(REIT) Financial Report for the Fiscal Period Ended August 2020
REIT Securities Issuer:
TSE Code:
Representative:

SANKEI REAL ESTATE Inc.
2972
Yuichi Ota, Executive Director

Listing:
URL:

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

October 15, 2020
Tokyo Stock Exchange
https://www.s-reit.co.jp/en/

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

November 26, 2020
November 20, 2020

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 2020 (from March 1, 2020, to August 31, 2020)(1) Results of Operations(% figures are the rate of period-on-period increase (decrease))
Operating revenue
Operating profit
Ordinary profit
Net profit
million yen%
million yen%
million yen%
million yen%
Fiscal period
2,005
3.7
996
(14.6)
904(15.5)
903(15.5)
Ended Aug. 2020
Ended Feb. 2020
1,933
67.1
1,166
66.6
1,069
217.9
1,068
218.9

yen

%

Ratio of ordinary profit
to total assets
%

2,532

2.4

1.2

45.1

3,007

3.5

1.7

55.3

Earnings per unit
Fiscal period
Ended Aug. 2020
Ended Feb. 2020

Return on equity

Ratio of ordinary profit
to operating revenue%(Note) Earnings per unit is calculated by dividing net profit by the daily weighted average number of investment units (Fiscal period ended February 2020:
355,420 units, Fiscal period ended August 2020: 356,800 units).

(2) Distribution
Distribution per unit
Total distribution
Distributions in(excluding distributions (excluding distributions excess of earnings
in excess of earnings) in excess of earnings)
per unit
yenmillion yen
yen

Total distribution inexcess of earnings

Payout ratio

Ratio of distribution
to net assets

million yen%%
Fiscal period
2,532
903
100.0
2.4
Ended Aug. 2020
Ended Feb. 2020
2,995
1,068
100.0
2.9
(Note) Due to issuance of new investment units during the fiscal period resulting in change in the number of investment units during the fiscal period, payout
ratio of the fiscal period ended February 2020 is calculated by the following formula and rounded to one decimal place.
Payout ratio = Total distribution (excluding distribution in excess of earnings) ÷ Net profit × 100(3) Financial Position

Fiscal period
Ended Aug. 2020
Ended Feb. 2020

Total assets
million yen

Net assets
million yen

76,19576,186Equity ratio%

Net assets per unit
yen

37,44449.1

104,945

37,60949.4

105,408SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
(4) Cash Flows

million yen

million yen

million yen

Cash and cash
equivalents at end of
periodmillion yen

1,714

91

(1,523)

7,160

2,123

(23,388)

24,711

6,877

Cash flows fromoperating activities
Fiscal period
Ended Aug. 2020
Ended Feb. 2020

Cash flows frominvesting activities

Cash flows fromfinancing activities

2. Operating Forecasts for the Fiscal Period Ending February 2021 (from September 1, 2020, to February 28, 2021) and Operating
Forecasts for the Fiscal Period Ending August 2021 (from March 1, 2021, to August 31, 2021)(% figures are the rate of period-on-period increase (decrease))
Operating revenue
million yen
Fiscal periodEnding Feb. 2021
Ending Aug. 2021

Operating profit% million yen

Ordinary profit% million yen

Net profit% million yen

Distribution per unit
Distributions in excess(excluding distributionsof earnings per unit
in excess of earnings)
%
yen
yen

2,135

6.5

1,051

5.5

955

5.7

954

5.7

2,676

-

2,166

1.5

1,064

1.3

958

0.3

957

0.3

2,684

-

(Reference) Forecast earnings per unit (Forecast net profit ÷ Forecast total number of investment units issued and outstanding at endof period)
Fiscal period ending February 2021: 2,675 yen
Fiscal period ending August 2021: 2,683 yen(Note)

Distribution per unit (excluding distribution in excess of earnings) is calculated based on the forecast total number of investment units issued andoutstanding as of the date of this document of 356,800 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 and outstanding (including
Fiscal period
Fiscal period
356,800 units
356,800 units
treasury investment units) at end of Ended Aug. 2020
Ended Feb. 2020
periodii. Number of treasury investment units
Fiscal period
Fiscal period
0 units
0 units
at end of period
Ended Aug. 2020
Ended Feb. 2020
(Note) For the number of investment units serving as the basis for calculation of earnings per unit, please refer to “Notes on Per
Unit Information” on page 23.

* Financial reports are exempt from audits by certified public accountants or audit corporations.
* Matters of special note
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 distributions. 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 2021 (from September 1, 2020, to February
28, 2021) and Fiscal Period Ending August 2021 (from March 1, 2021, to August 31, 2021)” on pages 6 and 7.

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
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 ........................................................................................................................................................... 10(3) Statement of Unitholders’ Equity ......................................................................................................................................... 11(4) Statement of Cash Distribution ............................................................................................................................................ 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 ....................................................................................................................................... 16(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 ............................................................................................................................................................ 29-1-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020

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 Trusts 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 the Investment Trusts Act on December 17, 2018 (Registration No. 140 with the Director-General of the Kanto
Local Finance Bureau). Later, SANKEI REAL ESTATE 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, 2020), total number of investment units issued andoutstanding was 356,800 units, and the unitholders’ capital was 36,540 million yen.
ii.

Management Environment
In this fiscal period (fiscal period ending August 2020), the Japanese economy was greatly affected by the rapid spread of
the novel coronavirus (COVID-19). The declaration of a state of emergency based on the Act on Special Measures for
Pandemic Influenza and New Infectious Diseases Preparedness and Response (Act No. 31 of 2012, as amended) for 7
prefectures on April 7, 2020, in response to the spread of the infection had a great impact on social and economic
activities upon expansion of the applicable regions to all prefectures until it was lifted completely on May 25, 2020. The
circumstances are the severest since the global financial crisis; for example, the real GDP growth rate (secondary
preliminary figure) of April to June 2020 by the Cabinet Office decreased by 7.9% compared with the preceding period
year (28.1% decrease in the annualized rate). Work styles have also been re-examined: for example, more and morecompanies have been promoting remote work such as working from home. Overseas economic activities have alsostagnated significantly due to rising unemployment rates caused by the spread of COVID-19, constraints on economic
activities, and limitations on transportation such as continued travel restrictions between countries. Both in Japan andabroad, the economy is recovering thanks to policies and resumed economic activities, but close attention is stillrequired.
Under such economic circumstances, in terms of the office building market, which SANKEI REAL ESTATE sets as theprimary investment target, the vacancy rate was on the rise but stayed low while rents remained firm thanks tocontinued steady demand in Tokyo and Osaka where SANKEI REAL ESTATE’s portfolio assets are located. As for the hotel
market, in which SANKEI REAL ESTATE invests as sub-assets, the number of foreign tourists greatly decreased due torestrictions on entry into Japan, overseas travel restrictions in foreign countries, etc. associated with the spread of
COVID-19. Though the number of business trips and tourists greatly decreased due to constraints on transportation in
Japan, the government’s Go To Travel campaign kicked off on July 22, 2020, and the Overnight Travel Statistics Survey by
the Japan Tourism Agency shows that the total number of guests and occupancy rate improved after June.

iii.

Management Performance
SANKEI REAL ESTATE did not acquire or sell any assets in the fiscal period under review. The portfolio of SANKEI REALESTATE as of the end of the fiscal period under review consisted of 11 properties with an asset size (total acquisition
price) of 67,325 million yen, the same as that in the preceding fiscal period.
SANKEI REAL ESTATE has sought to improve satisfaction through reinforcement and enhancement of its relationship withexisting tenants, aiming at expansion of revenue and stable growth of earnings from assets under management. For
existing tenants facing approaching contract renewal, SANKEI REAL ESTATE raised rents through efforts based on trendsof the rental market and implemented tenant replacement with no down time through flexible leading activities. Repairs
and capital expenditures were narrowed down to those which contribute to maintenance and improvement of thecompetitiveness of the assets under management.
As a result, the occupancy rate (Note) of the 11 portfolio properties remained at 100% and operating revenue from realestate leasing was 2,005 million yen, 3.7% higher than that at the end of the preceding fiscal period despite the COVID19 pandemic. The appraisal value as of the end of the fiscal period under review increased by 75,770 million yen, an
increase of 4.4% from that as of the end of the preceding fiscal period.
Although the two hotel properties held by SANKEI REAL ESTATE have started to see some impact of temporary closuredue to voluntary suspension of business activities associated with the spread of COVID-19, fixed rent based on thecurrent contract has been secured for the leasing business revenue of the fiscal period under review.
(Note)“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 eachportfolio property.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
iv.

