January 27, 2017

http://www.sekisuihouse-reit.co.jp/en/

Fiscal Results Briefing
0

4th Fiscal Period Ended October 31, 2016

Disclaimer
This document is provided for information purposes only and is not a solicitation for investment, nor a recommendation or invitation to make specific transactions.
We caution readers to undertake investment decisions of their own volition.
This document is not a disclosure document or report based upon the Financial Instruments and Exchange Act, the Act on Concerning Investment Trusts andInvestment Corporations, public listing regulations of the Tokyo Stock Exchange or other related laws or regulations in Japan.
This document includes charts, data and other information prepared by Sekisui House Investment Advisors, Ltd. (the “Asset Management Company”) based ondata, indices and other information disclosed by third parties, in addition to statements related to Sekisui House Reit, Inc. (the “Investment Corporation”).
Statements on analysis, judgments and other opinions concerning those charts, data and other information of the Investment Corporation or the AssetManagement Company as of the date of this document are also included.
This document is prepared based on accounting policies in Japan, unless otherwise specified.
The contents of this document have not been audited and their accuracy and completeness are not guaranteed. Analysis, judgments and other opinions of theInvestment Corporation or the Asset Management Company only reflect the views of the Investment Corporation or the Asset Management Company as of thedate of the document. Therefore, other views and opinions may exist and the Investment Corporation or the Asset Management Company may change its views in
the future.
The figures under the same item of other disclosed materials may differ from figures presented in this document due to different rounding of fractions and such.
This document includes forward looking statements with respect to the future performance, plans, managerial goals and strategies of the Investment Corporation.
These statements are based on assumptions of future events or trends of the business environment and there is no assurance that these assumptions are correct.
The actual results may differ significantly due to various factors.
While the Investment Corporation takes reasonable care in the preparation of this document, it does not guarantee the accuracy and completeness of its content.
Readers are also cautioned that the contents of this document may be changed or deleted without prior notice.
The Investment Corporation or the Asset Management Company accepts no responsibility for the accuracy of data, indices and other information disclosed bythird parties.
For the convenience of preparing graphs, the dates indicated herein may differ from actual business dates.
Making a copy of, or appropriation of, the content contained herein without prior permission is prohibited.
This English language document was prepared solely for the convenience of, and reference by, overseas investors. The Investment Corporation gives nowarranties as to its accuracy or completeness.
The material containing the information required under Article 23 (1) and (2) of the AIFMD is available at http://sekisuihouse-reit.co.jp/en/ir/library.html.

Inquiries
Asset Management Company: Sekisui House Investment Advisors, Ltd.
Financial Instruments Business Operator: Director-General of the Kanto Finance Bureau (Kinsho) No. 2791
TEL +81-3-6447-4870（main）

1

Contents

Appendix

About Sekisui House Reit, Inc.
・Executive Summary

3・Financial Results and Forecast

22・Growth Strategies Utilizing Sekisui House’s Support

5・Balance Sheet

23

・Management Performance since IPO

7・Statement of Income and Retained Earnings

24

・Portfolio Summary (as of December 14, 2016)

8

・Entire Portfolio (as of October 31, 2016)25

・Outline of Portfolio

9・Overview of Appraisal

26

・Portfolio Map and Growth Potential of the Area

11

・Types of Lease Agreement

27

・Portfolio Development Policy

12・Structure of SHR

28

・External Growth

13

・Unitholders Composition

29

・Urban developments undertaken by Sekisui House

14

・Governance System

30・Internal Growth15

・Asset Management Company (as of January 27, 2017)31

・Financial Results

16

・Change in Unit Price

32

・Interest-Bearing Liabilities (as of October 31, 2016)17

・Strategy for Future Growth19

・Our Growth Strategies

20

2Executive Summary
Characteristics of Sekisui House Reit, Inc. (“SHR”)
Characteristic 1

 SHR’s sponsor is Sekisui House, Ltd. (“Sekisui House”), one of

the leading homebuilders in Japan.
 Expanding asset size by utilizing pipeline support from Sekisui
House and reducing risk of portfolio concentration by entering
into fixed-rent type master lease agreement with Sekisui House.
Characteristic 2

 SHR is a diversified REIT focusing mainly on office buildings,

retail properties and hotels (“Commercial Properties”).
 Investing in Commercial Properties located in major

metropolitan areas; Greater Tokyo (59.6%), Osaka area (36.8%)
and Nagoya area (3.5%) (acquisition price basis).

Current AUM(aggregate acquisition price)

JPY 179.5 bil

Current Portfolio(asset type)

Office Buildings
100%
Current Portfolio(area)

Tokyo, Osaka & Nagoya
100% Investing in Prime Properties featuring “strategic locations” and“high quality”.
 All 6 properties have been recently built and 4 properties have arating of 4 or 5 stars under the DBJ Green Building Certification
system.
Characteristic 3

Current Portfolio(features)

Prime Properties
100% Strong relationships with major domestic financial institutions.

firstte) Money amounts less than the indicated figures are rounded down and percentage figures are rounded to the nearest first decimal place otherwise indicated in this document. The same shall apply hereinafter.

3

Executive Summary
Profile of Sekisui House Reit, Inc.
Corporate Profile
Trade name
Asset management company
Sponsor

JPY 55.6 bil JPY 51.5 bil JPY 23.1 bil JPY 38.6 bil JPY 4.4 bil JPY 6.35 bil/NAGOYA/OSAKA/OSAKA/TOKYO/TOKYO/OSAKA

Owned Assets
Aggregate acquisition price
Number of properties

JPY 179.5 bil
6 properties (6 office buildings)

Distributions
Fiscal period ends
Actual for 4th fiscal period
Forecast for 5th fiscal period
Forecast for 6th fiscal period

April and October of each year
JPY 2,596 per unit
JPY 2,640 per unit
JPY 2,590 per unit

Financial information
Total interest-bearing liabilities
Unitholders’ capital
Number of investment units
issued and outstanding
Long-term issuer rating

Sekisui House is also the mainsponsor of
Sekisui House SI Residential
Investment Corporation

Sekisui House Reit, Inc. (securities code: 3309)
Sekisui House Investment Advisors, Ltd.
Sekisui House, Ltd.

2,458

2,477

2,596

2,640

2,590

1,603
1st FP DPU 2nd FP DPU 3rd FP DPU 4th FP DPU 5th FP DPU 6th FP DPU(actual)(actual)(actual)(actual)(forecast) (forecast)Highlight

JPY 77.3 bil
JPY 100.0 bil

SHR has been included in the
FTSE EPRA/NAREIT Global Real Estate Index Series
from September 19, 2016.

894,000 units
AA- (stable) [JCR](Note) The figures are as of December 31, 2016.

