3) Financial Position

Fiscal period
ended Aug. 2023
ended Feb. 2023

Total assets
million yen

Net assets
million yen

112,235
105,828

Equity ratio%

Net assets per unit
yen

50,56545.1

108,253

50,512

47.7

108,140(4) Cash Flows

million yen

million yen

million yen

Cash andcash equivalents
at end of period
million yen

1,583(7,275)

5,722

8,337

1,310

(408)

(1,474)

8,306

Cash flows fromoperating activities
Fiscal period
ended Aug. 2023
ended Feb. 2023

Cash flows frominvesting activities

Cash flows fromfinancing activities

2. Operating Forecasts for the Fiscal Period Ending February 2024 (from September 1, 2023 to February 29, 2024) and Operating
Forecasts for the Fiscal Period Ending August 2024 (from March 1, 2024 to August 31, 2024)(% figures are the rate of period-on-period increase (decrease))
Operating revenue

million yen
Fiscal period
ending Feb. 2024
ending Aug. 2024

Operating income% million yen

Ordinary income% million yen

Net income% million yen

Distribution per unit
(excluding
Distribution in excess
distribution inof earnings per unit
excess of
earnings)
%
yen
yen

2,613

(5.0)

1,150

(13.8)

958(15.2)

957(15.2)

2,050

-

2,337

(10.6)

1,182

2.8

987

3.0

986

3.0

2,113

-

(Reference) Forecast net income per unit (Forecast net income / Forecast total number of investment units issued and outstanding at
end of period)
Fiscal period ending February 2024: 2,050 yen
Fiscal period ending August 2024: 2,112 yen(Note)

Distribution per unit (excluding distribution in excess of earnings) is calculated based on the total number of investment units issued and outstanding
as of the date of this document of 467,099 units.

* Other(1) Changes in accounting policies, changes in accounting estimates, and retrospective restatements
i. Changes in accounting policies accompanying amendments to accounting standards, etc.: None
ii. Changes in accounting policies other than i:Noneiii. Changes in accounting estimates:
None
iv. Retrospective restatements:
None(2) Total number of investment units issued and outstandingi.
Total number of investment units issued andFiscal period
Fiscal period
outstanding (including treasury investment units)
467,099 units
467,099 units
ended Feb. 2023
ended Aug. 2023
at end of period
Fiscal period
ii. Number of treasury investment units at end of
Fiscal period
0 units
0 units
periodended Feb. 2023
ended Aug. 2023
(Note) For the number of investment units serving as the basis for calculation of net income per unit, please refer to “Notes on
Per Unit Information” on page 22.

* Financial reports are exempt from audits by certified public accountants or audit corporations.
* Special remarks
The operating forecasts and other forward-looking statements contained in this document are based on information currently
available to and certain assumptions deemed reasonable by SANKEI REAL ESTATE. Accordingly, the actual results of operations, etc.
may differ materially due to various factors. In addition, the forecasts are not a guarantee of the amount of distribution. For theassumptions underlying the operating forecasts, matters of note in the use of the operating forecasts, etc., please refer to“Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending February 2024 (from September 1, 2023 to February
29, 2024) and Fiscal Period Ending August 2024 (from March 1, 2024 to August 31, 2024)” on pages 6-7.

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
Table of Contents
1. Management Status ...................................................................................................................................................................... 2(1) Management Status ............................................................................................................................................................... 2(2) Investment Risks .................................................................................................................................................................... 7
2. Financial Statements ..................................................................................................................................................................... 8(1) Balance Sheet ........................................................................................................................................................................ 8(2) Statement of Income and Retained Earnings ....................................................................................................................... 10(3) Statement of Changes in Unitholders’ Equity ...................................................................................................................... 11(4) Statement of Cash Distributions .......................................................................................................................................... 12(5) Statement of Cash Flows...................................................................................................................................................... 13(6) Notes on the Going Concern Assumption ............................................................................................................................ 14(7) Notes on Matters Concerning Significant Accounting Policies ............................................................................................. 14(8) Notes to the Financial Statements ....................................................................................................................................... 15(9) Changes in Total Number of Investment Units Issued and Outstanding .............................................................................. 23
3. Reference Information ................................................................................................................................................................ 24(1) Information on Price of Assets Under Management, Etc. .................................................................................................... 24(2) Capital Expenditures for Real Estate Held ............................................................................................................................ 29-1-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023

1.

Management Status(1) Management Status(Overview of the Fiscal Period under Review)i.
Brief History of the Investment Corporation
SANKEI REAL ESTATE was incorporated under the Act on Investment Trusts and Investment Corporations (Act No. 198 of1951, as amended; hereinafter, the “Investment Trust Act”) with Sankei Building Asset Management Co., Ltd. (hereinafter,
the “Asset Management Company”) as the organizer and investments in capital of 100 million yen (1,000 units) on
November 19, 2018, and completed the registration with the Kanto Local Finance Bureau pursuant to Article 187 of theInvestment Trust Act on December 17, 2018 (Registration No. 140 with the Director-General of the Kanto Local Finance
Bureau). Later, SANKEI REAL ESTATE was listed on the Real Estate Investment Trust Securities Market of Tokyo Stock
Exchange, Inc. on March 12, 2019 (TSE code: 2972).
As of the last day of the fiscal period under review (August 31, 2023), the total number of investment units issued andoutstanding was 467,099 units and unitholders’ capital (net) was 49,435 million yen.
ii.

Management Environment
In the fiscal period under review (fiscal period ended August 31, 2023), although the Japanese economy continued to beaffected by rising prices brought about by soaring global resources, energy, and raw material prices as well as the yen’s
weakness on the back of the interest rate differential between the US and Japan, it has continued a path of gradual
recovery as congestion in logistics flows were resolved and employment and consumption environments improved amid
a global trend of easing of COVID-19 restrictions, including the reclassification of the disease as a Class V infectious disease
under the Act on the Prevention of Infectious Diseases and Medical Care for Patients with Infectious Diseases (Act No. 114
of 1998, as amended) in Japan. However, caution should continue to be taken regarding downside risks to economies
starting in Europe and the US due to the continuation of monetary tightening policies overseas or slowdown in the paceof economic growth of Japan’s neighboring countries and their impact on the global economy will continue to warrant
caution.
Under such economic circumstances, in terms of the office building market, which SANKEI REAL ESTATE sets as the primary
investment target, while movements of consolidation of locations and the reduction of fixed expenses (rent payments,etc.) continue as travel restrictions are lifted and gradual progress is made in returning to offices, in Tokyo, Osaka andFukuoka where assets under management of SANKEI REAL ESTATE are located, the vacancy rates and rent levels remained
the same despite some variance observed across the different regions.
SANKEI REAL ESTATE conducts investment in the hotel market and logistics market as its sub assets. With regard to thehotel market, the total number of guests and room occupancy rates are recovering to pre-COVID levels due to a sharp
expansion of inbound demand with the lifting of COVID-19 restrictions according to the Overnight Travel Statistics Survey
by the Japan Tourism Agency. In addition, for the logistics market, despite the rise in vacancy rates due to a high supplyof new facilities and concerns over the 2024 problem, which calls for various measures due to the introduction of a limit
on overtime work for drivers in the logistics industry, the market remains strong due to solid demand and a stable levelof rental revenue.

iii.

Management Performance
SANKEI REAL ESTATE acquired two properties (of which one additional acquisition) on March 31, 2023, at a total acquisition
price (Note 1) of 6,642 million yen with borrowings. Quasi co-ownership interest of 1.55% in trust beneficiary rights for
BREEZÉ TOWER was disposed on August 31, 2023, and 164 million yen of gain on sale of real estate, etc. was recorded. As
a result, the portfolio of SANKEI REAL ESTATE as of the last day of the fiscal period under review consisted of 15 properties
with an asset size (total acquisition price) of 102,816 million yen, reaching 100 billion yen.
The main factor in management performance as of the last day of the fiscal period under review was cancellations of major
tenants. The occupancy rate (Note 2) of the 15 portfolio properties stood at 85.6%, and operating revenue was 2,751
million yen, 4.9% lower than that at the end of the previous fiscal period. The appraisal value as of the last day of the fiscal
period under review was 108,340 million yen.
SANKEI REAL ESTATE has sought to improve satisfaction through reinforcement and enhancement of relations with existing
tenants, aiming at expansion of revenue and stable growth of earnings from assets under management as in the previous
fiscal period. For existing tenants approaching contract renewal, efforts were made to carefully explain the differences in
the unique situation under the COVID-19 pandemic and the current trends of the leasing market, and some tenants cameto understand to a certain extent the upward rent revision. Furthermore, leasing activities for some assets undermanagement, which were undertaken as the most important issue, are gradually producing results after continuous efforts.
In addition, repairs and capital expenditures were narrowed down to those that contribute to maintenance andimprovement of the competitiveness of the assets under management.
The two hotel properties (Hotel Intergate Tokyo Kyobashi and Hotel Intergate Hiroshima) held by SANKEI REAL ESTATE havealmost recovered to pre-COVID levels with room occupancy rates and average room prices bolstered by factors such as therecovery in inbound travel. The content of contracts with fixed rents based on existing contracts have contributed to thestability of the portfolio’s revenue.
In the fiscal period under review, SANKEI REAL ESTATE acquired SANKEILOGI Settsu (acquisition price: 5,242 million yen)
and began managing assets in the logistics sector. In this sector, demand for logistics facilities has steadily expanded on
the back of logistics flows energized by growth in the e-commerce market and the resolution of supply restrictions. Moving
forward, SANKEI REAL ESTATE will continue to build on its management performance and enhance its presence in this
sector.
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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
SANKEI REAL ESTATE, along with the Asset Management Company, has continued to take measures to conduct
management in the fiscal period under review with consideration for ESG, meaning the Environment, Social andGovernance, for the purpose of sustainability of society and increasing the medium- to long-term unitholder value basedon the “Sustainability Policy” in the Asset Management Company’s management guidelines.
In April 2023, SANKEI REAL ESTATE acquired CASBEE Certification for Real Estate S rank for Shinagawa Seaside TS Tower,
taking the number of assets under management that have acquired environmental certifications to eight properties (fiveproperties with DBJ Green Building Certification, two properties with BELS Certification, and one property with CASBEE
Certification).
Furthermore, in March 2023, the Asset Management Company expressed its support for the recommendations of the Task
Force on Climate-related Financial Disclosures (“TCFD”) and joined the TCFD Consortium, a group of domestic companies
that supports the TCFD recommendations.
(Note 1) “Acquisition price” is the sale and purchase price of each real estate and trust beneficiary right stated in each sale and purchaseagreement for assets under management, rounded down to the nearest million yen. The sale and purchase prices do not include
consumption tax, local consumption tax and the various expenses required for the acquisition. The same shall apply hereinafter.
(Note 2) “Occupancy rate” is the ratio of total leased area to total leasable area, rounded to one decimal place. Moreover, for total leasable area
and total leased area, each total is calculated based on the area corresponding to SANKEI REAL ESTATE’s ownership interest in each
asset under management.

iv.