Overview of Fund Procurement
In the fiscal period under review, 4,300 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,
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 12, 2020, to repay 4,300 million yen of short-term borrowings due forrepayment on March 12, 2020. We are promoting extension of the average life of interest-bearing debt, improvement in
the ratio of fixed-rate debt, and staggering of maturities by applying a borrowing period of 4.5 years with a fixed-interestrate borrowing.
In addition, early repayment of 456 million yen was made on June 25, 2020, using the consumption tax refund for theproperties acquired on September 3, 2019.
As a result, as of the last day of the fiscal period under review, the balance of borrowings outstanding was 33,500 million
yen and the ratio of interest-bearing liabilities to total assets (hereinafter, “LTV ratio”) was 44.0%.

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 2,005 million yen, operating profit of 996 million yen, ordinary profit of 904 million yen, and net profit of 903
million yen. Concerning distribution, in accordance with SANKEI REAL ESTATE’s distribution policy (Article 36 of thearticles of incorporation), SANKEI REAL ESTATE intends to have the maximum amount of distribution of earnings included
in deductible 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 903,417,600 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 2,532 yen.

(Outlook for the Next Fiscal Period)i.
General Management Outlook
According to the Monthly Economic Report (September 2020) by the Cabinet Office, the recovery trend is expected tocontinue thanks to the effects of various polices and improvements in overseas economies to raise the level of social andeconomic activities and take measures to prevent the spread of COVID-19, close attention must be paid to the trend of
COVID-19 in Japan and abroad, as well as to the impacts of fluctuations of the financial and capital markets, etc. It is alsosuggested that while the recovery trend of overseas economies is expected to continue while economic activities are
resumed incrementally, it is necessary to pay attention to the trend COVID-19 in Japan and abroad, the impacts offluctuations of the financial and capital markets, etc.
In the office building market, the vacancy rate is rising amid the COVID-19 pandemic, and rents have appeared to peak.
In addition, people’s response to COVID-19 is expected to change with the development of a vaccine, etc. from now on,
but the new normal is propagating in social and economic activities under the COVID-19 pandemic. Moreover, it isnecessary to pay attention to changes in work styles and the trend of office demand. SANKEI REAL ESTATE mainly owns
office buildings in the central six wards of Tokyo (Chiyoda, Chuo, Minato, Shinjuku, Shibuya, and Shinagawa) and large
cities in Osaka, and the demand for offices from tenants is relatively strong. The contract periods and rents are stipulated
in leasing agreements contracts, so, as of now, the impact of COVID-19 is unlikely to become immediately significant. On
the other hand, SANKEI REAL ESTATE received requests for rent decrease and deferment of rent payment, etc. from sometenants due to COVID-19, so there is a possibility that we will accept such requests, tenants may terminate theircontracts, etc. We will pay attention to the performances of tenants, etc. as well as reinforce our relationship with themand continue discussions consultations and responses.
In terms of the hotel market, the number of inbound tourists decreased greatly while domestic trips and business trips
are still stagnant, and the severe situation is expected to continue. On the other hand, there are expectations for theeffect of policy support such as the special cash payment under a supplementary budget and the inclusion of Tokyo in
the applicable regions of the government’s Go To Travel campaign started on July 22, 2020, from October 2020. As forthe two hotels held by SANKEI REAL ESTATE, we take measures to prevent infection and make efforts to improve a senseof safety in terms of good hygiene in order to obtain the support of customers under the new environment. GRANVISTA
Hotels & Resorts Co., Ltd., which is a tenant of two properties, is a wholly owned subsidiary of The Sankei Building Co.,
Ltd. (hereinafter, “Sankei Building” or “Sponsor”) and continues to pay fixed rent based on the fixed-term building leaseagreement, so it is expected that there will be no impact on SANKEI REAL ESTATE.
(A) External Growth Strategy
SANKEI REAL ESTATE acquired 60% quasi co-ownership interest in “S-GATE AKASAKA” through the pipeline of the sponsor
on October 1, 2020, while the economy was affected by the spread of COVID-19. “S-GATE AKASAKA” is a newly built
office building with an occupancy rate of 100% in central Tokyo developed by Sankei Building as the first property of thehigh-grade and mid-size office building (S-GATE) series. This acquisition improved the quality of the portfolio of SANKEIREAL ESTATE and increased the asset size (total acquisition price) to 71,525 million yen. SANKEI REAL ESTATE willcontinue to be supported by the sponsor and maintain external growth through acquisition of Sankei Building’s portfolio
properties as well as properties held by third parties by leveraging the sourcing capabilities of Sankei Building.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
(B) Internal growth strategy
SANKEI REAL ESTATE aims for steady internal growth through reinforcement of its relationship with existing tenants andimprovement in tenant satisfaction. Specifically, we will raise rents when upon contract renewal based on the deviationfrom market rent and implement strategic leasing such as activities to extend the cancellation notification period fromtenants and disperse end dates of rental contracts from the viewpoint of termination risk for properties where the end
dates of multiple tenants are the same. We will take proactive measures to improve tenant satisfaction such as activities
to improve the quality of hygiene and planned implementation of maintenance and repairs under the COVID-19
pandemic.
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 growthof earnings from assets under management.
(a) Strive to provide services for tenants’ comfortable use while strengthening and enhancing tenant relationships inorder to maintain and improve tenant satisfaction so as to maintain and improve the occupancy rate and rent ofassets under management.
(b) SANKEI REAL ESTATE seeks to maintain and improve the market competitiveness of assets under management
through planning and implementation of repairs and capital expenditures by taking into consideration the state andcharacteristics of assets under management, real estate market conditions, tenant needs, and other factors andexamining them more carefully than usual.
(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 periodicallyverifying the validity of operations, management level, and costs of assets under management. In doing so, thebalance with between the market competitiveness of assets under management and perspective of maintaining andimproving tenant satisfaction are taken into consideration.
(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 undermanagement over the medium to long term.
(a) Equity Financing
Issuance of new investment units shall be in an agile manner with due consideration to investment unit dilution,
while also comprehensively taking into account capital market trends, financial environment, timing of acquisitionof real 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, and security,and by considering the borrowing period, fixed or floating interest rate, provision of collateral or not, fees, and otherterms and conditions of procurement of interest-bearing liabilities.
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 purpose of
new asset acquisition, etc.). As a rule, SANKEI REAL ESTATE will maintain an approximate range of 40% to 50% during
normal operations.
ii.

Significant Subsequent Events
Not applicable.

(Reference Information)(A) Borrowing of Funds
SANKEI REAL ESTATE conducted the following borrowing of funds on October 1, 2020, to use as part of the funds foracquisition and incidental expenses upon acquisition of the real estate trust beneficiary rights of 1 property as describedlater in this document under “(Reference Information) (B) Acquisition of Assets.”
Borrowing
Repayment
Category
LenderamountInterest rate (Note)
Maturity date
Description
method(million yen)
Base rate (JBA 1-monthLump-sum Unsecured
ShortMizuho Bank, Ltd.
4,300
Japanese Yen TIBOR) + Oct. 1, 2021 repayment at and nonterm
0.150%
maturity guaranteed(Note)The base rate applicable to the calculation period for the interest payable on each interest payment date shall be decided two businessdays prior to the immediately preceding interest payment date (the drawdown date in the case of the first interest calculation period).
For the JBA Japanese Yen TIBOR, please check the website of JBA TIBOR Administration (http://www.jbatibor.or.jp/english/rate/).

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020(B) Acquisition of Assets
SANKEI REAL ESTATE conducted the following acquisition of real estate trust beneficiary rights of 1 property (totalacquisition price: 4,200 million yen) on October 1, 2020.
Acquisition
Asset Property
Acquisition
price
Acquisition
Property nameLocation
Sellertype Number
asset(million yen)
Date
(Note)
OfficeMinato- Real estate trust
The Sankei
A-10
S-GATE AKASAKA
4,200
Oct. 1, 2020
building
ku, Tokyo beneficiary right
Building Co., Ltd.
(Note)“Acquisition price” is the sale and purchase price of the trust beneficiary right stated in the sale and purchase agreement for theacquisition asset, rounded down to the nearest million yen. The sale and purchase price do not include consumption tax, local
consumption tax and the various expenses required for the acquisition. The acquisition price shows the value equivalent to the quasi
co-ownership interest (60%) acquired by SANKEI REAL ESTATE

iii.