4

Growth Strategies Utilizing Sekisui House’s Support
Strength and Track Record of Sekisui House’s Development Business■ Sekisui House’s Corporate Profile and Business Strategies
About Sekisui House

Priority strategies for each business modelSekisui House’s Corporate Profile (As of January 31, 2016)
Corporation Name : Sekisui House, Ltd.
Date of Establishment : August 1, 1960
Capital Stock : JPY 202,591.20 million
Cumulative Number of Houses Built : 2,284,659 houses

Built-to-Order Business・Strengthening sales of mid-range and high-end products by enhancing value-added proposals
・Strengthening sales of multifamily housing by enhancing three-and four-story houses
・Reinforcing sales of Green First Zero・Promoting sales for elderly housing with supportive services

Supplied Housing Business・Strengthening the large-scale renovation for detached houses, rental housing, and condominiums
・Strengthening the brokerage business for sales of detached houses and rental housing
・Promoting Sum Stock (The Provision of Quality Housing Stock Association) business・Strengthening the block leasing of elderly housing with supportive services

How Sekisui House became involved in the field of J-REIT
Since 2005, Sekisui House entered the J-REIT field by acquiring anequity stake in Japan Excellent Asset Management Co., Ltd., theasset manager for Japan Excellent Inc.（The capital ties havedissolved already.）.

Development Business・Creating quality communities to promote sales in the Houses for Sale Business・Bolstering exit strategies through Sekisui House Reit, Inc.
・Strengthening brand building in the Overseas BusinessIn 2010, Sekisui House acquired 75% of Joint Capital Partners Co.,
Ltd., the asset manager of Joint Reit Investment Corporation, now
known as Sekisui House SI Residential Investment Corporation.
■ Commitment of properties by Sekisui House Group to its
sponsored J-REITs (as of December 31, 2016)■ Sekisui House’s Consolidated Financial Statements FY2015(15/2-16/1)

Collaboration with our J-REIT platform within Sekisui House’s Development
Business has become significantly more important.
Asset Type

Number of Properties (Note)

Net Sales
1,858.8(JPY bil)

OthersTransaction Price

Total Assets

JPY 2,029.79 bil

401.5
Development Business

Office(2007-2016)

Residential(2010-2016)

Total(2007-2016)

8 properties
55 properties
63 properties

JPY 213.8 bil

Net Sales

JPY 103.6 bil

Operating Income

583.2

JPY 149.64 bil

Net Income

5

JPY 84.30 bil

Supplied Housing
Business
Built-to Order Business

794.3

JPY 317.4bil(Note) 2 office properties have been acquired by Japan Excellent, Inc. and 55 residential properties have beenacquired by Sekisui House SI Residential Investment Corporation.

JPY 1,858.87 bil

Outline of Asset Management Operation
6

Garden City Shinagawa Gotenyama

Management Performance since IPO■Steady External Growth and Increase in Unitholder Value(JPY bil)IPO(3 properties)
JPY 114.3 bil

2nd follow-on PO(3 properties)
JPY 26.6 bil

1st follow-on PO(1 property)
JPY 38.6 bil

300
3,000

60.0
55.0

2,000
200

152.9 bil

179.5 bil

152.9 bil

114.3 bil

45.0

1,000
100

42.5％
0
Total acquisition
取得価格
price
LTV
LTV

50.0

40.0

41.0％

40.8％

40.9％

35.0

End of 1st FP
2015年4月期

End of 2nd FP
2015年10月期

End
of 4ｔｈ FP
第2回公募増資後
本募集後

End of 3rd FP
2016年4月期(as of Apr. 30, 2015)(as of Oct. 31, 2015)(as of Oct. 31, 2016)（第1期末）（第2期末）

Unrealized Gain

JPY 5.9 bil

JPY 11.9 bil

JPY 17.8 bil

JPY 24.1 bil

Total Market Value（Note）

JPY 89.6 bil

JPY 99.0 bil

JPY 100.2 bil

JPY 126.6 bilDistribution
per unit

1st FP (actual)
JPY 1,603

2nd FP (actual)
JPY 2,458

3rd FP (actual)
JPY 2,477

4th FP (actual)
JPY 2,596(as of Apr. 30, 2016)（第3期末）

Increase of 11.7％ from initial forecast

Increase of 7.7％ from initial forecast

Growth of Distribution per unit
by follow-on POs

Initial Forecast
JPY 2,201(Note) Total market value as of end of each FP is calculated based on unit price as of end of each FP respectively.

7

Initial Forecast
JPY 2,410

Portfolio Summary（as of December 14, 2016）■Portfolio Highlight
Asset size

（aggregate acquisition price）

JPY 179.5 bil

Number of properties

6

Office buildings ratio

100.0 ％

Average building age（Note 2）

5.9 years

Total appraisal value

JPY 202.1 bil

Occupancy rate（Note 1）

99.9 ％

Locationratio

3 majormetropolitan areas(acquisition
price basis)

Greater Tokyo

100.0 ％
59.6 ％■Portfolio Description
Acquisition
Price (JPY)

Appraisal
Value (JPY)

Investment
Ratio

Leasable Area

Occupancy
Rate

Building
Age

Address

Garden City Shinagawa Gotenyama

55.6 bil

63.1 bil

31.0％

29,235.95㎡

100.0%

5.8 years

Shinagawa-ku,
Tokyo

Ｊ-2

Gotenyama SH Building

51.5 bil

56.9 bil

28.7％

19,999.97㎡

100.0%

5.9 years

Shinagawa-ku,
Tokyo

Ｊ-3

Hommachi Minami Garden City

23.1 bil

27.2 bil

12.9％

16,699.46㎡

100.0%

5.8 years

Osaka-shi,
Osaka

Ｊ-4

Hommachi Garden City

38.6 bil

42.8 bil

21.5％

17,006.94㎡

100.0%

6.6 years

Osaka-shi,
Osaka

Ｊ-5

HK Yodoyabashi Garden Avenue

4.4 bil

5.19 bil

2.5％

4,554.52㎡

98.6%

1.4 years

Osaka-shi,
Osaka

Ｊ-6

Hirokoji Garden Avenue

6.35 bil

6.92 bil

3.5％

4,442.75㎡

100.0%

5.8 years

Nagoya-shi,
Aichi

No.

Property Name

Ｊ-1

(Note 1) Occupancy rate stated above is as of October 31, 2016.
(Note 2) Average building age is calculated using the weighted average of building age according to the respective acquisition price.
(Note 3) As for Garden City Shinagawa Gotenyama, Hommachi Minami Garden City and HK Yodoyabashi Garden Avenue, SHR owns the sectional ownership right as well as accompanying right of site (in the site ownership ratio of approximately 75.8%,
56.3% and 40.6%, respectively). As for Hommachi Garden City, SHR owns the sectional ownership right to all exclusively-owned portions used as office and retail property of the building (in the exclusive area ratio of approximately 52.7%),
as well as the accompanying right of site (in the site ownership ratio of approximately 69.7%).

