(REIT) Financial Report for the Fiscal Period Ended February 2021
April 15, 2021
Listing: Tokyo Stock Exchange
URL: https://www.s-reit.co.jp/en/

REIT Securities Issuer:
TSE Code:
Representative:

SANKEI REAL ESTATE Inc.
2972
Yuichi Ota, Executive Director

Asset Management Company:
Representative:
Contact:

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

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

May 27, 2021
May 26, 2021

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 February 2021 (from September 1, 2020, to February 28, 2021)(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
2,147
7.1
1,118
12.3
1,017
12.5
1,016
12.5
Ended Feb. 2021
Ended Aug. 2020
2,005
3.7
996
(14.6)
904(15.5)
903(15.5)

yen%

Ratio of ordinary profit
to total assets
%

2,849

2.7

1.3

47.4

2,532

2.4

1.2

45.1

Earnings per unit
Fiscal period
Ended Feb. 2021
Ended Aug. 2020

Return on
equityRatio 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 August 2020: 356,800
units; fiscal period ended February 2021: 356,800 units).

(2) Distribution

yenmillion yen

Distribution inexcess of
earnings per
unit
yen

2,849

1,016

-

-

100.0

2.7

2,532

903

-

-

100.0

2.4

Distribution per unit
Total distribution(excluding distribution (excluding distribution
in excess of earnings) in excess of earnings)
Fiscal period
Ended Feb. 2021
Ended Aug. 2020

Total
distribution inexcess of
earnings
million yen

Payoutratio

Ratio ofdistribution to net
assets%%(3) Financial Position

Fiscal period
Ended Feb. 2021
Ended Aug. 2020

Total assets
million yen

Net assets
million yen

79,482
76,195Equity ratio%

Net assets per unit
yen

37,55747.3

105,262

37,44449.1

104,945(4) Cash Flows

million yen

million yen

million yen

Cash andcash equivalents
at end of period
million yen

486(4,100)

3,397

6,944

1,714

91

(1,523)

7,160

Cash flows fromoperating activities
Fiscal period
Ended Feb. 2021
Ended Aug. 2020

Cash flows frominvesting activities

Cash flows fromfinancing activities

2. Operating Forecasts for the Fiscal Period Ending August 2021 (from March 1, 2021, to August 31, 2021) andOperating Forecasts for the Fiscal Period Ending February 2022 (from September 1, 2021, to February 28, 2022)(% figures are the rate of period-on-period increase (decrease))
Operating revenue
million yen
Fiscal periodEnding Aug. 2021
Ending Feb. 2022

Operating profit% million yen

Ordinary profit% million yen

Net profit% million yen

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

2,178

1.4

1,119

0.1

1,022

0.5

1,021

0.5

2,862

-

2,144

(1.6)

1,079

(3.5)

971

(5.0)

970

(5.0)

2,720

-

(Reference) Forecast earnings per unit (Forecast net profit ÷ Forecast total number of investment units issued and outstanding at endof period)
Fiscal period ending August 2021: 2,862 yen
Fiscal period ending February 2022: 2,719 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 andFiscal period
Fiscal period
outstanding (including treasury investment units) at
356,800 units
356,800 units
ended Feb. 2021
ended Aug. 2020end of period
Fiscal period
Fiscal period
ii. Number of treasury investment units at end of period
0 units
0 units
ended Feb. 2021
ended Aug. 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 22.

* 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 distribution. For theassumptions underlying the operating forecasts, matters of note in the use of the operating forecasts, etc., please refer to“Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending August 2021 (from March 1, 2021, to August 31,2021) and Fiscal Period Ending February 2022 (from September 1, 2021, to February 28, 2022)” on pages 5 and 6.

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
Table of Contents
1. Management Status ...................................................................................................................................................................... 2(1) Management Status ............................................................................................................................................................... 2(2) Investment Risks .................................................................................................................................................................... 6
2. Financial Statements ..................................................................................................................................................................... 7(1) Balance Sheet ........................................................................................................................................................................ 7(2) Statement of Income ............................................................................................................................................................. 9(3) Statement of Unitholders’ Equity ......................................................................................................................................... 10(4) Statement of Cash Distribution ............................................................................................................................................ 11(5) Statement of Cash Flows...................................................................................................................................................... 12(6) Notes on the Going Concern Assumption ............................................................................................................................ 13(7) Notes on Matters Concerning Significant Accounting Policies ............................................................................................. 13(8) Notes to the Financial Statements ....................................................................................................................................... 15(9) Changes in Total Number of Investment Units Issued and Outstanding .............................................................................. 22
3. Reference Information ................................................................................................................................................................ 23(1) Information on Price of Assets Under Management, Etc. .................................................................................................... 23(2) Capital Expenditures ............................................................................................................................................................ 28-1-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021

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 was listed on the Real Estate Investment Trust Securities Market ofTokyo Stock Exchange, Inc. on March 12, 2019 (TSE code: 2972).
As of the last day of the fiscal period under review (February 28, 2021), the total number of investment units issued andoutstanding was 356,800 units, and unitholders’ capital was 36,540 million yen.
ii.