Overview of Fund Procurement
In the fiscal period under review, 6,800 million yen was borrowed from Mizuho Bank, Ltd. on March 30, 2023 in conjunction
with the acquisition of two properties (S-GATE AKASAKA and SANKEILOGI Settsu) on March 31, 2023. In the fiscal period
under review, 3,700 million yen was borrowed from Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation,
Development Bank of Japan Inc., Mizuho Trust & Banking Co., Ltd., Sumitomo Mitsui Trust Bank, Limited, SBI Shinsei Bank,
Limited, and Resona Bank, Limited through a loan syndicate with Mizuho Bank, Ltd. and Sumitomo Mitsui Banking
Corporation as the arrangers on March 13, 2023, to repay long-term loans of 3,700 million yen due for repayment on thesame day.
As a result, as of the end of the fiscal period under review, the balance of loans outstanding was 57,000 million yen andthe ratio of interest-bearing liabilities to total assets (hereinafter, “LTV ratio”) was 50.8%.

v.

Overview of Business Performance and Distribution
As a result of the management described above, business performance in the fiscal period under review was operating
revenue of 2,751 million yen, operating income of 1,334 million yen, ordinary income of 1,130 million yen, and net incomeof 1,129 million yen.
Concerning distribution, in accordance with SANKEI REAL ESTATE’s cash distribution policy (Article 36 of the articles ofincorporation), SANKEI REAL ESTATE intends to have the maximum amount of distribution of earnings included indeductible expenses by application of special provisions for taxation on investment corporations (Article 67-15 of the Act
on Special Measures Concerning Taxation (Act No. 26 of 1957, as amended)). For the fiscal period under review, thedecision was made to distribute 1,129,445,382 yen, which is the entire amount of unappropriated retained earnings,
excluding fractions of distribution per unit of less than 1 yen. This resulted in distribution per unit of 2,418 yen.

(Outlook for the Next Fiscal Period)i.
General Management Outlook
While the economy is continuing to recover gradually as COVID-19 restrictions are lifted across the world, there is a downsiderisk to economies from the continuation of monetary tightening policies in Europe and the US as well as concerns over the
impact of a slowdown in the economic growth of Japan’s neighbors on the global economy. Under such circumstances, theimpact on the Japanese economy and its financial and capital markets will continue to warrant close attention.
In the office building market, while it is necessary to monitor future trends due to the large volume of new supply in 2023,
as the impact of COVID-19 is alleviated and there is a move to return to offices, rent levels are moving away from adownward trend to a more stable level. Furthermore, even with changes in working arrangements with the establishmentof telecommuting, such as working from home, the demand for office buildings has been increasing in general. On theother hand, the impact of a large volume of supply of offices in central Tokyo, the impact of recent inflation on tenants
and such trends in the office building market will continue to be monitored, and a structural change in the demand for
offices is foreseen. Furthermore, with regard to the rising utilities expenses on the back of soaring resources and energy
prices, relationships with tenants will be further reinforced and consultations and responses will be continued as required,while closely monitoring tenants’ business performance, trends, etc.
In terms of the hotel market, other than an expected increase in the number of domestic travelers and business travelers
with the recovery in social and economic activities, the number of foreign tourists has also been recovering since entry
restrictions on tourists were lifted in October 2022. A moderate operating environment is foreseen for also the two hotel
properties held by SANKEI REAL ESTATE, continued stable revenue is expected as GRANVISTA Hotels & Resorts Co., Ltd.,
which is a tenant of the two properties and a wholly owned subsidiary of SANKEI REAL ESTATE’s sponsor, The Sankei
Building Co., Ltd. (hereinafter, “Sankei Building” or the “Sponsor”), continues to pay fixed rent based on the fixed-termbuilding lease agreement.
In the logistics market, further expansion is expected buoyed by the expansion of the e-commerce market and strong
demand as well as the energization of the logistics market backed by stable rental revenue. Furthermore, in 2024, eventhough the sector will face various challenges stemming from the labor conditions in the logistics market, stable revenue
can be expected since the tenants of facilities held by SANKEI REAL ESTATE are contracted with fixed rents based on fixedterm building lease agreements.
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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
(A) External Growth Strategy
In light of the above outlook, SANKEI REAL ESTATE is scheduled to conduct a large-scale rebalancing of its portfolio as
its Revival Plan (Note), given the partial revision of the asset management guidelines at the Asset Management
Company. Through the Revival Plan, SANKEI REAL ESTATE will convert into a diversified REIT and aim to become a REIT
capable of sustainable growth.
Along with the scheduled large-scale portfolio rebalancing, with regard to future property acquisitions, SANKEI REALESTATE will continue to maintain external growth through acquisition of Sankei Building’s portfolio properties as wellas properties held by third parties by leveraging the sourcing capabilities of Sankei Building through full utilization ofsponsorship support, while carefully assessing the real estate investment market conditions and other factors.
In external growth, we will conduct diversified investment conscious of the balance of the portfolio matrix such asarea and yield and strive to improve the profitability and stability of the portfolio.
(Note) The Revival Plan consists of three elements designed to eliminate materialized risks in SANKEI REAL ESTATE’s
internal environment and bring about the revival of SANKEI REAL ESTATE as a REIT capable of sustainablegrowth: (i) a large-scale portfolio rebalancing, (ii) partial amendment to the asset management guidelines(conversion to a diversified REIT), and (iii) additional acquisition of investment units by the Sponsor. For
details, please refer to “Notice of Revival Plan and Granting of Preferential Negotiation Rights for Sale andAcquisition of Domestic Real Estate Trust Beneficiary Rights,” “Notice of Additional Acquisition of
Investment Units by The Sankei Building Co., Ltd.” and “Supplementary Explanation Material for Today’s
Press Releases” separately to be announced soon.
(B) Internal growth strategy
SANKEI REAL ESTATE aims for steady internal growth through reinforcement of the relations with existing tenants andimprovement in tenant satisfaction. Specifically, we will attempt to raise rents upon contract renewal if there is asignificant deviation from market rent and continue to implement strategic leasing such as activities to extend thecancellation notification period from tenants and disperse end dates of rental contracts from the viewpoint oftermination risk for properties where the end dates of multiple tenants are the same. Furthermore, we will continue
to take proactive measures to improve tenant satisfaction such as conducting customer satisfaction surveys,
improving the quality of hygiene, and planned implementation of maintenance and repairs.
SANKEI REAL ESTATE will utilize the Sankei Building Group’s comprehensive operation and management functions
ranging from real estate planning and development to lease-up, operation, and management through collaboration
within the Sankei Building Group with Sankei Building at the core.
In addition, SANKEI REAL ESTATE will execute the following measures, etc. to aim for greater revenue and stable
growth of earnings from assets under management.
(a) Strive to provide services for tenants’ comfortable use while strengthening and enhancing tenant relations inorder to maintain and improve tenant satisfaction so as to maintain and improve the occupancy rate and rent ofassets under management.
(b) Seek to maintain and improve the market competitiveness of assets under management through planning andimplementation of repairs and capital expenditures by taking into consideration the state and characteristics ofassets under management, real estate market conditions, tenant needs, and other factors and carefully
examining them.
(c) Strive to maintain and improve earnings by conducting agile leasing activities with a continual grasp of leasing
market trends.
(d) Adopt ongoing initiatives to reduce operating and management costs and consider the environment by
periodically verifying the validity of operations, management level, and costs of assets under management. In
doing so, the balance with the market competitiveness of assets under management and perspective of
maintaining and improving tenant satisfaction are taken into consideration.
(e) Conduct investment conscious of ESG, such as reduction of the environmental impact of assets undermanagement and cooperation with external stakeholders.
(C) Financial Strategy
SANKEI REAL ESTATE will conduct appropriate and sound financial management while considering agility of financing
activities, stability of cash flows, and other matters in order to secure stable earnings and steady growth of assets
under management over the medium to long term.
In addition, to secure financial soundness, the basic policy shall be to set the upper limit for the LTV ratio at 60% inprinciple (however, the LTV ratio may temporarily exceed the range of the upper limit for the LTV ratio for the purposeof new asset acquisition, etc.). As a rule, SANKEI REAL ESTATE will maintain an approximate range of 40% to 50%
during normal operations.
(a) Equity Financing
Issuance of new investment units shall be in an agile manner with due consideration to investment unit dilution
while comprehensively taking into account capital market trends, financial environment, timing of acquisition ofreal estate, etc. to be newly acquired, ratio of interest-bearing liabilities to total assets and other factors.
(b) Debt Financing
Upon borrowing, etc., fund procurement shall be executed in an appropriate manner by taking into account thebalance between interest rate trends, market levels, financial agility, long-term business relationships, andsecurity, and by considering the borrowing period, fixed or floating interest rate, provision of collateral or not,fees, and other terms and conditions of procurement of interest-bearing liabilities.
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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023

ii.

Significant Subsequent Events
Not applicable.

iii.

