(REIT) Financial Report for the Fiscal Period Ended August 2022
October 14, 2022
Listing: Tokyo Stock Exchange
URL: https://www.s-reit.co.jp/en/

REIT Securities Issuer:
TSE Code:
Representative:

SANKEI REAL ESTATE Inc.
2972
Yuichi Ota, Executive Director

Asset Management Company:
Representative:
Contact:

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

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

November 29, 2022
November 22, 2022

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

Yes
Yes (for institutional investors and analysts)(Amounts are rounded down to the nearest million yen)
1. Status of Management and Assets for the Fiscal Period Ended August 2022 (from March 1, 2022, to August 31, 2022)(1) Management Status(% 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
3,028
9.0
1,630
5.8
1,476
6.0
1,475
6.0
ended Aug. 2022
ended Feb. 2022
2,778
27.7
1,540
35.0
1,392
37.2
1,391
37.2

yen

%

Ratio of ordinary profit
to total assets
%

3,158

2.9

1.4

48.7

2,983

3.1

1.5

50.1

Earnings per unit
Fiscal period
ended Aug. 2022
ended Feb. 2022

Return on equity

Ratio of ordinary profit
to operating revenue%(Note) Earnings per unit is calculated by dividing net profit by the daily weighted average number of investment units (fiscal period ended February 2022:
466,286 units, fiscal period ended August 2022: 467,099 units).

(2) Distribution
Distribution
Total
Distribution
Total
per unit
distribution Distribution in
Total
per unit
distribution
Ratio of(excluding(excludingexcess of distribution in (including(including
Payout ratio distribution
distribution in distribution in earnings per
excess of
distributions distributions
to net assets
excess ofexcess ofunit
earnings
in excess of in excess ofearnings)
earnings)
earnings)
earnings)
Fiscal period
ended Aug. 2022
ended Feb. 2022

yenmillion yen

yenmillion yen

yenmillion yen

%

%

3,158

1,475

-

-

3,158

1,475

100.0

2.9

2,979
1,391
2,979
1,391
100.0
2.8
(Note) Due to issuance of new investment units during the fiscal period resulting in change in the number of investment units during the fiscal period, payout
ratio of the fiscal period ended February 2022 is calculated by the following formula and rounded to one decimal place.
Payout ratio = Total distribution (excluding distribution in excess of earnings) ÷ Net profit × 100(3) Financial Position

Fiscal period
ended Aug. 2022
ended Feb. 2022

Total assets
million yen

Net assets
million yen

106,553
106,523

Equity ratio%

Net assets per unit
yen

50,91047.8

108,993

50,82747.7

108,814(4) Cash Flows

million yen

million yen

million yen

Cash andcash equivalents
at end of period
million yen

2,504

(78)

(1,790)

8,878

1,203

(24,870)

24,651

8,242

Cash flows fromoperating activities
Fiscal period
ended Aug. 2022
ended Feb. 2022

Cash flows frominvesting activities

Cash flows fromfinancing activities

2. Operating Forecasts for the Fiscal Period Ending February 2023 (from September 1, 2022, to February 28, 2023) andOperating Forecasts for the Fiscal Period Ending August 2023 (from March 1, 2023, to August 31, 2023)(% figures are the rate of period-on-period increase (decrease))
Operating revenue

million yen

Operating profit% million yen

Ordinary profit% million yen

Net profit% million yen

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

Fiscal period
2,867
(5.3)
1,215
(25.5)
1,046(29.1)
1,045(29.2)
2,239
ending Feb. 2023
2,858
(0.3)
1,302
7.2
1,111
6.2
1,110
6.2
2,377
ending Aug. 2023
(Reference) Forecast earnings per unit (Forecast net profit / Forecast total number of investment units issued and outstanding at endof period)
Fiscal period ending February 2023: 2,238 yen
Fiscal period ending August 2023: 2,377 yen(Note)

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

* Other(1) Changes in accounting policies, changes in accounting estimates, and retrospective restatements
i. Changes in accounting policies accompanying amendments to accounting standards, etc.: None
ii. Changes in accounting policies other than i:Noneiii. Changes in accounting estimates:
None
iv. Retrospective restatements:
None(2) Total number of investment units issued and outstandingi.
Total number of investment units issued andFiscal period
Fiscal period
outstanding (including treasury investment units)
467,099 units
467,099 units
ended Feb. 2022
ended Aug. 2022
at end of period
Fiscal period
ii. Number of treasury investment units at end of
Fiscal period
0 units
0 units
periodended Feb. 2022
ended Aug. 2022
(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.
* Special remarks
The operating forecasts and other forward-looking statements contained in this document are based on information currently
available to and certain assumptions deemed reasonable by SANKEI REAL ESTATE. Accordingly, the actual results of operations, etc.
may differ materially due to various factors. In addition, the forecasts are not a guarantee of the amount of distribution. For theassumptions underlying the operating forecasts, matters of note in the use of the operating forecasts, etc., please refer to“Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending February 2023 (from September 1, 2022, to February
28, 2023) and Fiscal Period Ending August 2023 (from March 1, 2023, to August 31, 2023)” on page 6.

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
Table of Contents
1. Management Status ...................................................................................................................................................................... 2(1) Management Status ............................................................................................................................................................... 2(2) Investment Risks .................................................................................................................................................................... 7
2. Financial Statements ..................................................................................................................................................................... 8(1) Balance Sheet ........................................................................................................................................................................ 8(2) Statement of Income ........................................................................................................................................................... 10(3) Statement of Unitholders’ Equity ........................................................................................................................................ 11(4) Statement of Cash Distribution ............................................................................................................................................ 12(5) Statement of Cash Flows...................................................................................................................................................... 13(6) Notes on the Going Concern Assumption ............................................................................................................................ 14(7) Notes on Matters Concerning Significant Accounting Policies ............................................................................................. 14(8) Notes to the Financial Statements ....................................................................................................................................... 15(9) Changes in Total Number of Investment Units Issued and Outstanding .............................................................................. 23
3. Reference Information ................................................................................................................................................................ 24(1) Information on Price of Assets Under Management, Etc. .................................................................................................... 24(2) Capital Expenditures ............................................................................................................................................................ 29-1-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022

1.

Management Status(1) Management Status(Overview of the Fiscal Period under Review)i.
Brief History of the Investment Corporation
SANKEI REAL ESTATE was incorporated under the Act on Investment Trusts and Investment Corporations (Act No. 198 of1951, as amended; hereinafter, the “Investment Trust Act”) with Sankei Building Asset Management Co., Ltd. (hereinafter,
the “Asset Management Company”) as the organizer and investments in capital of 100 million yen (1,000 units) on
November 19, 2018, and completed the registration with the Kanto Local Finance Bureau pursuant to Article 187 of theInvestment Trust Act on December 17, 2018 (Registration No. 140 with the Director-General of the Kanto Local Finance
Bureau). Later, SANKEI REAL ESTATE was listed on the Real Estate Investment Trust Securities Market of Tokyo Stock
Exchange, Inc. on March 12, 2019 (TSE code: 2972).
As of the last day of the fiscal period under review (August 31, 2022), the total number of investment units issued andoutstanding was 467,099 units and unitholders’ capital (net) was 49,435 million yen.
ii.

Management Environment
In the fiscal period under review (fiscal period ended August 31, 2022), the Japanese economy showed movements ofmoderate picking up since the lifting of pre-emergency measures for COVID-19 based on the Act on Special Measures for
Pandemic Influenza and New Infectious Diseases Preparedness and Responses (Act No. 31 of 2012, as amended) in March
2022, and although the impact of COVID-19 continues to be felt, movement toward normalization of the economy iscontinuing. Overseas, the stagnation of production activity showed signs of recovery, and in Europe and the United States,
which were early to lift restrictions on COVID-19, economies started to pick up, but the prolongation of the militaryinvasion of Ukraine by Russia that began in February 2022 impacted logistics for resources and materials, and prices
centered on resources, energy and food continue to rise. Furthermore, central banks of the United States and othercountries raised their key interest rates, resulting in a rapid change of foreign exchange rates and a rise in prices, leading
to uncertainty about a full recovery of the Japanese economy.
Under such economic circumstances, in terms of the office building market, which SANKEI REAL ESTATE sets as the primary
investment target, movements to cancel lease agreements continued due to factors such as the consolidation of locations
and the reduction of fixed expenses (rent payments, etc.), and the vacancy rate remained the same or continued to rise
while rents declined slightly or remained the same in Tokyo, Osaka and Fukuoka where SANKEI REAL ESTATE’s portfolio
assets are located. The hotel market in which SANKEI REAL ESTATE invests as sub assets is continuing to be in a condition
significantly below its peak despite the total number of guests and room occupancy rates recovering according to theOvernight Travel Statistics Survey by the Japan Tourism Agency. Further expansion of deregulation measures not limited
to the resumption of acceptance of foreign tourists is much anticipated.

iii.

