Semi-Annual
Report4-15-1 Akasaka, Minato-ku, Tokyo
http://sekisuihouse-reit.co.jp/en/

9th
Fiscal Period(from November 1, 2018 to April 30, 2019)

Pictured on the cover

The Ritz-Carlton, Kyoto
The Ritz-Carlton, Kyoto is located in a premium location on the banks of the Kamogawa
river, a site that makes the most of the natural scenic beauty of Kyoto. During the Edo
period (1603-1867), the residences of aristocrats and nobles lined the shores here. Looking
at a map of this area in the Edo period, you can see the residences of the royal family such
the Arisugawa-no-miya at the north end of the Nijo-Ohashi bridge, and residences of samurai families including the Kagamaedas and the
Choshumoris to the south. Gazing out at the historic surroundings, it is easy to imagine these cultured people as they lived their lives
against the scenic backdrop of the distant Higashiyama mountains. Kyoto’s character as a tourist city flowered during the Edo period. At
first, small buildings for performances of various kinds, such as acrobatics and Kabuki dance, were built here and there in the city. Later,
wealthy merchants provided seats to watch, and soon teahouses were opened. This was also the beginning of noryodoko, or dining on
platforms above the river to enjoy the cool breezes, a practice that continues to this day as a summer tradition in Kyoto. The Ritz-Carlton,
Kyoto is a luxury resort that inherits the essence of this distinguished history, and engraves a new chapter in the culture of Kyoto.

Performance Highlights

Message to Our Unitholders

Distribution per Unit
I would like to express our sincere gratitude for yourcontinued and loyal patronage.

1,594 yen

Distribution per Unit (Actual)
9th Fiscal Period Ended April 2019

Business Results and Distribution
8th FP (Actual)(ended Oct. 2018)

Fiscal Period

9th FP (Actual)(ended Apr. 2019)

10th FP (Forecast)
11th FP (Forecast)(ending Oct. 2019) (Note) (ending Apr. 2020) (Note)

Operating revenue(million yen)

12,174

12,36913,84914,395

Operating income(million yen)

5,793

6,627

7,475

7,678

Ordinary income(million yen)

5,109

5,894

6,636

6,759

Net income(million yen)

7,402

5,894

6,635

6,758

Distribution per unit
(yen)

1,554

1,594

1,587

1,616

(Note) The respective figure for “10th FP (Forecast) (ending Oct. 2019)” and “11th FP (Forecast) (ending Apr. 2020)” are figures as of June 18, 2019 (the announcement date of business results)
calculated based upon certain assumptions. Actual operating revenue, operating income, ordinary income, net income and distribution per unit may differ materially due to various factors.
The above forecasts are not intended to be guarantees of business results or the actual amount of distribution.

Operating Revenue/Net income(million yen)

Operating revenue

16,00014,00012,000Distribution per Unit
Net income

13,84912,174

(yen)

2,000

1,500

1,554

1,594

In terms of investment operations, SHR newly acquired 3 properties, comprising The Ritz-Carlton,
Kyoto and 2 residences, for 19.2 billion yen in total.
Of these properties, The Ritz-Carlton, Kyoto, which
represents the second hotel investment for SHR,
stands on a rarely-found favorable location of scenic
beauty in Kyoto City, a globally popular tourist destination, and has extremely strong appeal as the mostvaluable brand hotel of Marriott International, Inc.
These acquisitions brought the assets owned by SHR
as of the end of the 9th fiscal period (April 30,2019) to 115 properties, with the asset size reaching
457.3 billion yen.
Moreover, the occupancy rate continued to stay at ahigh level, standing at 96.7% for residential properties, 100.0% for commercial properties and 97.5%
for the entire portfolio at the end of the 9th fiscal
period (April 30, 2019), partly due to the leasing
market remaining favorable in recent years.
In terms of finance, the long-term issuer rating
granted to SHR by Japan Credit Rating Agency, Ltd.
(JCR) was upgraded from AA- (Positive) to AA (Stable) on February 15, 2019, as JCR acknowledged
SHR’s portfolio enhancement after the merger andthe strong support system by the sponsor.

14,395

12,369Sekisui House Reit, Inc. (“SHR”) has settled its accounts for the 9th fiscal period (fiscal period endedApril 2019), the second fiscal period since the merger
with Sekisui House Residential Investment Corporation
on May 1, 2018. I hereby report on the management
status and financial results for the 9th fiscal periodof SHR.

1,587

1,616

With such a series of initiatives, the management
performance for the 9th fiscal period resulted in operating revenue of 12,369 million yen, operating income of 6,627 million yen, ordinary income of
5,894 million yen and net income of 5,894 million
yen. The distribution per unit declared for the fiscal
period was 1,594 yen, achieving a period-on-period
increase of 40 yen.
In June 2019, after entering the 10th fiscal period,
SHR acquired 7 properties, comprising 3 office buildings and 4 residences, for 70.1 billion yen by taking
full advantage of the real estate development capability of the Sekisui House Group. In doing so, SHR
used the funds obtained through a public offering it
conducted for the first time since the merger. The
acquisitions expanded the asset size to 527.5 billion
yen, approximately 2.6 times as much as the end of
the 7th fiscal period (April 30, 2018) before themerger.
Going forward, SHR will continue to strive for securing stable earnings and realizing steady growth of
its investment assets by utilizing the sponsor support
from Sekisui House, thereby aiming to maximize
unitholder value.
I ask for the continued support and encouragementof unitholders.

Junichi Inoue
Executive Director of Sekisui House Reit, Inc.
President & Representative Director of
Sekisui House Asset Management, Ltd.

10,0008,000
6,000

Table of Contents

1,000

7,402

6,635

6,758

5,894

500

4,000
2,000

Overview of SHR ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙2Statement of Cash Distributions ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙51

Financial Section (Audited)∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙45

Statement of Cash Flows ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙52

Financial Statements ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙46

Notes to Financial Statements ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙53Balance Sheet ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙46

Supplementary Schedules ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙71

8th FP(ended Oct. 2018)

9th FP(ended Apr. 2019)

10th FP(ending Oct. 2019)11th FP(ending Apr. 2020)

8th FP(ended Oct. 2018)

9th FP(ended Apr. 2019)

10th FP(ending Oct. 2019)11th FP(ending Apr. 2020)

Statement of Income and Retained Earnings ∙ ∙ ∙48

Independent Auditor’s Report ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙81

ActualActualForecast

Forecast

ActualActualForecast

Forecast

Statement of Changes in Net Assets ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙49Unitholder Information ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙

82

0

0

1

Overview of SHR

Topics: Asset Size Expanded to527.5 Billion Yen through the First Public Offering since the Merger

SHR acquired 3 properties including The Ritz-Carlton, Kyoto for 19.2 billion yen in the 9th fiscal period and,tional acquisitions) and 4 residences for 70.1 billion yen through the first public offering since the merger (theChange in Asset Size

Assets Acquired in the 9th Fiscal Period(billion yen)700

10th FP

9th FP
Asset replacement
conducted upon the merger

600

Acquired 6 residencesand disposed 12 residences

8th FP

Acquired a hoteland 2 residences

Disposed a suburban
retail property

113 properties

Acquired 3 office buildings
and 4 residences

120 properties
115 properties

112 properties

457.3 billion yen
440.8 billion yen 438.1 billion yen 19.2 billion yen

500

after entering the 10th fiscal period, acquired 7 properties comprising 3 office buildings (two of which are addi“4th Public Offering”). These acquisitions expanded the asset size to 120 properties for 527.5 billion yen.

527.5 billion yen
70.1 billion yen

Usage Type

Residence
Hotel

Acquisition Price Appraisal Value(million yen)(million yen)

Location

Kitakyushu-shi, Fukuoka

1,040

1,050

5.4

86.4

13.3

MAST Ijiri

Fukuoka-shi, Fukuoka

390

400

5.5

100.0

11.4

The Ritz-Carlton, Kyoto

Kyoto-shi, Kyoto

17,80018,480

4.0

100.0

5.7

19,23019,930

4.1

97.0

6.2

Occupancy
Rate (Note 2)(%)

Building
Age (Note 3)(years)Acquisition Price Appraisal Value(million yen)(million yen)

Akasaka Garden City

Minato-ku, Tokyo

28,70029,900

3.6

98.4

13.4

OfficeBuilding

Garden City Shinagawa Gotenyama(additional acquisition portion)

Shinagawa-ku, Tokyo

12,35015,000

4.2

100.0

8.3

Hommachi Minami Garden City
(additional acquisition portion)

Osaka-shi, Osaka

20,90023,800

4.3

100.0

8.3

Prime Maison Mitatsunamachi

Minato-ku, Tokyo

2,040

2,160

4.4

79.9

1.7

Prime Maison Hongo

Bunkyo-ku, Tokyo

2,600

2,700

4.3

91.7

1.3

Prime Maison Kuramae

Taito-Ku, Tokyo

2,190

2,260

4.3

81.8

0.6

1,360

1,460

5.0

100.0

1.0

70,14077,280

4.0

97.4

9.6

Residence

Location

Esty Maison Yokohama-aobadai North Yokohama-shi, Kanagawa
Total/Average

100

End of 8th FP
ended Oct. 2018

End of 9th FP
ended Apr. 2019

As of Jun. 18, 2019(the announcement
date of business results)

External Growth Centering on Property Acquisition from the Sekisui House GroupOf the 10 properties totaling 89.3 billion yen SHR acquired in the 9th and 10th fiscal periods, 9 properties totaling 88.3 billion yen
were acquired from the Sekisui House Group, accounting for 98.8%. With these, the ratio of acquisitions from the Sekisui HouseGroup now stands at 75.0% of the entire portfolio. Looking ahead, SHR will continue its ongoing efforts to promote external growthcentering on property acquisitions from the Sekisui House Group, which has an extensive track record of property development.

Appraisal NOI
Yield (Note 1)(%)

Property Name

200.7 billion yen

Upon the merger
as of May 1, 2018

Building
Age (Note 3)(years)Usage Type

6 properties

End of 7th FP
ended Apr. 2018

Occupancy
Rate (Note 2)(%)

Assets Acquired in the 10th Fiscal Period through the 4th Public Offering

300

0Appraisal NOI
Yield (Note 1)(%)

Esty Maison Kokura

Total/Average

400

200

Property Name

(Note 1) “Appraisal NOI Yield” refers to the figure obtained by dividing the (sum total of) appraisal NOI based on the direct capitalization method in the appraisal without considering depreciation for each acquired asset by the (sum total of) acquisition price.
(Note 2) “Occupancy Rate” of each acquired asset refers to the ratio of the (sum total of) leased area to the (sum total of) leasable area as of April 30, 2019 for the assets acquiredin the 9th fiscal period and as of May 31, 2019 for the assets acquired in the 10th fiscal period through the 4th Public Offering.
(Note 3) “Building Age” of each acquired asset is calculated by setting June 18, 2019 (the announcement date of business results) as the base date, and “Average Building Age”
refers to the weighted average of Building Age of each acquired asset calculated on the basis of the acquisition price. The same shall apply hereinafter.

Creation of Internal Growth Opportunities for Office Buildings
SHR works to create internal growth opportunities by adopting pass-through type master lease agreements for the office buildings it
acquired in accordance with the 4th Public Offering. This is because adopting pass-through type master lease agreements allows SHR
to enjoy upside gains when rents are raised. Of the existing owned properties, SHR plans to shift the fixed-rent type master leaseagreement for the owned portion of Hommachi Minami Garden City to the pass-through type master lease agreement in December
2019.
(Reference) Office Building Leasing Scheme Diagram (Illustration)

Acquired fromthird parties

Ratio of acquisition fromthe Sekisui House Group

Asset size

527.5 billion yen
120 properties

2

75.0%

395.8 billion yen / 57 properties
Sekisui House

379.2 billion yen/ 46 properties

Seven Sekiwa Real
Estate Companies

16.5 billion yen / 11 properties

Pass-through type master lease agreement
SHR receives the same amount of rent as the rent for the end tenants

Master lease agreement

End tenants

Sekisui House(master lessee)

Fixed-rent type master lease agreement
SHR receives the constant amount of rent regardless of the rent for the end tenants

Lease agreement

SHR

Direct lease agreement
SHR receives rent directly from the end tenants3Overview of SHR

Overview of Assets Acquired in the 9th and 10th Fiscal Periods
Hotel

H-002

The Ritz-Carlton, Kyoto

Acquired in 9th FP

Location(residential indication)

Kamogawa Nijo-Ohashi Hotori, Nakagyo-ku, Kyoto-shi, Kyoto

Acquisition price

17,800 million yen

Structure / Floors

RC with stainless steel sheet roof / B3, 5F

Total floor area (Note)

23,461.39m 2

Leasable area (Note)

9,384.56m 2Completion

Office Building

O-007

Akasaka Garden City

October 2013

(Note) SHR acquired 40% of the quasi co-ownership interest of the trust beneficiary interest in real estate for the property. As such, while “Total floor area” refers to the floor area of the entire
building, “leasable area” refers to the figure obtained by multiplying the leasable area of the entire building by 40%, which is the quasi co-ownership interest owned by SHR.

Residence R-107

Office Building

Esty Maison Kokura

Acquired in 9th FP

Residence R-108

MAST Ijiri

Acquired in 9th FP

Location(residential
indication)

4-2-5 Kyomachi, Kokurakita-ku,

Location(residential
indication)

4-3-13 Ijiri, Minami-ku,

Kitakyushu-shi, Fukuoka

Acquisition price

1,040 million yen

Acquisition price390 million yen

Structure / Floors

RC / 14F

Structure / Floors

RC / 11F

Leasable area

3,062.59m

Leasable area

1,430.60m2

Completion

February 2006

Completion

January 2008

O-001

2

Acquired in 10th FP

Location(residential indication)

4-15-1 Akasaka, Minato-ku, Tokyo

Acquisition price

28,700 million yen

Structure / Floors

S, SRC, RC / B2, 19F

Total floor area (Note)

46,776.76m 2

Leasable area (Note)

12,472.80m 2Completion

January 2006

(Note) SHR acquired 65.45% of the quasi co-ownership interest of the trust beneficiary interest in real estate with respect to the compartmentalized ownership interest in all of the
exclusively-owned portions of the 1st floor below ground to 4th floor above ground and 11th to 19th floor above ground of the building of “Akasaka Garden City,” as well as theaccompanying right of site (ratio of right of site: 662,768/1,000,000 (approximately 66.3%)). While “total floor area” refers to the floor area of the entire building, “leasable area” refers to
the total figure obtained by multiplying the leasable area of the each exclusively-owned portion with respect to the acquired compartmentalized ownership interest by 65.45%, which is thequasi co-ownership interest owned by SHR, rounded to two decimal places.

Fukuoka-shi, Fukuoka

Residence R-109 Prime Maison Mitatsunamachi Acquired in 10th FP

Residence R-110

Location(residential indication)

Location(residential indication)

Prime Maison Hongo

Acquired in 10th FP

Garden City Shinagawa Gotenyama (additional acquisition portion) Acquired in 10th FP
Location(residential indication)

6-7-29 Kitashinagawa, Shinagawa-ku, Tokyo

Acquisition price

12,350 million yen

Structure / Floors

RC / B1, 9F

Leasable area (Note)

7,341.65m2

Total floor area (Note)

62,975.42m2

Completion

February 2011

Acquisition
price
Structure /Floors2-1-41 Mita, Minato-ku, Tokyo
2,040 million yen

Leasable area

1,387.12m2

RC / B1, 5F

Completion

October 2017

Prime Maison Kuramae

Acquired in 10th FP

Residence R-111

Acquisition
price
Structure /Floors

4-14-10 Hongo, Bunkyo-ku, Tokyo
2,600 million yen

Leasable area

2,423.46m2

RC / B1, 14F

Completion

March 2018

Residence R-112 Esty Maison Yokohama-aobadai North Acquired in 10th FP(Note) “Total floor area” refers to the floor area of the entire building. “Leasable area” refers to the leasable area for the exclusively owned portions SHR additionally acquired.

Office Building

O-003

Hommachi Minami Garden City (additional acquisition portion) Acquired in 10th FP
Location(residential indication)

3-6-1 Kitakyuhojimachi, Chuo-ku, Osaka-shi, Osaka

Acquisition price

20,900 million yen

Structure / Floors

S, SRC / B2, 25F

Total floor area (Note)

46,010.88m2

Leasable area (Note)
Completion(Note) “Total floor area” refers to the floor area of the entire building. “Leasable area” refers to the leasable area for the exclusively owned portions SHR additionally acquired.

4

12,958.07m2
February 2011

Location(residential indication)
Acquisition
price
Structure /FloorsLocation(residential indication)

4-18-18 Kuramae, Taito-ku, Tokyo
2,190 million yen

Leasable area

2,259.40m

RC / 14F

Completion

November 20182

Acquisition
price
Structure /Floors2-28-8 Aobadai, Aoba-ku, Yokohama-shi, Kanagawa
1,360 million yen

Leasable area

2,723.24m2

RC / B1, 3F

Completion

July 20185

Overview of SHR

Outline of SHR

As of June 18, 2019 (the announcement date of business results)

Overview of Portfolio

Strategies of SHR
Portfolio Development Policy
Investment Ratio by Usage Type

Number of Owned Properties

Aggregate Acquisition Price

Total Appraisal Value (Note 1)

120 properties 527.5 billion yen 582.8 billion yen
Occupancy Rate (as of the end of May 2019)

Ratio of Prime Properties

97.4 %

91.4 %

Usage Type Ratio (Note 2)

Nagoya area
4.4%
(10 properties)

Others4.4%(14 properties)

Asset
Category(surveyed in April 2019)

1.64 %

Area Ratio (Note 2)(Note 3)

Hotel
6.6%
(2 properties)

Portfolio PML Value

Build a portfolio with “residences” as “the bases of living for residents” and “office buildings” as “the bases of operation forbusiness,” as core assets, while promoting investments in hotels that are expected to achieve continuous growth.

Core Assets

Residential
Properties

Building Age Ratio (Note 2)
15 or more years
4.3%(8 properties)

Under 5 years
9.2%(15 properties)

Usage Type

Residence

Examples of Specific Asset Types

Investment Ratio by
As of Jun. 18, 2019
Usage Type(the announcement date(acquisition price basis) of business results)

Investment Ratio Target byUsage Type upon Achieving an
Asset Size of 600 Billion Yen

Residences
Student dormitories
Company housing

30%~55%

46.8%

Around 45%

Office Buildings
Data centers

30%~55%

46.5%

Around 45%

HotelsService apartments

0%~30%

6.6%

Around 10%

Retail properties
Senior properties (Housing for theelderly with services, Fee-based homes
for the aged, and Daycare centers)

0%~10%-

Around 0%-10%

Office Building

Commercial
Properties
Hotel

Asset size

527.5 billion yen
Office building
46.5%(7 properties)

Osaka area
26.2%
(13 properties)
Residence
46.8%(112 properties)

Financial Status (as of the end of the 9th FP ended April 2019)
LTV (total asset basis)45.3 %

Three Major
Metropolitan Areas

95.6%

10 years ormore but lessthan 15 years
30.7%(68 properties)

Average
Building Age

Retail and other properties

9.6 years

Greater Tokyo
65.0%(83 properties)

5 years ormore but lessthan 10 years
55.8%(29 properties)

Investment Ratio by Area and Asset Category
Priority investment areas are set in light of the characteristics of each asset category.

Priority Investment Area

Residential Properties

Greater Tokyo

70% or higher

77.3%

Commercial Properties

Three Major Metropolitan Areas(Greater Tokyo, Osaka area, Nagoya area)

80% or higher

100%

Credit Rating
The long-term issuer rating and bond rating granted to SHR by Japan
Credit Rating Agency, Ltd. (JCR) were upgraded on February 15, 2019
for the following reasons.

As of Jun. 18, 2019
Investment Ratio by Area(the announcement date(acquisition price basis)of business results)

Asset Category● It has been confirmed that SHR manages its portfolio and finance asstably as before even after the merger.

Long-Term Debt Ratio

97.0 %
Fixed-Interest Rate Debt Ratio

93.1 %● It is anticipated that SHR will continue stable operations under thegrowth strategy that utilizes the strong sponsor support by Sekisui House.
<Rating agency> Japan Credit Rating Agency, Ltd. (JCR)

Subject of Rating

Before the change

After the change

Long-term Issuer rating(Rating outlook)

AA- (Positive)

AA (Stable)

Bonds rating

AA-

AA

(Note 1) “Total appraisal value” is based on the appraisal value as of the end of April 2019 for the properties that SHR owned as of the end of the 9th fiscal period ended April 2019, and the appraisal value as of April 1, 2019 for the properties acquired on June 10, 2019.
(Note 2) “Hommachi Garden City” is calculated by treating the office building portion as one property and hotel portion as one property according to the usage type of the building under compartmentalized ownership for calculating “Usage Type Ratio,” and the entire building as one property for calculating “Area Ratio” and “Building Age Ratio.”(Note 3) The “Three Major Metropolitan Areas” refer to “Greater Tokyo,” “Osaka area” and “Nagoya area.” The “Greater Tokyo” refers to Tokyo, Kanagawa Prefecture, Chiba Prefecture, andSaitama Prefecture; the “Osaka area” refers to Osaka Prefecture, Kyoto Prefecture, Hyogo Prefecture, and Nara Prefecture; and the “Nagoya area” refers to Aichi Prefecture. The same shallapply hereinafter.

6

Investment Strategy
Prime Properties with “Strategic Location” and “High Quality” as Pillars
SHR will continue to invest primarily in prime properties with the aim of enhancing the quality of the portfolio.
Asset Category

Strategic Location

High Quality

Residential Properties

Sites suited for “bases forsustainable living” for residents

As residences, provide high-class fundamental functionality, suchas comfort and safety, and give due consideration to the environment as a societal request to make comprehensive determinations
regarding buildings suited to neighborhoods and the like.

Commercial Properties

Sites suited for “sustainable bases ofoperation” of tenant companies

In addition to the functionality sought by tenant companies, giveconsideration to the environment as a societal request and establish
specifications suitable for BCP sites to make comprehensive determinations regarding buildings suited to neighborhoods and the like.
7Overview of SHR

Portfolio Map

As of Jun. 18, 2019 (the announcement date of business results)

Major Owned Properties

83 properties
14 properties
Osaka area
Nagoya area 10 properties
14 properties
OthersGreater Tokyo

Greater Tokyo(Note)

Acquired in 10th FP

Sapporo-shi Residence/
Residence

3 properties

Greater Tokyo

Office Building

80 properties
Office building/ 3 properties

Hotel

Residence/

Acquired in 10th FP

Osaka Area

Nagoya area

■ Akasaka GC■ PM Hongo■ GC Shinagawa Gotenyama (additional acquisition) ■ PM Mitatsunamachi■ PM Kuramae

Fukuoka-shi

Kanazawa-shi

Residence/

Residence/

8 properties

1 property

Kitakyushu-shi

Yokkaichi-shi

Residence/

Residence/

1 property

Acquired in 9th FP

9 properties
Office building/ 1 property

Residence/

1 property■ The Ritz-Carlton, Kyoto■ EM Yokohama-aobadai North

Osaka area (Note)

9 properties
Office building/ 3 properties
Hotel/ 2 properties

Residence/■ Gotenyama SH Building ■ PM Shinagawa■ Hommachi Minami GC(additional acquisition)■ PM Ginza East■■ Hommachi GC■ HK Yodoyabashi GA■ PM Kitatanabe■ PM Yuhigaoka■ Kobe Women’s Student
Housing

Nagoya Area

■ PM Musashinonomori■ Hirokoji GA■ PM Higashisakura■ PM Gokiso■ PM Takami■ PM Yadaminami

Others■ PM Gotenyama East

■ PM Asakusabashi■ PM Daikanyama■ PM Ebisu■ PM Gotenyama West

■ EM Toyosu Residence■ PM Yokohama Nihon-odori ■ PM Shirokane-takanawa ■ PM Ichigayayamabushicho ■ PM Shirokanedai Tower ■ PM Otsuka

Acquired in 9th FP■ MAST Ijiri■ EM Kokura■ PM Odorikoen■ PM Minami 2-jo

■ GM Kanazawa Nishiizumi ■ GM Unomori■ PM Central Park

■ Residence ■ Office Building ■ Hotel PM: Prime Maison EM: Esty Maison GC: Garden City GA: Garden Avenue GM: Granmast(Note) “Hommachi Garden City,” located in the Osaka area, is calculated by treating the office building portion as one property and hotel portion as one property.

89Overview of SHR

Stable and Sound Financial Operations

As of the end of the 9th fiscal period ended April 2019

Debt FinanceInterest-Bearing Liabilities

Total interestbearing liabilities 214.9 billion yen

Financial institution

45.3%

LTV

Balance(billion yen) Percentage

Signing of the Principles for Responsible Investment (PRI)

Financial institution Balance(billion yen) Percentage

24.2%

Shinkin Central Bank

39.6

19.6%

37.0

18.3%

Sumitomo Mitsui Trust Bank, Limited

17.8
13.6

MUFG Bank, Ltd.

48.8

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation

1.8

0.9%

Aozora Bank, Ltd.

1.7

0.8%

The Senshu Ikeda Bank, Ltd.

1.5

0.7%

8.8%

The 77 Bank, Ltd.

1.5

0.7%

6.7%

The Yamaguchi Bank, Ltd.

1.5

0.7%
0.6%

Fixed-Interest
Rate Debt Ratio

93.1%

Long-Term Debt Ratio

97.0%

Mizuho Trust & Banking Co., Ltd.

Averageinterest rate (Note)

Resona Bank, Limited.

11.4

5.7%

The Shizuoka Bank, Ltd.

1.3

0.73%

Development Bank of Japan Inc.

10.4

5.2%

The Hiroshima Bank, Ltd.

1.3

0.6%

The Norinchukin Bank

9.7

4.8%

Total Loans

201.9

100.0%The Bank of Fukuoka, Ltd.

2.7

1.3%

Total Investment
Corporation Bonds

13.0

-

Total InterestBearing Liabilities

214.9

-

Average maturity

6.9 years(Note) “Average interest rate” indicates a weighted average (annual) interest rate using the balance of interest-bearing liabilities. In respect of the interest rates of interest-bearing liabilities forwhich an interest rate swap was conducted, interest rates taking into account the effect of the interest rate swap are used.