Management Environment
In the fiscal period under review (fiscal period ended February 2021), the Japanese economy showed movements ofpicking up with the raising of the level of social and economic activities while taking measures to prevent the spread of
COVID-19. However, the rapid increase in the number of confirmed cases of COVID-19 in Japan led to re-declaration of astate 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) on January 7, 2021, that covered 11 prefectures at one
point. This, among other factors, made it an environment in which economic developments continued to require
attention. In overseas economies, too, the economy in some regions showed movements of picking up, but there werealso regions where economic activities were constrained due to the spread of COVID-19, continuing to be anenvironment with downside risks.
Under such economic circumstances, in terms of the office building market, which SANKEI REAL ESTATE sets as theprimary investment target, contract cancellations stemming from COVID-19 were limited, but there were movements ofoffice relocations being cancelled and contract cancellations associated with consolidation of bases, etc. with theprogress in remote working such as working from home. Even in Tokyo and Osaka, where SANKEI REAL ESTATE’s portfolio
assets are located, vacancy rates continued to be on the rise and rent levels also showed weak developments. In terms of
the hotel market, in which SANKEI REAL ESTATE invests as sub-assets, the substantial decrease in the number ofinternational visitors to Japan continued due to restrictions on entry into Japan. Meanwhile, domestic travel showedeven trends of improvement in the total number of overnight guests and room occupancy rates according to theOvernight Travel Statistics Survey by the Japan Tourism Agency due in part to the government’s Go To Travel campaign,
but took a downward turn again as the Go To Travel campaign was temporarily suspended due to the spread of COVID-19.

iii.

Management Performance
In the management environment described above, SANKEI REAL ESTATE acquired 1 property (S-GATE AKASAKA) on
October 1, 2020, at an acquisition price of 4,200 million yen using borrowings. As a result, the portfolio of SANKEI REALESTATE as of the last day of the fiscal period under review consisted of 12 properties with an asset size (total acquisition
price) of 71,525 million yen.
SANKEI REAL ESTATE has sought to improve tenant satisfaction through reinforcement and enhancement of therelationship with existing tenants, aiming at expansion of revenue and stable growth of earnings from assets undermanagement. For existing tenants approaching contract renewal, contract renewals managed to be made with upwardrevision or no change in rent for most tenants despite the COVID-19 pandemic through efforts based on trends of therental market. Even for the vacancy that arose at the beginning of the fiscal period under review, agile leasing activities
proved effective in managing to secure a new tenant to move in during the fiscal period under review. In addition, repairs
and capital expenditures were narrowed down to those that contribute to maintenance and improvement of thecompetitiveness of the assets under management. On the other hand, there are movements of consolidation of bases,
mainly among companies based in several locations, and notices of contract cancellation and such associated withconsolidation of bases have been received from some tenants even at the assets under management of SANKEI REALESTATE, but there is no impact on management performance in the fiscal period under review.
As a result, the occupancy rate (Note) of the 12 portfolio properties as of the last day of the fiscal period under review
remained high at 99.9%, and operating revenue from real estate leasing was 2,147 million yen, 7.1% higher than that at
the end of the previous fiscal period despite the COVID-19 pandemic. The appraisal value as of the last day of the fiscal
period under review was 79,181 million yen.
SANKEI REAL ESTATE received requests for rent decrease, deferment of rent payment, etc. due to COVID-19 from sometenants, mainly retail tenants occupying portions of office buildings that are assets under management, but the impact
on management performance in the fiscal period under review is minimal because the assets under management of
SANKEI REAL ESTATE are mainly office buildings. In addition, although the two hotel properties held by SANKEI REALESTATE saw impact associated with the spread of COVID-19, fixed rent based on the current contract has been secured as
usual for leasing business revenue in 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 February 2021
iv.

Overview of Fund Procurement
In the fiscal period under review, 4,300 million yen was borrowed from Mizuho Bank, Ltd. on October 1, 2020, in
conjunction with the acquisition of 1 property (S-GATE AKASAKA) on October 1, 2020.
As a result, as of the last day of the fiscal period under review, the balance of borrowings outstanding was 37,800 million
yen and the ratio of interest-bearing liabilities to total assets (hereinafter, “LTV ratio”) was 47.6%.

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 2,147 million yen, operating profit of 1,118 million yen, ordinary profit of 1,017 million yen, and net profit of
1,016 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 1,016,523,200 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 2,849 yen.

(Outlook for the Next Fiscal Period)i.
General Management Outlook
COVID-19 continues to impact social and economic activities in Japan and abroad. Although the spread of COVID-19 is
expected to slow with progress in vaccinations ahead, there is no guarantee that it will lead to containment. As such, theenvironment will likely continue to be one in which downside risks to the Japanese and overseas economies, the impact
on fluctuations in the financial and capital markets, etc. warrant close attention.
In terms of the office building market, vacancy rates are rising in the COVID-19 pandemic, and rents have also started toappear to peak or trend toward decrease in market rates. In addition, it is necessary to pay close attention to changes inwork styles and the trend of office demand in social and economic activities. At SANKEI REAL ESTATE, too, progress inconsolidation of bases and reduction of office space due to the expansion of remote working such as working from home
could lead to lease contract cancellations arising. We will further reinforce the relationship with tenants and continue
consultations and responses as required, while closely monitoring tenants’ business performance, etc.
In terms of the hotel market, recovery in the number of international visitors to Japan looking unlikely and also domestic
travelers and business travelers still in low numbers suggest the severe situation will continue for a while yet. A severe
operating environment is foreseen for also the two hotel properties held by SANKEI REAL ESTATE, but no impact on
SANKEI REAL ESTATE is expected as GRANVISTA Hotels & Resorts Co., Ltd., which is a tenant of the two properties and awholly owned subsidiary of SANKEI REAL ESTATE’s sponsor, The Sankei Building Co., Ltd. (hereinafter, “Sankei Building” or“Sponsor”), continues to pay fixed rent based on the fixed-term building lease agreement.
(A) External Growth Strategy
While carefully assessing the economic impact of the spread of COVID-19, the real estate investment market conditions,and other factors, SANKEI REAL ESTATE will continue to 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
through sponsorship support.
(B) Internal Growth Strategy
SANKEI REAL ESTATE aims for steady internal growth through reinforcement of the 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) Seek to maintain and improve the market competitiveness of assets under management through planning andimplementation of repairs and capital expenditures by taking into consideration the state and characteristics ofassets under management, real estate market conditions, tenant needs, and other factors and examining themmore 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 the market competitiveness of assets under management and perspective of maintaining andimproving tenant satisfaction are taken into consideration.
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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021

(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.
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.
(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, andother terms and conditions of procurement of interest-bearing liabilities.
The 4,800 million yen of long-term borrowings due for repayment on March 12, 2021, was refinanced through aloan syndicate with Mizuho Bank, Ltd. and Sumitomo Mitsui Banking Corporation as the arrangers on March 12,2021. The borrowing was made with a borrowing period of 4 years and fixed interest rate, thereby promoting
extension of the average time to maturity, improvement in the ratio of fixed-rate debt, and staggering of maturities
of interest-bearing liabilities.
ii.