Management Performance
SANKEI REAL ESTATE did not acquire or sell any assets in the fiscal period under review. The portfolio of SANKEI REALESTATE as of the end of the fiscal period under review consisted of 14 properties with an asset size (total acquisition price(Note 1)) of 96,625 million yen, the same as that in the previous fiscal period.
As a result, the occupancy rate (Note 2) of the 14 portfolio properties as of the end of the fiscal period under review stoodat 94.2%, and operating revenue from real estate leasing was 3,028 million yen, 9.0% higher than that at the end of theprevious fiscal period. The appraisal value as of the end of the fiscal period under review was 104,937 million yen.
SANKEI REAL ESTATE has sought to improve satisfaction through reinforcement and enhancement of relations with existing
tenants, aiming at expansion of revenue and stable growth of earnings from assets under management as in the previous
fiscal period. For existing tenants approaching contract renewal, an effort was made to limit reductions in rent as much as
possible and prevent the occurrence of vacancies through careful efforts based on the condition of the COVID-19 pandemic
and trends of the rental market. During the fiscal period under review, there were cancellations by major tenants in someassets under management, and we recognize the filling of those vacancies as the most important issue and are working
hard on leasing activities. In addition, repairs and capital expenditures were narrowed down to those that contribute tomaintenance and improvement of the competitiveness of the assets under management.
The number of requests for rent decrease, deferment of rent payment, etc. due to the spread of COVID-19 from sometenants occupying office buildings that are assets under management decreased in the fiscal period under review
compared with when the first state of emergency was declared in April 2020, and the impact on management performancein the fiscal period under review is minimal because the assets under management mainly have office tenants. In addition,although the two hotel properties held by SANKEI REAL ESTATE (Hotel Intergate Tokyo Kyobashi and Hotel Intergate
Hiroshima) 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.
SANKEI REAL ESTATE, along with the Asset Management Company, intends to continue to conduct management withconsideration for ESG, meaning the Environment, Social and Governance, for the purpose of sustainability of society andincreasing the medium- to long-term unitholder value based on the “Sustainability Policy” in the Asset Management
Company’s management guidelines.
SANKEI REAL ESTATE acquired 3 Star and Green Star ratings in October 2021 in the GRESB Real Estate Assessment that is a
global investment benchmark established as a tool for use in selection of and dialogue with investment destinations bymeasuring ESG considerations in individual companies and funds in the real estate sector. In addition, two of the hotels
owned obtained evaluations under the Building-Housing Energy-efficiency Labelling System (BELS) in December 2021.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
(Note 1) “Acquisition price” is the sale and purchase price of each real estate and trust beneficiary right stated in the sale and purchaseagreement for each acquired asset, rounded down to the nearest million yen. The sale and purchase prices do not include consumption
tax, local consumption tax and the various expenses required for the acquisition. The same shall apply hereinafter.
(Note 2) “Occupancy rate” is the ratio of total leased area to total leasable area, rounded to one decimal place. Moreover, for total leasable area
and total leased area, each total is calculated based on the area corresponding to SANKEI REAL ESTATE’s ownership interest in eachportfolio property.

iv.

Overview of Fund Procurement
In the fiscal period under review, 5,600 million yen was borrowed from Mizuho Bank, Ltd., Sumitomo Mitsui Banking
Corporation, Development Bank of Japan Inc., Mizuho Trust & Banking Co., Ltd., Sumitomo Mitsui Trust Bank, Limited,
Shinsei Bank, Limited, and Resona Bank, Limited. through a loan syndicate with Mizuho Bank, Ltd. and Sumitomo Mitsui
Banking Corporation as the arrangers on March 14, 2022, to repay long-term borrowings of 5,600 million yen due forrepayment on March 14, 2022. The borrowing was made with a borrowing period of 6 years and fixed interest rate, thereby
promoting extension of the average time to maturity and staggering of maturities of interest-bearing liabilities.
In addition, early repayment of short-term borrowings of 400 million yen was made on July 4, 2022, using the consumption
taxes refund for the properties acquired on September 2, 2021.
As a result, as of the end of the fiscal period under review, the balance of borrowings outstanding was 50,200 million yen
and the ratio of interest-bearing liabilities to total assets (hereinafter, “LTV ratio”) was 47.1%.

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 3,028 million yen, operating profit of 1,630 million yen, ordinary profit of 1,476 million yen, and net profit of
1,475 million yen.
Concerning distribution, in accordance with SANKEI REAL ESTATE’s cash distribution policy (Article 36 of the articles ofincorporation), SANKEI REAL ESTATE intends to have the maximum amount of distribution of earnings included indeductible expenses by application of special provisions for taxation on investment corporations (Article 67-15 of the Act
on Special Measures Concerning Taxation (Act No. 26 of 1957, as amended)). For the fiscal period under review, thedecision was made to distribute 1,475,098,642 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 3,158 yen.

(Outlook for the Next Fiscal Period)i.
General Management Outlook
Although the impact of COVID-19 on social and economic activities in Japan and abroad is expected to be alleviated due
to factors such as progress in vaccinations and approval of new drugs ahead, the environment will likely continue to be
one in which downside risks to the Japanese and overseas economies brought about by the prolongation of Russia’s
invasion of Ukraine and by sudden fluctuations in interest rates and exchange rates caused by rising prices resulting fromthe imbalance of supply and demand amid the global economic recovery persist while the impact on financial and capital
markets warrant close attention.
In the office building market, vacancy rates have risen and rents have continued to fall or remain the same. While socialand economic activities are expected to be normalized as COVID-19 continues to have an impact, it is necessary to monitor
future trends in office demand due to the emergence of some potential risks such as changes in work styles and moves toreduce fixed expenses (rent payments, etc.) accompanying downside risk to economies. SANKEI REAL ESTATE has concernsthat the consolidation of locations and reduction of office space will progress due to the impact of increased
telecommuting such as working from home and intentions to reduce fixed expenses (rent payments, etc.), and due toplans for a large volume of new supply especially in central Tokyo in 2023, it is believed that the occurrence of vacancies
and a drop in rents due to the relocation of tenants will progress. Furthermore, dealing with rising fuel procurement costs
that are a cause of rising utilities expenses is also a pressing issue. We will further reinforce the relationship with tenants
and continue consultations and responses as required, while closely monitoring tenants’ business performance, trends,
etc.
In terms of the hotel market, while domestic travelers and business travelers are expected to increase with the recovery
in social and economic activities, the severe situation is still expected to continue due to the resumption of acceptance of
foreign tourists not leading to a rapid expansion. 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 a wholly 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-termbuilding 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 ofSankei Building’s portfolio properties as well as properties held by third parties by leveraging the sourcing capabilities
of Sankei Building through full utilization of sponsorship support.
In external growth, we will conduct diversified investment conscious of the balance of the portfolio matrix such asarea and yield and strive to improve the profitability and stability of the portfolio.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
(B) Internal growth strategy
SANKEI REAL ESTATE aims for steady internal growth through reinforcement of the relations with existing tenants andimprovement in tenant satisfaction. Specifically, we will attempt to raise rents upon contract renewal if there is asignificant deviation from market rent and continue to implement strategic leasing such as activities to extend thecancellation notification period from tenants and disperse end dates of rental contracts from the viewpoint oftermination risk for properties where the end dates of multiple tenants are the same. Furthermore, we will continue
to take proactive measures to improve tenant satisfaction such as improving 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
growth of earnings from assets under management.
(a) Strive to provide services for tenants’ comfortable use while strengthening and enhancing tenant relations inorder to maintain and improve tenant satisfaction so as to maintain and improve the occupancy rate and rent ofassets under management.
(b) Seek to maintain and improve the market competitiveness of assets under management through planning andimplementation of repairs and capital expenditures by taking into consideration the state and characteristics ofassets under management, real estate market conditions, tenant needs, and other factors and carefully
examining them.
(c) Strive to maintain and improve earnings by conducting agile leasing activities with a continual grasp of leasing
market trends.
(d) Adopt ongoing initiatives to reduce operating and management costs and consider the environment by
periodically verifying the validity of operations, management level, and costs of assets under management. In
doing so, the balance with the market competitiveness of assets under management and perspective of
maintaining and improving tenant satisfaction are taken into consideration.
(e) Conduct investment conscious of ESG, such as reduction of the environmental impact of assets undermanagement and cooperation with external stakeholders.
(C) Financial Strategy
SANKEI REAL ESTATE will conduct appropriate and sound financial management while considering agility of financing
activities, stability of cash flows, and other matters in order to secure stable earnings and steady growth of assets
under management over the medium to long term.
In addition, to secure financial soundness, the basic policy shall be to set the upper limit for the LTV ratio at 60% inprinciple (however, the LTV ratio may temporarily exceed the range of the upper limit for the LTV ratio for the purposeof new asset acquisition, etc.). As a rule, SANKEI REAL ESTATE will maintain an approximate range of 40% to 50%
during normal operations.
(a) Equity Financing
Issuance of new investment units shall be performed in an agile manner with due consideration to investment
unit dilution while comprehensively taking into account capital market trends, financial environment, timing ofacquisition of real estate, etc. to be newly acquired, ratio of interest-bearing liabilities to total assets and otherfactors.
(b) Debt Financing
Upon borrowing, etc., fund procurement shall be executed in an appropriate manner by taking into account thebalance between interest rate trends, market levels, financial agility, long-term business relationships, andsecurity, and by considering the borrowing period, fixed or floating interest rate, provision of collateral or not,fees, and other terms and conditions of procurement of interest-bearing liabilities.
ii.

Significant Subsequent Events
Not applicable.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
iii.