Status of Commitment Line Agreement
Financial Institution

Credit Limit Amount

Agreement Term

MUFG Bank, Ltd.,
Mizuho Bank, Ltd.,
Sumitomo Mitsui Banking Corporation

15.0 billion yen

November 1, 2018 to October 31, 2019

Diversification of Repayment Dates(billion yen)
30
25

Loans with fixed interest rates

Six investment principles advocated in 2006 by Kofi Annan, the United
Nations Secretary-General at the time, for the financial industry, as
well as the international network of investors to realize the principles.

Certifications Acquired from External Institutions
SHR acquired rank “S,” the highest rank, in the “MUFG ESG Rating Certificate for J-REIT
supported by JCR” in April 2019.
SHR acquired “Green Star,” the highest rank, for the second consecutive year in the2018 “Global Real Estate Sustainability Benchmark (GRESB) Real Estate Assessment.”

MUFG ESG Rating Certificate for J-REIT supported by JCR

Global Real Estate Sustainability Benchmark (GRESB)

A product dedicated for J-REITs to assess their endeavors
on environmental, social and governance (“ESG”) considerations and grant scores, as well as to provide feedback theassessment results, current issues to tackle and other matters, with Mitsubishi UFJ Research and Consulting Co., Ltd.
as the service provider and Japan Credit Rating Agency,
Ltd. (“JCR”) as the supporting company.

A benchmark for ESG considerations of realestate companies and management institutions,which was established in 2009 primarily by major
European pension fund groups.

Proactive Acquisition of Environmental Certifications

As of Jun. 18, 2019 (the announcement date of business results)

26.8
20.7

3.0

3.0

3.0

External Certification

16.9
4.3
7.1

12.4

11.1

13.8

11.8

9.8

6.1

7.6

7.1

4.0

8.0

6.6

FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending
Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30,
2019
2020
2020
2021
2021
2022
2022
2023
2023
2024
2024
2025
2025
2026
2026
2027
2027
2028

50

45.3%

43.3%

42.5%
40.9%

40.8%

40.8%

40.7%

End of FP
ended Oct.
2016

End of FP
ended Apr.
2017

End of FP
ended Oct.
2017

40.7%

40

35

End of FP
ended Apr.
2015

End of FP
ended Oct.
2015

DBJ Green Building
Certification

May 1, 2018
Merged with Sekisui House
Residential Investment
Corporation

41.0%

Assessment Rank

2.0

12.4

4.4

(%)

End of FP
ended Apr.
2016

(Note) LTV (%) = Total interest-bearing liabilities / total assets × 100

10

Principles for Responsible Investment (PRI)(DBJ Green Building Certification and Certification for CASBEE for Real Estate)

Change in LTV

0

The Asset Management Company became a signatory to the Principles for Responsible Investment (PRI) in March 2019, in agreement with the PRI’s fundamental thinking that encourages companies to incorporate ESG issues into the investment analysis anddecision-making processes.

SHR has acquired environmental certifications for 48 properties (or 52.5% on a total floor area basis) (Note) of
the 120 properties it owns.

4.0

5

45

Investment corporation bonds

6.5

15

0

Loans with floating interest rates

2.0

20

10

ESG Initiatives

End of FP
ended Apr.
2018

End of FP
ended Oct.
2018

End of FP
ended Apr.
2019

LTV is expected tofall due tothe 4th Public Offering

Certification for
CASBEE for Real Estate

DBJ Green Building Certification

A program established in April 2011 by Development Bank of Japan
Inc. to assess and certify real estate properties required by the society
and economy, based on the comprehensive evaluation, including
responses to a variety of stakeholders, of the relevant properties fortheir considerations to disaster prevention and local communities, etc.
on top of their environmental performances.

S (Superior)

No. of Properties

Total

Residences

OfficeBuildings

2

1

3

2

4

6

7

-

7

12

-

12

20

-

20

-

4

4

Certification for CASBEE for Real Estate

A certification program developed with an aim to utilize theenvironmental assessment results of buildings, in the system tocomprehensively assess the environmental performances of buildings with regard to environmental load reductions, such as energy
saving, resource saving and recycling performances, as well as
considerations for scenic aesthetics and other factors.

(Note) Four of SHR’s properties (the owned portions (excluding the portions additionally acquired through the 4th Public Offering) of Garden City Shinagawa Gotenyama and Hommachi Minami
Garden City, Hommachi Garden City (Office building portion) and Hirokoji Garden Avenue) have acquired both the DBJ Green Building Certification and the Certification for CASBEE for Real
Estate .

11

Overview of SHR

Profile of SHR

Overview of Asset Management Company

Overview

History

Name

Sekisui House Reit, Inc.

Representative

Junichi Inoue, Executive Director

Location

Sep. 8, 2014

Registration of incorporation under
Article 166 of the Investment Trusts Act,and establishment of SHR

Sep. 18, 2014

Registered by the Prime Minister of Japan under
Article 187 of the Investment Trusts Act(registration number 95, filed with the Directorof the Kanto Local Finance Bureau)

4-15-1 Akasaka, Minato-ku, Tokyo

Asset
Management
Company

Sekisui House
Asset Management, Ltd.

Fiscal Period
Ends

April and October of each year

Overview

Dec. 3, 2014

Listed on the Tokyo Stock Exchange Real
Estate Investment Trust Securities Market(Securities Code: 3309)

May 1, 2018

Merged with Sekisui House Residential Investment
Corporation through an absorption-type merger(For each investment unit of the dissolving
corporation, 1.65 post-split investment units of thesurviving corporation (SHR) were allocated.)

Structure Diagram

As of Jun. 18, 2019 (the announcement date of business results)

Parent Company of the AssetManagement Company /Sponsor

Investment Corporation❹❷

Asset Management Company
Sekisui House
Asset Management, Ltd.

❸

General Meeting ofUnitholders❶

Sekiwa Real Estate, Ltd.
Sekiwa Real Estate Kanto, Ltd.
Sekiwa Real Estate Tohoku, Ltd.
Sekiwa Real Estate Chubu, Ltd.
Sekiwa Real Estate Kansai, Ltd.
Sekiwa Real Estate Chugoku, Ltd.
Sekiwa Real Estate Kyushu, Ltd.

❺

Junichi Inoue,
President & Representative Director

Location

4-15-1 Akasaka, Minato-ku, Tokyo

Capital

400 million yen

Shareholder

Sekisui House, Ltd. (100%)

Executive Director
Junichi Inoue
Supervisory Director Shigeru Nomura
Supervisory Director Tatsushi Omiya❻

Licensed for building lots andbuildings transaction business
License No.(2) 96411 issued by
the Governor of Tokyo

Licenses andregistration,
etc.

Registered as a financial instruments
business operator
Registration No.2791 issued
by the Director-General of
Kanto Local Finance Bureau (Kinsho)

General Meeting of
Shareholders
Auditors

Asset Custody Company

Transfer Agent

Certified as an entrustment-based
agencyLicense No.82 issued by the Ministerof Land, Infrastructure, Transportation
and Tourism

Operational Organizational Structure

General Administrative Agent

Board of Directors

Investment Committee

Compliance Committee

Mizuho Trust & Banking Co., Ltd.

Compliance Officer
Ernst & Young ShinNihon LLC❼

Administrator for Investment
Corporation Bonds

President &Representative Director

MUFG Bank, Ltd.

❶ Asset Management Agreement ❷ Sponsor Support Agreement ❸ Agreement on Preferential Negotiating Rights (etc.) ❹ General Administrative Agreement❺ Asset Custody Agreement ❻ Administrative Agreement (Administration of Investment Units) ❼ Financial Agent Agreement

12

Representative

Mitsubishi UFJ Trust andBanking Corporation

Board of Directors

Independent Auditor
Pipeline Support Companies

Sekisui House
Asset Management, Ltd.

Mitsubishi UFJ Trust andBanking Corporation

Sekisui House, Ltd.

100% ownership

Corporate
nameBusiness Strategy
Department

Internal Control
Promotion Department

Real Estate Division

Real Estate
Investment
No. 1 Dept.

Real Estate Real Estate
Real Estate
Real Estate
Real Estate Engineering
Investment Management Management Management Accounting Management
No. 2 Dept. No. 1 Dept.
No. 2 Dept.
No. 3 Dept. Department Department

Investor
Finance
Relations
Department Department

Accounting
Department

GeneralAffairs
Department13

Outline of asset management operation
1. Developments in Asset Management in the Fiscal Period under Review(1) Brief History of the Investment Corporation

Sekisui House Reit, Inc. (“SHR”) was established on September 8, 2014 as an investment corporation investing
primarily in commercial properties including office buildings, hotels and retail and other properties, sponsored by
Sekisui House, Ltd. (“Sekisui House”), a leading homebuilder representing Japan with an establisheddevelopment and management track record also in the property development business. SHR was listed on theReal Estate Investment Trust Section of the Tokyo Stock Exchange, Inc. (“Tokyo Stock Exchange”) on December
3, 2014 (securities code: 3309).
Sekisui House Residential Investment Corporation (“SHI,” and collectively with SHR, the “Two Investment

Corporations”) was established on April 20, 2005 as an investment corporation investing primarily in residences
and retail properties, with the corporate name of JOINT REIT Investment Corporation, and listed on the Real
Estate Investment Trust Section of the Tokyo Stock Exchange on July 28, 2005. In March 2010, a collaboration
system was established with Sekisui House serving as the main sponsor and Spring Investment Co., Ltd. as joint
sponsor for the investment corporation, which was renamed from JOINT REIT Investment Corporation to Sekisui

House SI Investment Corporation in June 2010. Later, in June 2014, its Articles of Incorporation were revised to
set residences as the sole target of investment, and the corporate name was changed to Sekisui House SI
Residential Investment Corporation. Subsequently, in association with the shift to a structure in which Sekisui
House serves as the sole sponsor in March 2017, SHI was renamed to Sekisui House Residential Investment
Corporation in June 2017.

The Two Investment Corporations, each under the support of the Sekisui House Group (Note 1), had separately
conducted asset management in an effort to expand their assets and secure stable returns by utilizing theirrespective strengths with the aim of continuous enhancement of unitholder value. However, with an aim to securestrong returns and stability and growth of cash distributions through promoting a steady increase of assets undermanagement and endeavor to maximize unitholder value by further expanding the scale of their assets andincreasing their market presence and enhancing a variety of opportunities for growth through utilizing the
integrated corporate strength of the Sekisui House Group, the Two Investment Corporations conducted anabsorption-type merger with SHR as the surviving corporation and SHI as the dissolving corporation (the“Investment Corporation Merger”), setting May 1, 2018 as the effective date (Note 2).
SHR’s investment policy is to conduct asset management that seeks to secure stable earnings over the medium tolong term and steady growth of its investment assets, with residential properties (Note 3) and commercial
properties (Note 4) as major investment targets.

(Note 1) “Sekisui House Group” refers to a group of companies comprised of Sekisui House and its consolidated subsidiaries and its
affiliates accounted for by the equity method. The same shall apply hereinafter.
(Note 2) In association with the Investment Corporation Merger, Sekisui House Asset Management, Ltd. (the “former SHAM”), the asset

management company for SHI, and Sekisui House Asset Management, Ltd. (former name: Sekisui House Investment Advisors,Ltd.) (the “Asset Management Company” or “SHAM”), the asset management company for SHR, carried out an absorption-typemerger as of the same date as the effective date of the Investment Corporation Merger, with the Asset Management Company
being the surviving company and the former SHAM being the dissolving company, and changed the company name to the current
one.
(Note 3) “Residential properties” refer to real estate whose principal use is residence (including student dormitories, company housing,furnished residences with appliances which do not fall under service apartments (*1) (*2)). The same shall apply hereinafter.
(*1) “Service apartments” refer to furnished residences with appliances where a dedicated operator provides certain services tousers. The same shall apply hereinafter.
(*2) Some service apartments may fall under apartment houses as defined in the Building Standards Act (Act No. 201 of 1950,
as amended) (the “Building Standards Act”). The same shall apply hereinafter.
(Note 4) “Commercial properties” refer to real estate whose principal use is for office buildings, hotels (including service apartments; thesame shall apply hereinafter.) and retail and other properties (including housing for elderly with service, fee-based homes forthe aged, and daycare centers (*); the same shall apply hereinafter.) and other non-residential business purposes. The same(2) Management Environment and Management Performancea. Management Environment
During the fiscal period under review, the Japanese economy continued to show a mild recovery trend, given an
increase in capital investment in accordance with improvements in corporate earnings and ongoing solid

improvements in the employment and income environment, although weakness was observed in exports andindustrial production in some areas.
Under such circumstances, the real estate leasing market continued to see a good supply and demand condition,
both for residences and office buildings, with leasing demand kept strong. As for the hotel market, the number offoreign tourists visiting Japan still remains on an upward trend despite a temporary decrease in demand foraccommodation in the preceding fiscal period due to the impact from natural disasters, etc.
In the real estate transaction market, the appetite for property acquisition continues to be strong among investors
in Japan and abroad given the accommodative financial condition while the high-quality properties that SHR
considers to be investible remain in short supply, continuously keeping their expected cap rates at a low level.

b. Management Performance

Under the circumstances described in a. Management Environment above, SHR newly acquired three properties
in order to enhance its portfolio of investment properties and further reinforce its earnings base.

These transactions brought the number of properties SHR owned as of April 30, 2019 (“as of the end of the fiscal
period under review”) to 115 (comprising 108 residential properties and 7 commercial properties) with anaggregate acquisition price (Note) of 457,375 million yen (238,825 million yen for residential properties and
218,550 million yen for commercial properties).
Moreover, the occupancy rate of SHR’s investment assets as of the end of the fiscal period under review stood at
96.7% for residential properties, 100.0% for commercial properties and 97.5% for the entire portfolio, bolstered bystrong leasing demand against the backdrop of the solid economic growth as described above.

(Note) The “acquisition price” indicates the transaction price shown in the sales agreements for respective properties (excluding
consumption tax, local consumption tax and commission and other various expenses, rounded down to the nearest million yen).
For properties SHR succeeded from SHI through the Investment Corporation Merger, however, the value based on the appraisal
by real estate appraisers with April 30, 2018 as the appraisal date is used as the acquisition price, because the acceptance priceshould be the appraisal value upon the acquisition by SHR as such properties are accounted for by the purchase method with
SHR set as the acquiring corporation and SHI as the acquired corporation. The same shall apply hereinafter.

(3) Overview of Fund Procurement
a. Borrowings
SHR has adopted as its basic policy the conduct of stable and sound financial operations in order to secure stableearnings over the medium to long term and enhance unitholder value. During the fiscal period under review,
SHR borrowed short-term loans totaling 17,000 million yen as of January 31, 2019 to partly fund the acquisitionof beneficiary interests in real estate and related expenses. SHR refinanced the said short-term loans with longterm loans with fixed interest rates in the same amount (of which 12,900 million yen was in long-term loans withfloating interest rates but interest rate swaps were arranged to practically fix the interest rates) as of March 29,
2019. For the long-term loans totaling 12,382 million yen due for repayment on February 28, 2019 andinvestment corporation bonds amounting to 2,500 million yen due for redemption on the same date, SHR
refinanced them with long-term loans with fixed interest rates amounting to 8,382 million yen (of which 6,691
million yen was in long-term loans with floating interest rates but interest rate swaps were arranged topractically fix the interest rates) and short-term loans with floating interest rates amounting to 6,500 million
yen as of the same date.
As a result, the fixed interest rate debt ratio against interest-bearing liabilities fell from 93.7% as of the end of
the previous fiscal period to 93.1% as of the end of the fiscal period under review. The balance of interest-bearing
liabilities as of the end of the fiscal period under review stood at 214,932 million yen, with the ratio of totalinterest-bearing liabilities to total assets (“LTV (total assets basis)”) standing at 45.3%.

shall apply hereinafter.
(*) Some housing for elderly with service, fee-based homes for the aged, and daycare centers may fall under apartment houses
as defined in the Building Standards Act. The same shall apply hereinafter.

14

15

b. Credit Rating
As of February 15, 2019, Japan Credit Rating Agency, Ltd. (JCR) upgraded the ratings it grants to SHR, changing
the long-term issuer rating and bond rating from AA- to AA, in consideration of such facts that SHR is expected
to continue stable operations even after the Investment Corporation Merger.
Credit Rating Agency

Rating TypeJapan Credit Rating Agency, Ltd.
(JCR)

Long-term issuer rating: AA
Rating outlook: Stable

Japan Credit Rating Agency, Ltd.
(JCR)

Bond rating: AA(4) Overview of Business Performance and Distributions

Results in the fiscal period under review are operating revenue of 12,369 million yen, operating income of 6,627
million yen and ordinary income of 5,894 million yen, resulting in net income of 5,894 million yen. In addition,
concerning cash distributions, SHR decided to distribute 5,996 million yen, which is the amount of unappropriatedretained earnings after adding reversal of reserve for temporary difference adjustments (102 million yen), as
distribution of earnings based on the application of special tax treatment for investment corporations (Article 6715 of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957, as amended) (the “Special Taxation
Measures Act”)).

2.

Status of Capital Increase, etc.

The following table sets forth the increase (/decrease) in unitholders’ capital and the total number of investment
units issued and outstanding since the establishment of SHR through to the end of the fiscal period under review.

Date

Event

Total number ofinvestment units
issued and outstanding(units)Unitholders’ capital(million yen)
Increase(Decrease)

Balance

Increase(Decrease)

Note

Balance

September 8, 2014

Private placement forincorporation

200

200

2,000

2,000

(Note 1)

December 2, 2014

Public offering

63,69063,890600,000

602,000(Note 2)

December 24, 2014

Third-party allotment

3,184

67,07430,000632,000(Note 3)

May 19, 2015

Public offering

19,67386,748154,200

786,200(Note 4)

June 12, 2015

Third-party allotment

995

87,7437,800

794,000(Note 5)

May 24, 2016

Public offering

11,70699,45095,200889,200(Note 6)

June 21, 2016

Third-party allotment

590

100,040

4,800

894,000(Note 7)

May 24, 2017

Public offering

9,661

109,70271,400965,400(Note 8)June 12, 2017

Third-party allotment

487

110,1893,600

969,000(Note 9)May 1, 2018

Split of investment units―

110,189

969,000

1,938,000(Note 10)

May 1, 2018

Allocation of investment
units through merger―

110,189

1,824,091

3,762,091(Note 11)

(Note 1) New investment units were issued at an issue price of 100,000 yen per unit upon the establishment of SHR.
(Note 2) New investment units were issued at an issue price of 110,000 yen (with the issue amount being 106,150 yen) per unit through apublic offering to procure funds for the acquisition of new properties.

(Note 3)(Note 4)(Note 5)(Note 6)

New investment units were issued at an issue amount of 106,150 yen per unit by way of third-party allotment and proceeds thereof
were intended to use to make part repayment of loans. Out of proceeds from the issuance of new investment units, (3,184 millionyen), 111 million yen was allocated for partial repayment of loans and the remaining (3,073 million yen) was allocated, with the net
proceeds from the public offering on May 19, 2015, to fund part of the acquisition cost of “Hommachi Garden City (Office building
portion)” (as defined in “Condition of investment assets” “2. Major Portfolio Assets” bellow).
New investment units were issued at an issue price of 131,917 yen (with the issue amount being 127,587 yen) per unit through apublic offering to procure funds for the acquisition of a new property.

New investment units were issued at an issue amount of 127,587 yen per unit by way of third-party allotment and proceeds thereof
were intended to use to make part-repayment of loans or as part of future acquisition funds for specified assets.

New investment units were issued at an issue price of 127,140 yen (with the issue amount being 122,967 yen) per unit through apublic offering to procure funds for the acquisition of new properties.
(Note 7) New investment units were issued at an issue amount of 122,967 yen per unit by way of third-party allotment and proceeds thereof
were intended to use to make future part-repayment of loans or as part of future acquisition funds for specified assets.
(Note 8) New investment units were issued at an issue price of 139,912 yen (with the issue amount being 135,320 yen) per unit through apublic offering to procure funds for the acquisition of new properties.
(Note 9) New investment units were issued at an issue amount of 135,320 yen per unit by way of third-party allotment, with the proceeds
thereof intended to be used for the partial repayment of the short-term loans that had been taken up to finance the acquisition of the
new properties.
(Note 10) SHR implemented a two-for-one split of investment units with April 30, 2018 as the record date and May 1, 2018 as the effective date.
(Note 11) Upon the Investment Corporation Merger, 1.65 SHR units following the investment unit split were allocated to every SHI unit on
May 1, 2018 and 1,824,091 investment units were newly issued.

16

17

[Changes in Market Price of Investment Securities]
The following table sets forth the fiscal period high and low (closing price) on the Tokyo Stock Exchange Real
Estate Investment Trust Section on which SHR investment securities are listed.
7th fiscal period

5th fiscal
period6th fiscal
periodFrom: Nov. 1,
2016
To: Apr. 30,
2017

From: May 1,
2017
To: Oct. 31,
2017High (yen)153,900

146,400

149,100

70,50073,90085,400Low (yen)

138,000

125,900

123,700

69,70068,20067,100Fiscal period

Before the exrights date

After the exrights date

8th fiscal
periodFrom: Nov. 1, From: Apr. 25, From: May 1,
2017
2018
2018
To: Apr. 24,
To: Apr. 30,
To: Oct. 31,
2018
2018
2018

9th fiscal
periodFrom: Nov. 1,
2018
To: Apr. 30,
2019(Note) SHR implemented a two-for-one split of investment units with April 30, 2018 as the record date and May 1, 2018 as the effective date.

3.

Performance of Distribution, etc.
Distribution per unit for the fiscal period under review (the 9th fiscal period) is 1,594 yen. The policy is to
distribute 5,996,773 thousand yen, which is the amount of unappropriated retained earnings after adding reversalof reserve for temporary difference adjustments (102,630 thousand yen), as distribution of earnings, in applicationof the special treatment of corporation tax under which the amount equivalent to distribution of earnings isdeductible from the taxable income of investment corporations as deductible expenses (Article 67-15 of the Special
Taxation Measures Act).
Fiscal period

Total amount of unappropriatedretained earnings (thousand yen)Amount of accumulated earnings(thousand yen)
Total amount of cash distribution(thousand yen)[Distribution per unit] (yen)Total amount of distribution of
earnings out of the total amountof cash distribution(thousand yen)[Distribution of earnings per unit](yen)
Total amount of refund ofinvestment in capital out of thetotal amount of cash distribution(thousand yen)[Amount of refund of investment
in capital per unit] (yen)Total distribution amount fromreserve for temporary difference
adjustments out of total amountof refund of investment in capital(thousand yen)[Distribution amount fromreserve for temporary difference
adjustments per unit out of
amount of refund of investment
in capital per unit] (yen)Total distribution amount from
distribution reducing unitholders’capital for tax purpose out of total
amount of refund of investment incapital(thousand yen)[Distribution amount from
distribution reducing unitholders’capital for tax purpose out of
amount of refund of investment incapital per unit]
(yen)

18

5th fiscal period 6th fiscal period 7th fiscal period 8th fiscal period 9th fiscal period
From: Nov. 1,
From: May 1,
From: Nov. 1,
From: May 1,
From: Nov. 1,
2016
2017
2017
2018
2018
To: Apr. 30, 2017 To: Oct. 31, 2017 To: Apr. 30, 2018 To: Oct. 31, 2018 To: Apr. 30, 2019
2,381,018

2,626,016

2,621,502

7,403,117

5,894,142

296

26

357

1,556,827―

2,380,722

2,625,990

2,621,145

5,846,289

5,996,773[2,663][2,710][2,705][1,554][1,594]2,380,722

2,625,990

2,621,145

5,846,289

5,996,773[2,663][2,710][2,705][1,554][1,594]

―

―

―

―

―

[―]

[―]

[―]

[―]

[―]

―

―

―

―

―

[―]

[―]

[―]

[―]

[―]

―

―

―

―

―

[―]

[―]

[―]

[―]

[―]

19

4. Future Management Policy(1) Future Trends Outlook
Looking ahead, the Japanese economy is expected to continue recovering moderately, supported partly by theeffects of various economic policies amid the employment and income situation continuing to improve, despite
weakness remains in exports and industrial production in some areas, according to the Monthly Economic Report(April 2019) released by the Cabinet Office. However, it is noted that attention must be paid to the impact of the
trade issue outcome on the world economy, the prospect of the Chinese economy, uncertainties of the overseas
economies and policies and the impact of fluctuations in global financial and capital markets.
Having such circumstances in mind, SHR believes that, in the real estate leasing market, demand will remain
stable both for residences and office buildings. Meanwhile, the hotel market will likely continue to see a steadySekisui House and Sekiwa Real Estate Group (Note 3) possess (a) property management (“PM”) skills based on
their relationship with tenants, (b) know-how as a real estate developer to maintain/improve real estate value
through large-scale repair, renovation/value enhancement, redevelopment, etc., and (c) know-how on developing
various types of businesses of master lease (Note 4). SHR and SHAM can, by concluding a PM services

consignment agreement (“PM Agreement”) or a sponsor support agreement with Sekisui House, seek (a) property
management services for commercial properties, and (b) in relation to management of owned assets for internal
growth, (i) technologies and know-how that contribute to the improvement of tenant satisfaction or other factors,
including energy efficiency and eco-friendliness, that contribute to the renovation/value enhancement ofproperties, (ii) personnel support, including provision of know-how required for the operation of SHR, and (iii)
support in areas such as negotiation of master lease agreements with regard to commercial properties.
Furthermore, Sekiwa Real Estate Group possesses PM skills, including know-how on PM services proven bytenant solicitation utilizing its nationwide network and an abundant management track record. As such, SHR

increase in the number of foreign tourists visiting Japan.
As to the real estate transaction market, the expected cap rate is likely to remain low for the time being.