Significant Subsequent Events
Not applicable.

iii.

Operating Forecasts
SANKEI REAL ESTATE’s operating forecasts for the fiscal period ending August 2021 (from March 1, 2021, to August 31,2021) and fiscal period ending February 2022 (from September 1, 2021, to February 28, 2022) are as follows:
Operatingrevenue

OperatingprofitOrdinary
profitNet
profitDistribution per unit Distribution in(excluding distribution
excess ofin excess of earnings) earnings per unit

million yen
million yen
million yen
million yen
yenyen
Fiscal period
2,178
1,119
1,022
1,021
2,862
ending Aug. 2021
Fiscal period
2,144
1,079
971
970
2,720
ending Feb. 2022
Furthermore, for the assumptions underlying the operating forecasts, please refer to “Assumptions Underlying the
Operating Forecasts for the Fiscal Period Ending August 2021 (from March 1, 2021, to August 31, 2021) and Fiscal PeriodEnding February 2022 (from September 1, 2021, to February 28, 2022)” 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.

-4-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending August 2021 (from March 1, 2021, to August 31, 2021)
and Fiscal Period Ending February 2022 (from September 1, 2021, to February 28, 2022)
Item

Accounting period

Assets undermanagement

Operating revenue

Assumptions
・Fiscal period ending August 2021 (5th fiscal period) (from March 1, 2021, to August 31, 2021) (184days)
・Fiscal period ending February 2022 (6th fiscal period) (from September 1, 2021, to February 28, 2022)(181 days)
・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 the endof the fiscal period ending February 2022.
・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 through to the end of the fiscal
period ending February 2022, operating revenue is calculated by taking into account the utilization
rate of rental conference rooms and utilities reimbursement largely similar to the figures for the 3rd
and 4th fiscal periods.
・Of operating expenses, the main components are as follows:(Unit: million yen)
Fiscal period
Fiscal period
ending Aug. 2021 ending Feb. 2022
Expenses related to leasing business [Total]
817
821
Outsourcing expenses

173

188

Utilities expenses

121

109

Repair expenses
Property taxes

53
221

49
221

Depreciation

228

233

Other than expenses related to leasing business
241
242[Total]Asset management fee
192
193
Operating expenses
・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 asset 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, 97 million yen is assumed for the fiscal
Non-operating expenses
period ending August 2021 and 108 million yen for the fiscal period ending February 2022.
・The assumption is that total interest-bearing liabilities will be 37,800 million yen at the end of the
fiscal period ending August 2021 and 37,800 million yen at the end of the fiscal period ending
February 2022.
・The assumption is that there will be no change in the balance of borrowings other than the above
Interest-bearing
through to the end of the fiscal period ending February 2022.
liabilities
・LTV ratio is expected to be 47.5% at the end of the fiscal period ending August 2021 and 47.4% at theend of the fiscal period ending February 2022. LTV ratio is calculated by the following formula androunded to one decimal place.
LTV ratio = Total interest-bearing liabilities ÷ Total assets × 100-5-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021

Item

Assumptions

・The assumption is the total number of investment units issued and outstanding as of the date of thisdocument of 356,800 units and that there will be no change in the number of investment units due to
Number of investment
issuance of new investment units, etc. through to the end of the fiscal period ending February 2022.
units issued and・Distribution per unit (excluding distribution in excess of earnings) is calculated based on the forecast
outstanding
total number of investment units issued and outstanding at the end of the fiscal period ending August2021 and fiscal period ending February 2022 of 356,800 units.
・Distribution per unit (excluding distribution in excess of earnings) is calculated based on theassumption that distribution of earnings will be in accordance with the policy on distribution of cash
Distribution per unit
provided in SANKEI REAL ESTATE’s articles of incorporation.
(excluding distribution
・Distribution per unit (excluding distribution in excess of earnings) may vary due to various factors,
in excess of earnings)
such as fluctuation in leasing business revenue accompanying change in assets under management,change in tenants or other event, or incurrence of unexpected repairs.
Distribution in excess of・No cash distribution in excess of earnings is planned to be made at this point in time.
earnings per unit
・The assumption is that 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
Other
Trusts Association, Japan, etc. that will impact the forecast figures above.
・The assumption is that there will be no unforeseen material change in general economic trends, realestate market conditions, etc.
(2) Investment Risks
Disclosure is omitted, because there is no significant change from “Investment Risks” in the semiannual securities report(submitted on November 26, 2020).