Operating Forecasts
SANKEI REAL ESTATE’s operating forecasts for the fiscal period ending February 2021 (from September 1, 2020, to
February 28, 2021) and fiscal period ending August 2021 (from March 1, 2021, to August 31, 2021) are as follows:
Distribution perunit
Distributions in
OperatingOperating(excludingexcess of
Ordinary profit
Net profit
revenue
profitdistributions inearnings per
excess ofunit
earnings)
million yen
million yen
million yen
million yen
yenyen
Fiscal period
2,135
1,051
955
954
2,676
ending Feb. 2021
Fiscal period
2,166
1,064
958
957
2,684
ending Aug. 2021
Furthermore, for the assumptions underlying the operating forecasts, please refer to “Assumptions Underlying the
Operating Forecasts for the fiscal period ending February 2021 (from September 1, 2020, to February 28, 2021) and fiscal
period ending August 2021 (from March 1, 2021, to August 31, 2021)” presented below.
(Note)

The forecast figures above are the current forecasts calculated under certain assumptions. Accordingly, the actual operating revenue,
operating profit, ordinary profit, net profit, distribution per unit, and distribution in excess of earnings per unit may vary due tochanges in the circumstances. 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 2020
Assumptions Underlying the Operating Forecasts for the fiscal period ending February 2021 (from September 1, 2020, to February 28,2021) and fiscal period ending August 2021 (from March 1, 2021, to August 31, 2021)
Item

Accounting period

Assets undermanagement

Operating revenue

Operating expenses

Non-operating expenses

Interest-bearing
liabilities

Assumptions
・Fiscal period ending February 2021 (4th fiscal period) (from September 1, 2020, to February 28,2021) (181 days)
・Fiscal period ending August 2021 (5th fiscal period) (from March 1, 2021, to August 31, 2021) (184days)
・The assumption is that the real estate and real estate trust beneficiary rights (total of 12 properties)
held by SANKEI REAL ESTATE as of the date of this document (hereinafter, the “current portfolio
assets”) will continue to be held and there will be no acquisition of new properties through to theend of the fiscal period ending August 2021.
・In actual practice, change may arise due to acquisition of new properties, disposition of portfolio
properties, etc.
・Leasing business revenue of the current portfolio assets is calculated by taking into account various
factors, such as lease agreements that have been concluded and are valid as of the date of thisdocument, tenant trends and market trends.
・The assumption is that there will be no delinquent or unpaid rent by tenants.
・Assuming that the effects of the spread of COVID-19 will continue until the end of August 2021,
operating revenue is calculated by taking into account a certain level of a vacancy rate for the entire
portfolio as well as utilization rate of rental conference rooms and utilities reimbursement largely
similar to the figures for the third fiscal period.
・Of operating expenses, the main components are as follows(Unit: million yen)
Fiscal period
Fiscal periodEnding Feb. 2021
Ending Aug. 2021
Expenses related to leasing business [Total]
840
853
Outsourcing expenses

185

177

Utilities expenses

122

122

Repair expenses
Property taxes

68
215

68
234

Depreciation

228

230

243

248

184

193

Other than expenses related to leasing business[Total]Asset management fee

・Of expenses related to leasing business, which are the main operating expenses, the expenses otherthan depreciation are calculated on the basis of historical data and by taking into consideration thefactors causing fluctuation in each of the expenses.
・Depreciation is calculated using the straight-line method.
・In general, fixed asset tax, city planning tax, etc. are calculated on a pro rata basis and reimbursed at
the time of property acquisition with the previous owner upon transactions of real estate, etc. At
SANKEI REAL ESTATE, the amount equivalent to the reimbursement is included in the cost of
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, the fixed asset tax, city planning tax, etc. on the assets acquired on October 1, 2020,
will be expensed starting from the fiscal period ending August 2021.
・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, 95 million yen is assumed for the fiscal
period ending February 2021 and 106 million yen for the fiscal period ending August 2021.
・The assumption is that total interest-bearing liabilities will be 37,800 million yen at the end of the
fiscal period ending February 2021 and 37,800 million yen at the end of the fiscal period ending
August 2021.
・It assumes that there will be no change in the balance of borrowings other than the above throughto the end of the fiscal period ending August 2021.
・LTV ratio is expected to be 46.9% at the end of the fiscal period ending February 2021 and 46.8% at
the end of the fiscal period ending August 2021. LTV ratio is calculated by the following formula androunded to one decimal place.
LTV ratio = Total interest-bearing liabilities ÷ Total assets × 100-6-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020

Item

Number of investment
units issued andoutstanding

Distribution per unit
(excluding distributions
in excess of earnings)
Distributions in excessof earnings per unit

Other

Assumptions
・The assumption is that the total number of investment units issued and outstanding as of the date ofthis document is 356,800 units and that there will be no change in the number of investment units
due to issuance of new investment units, etc. through to the end of the fiscal period ending August
2021.
・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 2021 and fiscal period ending August 2021 of 356,800 units.
・Distribution per unit (excluding distributions in excess of earnings) is calculated based on theassumption that 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,
such as fluctuation in leasing business revenue accompanying change in assets under management,change in tenants or other event, or incurrence of unexpected repairs.
・No cash distribution in excess of earnings is planned to be made at this point in time.
・The assumption is that the negative impact of the spread of COVID-19 will not further increase.
・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 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 annual securities report(submitted on May 27, 2020).

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020

2. Financial Statements(1) Balance Sheet(Unit: thousand yen)
2nd fiscal period(as of Feb. 29, 2020)
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
LandConstruction in progress
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
Total assets-8-

3rd fiscal period(as of Aug. 31, 2020)

3,778,564
3,099,144
64,006
41,198369,256
342,0737,694,243

3,876,992
3,283,341
87,95751,898567,790
7,867,979

159,569(5,519)154,050353(8)345
2,457,766
220
13,599,039(333,525)
13,265,513
22,236(514)
21,721
2,608
(77)
2,530
2,336
(224)
2,112
52,510,871
68,415,132

165,538(8,698)156,839
353
(12)
340
2,457,766
13,624,054(547,766)
13,076,288
22,236(813)
21,422
2,608
(208)
2,400
25,419(1,901)
23,51852,510,871
330
68,249,777

7,653
7,653

6,713
6,713

59,87816
10,00069,894
68,492,680
76,186,924

60,79314
10,00070,80768,327,298
76,195,278

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020

(Unit: thousand yen)
2nd fiscal period(as of Feb. 29, 2020)
Liabilities
Current liabilities
Operating accounts payable
Short-term borrowings
Long-term borrowings due within 1 year
Accounts payable - otherAccrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Deposits received
Total current liabilities
Non-current liabilities
Long-term borrowings
Leasehold and guarantee deposits received
Leasehold and guarantee deposits received in trust
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus
Unappropriated retained earnings (undisposed
loss)
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets

*1

-9-

3rd fiscal period(as of Aug. 31, 2020)

144,640
4,756,000
160,972
24,874946
341,424
951,0036,379,861

205,1284,800,000
214,600
26,272893
129,470
328,557
1,205,174
6,910,097

29,200,000
91,8802,905,497
32,197,378
38,577,239

28,700,000
92,935
3,047,718
31,840,654
38,750,751

36,540,901

36,540,901

1,068,783

903,625

1,068,783
37,609,684
37,609,684
76,186,924

903,625
37,444,526
37,444,526
76,195,278*1

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
(2) Statement of Income(Unit: thousand yen)
2nd fiscal period
From: Sept. 1, 2019
To: Feb. 29, 2020
Operating revenue
Leasing business revenue
Other leasing business revenue
Total operating revenue
Operating expenses
Expenses related to leasing business
Asset management fee
Asset custody fee
Administrative service fees
Remuneration for directors (and other officers)
Other operating expenses
Total operating expenses
Operating profit
Non-operating income
Interest income
Interest on refund
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing related expenses
Investment unit issuance expenses
Other
Total non-operating expenses
Ordinary profit
Net profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Net profit
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

*1
*1

*1

- 10 -

3rd fiscal period
From: Mar. 1, 2020
To: Aug. 31, 2020

1,796,513
136,736
1,933,249
577,268
139,263
1,420
7,320
3,600
38,333
767,204
1,166,045

*1
*1

*1

1,878,684
126,823
2,005,507
778,934
183,485
1,505
6,370
3,600
35,2301,009,126
996,380

30
778
808

32
323
356

56,03926,581
12,5022,000
97,123
1,069,729
1,069,729
950
4
955
1,068,774
8
1,068,783

58,586
33,79092,377904,359904,359898
2
901
903,458167
903,625SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
(3) Statement of Unitholders’ Equity
2nd fiscal period (from September 1, 2019, to February 29, 2020)(Unit: thousand yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning of period

Unappropriatedretained earnings(undisposed loss)