Operating Forecasts
SANKEI REAL ESTATE’s operating forecasts for the fiscal period ending February 2023 (from September 1, 2022, to February
28, 2023) and fiscal period ending August 2023 (from March 1, 2023, to August 31, 2023) are as follows:
Operatingrevenue

OperatingprofitOrdinary profit

Net profit

Distribution per unit
Distribution in(excluding distribution in excess of earnings
excess of earnings)
per unit

million yen
million yen
million yen
million yen
yenyen
Fiscal period
2,867
1,215
1,046
1,045
2,239
ending Feb. 2023
ending Aug. 2023
2,858
1,302
1,111
1,110
2,377
Furthermore, for the assumptions underlying the operating forecasts, please refer to “Assumptions Underlying the Operating
Forecasts for the Fiscal Period Ending February 2023 (from September 1, 2022, to February 28, 2023) and Fiscal Period Ending
August 2023 (from March 1, 2023, to August 31, 2023)” 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 to changes in thecircumstances. In addition, the forecasts are not a guarantee of the amount of distribution.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending February 2023 (from September 1, 2022, to February 28, 2023)
and Fiscal Period Ending August 2023 (from March 1, 2023, to August 31, 2023)
Item
Accounting period

Assets undermanagement

Operating revenue

Operating expenses

Non-operating
expensesAssumptions
・Fiscal period ending February 2023 (8th fiscal period) (from September 1, 2022, to February 28, 2023)(181 days)
・Fiscal period ending August 2023 (9th fiscal period) (from March 1, 2023, to August 31, 2023) (184 days)
・The assumption is that the portfolio will be comprised of the real estate and real estate trust beneficiaryrights (total of 14 properties) held by SANKEI REAL ESTATE as of the date of this document (hereinafter,
the “current portfolio assets”).
・There are no matters decided as of the date of this document, but it is assumed that the properties will
be disposed in the fiscal period ending August 2023.
・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.
・For the fiscal period ending February 2023, income from settlement of work to restore to the originalstate and income from settlement of electricity and air conditioning expenses associated withcancellations by tenants at Shinagawa Seaside TS Tower were recorded.
・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 August 2023, 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 period ended
February 2022 and the period ended August 2022.
・There are no matters decided as of the date of this document but it is assumed that around 570 million
yen will be recorded as gain on sale of real estate due to the sale of properties for the period ended
August 2023. Gain on sale of real estate may vary depending on whether the sale is made, thedisposition price, the timing of the disposition and other conditions.
・Of operating expenses, the main components are as follows:(Unit: million yen)
Fiscal period ending Fiscal period ending
Feb. 2023
Aug. 2023
Total expenses related to leasing business
1,342
1,262
Outsourcing expenses

228

354

Utilities expenses

154

167

Repair expenses
Property taxes

333
301

97
312

Depreciation

298

307

Other than expenses related to leasing business
310
294[Total]Asset management fee
245
228
・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.
・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.
・For the fiscal period ending February 2023, expenses to restore to the original state associated withcancellation by tenants of Shinagawa Seaside TS Tower was recorded under repair expenses.
・As interest expenses and other borrowing-related expenses, 162 million yen is assumed for the fiscal
period ending February 2023 and 183 million yen for the fiscal period ending August 2023.
・As amortization of investment unit issuance expenses, 6 million yen is assumed for the fiscal period
ending February 2023 and 6 million yen is assumed for the fiscal period ending August 2023.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
Item

Interest-bearing
liabilities

Number of investment
units issued andoutstanding

Distribution per unit
(excluding distribution
in excess of earnings)

Assumptions
・The assumption is that total interest-bearing liabilities will be 50,200 million yen at the end of the fiscal
period ending February 2023 and 50,200 million yen at the end of the fiscal period ending August 2023.
・The assumption is that there will be no change in the balance of borrowings other than the above
through to the end of the fiscal period ending August 2023.
・LTV ratio is expected to be 47.3% at the end of the fiscal period ending February 2023 and 47.6% at theend of the fiscal period ending August 2023. LTV ratio is calculated by the following formula androunded to one decimal place.
LTV ratio = Total interest-bearing liabilities / Total assets × 100
・The assumption is total number of investment units issued and outstanding as of the date of thisdocument of 467,099 units and that there will be no change in the number of investment units due toissuance of new investment units, etc. through to the end of the fiscal period ending August 2023.
・Distribution per unit (excluding distribution in excess of earnings) is calculated based on the forecast
total number of investment units issued and outstanding at the end of the fiscal period ending February
2023 and fiscal period ending August 2023 of 467,099 units.
・Distribution per unit (excluding distribution in excess of earnings) is calculated based on the assumptionthat distribution of earnings will be in accordance with the policy on distribution of cash provided in
SANKEI REAL ESTATE’s articles of incorporation.
・Distribution per unit (excluding distribution in excess of earnings) may vary due to various factors, suchas fluctuation in leasing business revenue accompanying change in assets under management, change
in tenants or other event, or incurrence of unexpected repairs.
・Distribution per unit for the fiscal period ending February 2023 is assumed to be 2,239 yen, down 29.1%
from the previous fiscal period, primarily due to the absence of termination penalties recorded in theprevious fiscal period.

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 external factors beyond the control of SANKEI REAL ESTATE, including
geopolitical conditions will not have a significant adverse impact on the Japanese economy, and alsothat the interest rate hikes by the central banks of the United States and Europe as well as further
progression of the depreciation of the yen will not have an adverse impact on the Japanese financial
Othermarket.
・The assumption is that there will be no amendment of laws and regulations, tax systems, accounting
standards, listing regulations provided by Tokyo Stock Exchange, Inc., rules provided by The Investment
Trusts Association, Japan, etc. that will impact the forecast figures above.
・The assumption is that there will be no unforeseen material change in general economic trends, realestate market conditions, etc.
(2) Investment Risks
Disclosure is omitted, because there is no significant change from “Investment Risks” in the semiannual securities report(submitted on May 30, 2022).

-7-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022

2. Financial Statements(1) Balance Sheet(Unit: thousand yen)
6th fiscal period(as of Feb. 28, 2022)
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
Deferred assets
Investment unit issuance expenses
Total deferred assets
Total assets-8-

7th fiscal period(as of Aug. 31, 2022)

4,512,675
3,729,623
89,93861,458389,377
8,783,072

5,575,535
3,303,184
62,70271,80178
9,013,302

179,269(18,849)
160,419
544
(39)
504
2,457,766
18,708,509(1,291,738)
17,416,771
71,171(2,476)
68,695
11,302(1,131)
10,17029,876(7,822)
22,05477,433,848
32,673
97,602,903

181,978(22,182)
159,795
544
(53)
490
2,457,766
18,769,170(1,592,660)
17,176,510
71,171(3,517)67,654
11,302(1,698)
9,603
49,525(11,769)
37,756
77,433,848
56,722
97,400,148

3,893
3,893

2,953
2,953

93,33810
10,000103,348
97,710,146

103,157
15
10,000113,173
97,516,274

30,12430,124
106,523,343

24,09924,099106,553,676

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
(Unit: thousand yen)
6th fiscal period(as of Feb. 28, 2022)
Liabilities
Current liabilities
Operating accounts payable
Short-term borrowings
Long-term borrowings due within 1 year
Accounts payable - otherAccrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Deposits received
Total current liabilities
Non-current liabilities
Long-term borrowings
Leasehold and guarantee deposits received
Leasehold and guarantee deposits received in trust
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Deduction from unitholders' capital
Unitholders’ capital (net)
Surplus
Unappropriated retained earnings(undisposed loss)
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets-9-

7th fiscal period(as of Aug. 31, 2022)

126,748
400,000
11,500,000
242,634
38,805815
485,392
11,356
12,805,752

244,965
9,600,000
308,770
44,831
926
171,838
447,828
6,036
10,825,198

38,700,000
87,974
4,102,499
42,890,473
55,696,225

40,600,000
88,2374,129,413
44,817,651
55,642,849

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

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

1,391,567

1,475,277

1,391,567
50,827,117*1 50,827,117
106,523,343

1,475,277
50,910,827*1 50,910,827
106,553,676

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
(2) Statement of Income(Unit: thousand yen)
6th fiscal period
From: Sept. 1, 2021
To: Feb. 28, 2022
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
Insurance claim income
Interest on refund
Other
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing related expenses
Amortization of investment unit issuance expenses
Other
Total non-operating expenses
Ordinary 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)- 10 -

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

*1 2,615,817*1 2,516,558*1 162,297*1 511,493

2,778,114

3,028,051*1 972,543*1 1,076,927

210,809
2,013
8,760
3,600
40,0981,237,824
1,540,290

265,992
2,100
7,460
3,600
41,722
1,397,803
1,630,247

37
253
17
308

41
279
0
321

88,26448,5406,024
5,583
148,414
1,392,184
1,392,184
820
2
823
1,391,360
207
1,391,567

100,93147,4606,024
26
154,444
1,476,124
1,476,124
932
(5)
927
1,475,197
80
1,475,277

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
(3) Statement of Unitholders’ Equity
6th fiscal period (from September 1, 2021, to February 28, 2022)(Unit: thousand yen)
Unitholders’ equity

Balance at beginning of
periodChanges in items during
periodIssuance of new
investment units
Distribution in excess ofearnings