Operating Forecasts
SANKEI REAL ESTATE’s operating forecasts for the fiscal period ending February 2024 (from September 1, 2023 to February
29, 2024) and fiscal period ending August 2024 (from March 1, 2024 to August 31, 2024) are as follows:
Operatingrevenue

OperatingincomeOrdinary
incomeDistribution per unit
Distribution in
Net income (excluding distribution in excess of earnings
excess of earnings)
per unit

million yen
million yen
million yen
million yen
yenyen
Fiscal period
2,613
1,150
958
957
2,050
ending Feb. 2024
Fiscal period
2,337
1,182
987
986
2,113
ending Aug. 2024
Furthermore, for the assumptions underlying the operating forecasts, please refer to “Assumptions Underlying the Operating
Forecasts for the Fiscal Period Ending February 2024 (from September 1, 2023 to February 29, 2024) and Fiscal Period Ending
August 2024 (from March 1, 2024 to August 31, 2024)” presented below.
(Note) The forecast figures above are the current forecasts calculated under certain assumptions. Accordingly, the actual operating revenue, operating
income, ordinary income, net income, distribution per unit, and distribution in excess of earnings per unit may vary due to changes in thecircumstances. In addition, the forecasts are not a guarantee of the amount of distribution.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending February 2024 (from September 1, 2023 to February 29,2024) and Fiscal Period Ending August 2024 (from March 1, 2024 to August 31, 2024)
Item

Accounting period

Assets undermanagement

Operating revenue

Operating expenses

Non-operating
expensesAssumptions
・Fiscal period ending February 2024 (10th fiscal period) (from September 1, 2023 to February 29, 2024)(182 days)
・Fiscal period ending August 2024 (11th fiscal period) (from March 1, 2024 to August 31, 2024) (184days)
・The assumption for the real estate and real estate trust beneficiary rights (total of 15 properties) heldby SANKEI REAL ESTATE as of the date of this document (hereinafter, the “existing assets undermanagement”) is that there will be no change through to the end of the fiscal period ending August2024 other than the expected sale and acquisition of some properties in the fiscal period ending
February 2024. For details, please refer to “Notice of Revival Plan and Granting of Preferential
Negotiation Rights for Sale and Acquisition of Domestic Real Estate Trust Beneficiary Rights” separately
announced today.
・Other than the above, change may arise due to acquisition of new properties, disposition of portfolio
properties, etc.
・Rent business revenue of the existing assets under management is calculated by taking into accountvarious factors, such as lease agreements that have been concluded and are valid as of the calculation
period of the assumptions, tenant trends and market trends.
・The assumption is that there will be no delinquent or unpaid rent by tenants.
・In light of the expected sale and acquisition of some properties, gain on sale of real estate, etc. is
expected to be recorded in the fiscal period ending February 2024. Moreover, rent business revenue
is calculated for the fiscal period ending August 2024, given the change in portfolio matrix assumed forthe fiscal period ending February 2024. Gain on sale of real estate and rent business revenue may varydepending on whether the sale is made, the disposition price, the timing of the disposition and otherconditions.
・Of operating expenses, the main components are as follows:(Unit: million yen)
Fiscal period ending Fiscal period ending
Feb. 2024
Aug. 2024
Total expenses related to rent business
1,144
821
Outsourcing expenses

239

115

Utilities expenses

175

113

Repair expenses
Property taxes

86
295

35
247

Depreciation

314

287

Other expenses related to rent business [Total]
318
334
Asset management fee
244
259
・Of expenses related to rent business, which are the main operating expenses, the expenses other thandepreciation are calculated on the basis of historical data and by taking into consideration the factors
causing fluctuation in each of the expenses.
・Depreciation is calculated using the straight-line method.
・In general, non-current asset tax, city planning tax, etc. are calculated on a pro rata basis andreimbursed at the time of property acquisition with the previous owner upon transactions of realestate, etc. At SANKEI REAL ESTATE, the amount equivalent to the reimbursement is included in the costof acquisition and thus not expensed in the business period in which the property acquisition date falls
in the case of the properties for which such reimbursement is made at the time of transaction.
Furthermore, non-current asset tax, city planning tax, etc. on the asset acquired on March 31, 2023,
will be expensed starting from the fiscal period ending August 2024.
・Repair expenses for buildings is the amount estimated based on medium- to long-term repair plans
formulated by the Asset Management Company. However, repair expenses possibly increasing inamount or additionally arising from unforeseeable factors may result in repair expenses differing
materially from the forecast amount.
・As interest expenses and other borrowing-related expenses, 184 million yen is assumed for the fiscal
period ending February 2024 and 186 million yen for the fiscal period ending August 2024.
・As amortization of investment unit issuance expenses, 6 million yen is assumed for the fiscal period
ending February 2024 and 6 million yen is assumed for the fiscal period ending August 2024.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
Item

Interest-bearing
liabilities

Number of investment
units issued andoutstanding

Distribution per unit
(excluding distribution
in excess of earnings)

Assumptions
・The assumption is that total interest-bearing liabilities will be 56,600 million yen at the end of the fiscal
period ending February 2024 and 50,200 million yen at the end of the fiscal period ending August 2024.
・The assumption is that there will be no change in the balance of loans outstanding other than the above
through to the end of the fiscal period ending August 2024.
・LTV ratio is expected to be 50.2% at the end of the fiscal period ending February 2024 and 47.2% at theend of the fiscal period ending August 2024. LTV ratio is calculated by the following formula androunded to one decimal place.
LTV ratio = Total interest-bearing liabilities / Total assets × 100
・The assumption is total number of investment units issued and outstanding as of the date of thisdocument of 467,099 units and that there will be no change in the number of investment units due toissuance of new investment units, etc. through to the end of the fiscal period ending August 2024.
・Distribution per unit (excluding distribution in excess of earnings) is calculated based on the forecast
total number of investment units issued and outstanding at the end of the fiscal period ending February
2024 and fiscal period ending August 2024 of 467,099 units.
・Distribution per unit (excluding distribution in excess of earnings) is calculated based on the assumptionthat distribution of earnings will be in accordance with the policy on distribution of cash provided in
SANKEI REAL ESTATE’s articles of incorporation.
・Distribution per unit (excluding distribution in excess of earnings) may vary due to various factors, suchas fluctuation in rent business revenue accompanying change in assets under management, change intenants or other event, or incurrence of unexpected repairs.

Distribution in excess of・No cash distribution in excess of earnings is planned to be made at this point in time.
earnings per unit
・The assumption is that there will be no amendment of laws and regulations, tax systems, accounting
standards, listing regulations provided by Tokyo Stock Exchange, Inc., rules provided by The Investment
Other
Trusts Association, Japan, etc. that will impact the forecast figures above.
・The assumption is that there will be no unforeseen material change in general economic trends, realestate market conditions, etc.
(2) Investment Risks
Disclosure is omitted, because there is no significant change from “Investment Risks” in the semiannual securities report(submitted on May 29, 2023).

-7-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023

2. Financial Statements(1) Balance Sheet(Unit: thousand yen)
8th fiscal period(as of Feb. 28, 2023)
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets
SoftwareTotal intangible assets
Investments and other assets
Long-term prepaid expenses
Deferred tax assets
Leasehold and guarantee deposits
Total investments and other assets
Total non-current assets
Deferred assets
Investment unit issuance costs
Total deferred assets
Total assets-8-

9th fiscal period(as of Aug. 31, 2023)

5,208,842
3,097,656
64,47862,7958,433,772

5,687,713
2,649,835
62,64578,865
166,96382
8,646,106

182,520(25,525)
156,995
544
(67)
476
2,457,766
18,955,810(1,879,113)
17,076,697
71,171(4,558)66,613
14,330(2,290)12,04071,817(16,419)
55,397
77,433,848
945
97,260,780

189,040(29,088)
159,952
544
(81)
463
604
(40)
564
2,457,766
21,225,884(2,169,707)
19,056,176
105,457(6,304)99,152
14,326(3,008)
11,31876,121(21,723)
54,397
81,618,833
5,886
103,464,511

2,013
2,013

8,806
8,806

103,557
12
10,000113,569
97,376,363

94,32617
10,000104,343
103,577,662

18,075
18,075
105,828,211

12,05012,050112,235,819

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
(Unit: thousand yen)
8th fiscal period(as of Feb. 28, 2023)
Liabilities
Current liabilities
Operating accounts payable
Short-term borrowings
Long-term loans due within one year
Accounts payable - otherAccrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Deposits received
Total current liabilities
Non-current liabilities
Long-term loans
Leasehold and guarantee deposits received
Leasehold and guarantee deposits received in trust
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Deduction from unitholders’ capital
Unitholders’ capital (net)
Surplus
Unappropriated retained earnings (undisposed
loss)
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets-9-

9th fiscal period(as of Aug. 31, 2023)

347,1039,600,000
288,400
50,743855
38,660449,764
676
10,776,204

217,790
6,800,000
9,200,000
295,160
56,973957
397,611
10,184
16,978,677

40,600,000
88,166
3,851,485
44,539,651
55,315,856

41,000,000
88,716
3,603,120
44,691,837
61,670,515

49,442,685(7,136)49,435,549

49,442,685(7,136)49,435,549

1,076,805

1,129,754

1,076,805
50,512,354*1 50,512,354
105,828,211

1,129,754
50,565,304*1 50,565,304
112,235,819

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
(2) Statement of Income and Retained Earnings(Unit: thousand yen)
8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023
Operating revenue
Rent business revenue
Other rent business revenue
Gain on sale of real estate
Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Remuneration for directors (and other officers)
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Reversal of distributions payable
Insurance claim income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing related expenses
Amortization of investment unit issuance expenses
Other
Total non-operating expenses
Ordinary income
Net income before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)- 10 -

9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023

*1 2,452,313*1 2,343,152*1 439,634*1 243,748

2,891,948*2 164,424*1 1,338,956*1 1,110,607

247,055
2,092
8,020
3,600
48,325
1,648,050
1,243,897

245,773
2,192
8,170
3,600
46,384
1,416,727
1,334,598

41
584
930
285
1,842

40
639
9
689

114,796
47,427
6,024
168,248
1,077,491
1,077,491
861
3
865
1,076,626
178
1,076,805

139,180
57,5116,024
2,000
204,716
1,130,571
1,130,571
963
(4)
958
1,129,612
141
1,129,754

2,751,326

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
(3) Statement of Changes in Unitholders’ Equity
8th fiscal period (from September 1, 2022 to February 28, 2023)(Unit: thousand yen)
Unitholders’ equity
Surplus
Deduction
Unitholders’fromUnitholders’
Unappropriatedcapitalunitholders’ capital (net)retained earnings
capital(undisposed loss)
Balance at beginning of
periodChanges in items during
periodDistributions fromsurplus49,442,685(7,136) 49,435,549

Balance at end of period*1 49,442,685

Total net
assets1,475,277

1,475,277

50,910,827

50,910,827(1,475,098)(1,475,098)(1,475,098)(1,475,098)

1,076,626

1,076,626

1,076,626

1,076,626-(398,472)(398,472)(398,472)(398,472)(7,136) 49,435,549

1,076,805

1,076,805

50,512,354

50,512,354

Net income
Total changes in items
during period

Total
surplusTotal
unitholders’equity-9th fiscal period (from March 1, 2023 to August 31, 2023)(Unit: thousand yen)
Unitholders’ equity
Surplus
Deduction
Unitholders’fromUnitholders’
Unappropriatedcapitalunitholders’ capital (net)retained earnings
capital(undisposed loss)
Balance at beginning of
periodChanges in items during
periodDistributions fromsurplus49,442,685(7,136) 49,435,549

Balance at end of period*1 49,442,685

Total net
assets

1,076,805

1,076,805

50,512,354

50,512,354(1,076,663)(1,076,663) (1,076,663)(1,076,663)

1,129,612

1,129,612

1,129,612

1,129,612-

52,94952,94952,94952,949(7,136) 49,435,549

1,129,754

1,129,754

50,565,304

50,565,304

Net income
Total changes in items
during period

Total
surplusTotal
unitholders’equity-- 11 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
(4) Statement of Cash Distributions(Unit: yen)
8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023

9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023

I. Unappropriated retained earnings

1,076,805,124

1,129,754,634

II. Amount of distribution

1,076,663,195

1,129,445,382[Amount of distribution per unit][2,305][2,418]

III.Retained earnings carried forward

141,929309,252

Method of calculation of amount of
distribution

In accordance with the policy on
distribution specified in Article 36,
Paragraph 1 of SANKEI REAL ESTATE’s
articles of incorporation, the amountof distribution shall be limited to theamount of net income in excess of theamount equivalent to 90% of
distributable profit, as stipulated in
Article 67-15 of the Act on Special
Measures Concerning Taxation. Basedon such policy, the decision was madeto distribute 1,076,663,195 yen, whichis the largest integral multiple of thetotal number of investment units
issued and outstanding (467,099 units)
not in excess of unappropriatedretained earnings, as distribution of
earnings.
The distribution in excess of earnings
specified in Article 36, Paragraph 2 of
SANKEI REAL ESTATE’s articles ofincorporation will not be made.