(2) Future Management Policy and Challenges to Address
SHR will continue to focus on prime properties―high-quality residential properties and commercial properties
situated in strategic locations―as its core investment targets among other main investment targets. By
implementing growth strategies that take full advantage of the real estate development and operation capabilities
and other strengths of the Sekisui House Group, which has established an extensive track record of developing
and operating residential properties and commercial properties, SHR will seek to secure stable earnings over the
medium to long term and steady growth of its investment assets and thereby aim to maximize unitholder value.
On the other hand, SHR will endeavor to expand its asset size by exploring investment opportunities through theinitiatives of SHAM on its own.
Concerning main investment target areas in Japan for residential properties, SHR has set Greater Tokyo (Note1) as the core investment area with a focus on the Tokyo 23 wards, which are believed to have a number of prime
properties that offer locations accommodating residents’ needs as well as excellent basic functions as a residence
including comfort and safety and such and are expected to see strong leasing demand and supplies of prime
properties. In addition, SHR will invest in other major cities throughout Japan outside of Greater Tokyo including
government designated cities as well as their surrounding commutable areas, where networks of Sekisui Houseand Seven Sekiwa Real Estate Companies (Note 2) can be fully utilized.
SHR has set the Three major metropolitan areas (Note 1) with three large cities, namely the Tokyo 23 wards,
Osaka City and Nagoya City, all of which SHR has knowledge in the course of developments by Sekisui House, as
the core investment areas in Japan for commercial properties, with a focus on the three large cities, in which SHR
can expect stable management against the backdrop of solidified demand resulting from being bases for tenantcompanies’ business activities. In addition, major cities throughout Japan other than the Three major
metropolitan areas are set as investment areas.
SHR has executed a sponsor support agreement with Sekisui House. This agreement provides for utilization ofwill capitalize on the PM skills possessed by Sekiwa Real Estate Group by concluding a PM Agreement with
Sekiwa Real Estate Group for residential properties.
(Note 1) The “Three major metropolitan areas” refer to “Greater Tokyo,” the “Osaka area” and the “Nagoya area,” where “Greater Tokyo”

refers to Tokyo, Kanagawa Prefecture, Chiba Prefecture and Saitama Prefecture, the “Osaka area” refers to Osaka Prefecture,

Kyoto Prefecture, Hyogo Prefecture and Nara Prefecture and the “Nagoya area” refers to Aichi Prefecture. The same shall apply
hereinafter.
(Note 2) “Seven Sekiwa Real Estate Companies” is a collective name for Sekiwa Real Estate, Ltd., Sekiwa Real Estate Kanto, Ltd.,
Sekiwa Real Estate Tohoku, Ltd., Sekiwa Real Estate Chubu, Ltd., Sekiwa Real Estate Kansai, Ltd., Sekiwa Real Estate
Chugoku, Ltd. and Sekiwa Real Estate Kyushu, Ltd., which are wholly-owned subsidiaries of Sekisui House and are corecompanies of real estate unit of the Sekisui House Group operating nationwide. The same shall apply hereinafter.

(Note 3) “Sekiwa Real Estate Group” refers to a group of companies comprised of Seven Sekiwa Real Estate Companies as the core, andof its subsidiaries and affiliates. The same shall apply hereinafter.
(Note 4) Master lease refers to a form of lease agreement in which the lessor leases the assets it owns to a master lessee, who subleases
the assets to end tenants.

(3) Financial Strategy
SHR has adopted as its policy the conduct of stable and sound financial operations in order to secure stableearnings over the medium to long term and enhance unitholder value. Specifically, the policy is to form strong andstable business relationships with leading domestic financial institutions, centering on megabanks, bolstered by
the creditworthiness of the sponsor, Sekisui House, and also to reduce refinancing risks and risks of fluctuationsin interest rates by exploring the extension of borrowing periods and working to diversify dates for repayment,
etc., while pursuing the optimum balance between fixed-rate and floating-rate debts.
In addition, with regard to LTV (total assets basis), SHR has the policy to set the figure at around 50% as its upper

limit and control the figure at a conservative level with a focus on securing its funding capabilities.
Furthermore, SHR will work to diversify its sources for direct and indirect financing, such as by issuinginvestment corporation bonds, in comprehensive consideration of the market environment, SHR’s financial
standing and other factors, while continuing its endeavors for stable and sound financial operations.

the urban redevelopment business track record and know-how of Sekisui House, allowing SHR to seek fromSekisui House property acquisition support for external growth (pipeline support). Specifically, such support will(a) grant to SHR preferential negotiation rights with regard to the sale of domestic real estate, etc. owned ordeveloped by Sekisui House, (b) provide SHR with information on real estate, etc. owned or developed in Japanby third parties, (c) provide SHR with warehousing functions, and (d) provide SHR with support for theredevelopment of owned properties.
Furthermore, SHR has concluded agreements concerning preferential negotiating rights (and others) with theSeven Sekiwa Real Estate Companies. Thus, particularly with residential properties, SHR will be able to receive
support in acquiring properties for external growth, such as granting of preferential negotiating rights regarding
sale of domestic real estate, etc. owned or developed by the Seven Sekiwa Real Estate Companies.

20

5.

Significant Subsequent Events
Issuance of new investment units
SHR passed the following resolution concerning issuance of new investment units at a meeting of the board of
directors held on May 23, 2019. Payment for new investment units issued through public offering and for new
investment units issued by way of third-party allotment were completed on June 10, 2019 and July 9, 2019,respectively. As a result, unitholders’ capital is 149,210,081,225 yen and the number of investment units issued
and outstanding is 4,288,666 units as of July 9, 2019.
i) Issuance of new investment units through public offering (primary offering)Number of investment units to be issued:
501,500 units(371,356 units through Domestic Primary Offering and
130,144 units through International Offering)
Issue price:
76,537 yen per unit
Total amount of issue price:
38,383,305,500 yen
Amount to be paid in (issue amount):
74,103 yen per unit
Total amount to be paid in (total issue amount):
37,162,654,500 yen
Payment date:June 10, 2019
Date of commencement of distribution calculation:
May 1, 201921ii) Issuance of new investment units by way of third-party allotment
Number of investment units to be issued:

Events” above, SHR additionally acquired the compartmentalized ownership interest in all of the exclusively-owned

portions of the 1st floor above ground and part of the exclusively-owned portions of the 5th floor above ground of thebuilding of “Garden City Shinagawa Gotenyama”, as well as the accompanying right of site (ratio of right of site:

25,075 units

Amount to be paid in (issue amount):

74,103 yen per unit

Total amount to be paid in (total issue amount):

1,858,132,725 yen

Payment date:July 9, 2019

Date of commencement of distribution calculation:

May 1, 2019

Allottee:

The domestic underwriter734,166/3,857,806 (approximately 19.0%)) (may be hereinafter referred to as “Garden City Shinagawa Gotenyama(additional acquisition portion)”) on June 10, 2019. After the additional acquisition, SHR owns all of “Garden City

Shinagawa Gotenyama”.
(Note 3) SHR acquired the compartmentalized ownership interest in all of the exclusively-owned portions of the 13th to 24th floors

above ground of the building of “Hommachi Minami Garden City”, as well as the accompanying right of site (ratio of rightof site: 1,669,946/2,965,753 (approximately 56.3%)) with an acquisition price of 23,100 million yen on December 3, 2014.
As of the end of the fiscal period under review, SHR owns trust beneficiary interest in real estate for these. In association

with the issuance of new investment units through public offering as described in “5. Significant Subsequent Events” above,
SHR additionally acquired the compartmentalized ownership interest in all of the exclusively-owned portions of the 1st toiii) Use of proceeds
SHR used the net proceeds from the issuance of new investment units through the public offering described

12th floors above ground of the building of “Hommachi Minami Garden City”, as well as the accompanying right of site(ratio of right of site: 1,295,807/2,965,753 (approximately 43.7%)) (may be hereinafter referred to as “Hommachi Minami
Garden City (additional acquisition portion)”) on June 10, 2019. After the additional acquisition, SHR owns all ofabove to fund part of the acquisition costs of Akasaka Garden City, Garden City Shinagawa Gotenyama(additional acquisition portion), Hommachi Minami Garden City (additional acquisition portion), Prime Maison
Mitatsunamachi, Prime Maison Hongo, Prime Maison Kuramae and Esty Maison Yokohama-aobadai North,which are acquired on June 10, 2019. SHR also used the proceeds from the issuance of new investment units
by way of the third-party allotment for partial repayment of short-term loans entered into in connection withthe acquisition of such specified assets.
(Reference Information)(1) Asset Acquisition
SHR acquired trust beneficiary interests in real estate for the following 3 office buildings and 4 residences onJune 10, 2019.
Property name

Asset type

Akasaka Garden City (Note 1)
Garden City Shinagawa Gotenyama(additional acquisition portion) (Note 2)
Hommachi Minami Garden City
(additional acquisition portion) (Note 3)

Officebuilding

Prime Maison Mitatsunamachi
Prime Maison Hongo
ResidencePrime Maison Kuramae
Esty Maison Yokohama-aobadai North

Total acquisition price

Location
Minato-ku,
TokyoShinagawaku, Tokyo
Osaka-shi,
Osaka
Minato-ku,
TokyoBunkyo-ku,
Tokyo
Taito-ku,
Tokyo
Yokohamashi,
Kanagawa

Acquisition
price(millionyen)

Seller

28,70012,35020,9002,040
2,600

SekisuiHouse,
Ltd.

2,190
1,360
70,140－(Note 1) SHR acquired 65.45% of the quasi co-ownership interest of the trust beneficiary interest in real estate with respect to thecompartmentalized ownership interest in all of the exclusively-owned portions of the 1st floor below ground to 4th floor
above ground and 11th to 19th floors above ground of the building of “Akasaka Garden City”, as well as the accompanying
right of site (ratio of right of site: 662,768/1,000,000 (approximately 66.3%)).
(Note 2) SHR acquired the compartmentalized ownership interest in all of the exclusively-owned portions of the 4th, 7th and 8th
floors above ground and part of the exclusively-owned portions of the 2nd, 3rd and 6th floors above ground of the buildingof “Garden City Shinagawa Gotenyama”, as well as the accompanying right of site (ratio of right of site: 2,103,349/3,857,806(approximately 54.5%)) with an acquisition price of 39,700 million yen on December 3, 2014, the compartmentalized
ownership interest in part of the exclusively-owned portions of the 2nd, 3rd, 5th and 6th floors above ground of suchbuilding, as well as the accompanying right of site (ratio of right of site: 820,252/3,857,806 (approximately 21.3%)) with anacquisition price of 15,900 million yen on May 24, 2016 and the compartmentalized ownership interest in part of the
exclusively-owned portions of the 2nd floor above ground and all of the exclusively-owned portions of the 9th floor above
ground of such building, as well as the accompanying right of site (ratio of right of site: 200,039/3,857,806 (approximately
5.2%)) with an acquisition price of 4,000 million yen on May 24, 2017, respectively. As a result, SHR owns the trust
beneficiary interest in real estate with respect to the compartmentalized ownership interest in all of the exclusively-owned
portions of the 2nd to 4th and 6th to 9th floors above ground and part of the exclusively-owned portions of the 5th floor
above ground of the building of “Garden City Shinagawa Gotenyama”, as well as the accompanying right of site (ratio ofright of site: 3,123,640/3,857,806 (approximately 81.0%)) as of the end of the fiscal period under review.
In association with the issuance of new investment units through public offering as described in “5. Significant Subsequent

22“Hommachi Minami Garden City”.

(2) Borrowing of Funds
SHR conducted the following borrowing of funds on June 10, 2019 to fund the acquisition of assets describedin “(1) Asset Acquisition” above, as well as related expenses.
Category

LenderShortterm

MUFG Bank, Ltd.,
Mizuho Bank, Ltd. and
Sumitomo Mitsui Banking
Corporation

Interest rate
Loanamount(Note 1) (Note 2)(million yen) (Note 3) (Note 4)
Base rate(JBA 1-month
31,160Japanese Yen
TIBOR) plus
0.170%

Drawdown
date

Repayment
date(Note 5)June 10,2019

May 29,2020

Repayment
method(Note 6)

Security

Lump-sum
Unsecured
repayment at
Unguaranteedmaturity(Note 1) The borrowing expenses and other charge payable to the lenders are not included.
(Note 2) The base rate applicable to the calculation period for the interest payable on an interest payment date shall be the one
month Japanese Yen TIBOR (Tokyo Interbank Offered Rate) published by the Japanese Bankers Association (JBA) TIBOR
Administration two business days immediately prior to the immediately preceding interest payment date on the relevantinterest payment date. The base rate is subject to review every interest payment date. Where no rate that corresponds tothe interest calculation period exists, the base rate shall be that which corresponds to the concerned period calculated
based on the method provided for in the relevant loan agreement.

(Note 3) The first interest payment date will be the last day of June 2019. Subsequent interest payment dates will be the last dayof each month and the principal repayment date. Where the relevant date is not a business day, such date will be theimmediately following business day or, if the immediately following business day falls into the next calendar month, theimmediately preceding business day.
(Note 4) The first interest calculation period is from June 10, 2019 to the last day of June 2019, and the base rate applicable to theperiod is 0.06909%.
(Note 5) Where the repayment date is not a business day, such date will be the immediately following business day or, if theimmediately following business day falls in the next calendar month, the immediately preceding business day.
(Note 6) SHR may, by giving prior written notice and if certain other terms and conditions are met, make early repayment of theloans in whole or in part in the period between the drawdown date and the repayment date.
(Note 7) SHR made early repayment (1,850 million yen) for part of the existing borrowing stated above as of July 12, 2019, and theremaining amount stands at 29,310 million yen.

(3) Issuance of Investment Corporation Bonds
SHR decided to conduct issuance of new investment corporation bonds (“Investment Corporation Bonds”) as
stated below on July 5, 2019 based on the comprehensive resolution passed at a meeting of the board of directorsof SHR held on February 25, 2019, and payment for such corporate bonds has been completed on July 11, 2019.
Name of the bonds:

Sekisui House Reit, Inc. Third Series Unsecured Investment Corporation Bonds(with pari passu clause among specified investment corporation bonds) (Green
Bonds) (“Third Series Bonds”)
Sekisui House Reit, Inc. Fourth Series Unsecured Investment Corporation
Bonds (with pari passu clause among specified investment corporation bonds)(Green Bonds) (“Fourth Series Bonds”)

Total issue amount of
the bonds:

Third Series Bonds
Fourth Series Bonds

4,000 million yen
2,500 million yen
23Interest rate:

Third Series Bonds
Fourth Series Bonds

Payment date:July 11, 2019

Collateral andguarantee:

No secured mortgage or guarantee is applicable, and no assets are specificallyreserved as security for the Investment Corporation Bonds.

Redemption methodand date:

0.220% per annum
0.570% per annum

Outline of the Investment Corporation

The total amount will be redeemed on July 11, 2024 for the Third Series Bonds
and on July 11, 2029 for the Fourth Series Bonds.
The Investment Corporation Bonds may be repurchased and cancelled at any
time after the payment date unless otherwise specified by Japan Securities
Depository Center, Incorporated or laws and regulations.

1.

Status of Capital
Fiscal period

As of the end
As of the end
As of the end
As of the end As of the endof 5th fiscal
of 6th fiscal
of 7th fiscal
of 8th fiscal
of 9th fiscal
periodperiodperiodperiodperiod(Apr. 30, 2017) (Oct. 31, 2017) (Apr. 30, 2018) (Oct. 31, 2018) (Apr. 30, 2019)

Total number of investment units
authorized (units)

10,000,000

10,000,000

10,000,000

20,000,000

20,000,000

Credit rating:

AA (Japan Credit Rating Agency, Ltd.)

Total number of investment units
issued and outstanding (units)

894,000

969,000

969,000

3,762,091

3,762,091

Fiscal agent, issuing
agent and paying
agent:
Use of proceeds:

MUFG Bank, Ltd.

Unitholders’ capital (million yen)

100,040

110,189

110,189

110,189

110,189

Number of unitholders (persons)

12,44914,49012,95820,293

18,736

The proceeds were used for early repayment of short-term loans on July 12, 2019
(Note 1).

(Note 1) Details of the early repayment are as follows.

Category

Shortterm

Lender

MUFG Bank, Ltd.,
Mizuho Bank, Ltd. and
Sumitomo Mitsui
Banking Corporation

Balance
Balance
Repayment
beforeafter
EarlyamountDrawdown Repayment
repayment
repayment
repayment(Millions of
date
date
(Millions of(Millions of
date
yen)
yen)
yen)
6,500

6,500

－

Feb. 28,2019

Feb. 28,
2020

Jul. 12,2019

2.

Matters Concerning Investment Units
Of the unitholders as of the end of the fiscal period under review, the following are the top ten unitholders in termsof investment unitholding ratio.
Percentage of
owned units to
Number of
total units
Name
units owned
issued and(units)outstanding(%)

Japan Trustee Services Bank, Ltd. (Trust Account)955,225

25.39

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

556,487

14.79

Sekisui House, Ltd.

194,750

5.18

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

142,384

3.78

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

75,5232.01

Mitsubishi UFJ Trust and Banking Corporation

50,102

1.33

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

46,432

1.23

STATE STREET BANK WEST CLIENT ― TREATY 505234

44,912

1.19

SSBTC CLIENT OMNIBUS ACCOUNT

42,550

1.13

The Hachijuni Bank, Ltd.

39,226

1.04

2,147,591

57.09

Total
(Note)

24

Percentage of owned units to total units issued and outstanding is rounded to the nearest second decimal place.

25

3.

Matters Concerning Directors, etc.

(1) Name of executive director, supervisory directors and an independent auditor
The following table sets forth information on the executive director, supervisory directors and an independent
auditor of SHR as of the date of this document.
Position
Executive
Director

Supervisory
Director

Independent
AuditorKey concurrently held position, etc.

Total amount of compensationfor each position during period(thousand yen)

President & Representative Director,
Sekisui House Asset Management, Ltd.

―

Name

Junichi Inoue

Shigeru Nomura

President, Shigeru Nomura Certified Public
Accountant OfficeOutside Director, Eiken Chemical Co., Ltd.

Condition of investment assets
1.

1,800

Member of Corporate Revitalization
Committee, The Resolution and Collection

Real estatein trust

Corporation (RCC)

Commercial
properties

Greater Tokyo

182,61539.9

182,060

38.3

Other areas

54,54411.9

55,768

11.7

Three major
metropolitan areas

196,67043.0

213,952

45.0

―

―

―

―

Other areas

Outside Director, QB Net Holdings Co., Ltd.
Lawyer, LEX Law Office

1,800

Total of real estate in trust

433,83094.8

451,782

95.1

Ernst & Young
ShinNihon LLC―

16,500(Note 2)

Deposits and other assets

23,757

5.2

23,203

4.9

Total amount of assets

457,588100.0

474,985100.0(Note 1) “Total amount held” is the carrying amount (or, for real estate in trust, the depreciated book value) as of the end of each fiscal
period, rounded down to the nearest million yen.

person. In addition, supervisory directors may be officers of other corporations other than those stated above, but none of suchcorporations, including those stated above, has vested interest in SHR.
(Note 2) The total amount of compensation for the independent auditor, as stated above, is an approximation and includes compensation(Note 2) Figures under the heading “As a percentage of total assets” have been rounded to the nearest first decimal place.
(Note 3) SHR does not own any overseas real estate, etc. as of the end of the fiscal period under review.

for auditing matters related to English financial statements.

(2) Policy for determining whether to dismiss or refuse the reappointment of independent auditor
Dismissal of the independent auditor is subject to consideration at a meeting of the board of directors of SHR inaccordance with the provisions of the Investment Trusts Act. Refusal of reappointment of the independent auditor
is also subject to consideration at a meeting of the board of directors of SHR by taking into account the quality ofaudits, amount of audit fee and various other circumstances in a comprehensive manner.
Asset Management Company, Asset Custodian and Administrative AgentsThe following table sets forth information on the asset management company, asset custodian and administrative
agents of SHR as of the date of this document.
Entrustment category

Name

Asset Management Company

Sekisui House Asset Management, Ltd.

Asset Custodian

Mitsubishi UFJ Trust and Banking Corporation

Administrative Agent (Transfer Agent)Mizuho Trust & Banking Co., Ltd.

Administrative Agent (Administrative Agent forOperation of Administrative Instruments)

Administrative Agent (Administrative Agent for
Investment Corporation Bonds)

26

Residential
properties

Tatsushi Omiya(Note 1) None of the executive director or supervisory directors owns SHR investment units in their own name or in the name of another

4.

Composition of Assets of the Investment Corporation
The following table sets forth the composition of assets of SHR as of the end of the fiscal period under review.
As of the end of 8th fiscal
As of the end of 9th fiscal
periodperiod(Oct. 31, 2018)(Apr. 30, 2019)
Geographical area,
Type of
Asset
As a
As a
Total amount
Total amountasset
category
percentage ofpercentage of
etc.
held
held
total assets
total assets(million yen)(million yen)(%)(%)
(Note 1)
(Note 1)
(Note 2)
(Note 2)2.

Major Portfolio Assets

The following table sets forth an overview of the major portfolio assets (top ten properties by book value at the end of
period) of SHR as of the end of the fiscal period under review.
As a percentage
Book value
Leasable
LeasedOccupancyof totalat the end
Name of
area
area
rate
property-related
Usageof period
real estate, etc.
(m2)
(m2)
(%)
operatingtype(million yen)
(Note 2)
(Note 3)(Note 4)revenue(Note 1)(%) (Note 5)
Garden City Shinagawa
Office58,512
31,236.34
31,236.34
100.0
10.7
Gotenyama (Note 6)
building
Gotenyama SH Building

50,30319,999.97

19,999.97

100.0

8.8

Officebuilding

Hommachi Garden City
(Office building portion) (Note 7)

37,322

17,006.94

17,006.94

100.0

7.3

Officebuilding

Hommachi Minami Garden City
(Note 8)22,168

16,699.46

16,699.46

100.0

4.8

Officebuilding

The Ritz-Carlton, Kyoto (Note 9)17,971

9,384.56

9,384.56

100.0

1.4

Hotel

Mitsubishi UFJ Trust and Banking Corporation

Hommachi Garden City
(Hotel portion) (Note 7)

17,082

18,092.98

18,092.98

100.0

3.3

Hotel

MUFG Bank, Ltd.

Esty Maison Ojima

8,537

9,905.97

9,678.86

97.7

2.0 Residence

Esty Maison Kinshicho II

8,160

9,469.65

9,063.79

95.7

1.8 Residence

Prime Maison Shirokanedai
Tower

8,049

6,772.89

6,364.05

94.0

1.9 Residence

Esty Maison Ginza

6,514

5,515.43

5,465.73

99.1

1.4 Residence

Total

234,624

144,084.19

142,992.68

99.2

43.4

―

27

(Note 1) “Book value at the end of period” refers to the depreciated book value of each property as of the end of the fiscal period underreview, rounded down to the nearest million yen. The same shall apply hereinafter.

(Note 2) “Leasable area” refers to the floor area presumably available for leasing based on the lease agreement or building drawing, etc.
for each property that is valid as of the end of the fiscal period under review, rounded down to the second decimal place. In cases

where SHR owns co-ownership interests or quasi co-ownership interests of trust beneficiary interests in real estate for respective

properties, the figure indicates the value obtained by multiplying the leasable area of real estate or real estate in trust (or theleasable area of exclusive areas for properties under compartmentalized ownership) by the ownership interest owned by SHR
or trustees. The same shall apply hereinafter.

3.

Details of Assets (Real Estate, etc.) in the Portfolio
The following table sets forth an overview of the properties owned by SHR as of the end of the fiscal period underreview.
Usage
type

Name ofreal estate, etc.

Location(Note 2)Type of ownershipBook value
at the end of
period(million yen)

Estimatedvalue at theend of period(million yen)
(Note 3)(Note 3) “Leased area” refers to the sum total of the leased area indicated in the respective lease agreements, which are valid as of the

R-001

Esty Maison Ginza

Chuo-ku, Tokyo

Real estate trust
beneficiary interests

6,514

6,870

Hommachi Garden City (Office building portion) (as defined in (Note 7) below), Hommachi Minami Garden City and Hommachi
Garden City (Hotel portion) (as defined in (Note 7) below), however, the “Leased area” column indicates the leasable area of

R-002

Esty Maison Azabunagasaka

Minato-ku, Tokyo

Real estate trust
beneficiary interests

1,779

1,880

R-003

Esty Maison Ebisu II

Shibuya-ku, Tokyo

Real estate trust
beneficiary interests

2,031

2,120

the figure indicates the area corresponding to the quasi co-ownership interest owned by SHR. The same shall apply hereinafter.

R-004

Esty Maison Ebisu

Shibuya-ku, Tokyo

Real estate trust
beneficiary interests

869

880

rounded to the nearest first decimal place. The figure indicated in the “Total” column indicates the ratio of the sum total of

R-005

Esty Maison Kanda

Chiyoda-ku, Tokyo

Real estate trust
beneficiary interests

1,592

1,690

1,573

1,650

end of the fiscal period under review, with the end tenants for each of the properties. For Garden City Shinagawa Gotenyama,each property as fixed-rent type master lease agreements have been concluded with the master lease companies, regardless ofwhether lease agreements have been concluded with the end tenants. For The Ritz-Carlton, Kyoto (as defined in (Note 9) below),(Note 4) “Occupancy rate” refers to the ratio of leased area to leasable area of each property as of the end of the fiscal period under review,

leased area of each property to the sum total of leasable area of each property, rounded to the nearest first decimal place.
(Note 5) Figures under the heading “As a percentage of total property-related operating revenue” indicate the ratio of property-related
operating revenue of each property for the fiscal period under review to total property-related operating revenue of each propertyof SHR’s entire property for the fiscal period under review, rounded to the nearest first decimal place.