23,124,900

Total surplus

335,209335,209

Total net assets

Total unitholders’equity23,460,109

23,460,109

13,416,001

13,416,001

Changes in items during period
Issuance of New Investment
Units

13,416,001

Dividend of surplus(335,200)(335,200)(335,200)(335,200)

Net profit

1,068,774

1,068,774

1,068,774

1,068,774

13,416,001

733,573733,573

14,149,574

14,149,574

36,540,901

1,068,783

1,068,783

37,609,684

37,609,684

Total changes in items during
periodBalance at end of period*1

3rd fiscal period (from March 1, 2020, to August 31, 2020)(Unit: thousand yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning of period

Unappropriatedretained earnings(undisposed loss)

36,540,901

Total surplus

Total unitholders’equityTotal net assets

1,068,783

1,068,783

37,609,684

37,609,684(1,068,616)(1,068,616)(1,068,616)(1,068,616)

903,458

903,458

903,458

903,458-(165,157)(165,157)(165,157)(165,157)

36,540,901

903,625

903,625

37,444,526

37,444,526

Changes in items during period
Dividend of surplus
Net profit
Total changes in items during
periodBalance at end of period*1- 11 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
(4) Statement of Cash Distribution(Unit: yen)
2nd fiscal period
From: Sept. 1, 2019
To: Feb. 29, 2020

3rd fiscal period
From: Mar. 1, 2020
To: Aug. 31, 2020

I. Unappropriated retained earnings

1,068,783,044

903,625,576

II. Amount of distribution

1,068,616,000

903,417,600(2,995)167,044(2,532)
207,976

In accordance with the policy on
distribution of cash provided in Article
36, Paragraph 1 of SANKEI REAL ESTATE’s
articles of incorporation, the amount of
distribution shall be in excess of theamount equivalent to 90% of the amountof SANKEI REAL ESTATE’s earnings
available for distribution provided in
Article 67-15 of the Act on Special
Measures Concerning Taxation, but nomore than the amount of earnings. Basedon such policy, the decision was made to
distribute 1,068,616,000 yen, which is
the largest integral multiple of the total
number of investment units issued andoutstanding (356,800 units) in an amountnot in excess of unappropriated retained
earnings, as distribution of earnings.
The distribution of cash in excess ofearnings provided in Article 36,
Paragraph 2 of SANKEI REAL ESTATE’s
articles of incorporation will not be
made.

In accordance with the policy on
distribution of cash provided in Article
36, Paragraph 1 of SANKEI REAL ESTATE’s
articles of incorporation, the amount of
distribution shall be in excess of theamount equivalent to 90% of the amountof SANKEI REAL ESTATE’s earnings
available for distribution provided in
Article 67-15 of the Act on Special
Measures Concerning Taxation, but nomore than the amount of earnings. Basedon such policy, the decision was made to
distribute 903,417,600 yen, which is thelargest integral multiple of the total
number of investment units issued andoutstanding (356,800 units) in an amountnot in excess of unappropriated retained
earnings, as distribution of earnings.
The distribution of cash in excess ofearnings provided in Article 36,
Paragraph 2 of SANKEI REAL ESTATE’s
articles of incorporation will not be
made.

(Amount of distribution per unit)
III. Retained earnings carried forward
Method of calculation of amount of
distribution- 12 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
(5) Statement of Cash Flows(Unit: thousand yen)
2nd fiscal period
From: Sept. 1, 2019
To: Feb. 29, 2020
Cash flows from operating activities
Net profit before income taxes
Depreciation
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 refund
payableIncrease (decrease) in advances received
Increase (decrease) in deposits received
Decrease (increase) in long-term prepaid expenses
Decrease (increase) in other assets
SubtotalInterest received
Interest paid
Income taxes paid
Cash flows from 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
Cash flows from investing activities
Cash flows from financing activities
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from long-term borrowings
Proceeds from issuance of investment units
Distribution paid
Cash flows from 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 -

3rd fiscal period
From: Mar. 1, 2020
To: Aug. 31, 2020

1,069,729
216,818
12,502(30)
56,039264,097

904,359
220,471(32)
58,586(23,792)

264,614369,256(3,188)(244,671)(17,959)(10,700)
58,29752,356-

129,470

164,823
750,659(19,491)(341,646)
2,172,297
30(47,352)(1,351)2,123,623(12,866)
254,170(915)(225,717)
1,772,944
32(57,188)(951)
1,714,837(22,088)(24,360,331)(5,747)(46,376)

1,017

1,400

(217)

(502)

1,012,067

142,697(18,904)(8)(23,388,457)

91,461

1,056,000(1,213,736)
11,800,000
13,403,498(334,117)
24,711,645
3,446,811
3,430,897*1
6,877,708(4,756,000)
4,300,000(1,067,674)(1,523,674)
282,624
6,877,708
7,160,333*1

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
(6) Notes on the Going Concern Assumption
Not applicable.
(7) Notes on Matters Concerning Significant Accounting Policies
1. Method of depreciation of non(1) Property, plant and equipment (including trust assets)
current assets
The straight-line method is adopted. Furthermore, the useful life of core property,
plant and equipment is as follows:
Buildings
2–65 years
Structures
6–59 years
Machinery and equipment
10 years
Tools, furniture and fixtures
4-8 years(2) Intangible assets
The straight-line method is adopted.
(3) Long-term prepaid expenses
The straight-line method is adopted.
2. Accounting for deferred assets
Investment unit issuance expenses
The entire amount is expensed as incurred.
3. Standards for revenue andAccounting for fixed asset tax, etc.
expense recognition
For fixed asset tax, city planning tax, depreciable asset tax, etc. on real estate or trust
beneficiary rights that have real estate as trust assets held, the method adopted isthat, of the tax amount assessed and determined, the amount corresponding to theconcerned accounting period is expensed as expenses related to leasing business.
Furthermore, the amount equivalent to fixed asset tax, etc. in the initial fiscal year
borne by SANKEI REAL ESTATE upon acquisition of real estate or trust beneficiaryrights that have real estate as trust assets is not recognized as expenses but includedin the cost of acquisition of the concerned real estate, etc. The amount equivalent to
fixed asset tax included in the cost of acquisition of real estate, etc. was 85,263
thousand yen in the previous fiscal period and zero in the fiscal period under review.
4. Scope of funds in the statement
The funds (cash and cash equivalents) in the statement of cash flows comprise cashof cash flows
on hand and cash in trust, demand deposits and deposits in trust, and short-term
investments with a maturity of 3 months or less from the date of acquisition that arereadily convertible to cash and that are subject to an insignificant risk of changes invalue.
5. Other significant matters serving (1) Accounting for trust beneficiary rights that have real estate, etc. as trust assets
as the basis for preparation ofConcerning trust beneficiary rights that have real estate, etc. as trust assets held, all
the financial statements
accounts 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 thebalance sheet and the statement of income.
Furthermore, the following material items of the trust assets recognized in therelevant 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(2) Accounting for consumption tax, etc.
The accounting for consumption tax and local consumption tax is by the method of
exclusion of the taxes.
[Notes on accounting standards, etc. yet to be applied]・ “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (ASBJ) Statement No. 29 issued
on March 31, 2020)
・ “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30 issued on March
31, 2020)
・ “Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued on March 31, 2020)
1. Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) in the
United States have jointly developed comprehensive accounting standards for revenue recognition and issued“Revenue from Contracts with Customers” (IFRS 15 by IASB and Topic 606 by FASB) in May 2014. Given the situation
where IFRS 15 will be applied from fiscal years beginning on or after January 1, 2018 and that Topic 606 will beapplied from fiscal years beginning after December 15, 2017, the ASBJ has developed comprehensive accounting
standards for revenue recognition and issued them together with the Implementation Guidance.
The basic policy for the ASBJ when it developed the accounting standards for revenue recognition was to determine
the accounting standards, incorporating the basic principles of IFRS 15 as a starting point, from the perspective ofcomparability between financial statements, which is one of the benefits of consistency with IFRS 15. If there is an
item to which consideration should be given, such as practices that have been conducted thus far in Japan,
alternative treatments shall be added to the extent to which comparability is not impaired.
- 14 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
2. Scheduled application date
The above standards will be applicable from the beginning of the fiscal year ending February 2022.
3. Impact of applying the accounting standards, etc.
The impact on the financial statements of the applying of the “Accounting Standard for Revenue Recognition” andthe like is currently under review.
・ “Accounting Standard for Calculation of Market Values” (Accounting Standards Board of Japan (ASBJ) Statement No.
30 issued on July 4, 2019)
・ “Accounting Standard for Financial Instruments” (Accounting Standards Board of Japan (ASBJ) Statement No. 10
issued on July 4, 2019)
・ “Implementation Guidance on Accounting Standard for Calculation of Market Values” (ASBJ Guidance No. 31 issued
on July 4, 2019)
・ “Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued on March 31,
2020)
1. Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) in the
United States set up detailed guidance on fair value measurement (IFRS No. 13 “Fair Value Measurement” by IASB
and Topic820 “Fair Value Measurement” by FASB); to improve the comparability with the provisions of theseinternational accounting standards, the ASBJ discussed the guidance and disclosure regarding mainly the market
values of financial instruments and announced the accounting standards the accounting standard for calculation ofmarket values and the implementation guidance on the standard.
The basic policy for the ASBJ when it developed the accounting standards for calculation of market values was toincorporate basically all of the provisions of IFRS 13, from the perspective of comparability between financial
statements among domestic and international companies using the unified calculation method. To the extent thatthe comparability between financial statements is not deteriorate greatly, other handling methods of individual
items shall be determined considering practices that have been conducted thus far in Japan, etc.
2. Scheduled application date
The above standards will be applicable from the beginning of the fiscal year ending February 2022.
3. Impact of applying the accounting standards, etc.
The impact on the financial statements of the applying of the “Accounting Standard for Calculation of Market
Values” and the like is currently under review.
“Accounting Standard for Disclosure of Accounting Estimates” (Accounting Standards Board of Japan (ASBJ) Statement No.
31 issued on March 31, 2020)
1. Overview
As for “Causes of Uncertainty of Quotation,” which is required to be disclosed in 125 “Presentation of Financial
Statements” of International Accounting Standard (IAS) No. 1 announced by the International Accounting Standards
Board (IASB) in 2003, it was requested to consider requirement of disclosure as information useful for users offinancial statements in the Japanese standards, and the ASBJ formulated and announced the accounting standard
for disclosure of quotation in accounting (hereinafter called “this Accounting Standard”).
The basic policy on the formulation of this Accounting Standard by the ASBJ is to not extend individual notes but
show the principles (purposes of disclosure), make companies judge the specific disclosure contents based on the
purposes of disclosure, and refer to the provisions of 125 of IAS No. 1.
2. Scheduled application date
The above standards will be applicable from the end of the fiscal year ending August 2021.
・“Accounting Standard for Disclosure of Accounting Policy, and Changes and Correction of Errors in Accounting”(Accounting Standards Board of Japan (ASBJ) Statement No. 24 issued on March 31, 2020)
1. Overview
In response to a propose of consideration of enhancement of note information on “Principles and Procedures of
Accounting Processing Adopted When the Provisions of the Related Accounting Standards, etc. Are Not Clear,” the
ASBJ made the required revisions and announced it as accounting standards for disclosure of company policies andchanges and correction of errors in Accounting.
It is decided that when enhancing note information on “Principles and Procedures of Accounting Processing
Adopted When the Provisions of the Related Accounting Standards, etc. Are Not Clear,” the provisions of theAnnotations on the Accounting Principles (Note 1-2) shall be taken over to avoid impacts on practices.
2. Scheduled application date
The above standards will be applicable from the end of the fiscal year ending August 2021.

