Fiscal Period Ended October 2023 18th Financial Results Briefing Script and Q&A Summary
Date and Time : Thursday, December 21, 2023 5:00pm-6:00pm

Event Summary[Speakers]

Number of speakers : 5
Toru Abe
Atsuhiro Kida
Nobuyoshi Sato
Kimiyoshi Otani
Sadaaki Takeuchi

President and Representative Director
Director, in charge of Accounting
Department and General Affairs Department
Director, in charge of Investor Relations
Department and Finance Department
Director, in charge of ESG Promotion
Department
Director and General Manager of Investment
Operations Division1

Abe: Hello, everyone. I am Abe from Sekisui House Asset Management. Thank you very much for attending
today's briefing on the financial results for the 18th fiscal period of SHR.
I will explain the details of the financial results.
First, please see page three of the document. Here are the operational highlights and future initiatives.
First, the distribution per unit for the 18th fiscal period ended October 2023 was 1,976 JPY, an increase of 195
JPY from the previous period and an increase of 81 JPY from the publicly announced forecast. The distribution
per unit forecast for the 19th fiscal period ending April 2024 and the 20th fiscal period ending October 2024
are 1,835 JPY and 1,732 JPY, respectively.
The long-term EPU has been reported since the previous period as earnings per unit, which is calculated bydeducting gain on disposition and asset management fees related to disposition from net income and adding
ATA to it. The forecast has been a decrease mainly due to lower earnings from office buildings in Tokyo. We
believe that drastic measures must be taken to restore this long-term EPU in the future.
Please see the table below.
First, regarding external growth, in terms of asset replacement, we have already signed a contract in the 18th
fiscal period to dispose of Gotenyama SH Building over 10 fiscal periods, and the first installment disposition,
10%, has been completed. In addition, Sha Maison Stage Kanazawa Nishiizumi located in Kanazawa has also
been sold due to deteriorating profitability, or rather, the lack of future expectations. The acquisition of one
residential property, Esty Maison Noborito in Kawasaki City, was completed.

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In the 19th fiscal period, the second installment disposition, 10%, in the Gotenyama SH Building is scheduled.
We will acquire three residential properties and one office property in the 19th fiscal period, as announced
today.
As for our future policy and strategy, first of all, we are currently having a very difficult time with leasing, thus
we intend to dispose of Garden City Shinagawa Gotenyama. Based on this, we have decided to change ourportfolio development policy in light of the current office leasing situation and market conditions. Our
acquisition policy will be to use our sponsor pipeline to make residential properties our primary asset and to
focus on residential properties.
Next, regarding internal growth. First, in office buildings, the occupancy rate at the end of the period was
94.4%, up 0.8% from the end of the previous period. The occupancy rate at Akasaka Garden City recovered to93.5% due to new contracts and floor space expansion, while at Garden City Shinagawa Gotenyama, there
were two new contracts, but the occupancy rate remained almost unchanged. As for Garden City Shinagawa
Gotenyama, its appraisal value dropped significantly to 66.7 billion JPY from 88 billion JPY at the end of theprevious period.
Next, in terms of residences, occupancy rate was 97.3% at the end of the period. We continued to maintain asolid 97%, and the change in rent rate at the time of new contracts rose to a positive 4.2%. The single type inTokyo 23 wards has also risen to a positive 1.9%, which means that we are entering a phase where we aremoving from recovery to strong performance overall. The recovery of the single type in Tokyo 23 wards has
been very strong, and occupancy in major cities across the country continues to be strong. We intend tomaintain and sustain high occupancy rates while increasing rents and acquiring non-refundable deposit toimprove earnings.
In terms of hotels, the St. Regis Osaka, which we currently own, has seen a return of inbound demand, and its
performance is recovering. We would like to continue to consider the details of the contract after renewal
while basing our decision on the continuation of the fixed master lease contract.
I will explain the financial part later.
Finally, on the topic of ESG, for the first time ever, we were selected as a constituent for DJSI Asia/Pacific.