-6-SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021

2. Financial Statements(1) Balance Sheet(Unit: thousand yen)
3rd fiscal period(as of Aug. 31, 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
Land
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets
SoftwareTotal intangible assets
Investments and other assets
Long-term prepaid expenses
Deferred tax assets
Leasehold and guarantee deposits
Total investments and other assets
Total non-current assets
Total assets-7-

4th fiscal period(as of Feb. 28, 2021)

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

4,147,117
2,797,010
54,096
46,597
9,321
41,015
7,095,157

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

166,032(11,908)
154,123
353
(16)
336
2,457,766
14,296,308(769,403)
13,526,905
23,602(1,122)
22,479
2,875
(348)
2,526
27,889(3,719)24,17056,132,321
8,103
72,328,733

6,713
6,713

5,773
5,773

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

43,23713
10,00053,251
72,387,757
79,482,915

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021

(Unit: thousand yen)
3rd fiscal period(as of Aug. 31, 2020)
Liabilities
Current liabilities
Operating accounts payable
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-8-

4th fiscal period(as of Feb. 28, 2021)

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

170,1129,100,000
219,582
26,175879
373,814
7,496
9,898,060

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

28,700,000
79,585
3,247,634
32,027,219
41,925,280

36,540,901

36,540,901

903,625

1,016,734

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

1,016,734
37,557,635*1 37,557,635
79,482,915

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
(2) Statement of Income(Unit: thousand yen)
3rd fiscal period
From: Mar. 1, 2020
To: Aug. 31, 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
Other
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing related 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

4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021

1,878,684
126,823
2,005,507*1

778,934
183,485
1,505
6,370
3,600
35,2301,009,126
996,380

*1

-9-

*1

2,015,771
132,163
2,147,934*1

790,014
186,562
1,568
7,065
3,600
40,5101,029,320
1,118,614

*1

32
323
356

21
0
21

58,586
33,79092,377904,359904,359898
2
901
903,458167
903,625

61,56537,6602,000
101,225
1,017,409
1,017,409882
0883
1,016,526
207
1,016,734

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
(3) Statement of Unitholders’ Equity
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
surplusTotal
net assets

Total
unitholders’equity1,068,783

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

4th fiscal period (from September 1, 2020, to February 28, 2021)(Unit: thousand yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning of period

Unappropriatedretained earnings(undisposed loss)

36,540,901

Total
surplusTotal
unitholders’equityTotal
net assets

903,625

903,625

37,444,526

37,444,526

Dividend of surplus(903,417)(903,417)(903,417)(903,417)

Net profit

1,016,526

1,016,526

1,016,526

1,016,526-

113,108

113,108

113,108

113,108

36,540,901

1,016,734

1,016,734

37,557,635

37,557,635

Changes in items during period

Total changes in items during
periodBalance at end of period*1- 10 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
(4) Statement of Cash Distribution(Unit: yen)
3rd fiscal period
From: Mar. 1, 2020
To: Aug. 31, 2020

4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021

I. Unappropriated retained earnings

903,625,576

1,016,734,169

II. Amount of distribution

903,417,600

1,016,523,200[Amount of distribution per unit][2,532][2,849]III. Retained earnings carried forward

207,976

210,969

Method of calculation of amount of
distribution

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 ofincorporation 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 1,016,523,200 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 ofincorporation will not be made.

- 11 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
(5) Statement of Cash Flows(Unit: thousand yen)
3rd fiscal period
From: Mar. 1, 2020
To: Aug. 31, 2020
Cash flows from operating activities
Net profit before income taxes
Depreciation
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
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Proceeds from leasehold and guarantee deposits
received
Refund of leasehold and guarantee deposits received
Proceeds from leasehold and guarantee deposits
received in trust
Refund of leasehold and guarantee deposits received
in trust
Net cash provided by (used in) investing activities
Cash flows from financing activities
Repayments of short-term borrowings
Proceeds from long-term borrowings
Distribution paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 12 -

4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021

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

1,017,409
228,057(21)
61,565
34,103369,256(9,321)(10,700)
58,29752,356

5,300(54,667)
4,076

129,470(129,470)(12,866)
254,170(915)(225,717)
1,772,944
32(57,188)(951)
1,714,837

45,256(1,197,677)
17,555
526,775
548,943
21(61,662)(896)
486,405(5,747)(46,376)(493)(4,286,634)

1,400

81

(502)

(12,724)

142,697

232,800(8)(33,127)

91,461(4,100,099)(4,756,000)
4,300,000(1,067,674)(1,523,674)
282,624
6,877,708*1 7,160,333