- 15 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020(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)
2nd fiscal period
3rd fiscal period(as of Feb. 29, 2020)(as of Aug. 31, 2020)
50,00050,000[Notes to the Statement of Income]*1. Breakdown of operating income (loss) from real estate leasing
2nd fiscal period
From: Sept. 1, 2019
To: Feb. 29, 2020
A. Operating revenue from real estateleasing
Leasing business revenue
Rental revenue
Common area maintenance revenue
Total leasing business revenue(Unit: thousand yen)
3rd fiscal period
From: Mar. 1, 2020
To: Aug. 31, 2020

1,643,859

1,727,126

152,654

151,557

1,796,513

1,878,684

102,51229,1805,043

90,92529,4606,437

136,736
1,933,249

126,823
2,005,507

Other leasing business revenue
Utilities reimbursement
Parking revenue
Other rental revenue
Total other leasing business revenue
Total operating revenue from real estateleasing
B. Operating expenses from real estateleasing
Expenses related to leasing businessOutsourcing expenses
Utilities expenses
Property taxes
Land rent
Repair expenses
Insurance premium
Trust fee
Depreciation
Other expenses related to leasing
business
Expenses related to leasing businessTotal operating expenses from realestate leasing
C. Operating income (loss) from real estateleasing [A−B]- 16 -

167,350

172,779

126,509
1,814
46,426
4,551
2,788
215,878

118,648
215,328
1,818
35,1484,449
3,200
219,531

11,9488,029

577,268

778,934

577,268

778,934

1,355,981

1,226,572

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
[Notes to the Statement of Unitholders’ Equity]*1. Total number of investment units authorized and total number of investment units issued and outstanding
2nd fiscal period
From: Sept. 1, 2019
To: Feb. 29, 2020
Total number of investment units
authorized
Total number of investment units issued
and outstanding(Unit: units)
3rd fiscal period
From: Mar. 1, 2020
To: Aug. 31, 2020

10,000,000

10,000,000

356,800

356,800[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)
2nd fiscal period
3rd fiscal period
From: Sept. 1, 2019
From: Mar. 1, 2020
To: Feb. 29, 2020
To: Aug. 31, 2020
Cash and deposits
Cash and deposits in trust

3,778,564
3,099,144

3,876,992
3,283,341

Cash and cash equivalents

6,877,708

7,160,333[Notes on Lease Transactions]Operating lease transactions (as lessor)
Future minimum lease payments
2nd fiscal period(as of Feb. 29, 2020)(Unit: thousand yen)
3rd fiscal period(as of Aug. 31, 2020)

Due within 1 year

2,108,261

2,457,949

Due after 1 year
Total

14,429,883
16,538,145

15,854,148
18,312,097[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
shall be 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. If 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
Borrowings are mainly for the purpose of procuring funds for acquisition of assets and funds for repayment of
obligations. Borrowings are exposed to the risk of inability to refinance upon becoming due for repayment, risk of risein the interest rate payable, etc., but the risks are mitigated by considering fund procurement that is well balanced
through issuance of investment units, etc. while also diversifying fund procurement sources and staggering maturities.
In addition, the risk of rise in interest rates on SANKEI REAL ESTATE’s operations is managed by closely watchinginterest rate trends and keeping the LTV ratio under control in an appropriate manner.
(3) Supplementary explanation to matters concerning fair value, etc. of financial instruments
The fair value of financial instruments is values based on market price, but may otherwise include values based onreasonable calculation when no market price is available. Certain assumptions, etc. are adopted in the calculation of
the concerned values. Accordingly, the concerned values may vary when different assumptions, etc. are adopted.
- 17 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
2. Matters concerning fair value, etc. of financial instruments
The following are the carrying amount and fair value as of February 29, 2020, and the amount of difference between these.
Financial instruments for which estimation of fair value is recognized to be extremely difficult are not included in thefollowing table (Note 2).
(Unit: thousand yen)
Carrying amount

Fair value

Amount of difference(1) Cash and deposits(2) Cash and deposits in trust
Total assets

3,778,564
3,099,144
6,877,708

3,778,564
3,099,144
6,877,708-(1) Short-term borrowings(2) Long-term borrowings

4,756,000
29,200,000

4,756,000
29,251,894

51,89433,956,000

34,007,894

51,894

Total liabilities

The following are the carrying amount and fair value as of August 31, 2020, and the amount of difference between these.
Financial instruments for which estimation of fair value is recognized to be extremely difficult are not included in thefollowing table (Note 2).
(Unit: thousand yen)
Carrying amount

Fair value

Amount of difference(1) Cash and deposits(2) Cash and deposits in trust

3,876,992
3,283,341

3,876,992
3,283,341

Total assets(1) Short-term borrowings(2) Long-term borrowings due within
1 year(3) Long-term borrowings
Total liabilities

7,160,333

7,160,333---

4,800,000
28,700,000

4,800,000
28,737,004

37,00433,500,000

33,537,004

37,004(Note 1) Method of calculation of the fair value of financial instruments
Assets(1) Cash and deposits; (2) Cash and deposits in trust
Because these are settled in a short period of time, the fair value is approximately the same as the book value and thus stated at that bookvalue.
Liabilities(1) Short-term borrowings
Because these are settled in a short period of time and have floating interest rates, the fair value is approximately the same as the book value
and thus stated at that book value.
(2) Long-term borrowings due within 1 year, (3) Long-term borrowings
Of long-term borrowings, because those with floating interest rates reflect market interest rates in a short period of time, the fair value isthought to resemble the book value and thus stated at that book value. However, in the case of long-term borrowings 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) Financial instruments for which estimation of fair value is recognized to be extremely difficult(Unit: thousand yen)
3rd fiscal period(as of Aug. 31, 2020)