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Now please see page five.
I will explain the financial results for the 18th fiscal period ended October 2023 and the factors behind thechange from the previous period on a per unit basis.
First, as stated in the center of the document, the gain from the transfer of 10% interest in the Gotenyama SH
Building and Sha Maison Stage Kanazawa Nishiizumi resulted in a positive 250 JPY.
On the left, as for real estate property-related operating income, office buildings posted a negative 13, mainly
due to a decrease in rent revenue from Garden City Shinagawa Gotenyama and an increase in property tax
and city planning tax. For residences, there was an increase in property tax and city planning tax, but this wasoffset by an increase in rent revenue due to higher rents, resulting in a positive 8 JPY. The hotels posted anegative 1 JPY. The total of these factors resulted in a negative 6 in real estate property-related operating
income.
SG&A and other expenses were negative 65 JPY, mainly due to an increase in the asset management fee
portion from the asset transfer that occurred in the current period and an increase in tax effects. As a result,the distribution per unit for the 18th fiscal period was 1,976 JPY, up 195 JPY from the previous period.
The next page shows the P/P change and the change from the announced forecast for each asset, and thefactors behind the change, which we hope you will review later.

4Now, please proceed to page seven, where you will find the forecasts for the 19th fiscal period ending April
2024 and the 20th fiscal period ending October 2024.
In the 19th fiscal period, the acquisition of Shinjuku Hirose Building announced today is expected to bepositive 13 JPY, but the transfer of equity in Gotenyama SH Building reduced revenues, and the prolonged
period of two unoccupied lots in Tokyo put downward pressure on revenues, resulting in a negative 60 JPY.
For residences, we expect a negative 7 JPY for leasing-related expenses for three new properties to beacquired in the 19th fiscal period. Although revenue from existing properties is expected to increase,management fees and repair costs are expected to increase, resulting in a negative 20 JPY, for a total of
negative 26 JPY.
In SG&A expenses, we expect an increase in asset management fees and interest expenses, resulting in anegative 32 JPY. We expect a gain of 224 JPY on the transfer of the second 10% portion of the Gotenyama SH
Building, resulting in a forecast of 1,835 JPY, a negative 141 JPY compared to the 18th fiscal period.
For the following 20th fiscal period, the total is expected to be negative 87 JPY due to a decrease in rent
revenues from office buildings and a decrease in rent revenues from the sale of the equity interest in theGotenyama SH Building. For residences, we expect a contribution from properties acquired in the 19th fiscal
period and higher rents from existing properties, but we expect a negative 17 JPY due to increases in property
tax, city planning tax, land lease fees, and depreciation, resulting in a negative 106 JPY in real estate propertyrelated operating income.
The portion of the gain on disposition of the Gotenyama SH Building is expected to be positive 3 JPY comparedto the 19th fiscal period, and the distribution per unit is expected to be 1,732 JPY.

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We intend to increase the ratio of highly stable residential properties by replacing properties in the future inan effort to bottom out.

Now, please proceed to page 10. This is about external growth.
First, Garden City Shinagawa Gotenyama.
As for the occupancy rate, if there are no new contracts or floor space expansion, the occupancy rate is
expected to fall below 50% because a major tenant is scheduled to vacate the building at the end of July nextyear, as announced. We are still leasing and expecting the occupancy rate to be slightly higher, but weanticipate very tight occupancy rates.
Regarding the appraisal value at the end of the period, based on the lower rent level in the new contract thistime and at the same time the decline in asking rent and others in surrounding buildings, the appraisal value
was 66.7 billion JPY, a decrease of 21.3 billion JPY from 88 billion JPY at the end of the previous period. This
amount is 2.7 billion JPY less than the book value at the end of the period.
Since the continued ownership of this property may be a factor in pushing down the long-term EPU, basically
we intend for a property disposition.

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Then, see page 11. This is about the change in portfolio development policy.
The portfolio development policy had been set at around 45% for residential properties and 45% for officebuildings, respectively, but this target has been changed to around 65% for residential properties and 30% foroffice buildings due to the uncertainties in the supply-demand balance for large office buildings, the recoveryof residential properties to the pre-COVID level and the fact that the pandemic did not have the same impact
as office buildings, and in addition, the sponsor pipeline continues to have a large number of properties in theresidential pipeline.
We intend to build stability of income by developing our assets with a focus on residential properties, which
is our sponsor group's strongest area of expertise.