(Note 6) For Garden City Shinagawa Gotenyama, SHR owns real estate trust beneficiary interests for the compartmentalized ownershipinterest to all of the exclusively-owned portions of the 2nd through 4th and 6th through 9th floors above ground of the building
and part of the exclusively-owned portions of the 5th floor and for the accompanying right of site (ratio of right of site:
3,123,640/3,857,806 (or approximately 81.0%)) as of the end of the fiscal period under review. Furthermore, SHR additionallyacquired the compartmentalized ownership interest in all of the exclusively-owned portions of the 1st floor above ground andpart of the exclusively-owned portions of the 5th floor above ground of the building of “Garden City Shinagawa Gotenyama”, aswell as the accompanying right of site (ratio of right of site: 734,166/3,857,806 (or approximately 19.0%)) on June 10, 2019. Afterthe additional acquisition, SHR owns all of “Garden City Shinagawa Gotenyama”.
(Note 7) Hommachi Garden City comprises the portions used as office building and retail property (“Hommachi Garden City (Officebuilding portion)”) and the portions used as a hotel (“Hommachi Garden City (Hotel portion)”). In this document, the overview
and other information regarding the property may be described separately for the Office building portion and the Hotel portion.
(Note 8) For Hommachi Minami Garden City, SHR owns real estate trust beneficiary interests for the compartmentalized ownershipinterest to all of the exclusively-owned portions of the 13th through 24th floors above ground of the building and for theaccompanying right of site (ratio of right of site: 1,669,946/2,965,753 (or approximately 56.3%) as of the end of the fiscal period
under review. Furthermore, SHR additionally acquired the compartmentalized ownership interest in all of the exclusivelyowned portions of the 1st to 12th floors above ground of the building of “Hommachi Minami Garden City”, as well as theaccompanying right of site (ratio of right of site: 1,295,807/2,965,753 (or approximately 43.7%)) on June 10, 2019. After the

Residence

R-006

Esty Maison Kitashinjuku

Shinjuku-ku, Tokyo

Real estate trust
beneficiary interests

R-007

Esty Maison
Asakusakomagata

Taito-ku, Tokyo

Real estate trust
beneficiary interests

2,160

2,300

R-008

Esty Maison Kawasaki

Kawasaki-shi,
Kanagawa

Real estate trust
beneficiary interests

2,516

2,600

R-009

Esty Maison Yokohama

Yokohama-shi,
Kanagawa

Real estate trust
beneficiary interests

2,084

2,070

R-010

Esty Maison Kameido

Koto-ku, Tokyo

Real estate trust
beneficiary interests

1,555

1,620

1,093

1,110

R-011

Esty Maison Meguro

Meguro-ku, Tokyo

Real estate trust
beneficiary interests

R-012

Esty Maison Sugamo

Toshima-ku, Tokyo

Real estate trust
beneficiary interests

1,618

1,690

R-013

Esty Maison Kyobashi

Osaka-shi, Osaka

Real estate trust
beneficiary interests

2,923

3,000

R-014

Esty Maison Hakuraku

Yokohama-shi,
Kanagawa

Real estate trust
beneficiary interests

918

952

Osaka-shi, Osaka

Real estate trust
beneficiary interests

R-015

Esty Maison Minamihorie

1,053

1,090

additional acquisition, SHR owns all of “Hommachi Minami Garden City”.

R-016

Shinagawa-ku,
Esty Maison Gotanda (Note 4)
Tokyo

Real estate trust
beneficiary interests

3,085

3,200

property, and the figures indicate the value corresponding to the quasi co-ownership interest. The same shall apply hereinafter.

R-017

Esty Maison Oisendaizaka

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

2,693

2,790

R-018

Esty Maison
Shinagawa Seaside

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

2,033

2,120

R-019

Esty Maison Minamiazabu

Minato-ku, Tokyo

Real estate trust
beneficiary interests

1,245

1,290

1,063

1,100

(Note 9) For The Ritz-Carlton, Kyoto, SHR owns 40% quasi co-ownership interest of trust beneficiary interest in real estate for the28

Property
number(Note 1)

R-020

Esty Maison Tsukamoto

Osaka-shi, Osaka

Real estate trust
beneficiary interests

R-021

Esty Maison Kawasaki II

Kawasaki-shi,
Kanagawa

Real estate trust
beneficiary interests

1,983

2,000

R-022

Esty Maison Azabujuban

Minato-ku, Tokyo

Real estate trust
beneficiary interests

2,730

2,820

R-023

Esty Maison Itabashihoncho

Itabashi-ku, Tokyo

Real estate trust
beneficiary interests

924

971

R-024

Esty Maison Oizumigakuen

Nerima-ku, Tokyo

Real estate trust
beneficiary interests

782

818

R-025

Esty Maison
Higashishinagawa

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

2,356

2,380

R-026

Esty Maison
Itabashikuyakushomae

Itabashi-ku, Tokyo

Real estate trust
beneficiary interests

2,513

2,620

R-027

Esty Maison Musashikoyama(Note 5)

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

1,040

1,100

R-028

Esty Maison Sendagi(Note 6)

Bunkyo-ku, Tokyo

Real estate trust
beneficiary interests

692

730

29

Usagetype

Residence

Property
number(Note 1)

Location(Note 2)Type of ownershipBook value
at the end of
period(million yen)

Estimatedvalue at theend of period(million yen)
(Note 3)

Usage
type

Property
number(Note 1)Name ofreal estate, etc.

Location(Note 2)Type of ownershipBook value
at the end of
period(million yen)

Estimatedvalue at theend of period(million yen)
(Note 3)

R-029

Esty Maison
Yotsuyasakamachi (Note 7)

Shinjuku-ku,
TokyoReal estate trust
beneficiary interests

2,081

2,190

R-059

Esty Maison Toritsudaigaku

Meguro-ku, Tokyo

Real estate trust
beneficiary interests

854

853

R-030

Esty Maison Hakatahigashi

Fukuoka-shi,
Fukuoka

Real estate trust
beneficiary interests

2,350

2,410

R-060

Esty Maison
Musashikoyama II

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

1,019

1,050

R-031

Esty Maison Kamigofuku

Fukuoka-shi,
Fukuoka

Real estate trust
beneficiary interests

805

815

R-061

Esty Maison Nakano

Nakano-ku, Tokyo

Real estate trust
beneficiary interests

1,853

1,860

1,008

1,020

R-032

Esty Maison Sangenjaya

Setagaya-ku,
TokyoReal estate trust
beneficiary interests

813

850

R-062

Esty Maison Shinnakano

Nakano-ku, Tokyo

Real estate trust
beneficiary interests

R-033

Prime Maison
Musashinonomori

Kodaira-shi,
Tokyo

Real estate trust
beneficiary interests

1,828

1,920

R-063

Esty Maison Nakanofujimicho

Nakano-ku, Tokyo

Real estate trust
beneficiary interests

974

995

R-034

Prime Maison Higashisakura

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

1,479

1,570

R-064

Esty Maison Tetsugakudo

Nakano-ku, Tokyo

Real estate trust
beneficiary interests

1,146

1,180

R-035

Prime Maison Kayabakoen

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

852

835

R-065

Esty Maison Koenji

Suginami-ku,
TokyoReal estate trust
beneficiary interests

1,149

1,170

2,461

2,510

R-036

Esty Maison Sangenjaya II

Setagaya-ku,
TokyoReal estate trust
beneficiary interests

777

822

R-066

Esty Maison Oshiage

Sumida-ku, Tokyo

Real estate trust
beneficiary interests

R-037

Esty Maison Itabashi C6

Itabashi-ku,
TokyoReal estate trust
beneficiary interests

2,528

2,620

R-067

Esty Maison Akabane

Kita-ku, Tokyo

Real estate trust
beneficiary interests

3,244

3,320

R-038

MAST Hakata (Note 8)

Fukuoka-shi,
Fukuoka

Real estate trust
beneficiary interests

2,294

2,450

R-068

Esty Maison Oji

Kita-ku, Tokyo

Real estate trust
beneficiary interests

1,629

1,700

R-039

Esty Maison Kinshicho

Sumida-ku,
TokyoReal estate trust
beneficiary interests

1,241

1,300

R-069

Prime Maison Waseda

Shinjuku-ku,
TokyoReal estate trust
beneficiary interests

1,561

1,610

Real estate trust
beneficiary interests

1,440

1,490

1,936

1,970

R-040

Esty Maison Musashikoganei

Koganei-shi,
Tokyo

Real estate trust
beneficiary interests

1,777

1,930

R-070

Prime Maison Hatchobori

Chuo-ku, Tokyo

R-041

Prime Maison Gokiso

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

1,919

1,980

R-071

Prime Maison Jimbocho

Chiyoda-ku,
Tokyo

R-042

Prime Maison Yuhigaoka

Osaka-shi, Osaka

Real estate trust
beneficiary interests

897

951

R-072

Prime Maison
Gotenyama East

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

592

MAST LIFE Akihabara

Chiyoda-ku,
TokyoFukuoka-shi,
Fukuoka

Real estate trust
beneficiary interests

1,923

R-043
R-044

Prime Maison Kitatanabe
Prime Maison Momochihama

Osaka-shi, Osaka

624
2,050

Residence

R-073
R-074

Real estate trust
beneficiary interests
Real estate trust
beneficiary interests

2,895

2,970

Real estate trust
beneficiary interests

551

555

Esty Maison Aoi

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

2,427

2,510

Real estate trust
beneficiary interests

2,406

2,430

R-045

Esty Maison Akihabara

Taito-ku, Tokyo

Real estate trust
beneficiary interests

1,902

2,000

R-075

Esty Maison Yakuin

Fukuoka-shi,
Fukuoka

R-046

Esty Maison Sasazuka

Shibuya-ku,
TokyoReal estate trust
beneficiary interests

3,418

3,420

R-076

Esty Maison Kinshicho II

Sumida-ku, Tokyo

Real estate trust
beneficiary interests

8,160

8,600

R-047

Prime Maison Ginza East

Chuo-ku, Tokyo

Real estate trust
beneficiary interests

6,188

6,510

R-077

Esty Maison Ojima

Koto-ku, Tokyo

Real estate trust
beneficiary interests

8,537

8,810

Real estate trust
beneficiary interests

1,044

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

2,051

2,080

4,679

4,540

R-048

Prime Maison Takami

Nagoya-shi, Aichi

1,070

R-078

Prime Maison Fujimidai

R-049

Prime Maison Yadaminami

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

880

848

R-079

Esty Maison Tsurumai

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

R-050

Prime Maison Teriha

Fukuoka-shi,
Fukuoka

Real estate trust
beneficiary interests

1,234

1,260

R-080

Prime Maison Morishita

Koto-ku, Tokyo

Real estate trust
beneficiary interests

1,904

2,010

R-051

Esty Maison
Higashishirakabe

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

1,557

1,620

R-081

Prime Maison Shinagawa

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

1,940

2,020

Esty Maison Sengoku

Bunkyo-ku,
TokyoReal estate trust
beneficiary interests

1,351

Real estate trust
beneficiary interests

3,135

3,220

Real estate trust
beneficiary interests

1,899

1,990

Real estate trust
beneficiary interests

1,227

1,310

Real estate trust
beneficiary interests

2,266

2,363

R-052

1,360

R-082

Prime Maison Odorikoen

Sapporo-shi,
Hokkaido

R-053

Esty Maison Daizawa

Setagaya-ku,
TokyoReal estate trust
beneficiary interests

2,255

2,300

R-083

Prime Maison Minami 2-jo

Sapporo-shi,
Hokkaido

R-054

Esty Maison Togoshi

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

1,754

1,820

R-084

Prime Maison
Kamokamogawa

Sapporo-shi,
Hokkaido

R-055

Esty Maison Nishitemma

Osaka-shi, Osaka

Real estate trust
beneficiary interests

1,660

1,660

R-085

Prime Maison Central Park
(Note 9)Fukuoka-shi,
Fukuoka

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

2,388

MAST LIFE Yahiro

Sumida-ku, Tokyo

Real estate trust
beneficiary interests

1,884

1,950

Shinjuku-ku,
TokyoReal estate trust
beneficiary interests

1,658Real estate trust
beneficiary interests

4,332

4,580

Minato-ku, Tokyo

Real estate trust
beneficiary interests

1,530

Real estate trust
beneficiary interests

1,061

1,060

R-056
R-057
R-058

30

Name ofreal estate, etc.

Esty Maison Shirokanedai
Esty Maison Higashishinjuku
Esty Maison Motoazabu

2,470
1,720
1,580

R-086
R-087

Prime Maison Ebisu

Shibuya-ku,
Tokyo

R-088

Granmast Kanazawa
Nishiizumi

Kanazawa-shi,Ishikawa

31

Usagetype

Property
number(Note 1)

Granmast Unomori

R-090

Esty Maison
Kohoku Tsunashima

Yokkaichi-shi,
MieYokohama-shi,
Kanagawa

R-091

MAST LIFE Hino

Hino-shi, Tokyo

Prime Maison
Yokohama Nihon-odori
Kobe Women’s Student
Housing

Yokohama-shi,
Kanagawa

R-093

R-095

Prime Maison Hatsudai

R-096

Esty Maison Uemachidai

R-097

Esty Maison Kobe-sannomiya

Kobe-shi, Hyogo

Prime Maison
Shirokane-takanawa
Prime Maison
Ichigayayamabushicho

Minato-ku,
TokyoShinjuku-ku,
Tokyo
Sumida-ku,
Tokyo
Shinagawa-ku,
TokyoToshima-ku,
Tokyo

R-099
R-100

Esty Maison Morishita

R-101

Prime Maison
Shirokanedai Tower

R-102

Prime Maison Otsuka

R-103

Prime Maison Asakusabashi

R-105
R-106
R-107
R-108

Prime Maison Daikanyama

Garden City Shinagawa
Gotenyama

O-002

Gotenyama SH Building

O-004
O-005
O-006

Meguro-ku,
TokyoShinagawa-ku,
Tokyo

-

O-001

O-003

Taito-ku, Tokyo

Prime Maison
Gotenyama West
Esty Maison Toyosu Residence
Koto-ku, Tokyo(Note 10)
Kitakyushu-shi,
Esty Maison Kokura
Fukuoka
Fukuoka-shi,
MAST Ijiri
Fukuoka

Subtotal

Hommachi Minami Garden
City
Hommachi Garden City
(Office building portion)
HK Yodoyabashi Garden
Avenue (Note 11)
Hirokoji Garden Avenue

Subtotal

32

Shibuya-ku,
TokyoShibuya-ku,
Tokyo
Osaka-shi,
Osaka

Prime Maison Shibuya

R-104

Hotel

Kobe-shi, Hyogo

R-094

R-098

Officebuilding

Location(Note 2)

R-089

R-092

Residence

Name ofreal estate, etc.

Shinagawa-ku,
Tokyo
Shinagawa-ku,
Tokyo
Osaka-shi,
Osaka
Osaka-shi,
Osaka
Osaka-shi,
Osaka
Nagoya-shi,
Aichi
-

H-001

Hommachi Garden City
(Hotel portion)

Osaka-shi, Osaka

H-002

The Ritz-Carlton, Kyoto

Kyoto-shi, Kyoto

Type of ownership
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests

Book value
at the end of
period(million yen)

Estimatedvalue at theend of period(million yen)
(Note 3)(Note 1) “Property number” is the number assigned by property after classifying the properties owned by SHR by usage type, and the

814

830

2,732

2,877

(Note 3) “Estimated value at the end of period” refers to the value stated in each real estate appraisal report (with the end of April as
the appraisal date) for each fiscal period ended April, and the value stated in each real estate appraisal report (with the end of

1,366

1,410

4,805

4,880

5,716

5,990

2,417

2,540

2,984

3,120

1,088

1,060

957

977

4,869

5,120

4,189

4,250

648

672

8,049

9,240

3,760

4,200

1,706

1,900

2,553

2,880

3,449

3,950

6,150

6,560

1,097

1,050

405

409

237,829

248,057

58,512

71,20050,303

61,90022,16830,30037,32244,700

4,324

5,930

6,267

7,170

178,899

221,200

17,082

17,80017,971

18,520Subtotal--

35,05336,320

Total

-

-

451,782

505,577

letters R, O, H and C refer to residence, office building, hotel and retail and other properties, respectively. The same shall apply
hereinafter.

(Note 2) “Location” is indicated based on the statement in the registry. If there are multiple statements of locations in the registry,either one of them is indicated.

October as the appraisal date) or the survey value stated in each real estate survey value report (with the end of October as
the survey date) as a result of value surveys not pursuant to real estate appraisal standards, for each fiscal period ended
October, rounded down to the nearest million yen.

(Note 4) For Esty Maison Gotanda, SHR owns real estate trust beneficiary interest for the compartmentalized ownership interest topart of the exclusively-owned portions of the building and for the accompanying right of site (ratio of right of site:

387,036/426,933 (or approximately 90.7%)).
(Note 5) For Esty Maison Musashikoyama, SHR owns real estate trust beneficiary interest for the compartmentalized ownershipinterest to part of the exclusively-owned portions of the building and for the accompanying right of site (ratio of right of site:
117,678/127,609 (or approximately 92.2%)).
(Note 6) For Esty Maison Sendagi, SHR owns real estate trust beneficiary interest for the compartmentalized ownership interest topart of the exclusively-owned portions of the building and for the accompanying right of site (ratio of right of site: 89,730/103,842(or approximately 86.4%)).

(Note 7) For Esty Maison Yotsuyasakamachi, SHR owns real estate trust beneficiary interest for the compartmentalized ownershipinterest to part of the exclusively-owned portions of the building and for the accompanying right of site (ratio of right of site:245,317/329,739 (or approximately 74.4%)).
(Note 8) MAST Hakata is a property on a leased land owned by the Urban Renaissance Agency and for which a general fixed-termleasehold right is established with a lease term of 50 years from December 1, 2002.

(Note 9) Part of the land of Prime Maison Central Park (lot number: 23-32) is a leased land, while the building (store) on the leased
land is owned by the lessee.

(Note 10) Esty Maison Toyosu Residence is a property on a leased land owned by the Urban Renaissance Agency and for which a general
fixed-term leasehold right is established with a lease term of 65 years from March 17, 2006.
(Note 11) For HK Yodoyabashi Garden Avenue, SHR owns real estate trust beneficiary interests for the compartmentalized ownershipinterest to all of the exclusively-owned portions of the 1st through 6th floors above ground of the building and for theaccompanying right of site (ratio of right of site: 405,901/1,000,000 (or approximately 40.6%)).

33

The following table sets forth the change in status of leasing of real estate, etc. owned by SHR.

Usage
type

Property
number

R-001
R-002
R-003
R-004
R-005
R-006
R-007
R-008
R-009
R-010
R-011
R-012
R-013
Residence

R-014
R-015
R-016
R-017
R-018
R-019
R-020
R-021
R-022
R-023
R-024
R-025
R-026
R-027

34

Name ofreal estate, etc.

Esty Maison Ginza
Esty Maison
Azabunagasaka
Esty Maison
Ebisu II
Esty Maison Ebisu
Esty Maison
Kanda
Esty Maison
Kitashinjuku
Esty Maison
Asakusakomagata
Esty Maison
Kawasaki
Esty Maison
Yokohama(Note 5)
Esty Maison
KameidoEsty Maison
MeguroEsty Maison
SugamoEsty Maison
Kyobashi
Esty Maison
Hakuraku
Esty Maison
Minamihorie
Esty Maison
GotandaEsty Maison
Oisendaizaka
Esty Maison
ShinagawaSeasideEsty Maison
Minamiazabu
Esty Maison
Tsukamoto
Esty Maison
Kawasaki II
Esty Maison
Azabujuban
Esty Maison
Itabashihoncho
Esty Maison
Oizumigakuen
Esty Maison
Higashishinagawa
Esty Maison
Itabashikuyakushomae
Esty Maison
Musashikoyama

8th fiscal period
9th fiscal period
From: May 1, 2018
From: Nov. 1, 2018
To: Oct. 31, 2018
To: Apr. 30, 2019
PropertyPropertyTotal
As arelatedrelatednumber Occupancy
percentage
Total
Occupancy
operatingoperatingofrateof total number ofraterevenuerevenuetenants [at the end
property- tenants [at the end[during[during[at theof fiscal
related [at the end of fiscal
fiscalfiscalend ofperiod]operating of fiscal
period]period]period]fiscal(%)
revenueperiod](%)(million(million
period](Note 2)(%)
(Note 1)
(Note 2)yen)
yen)(Note 1)
(Note 4)(Note 3)(Note 3)As apercentage
of total
propertyrelated
operatingrevenue(%)(Note 4)

Usage
type

Property
number

R-028

1

98.2

175

1.4

1

99.1

179

1.4

1

90.0

51

0.4

1

96.4

50

0.4

1

97.8

58

0.5

1

89.2

58

0.5

1

100.0

24

0.2

1

100.0

23

0.2

1

97.4

45

0.4

1

95.6

46

0.4

1

96.9

47

0.4

1

97.7

47

0.4

1

99.2

64

0.5

1

97.7

67

0.5

1

98.7

77

0.6

1

97.5

76

0.6

1

100.0

65

0.5

1

100.0

65

0.5

1

97.9

53

0.4

1

99.0

53

0.4

R-038

R-029
R-030
R-031
R-032
R-033
R-034
R-035
R-036
R-037

1

95.0

31

0.3

1

100.0

31

0.3

R-039

1

100.0

50

0.4

1

90.1

49

0.4

R-040

1

97.6

89

0.7

1

94.4

89

0.7

R-041

1

98.2

30

0.3

1

93.0

30

0.2

1

95.4

33

0.3

1

100.0

34

0.3

R-043

1

96.4

94

0.8

1

98.9

95

0.8

R-044

1

98.4

79

0.7

1

97.2

77

0.6

R-045

1

93.3

65

0.5

1

94.9

64

0.5

1

98.1

32

0.3

1

92.3

34

0.3

1

95.8

38

0.3

1

99.0

38

0.3

1

100.0

63

0.5

1

93.0

63

0.5

1

94.0

67

0.6

1

97.4

67

0.5

1

96.9

28

0.2

1

100.0

29

0.2

1

98.3

25

0.2

1

96.6

27

0.2

1

97.2

69

0.6

1

93.8

70

0.6

1

92.0

78

0.6

1

100.0

76

0.6

R-055

1

95.6

31

0.3

1

94.0

31

0.3

R-056

Residence

R-042

R-046
R-047
R-048
R-049
R-050
R-051
R-052
R-053
R-054

Name ofreal estate, etc.

Esty Maison
Sendagi
Esty Maison
Yotsuyasakamachi
Esty Maison
Hakatahigashi
Esty Maison
Kamigofuku
Esty Maison
Sangenjaya
Prime Maison
Musashinonomori
Prime Maison
Higashisakura
Prime Maison
Kayabakoen
Esty Maison
Sangenjaya II
Esty Maison
Itabashi C6
MAST Hakata
Esty Maison
Kinshicho
Esty Maison
Musashikoganei
Prime Maison
GokisoPrime Maison
Yuhigaoka
Prime Maison
Kitatanabe
Prime Maison
Momochihama
Esty Maison
Akihabara
Esty Maison
SasazukaPrime Maison
Ginza East
Prime Maison
TakamiPrime Maison
Yadaminami
Prime Maison
TerihaEsty Maison
Higashishirakabe
Esty Maison
Sengoku
Esty Maison
Daizawa
Esty Maison
Togoshi
Esty Maison
Nishitemma
Esty Maison
Shirokanedai

8th fiscal period
9th fiscal period
From: May 1, 2018
From: Nov. 1, 2018
To: Oct. 31, 2018
To: Apr. 30, 2019
PropertyPropertyTotal
As a
As a
relatedTotal
relatednumber Occupancy
percentage
Occupancy
percentage of
operatingnumber ofoperatingofrateof totalrate
total
revenuetenants
revenuetenants [at the end
property[at the end
property[during[at the[during[at theof fiscal
relatedof fiscal
relatedfiscalend offiscalend ofperiod]operatingperiod]operatingperiod]fiscalperiod]fiscal(%)
revenue(%)
revenue(million
period](million
period] (Note 2)(%)(Note 2)(%)yen)
(Note 1)yen)
(Note 1)
(Note 4)(Note 4)(Note 3)(Note 3)
1

100.0

22

0.2

1

100.0

22

0.2

1

98.2

58

0.5

1

100.0

62

0.5

1

100.0

86

0.7

1

98.9

85

0.7

1

95.7

28

0.2

1

97.0

29

0.2

1

97.2

23

0.2

1

97.2

24

0.2

1

95.9

62

0.5

1

95.8

62

0.5

1

100.0

52

0.4

1

89.7

52

0.4

1

100.0

29

0.2

1

96.3

29

0.2

1

97.0

23

0.2

1

100.0

24

0.2

1

96.2

78

0.6

1

97.0

80

0.6

1

100.0

94

0.8

1

100.0

93

0.8

1

100.0

36

0.3

1

97.2

37

0.3

1

98.0

54

0.4

1

95.1

55

0.5

1

96.6

64

0.5

1

96.5

65

0.5

1

95.9

30

0.2

1

100.0

30

0.2

1

95.5

23

0.2

1

96.6

23

0.2

1

100.0

69

0.6

1

100.0

69

0.6

1

96.2

56

0.5

1

98.7

58

0.5

1

97.6

88

0.7

1

98.9

90

0.7

1

98.6

175

1.4

1

98.7

174

1.4

1

97.2

35

0.3

1

88.8

34

0.3

1

96.1

27

0.2

1

100.0

28

0.2

1

100.0

51

0.4

1

100.0

51

0.4

1

100.0

46

0.4

1

100.0

46

0.4

1

95.7

36

0.3

1

97.3

38

0.3

1

100.0

60

0.5

1

95.4

60

0.5

1

98.8

49

0.4

1

97.9

50

0.4

1

96.1

56

0.5

1

96.9

51

0.4

1

96.2

64

0.5

1

98.8

66

0.5

35

Usagetype

Property
Number

R-057
R-058
R-059
R-060
R-061
R-062
R-063
R-064
R-065
R-066
R-067
R-068
R-069
R-070
Residence

R-071
R-072
R-073
R-074
R-075
R-076
R-077
R-078
R-079
R-080
R-081
R-082
R-083
R-084
R-085
R-086

36

Name ofreal estate, etc.