8

Outline of Portfolio
Property No.

J-1

J-2

J-3

Property name

Garden City Shinagawa Gotenyama

Gotenyama SH Building

Hommachi Minami Garden City

Photo of Properties

Map of Properties

Portion acquired at the time of the IPO

7F
6F
5F
4F
3F
2F
1F

25F

B1F

B2F

～

24F
13F
12F

～

Description of Rights

9F
8F
7F
6F
5F
4F
3F
2F
1F

Portion acquired at the time of the 2nd follow-on PO

Portion held by Sekisui House

Types of Lease
Agreement

Fixed-Rent Type Master Lease

Direct Lease

Fixed-Rent Type Master Lease

Environmental
Consideration

DBJ Green Building Certification: 5 Stars-

DBJ Green Building Certification: 4 Stars

Total Floor Area
(entire building)

62,975.42㎡

19,812.85㎡

46,010.88㎡

Leasable Area(acquired portions)

29,235.95㎡

19,999.97㎡

16,699.46㎡

Occupancy Rate

100.0％

100.0％

100.0％

Completion

Feb. 2011

Feb. 2011

Feb. 20119Outline of Portfolio
Property No.

J-4

J-5

J-6

Property name

Hommachi Garden CityHK Yodoyabashi Garden Avenue

Hirokoji Garden Avenue

Photo of Properties

Map of Properties～

27F

Description of Rights

～

14F
13F
12F
11F
10F
3F
2F
1F
B1F
B2F

Hotel
Common Area

OfficeRetailCommon Area

Portion acquired at the time of the 1st follow-on PO

13Ｆ
12Ｆ
11Ｆ
10Ｆ
9F
8F
7F
6F
5F
4F
3F
2F
1F

Portion held by Third Party

12Ｆ
11Ｆ
10Ｆ
9F
8F
7F
6F
5F
4F
3F
2F
1F

Portion acquired at the time of the 2nd follow-on PO

Portion held by Sekisui House

Types of Lease
Agreement

Fixed-Rent Type Master Lease

Pass-Through Type Master Lease

Pass-Through Type Master Lease

Environmental
Consideration

DBJ Green Building Certification: 4 Stars

DBJ Green Building Certification: 4 Stars
CASBEE OSAKA: Rank A

CASBEE NAGOYA: Rank A

Total Floor Area
(entire building)

49,163.16㎡

16,953.28㎡

7,017.98㎡

Leasable Area(acquired portions)

17,006.94㎡

4,554.52㎡

4,442.75㎡

Occupancy Rate

100.0％

98.6％

100.0％

Completion

May 2010

July 2015

Mar. 201110

Portfolio Map and Growth Potential of the Area
Shinagawa Gotenyama Area
■Shinagawa station, the accessible station from the two buildings below, is one of the largest stations in Tokyo and has a high growth rate in terms of the passenger numbers.
■Shinagawa Station offers easy access to the Shinkansen Line and to Tokyo International Airport.
Hommachi - Yodoyabashi Area
■These three buildings are located in an area known as the Hommachi - Yodoyabashi area, the representative business area of Osaka.
■This area is convenient for accessing public transportation and also offers easy access to the Shinkansen Line and to Osaka International Airport.
Nagoya Meieki Area
■ Nagoya Station, the biggest terminal station in Chubu Area, is located in Nagoya Meieki Area, which comprises a business and commercial district.
■ A large-scale redevelopment project around Nagoya is underway with an eye to the launch of the Linear Chuo Shinkansen in 2027.
Osaka International Airport (ITAMI)
Osaka Sta.

Narita International Airport

Umeda Sta.

Tokyo Terminal Sta.

Shibuya Sta.

Yodoyabashi Sta.
J-5

Midosuji Ave.
Hommachi Sta.

Tokyo

J-4

J-3

Shinagawa Sta.
J-2
J-1

Osaka
NagoyaNamba Sta.

Shinkansen Line

Tokyo International Airport(HANEDA)

Kansai International Airport
J-5

J-4

J-3

J-6

J-2

J-1

Nagoya Sta.

Shinkansen LineHK Yodoyabashi
Garden Avenue

Hommachi
Garden City

Hommachi Minami
Garden City
Chubu Centrair International Airport

J-6

11

Hirokoji
Garden Avenue

Gotenyama
SH Building

Garden City
Shinagawa Gotenyama

Portfolio Development Policy■Portfolio Development Policy by Asset Type and by Country(Japan/Overseas)
Asset Type

Japan
80％
or moreOffice buildings
Retail properties andhotels, etc.

Less than
20％■Portfolio Development Policy by Area (Japan)

Overseas80％
or moreLess than
20％

Area

Ratio

3 majormetropolitan areas

80％ or more

Other areas

Less than 20％(Note) “3 major metropolitan areas” refers to Greater Tokyo, Osaka area and Nagoya area.

SHR waived its preferential negotiation rights for overseas real estate in November 2016
(while maintaining the undermentioned investment policy for overseas real estate).

■Investment policy for overseas real estate
SHR may invest in real estate located overseas. The overseas areas where SHR intends to invest in real estate are those where Sekisui House
has expertise in its actual development projects. Currently, such areas are mainly Singapore, Australia and the U.S.

■Major overseas projects
SHR and the asset management company have entered into respective basic agreements on the sale of properties overseas with Sekisui House inrelation to the following two projects, which gives SHR and the said company preferential negotiation rights exercisable after Dec. 2016.

Punggol Waterway Point Project in Punggol, Singapore

Central Park Project in Sydney, Australia

12External Growth Investment policy••••

Promoting continuous external growth focusing on property acquisitions from the sponsor
Applying strict investment selection criteria when considering acquisition from third parties
External growth centering on acquisition of office buildings
Shifting to an external growth strategy focusing on domestic real estate for the time being

Achieve JPY 200 billion in asset size by focusing on domestic real estate through utilizing Sponsor Pipeline and promote continuous external growth.
【Preferential Negotiation Rights for Properties Co-owned with Sekisui House】
Garden City Shinagawa Gotenyama
Asset Type andRatio of unacquired floor area

Hommachi Minami Garden City

unacquired
floor area
24.2%

Office building(Note)

Office building

Hommachi Garden City

unacquired
floor area
43.6%

Hotel

unacquired
floor area
47.3%

 Background to investment in overseas real estate
SHR waived the preferential negotiation rights for overseas real estate as it has concluded that the time is not right to invest in overseas real estate.
Reasons for the decision• Status of the legal and tax systems surrounding overseas real estate• Concerns of investors over country risk, exchange rate fluctuation risk, etc.
• Problems of with the current indirect investment structure have from the perspective of acquiring of overseas real estate.