4,300,000(902,512)
3,397,487(216,205)
7,160,333*1 6,944,127

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
(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
8-10 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. 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, etc. included in the cost of acquisition of real estate, etc. was nil inthe previous fiscal period. The amount equivalent to fixed asset tax, etc. included in
the cost of acquisition of real estate, etc. was 3,425 thousand yen in the fiscal period
under review.
3. 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.
4. 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)
・ “Implementation 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 a comprehensive accounting
standard for revenue recognition and issued such together with an implementation guidance.
The basic policy for the ASBJ when it developed the accounting standard for revenue recognition was to determine
the accounting standard, 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.
- 13 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
2. Scheduled application date
Application will be from the beginning of the fiscal period 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 Fair Value Measurement” (Accounting Standards Board of Japan (ASBJ) Statement No. 30
issued on July 4, 2019)
・ “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10 issued on July 4, 2019)
・ “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31 issued on
July 4, 2019)
・ “Implementation 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 13 “Fair Value Measurement” by IASB and
Topic 820 “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 fair valueof financial instruments, and announced an accounting standard for fair value measurement and an implementation
guidance on the accounting standard for fair value measurement.
The basic policy for the ASBJ when it developed the accounting standard for fair value measurement was toincorporate basically all of the provisions of IFRS 13, from the perspective of improving the comparability between
financial statements among domestic and international companies by using a unified method of measurement. To
the extent that the comparability between financial statements is not significantly impaired, other treatments ofindividual items shall be determined considering practices that have been conducted thus far in Japan, etc.
2. Scheduled application date
Application will be from the beginning of the fiscal period 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 Fair Value Measurement”
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
In the International Accounting Standards (IAS), Paragraph 125 of IAS 1 “Presentation of Financial Statements”
announced by the International Accounting Standards Board (IASB) in 2003 requires disclosure of the “sources of
estimation uncertainty.” There were requests to consider requirement of such disclosure as notes in the Japanesestandards, too, as the information would be highly useful for users of financial statements, and the ASBJ thus
developed and announced an accounting standard for disclosure of accounting estimates (hereinafter, “thisAccounting Standard”).
The basic policy for the ASBJ when it developed this Accounting Standard was to not extend individual notes but
show the principles (purposes of disclosure) and have companies judge the specific disclosure contents based on
the purposes of disclosure, using the provisions of Paragraph 125 of IAS 1 as a reference in the development.
2. Scheduled application date
Application will be from the end of the fiscal period ending August 2021.
・“Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections” (AccountingStandards Board of Japan (ASBJ) Statement No. 24 issued on March 31, 2020)
1. Overview
In response to recommendations to consider enhancement of the notes on “accounting principles and procedures
adopted when there are no clearly relevant accounting standards or other provisions,” the ASBJ made the required
revisions and announced such as an accounting standard for accounting policy disclosures, accounting changes anderror corrections.
In enhancing the notes on “accounting principles and procedures adopted when there are no clearly relevant
accounting standards or other provisions,” the provisions of one of the annotations to Japanese corporate
accounting principles (Kigyo Kaikei Gensoku Chukai (Chu 1-2)) shall be followed so as not to affect the practices thus
far for when there are clearly relevant accounting standards or other provisions.
2. Scheduled application date
Application will be from the end of the fiscal period ending August 2021.

- 14 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
(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)
3rd fiscal period
4th fiscal period(as of Aug. 31, 2020)(as of Feb. 28, 2021)
50,00050,000[Notes to the Statement of Income]*1. Breakdown of operating income (loss) from real estate leasing
3rd fiscal period
From: Mar. 1, 2020
To: Aug. 31, 2020
A. Operating revenue from real estateleasing
Leasing business revenue
Rental revenue(Unit: thousand yen)
4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021

1,727,126

1,868,319

151,557

147,452

1,878,684

2,015,771

90,92529,4606,437

93,36630,655
8,141

Total other leasing business revenue
Total operating revenue from real estateleasing
B. Operating expenses from real estateleasing
Expenses related to leasing businessOutsourcing expenses

126,823
2,005,507

132,163
2,147,934

172,779

183,374

Utilities expenses
Property taxes
Land rent
Repair expenses
Insurance premium
Trust fee
Depreciation
Other expenses related to leasing
business
Total expenses related to leasing
business
Total operating expenses from realestate leasing
C. Operating income (loss) from real estateleasing [A−B]

118,648
215,328
1,818
35,1484,449
3,200
219,5318,029

110,924
214,815
1,818
35,844
4,664
2,371
227,117
9,081

778,934

790,014778,934

790,0141,226,572

1,357,920

Common area maintenance revenue
Total leasing business revenue
Other leasing business revenue
Utilities reimbursement
Parking revenue
Other rental revenue[Notes to the Statement of Unitholders’ Equity]*1. Total number of investment units authorized and total number of investment units issued and outstanding
3rd fiscal period
From: Mar. 1, 2020
To: Aug. 31, 2020
Total number of investment units authorized
Total number of investment units issued andoutstanding- 15 -(Unit: units)
4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021

10,000,000

10,000,000

356,800

356,800SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
[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
3rd fiscal period
From: Mar. 1, 2020
To: Aug. 31, 2020
Cash and deposits
Cash and deposits in trust

3,876,992
3,283,341

Cash and cash equivalents

7,160,333(Unit: thousand yen)
4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021
4,147,117
2,797,010
6,944,127[Notes on Lease Transactions]Operating lease transactions (as lessor)
Future minimum lease payments
3rd fiscal period(as of Aug. 31, 2020)(Unit: thousand yen)
4th fiscal period(as of Feb. 28, 2021)

Due within 1 year

2,457,949

2,692,306

Due after 1 year
Total

15,854,148
18,312,097

15,407,566
18,099,872[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.

- 16 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
2. Matters concerning fair value, etc. of financial instruments
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(1) Cash and deposits(2) Cash and deposits in trust
Total assets(1) Long-term borrowings due within 1 year
(2) Long-term borrowings
Total liabilities

Fair value

Amount of difference

3,876,992
3,283,341

3,876,992
3,283,341

7,160,333

7,160,333

4,800,000
28,700,000

4,800,000
28,737,004

33,500,000

33,537,004

37,00437,004

The following are the carrying amount and fair value as of February 28, 2021, 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(1) Cash and deposits(2) Cash and deposits in trust
Total assets(1) Long-term borrowings due within 1 year
(2) Long-term borrowings
Total liabilities

Fair value

Amount of difference

4,147,117
2,797,010
6,944,127

4,147,117
2,797,010
6,944,127-

9,100,000
28,700,000

9,100,000
28,744,574

44,57437,800,000

37,844,574

44,574-(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 book value.
Liabilities(1) Long-term borrowings due within 1 year; (2) 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 is thought
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 fairvalue 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)
4th fiscal period(as of Feb. 28, 2021)

3rd fiscal period(as of Aug. 31, 2020)
Leasehold and guarantee deposits received
Leasehold and guarantee deposits received in trust

92,93579,585

3,047,718

3,247,634* “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 (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

- 17 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
Amount of redemption of monetary claims scheduled to be due after the end of the fiscal period (February 28, 2021)
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