Surplus
Deduction
Unitholders’ Unappropriat
Unitholders’from
ed retained
capitalcapitalunitholders'earnings
Total surplus(net)
capital(undisposed
loss)

Total
unitholders’equity36,540,901- 36,540,901

37,555,134

37,555,134

12,901,784

12,901,784

12,901,784

12,901,784(7,136)(7,136)(7,136)(7,136)

1,014,232

1,014,232

Total net
assetsDistribution of surplus(1,014,025)(1,014,025)(1,014,025)(1,014,025)

Net profit

1,391,360

1,391,360

1,391,360

1,391,360

Total changes in items
during period
Balance at end of period

12,901,784(7,136) 12,894,648

377,335

377,335

13,271,983

13,271,983*1 49,442,685(7,136) 49,435,549

1,391,567

1,391,567

50,827,117

50,827,117

7th fiscal period (from March 1, 2022, to August 31, 2022)(Unit: thousand yen)
Unitholders’ equity

Balance at beginning of
periodChanges in items during
periodSurplus
Deduction
Unappropriat
Unitholders’fromUnitholders’
ed retained
capitalunitholders' capital (net)earnings
Total surplus
capital(undisposed
loss)

Total
unitholders’equity49,442,685

1,391,567

1,391,567

50,827,117

50,827,117

Distribution of surplus(1,391,487)(1,391,487)(1,391,487)(1,391,487)

Net profit

1,475,197

1,475,197

1,475,197

1,475,197-

83,70983,70983,70983,709(7,136) 49,435,549

1,475,277

1,475,277

50,910,827

50,910,827

Total changes in items
during period
Balance at end of period*1 49,442,685(7,136) 49,435,549

Total net
assets-- 11 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
(4) Statement of Cash Distribution(Unit: yen)
6th fiscal period
From: Sept. 1, 2021
To: Feb. 28, 2022

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

I. Unappropriated retained earnings

1,391,567,971

1,475,277,574

II. Amount of distribution

1,391,487,921

1,475,098,642[Amount of distribution per unit][2,979][3,158]

III.Retained earnings carried forward

80,050178,932

Method of calculation of amount of
distribution

In accordance with the policy on
distribution of cash provided in Article
36, Paragraph 1 of SANKEI REALESTATE’s articles of incorporation, theamount of distribution shall be inexcess of the amount equivalent to
90% of the amount of SANKEI REALESTATE’s earnings available for
distribution provided in Article 67-15
of the Act on Special Measures
Concerning Taxation, but no more than
the amount of earnings. Based on suchpolicy, the decision was made to
distribute 1,391,487,921 yen, which is
the largest integral multiple of thetotal number of investment units
issued and outstanding (467,099 units)
in an amount not in excess ofunappropriated retained earnings, as
distribution of earnings.
The distribution of cash in excess ofearnings provided in Article 36,
Paragraph 2 of SANKEI REAL ESTATE’s
articles of incorporation will not be
made.

In accordance with the policy on
distribution of cash provided in Article
36, Paragraph 1 of SANKEI REALESTATE’s articles of incorporation, theamount of distribution shall be inexcess of the amount equivalent to
90% of the amount of SANKEI REALESTATE’s earnings available for
distribution provided in Article 67-15
of the Act on Special Measures
Concerning Taxation, but no more than
the amount of earnings. Based on suchpolicy, the decision was made to
distribute 1,475,098,642 yen, which is
the largest integral multiple of thetotal number of investment units
issued and outstanding (467,099 units)
in an amount not in excess ofunappropriated retained earnings, as
distribution of earnings.
The distribution of cash in excess ofearnings provided in Article 36,
Paragraph 2 of SANKEI REAL ESTATE’s
articles of incorporation will not be
made.

- 12 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
(5) Statement of Cash Flows(Unit: thousand yen)
6th fiscal period
From: Sept. 1, 2021
To: Feb. 28, 2022
Cash flows from operating activities
Net profit before income taxes
Depreciation
Amortization of investment unit issuance expenses
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund
receivable
Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable - other
Increase (decrease) in consumption taxes refund
payableIncrease (decrease) in advances received
Increase (decrease) in deposits received
Decrease (increase) in long-term prepaid expenses
Decrease (increase) in other assets
SubtotalInterest received
Interest paid
Income taxes paid
Cash flows from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Proceeds from leasehold and guarantee deposits
received
Refund of leasehold and guarantee deposits received
Proceeds from leasehold and guarantee deposits
received in trust
Refund of leasehold and guarantee deposits received
in trust
Cash flows from investing activities
Cash flows from financing activities
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of investment units
Payments of investment unit issuance expenses
Distribution paid
Cash flows from financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 13 -

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

1,392,184
307,9376,024(37)88,264(47,934)

1,476,124
310,7636,024(41)
100,931
27,164(389,377)

389,377(2,245)(86,226)
9,619(10,343)
116,727
64,742(89,208)

171,838

145,449(2,709)(49,613)77
1,282,20437(77,396)(881)
1,203,964(37,563)(5,319)(9,818)(78)
2,600,531
41(94,905)(821)
2,504,846(9,967)(25,743,595)(2,708)(102,914)

5,933

595

(98)

(331)

1,005,708

110,219(128,308)(83,190)(24,870,328)(78,330)

1,000,000(600,000)
16,700,000(4,300,000)
12,901,784(29,661)(1,020,683)
24,651,439
985,075
7,257,223*1 8,242,298(400,000)
5,600,000(5,600,000)(1,390,093)(1,790,093)
636,421
8,242,298*1 8,878,719

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
(6) Notes on the Going Concern Assumption
Not applicable.
(7) Notes on Matters Concerning Significant Accounting Policies
1.

Method of depreciation of noncurrent assets

2.

Accounting for deferred assets

3.

Standards for revenue andexpense recognition

4.

Scope of funds in the statementof cash flows

5.

Other significant matters serving
as the basis for preparation of
the financial statements(1) Property, plant and equipment (including trust assets)
The straight-line method is adopted. Furthermore, the useful life of core property,
plant and equipment is as follows:
Buildings
1–65 years
Structures
6–59 years
Machinery and equipment
8-10 years
Tools, furniture and fixtures
4-10 years(2) Intangible assets
The straight-line method is adopted.
(3) Long-term prepaid expenses
The straight-line method is adopted.
Investment unit issuance expenses
They are amortized by the straight-line method over 3 years.
(1) Standards for revenue recognition
The details of performance obligations concerning revenue from contracts with
SANKEI REAL ESTATE’s customers and the time when the performance obligations arenormally satisfied (the normal time to recognize revenue) are as follows.
i. Sale of real estate, etc.
Revenue is recognized for the sale of real estate at the time the buyer who is acustomer gains control of the real estate, etc. through the performance ofdelivery obligations specified in a contract on the sale of real estate.
ii. Utilities reimbursement
Revenue is recognized for utilities reimbursement according to the supply ofelectricity, water, etc. to tenants who are customers based on the content oflease agreements for real estate and incidental agreements. For the utilities
reimbursement for which SANKEI REAL ESTATE is deemed to be an agent, the net
amount after deducting the amount to be paid to another party from the amountreceived from the other party as charges for electricity, gas, etc. provided by said
party is recorded as revenue.
(2) Accounting for fixed asset tax, etc.
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 beneficiary rightsthat have real estate as trust assets is not recognized as expenses but included in thecost 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 48,733
thousand yen in the previous fiscal period. The amount equivalent to fixed asset tax,
etc. included in the cost of acquisition of real estate, etc. was nil in the fiscal period
under review.
The funds (cash and cash equivalents) in the statement of cash flows comprise cash on
hand and cash in trust, demand deposits and deposits in trust, and short-term investmentswith a maturity of 3 months or less from the date of acquisition that are readily convertible
to cash and that are subject to an insignificant risk of changes in value.
Accounting for trust beneficiary rights that have real estate, etc. as trust assets
Concerning trust beneficiary rights that have real estate, etc. as trust assets held, allaccounts of assets and liabilities within trust assets and all accounts of revenue andexpenses from the trust assets are recognized in the relevant account item of the balance
sheet and the statement of income.
Furthermore, the following material items of the trust assets recognized in the relevant
account item are separately listed on the balance sheet.
i.
Cash and deposits in trustii. Buildings in trust; Structures in trust; Machinery and equipment in trust; Tools,
furniture and fixtures in trust; Land in trust; Construction in progress in trustiii. Leasehold and guarantee deposits received in trust- 14 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
(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)
6th fiscal period
7th fiscal period(as of Feb. 28, 2022)(as of Aug. 31, 2022)
50,00050,000[Notes to the Statement of Income]*1. Breakdown of operating income (loss) from real estate leasing
6th fiscal period
From: Sept. 1, 2021
To: Feb. 28, 2022

(Unit: thousand yen)
7th fiscal period
From: Mar. 1, 2022
To: Aug. 31, 2022

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

2,479,240
136,576

2,381,126
135,432

2,615,817

2,516,558

119,960
34,78913
7,533

121,659
33,939346,974
8,919

162,297
2,778,114

511,493
3,028,051

224,074
162,294
220,379
1,818
36,0696,044
3,871
306,997
10,992

202,506
184,674
303,718
1,818
55,2305,749
3,787
309,823
9,616

972,543

1,076,927

972,543

1,076,927

1,805,571

1,951,124[Notes to the Statement of Unitholders’ Equity]*1. Total number of investment units authorized and total number of investment units issued and outstanding
6th fiscal period
From: Sept. 1, 2021
To: Feb. 28, 2022
Total number of investment units
authorized
Total number of investment units issued
and outstanding- 15 -(Unit: units)
7th fiscal period
From: Mar. 1, 2022
To: Aug. 31, 2022