In accordance with the policy on
distribution specified in Article 36,
Paragraph 1 of SANKEI REAL ESTATE’s
articles of incorporation, the amountof distribution shall be limited to theamount of net income in excess of theamount equivalent to 90% of
distributable profit, as stipulated in
Article 67-15 of the Act on Special
Measures Concerning Taxation. Basedon such policy, the decision was madeto distribute 1,129,445,382 yen, whichis the largest integral multiple of thetotal number of investment units
issued and outstanding (467,099 units)
in an amount not in excess ofunappropriated retained earnings, as
distribution of earnings.
The distribution in excess of earnings
specified in Article 36, Paragraph 2 of
SANKEI REAL ESTATE’s articles ofincorporation will not be made.

- 12 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
(5) Statement of Cash Flows(Unit: thousand yen)
8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023
Cash flows from operating activities
Net income before income taxes
Depreciation
Amortization of investment unit issuance expenses
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund
receivable
Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable - other
Increase (decrease) in consumption taxes payable
Increase (decrease) in advances received
Increase (decrease) in deposits received
Decrease (increase) in long-term prepaid expenses
Decrease in property, plant and equipment in trust
due to sale
Decrease (increase) in other assets
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Proceeds from leasehold and guarantee deposits
received
Refund of leasehold and guarantee deposits received
Proceeds from leasehold and guarantee deposits
received in trust
Refund of leasehold and guarantee deposits received
in trust
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from short-term loans
Proceeds from long-term loans
Repayments of long-term loans
Distributions paid
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- 13 -

9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023

1,077,491
297,033
6,024(41)
114,796(1,775)1,130,571
322,1126,024(40)
139,180
1,832-(166,963)

9,006
77,214(22,151)(133,178)
1,936(5,360)(399)(16,070)(83,458)
8,101(38,660)(52,153)
9,507
9,230

-

447,91878
1,420,674
41(108,884)(932)
1,310,899(82)
1,717,050
40(132,950)(861)
1,583,278(542)(130,867)(7,125)(7,014,566)

632

5,231

(703)

(2,344)74,547

306,551(351,923)(554,915)(408,856)(8,000)(7,275,168)

5,900,000(5,900,000)(1,474,263)(1,474,263)(572,220)8,878,719*1 8,306,499

6,800,000
3,700,000(3,700,000)(1,077,059)
5,722,940
31,0508,306,499*1 8,337,549

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
(6) Notes on the Going Concern Assumption
Not applicable.
(7) Notes on Matters Concerning Significant Accounting Policies
1.

Method of depreciation of noncurrent assets

2.

Accounting for deferred assets

3.

Standards for revenue andexpense recognition

4.

Scope of cash (cash and cash
equivalents) in the statement ofcash flows

5.

Other significant matters related
to the basis for preparation of
the financial statements(1) Property, plant and equipment (including trust assets)
The straight-line method is adopted. Furthermore, the useful life of major property,
plant and equipment is as follows:
Buildings
3–69 years
Structures
6–59 years
Machinery and equipment
8-10 years
Tools, furniture and fixtures
4–15 years(2) Intangible assets
The straight-line method is adopted.
(3) Long-term prepaid expenses
The straight-line method is adopted.
Investment unit issuance costs
They are amortized by the straight-line method over 3 years.
(1) Standards for revenue recognition
The details of performance obligations concerning revenue from contracts withcustomers of SANKEI REAL ESTATE and the timing when the performance obligations
are normally satisfied (the normal time to recognize revenue) are as follows.
i. Sale of real estate, etc.
Revenue is recognized for the sale of real estate at the time the buyer, who is acustomer, gains control of the real estate, etc. through the performance ofdelivery obligations specified in a contract on the sale of real estate.
ii. Utilities reimbursement
Revenue is recognized for utilities reimbursement according to the supply ofelectricity, water, etc. to tenants, who are customers, based on the terms oflease agreements for real estate and incidental agreements. For the utilities
reimbursement for which SANKEI REAL ESTATE is deemed to be an agent, the net
amount after deducting the amount to be paid to another party from the amountreceived from tenants as charges for electricity, gas, etc. provided by said party
is recorded as revenue.
(2) Accounting for non-current asset tax, etc.
For non-current asset tax, city planning tax, depreciable asset tax, etc. on real estateor trust beneficiary rights of real estate, the tax levied corresponding to the calculation
period is recorded as expenses related to rent business.
Furthermore, the amount equivalent to non-current asset tax, etc. in the initial fiscal
year paid by SANKEI REAL ESTATE upon acquisition of real estate or trust beneficiaryrights of real estate is included in the cost of acquisition of the real estate, etc. andnot recognized as expenses. The amount equivalent to non-current asset tax, etc.
included in the cost of acquisition of real estate, etc. was nil in the previous fiscal
period. The amount equivalent to non-current asset tax, etc. included in the cost of
acquisition of real estate, etc. was 22,327 thousand yen in the fiscal period underreview.
Cash and cash equivalents in the statement of cash flows comprise cash on hand and cashin trust, demand deposits and deposits in trust, and short-term investments with a maturityof three months or less from the date of acquisition that are readily convertible to cash andthat are subject to an insignificant risk of changes in value.
Accounting for trust beneficiary rights that have real estate, etc. as trust assets
Concerning trust beneficiary rights that have real estate, etc. as trust assets held, allaccounts of assets and liabilities within trust assets and all accounts of revenue andexpenses from the trust assets are recognized in the relevant account item of the balance
sheet and the statement of income and retained earnings.
Furthermore, the following material items of the trust assets recognized in the relevant
account item are separately listed on the balance sheet.
i.
Cash and deposits in trustii. Buildings in trust; Structures in trust; Machinery and equipment in trust; Tools,
furniture and fixtures in trust; Land in trust; Construction in progress in trustiii. Leasehold and guarantee deposits received in trust- 14 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
(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)
8th fiscal period
9th fiscal period(as of Feb. 28, 2023)(as of Aug. 31, 2023)
50,00050,000[Notes to the Statement of Income and Retained Earnings]*1. Breakdown of operating income (loss) from real estate rent business(Unit: thousand yen)
9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023

8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023
A. Operating revenue from real estate rent
business
Rent business revenue
Rental revenue
Common area maintenance revenue
Total rent business revenue

2,323,174
129,138

2,224,844
118,308

2,452,313

2,343,152

130,668
34,048
10,466113,684
33,63285,520254,855420

9,596
439,634

10,491
243,748

2,891,948

2,586,901

231,216
214,149
300,889
1,818
271,4175,603
3,752
296,093

221,524
189,454
313,078
1,818
37,7047,097
4,090
320,905

14,014

14,933

1,338,956

1,110,607

1,338,956

1,110,607

1,552,992

1,476,293

Other rent business revenue
Utilities reimbursement
Parking revenue
Termination penalties
Income from work to restore to theoriginal state
Other rental revenue
Total other rent business revenue
Total operating revenue from real estate
rent business
B. Operating expenses from real estate rent
business
Expenses related to rent businessOutsourcing expenses
Utilities expenses
Property taxes
Land rent
Repair expenses
Insurance premium
Trust fee
Depreciation
Other expenses related to rent
business
Total expenses related to rent businessTotal operating expenses from realestate rent business
C. Operating income (loss) from real estate
rent business [A−B]*2. Breakdown of gain on sale of real estate, etc.
8th fiscal period (from September 1, 2022 to February 28, 2023)
Not applicable.
9th fiscal period (from March 1, 2023 to August 31, 2023)(Unit: thousand yen)
BREEZÉ TOWER (1.55% quasi co-ownership interest)
Revenue from the sale of real estate, etc.
Cost of sale of real estate, etc.
Other expenses related to sale
Gain on sale of real estate, etc.

- 15 -

620,000
447,918
7,656
164,424SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
[Notes to the Statement of Changes in Unitholders’ Equity]*1. Total number of investment units authorized and total number of investment units issued and outstanding
8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023
Total number of investment units
authorized
Total number of investment units issued
and outstanding(Unit: units)
9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023

10,000,000

10,000,000

467,099

467,099[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)
8th fiscal period
9th fiscal period
From: Sept. 1, 2022
From: Mar. 1, 2023
To: Feb. 28, 2023
To: Aug. 31, 2023
Cash and deposits
Cash and deposits in trust

5,208,842
3,097,656

5,687,713
2,649,835

Cash and cash equivalents

8,306,499

8,337,549[Notes on Lease Transactions]Operating lease transactions (as lessor)
Future minimum lease payments
8th fiscal period(as of Feb. 28, 2023)(Unit: thousand yen)
9th fiscal period(as of Aug. 31, 2023)

Due within 1 year

2,485,706

3,143,165

Due after 1 year
Total

12,893,670
15,379,376

15,588,904
18,732,069[Notes on Financial Instruments]
1. Matters concerning status of financial instruments(1) Policy for handling financial instruments
SANKEI REAL ESTATE shall procure funds in a well-balanced manner through borrowing from financial institutions,issuance of investment corporation bonds, issuance of new investment units, etc. to contribute to steady growth ofassets under management as well as efficient operation and stability of management.
Upon borrowing from financial institutions, issuance of investment corporation bonds, etc., the fund procurement shallbe in a manner that gives due consideration to the balance between agility in fund procurement and financial stability,
characteristics of to-be-acquired real estate, etc. Specifically, the procurement means, ratio of long-term debt, ratio of
fixed-rate debt, staggering of maturities, provision of collateral or not, etc. shall be considered. Upon borrowing, lenders
shall be limited to the qualified institutional investors provided in the Financial Instruments and Exchange Act (however,limited to the institutional investors provided in Article 67-15 of the Act on Special Measures Concerning Taxation).
Issuance of new investment units shall be for the purpose of expansion of asset size and enhancement of profitability,
and implementation decided by taking into account the LTV ratio, dilution of existing unitholders’ rights andaccompanying decline in transaction price of investment units, etc. and in light of the financial environment.
Derivative transactions may be conducted for the purpose of hedging the risk of fluctuation in interest rates and otherrisks on SANKEI REAL ESTATE arising from the concerned liabilities. No derivative transactions were conducted in thefiscal period under review.
(2) Description of financial instruments and associated risks, and risk management system
Loans are mainly for the purpose of procuring funds for acquisition of assets and funds for repayment of obligations.
Loans are exposed to the risk of inability to refinance upon becoming due for repayment, risk of rise in the interest rate
payable, etc., but the risks are mitigated by considering fund procurement that is well balanced through issuance ofinvestment units, etc. while also diversifying fund procurement sources and staggering maturities. In addition, the riskof rise in interest rates on SANKEI REAL ESTATE’s operations is managed by closely watching interest rate trends andkeeping the LTV ratio under control in an appropriate manner.
(3) Supplementary explanation to matters concerning fair value, etc. of financial instruments
Certain assumptions, etc. are adopted in the calculation of the value of financial instruments. Accordingly, the concernedvalues may vary when different assumptions, etc. are adopted.