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Next is the sponsor pipeline.
The total amount of the pipeline is approximately 250 billion JPY. Of this amount, approximately 100 billion
JPY is for residences and 150 billion JPY is for offices and other facilities.
Of the major developments listed on the right, 12 properties in the Prime Maison series of rental
condominiums have been completed and seven properties are under construction. In addition, the properties
marked with ZEH to the left of the property name were built as ZEH condominiums, and we expect that futureacquisitions will contribute to our GHG emission reduction and net-zero goals.
Moreover, although not included in the total amount of the pipeline, Sekisui House Real Estate companies arealso continuing to develop residential properties, and we will leverage the sponsor pipeline to achieve
external growth, including asset replacement.

8This is an overview of the asset replacement announced this time.
Starting from the fiscal period ended October 2023, we will transfer 10% of the equity in the Gotenyama SH
Building each fiscal period. For the two transfers in October 2023 and April 2024, we have decided to purchasethe four properties listed on the right side as asset replacement.
The four properties (to be) acquired are also listed on the next page.

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The three Esty Maison residential properties on the left are all newly built and unoccupied. From today
onward, we will promptly start leasing the properties in order to make them profitable as early as possible
from the scheduled delivery date in March.
On the right side, Shinjuku Hirose Building is a 38-year-old office building that has maintained high occupancy
over the years, with the current core tenant having occupied the building since 1998. Although this is a topic
for the future, we believe that the site has the potential to be reconstructed into an office building or eveninto a condominium.

10Trends of appraisal value.
The total appraisal value at the end of the 18th fiscal period was 627.5 billion JPY, as a result of the 21.3 billion
JPY decrease in the Garden City Shinagawa Gotenyama, which we reported earlier, and the transfer of theinterest in the Gotenyama SH Building and Sha Maison Stage Kanazawa Nishiizumi.
In residences, the appraisal value increased again this period, mainly due to a 0.1-point decrease in the cap
rate.
Unrealized gains amounted to 96.5 billion JPY, down 16 billion JPY from the previous period.

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This is the distribution per unit and NAV per unit.
The NAV per unit was 86,983 JPY, a decrease of 3,938 JPY from the previous period, due to a decrease in theappraisal value of Garden City Shinagawa Gotenyama.

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Next, I will explain internal growth. Please proceed to page 18.
First of all, regarding the performance of the office building as a whole, the results at the end of the 18th fiscal
period are circled in red.
The overall occupancy rate was 94.4%, up 0.8% from the previous period due to backfilling at Akasaka Garden
City.
The bottom table shows renewal results and trends in leases. In the 18th fiscal period, there was one vacatedlot, while there were five contracts for new and additional floor space. However, the rate of decrease in rent
was significant at negative 4.1%.

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Next, I would like to delve a little deeper into the situation of Garden City Shinagawa Gotenyama and Akasaka
Garden City, where vacant lots have occurred.
First is Garden City Shinagawa Gotenyama.
Two new lots of 1,166.26 square meters were contracted for this property in the 18th period. We have almost
backfilled the decrease that occurred at the end of the previous period, and the total vacant lots at this timeare 6,053.86 square meters.
In the 19th period, new contracts for two lots of 1,870.66 square meters have been concluded, while vacancies
and reduction of two floor spaces of 1,852.36 square meters have already been confirmed.
With regard to leasing, the number of inquiries and previews have both increased, leading to concrete
negotiations. Although there is a trend toward slightly larger floor space being requested, we expect that it
will take a considerable amount of time to backfill the space, including that of the large tenant who will vacatein July 2024.

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Next is Akasaka Garden City.
Although one tenant moved out during the 18th fiscal period, three new contracts were signed, resulting in
an increase of 1,328.12 square meters in terms of increase/decrease, leaving a total vacancy of 1,412.13
square meters at the end of the 18th fiscal period.
Contracts for two lots of 395.04 square meters have been concluded in the 19th period, and the occupancy
rate has recovered to the 95% level. We will continue to negotiate with highly concrete companies and aim
to restore 100% operation as soon as possible.