10,000,000

10,000,000

467,099

467,099

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
[Notes to the Statement of Cash Flows]*1. Reconciliation of cash and cash equivalents at end of period to the amount of balance sheet items(Unit: thousand yen)
6th fiscal period
7th fiscal period
From: Sept. 1, 2021
From: Mar. 1, 2022
To: Feb. 28, 2022
To: Aug. 31, 2022
Cash and deposits
Cash and deposits in trust

4,512,675
3,729,623

5,575,535
3,303,184

Cash and cash equivalents

8,242,298

8,878,719[Notes on Lease Transactions]Operating lease transactions (as lessor)
Future minimum lease payments
6th fiscal period(as of Feb. 28, 2022)(Unit: thousand yen)
7th fiscal period(as of Aug. 31, 2022)

Due within 1 year

2,859,110

2,645,767

Due after 1 year
Total

14,772,633
17,631,744

13,446,087
16,091,854[Notes on Financial Instruments]
1. Matters concerning status of financial instruments(1) Policy for handling financial instruments
SANKEI REAL ESTATE shall procure funds in a well-balanced manner through borrowing from financial institutions,issuance of investment corporation bonds, issuance of new investment units, etc. to contribute to steady growth ofassets under management as well as efficient operation and stability of management.
Upon borrowing from financial institutions, issuance of investment corporation bonds, etc., the fund procurement shallbe in a manner that gives due consideration to the balance between agility in fund procurement and financial stability,
characteristics of to-be-acquired real estate, etc. Specifically, the procurement means, ratio of long-term debt, ratio of
fixed-rate debt, staggering of maturities, provision of collateral or not, etc. shall be considered. Upon borrowing, lenders
shall be limited to the qualified institutional investors provided in the Financial Instruments and Exchange Act (however,limited to the institutional investors provided in Article 67-15 of the Act on Special Measures Concerning Taxation).
Issuance of new investment units shall be for the purpose of expansion of asset size and enhancement of profitability,
and implementation decided by taking into account the LTV ratio, dilution of existing unitholders’ rights andaccompanying decline in transaction price of investment units, etc. and in light of the financial environment.
Derivative transactions may be conducted for the purpose of hedging the risk of fluctuation in interest rates and otherrisks on SANKEI REAL ESTATE arising from the concerned liabilities. No derivative transactions were conducted in thefiscal period under review.
(2) Description of financial instruments and associated risks, and risk management system
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 watching interest
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
Certain assumptions, etc. are adopted in the calculation of the value of financial instruments. Accordingly, the concernedvalues may vary when different assumptions, etc. are adopted.

- 16 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
2. Matters concerning fair value, etc. of financial instruments
The following are the carrying amount and fair value as of February 28, 2022, and the amount of difference between these.
Notes on “cash and deposits,” “cash and deposits in trust” and “short-term borrowings” are omitted due to the fair value
being approximated to the carrying amount because they are cash or settled in a short period. Furthermore “leasehold
and guarantee deposits received” and “leasehold and guarantee deposits received in trust” are omitted because they lacksignificance.
(Unit: thousand yen)
Carrying amount(1) Long-term borrowings due within
1 year(2) Long-term borrowings
Total liabilities

Fair value

Amount of difference

11,500,000
38,700,000

11,504,603
38,654,400

4,603(45,599)

50,200,000

50,159,003(40,996)

The following are the carrying amount and fair value as of August 31, 2022, and the amount of difference between these.
Notes on “cash and deposits” and “cash and deposits in trust” are omitted due to the fair value being approximated to thecarrying amount because they are cash or settled in a short period. Furthermore “leasehold and guarantee deposits
received” and “leasehold and guarantee deposits received in trust” are omitted because they lack significance.
(Unit: thousand yen)
Carrying amount(1) Long-term borrowings due within
1 year(2) Long-term borrowings
Total liabilities

Fair value

Amount of difference

9,600,000
40,600,000

9,601,711
40,274,136

1,711(325,863)

50,200,000

49,875,848(324,151)(Note 1) Method of calculation of the fair value of financial instruments(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) Amount of repayment of borrowings scheduled to be due after the end of the fiscal period (February 28, 2022)
Due within
1 yearShort-term borrowings

Due after
1 to 2 years

Due after
2 to 3 years

Due after
3 to 4 years

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

400,000

-

-

-

-

-

11,500,000

-

-

-

-

-

Long-term borrowings-

9,600,000

7,600,000

11,000,000

10,500,000

-

Total

11,900,000

9,600,000

7,600,000

11,000,000

10,500,000-

Long-term borrowings due within 1
year

Amount of repayment of borrowings scheduled to be due after the end of the fiscal period (August 31, 2022)
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

9,600,000

-

-

-

-

-

Long-term borrowings-

9,200,000

9,100,000

10,500,000

6,200,000

5,600,000

Total

9,600,000

9,200,000

9,100,000

10,500,000

6,200,000

5,600,000[Notes on Securities]
6th fiscal period (as of February 28, 2022)
Not applicable.
7th fiscal period (as of August 31, 2022)
Not applicable.

- 17 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
[Notes on Derivative Transactions]
6th fiscal period (as of February 28, 2022)
Not applicable.
7th fiscal period (as of August 31, 2022)
Not applicable.
[Notes on Retirement Benefits]
6th fiscal period (as of February 28, 2022)
Not applicable.
7th fiscal period (as of August 31, 2022)
Not applicable.
[Notes on Tax-Effect Accounting]
1. Breakdown of main causes for occurrence of deferred tax assets and deferred tax liabilities
6th fiscal period(as of Feb. 28, 2022)(Unit: thousand yen)
7th fiscal period(as of Aug. 31, 2022)

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

10

15

10
10

15
15

2. Breakdown of major components that caused any significant differences between the statutory tax rate and the effective
income tax rate after application of tax-effect accounting(Unit: %)6th fiscal period
7th fiscal period(as of Feb. 28, 2022)(as of Aug. 31, 2022)
Statutory tax rate

31.46

31.46

(31.44)(31.44)

Other

0.04

0.04

Effective income tax rate after applicationof tax-effect accounting

0.06

0.06

[Adjustments]
Deductible distribution payable[Notes on Share of Profit (Loss) of Entities Accounted for Using Equity Method]
6th fiscal period (from September 1, 2021, to February 28, 2022)
Not applicable.
7th fiscal period (from March 1, 2022, to August 31, 2022)
Not applicable.
[Notes on Related-Party Transactions]
1. Parent company, major corporate unitholder, etc.
6th fiscal period (from September 1, 2021, to February 28, 2022)
Not applicable.
7th fiscal period (from March 1, 2022, to August 31, 2022)
Not applicable.

- 18 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
2. Affiliated company, etc.
6th fiscal period (from September 1, 2021, to February 28, 2022)
Not applicable.
7th fiscal period (from March 1, 2022, to August 31, 2022)
Not applicable.
3. Fellow subsidiary, etc.
6th fiscal period (from September 1, 2021, to February 28, 2022)
Not applicable.
7th fiscal period (from March 1, 2022, to August 31, 2022)
Not applicable.
4. Director, major individual unitholder, etc.
6th fiscal period (from September 1, 2021, to February 28, 2022)

Attribute

Name ofcompany,
etc. orname ofpersonDescription ofPercentage ofShare capital
Balancerelationshipvoting rights,
Transactionorat end of
Description ofConcurrent
amountAccount
etc. held by
Description of
investments
periodLocationbusiness or
holding oftransaction (thousand
item (thousand
Business(in) SANKEI
in capital
occupation
positions,yen)relationship
REAL ESTATE(thousandyen)
etc. byyen)(%)
directors

Executive
Director of
SANKEI REAL
Payment of
Executive Director of
ESTATE, andasset
SANKEI REAL ESTATE, andPresident andAccounts
management
President and Chief
461,809
fee to Asset
Director Yuichi Ota
Chief Executive
payable - 231,890(Note 4)
Executive Officer ofManagement
Officer ofotherSankei Building Asset
Company
Sankei Building
Management Co., Ltd.
(Note 3)
Asset
Management
Co., Ltd.
(Note 1) Of the related-party transactions subject to disclosure, the related-party transactions including significant transactions are disclosed.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period includes consumption tax,
etc. Amounts are rounded down to the nearest thousand yen.
(Note 3) Payment of asset management fee is for transactions conducted by Yuichi Ota as representative of Sankei Building Asset Management Co., Ltd.,and 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. (251,000
thousand yen).
(Note 5) Transaction terms and conditions are decided based on the actual market conditions.