4,147,117

-

-

-

-

-

Cash and deposits in trust

2,797,010

-

-

-

-

-

6,944,127

-

-

-

-

-

Total

(Note 4) Amount of repayment of borrowings scheduled to be due after the end of the fiscal period (August 31, 2020)
Due within
1 yearLong-term borrowings due within 1
year

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-

Amount of repayment of borrowings scheduled to be due after the end of the fiscal period (February 28, 2021)
Due within
1 yearLong-term borrowings due within 1
year

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

9,100,000

-

-

-

-

-

Long-term borrowings-

11,500,000

9,600,000

7,600,000

-

-

Total

9,100,000

11,500,000

9,600,000

7,600,000--[Notes on Securities]
3rd fiscal period (as of August 31, 2020)
Not applicable.
4th fiscal period (as of February 28, 2021)
Not applicable.
[Notes on Derivative Transactions]
3rd fiscal period (as of August 31, 2020)
Not applicable.
4th fiscal period (as of February 28, 2021)
Not applicable.
[Notes on Retirement Benefits]
3rd fiscal period (as of August 31, 2020)
Not applicable.
4th fiscal period (as of February 28, 2021)
Not applicable.

- 18 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
[Notes on Tax-Effect Accounting]
1. Breakdown of main causes for occurrence of deferred tax assets and deferred tax liabilities
3rd fiscal period(as of Aug. 31, 2020)(Unit: thousand yen)
4th fiscal period(as of Feb. 28, 2021)

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

14

13

14
14

13
13

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: %)3rd fiscal period
4th fiscal period(as of Aug. 31, 2020)(as of Feb. 28, 2021)

Statutory tax rate

31.46

31.46

(31.43)(31.43)

Other

0.07

0.06

Effective income tax rate after applicationof tax-effect accounting

0.10

0.09

[Adjustments]
Deductible distribution payable[Notes on Share of Profit (Loss) of Entities Accounted for Using Equity Method]
3rd fiscal period (from March 1, 2020, to August 31, 2020)
Not applicable.
4th fiscal period (from September 1, 2020, to February 28, 2021)
Not applicable.
[Notes on Related-Party Transactions]
1. Parent company, major corporate unitholder, etc.
3rd fiscal period (from March 1, 2020, to August 31, 2020)
Not applicable.
4th fiscal period (from September 1, 2020, to February 28, 2021)
Not applicable.
2. Affiliated company, etc.
3rd fiscal period (from March 1, 2020, to August 31, 2020)
Not applicable.
4th fiscal period (from September 1, 2020, to February 28, 2021)
Not applicable.
3. Fellow subsidiary, etc.
3rd fiscal period (from March 1, 2020, to August 31, 2020)
Not applicable.
4th fiscal period (from September 1, 2020, to February 28, 2021)
Not applicable.

- 19 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
4. Director, major individual unitholder, etc.
3rd fiscal period (from March 1, 2020, to August 31, 2020)

Attribute

Director

Name ofcompany, etc.
or name of
personYuichi Ota

Location-

Share capital orinvestments incapital(thousand yen)

Description ofbusiness or
occupation-

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

Percentage
of votingrights, etc.
held by (in)SANKEI REALESTATE(%)

Description of relationship
Concurrent
holding of
positions,etc. bydirectors

Businessrelationship

Description oftransaction

Payment of
Executive Director of SANKEI
asset
REAL ESTATE, and President management
and Chief Executive Officer of fee to asset
Sankei Building Assetmanagement
Management Co., Ltd.
company(Note 3)-

Transaction
amount(thousandyen)

Account
item

Balance at
end ofperiod(thousandyen)

183,485

Accounts
payable other

201,834(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.

4th fiscal period (from September 1, 2020, to February 28, 2021)

Attribute

Director

Name ofcompany, etc.
or name of
personYuichi Ota

Location-

Share capital orinvestments incapital(thousand yen)

Description ofbusiness or
occupation-

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

Percentage
of votingrights, etc.
held by (in)SANKEI REALESTATE(%)-

Description of relationship
Description oftransaction

Transaction
amount(thousandyen)

Account
item

Balance at
end ofperiod(thousandyen)

Payment of
Executive Director of SANKEI
asset
REAL ESTATE, and President management
and Chief Executive Officer of fee to asset
Sankei Building Assetmanagement
Management Co., Ltd.
company(Note 3)

228,562(Note 4)

Accounts
payable other

205,218

Concurrent
holding of
positions,etc. bydirectors

Businessrelationship(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.
(42,000 thousand yen)
(Note 5) Transaction terms and conditions are decided based on the actual market conditions.

[Notes on Asset Retirement Obligations]
3rd fiscal period (from March 1, 2020, to August 31, 2020)
Not applicable.
4th fiscal period (from September 1, 2020, to February 28, 2021)
Not applicable.
[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)
3rd fiscal period
4th fiscal period
From: Mar. 1, 2020
From: Sept. 1, 2020
To: Aug. 31, 2020
To: Feb. 28, 2021
Carrying amount
Balance at beginning of period
68,414,911
68,249,447
Amount of change during period
Balance at end of period
Fair value at end of period(165,463)

4,071,182

68,249,447
75,770,000

72,320,630
79,181,000(Note 1) Carrying amount is the amount of the cost of acquisition, less accumulated depreciation.
(Note 2) Of the amount of change during period, the amount of increase in the previous fiscal period is mainly attributable to capital expenditures(54,067 thousand yen), etc., while the amount of decrease is mainly attributable to depreciation (219,531 thousand yen). The amount of
increase in the fiscal period under review is mainly attributable to new property acquisition of 1 property (4,255,758 thousand yen), etc.,
while the amount of decrease is mainly attributable to depreciation (227,117 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.”- 20 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
[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
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 circumstances in that consent for disclosure has not been obtained from the lessee.