Esty Maison
Higashishinjuku
Esty Maison
Motoazabu
Esty Maison
Toritsudaigaku
Esty Maison
Musashikoyama II
Esty Maison
NakanoEsty Maison
Shinnakano
Esty Maison
Nakanofujimicho
Esty Maison
Tetsugakudo
Esty Maison
KoenjiEsty Maison
Oshiage
Esty Maison
AkabaneEsty Maison Oji
Prime Maison
WasedaPrime Maison
Hatchobori
Prime Maison
JimbochoPrime Maison
Gotenyama East
MAST LIFE
Akihabara
Esty Maison Aoi
Esty Maison
YakuinEsty Maison
Kinshicho II
Esty Maison
Ojima
Prime Maison
Fujimidai
Esty Maison
TsurumaiPrime Maison
Morishita
Prime Maison
ShinagawaPrime Maison
Odorikoen
Prime Maison
Minami 2-joPrime Maison
Kamokamogawa
Prime Maison
Central Park
MAST LIFE
Yahiro8th fiscal period
9th fiscal period
From: May 1, 2018
From: Nov. 1, 2018
To: Oct. 31, 2018
To: Apr. 30, 2019
PropertyPropertyTotal
As a
Total
As a
relatedrelatednumber Occupancy
percentage number Occupancy
percentage
operatingoperatingofrateof totalofrateof total
revenuerevenuetenants [at the end
property- tenants [at the end
property[during[during[at theof fiscal
related[at theof fiscal
relatedfiscalfiscalend ofperiod]operating end of
period]operatingperiod]period]fiscal(%)
revenuefiscal(%)
revenue(million(million
period] (Note 2)(%)
period] (Note 2)
(%)
yen)
yen)
(Note 1)
(Note 4) (Note 1)(Note 4)(Note 3)(Note 3)
1

100.0

46

0.4

1

100.0

47

0.4

1

85.2

36

0.3

1

100.0

35

0.3

1

100.0

22

0.2

1

100.0

23

0.2

1

97.8

29

0.2

1

97.4

29

0.2

1

98.4

52

0.4

1

96.8

52

0.4

1

98.0

28

0.2

1

92.9

27

0.2

1

97.7

30

0.2

1

92.1

29

0.2

1

95.4

33

0.3

1

91.6

33

0.3

1

100.0

33

0.3

1

96.4

33

0.3

1

97.7

72

0.6

1

97.5

72

0.6

1

97.6

96

0.8

1

94.6

97

0.8

1

98.9

48

0.4

1

100.0

50

0.4

1

93.0

41

0.3

1

94.5

44

0.4

1

96.2

37

0.3

1

96.9

39

0.3

1

100.0

51

0.4

1

100.0

52

0.4

1

100.0

84

0.7

1

100.0

84

0.7

1

100.0

15

0.1

1

100.0

15

0.1

1

92.3

71

0.6

1

85.7

69

0.6

1

96.1

75

0.6

1

96.3

76

0.6

1

98.7

219

1.8

1

95.7

223

1.8

1

99.1

242

2.0

1

97.7

244

2.0

1

92.2

67

0.6

1

94.1

69

0.6

1

100.0

155

1.3

1

100.0

155

1.3

1

98.8

57

0.5

1

97.7

57

0.5

1

100.0

57

0.5

1

98.9

56

0.5

1

96.5

115

0.9

1

89.2

113

0.9

1

99.3

70

0.6

1

100.0

71

0.6

1

98.1

47

0.4

1

88.8

46

0.4

1

98.7

88

0.7

1

93.1

87

0.7

1

100.0

56

0.5

1

100.0

56

0.5

8th fiscal period
From: May 1, 2018
To: Oct. 31, 2018
PropertyTotal
As arelatednumber Occupancy
percentage
operating
Usage
Property
Name ofofrate
of total
revenuenumber real estate, etc. tenants [at the end
type
property[during[at theof fiscal
relatedfiscalend ofperiod]operatingperiod]fiscal(%)
revenue(million
period] (Note 2)(%)yen)(Note 1)
(Note 4)(Note 3)
Prime Maison
R-087
1
98.2
113
0.9
Ebisu
Granmast
R-088 Kanazawa
1
100.0
41
0.3
Nishiizumi
Granmast
1
100.0
26
0.2
R-089
Unomori
Esty Maison
R-090 Kohoku
1
100.0
82
0.7
Tsunashima
MAST LIFE
R-091
1
99.0
48
0.4
Hino
Prime Maison
R-092 Yokohama
1
93.6
136
1.1
Nihon-odori
Kobe Women’s
R-093 Student
1
100.0
222
1.8
Housing
Prime Maison
1
96.6
64
0.5
R-094
ShibuyaPrime Maison
1
98.2
75
0.6
R-095
Hatsudai
Esty Maison
1
100.0
32
0.3
R-096
Uemachidai
Esty Maison
R-097 Kobe1
98.2
30
0.3
sannomiya
Prime Maison
Residence
R-098 Shirokane1
97.5
120
1.0
takanawa
Prime Maison
R-099 Ichigayayamabu
1
95.4
109
0.9
shichoEsty Maison
1
100.0
18
0.2
R-100
Morishita
Prime Maison
R-101 Shirokanedai
1
96.6
232
1.9
Tower
Prime Maison
R-102
1
94.9
105
0.9
OtsukaPrime Maison
R-103
1
100.0
51
0.4
Asakusabashi
Prime Maison
R-104
1
91.8
68
0.6
Daikanyama
Prime Maison
R-105 Gotenyama
1
95.9
109
0.9
West
Esty Maison
R-106 Toyosu
1
98.4
463
3.8
Residence
Esty Maison
―
―
―
―
R-107
KokuraR-108 MAST Ijiri――――
Subtotal

12

97.9

7,399

60.8

9th fiscal period
From: Nov. 1, 2018
To: Apr. 30, 2019
PropertyTotal
As arelatednumber Occupancy
percentage
operatingofrateof total
revenuetenants [at the end
property[during[at theof fiscal
relatedfiscalend ofperiod]operatingperiod]fiscal(%)
revenue(million
period](Note 2)(%)yen)
(Note 1)
(Note 4)(Note 3)
1

96.5

111

0.9

1

100.0

41

0.3

1

100.0

26

0.2

1

100.0

78

0.6

1

100.0

48

0.4

1

97.7

153

1.2

1

100.0

223

1.8

1

96.2

65

0.5

1

92.9

82

0.7

1

100.0

33

0.3

1

100.0

31

0.3

1

96.3

122

1.0

1

97.9

110

0.9

1

95.1

21

0.2

1

94.0

238

1.9

1

96.1

115

0.9

1

94.7

56

0.5

1

69.3

65

0.5

1

96.3

118

1.0

1

95.4

467

3.8

1

86.4

26

0.2

1

100.0

6

0.1

12

96.7

7,525

60.8

37

8th fiscal period
9th fiscal period
From: May 1, 2018
From: Nov. 1, 2018
To: Oct. 31, 2018
To: Apr. 30, 2019
PropertyPropertyTotal
As a
Total
As a
relatedrelatednumber Occupancy
percentage number Occupancy
percentage
operatingoperating
Property
Name ofofrate
of totalofrateof total
revenuerevenuenumber real estate, etc. tenants [at the end
property- tenants [at the end
property[during[during[at theof fiscal
related[at theof fiscal
relatedfiscalfiscalend ofperiod]operating end of
period]operatingperiod]period]fiscal(%)
revenuefiscal(%)
revenue(million(million
period] (Note 2)(%)
period](Note 2)
(%)
yen)
yen)
(Note 1)
(Note 4) (Note 1)(Note 4)(Note 3)(Note 3)
Garden City
O-001 Shinagawa
1
100.0
1,318
10.8
1
100.0
1,318
10.7
Gotenyama
Gotenyama SH
1
100.0
1,089
9.0
1
100.0
1,088
8.8
O-002
Building
HommachiO-003 Minami Garden
1
100.0
586
4.8
1
100.0
588
4.8
City
Hommachi
Garden City
1
100.0
903
7.4
1
100.0
905
7.3
O-004
(Office building
portion)HK
O-005 Yodoyabashi
1
100.0
152
1.3
1
100.0
148
1.2
Garden Avenue
Hirokoji Garden
O-006
1
100.0
213
1.8
1
100.0
210
1.7
AvenueUsage
type

Officebuilding

5.

Not applicable.

6.

7.

(Note 4)(Note 5)(Note 6)38

Table of Status of Contract Amount, etc. and Fair Value of Specified Transactions
The following table sets forth the status of contract amount, etc. and fair value of specified transactions at SHR
as of the end of the fiscal period under review.
Category

Type

4,264

35.0

2

100.0

4,260

34.4

1

100.0

402

3.3

1

100.0

406

3.3

―

―

―

―

1

100.0

178

1.4

1

100.0

402

3.3

2

100.0

584

4.7

Total

―

―

100

0.8

―

―

―

―

Subtotal

―

―

100

0.8

―

―

―

―

Total

14

98.4

12,166

100.0

15

97.5

12,369

100.0

H-002

C-001

Hamamatsu
Plaza(Note 6)

Transaction other thanmarket transaction

Transaction other thanmarket transaction

the total number of end tenants for HK Yodoyabashi Garden Avenue and Hirokoji Garden Avenue where pass-through type master
lease agreements have been concluded is 7 and 8, respectively, both as of the end of the 8th fiscal period (from May 1, 2018 to Oct.
31, 2018) and as of the end of the 9th fiscal period (from Nov. 1, 2018 to Apr. 30, 2019).

“Occupancy rate” refers to the ratio of leased area to leasable area of each property as of the end of each fiscal period, rounded to
the nearest first decimal place. The figures indicated in the “Subtotal” columns are the ratio of the subtotal of leased area of eachContract amount, etc.
Fair value(thousand yen) (Note 1)(thousand yen)Amount(Note 2)due after 1 year
55,572,500

48,780,000(542,929)

86,141,000

72,141,000－(Note 3)

141,713,500

120,921,000

ሺ542,929)(Note 1) The contract amount, etc. of interest rate swap transactions is based on notional principal amounts.
(Note 2) The fair value was calculated by the counterparty of the relevant transaction based on the actual market interest rate, etc.
(Note 3) The fair value is omitted because the transaction meets the criteria for special accounting under the Accounting Standards for
Financial Instruments.

8.

“Total number of tenants” refers to the sum total of the number of tenants under, and indicated in, the respective lease agreements
for each property that are valid as of the end of each fiscal period (or, if a master lease agreement that is valid as of the end of each

property classified by usage type to the subtotal of leasable area of each property classified by usage type, and the figure indicatedin the “Total” column is the ratio of the sum total of leased area of each property to the sum total of leasable area of each property,(Note 3)

Details of Investment Securities
Not applicable.

fiscal period has been concluded for the property, the number of lessees under the master lease agreement). In the “Subtotal” and“Total” columns, however, a tenant that leases spaces in multiple properties is counted as one. Furthermore, of the office buildings,(Note 2)

Details of Right to Operate Public Facility, etc.

100.0

Hommachi
Garden City
(Hotel portion)
The RitzCarlton, Kyoto

Subtotal(Note 1)

Not applicable.

2

H-001

Retail andotherproperties

Details of Renewable Energy Power Generation Facility, etc.

Interest rate swap transaction(Under which floating interest
rates are receivable and fixedinterest rates are payable)
Interest rate swap transaction(Under which floating interest
rates are receivable and fixedinterest rates are payable)

Subtotal

Hotel

4.

Status of Other Assets
Trust beneficiary interests with real estate as the main assets in trust are stated in “3. Details of Assets (Real
Estate, etc.) in the Portfolio” above. As of the end of the fiscal period under review, there are no specified assets
other than real estate, etc., asset-backed securities, etc. and infrastructure assets, etc. in the portfolio.

9.

Status of Holding of Assets by Country and Region
As of the end of the fiscal period under review, there are no portfolio real estate, etc. in any other country or region
besides Japan.

as the occupancy rate of the entire portfolio. The both figures have been rounded to the nearest first decimal place.

“Property-related operating revenue [during fiscal period]” indicates the property-related operating revenue of each property foreach fiscal period, rounded down to the nearest million yen.
Figures under the heading “As a percentage of total property-related operating revenue” indicate the ratio of property-related
operating revenue of each property for each fiscal period or the subtotal of property-related operating revenue of each property
classified by usage type for each fiscal period to total property-related operating revenue of each property for each fiscal period,
rounded to the nearest first decimal place.
For Esty Maison Yokohama, the lease agreement with a large tenant for the residential portion (leased area: 2,706.49m2) was

terminated as of May 31, 2019. As of the date of this document, no lease agreement has been concluded for the period following
June 1, 2019 for the relevant residential portion of Esty Maison Yokohama.
SHR disposed Hamamatsu Plaza on October 29, 2018. Accordingly, “Property-related operating revenue [during fiscal period]” and“As a percentage of total property-related operating revenue” for the property in the above table indicate the figures for the duration
SHR owned it during the previous fiscal period.

39

Capital expenditures for property
1.

Esty Maison Yokohama(Tsuruya-cho, Kanagawa-ku,
Yokohama-shi, Kanagawa)
Esty Maison Yakuin(Hirao, Chuo-ku, Fukuoka-shi,
Fukuoka)
Esty Maison Kyobashi(Higashinoda-machi, Miyakojimaku, Osaka-shi, Osaka)
Esty Maison Kokura(Kyomachi, Kokurakita-ku,
Kitakyushu-shi, Fukuoka)
Esty Maison Higashishirakabe(Yoshino, Higashi-ku, Nagoya-shi,
Aichi)
Esty Maison Shinagawa Seaside(Higashishinagawa, Shinagawaku, Tokyo)
Esty Maison Oisendaizaka(Higashi-Oi, Shinagawa-ku, Tokyo)
Esty Maison Akihabara(Ueno, Taito-ku, Tokyo)
Hommachi Garden City (Officebuilding portion)(Hommachi, Chuo-ku, Osaka-shi,
Osaka)
Hommachi Garden City (Hotelportion)(Hommachi, Chuo-ku, Osaka-shi,
Osaka)
Hommachi Garden City (Officebuilding portion)(Hommachi, Chuo-ku, Osaka-shi,
Osaka)
Hommachi Garden City (Hotelportion)(Hommachi, Chuo-ku, Osaka-shi,
Osaka)(Note)

PurposeRenovation
Large-scale repairs
Large-scale repairs
Large-scale repairs
Large-scale repairs
Large-scale repairs
Large-scale repairs
Large-scale repairs

Scheduled period
From: June 2019
To: August 2019
From: February 2019
To: October 2019
From: October 2019
To: April 2020
From: November 2019
To: April 2020
From: February 2019
To: June 2019
From: March 2019
To: October 2019
From: October 2019
To: March 2020
From: November 2019
To: April 2020

New installation of
coil units for ice heatstorage system

From: May 2019

New installation of
coil units for ice heatstorage system

From: May 2019

Upgrading of central
monitoring devices
and peripheral
equipment
Upgrading of central
monitoring devices
and peripheral
equipment

From: November 2019

To: June 2019

To: June 2019

To: April 2020
From: November 2019
To: April 2020

Scheduled amount (million yen) (Note)
Payment for
Total
the fiscal
Amountamount period under already paid
review
226
216

-

-

128

-

-

128

-

-

116

-

-

107

-

-

95

-

-

62

-

-

44

-

-

40

-

-

27

-

-

24

-

-

Capital Expenditures During Period
An overview of capital expenditures conducted by SHR for its properties during the fiscal period under review is

as set forth in the following table. Total capital expenditures during the fiscal period under review was 638 million
yen and, together with 282 million yen of repair expenses charged to expenses in the fiscal period under review,
work amounting to 920 million yen was implemented.

Schedule of Capital Expenditures
The main capital expenditure amounts accompanying renovation work, etc. currently planned for properties
owned by SHR, is as follows. However, a portion of such amounts may ultimately be classified as expenses in thecourse of the accounting process.

Name of real estate, etc.
(location)

40

2.

Name of real estate, etc. (location)
Esty Maison Kawasaki(Ogawa-cho, Kawasaki-ku,
Kawasaki-shi, Kanagawa)
Esty Maison Kawasaki II(Ogawa-cho, Kawasaki-ku,
Kawasaki-shi, Kanagawa)Prime Maison Yadaminami(Yadaminami, Higashi-ku, Nagoyashi, Aichi)
Prime Maison Kayabakoen(Kayaba, Chikusa-ku, Nagoya-shi,
Aichi)
Esty Maison Azabujuban(Azabujuban, Minato-ku, Tokyo)

3.

PurposeLarge-scale repair
Large-scale repair
Large-scale repair
Large-scale repair
Large-scale repair
Other capital expenditures
Total

PeriodFrom: August 2018

Payment amount(million yen)

To: March 2019
From: June 2018
To: November 2018
From: November 2018
To: April 2019
From: November 2018
To: April 2019
From: November 2018
To: March 2019

162
102
78
61
48
185
638

Cash Reserves for Long-Term Repair Plans
SHR had no cash reserved for long-term repair plans as of the end of the fiscal period under review (Note).

(Note) “Reserve fund for repair,” which has been reserved by management associations at the properties owned by SHR in order tosecure expenses for repair works expected in the future, is not included in the cash reserves.

“Scheduled amount” refers to the amount arrived at by multiplying (i) the full amount required for the work by (ii) the ratio of
SHR’s ownership or quasi-co-ownership in the real estate trust beneficiary interest, when SHR owns real estate trust beneficiaryinterests for the compartmentalized ownership interest or quasi-co-ownership in the real estate trust beneficiary interests forthe property that is subject to the relevant work.

41

Condition of expenses and debts

Condition of investment transactions

Details of Expenses Pertaining to Management, etc.

Item
Asset management fee (Note 1)(Unit: thousand yen)

8th fiscal period
From: May 1, 2018
To: Oct. 31, 2018

9th fiscal period
From: Nov. 1, 2018
To: Apr. 30, 2019
517,151

826,100

Asset custody fee

8,486

9,083

Administrative service fees

49,95942,953

Directors’ compensations

3,600

3,600

Other expenses (Note2)

1,221,937

217,096

1,801,135

1,098,833

Total

1.

(Note 1) In addition to the amounts shown above, the asset management fees contain 925,022 thousand yen as merger fees, which areincluded in Other expenses, and 57,599 thousand yen as management fees for property disposition, recorded as otherdisposition-related expenses, for the 8th fiscal period, and 3,120 thousand yen as management fees for property acquisition,
capitalized in the book value of real estate, etc., for the 9th fiscal period.
(Note 2) Other expenses include 941,174 thousand yen as merger-related expenses, including the merger fee, for the 8th fiscal period.

Status, etc. of Sale and Purchase of Real Estate, etc., Asset-Backed Securities, etc., Infrastructure Assets, etc. andInfrastructure-Related Assets

Name of real estate, etc.
Esty Maison Kokura
MAST Ijiri
The Ritz-Carlton, Kyoto
Total(Note)

Acquisition
Disposition
Acquisition
Disposition
Gain (Loss) on
price
price
Book value
Acquisition date
Disposition datesale(million yen)(million yen) (million yen)(million yen)
(Note)(Note)
November 29, 2018
1,040
―
―
―
―
January 31, 2019
390
―
―
―
―
January 31, 2019
17,800―――――19,230――――“Acquisition price” and “Disposition price” indicate the transaction prices shown in the sales agreements for respective owned
properties (excluding consumption tax, local consumption tax and miscellaneous expenses including transaction fees), rounded down
to the nearest million yen. The same shall apply hereinafter.

2.

Status, etc. in respect of Sale and Purchase of Other Assets
Not applicable.

Main assets other than the abovementioned real estate, etc., asset-backed securities, etc., infrastructure assets,etc. and infrastructure-related assets are essentially bank deposits or bank deposits within assets in trust.
3. Investigation into Value, etc. of Specified Assets(1) Real Estate, etc. (Appraisal)

Acquisitionordisposition

Acquisition

Name of realestate, etc.

Transaction
dateType of asset

Acquisition
price or
disposition
price(million yen)Appraisalvalue(millionyen)(Note)

1,040

1,050

Esty Maison
KokuraNovember 29,
Real estate trust
2018
beneficiary interests

MAST Ijiri

January 31,
2019

Real estate trust
beneficiary interests

390

400

The RitzCarlton, Kyoto

January 31,
2019

Real estate trust
beneficiary interests

17,80018,480Appraiser

Date ofappraisal

Richi Appraisal November 1,
Institute
2018
Daiwa Real
EstateDecember 31,
Appraisal Co.,
2018
Ltd.
Richi Appraisal December 31,
Institute
2018(Note) The appraisal value stated above is derived by applying the “Real Estate Appraisal Standards; Particulars; Chapter 3: Appraisal on
Value of Real Estate Subject to Securitization.”(2) Others
Concerning transactions requiring investigations into the value, etc. of specified assets pursuant to Article 201,
Paragraph 2 of the Investment Trusts Act, Akasaka Audit LLC has conducted the investigations pursuant toPractical Guidelines for Specialized Operations 4460 “Practical Guidelines for Agreed-Upon Procedures
Pertaining to Investigation into the Value, etc. of Specified Assets of Investment Trusts and Investment

Corporations” published by The Japanese Institute of Certified Public Accountants, and SHR has been notified of
the results of the investigations.
The transactions subject to investigations in the fiscal period under review were six interest rate swap
transactions. For the transactions, investigations into the name of the counterparty to the transaction, the typeof financial instrument or financial indicator involved, the transaction period, other matters concerning thecontent of the over-the-counter transaction of derivatives, etc. have been entrusted.

42

43

Financial Section (Audited)

4. Status of Transactions with Interested Persons, etc. (Note 1)(1) Status of Transactions
Amount of purchase and sale, etc.

Category

Amount of purchase, etc.

Total amountAmount of sale, etc.

19,230 million yen― million yen

Breakdown of status of transactions with interested persons, etc.
Sekisui House, Ltd.
Sekiwa Real Estate Kyushu, Ltd.

17,800 million yen [92.6%]― million yen [―%]

390 million yen [2.0%]― million yen [―%]

(2) Amount of Commission Fee, etc.
Category

Total amount Breakdown of transactions with interested persons, etc.
of commission
Amount paidfee, etc. (A)
Payee
(B)
(thousand yen)(thousand yen)Management fee(Note 2)

748,636

As a percentage of
total amount (B/A)(%)

Sekiwa Real Estate, Ltd.

394,048

52.6

Sekiwa Real Estate
Chubu, Ltd.

56,081

7.5

Sekiwa Kanri Kansai Co.,Ltd.

40,461

5.4

Sekisui House, Ltd.

26,458

3.5

Sekiwa Real Estate
Kyushu, Ltd.

17,757

2.4

Sekiwa Real Estate
Kansai, Ltd.

6,716

0.9

121

0.0

SH Hotel Systems Ltd.

(Note 1) “Interested persons, etc.” refers to interested persons, etc. of the Asset Management Company with which SHR has executed an asset
management entrustment agreement as provided in Article 123 of the Order for Enforcement of the Act on Investment Trusts andInvestment Corporations (Order for Enforcement No. 480 of 2000, as amended) and Article 26, Item 27 of the Rules on Investment
Reports, etc. of Investment Trusts and Investment Corporations of The Investment Trusts Association, Japan.
(Note 2) “Management fee” has been rounded down to the nearest thousand yen.
(Note 3) Other than the commission fee, etc. indicated above, the amounts paid to interested persons, etc. for repair works, etc. are as follows.
The figures have been rounded down to the nearest thousand yen.

5.

44

Sekiwa Real Estate, Ltd.

142,926 thousand yen

Sekiwa Real Estate Chubu, Ltd.

54,767 thousand yen

Sekiwa Kanri Kansai Co., Ltd.

30,630 thousand yen

Sekisui House, Ltd.

264,583 thousand yen

Sekiwa Real Estate Kyushu, Ltd.

24,317 thousand yen

Sekiwa Real Estate Kansai, Ltd.

4,009 thousand yen

Contents
Financial Statements
Balance Sheet

46

Statement of Income and Retained Earnings

48

Statement of Changes in Net Assets

49

Statement of Cash Distributions

51

Statement of Cash Flows

52

Notes to Financial Statements

53

Supplementary Schedules

71

Independent Auditor’s Report81

Status, etc. of Transactions with the Asset Management Company Pertaining to Business Operations ofConcurrent Business Engaged in by the Asset Management Company
There are no applicable transactions because as of the end of the fiscal period under review, the SHAM does notconcurrently engage in any type I financial instruments or type II financial instruments business (as defined in
the Financial Instruments and Exchange Act (Act No. 25 of 1948, including subsequent amendments)), building
lots and buildings transaction business, or specified joint real estate ventures.

45

(Thousands of yen)

8th Fiscal Period(As of October 31, 2018)

1. Financial Statements(1) Balance Sheet(Thousands of yen)

8th Fiscal Period(As of October 31, 2018)

AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
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
Leasehold rights in trust
Other
Total intangible assets
Investments and other assets
Lease and guarantee deposits
Long-term prepaid expenses
Other
Total investments and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance costs
Investment unit issuance costs
Total deferred assets
Total assets

46

9th Fiscal Period(As of April 30, 2019)9,230,651
12,859,502
145,522
154,213
5,114(499)
22,394,506

7,657,644
13,301,529
157,133
168,285
212,703(973)
21,496,324

154,045,698(6,157,456)
147,888,242
1,483,975(91,713)
1,392,261
2,093,637(45,276)
2,048,361
59,994(3,391)56,602279,918,555
43,344431,347,368

158,892,235(8,236,920)
150,655,315
1,500,004(121,928)
1,378,076
2,153,877(91,694)
2,062,182
117,224(10,983)
106,240
295,079,081
98,534449,379,431

2,526,599
8,346
2,534,946

2,501,173
6,894
2,508,068

800,700
279,284
173,347
1,253,331
435,135,646

790,700
396,558
373,282
1,560,540
453,448,040

29,205
29,13958,344
457,588,497

26,285
14,75541,040474,985,405

Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of investment corporation bonds
Current portion of long-term loans payable
Accounts payable – otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Derivatives liabilities
Other
Total current liabilities
Non-current liabilities
Investment corporation bonds
Long-term loans payable
Tenant leasehold and security deposits in trust
Derivatives liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
SurplusCapital surplus
Voluntary reserve
Reserve for temporary difference adjustments
Total voluntary reserve
Unappropriated retained earnings
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets (Note 4)
Total liabilities and net assets

9th Fiscal Period(As of April 30, 2019)

640,450－
2,500,000
12,382,000
623,167
195,311590
200,653
311,576
15,009201,664
17,070,424

751,690
6,500,000
2,000,000
20,792,500
986,348
189,758590－
309,077
27,894
189,700
31,747,560

13,000,000
170,050,500
10,964,384
511,956
327,370
194,854,211
211,924,636

11,000,000
174,640,000
11,148,044
515,034
239,015
197,542,094
229,289,654

110,189,294

110,189,294

128,598,415

128,598,415－－
7,403,117
136,001,532
246,190,826

1,556,827
1,556,827
5,894,142
136,049,385
246,238,679(526,965)(526,965)
245,663,860
457,588,497(542,929)(542,929)
245,695,750
474,985,405

The accompanying notes are an integral part of these financial statements.