7th fiscal period (from March 1, 2022, to August 31, 2022)
Description ofPercentage ofrelationship
Name of
Balance at
Share capitalvoting rights,
Transaction
company,
Description ofend ofConcurrent
or investments
etc. held by
Description ofamount AccountAttributeetc. or
Locationbusiness or
periodholding of
in capital(in) SANKEItransaction(thousanditem
Businessname ofoccupation(thousandpositions,(thousand yen)
REAL ESTATE
yen)
relationshippersonyen)
etc. by(%)
directors
Executive
Director of
SANKEI REAL
Payment of
Executive Director of
ESTATE, andasset
SANKEI REAL ESTATE,
Account
President andmanagement
and President and Chiefs
fee to Asset
Director Yuichi Ota
Chief Executive
265,992
292,592
Executive Officer of
payableManagement
Officer ofSankei Building Asset- otherCompany
Sankei Building
Management Co., Ltd.
(Note 3)
Asset
Management
Co., Ltd.
(Note 1) Of the related-party transactions subject to disclosure, the related-party transactions including significant transactions are disclosed.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period includes consumption tax,
etc. Amounts are rounded down to the nearest thousand yen.
(Note 3) Payment of asset management fee is for transactions conducted by Yuichi Ota as representative of Sankei Building Asset Management Co., Ltd.,and transaction amount is based on the terms and conditions provided in SANKEI REAL ESTATE’s articles of incorporation.
(Note 4) Transaction terms and conditions are decided based on the actual market conditions.

[Notes on Asset Retirement Obligations]
6th fiscal period (from September 1, 2021, to February 28, 2022)
Not applicable.
7th fiscal period (from March 1, 2022, to August 31, 2022)
Not applicable.
- 19 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
[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)
6th fiscal period
7th fiscal period
From: Sept. 1, 2021
From: Mar. 1, 2022
To: Feb. 28, 2022
To: Aug. 31, 2022
Carrying amount
Balance at beginning of period
72,149,470
97,570,230
Amount of change during period
Balance at end of period
Fair value at end of period

25,420,759(226,804)

97,570,230
105,713,000

97,343,425
104,937,000(Note 1) Carrying amount is the amount of the cost of acquisition, less accumulated depreciation.
(Note 2) Of the amount of change during period, the amount of increase in the previous fiscal period is mainly attributable to new property acquisitionof 4 properties (25,653,909 thousand yen), etc., while the amount of decrease is mainly attributable to depreciation (306,997 thousand yen).
The amount of increase in the fiscal period under review is mainly attributable to capital expenditures (83,067 thousand yen), etc., while theamount of decrease is mainly attributable to depreciation (309,823 thousand yen).
(Note 3) Fair value at end of period is the appraisal value by an external real estate appraiser.

Furthermore, the income (loss) concerning investment and rental properties is presented in “Notes to the Statement of
Income.”[Notes on Revenue Recognition]
1. Information breaking down revenue from contracts with customers
6th fiscal period (from September 1, 2021, to February 28, 2022)(Unit: thousand yen)

Sale of real estate, etc.

Revenue from contracts with customers(Note)-

Utilities reimbursement

119,960

119,960

Other-

2,658,154

Total

119,960

2,778,114(Note)

Sales to external customers-

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

7th fiscal period (from March 1, 2022, to August 31, 2022)(Unit: thousand yen)

Sale of real estate, etc.

Revenue from contracts with customers(Note)-

Utilities reimbursement

121,659

121,659

Other-

2,906,392

Total

121,659

3,028,051(Note)

Sales to external customers-

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

2. Information forming the basis for understanding revenue from contracts with customers
6th fiscal period (from September 1, 2021, to February 28, 2022)
Matters related to significant accounting policies are as stated in the notes.
7th fiscal period (from March 1, 2022, to August 31, 2022)
Matters related to significant accounting policies are as stated in the notes.

- 20 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
3. Information on satisfaction of performance obligations based on contracts with customers, cash flows from such contracts,
and the amount and timing of revenue expected to be recognized from the next accounting period from contracts withcustomers that exist at the end of the accounting period under review(1) Balance of contract assets and contract liabilities, etc.
(Unit: thousand yen)
7th fiscal period
From: Mar. 1, 2022
To: Aug. 31, 2022

6th fiscal period
From: Sept. 1, 2021
To: Feb. 28, 2022
Receivables from contracts with customers

22,574

26,182

26,18230,002Contract assets (balance at beginning of period)--

Contract assets (balance at end of period)--

Contract liabilities (balance at beginning of period)--

Contract liabilities (balance at end of period)--(balance at beginning of period)
Receivables from contracts with customers(balance at end of period)(2) Transaction price allocated to remaining performance obligations
6th fiscal period (from September 1, 2021, to February 28, 2022)
Revenue is recognized for utilities reimbursement using the amount for which there is a right to claim in accordancewith section 19 of the Implementation Guidance on Accounting Standard for Revenue Recognition because there
is a right to receive an amount of consideration directly corresponding to the value for the lessee who is a customer
for the portion for which performance is completed by the end of the period. Therefore, the provisions of section
80-22(2) of the Revenue Recognition Accounting Standard apply, and the transaction prices allocated to remaining
performance obligations are not included in the notes.
7th fiscal period (from March 1, 2022, to August 31, 2022)
Revenue is recognized for utilities reimbursement using the amount for which there is a right to claim in accordancewith section 19 of the Implementation Guidance on Accounting Standard for Revenue Recognition because there
is a right to receive an amount of consideration directly corresponding to the value for the lessee who is a customer
for the portion for which performance is completed by the end of the period. Therefore, the provisions of section
80-22(2) of the Revenue Recognition Accounting Standard apply, and the transaction prices allocated to remaining
performance obligations are not included in the notes.
[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
6th fiscal period (from September 1, 2021, to February 28, 2022)(1) Information by product and service
The information is omitted, because operating revenue to external customers for a single group of products and services
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.

- 21 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
(3) Information by major customer
Name of customer
GRANVISTA Hotels & Resorts Co., Ltd.

Operating revenue
325,755(Unit: thousand yen)
Related segment
Real estate leasing businessSony Group Corporation

Not disclosed (Note)

Real estate leasing business(Note)

Not disclosed, due to unavoidable circumstances in that consent for disclosure has not been obtained from the lessee.

7th fiscal period (from March 1, 2022, to August 31, 2022)(1) Information by product and service
The information is omitted, because operating revenue to external customers for a single group of products and services
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(Unit: thousand yen)
Related segment
Real estate leasing businessSony Group Corporation

Not disclosed (Note)

Real estate leasing business(Note)

Not disclosed, due to unavoidable circumstances in that consent for disclosure has not been obtained from the lessee.

[Notes on Per Unit Information]
6th fiscal period
From: Sept. 1, 2021
To: Feb. 28, 2022

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

Net assets per unit

108,814 yen

108,993 yen

Earnings per unit

2,983 yen

3,158 yen

(Note 1) Earnings per unit is calculated by dividing net profit by the period’s daily weighted average number of investment units (fiscal period ended
February 2022: 466,286 units; fiscal period ended August 2022: 467,099 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:

6th fiscal period
From: Sept. 1, 2021
To: Feb. 28, 2022
Net profit (thousand yen)Amount not available to common unitholders(thousand yen)
Net profit attributable to common investment units(thousand yen)
Average number of investment units during period(units)[Notes on Significant Subsequent Events]
Not applicable.

- 22 -

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

1,391,360

1,475,197--

1,391,360

1,475,197

466,286

467,099

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
(9) Changes in Total Number of Investment Units Issued and Outstanding
Changes in unitholders’ capital and the total number of investment units issued and outstanding from the incorporation of
SANKEI REAL ESTATE to the last day of the fiscal period under review (August 31, 2022) are as follows:
Total number of investment
Unitholders’ capital (net)units issued and outstanding Remarks(thousand yen) (Note 1)(units)Date
Description
Increase
Increase
Balance
Balance(Decrease)(Decrease)
Incorporation
Nov. 19, 2018
through private
100,000
100,000
1,000
1,000 (Note 2)placement
Capital increase
Mar. 11, 2019
through public
21,928,467
22,028,467
227,238
228,238 (Note 3)
offering
Capital increase
Apr. 10, 2019
through third-party
1,096,433
23,124,900
11,362
239,600 (Note 4)
allotment
Capital increase
Sept. 2, 2019
through public
12,777,138
35,902,038
111,619
351,219 (Note 5)
offering
Capital increase
Sept. 26, 2019
through third-party
638,862
36,540,901
5,581
356,800 (Note 6)
allotment
Capital increase
Sept. 1, 2021
through public
12,287,452
48,828,353
105,047
461,847 (Note 7)
offering
Capital increase
Sept. 29, 2021
through third-party
614,33149,442,685
5,252
467,099 (Note 8)
allotment
Cash distribution inexcess of earnings
Nov. 22, 2021
(7,136)49,435,549
467,099 (Note 9)(contribution
refund)(Note 1) The amount obtained by subtracting the deduction from unitholders' capital from unitholders’ capital.
(Note 2) Investment units were issued at a paid-in amount of 100,000 yen per unit upon the incorporation of SANKEI REAL ESTATE.
(Note 3) New investment units were issued through public offering at an issue price of 100,000 yen (paid-in amount of 96,500 yen) per unit for the
purpose of procuring funds for acquisition of new properties.
(Note 4) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in
amount of 96,500 yen per unit.
(Note 5) New investment units were issued through public offering at an issue price of 118,734 yen (paid-in amount of 114,471 yen) per unit for the
purpose of procuring funds for acquisition of new properties.
(Note 6) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in
amount of 114,471 yen per unit.
(Note 7) New investment units were issued through public offering at an issue price of 121,327 yen (paid-in amount of 116,971 yen) per unit for the
purpose of procuring funds for acquisition of new properties.
(Note 8) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in
amount of 116,971 yen per unit.
(Note 9) A cash distribution in excess of earnings of 20 yen per unit (contribution refund that falls under distribution through the reduction inunitholders’ capital for tax purposes) as the cash distribution for the 5th fiscal period (ended August 2021) resolved at SANKEI REAL ESTATE’s
board of directors’ meeting held on October 15, 2021, and payment of the distribution commenced on November 22, 2021.