Clearly show a stance to seek external growth through acquisitions of domestic real estate for the time being
October 2014
Established investment policy for overseas real estateObtained preferential negotiation rights for 2 overseas real estate(2 overseas properties)
Singapore

November 2016
Waived preferential negotiation rights for the overseas
real estate
December 2016
The preferential negotiation rights were exercisable from
December 1, 2016

Australia

2014

Sep

Oct

2015
1st FPMay

Nov
2nd FP2016
3rd FPMay

Nov
4th FP

2017

Dec

May

5th FP(Note) "Ratio of unacquired floor area" refers to the ratio of the floor area that SHR does not own but in respect of which it holds preferential acquisition negotiation rights in the relevant building, as against the total floor area in the relevant building that is
exclusively owned. Specifically, such floor area refers to the floor area which is exclusively owned and over which SHR holds preferential acquisition negotiation rights in the Garden City Shinagawa Gotenyama, Hommachi Minami Garden City andHommachi Garden City properties

13

Urban developments undertaken by Sekisui HouseOSAKA AREA
Umeda Sky Building
Completion in Mar. 1993

Grand Front Osaka
Completion in Apr. 2013

The Ritz-Carlton, Kyoto
Completion in Oct. 2013

Hommachi Minami Garden City
Completion in Feb. 2011

Hommachi Garden City
Completion in May 2010

HK Yodoyabashi Garden Avenue
Completion in July 2015

Asset acquired (Note1 )Asset acquired (Note1 )Asset acquired

TOKYO AREA
Garden City Shinagawa
GotenyamaCompletion in Feb. 2011

Gotenyama SH Building
Completion in Feb. 2011

Asset acquired (Note1 )NAGOYA AREA
Hirokoji Garden Avenue
Completion in Mar. 2011
Asset acquired(Note1) Although SHR has acquired parts of the above buildings, it still has preferential negotiation rights by acquiring the remaining parts of these buildings.
(Note2) The above projects include joint projects with other companies and properties that have been sold. Also, SHR does not have any plan to acquire the above properties as of the date hereof.
.

14

Asset acquired

Akasaka Garden City
Completion in Jan. 2006

Internal Growth Utilization of sponsor support••••

Provision of property management services for owned assets
Utilization of know-how and services possessed by Sekisui House that can enhance tenant satisfaction for operation management
Coordination in strategies such as renovation and value enhancement, etc. regarding old properties
Investigation and discussion regarding execution of master lease agreements responding to property characteristics

 Status of lease agreements of portfolio properties (as of December 14, 2016)
Management policy emphasizing stability until the portfolio is diversified
Selecting lease type depending on property characteristics
Property Name

Garden City
Shinagawa Gotenyama

HommachiMinami
Garden City

Hommachi
Garden City

Gotenyama
SH Building

HK Yodoyabashi
Garden Avenue

Hirokoji
Garden Avenue

Photo of Properties

Lease Type
(Ratio of lease types)

Fixed-Rent Type Master Lease

68.5%

Direct Lease 21.8%

Pass-Through Type Master Lease

9.8%(Note)

Contract Period① portion originallyacquired② portion additionallyacquired（Master Lease or
Direct Lease)

From Dec. 2014
to Dec. 2019

From May 2016
to Dec. 2019

From Dec. 2014
to Dec. 2019

From May 2015
to May 2020

From Mar. 2011
to Feb. 2031

Long-term rent revenue

Stable rent revenue

Rent for 90.2% of leased floor area (including direct lease) has been fixed substantively

From May 2016
to May 2019

From May 2016
to May 2019

Creation of internal growth opportunities
Seeking internal growth opportunities byadopting pass-through type master lease(Note) "Ratio of lease type" refers to the ratio of the leased floor area for each lease type under the relevant lease agreements, in respect of the properties, that are valid as of December 14, 2016 (or, if a master lease agreement that is valid as of December
14, 2016 is concluded for the property, the master lease agreement), to the total sum of the leased floor areas indicated in such lease agreements, rounded to the nearest first decimal place.

15

Financial Results■Financial Standing■Status of interest-bearing liabilities （as of October 31, 2016）
End of 3rd FP(actual)End of 4th FP(actual)(as of Apr. 30, 2016)(as of Oct. 31, 2016)

JPY 68.1 bil

JPY 77.3 bil

Total interest-bearing liabilities
Fixed interest rate
debt ratio

79.4%

76.6%

Long-term debt ratio

100.0%

100.0%LTV (total asset basis)

40.9％

40.8％

Acquisition capacity until
LTV reaches 50%(Approximate amount)

JPY 31.0 bil

Average financing interest rate

0.80%(Note 1)

Percentage

JPY 35.0 bil
0.75%

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

23.4 %

Sumitomo Mitsui Banking Corporation

20.9 %

Mizuho Bank, Ltd.

12.4 %

Sumitomo Mitsui Trust Bank, Limited

11.6 %

Resona Bank, Limited

7.4 %Mitsubishi UFJ Trust and Banking Corporation

6.1 %Development Bank of Japan Inc.

5.2 %The Norinchukin Bank

5.2 %Mizuho Trust & Banking Co., Ltd.

5.1 %Investment Corporation Bonds

2.6 %■Diversification of Repayment Date（as of October 31, 2016）（JPY bil）（億円）

Average financing term
(Note 2)Average remaining term ofinterest-bearing liabilities (Note 3)

6.1 years
4.8 years

200
20

6.3 years

固定金利
Fixed

4.7 years

100
10

4.05
14.0

JCR

Long-term Issuer Rating

14.0

50
5

17.0
10.0

7.0

AA-（Stable）
0
2017(Note 1)
(Note 2)
(Note 3)

Investment

投資法人債
Corporation

Bonds

150
15

■Credit Rating Information
Credit Rating Company

変動金利
Floating

2018

2019

2020

2021

3.0

3.1

2022

2023

2.0
3.15

2024

2025

“Average financing interest rate” indicates a weighted average (annual) interest rate using the balance of interest-bearing liabilities as of the end of each FP. In respect of the average interest rates of interest-bearing liabilities forwhich an interest rate swap was conducted in order to hedge the risk of interest rate fluctuations, interest rates taking into account the effect of the interest rate swap are used. The figure is rounded to the nearest 2nd decimal place.
“Average financing term” indicates the average term from the date of borrowing to maturity dates weighted by the balance of the respective interest-bearing liabilities.
“Average remaining term of interest-bearing liabilities” indicates the average remaining term from the end of each FP to maturity dates weighted by the balance of the respective interest-bearing liabilities.

16

2026

Interest-Bearing Liabilities (1/2)（as of October 31, 2016) LoanTerm

LenderInterest Rate

Drawdown
Date

Repayment
Date

14,000Base Rate(JBA 1-month JPY
TIBOR)+0.25％

Nov. 30, 2017

14,0000.65830% (Note)

Nov. 30, 2019

17,0000.94060% (Note)

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Mitsubishi UFJ Trust and Banking Corporation
Development Bank of Japan Inc.