47

(2) Statement of Income and Retained Earnings(Thousands of yen)

8th Fiscal Period

Operating revenue
Rent revenue – real estate (Note 5)
Other lease business revenue (Note 5)
Gain on sale of real estate properties (Note 5)
Total operating revenue
Operating expenses
Expenses related to rent business (Note 5)
Asset management fees
Asset custody fees
Administrative service fees
Directors’ compensation
Merger expenses
Provision of allowance for doubtful accounts
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Reversal of distribution payable
Refunded consumption taxes
Other
Total non-operating income
Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds
Borrowing related expenses
Amortization of investment unit issuance costs
Amortization of investment corporation bond issuance costs
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on negative goodwill
Total extraordinary income
Income before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings

9th Fiscal Period(From May 1, 2018 to(From November 1, 2018

October 31, 2018)

to April 30, 2019)

11,913,550
252,879
8,114
12,174,544

12,085,814
284,165－
12,369,980

4,579,453
517,151
8,486
49,9593,600
941,174324
280,439
6,380,588
5,793,955

4,643,232
826,100
9,083
42,9533,600－
483
216,612
5,742,066
6,627,913

98
1,716
49,862
143
51,820111
1,135
30,680－31,927599,481
51,21867,576
14,384
2,919
734
736,314
5,109,461

607,995
48,75589,904
14,3842,919
1,135
765,094
5,894,747

2,293,923
2,293,923
7,403,385
605
21
626
7,402,759
357
7,403,117－－
5,894,747
605－
605
5,894,142－
5,894,142(3) Statement of Changes in Net Assets
8th Fiscal Period (From May 1, 2018 to October 31, 2018)(Thousands of yen)

Unitholders’ equity
Unitholders’capitalBalance at beginning of period

Surplus
Unappropriatedretainedearnings

Capitalsurplus110,189,294－

2,621,502

Total
surplusTotal
unitholders’equity2,621,502 112,810,796

Changes of items during period
Increase due to merger

128,598,415

128,598,415 128,598,415

Distribution from surplus(2,621,145)(2,621,145)(2,621,145)

Net income

7,402,759

7,402,759

7,402,759

Net changes of items other thanunitholders’ equity
Total changes of items during period
Balance at end of period (Note 6)－

128,598,415

4,781,614

133,380,029 133,380,029

110,189,294

128,598,415

7,403,117

136,001,532 246,190,826(Thousands of yen)

Valuation and translation adjustments

Balance at beginning of period

Deferred gains orlosses on hedges

Total valuationand translation
adjustments

－

－

Total
net assets
112,810,796

Changes of items during period
Increase due to merger

128,598,415

Distribution from surplus(2,621,145)

Net income

7,402,759

Net changes of items other thanunitholders’ equity(526,965)(526,965)(526,965)

Total changes of items during period(526,965)(526,965)

132,853,063(526,965)(526,965)

245,663,860

Balance at end of period (Note 6)

The accompanying notes are an integral part of these financial statements.

48

49

9th Fiscal Period (From November 1, 2018 to April 30, 2019)(4) Statement of Cash Distributions(Thousands of yen)

Item

Unitholders’ equity

Ⅰ. Unappropriated retained earnings
Ⅱ. Reversal of voluntary reserve

Surplus
Voluntary reserve

Unitholders’capitalReserve fortemporarydifference
adjustments

Capitalsurplus

Total
voluntary
reserve

Reversal of reserve for temporary difference
adjustments (Note 7)

Unappropriate
d retained
earnings

Ⅲ. Cash distributions(1,556,827)[Cash distributions per unit]
Ⅳ. Voluntary reserve
Provision of reserve for temporary difference
adjustments (Note 7)
Ⅴ. Retained earnings carried forward

Distribution from surplus(5,846,289)

Method for calculating cash distributions

Net income

5,894,142

Balance at beginning of period

110,189,294

128,598,415－

7,403,117－

Changes of items during period
Reserve for temporary difference
adjustments

1,556,827

1,556,827

Balance at end of period (Note 6)－－

1,556,827

1,556,827(1,508,974)

110,189,294

128,598,415

1,556,827

1,556,827

5,894,142(Thousands of yen)

Valuation and translation
adjustments

Unitholders’ equity
Surplus

Total
Deferred gains valuation andor losses ontranslation
hedgesadjustments

Total
net assets

Total
surplusTotal
unitholders’equity136,001,532

246,190,826

－

－

－

Distribution from surplus(5,846,289)(5,846,289)(5,846,289)

Net income

5,894,142

5,894,142

5,894,142

Balance at beginning of period(526,965)(526,965)

245,663,860

Changes of items during period
Reserve for temporary difference
adjustments

Balance at end of period (Note 6)(15,963)(15,963)(15,963)

47,85247,852(15,963)(15,963)

31,889136,049,385

246,238,679(542,929)(542,929)

245,695,750

The accompanying notes are an integral part of these financial statements.

50

October 31, 2018 )April 30, 2019 )7,403,117,143yen

5,894,142,237yen－yen

102,630,817yen

5,846,289,414yen[1,554yen]

5,996,773,054yen

1,556,827,729yen

－yen

－yen

[1,594yen]－yen

The basic policy is to distributein excess of an amountThe basic policy is to distributein excess of an amountfor distribution of SHR
provided in Article 67-15,
Paragraph 1 of the Act onfor distribution of SHR
provided in Article 67-15,
Paragraph 1 of the Act on

Special Measures Concerning

Taxation as set forth in Article
46, Paragraph 1, Item 2 of the
Articles of Incorporation of
SHR.
Based on such policy, SHR

decided to distribute
5,846,289,414 yen, which is theamount of unappropriatedretained earnings after

Net changes of items other thanunitholders’ equity
Total changes of items during period

9th Fiscal Period(From November 1, 2018 toequivalent to 90% of theamount of earnings available

Net changes of items other thanunitholders’ equity
Total changes of items during period

8th Fiscal Period(From May 1, 2018 todeducting part of the gain on
negative goodwill, as
distribution of earnings.
SHR will not distribute cash inexcess of earnings as set forthin Article 46, Paragraph 2 of

the Articles of Incorporation ofSHR.

equivalent to 90% of theamount of earnings available

Special Measures Concerning

Taxation as set forth in Article
46, Paragraph 1, Item 2 of the
Articles of Incorporation of
SHR.
Based on such policy, SHR

decided to distribute
5,996,773,054 yen, which is
obtained by adding a reversalof the reserve for temporary
difference adjustments(102,630,817 yen) tounappropriated retained
earnings, as distribution of

earnings.
SHR will not distribute cash inexcess of earnings as set forthin Article 46, Paragraph 2 of

the Articles of Incorporation of
SHR.

51

(5) Statement of Cash Flows
8th Fiscal Period(From May 1, 2018 to

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Gain on negative goodwill
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes receivable
Decrease (increase) in prepaid expenses
Decrease (increase) in long-term prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable – other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in advances received
Decrease due to sale of property, plant and equipment in trust
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Purchase of property, plant and equipment in trust
Purchase of intangible assets in trust
Purchase of intangible assets
Payments for lease and guarantee deposits
Proceeds from tenant leasehold and security deposits in trust
Repayments of tenant leasehold and security deposits in trust
Decrease (increase) in other investments
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Redemption of investment corporation bonds
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting from merger
Cash and cash equivalents at end of period (Note 8)
The accompanying notes are an integral part of these financial statements.

52

October 31, 2018)(Thousands of yen)

9th Fiscal Period(From November 1, 2018
to April 30, 2019)

7,403,385
2,143,819
2,919
14,384(2,293,923)(98)
650,700(6,629)－(40,845)(29,126)
147,997(404,864)(127,643)
72,781
19,029,353
25,875
26,588,085
98(763,802)(3,188)25,821,192

5,894,747
2,190,566
2,919
14,384－(111)
656,751(11,611)(147,089)(14,072)(117,273)(80,862)361,698(200,653)(2,499)－(59,850)
8,487,044
111(767,380)(604)
7,719,170(24,039,880)(2,290,065)(7,067)(537,857)
483,748(666,337)(6,605)(27,064,065)(19,999,067)－－－
310,349(126,690)(189,934)(20,005,342)

8,000,000(8,000,000)
10,500,000(2,500,000)－(5,673,896)
2,326,103
1,083,230
9,613,003
11,393,919
22,090,154

23,500,000(17,000,000)
25,382,000(12,382,000)(2,500,000)(5,844,807)
11,155,192(1,130,979)
22,090,154－
20,959,174(6) Notes to Financial Statements
1. Organization
Sekisui House Reit, Inc. (“SHR”) is a Japanese real estate investment corporation established in September 2014
under the Act on Investment Trusts and Investment Corporations of Japan (the “Investment Trust Act”).
On December 3, 2014, SHR commenced its investment operations when it was listed on the Real Estate Investment
Trust Securities Market of the Tokyo Stock Exchange, and it acquired three properties (total acquisition cost of¥114.3 billion) on the same day.
SHR implemented a 2-for-1 split of its investment units with May 1, 2018 as the effective date.
SHR conducted an absorption-type merger with Sekisui House Residential Investment Corporation (“SHI”) as thedissolved corporation, setting May 1, 2018 as the effective date.
SHR is externally managed by a licensed asset management company, Sekisui House Asset Management, Ltd. (the“Asset Management Company”).
Sekisui House Asset Management, Ltd., previously called Sekisui House Investment Advisors, Ltd., carried out anabsorption-type merger with Sekisui House Asset Management, Ltd. (the “former SHAM”), which was the asset
management company for SHI, on May 1, 2018, with the Asset Management Company being the surviving company
and the former SHAM being the dissolved company, and changed its company name to the current one.
2. Basis of Presentation
SHR maintains its accounting records and prepares its financial statements in accordance with accounting
principles generally accepted in Japan (“Japanese GAAP”), including provisions set forth in the Financial
Instruments and Exchange Act, the Investment Trust Act, the Companies Act and the related regulations, which are
different in certain respects as to the application and disclosure requirements of International Financial ReportingStandards.
The accompanying financial statements are basically a translation of the financial statements of SHR, which wereprepared in accordance with Japanese GAAP and were presented in its Securities Report filed with the Kanto Local
Finance Bureau. In preparing the accompanying financial statements, certain reclassifications and modifications
have been made to the financial statements issued domestically in order to present them in a format which is morefamiliar to readers outside Japan. In addition, the notes to the financial statements include certain information
which might not be required under Japanese GAAP but is presented herein as additional information.
SHR’s fiscal period is a six-month period, which ends at the end of April and October of each year.
SHR does not prepare consolidated financial statements as it has no subsidiaries.
Unless otherwise specified, amounts have been rounded down to the nearest thousand yen in the accompanying
financial statements and the notes thereto. As a result, the amounts shown in the financial statements and notes
thereto do not necessarily agree with the sum of the individual account balances.
3. Summary of Significant Accounting Policies(1)Property, plant and equipment (including assets in trust)
1. Method of depreciation
Depreciation is calculated using the straight-line method.
and amortization of nonThe useful lives of principal property, plant and equipment are as follows:
current assets
3-69 years
Buildings
Structures
7-45 years
Machinery and equipment
10-61 years
Tools, furniture and fixtures
2-15 years(2)Intangible assets
Intangible assets are amortized utilizing the straight-line method.
Leasehold rights in trust are amortized on a straight-line basis over theremaining life of each fixed-term land lease contract.
(3)Long-term prepaid expenses
Long-term prepaid expenses are amortized utilizing the straight-line method.
2. Accounting for(1) Investment corporation bond issuance costs
deferred assets
Investment corporation bond issuance costs are amortized utilizing thestraight-line method over the redemption periods.
(2) Investment unit issuance costs
Investment unit issuance costs are amortized utilizing the straight-line
method (over 3 years).

53

3. Standards for recording
allowance

4. Standards forrevenue and expense
recognition

5. Method of hedge
accounting

6.

54

Scope of funds in thestatement of cash flows

Allowance for doubtful accounts
To prepare for possible losses arising from default on receivables, theestimated uncollectable amount is recorded by examining collectability on acase-by-case basis for doubtful and other specific receivables.
(1)Revenue recognition
Rent revenue
SHR generally recognizes rent revenue,
including fixed rent revenues, variable rent
revenues and common area charges, on an
accrual basis over the term of each leaseagreement.
Other lease business Other lease business revenues is recognizedrevenuein accordance with Japanese GAAP, typicallyas amounts under relevant agreements
become due.
(2)Accounting for property taxes
In accounting for property tax, city planning tax, depreciable asset tax, etc. onreal estate, etc., of the tax amount assessed and determined, the amountcorresponding to the applicable calculation period is expensed as expenses
related to rent business.
Reimbursement of property tax, paid to the seller upon the acquisition of realestate or trust beneficiary interests of real estate as assets in trust, is notrecognized as expenses related to rent business in the corresponding fiscal
period but included in the acquisition cost of the property.
Property taxes capitalized as a part of the acquisition cost amounted to 39,028
thousand yen for the 9th fiscal period and 65,915 thousand yen for the 8th fiscal
period(1)Method of hedge accounting
Deferral hedge accounting is applied. However, the special accounting
treatment is applied to interest rate swaps that meet the criteria for the
special accounting treatment.
(2)Hedging instruments and hedged items
Hedging instruments: Interest rate swap transactions
Hedged items:
Interest on loans(3)Hedging policy
SHR conducts derivative transactions for the purpose of hedging the risks set
forth in its Articles of Incorporation based on its basic risk management policy.
(4)Method for assessing the effectiveness of hedging
Interest rate swaps meet the criteria for the special accounting treatment andan assessment of the effectiveness is thus omitted.
(5)Special accounting treatment
Under the special accounting treatment, interest rate swaps are not measured
at fair value, but the differential paid or received under the swap agreements
is recognized and included in or deducted from interest expense. Anyamounts received under interest rate swaps subject to such accounting
treatment are not recognized as income on the accompanying statements ofincome and retained earnings but rather have the effect of decreasing interest
expenses.
The funds (cash and cash equivalents) in the statement of cash flows consist of cashon hand and cash in trust; deposits that can be withdrawn at any time and deposits
in trust; and short-term investments with a maturity of three months or less fromthe date of acquisition, which are readily convertible to cash and bear only an
insignificant risk of price fluctuation.

7.

Other significant mattersserving as basis for
preparation offinancial statements(1)Accounting for trust beneficiary interests of real estate, etc. as assets in trust
Concerning trust beneficiary interests of real estate, etc. as assets in trust, allaccounts of assets and liabilities within assets in trust as well as all accountsof revenue and expenses from the assets in trust are recognized in the relevant
account items on the balance sheet and the statement of income and retained
earnings.
The following material items of the assets in trust recognized in the relevant
account items are separately listed on the balance sheet.
ͳሻ Cash and deposits in trustʹሻ Buildings in trust; Structures in trust; Machinery and equipment in trust;Tools, furniture and fixtures in trust; Land in trust; Construction inprogress in trust; Leasehold rights in trust͵ሻ Tenant leasehold and security deposits in trust(2)Accounting for consumption tax, etc.
Consumption tax and local consumption tax are excluded from thecorresponding transaction amounts.

55

4. Notes to Balance Sheet

5. Notes to Statement of Income and Retained Earnings*1. Breakdown of property-related operating revenue and expenses*1. Minimum net assets designated in Article 67-4 of the Investment Trust Act(Thousands of yen)(Thousands of yen)

8th Fiscal Period

8th Fiscal Period

9th Fiscal Period(As of October 31, 2018)(From May 1, 2018 to(As of April 30, 2019)50,00050,000*2. Commitment line agreement
SHR has entered into a commitment line agreement with three financial institutions in order to secure flexible
and stable financing.

(Thousands of yen)

8th Fiscal Period

9th Fiscal Period(As of October 31, 2018)

Total amount of commitment line
Balance executed as loans
Unused line of credit(As of April 30, 2019)15,000,000－－

15,000,000

15,000,000*3. Matters concerning accounting for reserve and reversal of reserve for temporary difference adjustments(Thousands of yen)

8th Fiscal Period

9th Fiscal Period(As of April 30, 2019)

Gain on negative goodwill (*)
Initial amount－

1,556,827

Balance at beginning of period－－

Reserve amount during period－

1,556,827

Reversal amount during period

－

－

－

1,556,827－

Reserve of a part of gain on
negative goodwill by merger
with SHI.

Balance at end of period
Reason for reserve and reversal(*) Reserve of a part of gain on negative goodwill that arose in the previous fiscal period; SHR plans to drawdown at least 1% of thereserve for each fiscal period (corresponding to the amount of the reserve expensed equally over 50 years) and appropriate the amountfor cash distributions, starting from the fiscal period following the fiscal period in which the reserve was made.

A. Property-related operating revenue
Rent revenue – real estate
Rental income
Other

11,913,550

11,812,505
273,308

50,897201,981

252,879

42,768241,397

Other lease business revenue
Utilities revenue
Other
B. Property-related operating expenses
Expenses related to rent businessSubcontract expenses
Property management fees
Trust fees
Utilities expenses
Property and other taxes
Insurance expenses
Repair expenses
Depreciation
Other expenses related to rent business(From November 1, 2018 toApril 30, 2019)

11,601,257
312,293

Total property-related operating revenue

15,000,000(As of October 31, 2018)

October 31, 2018)

9th Fiscal Period

12,166,429

381,521383,058
40,485
109,791
806,781
14,209238,406
2,142,602
462,595

4,579,453

12,085,814

284,165
12,369,980

374,236
374,765
44,181
113,511803,144
14,533
282,133
2,189,114
447,612

4,643,232

Total property-related operating expenses

4,579,453

4,643,232

C. Property-related operating income [A − B]

7,586,976

7,726,747*2. Breakdown of gain on sale of real estate properties
8th Fiscal Period (From May 1, 2018 to October 31, 2018)(Thousands of yen)

Esty Maison Machida
Esty Maison Shinkawasaki
Esty Maison Megurohoncho
Esty Maison Joto
Esty Maison Tenjinhigashi I
Esty Maison Tenjinhigashi II
Esty Maison Shijonishinotoin
Esty Maison Hachiojiminamino
Esty Maison Nishinakajima
Esty Maison Kawaramachi
Esty Maison Shibaura
Esty Maison Tsutsujigaoka
Proceeds from sale of realestate properties

16,400,000

Cost of real estate properties

16,302,324

Other sales expenses
Gain on sale of real estate
properties

97,675－(Note) Individual gain on sale of real estate properties (disposition prices) are not disclosed as consent for disclosure cannot be
obtained from the purchasers. In accordance with this, individual costs of sales of real estate properties (book values) are
not disclosed either.

56

57

Hamamatsu Plaza
Proceeds from sale of realestate property

2,799,860

Cost of real estate property

2,727,028

Other sales expenses

64,716

Gain on sale of real estate
property

8,114(Thousands of yen)

8th Fiscal Period(From May 1, 2018 to
October 31, 2018)

9th Fiscal Period (From November 1, 2018 to April 30, 2019)
Not applicable.
6. Notes to Statement of Changes in Net Assets*1. Total number of authorized investment units and total number of investment units issued
9th Fiscal Period
8th Fiscal Period(From May 1, 2018 to
October 31, 2018)(From November 1, 2018 toApril 30, 2019)

Total number of authorized investment units

20,000,000units

20,000,000units

Total number of investment units issued

3,762,091units

3,762,091units

7. Notes to Statement of Cash Distributions
Reserve for temporary difference adjustments
8th Fiscal Period(As of October 31, 2018)

Of the gain on negative goodwill recorded for the
8th fiscal period, SHR recognized 1,556,827,729

yen as reserve for temporary difference
adjustments. SHR plans to drawdown at least 1%of the reserve (corresponding to the amount of thereserve expensed equally over 50 years) andappropriate the amount for cash distributions,starting from the fiscal period following the fiscal
period in which the reserve was made.

9th Fiscal Period(From November 1, 2018
to April 30, 2019)

Current assets

11,596,391－

Non-current assets

231,681,572－

Total assets

243,277,963－

Current liabilities

21,936,953－

Non-current liabilities

90,448,670－

Total liabilities

112,385,624－

9th Fiscal Period (From November 1, 2018 to April 30, 2019)
Not applicable.
9. Lease Transactions
Operating lease transactions as lessee
Future minimum lease payments(Thousands of yen)

9th Fiscal Period

8th Fiscal Period(As of April 30, 2019)

With regard to the reserve for temporary
difference adjustments, SHR plans to

drawdown at least 1% of the reserve for eachfiscal period (corresponding to the amount of
the reserve expensed equally over 50 years)
and appropriate the amount for cash
distributions, starting from the fiscal period

following the fiscal period in which the reserve

Due within 1 year
Due after 1 year
Total

(Thousands of yen)

8th Fiscal Period(From May 1, 2018 to
October 31, 2018)

9th Fiscal Period(From November 1, 2018
to April 30, 2019)

Cash and deposits

9,230,651

7,657,644

Cash and deposits in trust

12,859,502

13,301,529

Cash and cash equivalents

22,090,154

20,959,174(As of April 30, 2019)

411,348

411,960

20,675,865

20,499,571

21,087,213

20,911,531

Operating lease transactions as lessor
Future minimum lease income(Thousands of yen)

was made. SHR decided to drawdown
102,630,817 yen for the 9th fiscal period.

8. Notes to Statement of Cash Flows*1. Reconciliation of cash and cash equivalents at end of period to the corresponding balance sheet items

9th Fiscal Period(As of October 31, 2018)

8th Fiscal Period

9th Fiscal Period(As of October 31, 2018)(As of April 30, 2019)

Due within 1 year

10,582,684

9,798,520

Due after 1 year

31,930,912

30,096,783

42,513,596

39,895,304

Total*2. Details of non-cash transaction
8th Fiscal Period (From May 1, 2018 to October 31, 2018)

The assets and liabilities succeeded from SHI as a result of the merger in the 8th fiscal period are summarized

as follows.
Capital surplus increased by 128,598,415 thousand yen as a result of merger.

58

59

10. Financial Instruments
1. Status of financial instruments(1) Policy for financial instruments
Making it a policy to conduct stable and sound financial operations that would contribute to steady growthof its investment assets as well as efficient management and stability of management, SHR shall procure
funds through borrowings or the issuance of investment corporation bonds for the purposes of utilizing
such funds for the acquisition of assets, payments of repair expenses or distributions, operations of SHR,
repayment of obligations or other.
For derivative transactions, the policy is that derivative transactions shall be limited to those for the

purpose of hedging the risk of fluctuations in interest rates on liabilities and foreign currency risk in thecase of overseas real estate investments, and that no speculative transactions shall be conducted.
(2) Description of financial instruments and associated risks, and risk management structure
The funds procured through borrowings shall be used mainly for the acquisition of investment assets andfor repayment of loans.

8th Fiscal Period (As of October 31, 2018)
Book value
recorded on thebalance sheet

SHR manages and limits the liquidity risk and the risk of fluctuations in interest rates associated withsuch fund procurement by diversifying fund procurement sources and means and by maintaining the ratio

of interest-bearing liabilities to total assets and the ratio of floating-rate loans to total loans at appropriate
levels. Furthermore, for certain loans with floating interest rates, derivative transactions (interest rate
swap transactions) are used as a hedging instrument for hedging the risk of fluctuations in interest rates

based on rules that set forth the basic policy for handling derivative transactions and risk management.
(3) Supplementary explanation of matters concerning fair value of financial instruments
The fair value of financial instruments, aside from values based on market price, includes values based onreasonable calculations when there is no market price. As the calculations involve variable factors, there
may be cases where the corresponding values will vary when different assumptions are adopted. In

addition, the contract amounts of derivative transactions in “2. Matters concerning fair value of financial
instruments” do not represent the market risk involved in the derivative transactions.
2. Matters concerning fair value of financial instruments
The following is the carrying amount and fair value of financial instruments as of October 31, 2018 andApril 30, 2019, and the difference between them.
The following table does not include those for which fair value is recognized to be extremely difficult todetermine (please refer to (Note 2)).

Fair value

Difference(1) Cash and deposits

9,230,651

9,230,651－(2) Cash and deposits in trust

12,859,502

12,859,502－

22,090,154

22,090,154－

2,500,000

2,501,004

1,004

Total assets(4) Current portion of investment corporation
bonds(5) Current portion of long-term loans payable

12,382,000

12,402,940

20,940(6) Investment corporation bonds

13,000,000

13,169,226

169,226(7) Long-term loans payable

170,050,500

172,355,674

2,305,174

197,932,500

200,428,846

2,496,346[526,965][526,965]－[526,965][526,965]－

Total liabilities

The availability and terms and conditions of borrowings and the issuance of investment corporation bonds
may be affected by SHR’s financial creditworthiness, the interest rate situation and other factors, andthere is thus no guarantee that funds can be procured at SHR’s desired timing and terms and conditions.
Furthermore, loans with floating interest rates are susceptible to subsequent market trends.

(Thousands of yen)

(8) Derivative transactions(*)
Total derivative transactions(*)(*)Amounts arising from derivative transactions are shown on a net basis with any amounts inside square parentheses [ ]indicating a net liability position.

9th Fiscal Period (As of April 30, 2019)
Book value
recorded on thebalance sheet(Thousands of yen)

Fair value

Difference(1) Cash and deposits

7,657,644

7,657,644－(2) Cash and deposits in trust

13,301,529

13,301,529－

20,959,174

20,959,174－

6,500,000

6,500,000－

2,000,000

2,013,069

13,069(5) Current portion of long-term loans payable

20,792,500

20,828,447

35,947(6) Investment corporation bonds

11,000,000

11,209,963

209,963

Total assets(3) Short-term loans payable(4) Current portion of investment corporation
bonds(7) Long-term loans payable
Total liabilities

174,640,000

176,826,547

2,186,547

214,932,500

217,378,028

2,445,528[542,929][542,929]－[542,929][542,929]－(8) Derivative transactions(*)
Total derivative transactions(*)(*)Amounts arising from derivative transactions are shown on a net basis with any amounts inside square parentheses [ ]indicating a net liability position.