- 23 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
3.

Reference Information(1) Information on Price of Assets Under Management, Etc.
i. Investment Status
6th fiscal period(as of Feb. 28, 2022)
Asset group

Asset type

Geographic area
(Note 1)

7th fiscal period(as of Aug. 31, 2022)

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

2,618

2.5

2,618

2.5

-

-

-

-

-

-

-

-

-

-

-

-

71,86867.5

71,70967.3

10,208

9.6

10,193

9.6

8,951

8.4

8,924

8.4

3,923

3.7

3,898

3.7

8,951

8.4

8,924

8.4

3,923

3.7

3,898

3.7

97,570
8,953

91.6
8.4

97,343
9,210

91.4
8.6

106,523

100.0

106,553100.0(Note 1) “Greater Tokyo” refers to Tokyo, Kanagawa, Saitama and Chiba prefectures.
“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.

6th fiscal period(as of Feb. 28, 2022)

7th fiscal period(as of Aug. 31, 2022)

Total liabilities

As a percentage of total
assets(%) (Note 2)
55,696
52.3

Total net assets
Total assets

50,827
106,523

Amount(million yen) (Note 1)

47.7
100.0

As a percentage of total
assets(%) (Note 2)
55,642
52.2

Amount(million yen) (Note 1)

50,910106,553

47.8
100.0

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

- 24 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
ii.

Investment Assets
The following are the assets held by SANKEI REAL ESTATE (real estate or trust beneficiary rights that have real estate as trust
assets; hereinafter, may be collectively referred to as the “portfolio assets”) as of August 31, 2022.

(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
Book value(Note 1)
Asset Property
value
Acquisition date
Property nameLocation
Investment (million yen) (million yen)type
number(Note 4)Price
(Note 2)
ratio
(Note 3)(million yen)(%)
Tokyo Sankei
Chiyoda-ku,
A-1
Building
2,509
2.6
2,618
2,690
Mar. 12, 2019Tokyo
(Note 5)i. 8,600
i. Mar. 12, 2019
Kita-ku,
BREEZÉ TOWER
A-2Osaka-shi,
13.6
12,99918,225 ii. Sept. 3, 2019
ii. 4,500(Note 5)
Osaka
Total 13,100
S-GATENIHONBASHIChuo-ku,
A-3
6,698
6.9
6,671
7,720
Mar. 12, 2019
HONCHOTokyo(Note 5)
Chiyoda-ku,
A-4
S-GATE AKIHABARA
2,055
2.1
2,036
2,710
Mar. 12, 2019
Tokyo
Hibiya Sankei
Chiyoda-ku,
A-5
5,829
6.0
6,067
6,620
Mar. 12, 2019
Building
Tokyo
Hatchobori Sankei
Chuo-ku,
A-6
4,959
5.1
5,007
5,520
Mar. 12, 2019
Building
Tokyo
OfficeKoto-ku,buildings
A-7
Toyo Park Building
3,782
3.9
3,880
3,920
Mar. 12, 2019Tokyo
i. 10,040
Shinagawa Seaside
Shinagawa-ku,
i. Sept. 3, 2019A-8
TS Tower
21.7
21,11519,800ii. 10,900
Tokyo
ii. Sept. 2, 2021
(Note 5)
Total 20,940
Ota-ku,A-9
Omori Park Building
5,400
5.6
5,444
5,490
Sept. 3, 2019
Tokyo
i. 4,200
S-GATE AKASAKA
Minato-ku,
i. Oct. 1, 2020
A-10
5.8
5,642
5,992
ii. 1,400(Note 5)
Tokyo
ii. Sept. 2, 2021
Total 5.600
Miyamae-ku,
Miyazakidai Garden
A-11
Kawasaki-shi,
2,800
2.9
2,844
2,790
Sept. 2, 2021
OfficeKanagawa
Sawara-ku,
Hitachi Kyushu
A-12
Fukuoka-shi,
10,00010.3
10,193
10,300
Sept. 2, 2021
Building
Fukuoka
Subtotal-

83,674

86.6

84,52091,777-

B-1

Hotel Intergate
Tokyo Kyobashi

Chuo-ku,
Tokyo

8,961

9.3

8,924

9,040

Mar. 12, 2019

B-2

Hotel Intergate
Hiroshima

Naka-ku,
Hiroshima-shi,
Hiroshima

3,990

4.1

3,898

4,120

Sept. 3, 2019

Subtotal-

12,951

13.4

12,822

13,160

-

Total

-

96,625100.0

97,343104,937-

Sub assets(Note 1) “Acquisition price” is the sale and purchase price of each real estate and trust beneficiary right stated in each sale and purchase agreement for theacquired assets, rounded down to the nearest million yen. The sale and purchase prices do not include consumption tax, local consumption tax and thevarious expenses required for the acquisition. “Investment ratio” is the proportion of the acquisition price of each portfolio asset to the sum total
amount of acquisition prices, rounded to one decimal place.
(Note 2) “Book value” is the depreciated book value for each portfolio asset as of August 31, 2022, rounded down to the nearest million yen.
(Note 3) “Appraisal value” is the appraisal value with an appraisal date of August 31, 2022, 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,” 50% for “Shinagawa Seaside TS Tower,” and 80%
for “S-GATE AKASAKA”) held by SANKEI REAL ESTATE.

- 25 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
(B)

Overview of Buildings and Leasing
The property name, construction completion, total rental revenue, security and guarantee deposits, total leasable area,
total leased area and occupancy rate of the portfolio assets of SANKEI REAL ESTATE are as follows:
Security andTotal rental
Total leasable
Total leased Occupancy
Construction
guarantee
Asset Property
revenue
area
area
rate
completion
deposits
Property name(million yen)
(m2)
(m2)
(%)
type number(million yen)
(Note 1)
(Note 2)
(Note 4)(Note 5)(Note 6)(Note 3)
Tokyo Sankei
A-1
Sept. 28, 2000
10187
881.69877.0999.5
Building(Note 7)BREEZÉ TOWER
A-2
July 1, 2008
1,024
907
12,146.02
11,697.81
96.3(Note 7)
S-GATENIHONBASHIA-3
Oct. 31, 2018307
307
3,171.83
3,171.83
100.0
HONCHO(Note 7)
A-4
S-GATE AKIHABARA Sept. 29, 2017130
130
1,681.55
1,681.55
100.0
Hibiya Sankei
A-5
June 25, 1992
376
303
3,439.61
3,439.61
100.0
Building
OfficeHatchobori Sankei
A-6
Sept. 1, 1965
310
261
5,594.90
5,594.90
100.0
buildings
Building
A-7
Toyo Park Building June 18, 1991
189
172
4,224.52
3,897.52
92.3
Shinagawa Seaside
Not disclosed Not disclosed Not disclosed Not disclosed
A-8
July 25, 2003
66.3
TS Tower(Note 8)(Note 8)(Note 8)(Note 8)(Note 7, 9)
Omori Park
A-9
May 31, 1993
293
273
7,469.72
7,469.72
100.0
Building
S-GATE AKASAKA
Not disclosed Not disclosed
A-10
July 31, 2015
2,646.48
2,646.48
100.0(Note 7)(Note 8)(Note 8)Miyazakidai Garden
A-11
Feb. 4, 1993
153
144
3,687.53
3,687.53
100.0
OfficeHitachi Kyushu
Not disclosed Not disclosed
A-12
Feb. 29, 1996
26,513.33
26,513.33
100.0
Building(Note 8)(Note 8)Not disclosed Not disclosed
Subtotal (average)
4,322
3,532
93.2
(Note 8)(Note 8)
Hotel Intergate
Jan. 18, 2018
413
206
6,006.53
6,006.53
100.0
B-1
Tokyo Kyobashi
SubassetsHotel Intergate
Oct. 31, 2018
237
118
9,160.15
9,160.15
100.0
B-2
Hiroshima
Subtotal (average)
651
325
15,166.68
15,166.68
100.0
Not disclosed Not disclosed
Total (average)
4,974
3,857
94.2
(Note 8)(Note 8)(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 each portfolio
asset effective as of August 31, 2022, rounded down to the nearest million yen. The amount calculated by annualizing the monthly rent stated in thelease agreement concluded with the end tenant with respect to the portion in the pass-through-type master lease agreement (*2) is indicated when apass-through-type master lease agreement has been concluded for the portfolio assets.
(*1) “Free rent” refers to measures temporarily reducing rent or other amounts for mainly tenants newly moving in which temporarily reduce costs
associated with moving so as to encourage them to move in. “Rent holiday” refers to an agreement on measures temporarily reducing rent orother amount on a regular or irregular basis for a certain period of time during a tenant’s period of occupancy. The same shall apply hereinafter.
Unless otherwise stated, calculations are made without taking free rent or rent holiday into consideration when calculating monthly rent, etc.
in this document.
(*2) “Pass-through-type master lease agreement” refers to master lease agreements that have no rent guarantee.
(Note 3) “Security and guarantee deposits” is the total amount of security and guarantee deposits (including the amount expected to be received based on eachlease agreement, but excluding security and guarantee deposits for warehouses, signboards, parking lots, etc.) based on the lease agreement for eachportfolio asset as of August 31, 2022, 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 leaseagreement has been concluded for the portfolio assets.
(Note 4) “Total leasable area” is the area (excluding area of warehouse, signboard, parking lot, etc.) expected to be leasable based on the lease agreement,
drawing, etc. of the buildings for each portfolio asset as of August 31, 2022, 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 August 31, 2022, rounded down to two decimal places.
With respect to the portion which comes under the pass-through-type master lease agreement, the total area for which the lease agreement has
actually been concluded with the end tenant and for which the lease period has commenced is indicated, rounded down to two decimal places.
(Note 6) “Occupancy rate” is the ratio of total leased area to total leasable area for each portfolio asset as of August 31, 2022, rounded to one decimal place. In
addition, each subtotal and portfolio total figure is the ratio of the sum total of total leased area to the sum total of total leasable area for each portfolio
asset, rounded to one decimal place.