- 16 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
2. Matters concerning fair value, etc. of financial instruments
The following are the carrying amount and fair value as of February 28, 2023, and the amount of difference between these.
Notes on “cash and deposits” and “cash and deposits in trust” are omitted due to the fair value being approximated to thecarrying amount because they are cash or settled in a short period. Furthermore “lease and guarantee deposits received”
and “lease and guarantee deposits received in trust” are omitted because the amounts are immaterial.
(Unit: thousand yen)
Carrying amount(1) Long-term loans due within one year
(2) Long-term loans
Total liabilities

Fair value

Amount of difference

9,600,000
40,600,000

9,600,915
40,112,914

50,200,000

49,713,829

915(487,085)(486,170)

The following are the carrying amount and fair value as of August 31, 2023, and the amount of difference between these.
Notes on “cash and deposits,” “cash and deposits in trust” and “short-term loans” are omitted as the fair value
approximates the carrying amount because they are cash or settled in a short period. Furthermore “lease and guarantee
deposits received” and “lease and guarantee deposits received in trust” are omitted because the amounts are immaterial.
(Unit: thousand yen)
Carrying amount(1) Long-term loans due within one year
(2) Long-term loans
Total liabilities

Fair value

Amount of difference

9,200,000
41,000,000

9,207,868
40,720,139

7,868(279,860)

50,200,000

49,928,008(271,991)(Note 1) Method of calculation of the fair value of financial instruments(1) Long-term loans due within one year; (2) Long-term loans
Of long-term loans, because those with floating interest rates reflect market interest rates in a short period of time, the fair value approximates
the book value and thus stated at that book value. However, in the case of long-term loans with fixed interest rates, the fair value is calculated
based on the present value of their future cash flows discounted over the time to maturity and at the rate adjusted for credit risks.
(Note 2) Amount of repayment of loans scheduled to be due after the end of the fiscal period (February 28, 2023)
Due within
1 yearLong-term loans due within one year

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years(Unit: thousand yen)
Due after
5 years

9,600,000

-

-

-

-

-

-

7,600,000

11,000,000

10,500,000

5,900,000

5,600,000

9,600,000

7,600,000

11,000,000

10,500,000

5,900,000

5,600,000

Long-term loans
Total

Due after
1 to 2 years

Amount of repayment of loans scheduled to be due after the end of the fiscal period (August 31, 2023)
Due within
1 yearLong-term loans due within one year

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years(Unit: thousand yen)
Due after
5 years

9,200,000

-

-

-

-

-

-

9,100,000

10,500,000

12,100,000

9,300,000-

9,200,000

9,100,000

10,500,000

12,100,000

9,300,000-

Long-term loans
Total

Due after
1 to 2 years[Notes on Securities]
8th fiscal period (as of February 28, 2023)
Not applicable.
9th fiscal period (as of August 31, 2023)
Not applicable.
[Notes on Derivative Transactions]
8th fiscal period (as of February 28, 2023)
Not applicable.
9th fiscal period (as of August 31, 2023)
Not applicable.

- 17 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
[Notes on Retirement Benefits]
8th fiscal period (as of February 28, 2023)
Not applicable.
9th fiscal period (as of August 31, 2023)
Not applicable.
[Notes on Tax-Effect Accounting]
1. Breakdown of main causes for occurrence of deferred tax assets and deferred tax liabilities(Unit: thousand yen)
8th fiscal period(as of Feb. 28, 2023)

9th fiscal period(as of Aug. 31, 2023)

12

17

12
12

17
17

Deferred tax assets
Non-deductible accrued enterprise tax
Total
Deferred tax assets, net

2. Reconciliation of significant differences between the statutory tax rate and the effective income tax rate
(Unit: %)8th fiscal period(as of Feb. 28, 2023)

9th fiscal period(as of Aug. 31, 2023)

31.46

31.46

(31.44)(31.43)

Other

0.06

0.05

Effective income tax rate after applicationof tax-effect accounting

0.08

0.08

Statutory tax rate
[Adjustments]
Deductible distribution payable[Notes on Share of Profit (Loss) of Entities Accounted for Using Equity Method]
8th fiscal period (from September 1, 2022 to February 28, 2023)
Not applicable.
9th fiscal period (from March 1, 2023 to August 31, 2023)
Not applicable.
[Notes on Related-Party Transactions]
1. Parent company, major corporate unitholder, etc.
8th fiscal period (from September 1, 2022 to February 28, 2023)
Not applicable.
9th fiscal period (from March 1, 2023 to August 31, 2023)
Not applicable.
2. Affiliated company, etc.
8th fiscal period (from September 1, 2022 to February 28, 2023)
Not applicable.
9th fiscal period (from March 1, 2023 to August 31, 2023)
Not applicable.
3. Fellow subsidiary, etc.
8th fiscal period (from September 1, 2022 to February 28, 2023)
Not applicable.
9th fiscal period (from March 1, 2023 to August 31, 2023)
Not applicable.
4. Director, major individual unitholder, etc.

- 18 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
8th fiscal period (from September 1, 2022 to February 28, 2023)
Name of
Share capitalcompany,or
Description of
Attributeetc. or Location investments
business orname ofin capital
occupation
person(thousand yen)

Description ofPercentage
relationshipof votingrights, etc. Concurrent
Description ofheld by (in) holding oftransaction
Business
SANKEI
positions,relationship
REAL ESTATE
etc. by(%)
directors

Transaction
amount(thousandyen)

Balanceat end of
Account
perioditem(thousandyen)

Executive
Director of
SANKEI REAL
Payment of
Executive Director of
ESTATE, andasset
SANKEI REAL ESTATE,
President andmanagement
Accounts
and President and Chief
Director Yuichi Ota
Chief Executive
fee to Asset
247,055
payable - 271,761
Executive Officer of
Officer ofManagement
other
Sankei Building Asset
Sankei Building
Company
Management Co., Ltd.
Asset
(Note 3)
Management
Co., Ltd.
(Note 1) Of the related-party transactions subject to disclosure, the related-party transactions including significant transactions are disclosed.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period includes consumption tax,
etc. Amounts are rounded down to the nearest thousand yen.
(Note 3) Payment of asset management fee is for transactions conducted by Yuichi Ota as representative of Sankei Building Asset Management Co.,
Ltd., and asset management fee is based on the terms and conditions provided in SANKEI REAL ESTATE’s articles of incorporation.
(Note 4) Transaction terms and conditions are decided based on the actual market conditions.

9th fiscal period (from March 1, 2023 to August 31, 2023)
Share capital
Name oforcompany,
Description of
Attributeetc. or Location investments
business orname ofoccupationin capital
person(thousand yen)

Description ofPercentage
relationshipof votingrights, etc. Concurrent
Description ofheld by (in) holding oftransaction
Business
positions,
SANKEI
relationshipetc. by
REAL ESTATE
directors(%)

Transaction
amount(thousandyen)

Balanceat end of
Account
perioditem(thousandyen)

Executive
Director of
SANKEI REAL
Payment of
Executive Director of
ESTATE, andasset
SANKEI REAL ESTATE,
President andmanagement
Accounts
and President and Chief
318,393
Director Yuichi Ota
Chief Executive
fee to Assetpayable - 277,170
Executive Officer of(Note 4)
Officer ofManagement
other
Sankei Building Asset
Sankei Building
Company
Management Co., Ltd.
Asset
(Note 3)
Management
Co., Ltd.
(Note 1) Of the related-party transactions subject to disclosure, the related-party transactions including significant transactions are disclosed.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period includes consumption tax,
etc. Amounts are rounded down to the nearest thousand yen.
(Note 3) Payment of asset management fee is for transactions conducted by Yuichi Ota as representative of Sankei Building Asset Management Co.,
Ltd., and asset management fee is based on the terms and conditions provided in SANKEI REAL ESTATE’s articles of incorporation.
(Note 4) Asset management fee includes the fee for property acquisition or sale included in the book value of individual real estate, etc. or deductedfrom sale price (72,620 thousand yen)
(Note 5) Transaction terms and conditions are decided based on the actual market conditions.

[Notes on Asset Retirement Obligations]
8th fiscal period (from September 1, 2022 to February 28, 2023)
Not applicable.
9th fiscal period (from March 1, 2023 to August 31, 2023)
Not applicable.

- 19 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
[Notes on Investment and Rental Properties]
SANKEI REAL ESTATE owns office buildings, etc. for the purpose of earning revenue from rent business. The carrying amount,amount of change during period and fair value of these investment and rental properties are as follows:(Unit: thousand yen)
8th fiscal period
9th fiscal period
From: Sept. 1, 2022
From: Mar. 1, 2023
To: Feb. 28, 2023
To: Aug. 31, 2023
Carrying amount
Balance at beginning of period
97,343,425
97,259,835
Amount of change during period
6,198,790(83,590)
Balance at end of period
Fair value at end of period

97,259,835
104,232,000

103,458,625
108,340,000(Note 1) Carrying amount is the amount of the cost of acquisition, less accumulated depreciation.
(Note 2) Of the amount of change during period, the amount of increase in the previous fiscal period is mainly attributable to capital expenditures(212,502 thousand yen), etc., while the amount of decrease is mainly attributable to depreciation (296,093 thousand yen). The amount of
increase in the fiscal period under review is mainly attributable to new property acquisition of 1 property and additional acquisition of 1
property (total of 2 properties: 6,748,166 thousand yen <including expenses incidental to the acquisition>) while the amount of decrease ismainly attributable to the partial sale of 1 property (447,918 thousand yen).
(Note 3) Fair value at end of period is the appraisal value by an external real estate appraiser.