2nd fiscal period(as of Feb. 29, 2020)
Leasehold and guarantee deposits received
Leasehold and guarantee deposits received in trust

91,88092,9352,905,497

3,047,718* “Leasehold and guarantee deposits received” and “Leasehold and guarantee deposits received in trust” are not subject to disclosure of fair value,
because there being no market price and, even if the lease contract period has been set, there being the possibility of contract cancellation
before expiration, contract extension or contract renewal make calculating the actual deposit period impossible and reasonable projection of
future cash flows is thus recognized to be extremely difficult.
(Note 3) Amount of redemption of monetary claims scheduled to be due after the end of the fiscal period (February 29, 2020)
Due within
1 yearDue after 1 to
2 years

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

Cash and deposits

3,778,564

-

-

-

-

-

Cash and deposits in trust

3,099,144

-

-

-

-

-

6,877,708

-

-

-

-

-

Total

- 18 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
Amount of redemption of monetary claims scheduled to be due after the end of the fiscal period (August 31, 2020)
Due within
1 yearDue after 1 to
2 years

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

Cash and deposits

3,876,992

-

-

-

-

-

Cash and deposits in trust

3,283,341

-

-

-

-

-

7,160,333

-

-

-

-

-

Total

(Note 4) Amount of repayment of borrowings scheduled to be due after the end of the fiscal period (February 29, 2020)
Due within
1 yearDue after 1 to
2 years

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

Short-term borrowings

4,756,000

-

-

-

-

-

Long-term borrowings-

4,800,000

11,500,000

9,600,000

3,300,000

-

Total

4,756,000

4,800,000

11,500,000

9,600,000

3,300,000-

Amount of repayment of borrowings scheduled to be due after the end of the fiscal period (August 31, 2020)
Due within
1 yearShort-term borrowings

Due after 1 to
2 years

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

-

-

-

-

-

-

4,800,000

-

-

-

-

-

Long-term borrowings-

5,600,000

9,600,000

9,200,000

4,300,000

-

Total

4,800,000

5,600,000

9,600,000

9,200,000

4,300,000-

Long-term borrowings due within 1
year[Notes on Securities]
2nd fiscal period (as of February 29, 2020)
Not applicable.
3rd fiscal period (as of August 31, 2020)
Not applicable.
[Notes on Derivative Transactions]
2nd fiscal period (as of February 29, 2020)
Not applicable.
3rd fiscal period (as of August 31, 2020)
Not applicable.
[Notes on Retirement Benefits]
2nd fiscal period (as of February 29, 2020)
Not applicable.
3rd fiscal period (as of August 31, 2020)
Not applicable.

- 19 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
[Notes on Tax-Effect Accounting]
1. Breakdown of main causes for occurrence of deferred tax assets and deferred tax liabilities
2nd fiscal period(as of Feb. 29, 2020)(Unit: thousand yen)
3rd fiscal period(as of Aug. 31, 2020)

Deferred tax assets
Non-deductible accrued enterprise tax
Total
Deferred tax assets, net
2.

16

14

16
16

14
14

Breakdown of major components that caused any significant differences between the statutory tax rate and theeffective income tax rate after application of tax-effect accounting(Unit: %)2nd fiscal period
3rd fiscal period(as of Feb. 29, 2020)(as of Aug. 31, 2020)

Statutory tax rate

31.51

31.46

(31.48)(31.43)

Other

0.06

0.07

Effective income tax rate after applicationof tax-effect accounting

0.09

0.10

[Adjustments]
Deductible distribution payable[Notes on Share of Profit (Loss) of Entities Accounted for Using Equity Method]
2nd fiscal period (from September 1, 2019, to February 29, 2020)
Not applicable.
3rd fiscal period (from March 1, 2020, to August 31, 2020)
Not applicable.
[Notes on Related-Party Transactions]
1. Parent company, major corporate unitholder, etc.
2nd fiscal period (from September 1, 2019, to February 29, 2020)
Not applicable.
3rd fiscal period (from March 1, 2020, to August 31, 2020)
Not applicable.
2. Affiliated company, etc.
2nd fiscal period (from September 1, 2019, to February 29, 2020)
Not applicable.
3rd fiscal period (from March 1, 2020, to August 31, 2020)
Not applicable.
3. Fellow subsidiary, etc.
2nd fiscal period (from September 1, 2019, to February 29, 2020)
Not applicable.
3rd fiscal period (from March 1, 2020, to August 31, 2020)
Not applicable.

- 20 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
4. Director, major individual unitholder, etc.
2nd fiscal period (from September 1, 2019, to February 29, 2020)
Name ofcompany, etc.
Attributeor name of
personDirector

Yuichi Ota

Location-

Share capitalor
investments
in capital(thousand yen)

Description ofbusinessor occupation-

Executive Director of
SANKEI REALESTATE, andPresident and Chief
Executive Officer ofSankei Building
Asset Management
Co., Ltd.

Percentage
of votingrights, etc.
held by(in) SANKEIREAL
ESTATE(%)-

Description of relationship
Concurrent
holding of
positions,etc. bydirectors

Businessrelationship

Descriptionoftransaction

Payment of
Executive Director of
asset
SANKEI REAL ESTATE, andmanagement
President and Chief
fee to asset
Executive Officer of Sankei
Building Asset Management managementcompanyCo., Ltd.
(Note 3)

Transaction
amount Account
item(thousandyen)

Balance at
end ofperiod(thousand
yen)

Sales
Accounts
payable other139,263

378,563(Note 4)(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 transaction amount is based on the terms and conditions provided in SANKEI REAL ESTATE’s articles of incorporation.
(Note 4) Asset management fee includes the portion of the fee for property acquisition included in the book value of individual real estate, etc.
(239,300 thousand yen).
(Note 5) Transaction terms and conditions are decided based on the actual market conditions.

3rd fiscal period (from March 1, 2020, to August 31, 2020)
Name ofcompany, etc.
Attributeor name of
personDirector

Yuichi Ota

Location-

Share capitalor
investments
in capital(thousand yen)

Description ofbusinessor occupation-

Executive Director of
SANKEI REALESTATE, andPresident and Chief
Executive Officer ofSankei Building
Asset Management
Co., Ltd.

Percentage
of votingrights, etc.
held by(in) SANKEIREAL
ESTATE(%)-

Description of relationship
Concurrent
holding of
positions,etc. bydirectors

Businessrelationship

Descriptionoftransaction

Payment of
Executive Director of
asset
SANKEI REAL ESTATE, andmanagement
President and Chief
fee to asset
Executive Officer of Sankei
Building Asset Management managementcompanyCo., Ltd.
(Note 3)

Transaction
amount Account
item(thousandyen)

Balance at
end ofperiod(thousandyen)

Accounts
payable other

201,834

183,485(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 transaction amount 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.

[Notes on Asset Retirement Obligations]
2nd fiscal period (from September 1, 2019, to February 29, 2020)
Not applicable.
3rd fiscal period (from March 1, 2020, to August 31, 2020)
Not applicable.

- 21 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
[Notes on Investment and Rental Properties]
SANKEI REAL ESTATE owns office buildings, etc. for the purpose of earning revenue from leasing. The carrying amount,amount of change during period and fair value of these investment and rental properties are as follows:(Unit: thousand yen)
2nd fiscal period
3rd fiscal period
From: Sept. 1, 2019
From: Mar. 1, 2020
To: Feb. 29, 2020
To: Aug. 31, 2020
Carrying amount
Balance at beginning of period
44,203,915
68,414,911
Amount of change during period
Balance at end of period
Fair value at end of period

24,210,996(165,463)

68,414,911
72,605,000

68,249,447
75,770,000(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 new property
acquisition of 4 properties (24,345,357 thousand yen), etc., while the amount of decrease is mainly attributable to depreciation (215,878
thousand yen). The amount of increase in the fiscal period under review is mainly attributable to capital expenditures (54,067 thousandyen), etc., while the amount of decrease is mainly attributable to depreciation (219,531 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.”[Notes on Segment Information, Etc.]
1. Segment information
The information is omitted because SANKEI REAL ESTATE has a single segment—the real estate leasing business.
2. Related information
2nd fiscal period (from September 1, 2019, to February 29, 2020)(1) Information by product and service
The information is omitted, because operating revenue to external customers for a single group of products andservices exceeds 90% of operating revenue on the statement of income.
(2) Information by geographic area
i. Operating revenue
The information is omitted, because operating revenue to external customers in Japan exceeds 90% of operating
revenue on the statement of income.
ii. Property, plant and equipment
The information is omitted, because 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.
Sony Corporation(Note)

Operating revenue
324,435
Not disclosed (Note)(Unit: thousand yen)
Related segment
Real estate leasing business
Real estate leasing businessNot disclosed due to unavoidable reasons as consent for disclosure has not been obtained from the lessee.