10,0001.47450％ (Note)

Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited
Mitsubishi UFJ Trust and Banking Corporation
The Norinchukin Bank
Mizuho Trust & Banking Co., Ltd.

5,350

0.62760％ (Note)

Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited

1,650

0.89470％ (Note)

Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited
Mitsubishi UFJ Trust and Banking Corporation
Mizuho Trust & Banking Co., Ltd.

2,350

1.01850％ (Note)

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited
Mitsubishi UFJ Trust and Banking Corporation
Development Bank of Japan Inc.
The Norinchukin Bank
Mizuho Trust & Banking Co., Ltd.

Long

Balance(JPY mil)Dec. 3, 2014

Remarks

Nov. 30, 2021

Nov. 30, 2024
UnsecuredandUnguaranteed
Nov. 30, 2020

July 31, 2015

Nov. 30, 2022

Nov. 30, 2023

(Note) In order to hedge the risk of interest rate fluctuations, an interest rate swap transaction, which substantially secured interest rates, was conducted. Accordingly, the interest rates are calculated taking the effect of this interest rate swap into consideration.

17

Interest-Bearing Liabilities (2/2)（as of December 14, 2016)
Term

LenderDevelopment Bank of Japan Inc.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Long

Mizuho Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corporation
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited
Development Bank of Japan Inc.
The Norinchukin Bank
Mizuho Trust & Banking Co., Ltd.
Total Loans

Balance(JPY mil)
650
1,650
700
750
1,810

Interest Rate
0.88500%
0.61760%
0.88470%
1.00850%
0.60500%

Drawdown
Date
July 31, 2015

Repayment
Date
Nov. 30, 2022
Nov. 30, 2020
Nov. 30, 2022
Nov. 30, 2023
Sep. 8, 2026

Remarks

UnsecuredandUnguaranteed

1,340

0.67000%

Sep. 9, 2016

4,050

Base Rate(JBA 1-month JPY
TIBOR)+0.225％75,300----Interest Rate

Issue Date

Redemption
Date

Remarks

Nov. 30, 2020

■Investment Corporation Bond
Name

Issue Amount(JPY mil)First Series Unsecured Investment Corporation Bonds(with a clause that ranks them pari passu among specified investment
corporation bonds)

2,000

0.340%

Sep. 8, 2016

Sep. 8, 2026

UnsecuredandUnguaranteed

Total Investment Corporation Bonds

2,000

-

-

-

-

Total Interest-Bearing Liabilities

77,30018Strategy for Future Growth
Sekisui House REIT’s goals are to continue to focus on “Prime Properties”, andexpand and diversify its portfolio at a sustainable pace,by capitalizing on the strong support of Sekisui House.

Sekisui House REIT’s Operational Philosophy
・Provide high-quality social capital and maximize unitholder value
・Invest in commercial properties focused on strategic locations and high quality
・Portfolio development policy centering on office buildings
・Growth strategies that take full advantage of the versatile support of Sekisui House

Sekisui House’s Support for Sekisui House REIT
・External growth through Pipeline Support Agreement
・Fixed-rent type Master Lease with Sekisui House

19

Our Growth Strategies■Growth of Our Asset Size and Target(JPY bil)
3,000
300

JPY179.5bil

2,000
200

Utilize sponsor pipeline
by Sekisui House

JPY200bil+

JPY152.9bil

Utilize acquisition capacity

JPY114.3bil

↓

1,000
100

Promote continuous
external growth

0
上場時
After
IPO

After 1st第1回
follow-on PO After 2nd第2回
follow -on PO

公募増資後

公募増資後

The current
target■Management Strategies

Investment
Strategies

 Investment focusing on Prime Properties
 Continuous expansion of asset size Diversifying portfolio(number of properties / tenants)
 Utilizing sponsor pipeline by Sekisui House

Provide highquality social
capitalFinancial
Strategies

 Managing LTV (total asset basis) at a conservative
level between 40% and 50%
 Promoting extension of borrowing periods,
diversification of repayment dates andfixation of interest rates
 Diversifying funding sources

Realizeappropriate
financing20

Maximize ourunitholder value
while maintaining stable
DPU growthⅢ. Appendix

Appendix

HK Yodoyabashi Garden Avenue

21

Financial Results and Forecast■Comparison of forecast and actual results
Forecast of

Forecast of

Actual Results of
1st FP

Actual Results of
2nd FP

Actual Results of
3rd FP

Actual Results of
4th FP（as of Oct. 31, 2016)（as of Apr. 30, 2017)（as of Oct. 31, 2017)

149 days

184 days

182 days

184 days

181 days

184 days

Operating
Revenue

2,108 JPY
mil

3,379 JPY
mil

3,467 JPY
mil

4,059 JPY
mil

4,140 JPY
mil

4,149 JPY
mil

Operating Income

1,580 JPY
mil

2,290 JPY
mil

2,278 JPY
mil

2,664 JPY
mil

2,686 JPY
mil

2,657 JPY
mil

Ordinary Income

1,014 JPY
mil

1,952 JPY
mil

1,967 JPY
mil

2,321 JPY
mil

2,361 JPY
mil

2,315 JPY
mil

Net Income

1,013 JPY
mil

1,951 JPY
mil

1,966 JPY
mil

2,320 JPY
mil

2,360 JPY
mil

2,314 JPY
mil

Distribution Per
Unit (DPU)

1,603 JPY

2,458 JPY

2,477 JPY

2,596 JPY

2,640 JPY

2,590 JPY

Forecast of 5th FP

Forecast of 6th FP（as of Apr. 30, 2015)

Days of Operation（as of Oct. 31, 2015)（as of Apr. 30, 2016)■Results of NOI

th

5 FP

6th FP■Forecast of NOI yield
Actual Results of 4th FP（as of Oct. 31, 2016)（as of Apr. 30, 2017)（as of Oct. 31, 2017)

Actual Results

Yield (Note)

NOI

3,686 JPY
mil

4.2 %

NOI yield

4.2 %

4.1 %

NOI
(after depreciation)

3,038 JPY
mil

3.5 %

NOI yield(after depreciation)

3.4 %

3.4 %

(Note) Yield is calculated by dividing annualized NOI and NOI (after depreciation) by total acquisition price of the current portfolio.