Furthermore, the income (loss) concerning investment and rental properties is presented in “Notes to the Statement of
Income and Retained Earnings.”[Notes on Revenue Recognition]
1. Information breaking down revenue from contracts with customers
8th fiscal period (from September 1, 2022 to February 28, 2023)(Unit: thousand yen)

Sale of real estate, etc.

Revenue from contracts with customers(Note)-

Utilities reimbursement

130,668

130,668

Other-

2,761,279

Total

130,668

2,891,948(Note)

Sales to external customers-

Rent business revenue, etc. subject to ASBJ Statement No. 13 “Accounting Standard for Lease Transactions” and sale of real estate, etc.
subject to The Japanese Institute of Certified Public Accountants Accounting Committee Report No. 15 “Practical Guidelines on Accountingof Transferors for the Securitization of Real Estate Utilizing Special Purpose Companies” are not included in the above amounts because they
are excluded from application of the Revenue Recognition Accounting Standard. The main revenues from contracts with customers arerevenue from the sale of real estate, etc. and utilities reimbursement.

9th fiscal period (from March 1, 2023 to August 31, 2023)(Unit: thousand yen)

Sale of real estate, etc.

Revenue from contracts with customers(Note 1)620,000

Utilities reimbursement

113,684

113,684-

2,473,216

733,684

2,751,326

Other
Total
(Note 1)

(Note 2)

Sales to external customers(Note 2) 164,424

Rent business revenue, etc. subject to ASBJ Statement No. 13 “Accounting Standard for Lease Transactions” and sale of real estate, etc.
subject to The Japanese Institute of Certified Public Accountants Accounting Committee Report No. 15 “Practical Guidelines on Accountingof Transferors for the Securitization of Real Estate Utilizing Special Purpose Companies” are not included in the above amounts because
they are excluded from application of the Revenue Recognition Accounting Standard. The main revenues from contracts with customers
are revenue from the sale of real estate, etc. and utilities reimbursement.
Since gain or loss on sale of real estate is recognized for the sale of real estate, etc. pursuant to Article 48, paragraph 2 of the Ordinanceon Accounting at Investment Corporations (Cabinet Office Ordinance No. 47 or 2006, as amended), the amount obtained by subtracting
the cost of sale of real estate, etc. and other sale expenses deducted from revenue from the sale of real estate, etc. is indicated for “Saleof real estate, etc.”

2. Information forming the basis for understanding revenue from contracts with customers
8th fiscal period (from September 1, 2022 to February 28, 2023)
As stated in Notes on Matters Concerning Significant Accounting Policies
9th fiscal period (from March 1, 2023 to August 31, 2023)
As stated in Notes on Matters Concerning Significant Accounting Policies- 20 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
3. Information on relationship between satisfaction of performance obligations based on contracts with customers and cash
flows from such contracts, and the amount and timing of revenue expected to be recognized from the next fiscal period
from contracts with customers that exist at the end of the fiscal period under review(1) Balance of contract assets and contract liabilities, etc.
8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023
30,002(Unit: thousand yen)
9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023
25,12725,127

26,668Contract assets (Balance at beginning of period)--

Contract assets (Balance at end of period)--

Contract liabilities (Balance at beginning of period)--

Contract liabilities (Balance at end of period)--

Receivables from contracts with customers(Balance at beginning of period)
Receivables from contracts with customers(Balance at end of period)(2) Transaction price allocated to remaining performance obligations
8th fiscal period (from September 1, 2022 to February 28, 2023)
Revenue is recognized for utilities reimbursement using the amount for which there is a right to claim in accordancewith section 19 of the Implementation Guidance on Accounting Standard for Revenue Recognition because there
is a right to receive an amount of consideration directly corresponding to the value for the lessee, who is acustomer, for the portion for which performance is completed by the end of the period. Therefore, the provisionsof section 80-22(2) of the Revenue Recognition Accounting Standard apply, and the transaction prices allocated toremaining performance obligations are not included in the notes.
9th fiscal period (from March 1, 2023 to August 31, 2023)
Revenue is recognized for utilities reimbursement using the amount for which there is a right to claim in accordancewith section 19 of the Implementation Guidance on Accounting Standard for Revenue Recognition because there
is a right to receive an amount of consideration directly corresponding to the value for the lessee, who is acustomer, for the portion for which performance is completed by the end of the period. Therefore, the provisionsof section 80-22(2) of the Revenue Recognition Accounting Standard apply, and the transaction prices allocated toremaining performance obligations are not included in the notes.
[Notes on Segment Information, Etc.]
1. Segment information
The information is omitted since SANKEI REAL ESTATE has a single segment—the real estate rent business.
2. Related information
8th fiscal period (from September 1, 2022 to February 28, 2023)(1) Information by product and service
The information is omitted since operating revenue to external customers for a single group of products and services
exceeds 90% of operating revenue on the statement of income and retained earnings.
(2) Information by geographic areai.
Operating revenue
The information is omitted since operating revenue to external customers in Japan exceeds 90% of operating
revenue on the statement of income and retained earnings.
ii. Property, plant and equipment
The information is omitted since the amount of property, plant and equipment located in Japan exceeds 90% of
the amount of property, plant and equipment on the balance sheet.

- 21 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
(3) Information by major customer
Name of customer
GRANVISTA Hotels & Resorts Co., Ltd.

Operating revenue
325,755
Not disclosed (Note)Sony Group Corporation(Note)(Unit: thousand yen)
Related segment
Real estate rent business
Real estate rent businessNot disclosed because consent for disclosure has not been obtained from the lessee.

9th fiscal period (from March 1, 2023 to August 31, 2023)(1) Information by product and service
The information is omitted since operating revenue to external customers for a single group of products and services
exceeds 90% of operating revenue on the statement of income and retained earnings.
(2) Information by geographic area
i. Operating revenue
The information is omitted since operating revenue to external customers in Japan exceeds 90% of operating
revenue on the statement of income and retained earnings.
ii. Property, plant and equipment
The information is omitted since the amount of property, plant and equipment located in Japan exceeds 90% of
the amount of property, plant and equipment on the balance sheet.
(3) Information by major customer
Name of customer
GRANVISTA Hotels & Resorts Co., Ltd.

Operating revenue
325,755(Unit: thousand yen)
Related segment
Real estate rent business[Notes on Per Unit Information]
8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023

9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023

Net assets per unit

108,140 yen

108,253 yen

Net income per unit

2,304 yen

2,418 yen

(Note 1) Net income per unit is calculated by dividing net income by the period’s daily weighted average number of investment units (fiscal period
ended February 2023: 467,099 units; fiscal period ended August 2023: 467,099 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:
8th fiscal period
9th fiscal period
From: Sept. 1, 2022
From: Mar. 1, 2023
To: Feb. 28, 2023
To: Aug. 31, 2023
Net income (thousand yen)Amount not available to common unitholders (thousand yen)
Net income attributable to common investment units(thousand yen)
Average number of investment units during period (units)[Notes on Significant Subsequent Events]
Not applicable.

- 22 -

1,076,626

1,129,612--

1,076,626

1,129,612

467,099

467,099

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
(9) Changes in Total Number of Investment Units Issued and Outstanding
Changes in the total number of investment units issued and outstanding and unitholders’ capital from the incorporation of
SANKEI REAL ESTATE to the last day of the fiscal period under review (August 31, 2023) are as follows:
Total number of investment
Unitholders’ capital (net)units issued and outstanding Remarks(thousand yen) (Note 1)(units)Date
Description
Increase
Increase
Balance
Balance(Decrease)(Decrease)
Incorporation
Nov. 19, 2018
through private
100,000
100,000
1,000
1,000 (Note 2)placement
Capital increase
Mar. 11, 2019
through public
21,928,467
22,028,467
227,238
228,238 (Note 3)
offering
Capital increase
Apr. 10, 2019
through third-party
1,096,433
23,124,900
11,362
239,600 (Note 4)
allotment
Capital increase
Sept. 2, 2019
through public
12,777,138
35,902,038
111,619
351,219 (Note 5)
offering
Capital increase
Sept. 26, 2019
through third-party
638,862
36,540,901
5,581
356,800 (Note 6)
allotment
Capital increase
Sept. 1, 2021
through public
12,287,452
48,828,353
105,047
461,847 (Note 7)
offering
Capital increase
Sept. 29, 2021
through third-party
614,33149,442,685
5,252
467,099 (Note 8)
allotment
Cash distribution inexcess of earnings
Nov. 22, 2021
(7,136)49,435,549
467,099 (Note 9)(contribution
refund)(Note 1) The amount obtained by subtracting the deduction from unitholders’ capital from unitholders’ capital.
(Note 2) Investment units were issued at a paid-in amount of 100,000 yen per unit upon the incorporation of SANKEI REAL ESTATE.
(Note 3) New investment units were issued through public offering at an issue price of 100,000 yen (paid-in amount of 96,500 yen) per unit for the
purpose of procuring funds for acquisition of new properties.
(Note 4) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in
amount of 96,500 yen per unit.
(Note 5) New investment units were issued through public offering at an issue price of 118,734 yen (paid-in amount of 114,471 yen) per unit for the
purpose of procuring funds for acquisition of new properties.
(Note 6) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in
amount of 114,471 yen per unit.
(Note 7) New investment units were issued through public offering at an issue price of 121,327 yen (paid-in amount of 116,971 yen) per unit for the
purpose of procuring funds for acquisition of new properties.
(Note 8) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in
amount of 116,971 yen per unit.
(Note 9) A cash distribution in excess of earnings of 20 yen per unit (contribution refund that falls under distribution through the reduction inunitholders’ capital for tax purposes) as the cash distribution for the 5th fiscal period (ended August 2021) resolved at SANKEI REAL ESTATE’s
board of directors’ meeting held on October 15, 2021, and payment of the distribution commenced on November 22, 2021.

- 23 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
3.