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Now, please see page 21. This page includes information on the operation status of other buildings owned in
the Osaka and Nagoya areas. All continue to maintain 100% occupancy.
In Osaka, there are concerns that the rent market will weaken due to the continued supply of new large-scale
properties. We will aim for stable management of the three properties we own while strengthening tenant
relations.

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Rent status.
This is the status of rent revisions and rent gaps. As a result of the rent revision in the 18th fiscal period, we
maintained rents for 58.7% of all tenants, increased rents for 25.1%, and decreased for 16.2%. The rent change
rate was a negative 4.1% due to the reduction in rent at Garden City Shinagawa Gotenyama.
The middle and lower rows show rent gaps in the Tokyo and Osaka areas, respectively, with no change intrend during the current period. In the Tokyo area, the rent gap is positive 25.9%, and in the Osaka area,
negative 12.7%. In the Tokyo area, we will continue to focus on quickly backfilling and increasing occupancy
rates with rent reductions in mind. In the Osaka area, we would like to focus on negotiating as much as
possible for an increase while, of course, placing emphasis on occupancy.

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This is the market trends for your reference.
In the Tokyo’s business districts, vacancy rates have remained almost unchanged since 2021, and averagerents, which have fallen, have declined only modestly.
As for the Osaka’s business districts, vacancy rates have slightly decreased. Rents are also flat.
I will now explain about residential properties from the next page onward.

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First, in terms of portfolio status, the average occupancy rate for the residential portfolio was 97.2% in the
18th fiscal period and recovered to 97.3% at the end of the fiscal period.
As for the occupancy rate of single type in Tokyo 23 wards, the lower graph shows that the occupancy rate
has recovered to 96.5% as of the end of October.
As Tokyo continues to see a strong population inflow and an increase in the jobs-to-applicants ratio, we intend
to further focus on improving occupancy rates and increasing rents in the Tokyo 23 wards.

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See the next page. Rent status.
Rent trend in new contracts and in renewal contracts are shown here. On the left side, regarding the rent
ratio in new contracts, the overall change in rent rate was a positive 4.2%, setting a new record for thepercentage increase at the end of a fiscal period for SHR.
On the right side, in the renewal contracts, the renewal rate is 85.9%, and we maintain a positive figure,although only slightly, of 0.3% in the change in rent rate.
The acquisition rate of non-refundable deposit has also increased, albeit by 1.5 percentage points, from theprevious period to over 55%.
The rate of renewal has increased to 88.7%.
We will continue to make every effort to further increase earnings from residences.

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On the next page, we have described the rent trend in new contracts by room type for the entire residence
and for Tokyo 23 wards.
In both cases, the family type at the bottom of the table rose sharply, followed by the compact type in the
middle.
The balance between supply and demand has a large impact, but the extent to which we are able to increase
rents for single-type properties will be a major factor in our future growth, and we will work with each PM
company to increase revenues by balancing occupancy rates and rent increases.

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Here, we have included data showing the population inflow to the Tokyo 23 wards and the jobs-to-applicantsratio, which we discussed earlier, up to the most recent period for your reference.

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The next page shows examples of value-enhancing construction work performed in the current fiscal period.
In order to increase rents, we believe that a certain amount of value enhancement is also necessary, and wewould like to systematically and continuously implement these measures so that we can reduce downtime
and increase rents at the same time.

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Now, the operation status of the hotel.
Currently, we own one hotel, the St. Regis Osaka in Osaka, which is also experiencing stable operations thanks
to continued inbound demand. However, the variable component revenue, which is paid on profits above acertain level, has not yet occurred at this time.
As you can see from the graph on the right side of the document, the number of Chinese visitors to Japan,
looking at the last four months, is about 30% compared to 2019.
We have the current master lease agreement in place, but I think the key to the hotel's further improvementin the future will be the increase in the number of Chinese tourists. We would like to have a little hope here.