(Note 1) Method of calculating the fair value of financial instruments(1) Cash and deposits and (2) Cash and deposits in trust
As these are settled within a short period of time, the fair value is approximately the same as the book value and is thusstated at that book value.
(3) Short-term loans payable

As these are settled within a short period of time and have floating interest rates, the fair value is approximately the same as
the book value and is thus stated at that book value.

(4) Current portion of investment corporation bonds (6) Investment corporation bonds
The fair value of investment corporation bonds is based on the quoted market price.

Of the investment corporation bonds issued by SHR, the fair value of those with a market price is based on the quoted market
price. For those where it is difficult to obtain the fair value based on the quoted market price, the fair value is based on themethod of calculating by discounting the combined total of principal and interest by a reasonably estimated interest rateapplicable when conducting similar fund procurement for the remaining period of the bonds.

60

61

(5) Current portion of long-term loans payable (7) Long-term loans payable

As the long-term loans payable with floating interest rates reflect interest rate changes within a short period of time, the fairvalue is approximately the same as the book value and is thus stated at that book value (provided, however, that for long-termloans payable with floating interest rates that qualify for the special accounting treatment of interest rate swaps (please refer
to “12. Derivative Transactions”), the fair value is based on the method of calculation in which the sum total amount ofprincipal and interest accounted for with the interest rate swap is discounted by the rate assumed in the event of a similar
new drawdown). In addition, for those with fixed interest rates, the fair value is based on the method of calculation in which
the sum total amount of principal and interest is discounted by the rate assumed in the event of a similar new drawdown
corresponding to the remaining period.

(8) Derivative transactions
Please refer to “12. Derivative Transactions”.

(Note 2) Financial instruments for which fair value is recognized to be extremely difficult to determine
Tenant leasehold and security deposits in trust are not subject to valuation of fair value because a reasonable estimation of(Thousands of yen)Item

9th Fiscal Period(As of October 31, 2018)(As of April 30, 2019)

10,964,384

11,148,044

Tenant leasehold and security deposits in trust

Not applicable.
9th Fiscal Period (From November 1, 2018 to April 30, 2019)
Not applicable.

12. Derivative Transactions
1. Derivatives to which hedge accounting is not applied
8th Fiscal Period (As of October 31, 2018)
Not applicable.
9th Fiscal Period (As of April 30, 2019)
Not applicable.

cash flows is recognized to be extremely difficult because there is no market price and the difficulty of calculating the actual
deposit period from when lessees move in to when they move out.

8th Fiscal Period

11. Securities
8th Fiscal Period (From May 1, 2018 to October 31, 2018)

2. Derivatives to which hedge accounting is applied
The following is the contract amount or the amount equivalent to the principal provided in the contract asof the closing date for each method of hedge accounting.
8th Fiscal Period (As of October 31, 2018)(Thousands of yen)

(Note 3) Redemption schedule of monetary claims after the closing date

8th Fiscal Period (As of October 31, 2018)(Thousands of yen)
Due after
5 years

Due in1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Cash and deposits

9,230,651

－

－

－

－

－

Cash and deposits in trust

12,859,502

－

－

－

－

－

Total

22,090,154

－

－

－

－

－

9th Fiscal Period (As of April 30, 2019)(Thousands of yen)
Due after
4 to 5 years
5 years

Due in1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

Cash and deposits

7,657,644

－

－

－

－

－

Cash and deposits in trust

13,301,529

－

－

－

－

－

Total

20,959,174

－

－

－

－

－

(Note 4) Repayment schedule of investment corporation bonds and loans after the closing date

8th Fiscal Period (As of October 31, 2018)

Investment corporationbonds
Long-term loans payable

1 to 2 years

2 to 3 years

3 to 4 years

2,500,000

2,000,000－

3,000,000－

8,000,000

12,382,000

27,892,500

29,710,000

39,230,000

22,200,000

51,018,000

9th Fiscal Period (As of April 30, 2019)

62(Thousands of yen)
Due after
4 to 5 years
5 years

Due in1 year or less(Thousands of yen)
Due after
4 to 5 years
5 years

Due in1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

Short-term loans payable

6,500,000

－

－

－

－

－

Investment corporation
bonds

2,000,000－－

3,000,000

3,000,000

5,000,000

Long-term loans payable

20,792,500

28,050,000

35,590,000

23,500,000

25,640,000

61,860,000

Method ofhedge
accounting

Type ofderivative transactions

Interest rate swap
transaction
Floating interest ratereceivable and fixedinterest rate payable
Interest rate swap
Specialtransaction
accounting
treatment for Floating interest rateinterest rate receivable and fixedswapsinterest rate payable
Principal
method*1*2

Mainhedgeditem

Contract amount
Of which,over
1 yearFair value

Calculation
method offair value

Long-term
loans
payable63,954,500

55,572,500(526,965)*1

Long-term
loans
payable66,550,000

66,550,000*2－Fair value is quoted by counterparties based on the prevailing market interest rates.
As derivative transactions qualifying for the special accounting treatment for interest rate swaps are accounted for with thehedged long-term loans payable, the fair value is included in the fair value of the underlying long-term loans payable (pleaserefer to “10. Financial Instruments; 2. Matters concerning fair value of financial instruments (Note 1)”).

9th Fiscal Period (As of April 30, 2019)
Method ofhedge
accounting

Type ofderivative transactions

Interest rate swap
transaction
Principal
Floating interest rate
methodreceivable and fixedinterest rate payable
Interest rate swap
Specialtransaction
accounting
treatment for Floating interest rateinterest rate receivable and fixedswapsinterest rate payable*1*2(Thousands of yen)Mainhedgeditem

Contract amount
Of which,over
1 yearFair value

Calculation
method offair value

Long-term
loans
payable55,572,500

48,780,000(542,929)*1Long-term
loans
payable86,141,000

72,141,000*2－Fair value is quoted by counterparties based on the prevailing market interest rates.

As derivative transactions qualifying for the special accounting treatment for interest rate swaps are accounted for with thehedged long-term loans payable, the fair value is included in the fair value of the underlying long-term loans payable (pleaserefer to “10. Financial Instruments; 2. Matters concerning fair value of financial instruments (Note 1)”).

63

13. Retirement Benefits
8th Fiscal Period (From May 1, 2018 to October 31, 2018)
Not applicable.
9th Fiscal Period (From November 1, 2018 to April 30, 2019)
Not applicable.

14. Business Combination
8th Fiscal Period (From May 1, 2018 to October 31, 2018)
Business Combination through Acquisition
1. Overview of Business Combination（1）Name and Business Description of Acquire

Name of acquire：Sekisui House Residential Investment Corporation (“SHI”)
Business description： Real estate investment trust（2）Main Reasons for Business Combination
SHR reached the conclusion that expanding the scale of assets and increasing market presence throughthe Investment Corporation Merger as well as enhancing a variety of opportunities for growth by utilizing
the integrated corporate strength of the Sekisui House Group would be the best strategy for maximizing
unitholder value by securing strong returns and stability and growth of cash distributions through thesteady increase of assets under management. Accordingly, SHR concluded a merger agreement as ofJanuary 24, 2018.
（3）Date of Business Combination
May 1,2018（4）Legal Form of Business Combination
An absorption-type merger: SHR as the surviving corporation and SHI as the dissolved corporation.
（5）Name of the Investment Corporation after Business Combination
Sekisui House Reit, Inc.
（6）Main Reasons for Determining Acquiring Company

negotiations were repeatedly conducted in a prudent manner. As a result, it was determined that theabove merger ratio is reasonable.
（3）Number of Investment Units Allotted
1,824,091units
5. Type and Amount of Major Acquisition-Related Expenses

Merger-related fees 925,022 thousand yen

6. Amount and Reason for Gain on Negative Goodwill（1）Amount of Gain on Negative Goodwill
2,293,923 thousand yen（2）Reason
Negative goodwill represents the difference between the acquisition cost of SHI in the amount of 128,598,415
thousand yen and the fair value of SHI’s net assets acquired in the amount of 130,892,339 thousand yen asof the business combination date.
7. Breakdown of Assets Acquired and Liabilities Assumed on the Date of Business Combination
Current assets
11,596,391 thousand yen
Non-current assets

231,681,572 thousand yen

Total liabilities

112,385,624 thousand yen

Total assets
Current liabilities
Non-current liabilities

243,277,963 thousand yen
21,936,953 thousand yen
90,448,670 thousand yen

8. Estimated Impact on the Statement of income and Retained Earnings for the 8th fiscal period.
There is no impact as the business combination date was the same date as the beginning of the fiscal period.
9th Fiscal Period (From November 1, 2018 to April 30, 2019)
Not applicable.

SHR was determined to be the acquiring corporation after comprehensively considering the relative
voting rights of the unitholders in the combined entity, the composition of the board of directors and otherfactors, based on the accounting standard for business combination
2. Operating period of Acquire Included in the Statement of Income and Retained Earnings
From May 1, 2018 to October 31, 2018
3. Acquisition Cost of Acquire and the Breakdown
Acquisition cost

Fair value of the Investment Corporation's investment units allotted on the date of business combination
128,598,415 thousand yen
Acquisition cost
128,598,415 thousand yen

4. Exchange Ratio, Method of Determining the Exchange Ratio and Number of Investment Units Allotted
for the Acquisition（1）Exchange Ratio of Investment Units
1.65 units of the Investment Corporation were allotted for 1 unit of SHI through the Merger.

SHR implemented a 2-for-1 investment unit split with May 1, 2018 as the record date before the Merger.
（2）Method of Determining the Exchange Ratio
In calculating the merger ratio used for the Investment Corporation Merger, for the sake of securing
fairness, SHR selected Nomura Securities Co., Ltd. and SHI selected Mizuho Securities Co., Ltd. as thefinancial advisors (“FAs”), respectively, and requested them to calculate the merger ratio. Comprehensive

considerations were made regarding such factors as the financial results and the status of assets andliabilities of SHR and SHI, prospects of business operations in the future, advantages of the Investment
Corporation Merger and the results of financial analyses conducted by the FA, and discussions and64

65

15. Income Taxes
1. Breakdown of deferred tax assets and deferred tax liabilities by major cause

3. Sister companies.
8th Fiscal Period (From May 1, 2018 to October 31, 2018)(Thousands of yen)

8th Fiscal Period

9th Fiscal Period(As of October 31, 2018)(As of April 30, 2019)

2,422,055

2,357,755

6,835

13,671

166,456

171,511

Deferred tax assets
Valuation difference on assets acquired due to merger
Amortization of leasehold rights in trust
Deferred gains or losses on hedges
Deferred tax assets (subtotal)

2,595,347

2,542,938

Valuation allowance for total deductible temporary
difference(2,595,347)(2,542,938)

Total deferred tax assets－

Net deferred tax assets

－

－

－

2. Breakdown of major items that caused significant differences between the statutory tax rate and theeffective income tax rate after application of tax-effect accounting(%)

8th Fiscal Period

9th Fiscal Period(As of October 31, 2018)(As of April 30, 2019)

31.51

31.51

Statutory tax rate

Not applicable.

9th Fiscal Period (From November 1, 2018 to April 30, 2019)
Not applicable.

4. Directors and major individual unitholders.
8th Fiscal Period (From May 1, 2018 to October 31, 2018)
Type

Directoror close
relative

Name

JunichiInoue(24.87)(32.04)Gain on negative goodwill(9.76)－

Changes in valuation allowance

3.13

0.54

Other

0.00

0.00

Effective income tax rate
after application of tax-effect accounting

0.01

0.01

occupation

Percentage ofvoting rights

held by (in) SHR

Executive Directorof SHR and
Representative
Director of Sekisui

Description oftransaction
Payment of asset
management fees－

House AssetManagement, Ltd.

to Sekisui House
Asset

Management, Ltd.
(Note 1)

Transaction
amount(Thousandsof yen)1,499,773(Note 2)

Account
item

Balanceat end of period(Thousands ofyen)

Accounts
payable567,595– other(Note 1) A transaction conducted by Junichi Inoue as a representative of a third party (Sekisui House Asset Management, Ltd.) andthe fee amount is based on terms and conditions set forth in the Articles of Incorporation of SHR.

(Note 2) The amount includes 57,599 thousand yen of asset management fees pertaining to real estate sales included in the book valueof property, plant and equipment.
(Note 3) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

9th Fiscal Period (From November 1, 2018 to April 30, 2019)[Adjustments]
Deductible cash distribution

Description ofbusiness or

Type

Name

Description ofbusiness or
occupation

Percentage ofvoting rights
held by (in) SHR

Executive Director
Directoror close
relative

JunichiInoueof SHR and
Representative

Director of Sekisui
House Asset

Description oftransaction

Transaction
amount(Thousandsof yen)Account
item

Balanceat end of period(Thousands ofyen)

Payment of asset－

Management, Ltd.

management feesto Sekisui House

Asset
Management, Ltd.

829,220(Note 2)

Accounts
payable– other

892,188(Note 1)

(Note 1) A transaction conducted by Junichi Inoue as a representative of a third party (Sekisui House Asset Management, Ltd.) and

16. Profit or Loss of Affiliates Accounted for Under the Equity Method
8th Fiscal Period (From May 1, 2018 to October 31, 2018)
Not applicable.

9th Fiscal Period (From November 1, 2018 to April 30, 2019)
Not applicable.

17. Transactions with Related Parties
1. Parent company and major corporate unitholders.
8th Fiscal Period (From May 1, 2018 to October 31, 2018)

the fee amount is based on terms and conditions set forth in the Articles of Incorporation of SHR.
(Note 2) The amount includes 3,120 thousand yen of asset management fees pertaining to real estate acquisition included in the bookvalue of property, plant and equipment.
(Note 3) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

18. Asset Retirement Obligations
8th Fiscal Period (From May 1, 2018 to October 31, 2018)
Not applicable.
9th Fiscal Period (From November 1, 2018 to April 30, 2019)
Not applicable.

Not applicable.

9th Fiscal Period (From November 1, 2018 to April 30, 2019)
Not applicable.

2. Subsidiaries and affiliates.
8th Fiscal Period (From May 1, 2018 to October 31, 2018)
Not applicable.

9th Fiscal Period (From November 1, 2018 to April 30, 2019)
Not applicable.

6667

19. Investment and Rental Properties
SHR owns rental office buildings, etc. in Tokyo and other areas for the purpose of earning revenue fromleasing. The following is the carrying amount, amount of increase (decrease) during the period and fair value ofthese investment and rental properties.

(Thousands of yen)

8th Fiscal Period(From May 1, 2018 to
October 31, 2018)

9th Fiscal Period(From November 1, 2018 toApril 30, 2019)

Carrying amount
Balance at beginning of period

197,376,695

433,830,623

Amount of increase (decrease) during period

236,453,927

17,951,447

Balance at end of period

433,830,623

451,782,070

479,147,000

505,577,000

Fair value at end of period

9th Fiscal Period (From November 1, 2018 to April 30, 2019)(1) Information about products and services
Information about products and services is omitted because net sales to external customers for a single
products and services category are in excess of 90% of operating revenue on the statement of income andretained earnings.
(2) Information about geographic areas
ͳሻ Operating revenue
Information about net sales is omitted because net sales to external customers in Japan are in excessof 90% of operating revenue on the statement of income and retained earnings.
ʹሻ Property, plant and equipment

Information about property, plant and equipment is omitted because the property, plant andequipment located in Japan is in excess of 90% of property, plant and equipment on the balance
sheet.
(3) Information about major customers(Thousands of yen)

(Note 1) Carrying amount is the book value less accumulated depreciation.

(Note 2) Net increase during the 8th fiscal period is mainly attributable to the acceptance of properties (231,126,624 thousand yen)from SHI through the investment corporation merger and the acquisition of 6 new properties (25,927,177 thousand yen). Net

decrease during the 8th fiscal period is mainly attributable to the disposition of 13 properties (19,029,353 thousand yen) SHR
owned and depreciation (2,142,602 thousand yen). Net increase during the 9th fiscal period is mainly attributable to theacquisition of 3 new properties (19,501,844thousandyen), offset by depreciation (2,189,114 thousand yen).
(Note 3) Fair value at the end of the period is the appraisal value by outside real estate appraisers.

Name of customer

Operating revenue

Sekisui House, Ltd.

21. Per Unit Information

The property-related operating income in the 8th and 9th fiscal periods for investment and rental properties ispresented in “5. Notes to Statement of Income and Retained Earnings”.

20. Segment Information
1. Segment information

Segment information is omitted because SHR operates a single segment, which is the real estate leasing
business.

2. Related information
8th Fiscal Period (From May 1, 2018 to October 31, 2018)(1) Information about products and services
Information about products and services is omitted because net sales to external customers for a single
products and services category are in excess of 90% of operating revenue on the statement of income andretained earnings.
(2) Information about geographic areas
ͳሻ Operating revenue
Information about net sales is omitted because net sales to external customers in Japan are in excessof 90% of operating revenue on the statement of income and retained earnings.
ʹሻ Property, plant and equipment

Information about property, plant and equipment is omitted because the property, plant andequipment located in Japan is in excess of 90% of property, plant and equipment on the balance
sheet.
(3) Information about major customers

3,214,990

Name of related segment
Real estate leasing business8th Fiscal Period(From May 1,
2018
to October 31, 2018)

9th Fiscal Period(From November 1,
2018

to April 30, 2019)

Net assets per unit

65,299yen

65,308yen

Net income per unit

1,967yen

1,566yen(Note 1) Net income per unit is calculated by dividing net income by the daily weighted average number of investment units.
In addition, diluted net income per unit is not stated because there are no dilutive investment units.
The following is the basis for calculating net income per unit.

8th Fiscal Period(From May 1,

2018
to October 31, 2018)

9th Fiscal Period(From November 1,
2018

to April 30, 2019)

7,402,759

5,894,142

Amount not attributable to common unitholders (Thousands of yen)－－

Net income attributable to common investment units (Thousands ofyen)

7,402,759

5,894,142

Average number of investment units during period (Units)

3,762,091

3,762,091

Net income (Thousands of yen)(Thousands of yen)

Name of customer
Sekisui House, Ltd.

68

Operating revenue
3,212,851

Name of related segment
Real estate leasing business69

22. Significant Subsequent Events
SHR resolved, at its meeting of the board of directors held on May 23, 2019, the following issuance of new
investment units with payment dates of June 10, 2019 for new investment units issued through a public

offering and on July 9, 2019 for new investment units issued by way of a third-party allotment. As a result, asof July 9, 2019, unitholders’ capital is 149,210,081,225 yen and the total number of investment units issued andoutstanding is 4,288,666 units.

<Issuance of new investment units through public offering (primary offering)>
Number of new investment units to be issued: 501,500 units
to be offered: of which the domestic primary offering: 371,356 investment unitsof which the international offering: 130,144 investment units
Issue price: 76,537 yen per unit
Total amount of issue price: 38,383,305,500 yen
Amount to be paid in (issue amount): 74,103 yen per unit
Total amount to be paid in (total issue amount): 37,162,654,500 yen
Payment date: June 10, 2019

Initial date of calculating distribution: May 1, 2019
<Issuance of new investment units by way of third-party allotment>
Number of new investment units to be issued: 25,075 units
Amount to be paid in (issued amount): 74,103 yen per unit

Total amount to be paid in (issued amount): 1,858,132,725 yen
Payment date: July 9, 2019
Initial date of calculating distribution: May 1, 2019(7) Supplementary Schedules
9th Fiscal Period (From November 1, 2018 to April 30, 2019)
1. Schedule of securities(1) Shares

Not applicable.

(2) Securities other than shares
Not applicable.
2. Contract amount and fair value of derivative transactions(Thousands of yen)

Category
Transaction other thanmarket transaction
Transaction other thanmarket transaction

TypeInterest rate swap transaction
Floating interest rate receivableand fixed interest rate payable
Interest rate swap transaction
Floating interest rate receivableand fixed interest rate payable
Total

Contract amount (Note 1)
Of which,over 1 year

Fair value(Note 2)

55,572,500

48,780,000(542,929)

86,141,000

72,141,000(Note 3)

141,713,500

120,921,000(542,929)(Note 1) The contract amount of interest rate swap transactions is based on the notional principal amount.
(Note 2) Fair value is quoted by counterparties based on the prevailing market interest rates.

(Note 3) The fair value is omitted because the transaction meets the criteria for the special accounting treatment under the
Accounting Standards for Financial Instruments.

Allottee: Nomura Securities Co., Ltd.

Funds procured from the above issuance of new investment units through the public offering were used topartly fund the acquisition of Akasaka Garden City ,Garden City Shinagawa Gotenyama (additional
acquisition portion) ,Hommachi Minami Garden City (additional acquisition portion) ,Prime Maison

Mitatsunamachi ,Prime Maison Hongo ,Prime Maison Kuramae and Esty Maison Yokohama-aobadai North onJune 10, 2019.
Funds procured from the issuance of new investment units by way of the third-party allotment were used forpart of repayment of borrowings for the acquisition funds of those specified assets.

70

71

3. Schedule of property, plant and equipment and intangible assets
Type of assets

Buildings
in trust
Structuresin trust

Balanceat beginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodBalanceat end ofperiod(Thousands of yen)
Accumulated depreciationoraccumulated
amortization

For theperiodNet balanceat end ofperiod154,045,698

4,846,536－

158,892,235

8,236,920

2,079,463

150,655,315

1,483,975

16,029－1,500,004

121,928

30,214

1,378,076

2,093,637

60,240－2,153,877

91,694

46,4182,062,182

59,99457,229－117,224

10,983

7,591

106,240

279,918,555

15,160,525－

295,079,081－－

295,079,081

43,344

98,534

43,344

98,534－－

98,534

437,645,207

20,239,096

43,344

457,840,959

8,461,527

2,163,688

449,379,431

Name

equipment in
Property,plant andequipment(Note 1)trust
Tools,
furniture andfixtures intrust
Land in trust(Note 1)

Constructionin progress intrust
Subtotal
Intangible Leasehold
assetsrights in

2,552,025－－

2,552,025

50,851

25,4252,501,173

Other

14,500－－14,500

7,606

1,452

6,894

Subtotal

2,566,526－－

2,566,526

58,457

26,8772,508,068

440,211,733

20,239,096

460,407,485

8,519,985

2,190,566

451,887,499

trust

Total
(Note 1)

43,344

Issue date

Notes

Machineryand

5. Schedule of investment corporation bonds

The increase during the fiscal period under review is mainly attributable to the acquisition of The Ritz-Carlton, Kyoto, MAST Ijiri,

SHI
Second Series
February 28,
Unsecured Investment
2013
Corporation Bond
SHI
Third Series
February 28,
Unsecured Investment
2014
Corporation Bond
SHI
Fourth Series
February 28,
Unsecured Investment
2014
Corporation Bond
SHI
Fifth Series
August 29,
Unsecured Investment
2014
Corporation Bond
SHRFirst Series
September 8,
Unsecured Investment
2016
Corporation Bond
SHR
Second Series
July 13,
Unsecured Investment
2017
Corporation Bond
Total

－

Balance at
beginning of
period(Thousands ofyen )Amount ofdecrease during
period(Thousands ofyen )Balanceat end of period(Thousands ofyen )Couponrate(%)

Redemption Use of
dateproceeds

2,000,000－

2,000,000

1.000

February 28,
2020(Note 2) Unsecured(Note 1)2,500,000

2,500,000

－

0.374

February 28,(Note 3) Unsecured
2019

3,000,000－

3,000,000

1.069

February 28,(Note 3) Unsecured2024

3,000,000－

3,000,000

0.871

2,000,000－

2,000,000

0.340

3,000,000－

3,000,000

0.240

July 13,2022

15,500,000

2,500,000

13,000,000－－

August30,2024

Security(Note 3) Unsecured

September 8,(Note 3) Unsecured
2026(Note 3) Unsecured－－(Note 1) As of the end of the fiscal period under review, these bonds are recorded as Current portion of investment corporation bondsin Current liabilities on the balance sheet.

(Note 2) The funds are used to repay borrowings and acquire trust beneficiary interests in real estate, etc.
(Note 3) The proceeds are used as funds for repayment of loans payable.

(Note 4) These investment corporation bonds are equipped with pari passu clause among specified investment corporation bonds.
(Note 5) The following is the maturity schedule of investment corporation bonds within five years of the balance sheet date.
Due in1 year or less
Investment Corporation Bonds

2,000,000(Thousands of yen)

1 to 2 years

2 to 3 years－

3 to 4 years－

3,000,000

4 to 5 years
3,000,000

and Esty Maison Kokura.

4. Schedule of other specified assets

Real estate trust beneficiary interests are included above in “3. Schedule of property, plant and equipment
and intangible assets”.

72

73

6. Schedule of loans payable

Average(Thousands of yen)
Lendercategory
Average

Lendercategory

Amount ofAmount ofBalanceincreasedecreaseat beginning of period

duringduringperiodperiodinterest

Balancerate

at end of(%)

period(Note 1)

Repayme Repayme
nt duent

date

methodUse ofproceeds

Security-

6,700,000

6,700,000-

Mizuho Bank, Ltd.

-

5,000,000

5,000,000--

5,300,000

5,300,000-

Sumitomo Mitsui Banking
Corporation
Shortterm

MUFG Bank, Ltd.

-2,600,000-

0.23091

2,600,000

of loans

loans
payableexpensesFeb. 28,
Mizuho Bank, Ltd.

-

1,900,000-

1,900,000 0.23175

of existing(Note3)
Sumitomo Mitsui Banking
Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation

payable-1,470,500-

1,470,500-

1,470,500- 1.15475

400,000

500,000--

500,000

Feb. 28,

MUFG Bank, Ltd.

750,000-

750,000-2019

Mizuho Bank, Ltd.

750,000-

750,000-

payablerelated

750,000-

750,000-

Mizuho Trust & Banking Co., Ltd.

2,250,000-

2,250,000-

MUFG Bank, Ltd.

3,842,500--

3,842,500

Mizuho Bank, Ltd.

400,000--

400,000

Mizuho Trust & Banking Co., Ltd.