Reference Information(1) Information on Price of Assets Under Management, Etc.
i. Investment Status
8th fiscal period(as of Feb. 28, 2023)
Type of asset

Asset type

Geographic area
(Note 1)

9th fiscal period(as of Aug. 31, 2023)

Total amount
As a
Total amount
As a
held
percentage ofheldpercentage of(million yen) total assets (million yen) total assets(Note 2)(%) (Note 3)(Note 2)(%) (Note 3)

Greater Tokyo, Osaka City andNagoya City
Cities designated by
Office buildings
government ordinance(excluding above), core cities
and major regional cities
Real estate
Greater Tokyo, Osaka City andNagoya City
Cities designated by
Sub assets
government ordinance(excluding above), core cities
and major regional cities
Greater Tokyo, Osaka City andNagoya City
Cities designated by
Office buildings
government ordinance(excluding above), core cities
and major regional cities
Greater Tokyo, Osaka City andNagoya City
Cities designated by
Sub assets
government ordinance(excluding above), core cities
and major regional cities
Real estate intrust
Greater Tokyo, Osaka City andNagoya City
Cities designated byHotelsgovernment ordinance(excluding above), core cities
and major regional cities
Greater Tokyo, Osaka City andNagoya City
Logistics
Cities designated byfacilities
government ordinance(excluding above), core cities
and major regional cities
Subtotal
Deposits and other assets
Total assets

2,615

2.5

2,618

2.3

-

-

-

-

-

-

-

-

-

-

-

-

71,67767.7

72,646

64.7

10,197

9.6

10,167

9.1

8,897

8.4

8,871

7.9

3,872

3.7

9,154

8.2

8,897

8.4

8,871

7.9

3,872

3.7

3,847

3.4

-

-

-

-

-

-

5,307

4.7

97,259
8,568

91.9
8.1

103,458
8,777

92.2
7.8

105,828100.0

112,235100.0(Note 1) “Greater Tokyo” refers to Tokyo, Kanagawa Prefecture, Saitama Prefecture and Chiba Prefecture.
“Core cities” refers to cities with population of 200,000 or more (excluding Greater Tokyo, Osaka City and Nagoya City, and other cities
designated by government ordinance).
“Major regional cities” refers to cities that are municipalities with population of less than 200,000 and the Asset Management Company has
deemed certain demand can be found for specific asset types.
(Note 2) “Total amount held” is based on the carrying amount (in the case of real estate and real estate in trust, the depreciated book value), rounded
down to the nearest million yen. Furthermore, the total amount held for real estate in trust with hotel as the asset type includes the bookvalue of movables incidental to hotels.
(Note 3) “As a percentage of total assets” is rounded to one decimal place.

- 24 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023

8th fiscal period(as of Feb. 28, 2023)

9th fiscal period(as of Aug. 31, 2023)

Total liabilities

55,315

As a percentage of
total assets(%) (Note 2)
52.3

Total net assets
Total assets

50,512
105,828

47.7
100.0

Amount(million yen) (Note 1)

61,670As a percentage of
total assets(%) (Note 2)
54.9

50,565112,235

45.1
100.0

Amount(million yen) (Note 1)(Note 1) Total liabilities, total net assets and total assets amounts are each based on the carrying amount, rounded down to the nearest million yen.
(Note 2) “As a percentage of total assets” is rounded to one decimal place.

- 25 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
ii.

Investment Assets
The following are the assets held by SANKEI REAL ESTATE (real estate or trust beneficiary rights that have real estate as trust
assets; hereinafter, collectively referred to as the “assets under management”) as of August 31, 2023.

(A) Portfolio List
The property name, location, acquisition price, investment ratio, book value and appraisal value of the assets undermanagement of SANKEI REAL ESTATE are as follows:

Asset type

Property
numberBook value(million yen)
(Note 2)

Appraisal value(million yen)
(Note 3)

Tokyo Sankei
Building(Note 4)

Chiyoda-ku,
Tokyo

2,509

2.4

2,618

2,570

A-2

BREEZÉ TOWER(Note 4)Kita-ku,
Osaka-shi,
Osaka

12,64812.3

12,556

17,380A-3

S-GATENIHONBASHIHONCHO(Note 4)Chuo-ku,
Tokyo

6,698

6.5

6,635

7,750

A-4

S-GATE AKIHABARA

2,055

2.0

2,021

2,690

5,829

5.7

6,060

6,630

4,959

4.8

4,989

5,470

3,782

3.7

3,871

3,900

20,94020.4

21,191

17,350

5,400

5.3

5,445

5,270

7,000

6.8

7,040

7,400

2,800

2.7

2,835

2,710

10,0009.7

10,167

10,300-84,62382.3

85,43389,420Hibiya Sankei
Building
Hatchobori Sankei
Building

A-6
A-7

Toyo Park Building

A-8

Shinagawa Seaside
TS Tower(Note 4)

A-9

Omori Park Building

A-10
A-11
A-12

Chiyoda-ku,
Tokyo
Chiyoda-ku,
Tokyo
Chuo-ku,Tokyo
Koto-ku,Tokyo
Shinagawa-ku,
Tokyo

Ota-ku,Tokyo
Minato-ku,
S-GATE AKASAKA
Tokyo
Miyamae-ku,
Miyazakidai Garden
Kawasaki-shi,
OfficeKanagawa
Sawara-ku,
Hitachi Kyushu
Fukuoka-shi,
Building
Fukuoka

Subtotal

Sub assets

Location

A-1

A-5
Officebuildings

Property nameAcquisition price(Note 1)
Investment
Price
ratio
(million yen)
(%)

B-1

Hotel Intergate
Tokyo Kyobashi

Chuo-ku,
Tokyo

8,961

8.7

8,871

9,190

B-2

Hotel Intergate
Hiroshima

Naka-ku,
Hiroshima-shi,
Hiroshima

3,990

3.9

3,847

4,180

B-3

SANKEILOGI Settsu

Settsu-shi,
Osaka

5,242

5.1

5,307

5,550

Subtotal-

18,19317.7

18,02518,920Total-

102,816

100.0

103,458

108,340(Note 1) “Acquisition price” is the sale and purchase price of each real estate and trust beneficiary right stated in the sale and purchase agreement for each asset
under management, rounded down to the nearest million yen. The sale and purchase prices do not include consumption tax, local consumption tax andthe various expenses required for the acquisition. “Investment ratio” is the proportion of the acquisition price of each asset under management to thesum total amount of acquisition prices, rounded to one decimal place.
(Note 2) “Book value” is the depreciated book value for each asset under management as of August 31, 2023, rounded down to the nearest million yen.
(Note 3) “Appraisal value” is the appraisal value with an appraisal date of August 31, 2023, stated in each real estate appraisal report. The appraisal of each asset
under management is entrusted to Japan Real Estate Institute, The Tanizawa Sōgō Appraisal Co., Ltd. and Daiwa Real Estate Appraisal Co., Ltd.
(Note 4) The acquisition price, book value and appraisal value are the figures equivalent to the co-ownership interest (2% for “Tokyo Sankei Building” and 51%
for “S-GATE NIHONBASHI-HONCHO”) and the quasi co-ownership interest (43.45% for “BREEZÉ TOWER” and 50% for “Shinagawa Seaside TS Tower”)
held by SANKEI REAL ESTATE.

- 26 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
(B)

Overview of Buildings and Leasing
The property name, construction completion, total rental revenue, lease and guarantee deposits, total leasable area, totalleased area and occupancy rate of the assets under management of SANKEI REAL ESTATE are as follows:
Lease and
Total rental
Total leasable
Total leased Occupancy
Construction
guarantee
Asset Property
revenue
area
area
rate
Property namecompletion
deposits
type number(million yen)
(m2)
(m2)
(%)
(Note 1)(million yen)
(Note 2)
(Note 4)(Note 5)(Note 6)(Note 3)
Tokyo Sankei
A-1
Building
Sept. 28, 2000
10187
881.68880.1299.8(Note 7)BREEZÉ TOWER
A-2
July 1, 2008
992
903
11,689.09
11,305.84
96.7(Note 7)
S-GATE NIHONBASHIA-3
HONCHO
Oct. 31, 2018
308
308
3,171.83
3,171.83
100.0(Note 7)
A-4
S-GATE AKIHABARA Sept. 29, 2017130
130
1,681.55
1,681.55
100.0
Hibiya Sankei
A-5
June 25, 1992
375
303
3,439.61
3,439.61
100.0
Building
Hatchobori Sankei
OfficeA-6
Sept. 1, 1965
310
262
5,594.90
5,594.90
100.0
Buildingbuildings
A-7
Toyo Park Building
June 18, 1991
152
135
4,224.52
3,170.61
75.1
Shinagawa Seaside
Not disclosed Not disclosed
A-8
TS Tower
July 25, 2003
15,348.20
1,476.01
9.6(Note 8)(Note 8)(Note 7, 9)
A-9
Omori Park Building May 31, 1993
234
213
7,469.72
5,914.78
79.2
Not disclosed Not disclosed
A-10
S-GATE AKASAKA
July 31, 2015
3,308.10
3,308.10
100.0(Note 8)(Note 8)Miyazakidai
A-11
Feb. 4, 1993
153
144
3,687.53
3,687.53
100.0
Garden OfficeHitachi Kyushu
Not disclosed Not disclosed
A-12
Feb. 29, 1996
26,513.33
26,513.33
100.0
Building(Note 8)(Note 8)Subtotal (average)
3,651
3,118
87,010.07
70,144.21
80.6
Hotel Intergate
B-1
Jan. 18, 2018
413
206
6,006.53
6,006.53
100.0
Kyobashi, TokyoSub
Hotel Intergate
assetsB-2
Oct. 31, 2018
237
118
9,160.15
9,160.15
100.0
Hiroshima
B-3
SANKEILOGI Settsu
Oct. 1, 2022
237
118
14,748.33
14,748.33
100.0
Subtotal (average)
888
444
29,915.01
29,915.01
100.0
Total (average)
4,540
3,562
116,925.08
100,059.22
85.6(Note 1) “Construction completion” is the date of new construction completion stated in the registry of the main building for each asset under management. If
there are multiple main buildings, the date of the oldest building stated in the registry is indicated. As for “Shinagawa Seaside TS Tower,” the date of
new construction completion stated in the registry of the building with the building number 100-1-9 is indicated.
(Note 2) “Total rental revenue” is the amount calculated by annualizing the monthly rent (Only the rent for the rental accommodation, excluding usage fees forcertain incidental areas such as warehouses which are not the main asset type, signboards, parking lots, etc., but including common service charges,
etc. Free rent and rent holiday (*1) will not be taken into consideration. As for rents that include floating rents in agreements with the tenants, the rents
are calculated without taking floating rents into consideration. Consumption tax, etc. are not included. The same shall apply hereinafter.) for the building
stated in the lease agreement for each asset under management effective as of August 31, 2023, rounded down to the nearest million yen. The amountcalculated by annualizing the monthly rent stated in the lease agreement concluded with the end tenant with respect to the portion in the pass-throughtype master lease agreement (*2) is indicated when a pass-through-type master lease agreement has been concluded for the assets under management.
(*1) “Free rent” refers to measures temporarily reducing rent or other amounts for mainly tenants newly moving in which temporarily reduce costs
associated with moving so as to encourage them to move in. “Rent holiday” refers to an agreement on measures temporarily reducing rent orother amount on a regular or irregular basis for a certain period of time during a tenant’s period of occupancy. The same shall apply hereinafter.
Unless otherwise stated, calculations are made without taking free rent or rent holiday into consideration when calculating monthly rent, etc.
in this document.
(*2) “Pass-through-type master lease agreement” refers to master lease agreements that have no rent guarantee.
(Note 3) “Lease and guarantee deposits” is the total amount of lease and guarantee deposits (including the amount expected to be received based on each leaseagreement, but excluding lease and guarantee deposits for certain incidental areas such as warehouses which are not the main asset type, signboards,
parking lots, etc.) based on the lease agreement for each asset under management as of August 31, 2023, rounded down to the nearest million yen.
The amount of security deposits stated in the lease agreement concluded with the end tenant with respect to the portion in the pass-through-type
master lease agreement is indicated when a pass-through-type master lease agreement has been concluded for the assets under management.
(Note 4) “Total leasable area” is the area (excluding certain incidental areas such as warehouses which are not the main asset type, signboards, parking lots, etc.)
expected to be leasable based on the lease agreement, drawing, etc. of the buildings for each asset under management as of August 31, 2023, rounded
down to two decimal places.
(Note 5) “Total leased area” is the total leased area (excluding certain incidental areas such as warehouses which are not the main asset type, signboards, parking
lots, etc.) stated in the lease agreement (excluding lease agreements under which the lease period is yet to commence) for each asset undermanagement as of August 31, 2023, rounded down to two decimal places. With respect to the portion which comes under the pass-through-type master
lease agreement, the total area for which the lease agreement has actually been concluded with the end tenant and for which the lease period hascommenced is indicated, rounded down to two decimal places.
(Note 6) “Occupancy rate” is the ratio of total leased area to total leasable area for each asset under management as of August 31, 2023, rounded to one decimal
place. In addition, each subtotal and portfolio total figure is the ratio of the sum total of total leased area to the sum total of total leasable area for each
asset under management, rounded to one decimal place.
(Note 7) The total rental revenue, lease and guarantee deposits, total leasable area and total leased area are the figures equivalent to the co-ownership interest(2% for “Tokyo Sankei Building” and 51% for “S-GATE NIHONBASHI-HONCHO”) and the quasi co-ownership interest (43.45% for “BREEZÉ TOWER” and50% for “Shinagawa Seaside TS Tower”) held by SANKEI REAL ESTATE.
(Note 8) Not disclosed because such contains information for which consent for disclosure has not been obtained from the tenant, relevant party, etc. or
information from which confidential information can be derived.
(Note 9) An agreement has been reached with Sony Group Corporation for the termination of the contract for Shinagawa Seaside TS Tower with a termination
date of March 31, 2023 (14 floors).