4th fiscal period (from September 1, 2020, to February 28, 2021)(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.

Operating revenue
325,755

Sony Corporation(Note)

Not disclosed (Note)(Unit: thousand yen)
Related segment
Real estate leasing business
Real estate leasing businessNot disclosed, due to unavoidable circumstances in that consent for disclosure has not been obtained from the lessee.

- 21 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
[Notes on Per Unit Information]
3rd fiscal period
From: Mar. 1, 2020
To: Aug. 31, 2020

4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021

Net assets per unit

104,945 yen

105,262 yen

Earnings per unit

2,532 yen

2,849 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
August 2020: 356,800 units; fiscal period ended February 2021: 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:
3rd fiscal period
4th fiscal period
From: Mar. 1, 2020
From: Sept. 1, 2020
To: Aug. 31, 2020
To: Feb. 28, 2021
Net profit (thousand yen)903,458

1,016,526－－

Net profit attributable to common investment units (thousand yen)903,458

1,016,526

Average number of investment units during period (units)356,800

356,800

Amount not available to common unitholders (thousand yen)

[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 (February 28, 2021) are as follows:
Total number of investment
Unitholders’ capitalunits issued and outstanding Remarks(thousand yen)(units)Date
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.

- 22 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021

3. Reference Information(1) Information on Price of Assets Under Management, Etc.
i. Investment Status
3rd fiscal period(as of Aug. 31, 2020)
Asset group

Asset type

Geographic area
(Note 1)

4th fiscal period(as of Feb. 28, 2021)

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

2,614

3.4

2,612

3.3

-

-

-

-

-

-

-

-

-

-

-

-

52,60269.0

56,728

71.4

-

-

-

-

9,031

11.9

9,004

11.3

4,000

5.3

3,974

5.0

9,031

11.9

9,004

11.3

4,000

5.3

3,974

5.0

68,249
7,945

89.6
10.4

72,320
7,162

91.0
9.0

76,195100.0

79,482100.0(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.

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

4th fiscal period(as of Feb. 28, 2021)

Total liabilities

38,750As a percentage of
total assets(%) (Note 2)
50.9

Total net assets
Total assets

37,44476,19549.1
100.0

Amount(million yen) (Note 1)

41,925

As a percentage of
total assets(%) (Note 2)
52.7

37,557
79,48247.3
100.0

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

- 23 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
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 February 28, 2021.

(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:
Acquisition priceAppraisal(Note 1)
Book value
Acquisition
Asset Property
value
Property nameLocation(million yen)date
Investment
type number(million yen)
Price
(Note 2)
(Note 4)
ratio
(Note 3)(million yen)(%)
Tokyo Sankei
Chiyoda-ku,
A-1
Building
2,509
3.5
2,612
2,690 Mar. 12, 2019Tokyo
(Note 5)Kita-ku,i. 8,600
BREEZÉ TOWER
i. Mar. 12, 2019
A-2
Osaka-shi,ii. 4,500
18.3
13,13017,235(Note 5)ii. Sept. 3, 2019
Osaka
Total 13,100
S-GATENIHONBASHIChuo-ku,
A-3
6,698
9.4
6,725
7,470 Mar. 12, 2019
HONCHOTokyo(Note 5)
Chiyoda-ku,
A-4
S-GATE AKIHABARA
2,055
2.9
2,059
2,530 Mar. 12, 2019
Tokyo
OfficeHibiya Sankei
Chiyoda-ku,
5,829
8.1
6,051
6,340 Mar. 12, 2019buildings A-5
Building
Tokyo
Hatchobori Sankei
Chuo-ku,
A-6
4,959
6.9
5,020
5,500 Mar. 12, 2019
BuildingTokyo
Koto-ku,A-7
Toyo Park Building
3,782
5.3
3,881
3,610 Mar. 12, 2019
Tokyo
Shinagawa Seaside
Shinagawa-ku,
A-8
TS Tower
10,04014.0
10,132
11,000 Sept. 3, 2019Tokyo
(Note 5)
Ota-ku,A-9
Omori Park Building
5,400
7.5
5,477
5,490 Sept. 3, 2019Tokyo
S-GATE AKASAKA
Minato-ku,
A-10
4,200
5.9
4,249
4,266 Oct. 1, 2020
(Note 5)Tokyo
Subtotal-

58,574

81.9

59,34066,131-

B-1

Hotel Intergate
Tokyo Kyobashi

Chuo-ku,
Tokyo

8,961

12.5

9,004

8,970 Mar. 12, 2019

B-2

Hotel Intergate
Hiroshima

Naka-ku,
Hiroshima-shi,
Hiroshima

3,990

5.6

3,974

4,080

Sept. 3, 2019

Subtotal-

12,951

18.1

12,97913,050

-

Total

-

71,525100.0

72,32079,181-Sub
assets(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 February 28, 2021, rounded down to the nearest million yen.
(Note 3) “Appraisal value” is the appraisal value with an appraisal date of February 28, 2021, 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,” 25% for “Shinagawa Seaside TS Tower” and 60%
for “S-GATE AKASAKA”) held by SANKEI REAL ESTATE.