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Next, I will explain the finance. Please see page 31.
As you can see, the financial indicators are listed as of the end of the previous fiscal period and the end of thecurrent fiscal period.
The average interest rate was 0.61%, 3 basis points higher than as of the end of the previous period.
The most recent financial activities are shown on the right. Basically, we have been implementing green
finance, and we have been able to reduce the interest rates of borrowing, albeit slightly.
Although interest rates are expected to rise further in the future, we will continue to conduct our operations
while taking measures to minimize cost increases as much as possible while also incorporating short-termborrowings and some floating rates.
The LTV on total assets at the end of the current period was 45.2%. If the ratio were to increase to 47%, thecapacity to acquire properties would be approximately 20 billion JPY.

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We have reviewed our LTV control policy this time, and we will operate setting the ratio at 45% to 50% cruising
range.
It is assumed that future asset replacement will result in a larger proportion of more stable residential
properties. However, we do not intend to raise LTV immediately, but rather aim to control it appropriately
while also keeping an eye on rising costs.

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Finally, I would like to introduce ESG. See page 34.
Measures for addressing climate change. First, this is the status of GHG emission reduction.
We have reduced 50.7% compared to the mid-term goal of a 42% reduction by FY2030. In addition, as for theenergy consumption shown in the lower right-hand corner, we have reduced 8.3% compared to the target of
10% by FY2028.
The analysis using CRREM, which is shown in the lower left-hand corner, was performed only on officebuildings one year ago. This year, we have analyzed the portfolio as a whole. Therefore, many residential
properties were included.
As a result, the target pathway has been replaced by a stricter curve than before, but we can see that thepathway will not be met unless further GHG emission reductions are made. The results of this analysis will be
used to examine business strategies, including property renovations and sales, and to firmly establish a roadmap for achieving net zero.

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The next page is about the acquisition status of green certifications in the portfolio.
The ratio has progressed from 78.9% at the end of the previous period to 82.8% at the end of this period. We
will continue our efforts to achieve our target KPI of 70% or higher.
That is all I have to say.
As I have explained, leasing of Garden City Shinagawa Gotenyama has taken time, and earnings havedeteriorated due to a drop in rent levels.
Meanwhile, the residences recovery has been very strong. In order to achieve the results of recovering,
maintaining, and improving the profitability of the entire portfolio, including asset replacement, we willcontinue to cooperate with the sponsor group and strive to maximize value for our unitholders while also
extensively examining new measures. We look forward to your continued support.
Thank you for your attention.

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Question & Answer[Q]: The first point is about the sale of Garden City Shinagawa Gotenyama. Could you give me an outlook on
the accuracy and price range? I would also like to know what you think about the overall structure of the sale,including whether you will take any measures to deal with the possibility of a loss on the sale, based on the
new appraisal.
The second point is about the portfolio development policy, which is to make residential properties the main
asset in the future. I would like to know what kind of asset you consider residential properties to be and how
you intend to invest in it. As in the past, is stability still the selling point of the asset? Or now rents are rising,
and will you continue to develop the residential properties as a growth asset that can aggressively raise theunit rent price even if you have to take some risk? Please explain your thinking on the future.
Abe [A]: Regarding the first one, the sale of Garden City Shinagawa Gotenyama, we have already made adecision on the sale of the property and have already started the process. However, we understand that theasset value of the property is very large and that the current office market environment has made prospective
buyers cautious.
So far, the appraisal has significantly dropped this time, and I believe that the rent level was the biggest factor
here. At the level up to the previous period, there were vacancies, but the average rent in the building wasstill above 26,000 JPY. As we continue leasing in this context, the reality is that the rent is now around the
20,000 JPY level. This time, the assessed rent has been lowered to 22,000 JPY level, resulting in such a price.
We believe that each prospective buyer has his/her own point of view, including the future use of the property,
etc. Therefore, we are certain that the amount of value assessed from continuous appraisal will be one of theguidelines.
If we were to proceed with the sale on that basis, as I mentioned earlier in my explanation, our book value atthe end of this fiscal period is 69.4 billion JPY, which means that even if we were to sell at the appraisal valuelevel, we would incur a loss on the transfer. My opinion at this point is that we should proceed even if that isthe case, so we must take measures to mitigate the impact on unitholders as much as possible.
It is difficult to give specific details here, but we believe it is necessary to consider using the proceeds fromthe sale of another property, distribution in excess of earnings, and the purchase of our own investment units
using the proceeds from the sale.
Second, regarding our policy on residential properties, after almost three years of the pandemic, there havebeen many changes in each of our assets. SHR has been managing three types of properties: residential, officebuilding, and hotel. As a result, residential had less volatility. As I mentioned earlier in my introduction of thepipeline, the sponsor group's greatest strength is in the residential properties, and our first priority is to keep
the ratio with low volatility.
As to your question about whether we are looking for stability or growth, we are currently in a very strong
situation due to the impact of the pandemic, and the high growth potential is being discussed. We need tomake sure that we grow this part even into next spring.
As a real estate investment trust, I always strongly believe in my operation that the first priority is to achieve
stable distributions. As for residential properties, in addition to their growth potential, they must also be
stable. Especially in the Japanese market, they have less volatility.