- 27 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
(C) Overview of Real Estate Appraisal Reports
The following is an overview of each real estate appraisal report prepared by Japan Real Estate Institute, The Tanizawa Sōgō
Appraisal Co., Ltd. and Daiwa Real Estate Appraisal Co., Ltd. upon being entrusted by SANKEI REAL ESTATE and the AssetManagement Company with the appraisal of the assets under management of SANKEI REAL ESTATE. The concerned realestate appraisal reports are the appraising appraisal company’s judgment and opinion at a certain point in time and are
not a guarantee of the validity or accuracy of the content thereof, possibility of transaction at the concerned appraisal value,etc. Furthermore, there is no special vested interest between Japan Real Estate Institute, The Tanizawa Sōgō Appraisal Co.,
Ltd. or Daiwa Real Estate Appraisal Co., Ltd. and SANKEI REAL ESTATE or the Asset Management Company.
Overview of appraisal report
Direct capitalization
DCF method
methodIndicated
Appraisal
Indicated
Indicatedvalue byAsset Property
value
Property nameAppraiser
value byvalue bycost
type
number(million yen)
Discount Terminal
approachCap
rateincomeincome(Note 1)rate
cap rate (million(%)
approachapproach
(%)
(%)
yen)
(million(millionyen)
yen)Tokyo Sankei
Japan Real
A-1
2,570
2,610
2.3
2,530
2.0
2.4
2,730
Building
Estate Institute(Note 2)BREEZÉ
Japan RealA-2
17,38017,5103.5
17,206
3.1
3.7
15,772TOWER
Estate Institute(Note 2)S-GATENIHONBASHI Japan Real
A-3
7,750
7,890
3.2
7,610
2.9
3.4
6,550
Estate Institute-HONCHO(Note 2)S-GATE
Japan Real
A-4
2,690
2,700
3.3
2,670
3.1
3.4
2,410
AKIHABARA
Estate InstituteHibiya Sankei Japan Real
A-5
6,630
6,710
2.8
6,550
2.6
2.9
7,140
Building
Estate InstituteHatchobori
The Tanizawa
A-6
Sankei
Sōgō Appraisal
5,470
5,640
4.1
5,390
4.2
4.3
5,650
OfficeBuilding
Co., Ltd.
buildings
Toyo Park
Japan Real
A-7
3,900
3,940
3.7
3,850
3.5
3.8
2,990
Building
Estate InstituteShinagawa
The Tanizawa
Seaside TS
A-8Sōgō Appraisal
17,35018,3503.4
16,950
3.5
3.6
21,250Tower
Co., Ltd.
(Note 2)
Omori Park
Japan Real
A-9
5,270
5,350
3.7
5,190
3.5
3.8
5,550
Building
Estate Institute
S-GATE
Japan Real
A-10
7,400
7,490
3.1
7,310
2.9
3.2
6,650
AKASAKA
Estate InstituteMiyazakidai
Japan RealA-11
Garden
2,710
2,730
4.5
2,690
4.3
4.6
2,330
Estate Institute
OfficeHitachiJapan Real
A-12
Kyushu10,30010,400
4.2
10,2004.0
4.3
12,500Estate Institute
Building
Subtotal
89,42091,32088,146
91,522
Hotel
Daiwa RealIntergate
Estate
B-1
9,190
9,320
3.7
9,130
3.5
3.9
8,800
Tokyo
Appraisal Co.,
Kyobashi
Ltd.
Sub
Hotel
assetsJapan Real
B-2
Intergate
4,180
4,220
4.5
4,140
4.3
4.7
4,530
Estate Institute
Hiroshima
SANKEILOGI Japan Real
B-3
5,550
5,640
3.7
5,460
3.5
3.9
5,210
SettsuEstate InstituteSubtotal
18,92019,18018,73018,540Total
108,340
110,500
106,876
110,062(Note 1) “Appraisal value” is the appraisal value with an appraisal date of August 31, 2023, stated in each real estate appraisal report.
(Note 2) The appraisal value, indicated value by income approach based on direct capitalization method, indicated value by income approach basedon DCF method and indicated value by cost approach are the figures equivalent to the co-ownership interest (2% for “Tokyo Sankei
Building” and 51% for “S-GATE NIHONBASHI-HONCHO”) and the quasi co-ownership interest (43.45% for “BREEZÉ TOWER” and 50% for“Shinagawa Seaside TS Tower”) held by SANKEI REAL ESTATE.

- 28 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
(2) Capital Expenditures for Real Estate Heldi. Schedule of Capital Expenditures
Of capital expenditures associated with renovation work, etc. currently planned for assets under management of SANKEIREAL ESTATE as of August 31, 2023, the following are the major estimated amounts (10 million yen or more). The estimatedconstruction costs below may include the portion separately charged to expenses in accounting.

Name of real estate, etc.
(Location)

PurposeScheduled period

Expected construction cost
(million yen)Amount of
Total
payment
amountTotal amountduringalready
periodpaid

Hibiya Sankei Building(Chiyoda-ku, Tokyo)

Replacement of SP pump

From: Feb. 1, 2024
To: Feb. 29, 2024

24

-

-

Hibiya Sankei Building(Chiyoda-ku, Tokyo)

Renewal of air-conditioner
outdoor unit

From: May 1, 2024
To: May 31, 2024

18

-

-

Shinagawa Seaside TS Tower(Shinagawa-ku, Tokyo)

Overhaul of engine of
emergency generator

From: Nov. 1, 2023
To: Nov. 30, 2023

17

-

-

Shinagawa Seaside TS Tower(Shinagawa-ku, Tokyo)

Repair of air-conditioning
system

From: Nov. 1, 2023
To: Dec. 31, 2023

25

-

-

Omori Park Building(Ota-ku, Tokyo)

Repair of individual airconditioning system

From: Dec. 1, 2023
To: Dec. 31, 2023

16

-

-

Omori Park Building(Ota-ku, Tokyo)

Update of battery facilities

From: Jan. 1, 2024
To: Jan. 31, 2024

16

-

-

- 29 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2023
ii.

Capital Expenditures during the Fiscal Period
Major construction work falling under the category of capital expenditures of 10 million yen or more conducted in the fiscal
period under review for assets under management of SANKEI REAL ESTATE as of August 31, 2023, are as follows: For the fiscal
period under review, capital expenditures amounted to 219 million yen and repair expenses separately charged to expenses
amounted to 37 million yen for a combined total of 257 million yen of construction works implemented.

Name of real estate, etc.
(Location)

Purpose

PeriodAmount of payment(million yen)

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Update of blind system

From: Jul 14, 2022
To: Mar. 2, 2023

14

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Replacement of tile carpet in
office common area

From: Jan. 14, 2023
To: Mar. 31, 2023

11

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Dividing work of area on 17F

From: Mar. 3, 2023
To: May 15, 2023

28

Shinagawa Seaside TS Tower(Shinagawa-ku, Tokyo)

Common area renovation
work

From: Jan. 6, 2023
To: Jun. 30, 2023

118

iii.

Other

46

Total

219

Cash Reserves for Long-Term Repair Plans
Based on long-term repair plans formulated on a property-by-property basis, SANKEI REAL ESTATE makes the following
provision of reserve for repairs from cash flows during the fiscal period for the purpose of allocating to medium- to long-term
future large-scale repairs and other funds.

Business period
Balance of reserve at
beginning of period(thousand yen)
Provision of reserve
during period(thousand yen)
Reversal of reserve
during period(thousand yen)
Reserve carriedforward(thousand yen)

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

6th fiscal period
From: Sept. 1, 2021
To: Feb. 28, 2022

7th fiscal period
From: Mar. 1, 2022
To: Aug. 31, 2022

8h fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023

9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023

175,880

209,678

262,349

303,132

324,485

59,29385,56759,80159,801

72,811

25,49632,89519,01938,44827,295

209,678

262,349

303,132

324,485

370,002- 30 -