22

Balance Sheet（unit：JPY thousand ）3rd Fiscal Period
April 30, 2016

4th Fiscal Period
October 31, 2016

3rd Fiscal Period
April 30, 2016

Assets

4th Fiscal Period
October 31, 2016

Liabilities
Current liabilities

Current assets
Cash and deposits

4,059,682

2,537,620

Operating accounts payable

75,140143,397

Cash and deposits in trust

10,037,966

7,805,438

Accounts payable - other319,477

347,741-

24,252

Accrued expenses

69,90973,014

Prepaid expenses

82,843

88,117

Income taxes payable

775

815

Deferred tax assets

17

10

-

461,715

Operating accounts receivable

Consumption taxes receivable
Other
Total current assets

6,333

464

14,186,844

10,917,618

53,265,090

Accumulated depreciation(1,399,667)(2,038,527)

Buildings in trust, net

44,495,829

51,226,562

Structures in trust
Accumulated depreciation
Structures in trust , net
Machinery and equipment in trust

672,428

672,428(25,303)(34,346)

647,125

638,082-

411

Accumulated depreciation-(3)

Machinery and equipment in trust, net-

407

Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net

996

996

(97)

(181)

898

815

106,673,263

126,120,644

16,023-

151,833,140

177,986,512

Other

5,352

4,617

Total intangible assets

5,352

4,617

Lease and guarantee deposits

10,00020,181Long-term prepaid expenses

267,961

275,627

Total investments and other assets

277,961

295,808

152,116,453

178,286,938

Investment corporation bond issuance costs-

18,388Investment unit issuance costs-

35,032

Total deferred assets-

53,420166,303,297

189,257,978

Land in trust
Construction in progress in trust
Total property, plant and equipment

564,968-2,000,000

Long-term loans payable

68,100,000

75,300,000

Tenant leasehold and security deposits in trust
Total non-current liabilities

7,803,586

9,031,712

75,903,586

86,331,712

76,592,668

86,896,680

87,743,594

100,040,294

Unappropriated retained earnings

1,967,034

2,321,003

Total surplus

1,967,034

2,321,003

89,710,628

102,361,297

89,710,628

102,361,297

166,303,297

189,257,978

Net assets
Unitholders’ equity
Unitholders’ capital
Surplus

Total unitholders’ equity

Investments and other assets

Total assets

689,082

Total liabilities

Intangible assets

Total non-current assets
Deferred assets-

Total current liabilities
Investment corporation bond

Property, plant and equipment
45,895,496

223,779

Non-current liabilities

Non-current assets
Buildings in trust

Accrued consumption taxes

Total net assets

Total liabilities and net assets

23

Statement of Income and Retained Earnings（unit：JPY thousand ）rdth

3 Fiscal Period
From November 1, 2015 to April 30, 2016

4 Fiscal Period
From May 1, 2016 to October 31, 2016

Operating revenue
Rent revenue - real estate

3,467,176

4,032,189

379

27,097

3,467,556

4,059,286

Expenses related to rent business

860,922

1,021,071

Asset management fee

Other lease business revenue

Total operating revenue
Operating expenses

272,995

309,334

Asset custody fee

3,154

3,159

Administrative service fees

11,783

11,217

Directors’ compensations

3,600

3,600

Other operating expenses

36,51746,026

Total operating expenses

1,188,973

1,394,409

2,278,582

2,664,877

1,267

58

Operating income
Non-operating income
Interest income
Interest on refund
Total non-operating income

197

-

1,465

58

275,257

283,943-

995

36,44748,898-

7,006

Non-operating expenses
Interest expenses
Interest expenses on investment corporation bond

Borrowing related expenses
Amortization of investment unit issuance costs
Amortization of investment corporation bond issuance costs
Other
Total non-operating expenses

-

311

499

2,241

312,204

343,397

Ordinary income

1,967,842

2,321,537

Income before income taxes

1,967,842

2,321,537

Income taxes - current

969

824

Income taxes - deferred(7)

6

Total income taxes
Net Income

961

831

1,966,880

2,320,706

Retained earnings brought forward

153

296

Unappropriated retained earnings

1,967,034

2,321,003

24

Entire Portfolio（as of October 31, 2016）（unit：JPY thousand ）Property No.

J-1

J-2

J-3

J-4

J-5

J-6

Garden City
Shinagawa
Gotenyama
Shinagawa-ku,
Tokyo

Gotenyama
SH Building

Hommachi Minami
Garden City

Hommachi
Garden CityHK Yodoyabashi
Garden Avenue

Hirokoji
Garden Avenue

Shinagawa-ku,
Tokyo

Osaka-shi,
Osaka

Osaka-shi,
Osaka

Osaka-shi,
Osaka

Nagoya-shi,
Aichi

55,60051,50023,10038,600

4,400

6,350

29,235.95

19,999.97

16,699.46

17,006.94

4,554.52

4,442.75

100.0

100.0

100.0

100.0

98.6

100.0

Sekisui House

Non-disclosure

Sekisui House

Sekisui House

Sekisui House

Sekisui House

184

184

184

184

161

161

1,190,918

1,088,998

586,791904,006

130,299

158,272

1,190,918

1,088,998

586,791

903,801

120,130

141,549

-

-

-

205

10,16816,722

252,705

195,262

187,723

296,046

41,24548,088

-

-

-

-

7,296

14,389

8,103

1,200

6,000

6,000

1,577

1,523

619

400

500

250

210

197

-

-

-

-

9,130

7,058

Property and other taxes

75,922

50,62062,417

88,209--Insurance expenses

1,590

962

984

1,823

502

281

Repair expenses

7,983

160

6,402

5,434

98

819

157,316

139,639

111,402194,298

21,69023,645

1,170

2,280

16

31

738

172

938,212

893,735

399,067

607,960

89,053

110,184

1,095,528

1,033,375

510,470

802,258

110,743

133,829

4.1%

4.0%

4.4%

4.2%

5.7%

4.8%

Property name
Address
Acquisition price (JPY mil)Leasable area (m2)Occupancy rate（％）
TenantDays of operation(Note 1)

Notes to Statement of Income
October 31, 2016（end of 4th FP）① Property-related operating revenue
Rent revenue
Other lease business revenue② Property-related operating expenses
Subcontract expenses
Property management fees
Trust fees
Utilities expenses

Depreciation
Other expenses related to rent
business③ Property-related operating income（= ① - ②）
NOI（= ③ + Depreciation）
NOI yield (Note 2)(Note 1) The tenant name cannot be disclosed as consent for disclosure has not been acquired from the tenant.
(Note 2) NOI yield is calculated by dividing annualized NOI by total acquisition price.

25

Overview of Appraisal■Appraisal Value List
Property
No.

Property Name

Capitalization

Appraisal
Value①(JPY mil)Book Valueor
Acquisition
price②(JPY mil)Unrealized
Gain/Loss①-②(JPY mil)Direct Return Method
Capitalization(JPY mil)

Cap
Rate
（％）

DCF Method
Capitalization(JPY mil)Discount
Rate（％）

Terminal
Cap Rate（％）

Appraisal
NOI(JPY mil)Appraisal
Institution

J-1

Garden City
Shinagawa Gotenyama

63,10055,262+7,83764,7003.5

62,400

3.2

3.7

2,274

DAIWA REAL ESTATEAPPRAISAL CO.,LTD.