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The rate of increase in good times may not be as large as in other countries, but we have experienced thatthe rate of decrease in bad times was also very small.
This is the reason why we decided to raise the ratio in residence to 65%.

[Q]: I have a major question regarding the Garden City Shinagawa Gotenyama sale policy. If you were to sell
the property, because of the large amount of money involved, and if nothing is done, the long-term EPU would
drop even more. The president mentioned earlier that you are going to increase the long-term EPU and alsomentioned earlier that one of the things you are considering is to purchase your own investment units.
That said, I don't think that's enough. You mentioned earlier that in residential properties, there is about 100
billion JPY in the sponsor pipeline, so if you sell the Garden City Shinagawa Gotenyama, is there a possibilityof a big deal like buying the entire 100 billion JPY?
Also, if you are going to elevate the long-term EPU, I believe that you need to ensure a solid yield as a cap
rate, so what is the cap rate you are looking at for acquisitions? Is it about 3.5% or so as announced today, or
do you want 4%?
Also, would you be willing to raise the loan-to-value accordingly, to raise it if it is 100 billion JPY? You
mentioned earlier that the loan-to-value range is also elevated, so I would like to ask you about that part now.
Abe [A]: As you mentioned, if the sale goes through, it will bring in a significant amount of cash, so eventhough profitability is declining now, the EPU cannot be covered without properly compensating for the
portion that is being earned, so I think the first thing to do is to make sure that we utilize the pipeline well.
Today, we announced the acquisition of three new residential properties from an outside source, and we areaware that the number of residential properties is small and the price of properties that have come on themarket is very high. Taking that into account, first we would like to make a firm commitment to the sponsor
pipeline, as ZEH properties are expected to appear across the board in the near future.
The cap rate will naturally vary depending on the location of the property and other factors, so if the property
is located in the center of the Tokyo 23 wards, even if it is from a sponsor, the procurement cost will probably
be quite high for the finish, and as we have always said, our policy is to maintain a yield of 3% on an acquisition
price basis, which can be used for distributions after depreciation.
Of course, we would like to include properties that can generate a solid 4% on the surface, but this will bedifficult to achieve in the city center for some time to come. Therefore, we would like to focus our attention
on some of the regional cities, or rather, the cities where we have been holding properties.
Regarding loan-to-value, we have already had hearings and communication with the rating agencies, and they
have assured us that there is no problem with the rating. However, this is also a story that will lead toincreased costs, so we have been telling you that we would like to stabilize in the mid-45% range, but wewould like to be a little more flexible and may be able to use up to 47% or 48%, depending on the situation.
We do not intend to raise it unnecessarily.
We also believe that it is very important to keep and raise the ability per unit. We should work on measuresthat will bring this closer to reality after the sale is finalized, and we would like to explain this to you as we
proceed with each case one by one.