3rd fiscal period (from March 1, 2020, to August 31, 2020)(1) Information by product and service
The information is omitted, because operating revenue to external customers for a single group of products andservices exceeds 90% of operating revenue on the statement of income.
(2) Information by geographic area
i. Operating revenue
The information is omitted, because operating revenue to external customers in Japan exceeds 90% of operating
revenue on the statement of income.
ii. Property, plant and equipment
The information is omitted, because 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.
Sony Corporation(Note)

Operating revenue
325,755
Not disclosed (Note)(Unit: thousand yen)
Related segment
Real estate leasing business
Real estate leasing businessNot disclosed due to unavoidable reasons as consent for disclosure has not been obtained from the lessee.

- 22 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020

[Notes on Per Unit Information]
2nd fiscal period
From: Sept. 1, 2019
To: February 29, 2020

3rd fiscal period
From: Mar. 1, 2020
To: Aug. 31, 2020

Net assets per unit

105,408 yen

104,945 yen

Earnings per unit

3,007 yen

2,532 yen

(Note 1) Earnings per unit is calculated by dividing net profit by the period’s daily weighted average number of investment units (Fiscal period
ended February 2020: 355,420 units, Fiscal period ended August 2020: 356,800 units). In addition, diluted earnings per unit is not stated,because there are no diluted investment units(Note 2) The basis for calculation of earnings per unit is as follows:
2nd fiscal period
3rd fiscal period
From: Sept. 1, 2019
From: Mar. 1, 2020
To: Feb.29, 2020
To: Aug. 31, 2020
Net profit (thousand yen)

1,068,774

903,458

Amount not available to common unitholders (thousand yen)--

Profit attributable to common investment units (thousand yen)

1,068,774

903,458

355,420

356,800

Average number of investment units during period (units)[Notes on Significant Subsequent Events]
Not applicable.
(9) Changes in Total Number of Investment Units Issued and Outstanding
Changes in unitholders’ capital and the total number of investment units issued and outstanding from the incorporation of
SANKEI REAL ESTATE to the last day of the fiscal period under review (August 31, 2020) are as follows:
Total number of investment
Unitholders’ capitalunits issued and outstanding
Remarks(thousand yen)Date(units)Description
Increase
Increase
Balance
Balance(Decrease)(Decrease)
Incorporation
Nov. 19, 2018
through private
100,000
100,000
1,000
1,000(Note 1)placement
Capital increase
Mar. 11, 2019
through public
21,928,467
22,028,467
227,238
228,238(Note 2)
offering
Capital increase
Apr. 10, 2019
through third-party
1,096,433
23,124,900
11,362
239,600(Note 3)
allotment
Capital increase
Sept. 2, 2019
through public
12,777,138
35,902,038
111,619
351,219(Note 4)
offering
Capital increase
Sept. 26, 2019
through third-party
638,862
36,540,901
5,581
356,800(Note 5)allotment(Note 1) Investment units were issued at a paid-in amount of 100,000 yen per unit upon the incorporation of SANKEI REAL ESTATE.
(Note 2) 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 3) 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 4) 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 5) 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.

- 23 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020

3. Reference Information(1) Information on Price of Assets Under Management, Etc.
i. Investment Status
2nd fiscal period(as of Feb. 29, 2020)
Asset group

Asset type

Geographic area
(Note 1)

3rd fiscal period(as of Aug. 31, 2020)

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
Real estate inCities designated by
Sub assets
trustgovernment ordinance(excluding above), core cities
and major regional cities
Greater Tokyo, Osaka City andNagoya City
Cities designated byHotelsgovernment ordinance(excluding above), core cities
and major regional cities
Subtotal
Deposits and other assets
Total assets

2,612

3.4

2,614

3.4

-

-

-

-

-

-

-

-

-

-

-

-

52,71869.2

52,602

69.0

-

-

-

-

9,058

11.9

9,031

11.9

4,026

5.3

4,000

5.3

9,058

11.9

9,031

11.9

4,026

5.3

4,000

5.3

68,414
7,772
76,186

89.8
10.2
100.0

68,249
7,945
76,195

89.6
10.4
100.0

(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.

2nd fiscal period(as of Feb. 29, 2020)

3rd fiscal period(as of Aug. 31, 2020)

Total liabilities

As a percentage of total
assets(%) (Note 2)
38,577
50.6

Total net assets
Total assets

37,60976,186

Amount(million yen) (Note 1)

49.4
100.0

As a percentage of total
assets(%) (Note 2)
38,75050.9

Amount(million yen) (Note 1)

37,44476,19549.1
100.0(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.

- 24 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
ii.

Investment Assets
The following are the assets held by SANKEI REAL ESTATE (real estate or trust beneficiary rights that have real estate astrust assets; hereinafter, may be collectively referred to as the “portfolio assets”) as of August 31, 2020.
(A) Portfolio List
The property name, location, acquisition price, investment ratio, book value, appraisal value and acquisition date of theportfolio assets of SANKEI REAL ESTATE are as follows

Asset
type

Property
number

Property namePrice(million yen)

Investment
ratio
(%)
3.7

Book value(million yen)
(Note 2)

Appraisal value(million yen)
(Note 3)Acquisition
date(Note 4)

Tokyo Sankei
Building(Note 5)

Chiyoda-ku,
Tokyo

2,509

A-2

BREEZÉ TOWER(Note 5)Kita-ku,
Osaka-shi,
Osakai. 8,600
ii. 4,500
Total
13,10019.5

13,18017,100

6,698

9.9

6,743

7,470 Mar. 12, 2019

2,055

3.1

2,066

2,530 Mar. 12, 2019

5,829

8.7

6,035

6,530 Mar. 12, 2019

4,959

7.4

5,034

5,570 Mar. 12, 2019

3,782

5.6

3,888

3,950 Mar. 12, 2019

10,04014.9

10,15911,000

Sept. 3, 2019

5,400

8.0

5,493

5,620

Sept. 3, 2019

54,37480.8

55,21762,460

-

8,961

13.3

9,031

9,140 Mar. 12, 2019

3,990

5.9

4,000

4,170

Sept. 3, 2019

A-4
A-5
A-6
A-7
A-8
A-9

S-GATENIHONBASHIChuo-ku,
HONCHOTokyo(Note 5)S-GATE
Chiyoda-ku,
AKIHABARATokyo
Hibiya Sankei
Chiyoda-ku,
Building
Tokyo
Hatchobori
Chuo-ku,
Sankei Building
Tokyo
Toyo Park
Koto-ku,
Building
Tokyo
ShinagawaShinagawa-ku,
Seaside TS Tower
Tokyo(Note 5)
Omori Park
Ota-ku,Building
Tokyo

SubtotalSub
assetsLocation

A-1

A-3
Officebuildings

Acquisition price(Note 1)

B-1

Hotel Intergate
Tokyo Kyobashi

B-2

Hotel Intergate
Hiroshima

Chuo-ku,Tokyo
Naka-ku,
Hiroshima-shi,
Hiroshima

2,614

2,690 Mar. 12, 2019
i. Mar. 12,
2019
ii. Sept. 3,
2019

Subtotal-

12,951

19.2

13,032

13,310

-

Total

-

67,325100.0

68,24975,770-(Note 1) “Acquisition price” is the sale and purchase price of real estate and each trust beneficiary right stated in each sale and purchase agreement for the
portfolio assets, 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 portfolio asset to the sum total
amount of acquisition prices, rounded to one decimal place.
(Note 2) “Book value” is the depreciated book value for each portfolio asset as of August 31, 2020, rounded down to the nearest million yen.
(Note 3) “Appraisal value” is the appraisal value with an appraisal date of August 31, 2020, stated in each real estate appraisal report. The appraisal of eachportfolio asset is entrusted to Japan Real Estate Institute, The Tanizawa Sōgō Appraisal Co., Ltd. and Daiwa Real Estate Appraisal Co., Ltd.
(Note 4) “Acquisition date” is the acquisition date stated in each sale and purchase agreement for the portfolio assets.
(Note 5) 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 (45% for “BREEZÉ TOWER” and 25% for “Shinagawa Seaside TS Tower”) heldby SANKEI REAL ESTATE.