- 24 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
(B)

Asset
type

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
Occupancy
Construction
guarantee
Total leased area
Property
revenuearea
rate
Property namecompletion
deposits(m2)
number(million yen)(m2)(%)
(Note 1)(million yen)
(Note 5)(Note 2)
(Note 4)(Note 6)(Note 3)
Tokyo Sankei
A-1
Building
Sept. 28, 2000
94
79
881.69808.04
91.6(Note 7)BREEZÉ TOWER
A-2
July 1, 2008
1,037
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)
A-4

Officebuildings

A-5
A-6
A-7
A-8
A-9
A-10

S-GATE AKIHABARA Sept. 29, 2017
Hibiya Sankei
Building
Hatchobori Sankei
Building
Toyo Park Building

130

130

1,681.55

1,681.55

100.0

June 25, 1992

390

324

3,439.61

3,439.61

100.0

Sept. 1, 1965

316

261

5,594.90

5,594.90

100.0

June 18, 1991

208

168

4,224.52

4,224.52

100.0

Not disclosed(Note 8)Not disclosed(Note 8)100.0

7,469.72

7,469.72

100.0

1,984.86

1,984.86

100.0

Shinagawa Seaside
Not disclosed Not disclosed
TS Tower
July 25, 2003
(Note 8)(Note 8)(Note 7)
Omori ParkMay 31, 1993
289
269
Building
S-GATE AKASAKA
Not disclosed Not disclosed
July 31, 2015
(Note 7)(Note 8)(Note 8)Subtotal (average)

-

3,457

2,856

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

99.8

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)

-

4,108

3,182

Not disclosed(Note 8)Not disclosed(Note 8)99.9

Subassets(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, etc. Free rent and rent holiday (*1) will not be taken into
consideration. As for rents that include floating rents in agreements with the tenants, the rents are calculated without taking floating rents into
consideration. Consumption tax, etc. are not included. The same shall apply hereinafter.) for the building stated in the lease agreement for eachportfolio asset effective as of February 28, 2021, rounded down to the nearest million yen. The amount calculated by annualizing the monthly rent
stated in the lease agreement concluded with the end tenant with respect to the portion in the pass-through-type master lease agreement (*2) isindicated when a pass-through-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 February 28, 2021, 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 February 28, 2021, rounded down to two decimal places.
(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 February 28, 2021, 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.

- 25 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
(Note 6) “Occupancy rate” is the ratio of total leased area to total leasable area for each portfolio asset as of February 28, 2021, 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,” 25% for “Shinagawa
Seaside TS Tower” and 60% for “S-GATE AKASAKA”) 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.

- 26 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
(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 appraisal company’s judgment and opinion at a certain point in time, and are not a guarantee ofthe 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
Property namenumber

A-1

A-2

A-3

A-4

Officebuildings

A-5

A-6
A-7

A-8

A-9
A-10

Tokyo Sankei
Building(Note 2)BREEZÉ
TOWER(Note 2)S-GATENIHONBASHI-HONCHO(Note 2)S-GATEAKIHABARA
HibiyaSankei
Building
Hatchobori
Sankei
Building
Toyo Park
Building
ShinagawaSeaside TS
Tower(Note 2)
Omori Park
Building
S-GATEAKASAKA(Note 2)

Appraiser

Japan Real
Estate Institute

2,690

2,730

2.5

2,640

2.2

2.6

2,750

Japan Real
Estate Institute17,235

17,3703.8

17,055

3.4

4.0

15,795

Japan Real
Estate Institute

7,470

7,590

3.3

7,340

3.0

3.5

6,650

Japan Real
Estate Institute

2,530

2,560

3.5

2,490

3.3

3.7

2,570

Japan Real
Estate Institute

6,340

6,480

3.0

6,200

2.8

3.2

6,970

5,500

5,660

4.1

5,430

4.2

4.3

5,660

3,610

3,650

4.0

3,560

3.7

4.1

2,990

The Tanizawa
Sōgō Appraisal
Co., Ltd.

11,00011,4003.6

10,825

3.7

3.8

10,275

Japan Real
Estate Institute

5,490

5,590

3.8

5,380

3.6

4.0

5,530

Japan Real
Estate Institute

4,266

4,362

3.2

4,170

3.0

3.4

3,954

The Tanizawa
Sōgō Appraisal
Co., Ltd.
Japan Real
Estate InstituteSubtotal
B-1
Sub
assetsB-2

Direct capitalization
DCF method
methodIndicated
Appraisalvalue by
Indicated
Indicated
value
cost
value by(million yen) value by
Discount Terminal
approachincomeCap
rateincome(Note 1)rate
cap rate(million
approach(%)
approach
(%)
(%)
yen)
(million(millionyen)
yen)

66,131

67,392-65,090--63,144

Daiwa Real
EstateAppraisal
Co., Ltd.

8,970

9,100

3.8

8,910

3.6

4.0

8,860

Japan Real
Estate Institute

4,080

4,120

4.6

4,030

4.4

4.8

4,320

Subtotal

13,05013,220-12,940--13,180Total

79,18180,612-78,030--76,324

Hotel
IntergateTokyo
Kyobashi
HotelIntergate
Hiroshima(Note 1) “Appraisal value” is the appraisal value with an appraisal date of February 28, 2021, 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,” 25% for “Shinagawa Seaside TS Tower,” and 60% for “SGATE AKASAKA”) held by SANKEI REAL ESTATE.

- 27 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2021
(2) Capital Expendituresi.
Schedule of Capital Expenditures
No capital expenditures associated with renovation work, etc. are currently planned for assets held by SANKEI REALESTATE as of February 28, 2021. There may end up being a portion separately charged to capital expenditures inaccounting.
ii.

Capital Expenditures during the Fiscal Period
No major construction works falling under the category of capital expenditures of 10 million yen or more wereconducted in the fiscal period under review for assets held by SANKEI REAL ESTATE as of February 28, 2021. For the fiscal
period under review, capital expenditures amounted to 42 million yen and repair expenses separately charged to
expenses amounted to 35 million yen for a combined total of 78 million yen of construction works implemented.

iii.

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

4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021-

95,103

130,466

217,842

95,103

105,897

128,187

59,293-70,53440,812

101,255

95,103

130,466

217,842

175,880- 28 -