J-2

Gotenyama SH Building

56,90051,002+5,89758,0003.6

56,400

3.6

3.8

2,063

The Tanizawa Sōgō
Appraisal Co., Ltd.

J-3

Hommachi Minami
Garden City

27,20022,695+4,50428,2004.026,800

3.7

4.2

1,141

Richi Appraisal InstituteCo., Ltd.

J-4

Hommachi Garden City

42,80038,242+4,55743,4003.7

42,200

3.4

3.9

1,607

Japan Real Estate
InstituteJ-5

HK Yodoyabashi
Garden Avenue

5,190

4,413

+776

5,410

4.2

5,100

4.2

4.3

230

The Tanizawa Sōgō
Appraisal Co., Ltd.

J-6

Hirokoji Garden Avenue

6,920

6,370

+549

7,000

4.4

6,880

4.2

4.6

311

DAIWA REAL ESTATEAPPRAISAL CO.,LTD.

202,110

177,986＋24,123

206,710-

199,780

-

-

7,628

-

Total

■Appraisal Value (as of end of 4th Fiscal Period, compared to as of end of 3rd Fiscal Period)
Appraisal Value (JPY mil)Property
No.

Property Name

End of 3rd FP ①
(Note)

Garden City Shinagawa Gotenyama

44,300(Portion of additional acquisition)

16,900J-2

Gotenyama SH Building

J-3

J-1

Direct Cap Rate (％)
Comparison②-①

End of 4th FP ②

End of 3rd FP ①

Comparison②-①

End of 4th FP ②

(Note)

3.6+1,90056,30056,900

+600

3.7

3.6

(0.1)

Hommachi Minami Garden City

26,90027,200

+300

4.1

4.0

(0.1)

J-4

Hommachi Garden City

42,20042,800

+600

3.8

3.7

(0.1)

J-5

HK Yodoyabashi Garden Avenue

5,100

5,190

+90

4.3

4.2

(0.1)

J-6

Hirokoji Garden Avenue

6,780

6,920

+140

4.5

4.4

(0.1)

Total

198,480

202,110+3,630

-

-

-

3.7

3.5

(0.1)

63,100(0.2)(Note) For Garden City Shinagawa Gotenyama (portion of additional acquisition), HK Yodoyabashi Garden Avenue and Hirokoji Garden Avenue, which were acquired in the 4th FP, the figures described are based on appraisal reports as of March 31,
2016.

26

Types of Lease Agreement■Image of Lease Scheme

End-Tenant(Sub-lessee)

Tenant(Lessee)LessorFixed-Rent Type
Master Lease

Pass-Through Type
Master Lease

Direct Lease

End-Tenant

End-Tenant

End-Tenant

Rent

Rent

Sekisui House

Sekisui House

Fixed-Rent

Rent

SHR

SHR

Rent

SHR

■Characteristics of SHR’s Internal Growth• Approximately 70% of the portfolio (ratio of lease types) adopts fixed-rent type master lease with Sekisui House.
Rent revenue is being fixed in order to reduce the impact of tenant vacation, etc. on earnings.
• HK Yodoyabashi Garden Avenue and Hirokoji Garden Avenue adopt pass-through type master lease with Sekisui House.
Since SHR can receive rent of the same amount as the rent under the lease agreement concluded between Sekisui Houseand end-tenants, SHR can benefit from rent revenue upside when the occupancy rate rises or the rent is revised upward.
• Gotenyama SH Building adopts direct lease in which the property is directly leased to the end-tenant. A 20-year leaseagreement has been concluded with the tenant, and thus the rent revenue is stable over the long-term.
27

Structure of SHR■ Structure Diagram

Asset Custodian

2

SEKISUI HOUSE REIT, INC.

5

Mitsubishi UFJ Trust and Banking Corporation

Administrative Agent for Operation of
Administrative Instruments
Mitsubishi UFJ Trust and Banking Corporation

General Meeting of Unitholders
Holding approximately 7.3% of investment units
Transfer Agent3(as of October 31,2016)

Board of Directors
Executive Director: Junichi Inoue
Supervisory Director: Shigeru Nomura
Supervisory Director: Tatsushi Omiya

Mizuho Trust & Banking Co.,Ltd.

6

Parent Company of
the Asset Management Company / Sponsor
SEKISUI HOUSE, LTD.

Independent Auditor

Administrative Agent for
Investment Corporation Bonds

4

Ernst & Young ShinNihon LLC

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

1

Asset Management Company

100% ownership

SEKISUI HOUSE INVESTMENT ADVISORS, LTD.

1

Asset Management Agreement

4

Fiscal Agency Agreement

52

Asset Custody Agreement

3

Administrative Agreement (Administration of Investment Units)General Administrative Agreement

6

Pipeline Support Agreement / Sponsor Support Agreement, etc.

28

Unitholders Composition■Major Unitholders（Top 10）（as of October 31, 2016）
Name

Units

■Number of Unitholders by Unitholder Type

Percentage

Japan Trustee Services Bank, Ltd. (Trust Account)

269,58130.15%

Trust & Custody Services Bank, Ltd.
(Securities Investment Trust Account)

93,26810.43%

Sekisui House, Ltd.

65,200

7.29%

The Master Trust Bank of Japan, Ltd.
(Trust Account)

54,371

6.08%

The Nomura Trust and Banking Co., Ltd.
(Investment Trust Account)

32,984

3.69%

STATE STREET BANK AND TRUST COMPANY 505012

11,668

1.31%

STATE STREET BANK – WEST PENSION FUND CLIENTS– EXEMPT 505233

11,152

1.25%

The Hokuriku Bank, Ltd.

9,818

1.10%

Financial Institutions

その他国内法人
companies

Foreign

外国人
Companies/Individuals

Individuals

個人・その他/Others

2016年

As of
Oct.
31, 2016
10月31日13,749 people

13,180 people (95.86%)

現在

13,749人

The Hyakujushi Bank, Ltd.

9,300

1.04%

The Dai-ichi Life Insurance Company, Limited

6,580

0.74%

563,92263.08%

Total(Note) Percentages, rounded to the nearest 2nd decimal place, are based on the total number of investment units issued and outstanding
as of October 31, 2016 (894,000 units).

0%

Units

153 (1.11%)

261 (1.90%)

20%

40%

Financial Institutions

Submission
Date

152,31117.04%

January 26
201710月31日As ofOct. 31, 2016現在
894,000 units

Asset Management One Co., Ltd.

137,555

15.39%

October 7
2016

894,000口

Nomura Securities Co., Ltd.
Nomura Asset Management Co., Ltd.

32,538

3.64%

May 11
2016

Other domestic
その他国内法人
companies

Foreign

外国人
Companies/Individuals

100%

Individuals
個人・その他/Others

88,639 106,043 98,258
units
units
units
(9.91%) (11.86%) (10.99%)

601,060 units(67.23%)

0%

20%

40%

60%

(Note) Percentages are rounded to the nearest 2nd decimal place.