500,000--

500,000

Resona Bank, Limited

500,000--

500,000

MUFG Bank, Ltd.

800,000--

800,000

at

Repayment

guaran-Mizuho Bank, Ltd.

500,000--

500,000

maturityof loans

teed

2,500,000--

2,500,000

Mizuho Trust & Banking Co., Ltd.

200,000--

200,000

Resona Bank, Limited

500,000--

500,000

Aozora Bank, Ltd.

expenses(Note3)

1.17200

1,000,000

MUFG Bank, Ltd.

800,000--

800,000

Mizuho Bank, Ltd.

300,000--

300,000

300,000--

300,000 1.17350

400,000--

400,000

405,000--

405,000

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking

1,145,000--

1,145,000

MUFG Bank, Ltd.

500,000--

500,000

Mizuho Bank, Ltd.

400,000--

400,000

Corporation

Sumitomo Mitsui Banking-

500,000

500,000--

500,000 0.95225

Mizuho Trust & Banking Co., Ltd.

500,000--

500,000

Resona Bank, Limited

500,000--

500,000

The Senshu Ikeda Bank, Ltd.

500,000--

500,000

The Yamaguchi Bank, Ltd.

500,000--

500,000

LimitedAug. 31,

Un-

payable2020

980,000
800,000
300,000

300,000--

300,000

The Bank of Fukuoka, Ltd.

500,000--

500,000

Shinkin Central Bank

500,000--

500,000

500,000--

500,000

2,450,000--

2,450,000

1,950,000--

1,950,000

MUFG Bank, Ltd.

900,000--

900,000

Mizuho Bank, Ltd.

2,500,000--

2,500,000

2,000,000--

2,000,000

MUFG Bank, Ltd.

4,300,000--

4,300,000

Long-

Mizuho Bank, Ltd.

1,800,000--

1,800,000

term

Sumitomo Mitsui Banking

loans

Corporation

3,000,000--

3,000,000

LimitedMizuho Trust & Banking Co., Ltd.

1,800,000
600,000--

900,000--

900,000

800,000--

800,000

800,000--

800,000

MUFG Bank, Ltd.

5,100,000--

5,100,000

Mizuho Bank, Ltd.

2,400,000--

2,400,000

3,700,000--

3,700,000

2,000,000--

900,000--

900,000

Mizuho Trust & Banking Co., Ltd.

Feb. 28,

assets andResona Bank, Limited

1,400,000--

1,400,000

2022

relatedDevelopment Bank of Japan Inc.

800,000--

800,000

expenses

The Norinchukin Bank

700,000--

700,000

MUFG Bank, Ltd.

4,600,000--

4,600,000

Mizuho Bank, Ltd.

700,000--

700,000

3,700,000--

3,700,000

700,000--

700,000

300,000--

300,000

Sumitomo Mitsui Banking(Note3)

Corporation
Sumitomo Mitsui Trust Bank,
LimitedRepayment

Development Bank of Japan Inc.

(Note 1)

Repayme Repayme
nt duent

date

methodUse ofproceeds

Security

Repayment

Feb. 28,of loans

2022

payablePurchase of
0.97300

Feb. 26,

assets and2021

relatedexpenses

0.83600

Aug. 31,2021

Repaymentof loans

0.96475

Aug. 31,

payable

2022

Lump-

Un-

sum

securedpayment

Un-

Nov. 30,

atguaran-2019

maturityteed(Note3)Purchase of
assets and

2,000,000 0.94060

Purchase of

2020

(%)

600,000

Development Bank of Japan Inc.
The Norinchukin Bankrate

1,800,000 0.65830

Resona Bank, Limited

Sumitomo Mitsui Banking

Feb. 28,
0.79614-

Sumitomo Mitsui Trust Bank,

secured-Limited

500,000

Corporation

sum

-

-

Sumitomo Mitsui Trust Bank,-

LimitedUn-

980,000-

Corporation-

Sumitomo Mitsui Trust Bank,

Lumppayment

1,000,000

Corporation

2020

1,500,000-

payable Sumitomo Mitsui Trust Bank,

Feb. 28,
1.02225-

800,000

Corporation

assets and0.89900-

300,000

Sumitomo Mitsui Banking

Purchase of

1,500,000

Mizuho Bank, Ltd.

Corporationinterest

1.11000

Resona Bank, Limited

Sumitomo Mitsui Bankingof loans

period500,000

Mizuho Bank, Ltd.

Repayment

periodperiod-The Shizuoka Bank, Ltd.

bonds

-

Sumitomo Mitsui Banking

74

1,470,500

941,000

Limitedloans

2,000,000-

Sumitomo Mitsui Trust Bank,

term

-

941,000

CorporationLong-

2,000,000

Development Bank of Japan Inc.

Sumitomo Mitsui Banking

investment
corporation-

during-

Corporation

Redemption

2020

during-Sumitomo Mitsui Banking

payable andat beginning of period

Balanceat end of-Mizuho Trust & Banking Co., Ltd.

Repayment

decrease

500,000

Limitedrelated(Note2)increase

400,000

Sumitomo Mitsui Trust Bank,

assets and2020

Balance

MUFG Bank, Ltd.

Corporation

Purchase ofJan. 31,

Amount ofMizuho Bank, Ltd.
Sumitomo Mitsui Banking

MUFG Bank, Ltd.

Amount of

1.47450

Nov. 30,2021

relatedexpensesNov. 30,2024

of loans
Feb. 26,

payable2021

75

Average

Average

Lendercategory

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation

at beginning of period

duringduringperiodperiodat end ofperiod600,000--

600,000

300,000--

300,000

rate(%)(Note 1)nt duent

date

methodUse ofproceeds

Lendercategory

Security

Balanceincreasedecreaseat beginning of period

duringduringperiodperiodBalanceat end ofperiod--750,000 1.00850--

500,000

Mizuho Bank, Ltd.

400,000--

400,000

700,000--

700,000

500,000--

500,000 0.62800

The Senshu Ikeda Bank, Ltd.

500,000--

500,000

The Shizuoka Bank, Ltd.

500,000--

500,000

Mizuho Trust & Banking Co., Ltd.

300,000--

300,000

The 77 Bank, Ltd.

500,000--

500,000

Resona Bank, Limited

100,000--

100,000

The Hiroshima Bank, Ltd.

500,000--

500,000

Mizuho Bank, Ltd.

MUFG Bank, Ltd.

300,000--

300,000

Development Bank of Japan Inc.

Mizuho Bank, Ltd.

500,000--

500,000--

500,000

Sumitomo Mitsui Trust Bank,
LimitedMizuho Bank, Ltd.

0.73975

Sumitomo Mitsui Banking

Feb. 28,

Corporation

2022

Mizuho Trust & Banking Co., Ltd.

350,000--

100,000--

100,000

2,100,000--

2,100,000

450,000--

450,000

450,000--

450,000 0.68030

750,000--

750,000

1,000,000--

800,000--

800,000

MUFG Bank, Ltd.

700,000--

700,000

The Bank of Fukuoka, Ltd.

500,000--

500,000

Mizuho Bank, Ltd.

1,100,000--

1,100,000

1,000,000--

1,100,000--

1,100,000

450,000--

450,000

Mizuho Trust & Banking Co., Ltd.

500,000--

500,000

Resona Bank, Limited

300,000--

300,000

The Norinchukin Bank

300,000--

300,000

Aozora Bank, Ltd.

200,000--

200,000

The Yamaguchi Bank, Ltd.

100,000--

100,000

MUFG Bank, Ltd.

450,000--

450,000

Corporation

MUFG Bank, Ltd.

1,300,000--

1,300,000

Sumitomo Mitsui Trust Bank,

Mizuho Bank, Ltd.

1,000,000--

1,000,000

LimitedSumitomo Mitsui Trust Bank,

600,000--

600,000

300,000--

300,000

Mizuho Trust & Banking Co., Ltd.

800,000--

800,000

Resona Bank, Limited

500,000--

500,000

LimitedFeb. 28,
2023

Lump-

Un-

sum

Repayment

securedLong-

500,000 0.86650

payment

of loans

Un-

term

Development Bank of Japan Inc.

600,000--

600,000

700,000

atpayableguaran-loans

The Bank of Fukuoka, Ltd.

200,000--

200,000

Aozora Bank, Ltd.

200,000--

200,000

maturity

100,000--

100,000

Shinkin Central Bank

200,000--

200,000

The Senshu Ikeda Bank, Ltd.

100,000--

100,000

The Senshu Ikeda Bank, Ltd.

200,000--

200,000

The Shizuoka Bank, Ltd.

100,000--

100,000

The Shizuoka Bank, Ltd.

200,000--

200,000

The 77 Bank, Ltd.

100,000--

100,000

The 77 Bank, Ltd.

200,000--

200,000

The Hiroshima Bank, Ltd.

100,000--

100,000

The Hiroshima Bank, Ltd.

200,000--

200,000

Mizuho Bank, Ltd.

200,000--

200,000

200,000--

200,000

Sumitomo Mitsui Banking

1,650,000--

200,000--

200,000

400,000--

400,000 0.49500

500,000--

500,000

200,000--

200,000

Mizuho Bank, Ltd.

950,000--

950,000

LimitedSumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank,

1,650,000--

Mizuho Trust & Banking Co., Ltd.

1,650,000
0.62760

Nov. 30,

Resona Bank, Limited

300,000--

300,000

2020

The Norinchukin Bank

300,000--

300,000

850,000--

850,000

MUFG Bank, Ltd.

600,000--

Mizuho Trust & Banking Co., Ltd.

500,000--

500,000

MUFG Bank, Ltd.

1,000,000--

1,000,000

Resona Bank, Limited

550,000--

550,000

Mizuho Bank, Ltd.

800,000--

800,000

800,000--

800,000

400,000--

400,000

1,560,000--

1,560,000

LimitedThe Norinchukin Bank

650,000--

650,000

Sumitomo Mitsui Banking

MUFG Bank, Ltd.

700,000--

700,000 0.88470

Corporation

Development Bank of Japan Inc.

650,000--

650,000 0.88500

Development Bank of Japan Inc.

Mizuho Bank, Ltd.

350,000--

350,000

Sumitomo Mitsui Banking

650,000--

650,000

350,000--

350,000

300,000--

300,000

Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank,
LimitedResona Bank, Limited

Nov. 30,
0.894702022

Corporation
Sumitomo Mitsui Trust Bank,

assets and0.50500

Lump-

Un-

sum

securedpaymentUn-

atguaran-maturityteedAug. 30,2024

600,000 0.57000

830,000--

830,000

Mizuho Trust & Banking Co., Ltd.

370,000--

370,000

Resona Bank, Limited

550,000--

550,000

Development Bank of Japan Inc.

370,000--

370,000

The Norinchukin Bank

370,000--

370,000

LimitedPurchase of

2024

-

MUFG Bank, Ltd.

2023

Feb. 29,-

Sumitomo Mitsui Trust Bank,

payablerelated-Corporationof loans

2023

expenses-

1,650,000 0.61760

Security

Repayment

0.63800

700,000

MUFG Bank, Ltd.

method1,000,000

500,000

The Yamaguchi Bank, Ltd.

date

Use ofproceeds

Aug. 31,

The Norinchukin Bank

payable Shinkin Central Banknt

0.67400

The Bank of Fukuoka, Ltd.

teed

nt due350,000

The Norinchukin Bank

Sumitomo Mitsui Banking

Repayme Repayme

Nov. 30,
1.01850

Resona Bank, Limited

1,000,000 0.85250(Note 1)500,000

Shinkin Central Bank

500,000(%)

750,000

Corporation

2021

rate

MUFG Bank, Ltd.
Sumitomo Mitsui Banking

Feb. 26,

interest

MUFG Bank, Ltd.

500,000

Corporation76

decrease

Repayme Repayme-

Sumitomo Mitsui Banking

payableincreaseinterest-

Development Bank of Japan Inc.

loans

Balance

Balance

500,000

Corporation

term

Amount ofAmount of

The Norinchukin Bank

Sumitomo Mitsui Banking

Long-

Amount ofAmount ofAug. 29,0.597500.287122025

Repaymentof loans
payableNov. 30,
2020

77

Average

Lendercategory

MUFG Bank, Ltd.

Amount ofBalanceincreasedecreaseat beginning of period

duringduringperiodperiod

1,810,000-

Balanceat end ofperiod-interest
rate(%)(Note 1)

1,810,000 0.60500

MUFG Bank, Ltd.

440,000--

440,000

Mizuho Bank, Ltd.

900,000--

900,000

Sumitomo Mitsui Banking

0.67000

1,600,000--

1,600,000 0.31000

MUFG Bank, Ltd.

600,000--

600,000 0.61000

Mizuho Bank, Ltd.

200,000--

200,000

Corporation

Sumitomo Mitsui Trust Bank,
Limited

300,000--

300,000

Mizuho Trust & Banking Co., Ltd.

600,000--

600,000

Resona Bank, Limited

400,000--

400,000

Shinkin Central Bank

300,000--

300,000

MUFG Bank, Ltd.

1,500,000--

MUFG Bank, Ltd.

800,000--

800,000

Mizuho Bank, Ltd.

700,000--

700,000

Development Bank of Japan Inc.

0.67000-

1,200,000--

500,000

Aozora Bank, Ltd.

300,000--

300,000

The Yamaguchi Bank, Ltd.

500,000--

500,000

870,000--

870,000

480,000--

480,000 0.26212

Resona Bank, Limited

300,000--

300,000

The Norinchukin Bank

210,000--

210,000Long-

MUFG Bank, Ltd.

990,000--

990,000 0.37000

term

MUFG Bank, Ltd.

260,000--

260,000loans

Mizuho Bank, Ltd.

550,000--

550,000

payable Mizuho Trust & Banking Co., Ltd.

220,000--

220,000

Development Bank of Japan Inc.

220,000--

220,000

Mizuho Bank, Ltd.

176,000--

176,000

2,352,000--

2,352,000

MUFG Bank, Ltd.

750,000--

Mizuho Bank, Ltd.

1,050,000--

1,050,000

600,000--

600,000

The Norinchukin Bank

Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank,
LimitedMizuho Trust & Banking Co., Ltd.

1,050,000--

650,000--

0.77880

950,000--

950,000--

750,000

MUFG Bank, Ltd.

650,000--

650,000

2026

2025

-

550,000--

750,000 0.34000

Mizuho Bank, Ltd.

1,050,000--

1,050,000

600,000--

600,000

1,050,000--

Mizuho Trust & Banking Co., Ltd.

650,000--

650,000

Resona Bank, Limited

950,000--

950,000

The Norinchukin Bank

750,000--

750,000

MUFG Bank, Ltd.

650,000--

650,000

Development Bank of Japan Inc.

550,000--

550,000

periodperiod(%)

period(Note 1)-1,400,000-

Repayme Repayme
nt duent

date

methodUse ofproceeds

Security

1,300,000

MUFG Bank, Ltd.

500,000--

500,000 0.56500

MUFG Bank, Ltd.

500,000--

500,000

Mizuho Bank, Ltd.

100,000--

100,000

The 77 Bank, Ltd.

500,000--

500,000

Aug. 31,
2021

-

-

-

-

1,900,000 0.70000

Mizuho Bank, Ltd.

4,200,000--

4,200,000

Un-

term

securedloans

of loans

Un-payablepayableguaran-sum

Repayment

Nov. 30,

payment2023

atAug. 29,
2025

teed

2022

-

-

1,900,000

1,480,000--

1,480,000

320,000--

320,000

Aug. 31,0.78300

0.23212--500,000

200,000--

200,000

Development Bank of Japan Inc.

-

376,000-

376,000 0.28568

2027

Aug. 31,2021

MUFG Bank, Ltd.

-

300,000-

Mizuho Bank, Ltd.

-2,459,000--

260,000-

260,000 0.35900

Mizuho Trust & Banking Co., Ltd.

-

900,000-

900,000

Development Bank of Japan Inc.

-

565,000-

565,000 0.48000

payment

MUFG Bank, Ltd.

-

450,000-

450,000 0.56500

atMizuho Bank, Ltd.

-1,332,000-

Corporation

Sumitomo Mitsui Banking

1,332,000

390,000

Mizuho Trust & Banking Co., Ltd.

-

1,350,000-

MUFG Bank, Ltd.

-

500,000-

500,000 0.29900

Mizuho Bank, Ltd.

-

500,000-

500,000-

500,000-

500,000-

700,000-

700,000 0.30900

Limited

-300,000 0.34900
2,459,000-

Corporation

Sumitomo Mitsui Banking

Jul. 13,1,900,000

500,000

2026

500,000

Mizuho Trust & Banking Co., Ltd.

Sumitomo Mitsui Banking

Lump-

Feb. 27,
0.63500

500,000

Corporation

investment
corporation

1,900,000

Sumitomo Mitsui Banking

of existing

2019

-

MUFG Bank, Ltd.

Corporation

2026

0.24231-

The Hiroshima Bank, Ltd.

Redemption

Feb. 28,

1,300,000

390,000 0.57500-

200,000-

200,000

Resona Bank, Limited-

200,000-

200,000

The Norinchukin Bank-

100,000-

MUFG Bank, Ltd.

-

1,000,000-

Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank,

Aug. 30,
2024
Lump-

Un-

sum

securedFeb. 26, maturity
2027

UnRepayment

guaran-of loansteedpayable1,350,000

Mizuho Trust & Banking Co., Ltd.

Limited

1,050,000 0.41800

during1,300,000

Mizuho Bank, Ltd.

-duringrate

at end of-

Sumitomo Mitsui Banking

0.35341

750,000at beginning of periodinterest-

Sumitomo Mitsui Trust Bank,

550,000

decrease

1,400,000

Corporation

Development Bank of Japan Inc.

increase

1,300,000

Corporation

2020

maturity

0.61380

Balance

BalanceMizuho Bank, Ltd.
Sumitomo Mitsui Banking

Aug. 31,Long-

0.45254

Amount of

MUFG Bank, Ltd.

Limited

MUFG Bank, Ltd.

LimitedLendercategory

Amount of

Sep. 8,650,000

750,000

Sumitomo Mitsui Trust Bank,

proceeds

Security

Sumitomo Mitsui Trust Bank,

1,050,000 0.34800

The Norinchukin Bank

Corporation

method750,000 0.32000

Resona Bank, Limited

Sumitomo Mitsui Banking

date

AverageUse ofMizuho Bank, Ltd.

-

Limitednt

Feb. 27,

500,000

Sumitomo Mitsui Trust Bank,

nt due1,500,000 0.72500

1,200,000

Corporation

Repayme Repayme

Feb. 28,

The Bank of Fukuoka, Ltd.

Sumitomo Mitsui Banking

78

Amount ofMay. 31,2023

100,000
1,000,000 0.39580-

800,000-

800,000-

700,000-

700,000-

400,000-

400,000 0.40580

Aug. 30,Mizuho Trust & Banking Co., Ltd.

-

400,000-

400,000

Resona Bank, Limited-

200,000-

200,000

2024

May. 31,

The Norinchukin Bank-

200,000-

200,000

2023

Shinkin Central Bank-

200,000-

200,000 0.41388 Aug. 31,

MUFG Bank, Ltd.

-

1,000,000-

1,000,000 0.55600

2026

0.4262279

Average

Lendercategory

Amount ofAmount ofBalanceincreasedecreaseat beginning of period

duringduringperiodperiodMizuho Bank, Ltd.

Balanceat end ofperiodinterest
rate(%)(Note 1)-800,000-

800,000-

700,000-

700,000-

200,000-

200,000 0.56600

Mizuho Trust & Banking Co., Ltd.

-

400,000-

400,000

Resona Bank, Limited-

200,000-

200,000

The Norinchukin Bank-

500,000-Long-

MUFG Bank, Ltd.

-

1,400,000-

1,400,000 0.68500

term

Mizuho Bank, Ltd.

-2,400,000-

2,400,000

loans

Sumitomo Mitsui Banking-

1,000,000-

1,000,000-

200,000-

200,000

Mizuho Trust & Banking Co., Ltd.

-

400,000-

400,000 0.69500

Resona Bank, Limited-

300,000-

300,000

Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank,
Limitedpayable Corporation

nt duent

date

methodUse ofproceeds

Limited2026

500,000

The Bank of Fukuoka, Ltd.

-

300,000-

300,000

The Senshu Ikeda Bank, Ltd.

-

200,000-

200,000

The 77 Bank, Ltd.

-

200,000-

200,000

The Yamaguchi Bank, Ltd.

-

200,000-

200,000

182,432,500

Security

Aug. 31,

Lump-

Un-

sum

Repayment

payment

of loans

Un-atpayableguaran-securedteedmaturity

Sumitomo Mitsui Trust Bank,

Total

Repayme Repayme

Feb. 29,2028

48,882,000 29,382,000 201,932,500(Note 1) Average interest rate is the weighted average interest rate during the period. Interest rates are rounded to six decimal
places. The interest rates for loans hedged by interest rate swap transactions used to hedge the risk of interest rate
fluctuations are the interest rates reflecting the effect of the interest rate swaps.

(Note 2) Early repayment was made on March 29, 2019.
(Note 3) As of the end of the fiscal period under review, these loans are recorded as Current portion of long-term loans payable in
Current liabilities on the balance sheet.
(Note 4) The following is the maturity schedule of long-term loans within five years of the balance sheet date.

Due in1 year or lessLong-term loans payable80

20,792,500(Thousands of yen)
1 to 2 years
28,050,000

2 to 3 years
35,590,000

3 to 4 years
23,500,000

4 to 5 years
25,640,00081Unitholder Information

Unitholder Information

Unitholder Memo

Change in Investment Unit Price and Trading Volume (December 3, 2014 to June 14, 2019)
SHR´s investment unit price (left axis)

TSE REIT Index

Trading volume (right axis)

Unitholder Memo
Account Closing Date

End of April and October of each year

Record Date for Determining
Distribution Payment

End of April and October of each year
(Cash distribution will be paid out within 3 months from the record date.)

General Meeting of Unitholders

General meeting of unitholders shall be convened on January 1, 2020 and onwards without delay,and subsequently be convened on January 1 every 2 years and onwards without delay. In addition,
the general meetings of unitholders may be held from time to time when it is necessary.

200,000

Date to Determine Exercising of
Voting Rights by Unitholders

Date stipulated in Article 12 of the Articles of Incorporation

65,000150,000

Listed Stock ExchangeTokyo Stock Exchange, Inc. (Securities Code: 3309)

60,000100,000

Newspaper Posting Public Notice

Nikkei Inc.

55,00050,000Transfer Agent

Mizuho Trust & Banking Co., Ltd.

Contact

Stock Transfer Agency Department,
Mizuho Trust & Banking Co., Ltd.
1-2-1 Yaesu, Chuo-ku, Tokyo, 103-0028
Phone: 0120-288-324 (Toll Free only in Japan)(JPY)(Unit)

90,000400,000

85,000350,000

80,000300,000

75,000250,000

70,0000Dec. Mar.
2014 2015

Jun.

Sep.

Dec. Mar.
2016

Jun.

Sep.

Dec. Mar.
2017

Jun.

Sep.

Dec. Mar.
2018

Jun.

Sep.

Dec. Mar.
2019

Jun.

0

(Note 1) Closing price and trading volume of the investment unit of SHR in a regular trading session at Tokyo Stock Exchange, Inc. are indicated.
(Note 2) As a two-for-one split of investment units was implemented on May 1, 2018, investment units have been traded at halved (the ex-rights) unit price on and after April 25, 2018. In consideration of the impact of the split, the above graph is based on actual figures of “Investment Unit Price” for April 24, 2018 and earlier being divided by two and actual figures of “Trading
Volume” being multiplied by Two.
(Note 3) Change in TSE REIT Index is indicated after converting the closing price of TSE REIT Index on the listing date of SHR (December 3, 2014) to JPY 66,000, the amount gained after adjusting
the two-for-one split to the closing price of the investment unit of SHR in a regular trading session. Furthermore, TSE REIT Index refers to the weighted average-type index of market
capitalization of all REIT counters listed on the Tokyo Stock Exchange (TSE).

Concerning Procedures to Change Registered Address, etc.

Unitholder Composition

As of the end of the 9th fiscal period ended April 2019

Financial institutions (including securities companies)
Foreign firms, etc.
Individuals and others

Please contact your securities company to change registered address, name, etc.

616,753 units (16.4%)

2,580,625 units (68.6%)

Number ofinvestment units
owned by owner type296,683 units (7.9%)

Other domestic firms

Concerning Receiving Cash Distribution

268,030 units (7.1%)

You can receive your “cash distribution” by bringing your “distributions receipt” to a nearby Japan Post Bank or post office.
In cases where the reception period has elapsed, please specify how you wish to receive dividends on the back of the “distributions receipt,” and then mail it to the place of contact mentioned above, or receive cash distribution directly at the service
counter of the head office/branch of Mizuho Trust & Banking Co., Ltd. In addition, with respect to future cash distribution, if
you wish to receive them through transfer to a bank account you specify or other measures, please contact your securities
company, etc.
Please receive your “cash distribution” on an early date as we will be unable to pay them if they are not received within 3
years from the commencement date of payments of cash distribution.

Total: 3,762,091 units

Number ofunitholders by owner type
Total: 18,736 persons
17,977 persons (95.9%)

210 persons (1.1%)
339 persons (1.8%)
210 persons (1.1%)(Note) Total of ratios may not add up to 100.0% as ratios are indicated as rounded to the first decimal place.

Website of Sekisui House Reit, Inc.

IR Calendar
Closing month of
FP ending April

Announcement offinancial results for FP
ending April

Apr.

Jun.
May

Closing month of
FP ending October

Announcement offinancial results for FP
ending October

Oct.

Dec.

Aug.
Jul.

Sep.

Commencement of the payment of cash distributions for FP ending April
Dispatch of Semi-Annual Report for FP ending April (Japanese version)
82

Nov.

Guide to website

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

Jan.

Mar.

Commencement of the payment of cash distributions for FP ending October
Dispatch of Semi-Annual Report for FP ending October (Japanese version)

SHR strives for timely and accurate information disclosure via
the website. IR information is also made available to subscribers
via e-mail delivery (Japanese only) to provide access to thelatest information.
The latest cash distribution, financial, investment property
and other information useful to investors are made available
for viewing on the website.

83