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[Q]: The first point is on page 29 of the 18th financial results briefing materials, where the St. Regis Osakacontract is up for renewal. Currently, before the contract is renewed, this variable component revenue has
not yet accrued at this stage. Is this still quite far away? Currently, there is still a divergence, but how much
more time will it take to generate revenue? If it gets closer, it will probably have some impact on futurenegotiations. I would like to ask for some additional information on the situation.
Secondly, there is an older building, Shinjuku Hirose Building, which is a bit different from the other buildingsin this acquisition because it is not a residential property. What is the potential of this building? For example,
it is relatively close to the redevelopment area, and I am sure that it will be in operation for a while, but for
example, is there a possibility of a fairly high exit as a redevelopment seed site in years to come, or is there
an unutilized current floor area ratio, etc.? I would like to ask you about the upside of this.
Abe [A]: First of all, as for the St. Regis Osaka's variable component revenue, occupancy and ADR arerecovering well, but growth in other areas, such as non-accommodation areas, is not yet there. The variable
component revenue portion, even when it was good, was 8 million JPY per term, so it is not that large, but wehave not yet reached that level. Whether that part of the results will be available, we have been doing
calculations based on the results of a one-year period, and as of this current time, we are not back to thatsituation.
In terms of the type of contract, we are not in a situation to be able to take that part of the contract in 2024.
As I explained earlier in the materials, probably we will be able to take more proﬁt mainly from group travelers
from China, and the fact that they are coming back will lead to a very large potential.
Regarding the acquisition of the Shinjuku Hirose Building, it stands on the corner of Yotsuya 4-chomeintersection and has very high visibility. Although it has not been the type that SHR would directly purchase,the transfer of the Gotenyama SH Building will continue intermittently in 10 installments, so we will have toacquire assets for that portion because otherwise our earnings will fall. Also, when we look at the current
Tokyo office market after the pandemic to date, specializing in and concentrating our attention to large scaleis still a very risky thing to do. We have first-hand experience with that. Therefore, this year, we have made it
our policy to consider medium-scale buildings that can contribute to the operation, and we were fortunate
enough to purchase this property.
I believe that the attraction is its location. Also, although we do not have a complete understanding of thebuilding's age, we know that many tenants have been here for a very long time, and the current anchor tenant
has been here since 1998. It is a place that has been used continuously, with some of the interior being
tweaked in the most recent years. We believe that the building will continue to be occupied by tenants forsome time to come, which was one of the factors that led to our decision to acquire the property.
In the explanation, I also talked about the potential for redevelopment in the future, and although there arequite a few old buildings in the surrounding area, we believe that demand for residential and small-scale officebuildings can be expected as reconstruction progresses little by little.
In terms of whether the floor-area ratio is in excess or not, the site is not that large, so it would be difficult toreconstruct the property by adding more floor space, but we have done a thorough volume check in the caseof rebuilding or, in essence, new construction at the acquisition stage. We have made the decision to purchasethe land based on our judgment that it has the potential to be utilized in the future.

[Q]: First, although it may be difficult to express directly, since you mentioned that the Garden City Shinagawa
Gotenyama property is already in the process of sale, could you give us some kind of indication of the deadline
for this?

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Second, regarding the DPU and EPU. Six months ago, I think the DPU was set at 1,800 and the EPU at 1,500,
in the form of a target, or [inaudible]. Is this still alive today? Or the composition of this portfolio by use has
been changed dynamically as a result, so once the 1,500 and 1,800 targets are withdrawn, and another goal
will be discussed at a later date? This is the second point.
Abe [A]: Regarding the Garden City Shinagawa Gotenyama disposition, I must admit that we are not yet in aposition to give you any specifics, including a deadline. Although we will gradually learn the level and timingof specific exchanges and negotiations, I am sorry to say that we are not in a position to tell you at this time.
Then, we are looking at 1,800 JPY and 1,500 JPY for the DPU and EPU. Although we did not include them again
in this document, we would like to continue to target the EPU of 1,500 JPY and DPU of 1,800 JPY at this time.
While there would be a possibility that we will need to review this part of the plan as major asset replacements
take place, basically, we would like to continue our policy of achieving the 1,500 JPY and 1,800 JPY targets,
while weaving in the measures I mentioned earlier, with our eyes on the targets.
[END]______________

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