29

80%

2016年

Sumitomo Mitsui Trust Bank, Ltd.
Sumitomo Mitsui Trust Asset Management Co., Ltd.
Nikko Asset Management Co., Ltd.

(Note) Percentages, rounded to the nearest 2nd decimal place, are based on the total number of investment units issued and outstanding
as of December 7, 2016 (894,000 units).

60%■ Number of Investment Units Issued andOutstanding by Unitholder Type

金融機関（証券会社含む）(Including Security Firms)

Share
(%)

155 (1.13%)(Note) Percentages are rounded to the nearest 2nd decimal place.

■Main Report on Possession of Large Volume（Including Change Report）（as of January 26, 2017）
Name

Other domestic

金融機関（証券会社含む）(Including Security Firms)

80%

100%

Governance System
Adopts a Scheme that Emphasizes Unitholders’ Interests

Strong Alignment of Interests between Sekisui House
and Our Unitholders■Decision-Making Process

Sekisui House has confirmed that it intends to continue holding
SHR’s investment units on a long-term basis■Agreement on Consideration of Co-Ownership or
Sectional Ownership with Sekisui House
Deliberation
and approval

Board of Directorsof Sekisui House Reit

Disapproved

Deliberation
and resolution

Deliberation
and resolution

Compliance Committee

Board of Directors

Rejected

Rejected

Deliberation
and resolution

Investigation
and approval

Compliance Officer

Proposal

Proposing Department

Investment Committee

Rejected

Remanded■Same-Boat Investment from Sekisui House

Sekisui House has confirmed that it will consider faithfully
co-ownership (including beneficiary interests) or sectional
ownership with us upon our request■Measures to Prevent Transactions Involving Conflictof Interest

Attendance and assent byexternal members are required

Calculation Method

Type 1(Asset-based fee)

Total assets at prior FY-end × (up to) 0.5% (Note 1)

Type 2(DPU-based fee)

DPU (Note 2)× Operating Income (Note 3) × (up to) 0.004% (Note 1)

Type 3(Acquisition Fees)

Purchase price × (up to) 0.5% (Note 1)(up to 0.25%(Note 1) in case of a transaction with a related party)

Type 4(Disposition Fees)

Sale price × (up to) 0.5%
(zero in case of a transaction with a related party)

Acquisition price shall be equal to or less than the appraisal value.

Property Transfer

Transfer price shall be equal to or higher than the appraisal value.

Brokerage fee shall be within the scope of reward stipulated in the Building
Lots and Buildings Transaction Business Act, and shall be determined after
Payment of Brokerage Feetaking into account the levels of contract terms and conditions, difficulty inconducting brokerage and other factors.
a. Consignment shall be made under conditions that are deemed to beappropriate after comprehensively taking into account the market levelsof the outsourcing fees, the content of provided services, total work
volume and other factors.
b. Upon acquiring real estate and other assets, and if their management
and other services have been outsourced to interested parties and will
Outsourcing of Management
continue to be outsourced to the same parties, approval or disapproval of
and Other Services of Realthe acquisition as well as the acquisition price shall be determined by
Estate and Other Assets
paying full attention to the adequacy of the outsourcing terms andconditions.
c. With regard to the interested party’s status of implementing management
and other services, the party’s adequacy as consignee shall be verified
once a year as a rule via assessments and such conducted by an outside
independent appraiser that is not an interested party.
The agreements shall be executed under the terms and conditions that are
Execution of Lease
deemed to be adequate after investigating such factors as the market rent
Agreements for Real Estatelevel and price situation in neighboring markets and, as needed, referring to
and Other Assets
the opinions of third parties that are not interested parties.

■Performance-Based Asset Management FeesManagement Fee

Property Acquisition(Note 1) As of December 14, 2016,
Rate for Type 1 management fee is 0.15%,
Rate for Type 2 management fee is 0. 0023%,
Rate for Type 3 management fee is 0.3％ (or 0.15% in case of a transaction with a related party)(Note 2) DPU= distributable profit before deduction of Type 2 management fee / total number of investment units issued
and outstanding(Note 3) Operating Income before deduction of type 2 management fee

Placement of Orders forConstruction Work, Etc.
with Contract AmountSurpassing 30 million yen

30

Orders may be placed to interested parties only when such factors as theestimated price and the content of services to be provided are notdisadvantageous to SHR after comparing such factors with those of third
parties other than the interested parties.

Asset Management Company（as of January 27, 2017）■Overview of Asset Management Company■Directors and Corporate Auditors

Sekisui House Investment Advisors, Ltd.

Trade Name

（Financial Instruments Business Operator: Director-Generalof the Kanto Finance Bureau (Kinsho) No. 2791）

President &Representative Director

Atsuhiro Kida

Director
Foundation

Junichi Inoue（General Manager of Management Division）

February 17, 2014

Shoichi Maruyama
Paid-in capital

JPY 400 mil

Shareholder

Sekisui House, Ltd.（100％）

Directors andemployees

24

Director（General Manager of Real Estate Investment
Management Division）

Director

Ichiro Maeoka（Compliance Officer）
Hideyuki Kamijyo

Director（Part time）
Auditor（Part time）■Organization Chart（Executive Officer, Chief Manager of Accounting &Finance Department of Sekisui House）

Keizo Yoshimoto（Senior Manager of Secretariat of Sekisui House ）General Meeting of
Shareholders
AuditorBoard of Directors
Investment
Committee

Compliance
Committee
President &Representative Director

Real Estate Investment andManagement Division

Real Estate Investment
Department

Compliance
OfficerManagement
Division

Real Estate Management
Department

IR and Finance
Department

31

General Affairs andAccounting Department

Change in Unit Price■Change in Unit Price（December 3, 2014 - November 30, 2016）
Volume（Right axis）

Price of SHR（Left axis）

TSE REIT Index（JPY）
On September 2, 2016, it was announced that SHR has been included in the
FTSE EPRA/NAREIT Global Real Estate Index Series from September 19, 2016.

160,000
155,000

186,236 units
as of Dec. 3 ,2014（Units）

50,00045,000150,000
40,000145,000
35,000140,000
30,000135,000
130,000

25,000125,000

20,000120,000
15,000115,000
10,000110,000
5,000

105,000
100,000
2014-Dec0
2015-Mar

2015-Jun

2015-Sep

2015-Dec(Note) TSE REIT Index performance is indexed to SHR unit price (132,000 yen) as of December 3, 2014, which is our listing date.
TSE REIT Index refers to the weighted average-type index of market capitalization of all REIT counters.

32

2016-Mar

2016-Jun

2016-Sep

2016-Dec

Memo

33

Memo

34

35