- 25 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
(B) Overview of Buildings and Leasing
The property name, construction completion, total rental revenue, security and guarantee deposits, total leasable area,
total leased area and occupancy rate of the portfolio assets of SANKEI REAL ESTATE are as follows:
Security andTotal 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
101
92
881.69881.69100.0(Note 7)BREEZÉ TOWER
A-2
July 1, 2008
991
806
12,146.02
12,146.02
100.0(Note 7)
S-GATENIHONBASHIA-3
Oct. 31, 2018307
307
3,171.83
3,171.83
100.0
HONCHO(Note 7)
S-GATE
A-4
Sept. 29, 2017
111
111
1,681.55
1,681.55
100.0
AKIHABARA
OfficeHibiya Sankei
buildings
A-5
June 25, 1992
390
324
3,439.61
3,439.61
100.0
Building
Hatchobori
A-6
Sept. 1, 1965
316
261
5,594.90
5,594.90
100.0
Sankei Building
Toyo Park
A-7
June 18, 1991
205
168
4,224.52
4,224.52
100.0
Building
ShinagawaSeaside TS
Not disclosed Not disclosed Not disclosed Not disclosed
A-8
July 25, 2003
100.0
Tower
(Note 8)(Note 8)(Note 8)(Note 8)(Note 7)
Omori Park
A-9
May 31, 1993
292
268
7,469.72
7,469.72
100.0
Building
Not disclosed Not disclosed Not disclosed Not disclosed
Subtotal (average)
100.0(Note 8)(Note 8)(Note 8)(Note 8)
B-1

Hotel Intergate
Tokyo Kyobashi

Jan. 18, 2018

413

206

6,006.53

6,006.53

100.0

B-2

Hotel Intergate
Hiroshima

Oct. 31, 2018

237

118

9,160.15

9,160.15

100.0

Subtotal (average)

-

651

325

15,166.68

15,166.68

100.0

Total (average)-

Not disclosed(Note 8)Not disclosed(Note 8)Not disclosed(Note 8)Not disclosed(Note 8)

100.0

Sub
assets(Note 1) “Construction completion” is the date of new construction completion stated in the registry of the main building for each portfolio asset. 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 forwarehouses, signboards, parking lots, etc., but including common service charges. 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 portfolio asset
effective as of August 31, 2020, rounded down to the nearest million yen. The amount calculated by annualizing the monthly rent stated in the leaseagreement concluded with the end tenant with respect to the portion in the pass-through-type master lease agreement (*2) is indicated when a passthrough-type master lease agreement has been concluded for the portfolio assets.
(*1) “Free rent” refers to measures temporarily reducing rent or other amount for mainly tenants newly moving in that 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. inthis document.
(*2) “Pass-through-type master lease agreement” refers to master lease agreements that have no rent guarantee.
(Note 3) “Security and guarantee deposits” is the total amount of security and guarantee deposits (including the amount expected to be received based oneach lease agreement, but excluding security and guarantee deposits for warehouses, signboards, parking lots, etc.) based on the lease agreement foreach portfolio asset as of August 31, 2020, 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 portfolio assets.
(Note 4) “Total leasable area” is the area (excluding area of warehouse, signboard, parking lot, etc.) expected to be leasable based on the lease agreement,
drawing, etc. of the buildings for each portfolio asset as of August 31, 2020, rounded down to two decimal places.

- 26 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
(Note 5) “Total leased area” is the total leased area (excluding area of warehouse, signboard, parking lot, etc.) stated in the lease agreement (excluding leased
agreements under which the lease period is yet to commence) for each portfolio asset as of August 31, 2020, 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 has commenced 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 portfolio asset as of August 31, 2020, 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 eachportfolio asset, rounded to one decimal place.
(Note 7) The security 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 (45% for “BREEZÉ TOWER” and 25% for“Shinagawa Seaside TS Tower”) held by SANKEI REAL ESTATE.
(Note 8) Not disclosed, due to unavoidable circumstances in that such contains information for which consent for disclosure has not been obtained from thetenant, relevant party, etc. or information from which confidential information can be derived.

- 27 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
(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 theAsset Management Company with the appraisal of the portfolio assets of SANKEI REAL ESTATE. The concerned real estateappraisal reports are the appraising appraisal company’s judgment and opinion at a certain point in time, and are not aguarantee 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

Asset type

Property
number

A-1
A-2

A-3

A-4
Officebuildings

A-5

Property nameTokyo Sankei
Building(Note 2)BREEZÉ TOWER(Note 2)S-GATENIHONBASHIHONCHO(Note 2)S-GATEAKIHABARA
Hibiya Sankei
Building

A-6

Hatchobori
Sankei Building

A-7

Toyo Park
Building

A-8

A-9

Appraiser

Appraisalvalue(millionyen)(Note 1)

Direct capitalization
DCF method
methodIndicatedvalue by
Indicated
Indicated
cost
value byvalue byTerminal
Discount
income Cap rate income
cap rate approachrate(million
approach(%)
approach(%)yen)(million(million
(%)
yen)
yen)

Japan Real
Estate Institute

2,690

2,720

2.5

2,650

2.2

2.6

2,750

Japan Real
Estate Institute17,10017,235

3.8

16,965

3.4

4.0

16,020Japan Real
Estate Institute

7,470

7,590

3.3

7,350

3.0

3.5

6,700

2,530

2,560

3.5

2,490

3.3

3.7

2,570

6,530

6,670

3.0

6,390

2.8

3.2

7,030

5,570

5,670

4.1

5,530

4.2

4.3

5,550

3,950

4,010

4.0

3,880

3.8

4.2

2,990

11,00011,4003.6

10,8253.7

3.8

10,325

5,620

5,720

3.8

5,510

3.6

4.0

5,530

62,46063,575-61,590--59,465

Japan Real
Estate InstituteJapan Real
Estate Institute
The Tanizawa
Sōgō Appraisal
Co., Ltd.

Japan Real
EstateInstitute
Shinagawa
The Tanizawa
Seaside TS Tower Sōgō Appraisal(Note 2)
Co., Ltd.
Japan Real
Omori Park
EstateBuilding
Institute
Subtotal

B-1

Hotel Intergate
Tokyo Kyobashi

Daiwa Real
EstateAppraisal Co.,
Ltd.

9,140

9,280

3.7

9,080

3.5

3.9

9,360

B-2

Hotel Intergate
Hiroshima

Japan Real
Estate Institute

4,170

4,210

4.5

4,130

4.3

4.7

4,400

Subtotal

13,31013,490-13,210--13,760Total

75,77077,065-74,800--73,225

Sub assets(Note 1) “Appraisal value” is the appraisal value with an appraisal date of August 31, 2020, 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 based on 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 “SGATE NIHONBASHI-HONCHO”) and the quasi co-ownership interest (45% for “BREEZÉ TOWER” and 25% for “Shinagawa Seaside TS Tower”) held by
SANKEI REAL ESTATE.

- 28 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2020
(2) Capital Expendituresi. Schedule of Capital Expenditures
Of capital expenditures associated with renovation work, etc. currently planned for assets held by SANKEI REAL ESTATE as
of August 31, 2020, the following are the major estimated amounts (10 million yen or more). The estimated construction
costs below include the portion separately charged to expenses in accounting.
Name of real estate, etc.
(Location)

BREEZÉ TOWER(Kita-ku, Osaka-shi, Osaka)ii.

Scheduled period

Renewal of billing for the
medium layer WHM(electricity meter) and CT(current transformer)

From February 1, 2021,
to February 28, 2021

10

-

-

Capital Expenditures during the Fiscal Period
Major construction works falling under the category of capital expenditures of 10 million yen or more conducted in thefiscal period under review for assets held by SANKEI REAL ESTATE as of August 31, 2020 are as follows: For the fiscal
period under review, capital expenditures amounted to 54 million yen and repair expenses separately charged to
expenses amounted to 35 million yen for a combined total of 89 million yen of construction work implemented.

Name of real estate, etc.
(Location)
BREEZÉ TOWER(Kita-ku, Osaka-shi, Osaka)iii.

PurposeExpected construction cost
(million yen)Amount of
Total
Total amountpayment
amountalready paid
during period

Amount of payment(million yen)

Purpose

PeriodRenewal of electric window
shade for office

From March 27, 2020,
to March 27, 2020

22

Other

31

Total

54

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 longterm future large-scale repairs and other funds.
Fiscal 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 carried forward(thousand yen)

1st fiscal period
From: Nov. 19, 2018
To: Aug. 31, 2019

2nd fiscal period
From: Sept. 1, 2019
To: Feb. 29, 2020

3rd fiscal period
From: Mar. 1, 2020,
To: Aug. 31, 2020‐

95,103

130,466

95,103

105,897

128,187‐

70,53440,812

95,103

130,466

217,842- 29 -