- 26 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
(Note 7) The total rental revenue, security and guarantee deposits, total leasable area and total leased area are the figures equivalent to the co-ownershipinterest (2% for “Tokyo Sankei Building” and 51% for “S-GATE NIHONBASHI-HONCHO”) and the quasi co-ownership interest (45% for “BREEZÉ TOWER,”
50% for “Shinagawa Seaside TS Tower,” and 80% 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.
(Note 9) Agreements have been reached with Sony Group Corporation for the termination of the contract for Shinagawa Seaside TS Tower with termination
dates of March 31, 2022 (7 floors), and March 31, 2023 (14 floors). Of these, termination penalties were received on March 31, 2022, for the 7 floors
with the termination date of March 31, 2022.

- 27 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
(C) Overview of Real Estate Appraisal Reports
The following is an overview of each real estate appraisal report prepared by Japan Real Estate Institute, The Tanizawa Sōgō
Appraisal Co., Ltd. and Daiwa Real Estate Appraisal Co., Ltd. upon being entrusted by SANKEI REAL ESTATE and the AssetManagement Company with the appraisal of the portfolio assets of SANKEI REAL ESTATE. The concerned real estateappraisal reports are the appraising appraisal company’s judgment and opinion at a certain point in time and are not aguarantee of the validity or accuracy of the content thereof, possibility of transaction at the concerned appraisal value, etc.
Furthermore, there is no special vested interest between Japan Real Estate Institute, The Tanizawa Sōgō Appraisal Co., Ltd.
or Daiwa Real Estate Appraisal Co., Ltd. and SANKEI REAL ESTATE or the Asset Management Company.
Overview of appraisal report

Asset
type

Property
Property namenumber

A-1

A-2

A-3

A-4
A-5
A-6
Officebuildings

A-7

A-8

A-9
A-10

A-11

A-12

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

Appraiser

Japan Real
Estate Institute

2,690

2,730

2.3

2,640

2.0

2.4

2,750

Japan Real
Estate Institute18,225

18,405

3.6

18,0003.2

3.8

15,660Japan Real
Estate Institute

7,720

7,860

3.2

7,580

2.9

3.4

6,600

2,710

2,730

3.3

2,690

3.1

3.4

2,440

6,620

6,700

2.8

6,530

2.6

2.9

7,140

5,520

5,700

4.1

5,440

4.2

4.3

5,650

3,920

3,960

3.7

3,880

3.5

3.8

2,990

The Tanizawa
Sōgō Appraisal
Co., Ltd.

19,80021,2003.3

19,200

3.4

3.5

20,700Japan Real
Estate Institute

5,490

5,540

3.7

5,430

3.5

3.8

5,500

Japan Real
Estate Institute

5,992

6,064

3.1

5,912

2.9

3.2

5,248

Japan Real
Estate Institute

2,790

2,810

4.5

2,760

4.3

4.6

2,350

Japan Real
Estate Institute10,30010,400

4.3

10,200

4.1

4.4

11,70091,777

94,099-90,262--

88,728Daiwa Real
EstateAppraisal Co.,
Ltd.

9,040

9,180

3.8

8,980

3.6

4.0

8,730

Japan Real
Estate Institute

4,120

4,160

4.6

4,070

4.4

4.8

4,320

Subtotal

13,16013,340-13,050--13,050Total

104,937

107,439-

103,312--

101,778

Japan Real
Estate InstituteJapan Real
Estate Institute
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
approachincome Cap rate income(Note 1)rate
cap rate(million
approach(%)
approach
(%)
(%)
yen)
(million(million
yen)
yen)

Hotel
IntergateTokyo
Kyobashi
HotelIntergate
Hiroshima(Note 1) “Appraisal value” is the appraisal value with an appraisal date of August 31, 2022, stated in each real estate appraisal report.
(Note 2) The appraisal value, indicated value by income approach based on direct capitalization method, indicated value by income approach basedon DCF method and indicated value by cost approach are the figures equivalent to the co-ownership interest (2% for “Tokyo Sankei
Building” and 51% for “S-GATE NIHONBASHI-HONCHO”) and the quasi co-ownership interest (45% for “BREEZÉ TOWER,” 50% for“Shinagawa Seaside TS Tower,” and 80% for “S-GATE AKASAKA”) held by SANKEI REAL ESTATE.

- 28 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
(2) Capital Expendituresi. Schedule of Capital Expenditures
Of capital expenditures associated with renovation work, etc. currently planned for assets held by SANKEI REAL ESTATE as ofAugust 31, 2022, the following are the major estimated amounts (10 million yen or more). The estimated construction costs
below may include the portion separately charged to expenses in accounting.
Expected construction costTotal
amountAmount ofpayment
duringperiodFrom: Aug. 1, 2022
To: Oct. 31, 2022

16

-

-

Update and maintenance of
air conditioner AHU parts

From: Feb. 1, 2022
To: Feb. 28, 2023

10

-

-

Shinagawa Seaside TS Tower(Shinagawa-ku, Tokyo)

Update of automatic fire
detection equipment

From: Oct. 1, 2022
To: Oct. 31, 2022

29

-

-

Shinagawa Seaside TS Tower(Shinagawa-ku, Tokyo)

Update of disasterprevention facilities

From: Oct. 1, 2022
To: Dec. 31, 2022

32

-

-

Shinagawa Seaside TS Tower(Shinagawa-ku, Tokyo)

Replacement of automatedcontrol parts

From: Nov. 1, 2022
To: Nov. 30, 2022

12

-

-

Shinagawa Seaside TS Tower(Shinagawa-ku, Tokyo)

Update of uninterruptible
power supply system

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

11

-

-

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

20

-

-

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

20

-

-

Name of real estate, etc.
(Location)

PurposeScheduled period

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Conversion to LED lighting forleased space

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Shinagawa Seaside TS Tower(Shinagawa-ku, Tokyo)
Shinagawa Seaside TS Tower(Shinagawa-ku, Tokyo)

Update of clean waterpressurization water supply
pump unit
Update of general service
water pressurization watersupply pump unit

Total
amountalreadypaid

Shinagawa Seaside TS Tower(Shinagawa-ku, Tokyo)

Common area renewal work

From: Dec. 1, 2022
To: Feb. 28, 2023

120

-

-

Omori Park Building(Ota-ku, Tokyo)

Repair of individual airconditioning system on 7th
floor

From: Nov. 1, 2022
To: Jan. 31, 2023

17

-

-

Hitachi Kyushu Building(Sawara-ku, Fukuoka-shi)Toilet renovation work

From: Sep. 1, 2022
To: Oct. 31, 2022

11

-

-

Hitachi Kyushu Building(Sawara-ku, Fukuoka-shi)

Vacuum Circuit Breaker (VCB)
update work

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

12

-

-

Hitachi Kyushu Building(Sawara-ku, Fukuoka-shi)Toilet renovation work for
11F and 13F

From: Dec. 1, 2022
To: Dec. 31, 2022

19

-

-

ii.

Capital Expenditures during the Fiscal Period
Major construction work falling under the category of capital expenditures of 10 million yen or more conducted in the fiscal
period under review for assets held by SANKEI REAL ESTATE as of August 31, 2022, are as follows: For the fiscal period underreview, capital expenditures amounted to 83 million yen and repair expenses separately charged to expenses amounted to
55 million yen for a combined total of 138 million yen of construction works implemented.

Name of real estate, etc.
(Location)

Purpose

PeriodAmount of payment(million yen)

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Update of high-rise billing
WHM

From: Oct. 5, 2021
To: Mar. 10, 2022

14

Hitachi Kyushu Building(Sawara-ku, Fukuoka-shi)

Update central monitoring
panel server and client PCs

From: Mar. 22, 2022
To: Mar. 22, 2022

13

Other

55

Total

83

- 29 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2022
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 long-term
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 carriedforward(thousand yen)

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

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

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

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

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

130,466

217,842

175,880

209,678

262,349

128,187

59,29359,29385,56759,80140,812

101,255

25,49632,89519,019217,842

175,880

209,678

262,349

303,132- 30 -