Fiscal Results Briefing
7th Fiscal Period Ended April 30, 2018
June 15, 2018⚫ This document is provided for information purposes only and is not a solicitation for investment, nor arecommendation to enter into specific transactions. Please contact your securities companies to purchase theinvestment units of Sekisui House Reit, Inc. (“SHR”). We caution readers to undertake investment decisions of
their own volition.
⚫ This document is not a disclosure document or report under the Financial Instruments and Exchange Act, theAct on Investment Trusts and Investment Corporations, public listing regulations of the Tokyo Stock Exchange
or other related laws and regulations.
⚫ Strategies, goals and forward-looking statements contained herein are based upon specific assumptions andjudgments made as of the date of the document in accordance with information available to SHR at the time.
Information herein is subject to impact from risks, uncertainties, assumptions and other factors. Accordingly,
strategies, goals and forward-looking statements do not guarantee the SHR’s future performance, operating
results or financial position. Actual results may differ significantly from explicit or implicit statements madeherein regarding future performance, operating results, financial position or other conditions.
⚫ While SHR has taken due care in the preparation of this document, it does not guarantee the accuracy,completeness, rationality or fairness of its content. Readers are also cautioned that the contents of thisdocument are subject to change or removal without prior notice.
⚫ Duplication and reproduction of the content contained herein without prior consent is prohibited.
⚫ The material containing the information required under Article 23(1) and (2) of the AIFMD is available at
http://www.sekisuihouse-reit.co.jp/en_cms/ir/library.html

Asset Management Company: Sekisui House Asset Management, Ltd.
Registered by the Director of Kanto Local Finance Bureau, as a Financial Instruments Business Operator Registration (Kinsho) No. 2791.
Member of the Investment Trusts Association, Japan

CONTENTS
1.

Executive summary

2.

3.

4.

6.

•••

3

Balance Sheet
Balance Sheet of SHR (7th Fiscal Period Ended April 2018)

Statement of Income and Retained Earnings

Overview of the Merger

Profit and Loss Statement of SHR (7th Fiscal Period Ended April 2018)

Balance Sheet

•••

21

•••

22

•••

23

•••

24

Overview of the Merger•••

4Outline of Portfolio after the Merger•••

5

Residential Properties (Residence) Portfolio•••

6

Overview of SHR’s Business Results for Fiscal Period Ended April 30, 2018 (7th FP)

•••

25

Commercial Properties (Office building, Hotel, Retail property, etc.) Portfolio•••

7

Overview of SHI’s Business Results for Fiscal Period Ended April 30, 2018 (25th FP)

•••

26

Utilization Policy of Negative Goodwill Arising in Conjunction with the Merger•••

8

Portfolio Development Policy

•••

27

Financial Results after the Merger•••

9Continuous investment in prime properties

•••

28

Overview of Assets Acquired (6 properties in all)

•••

29

Operating Results of SHR/SHI for Immediately Preceding FP

Balance Sheet of SHI (25th Fiscal Period Ended April 2018 (Unaudited))

Statement of Income and Retained Earnings
Profit and Loss Statement of SHI (25th Fiscal Period Ended April 2018 (Unaudited))

Occupancy Status of SHR and SHI

•••

10

Overview of Assets Sold (12 properties in all)

•••

30

Rent Trends of Office Buildings and Hotels (Properties Owned by SHR)

•••

1１

Portfolio Map

•••

31

Rent Trends of Residential Properties (Properties Owned by SHI)

•••

12

List of Portfolio

•••

32

Overview of Appraisal

•••

34

ESG initiatives of Sekisui House

•••

38

Sustainable Policy of Asset Management Company

•••

39

Financial Forecast of New SHR
Financial Forecast for the FP Ending October 31, 2018 (8th FP) and April 30, 2019 (9thFP) of New SHR

5.

Appendix

Summary•••14

Growth Strategy
Future Growth Strategy

・・・

15

Example of Initiatives for ESG

•••

40

Increase of varied growth opportunities by utilizing the integrated corporate strength of
the Sekisui House Group

・・・

16

Overview of Interest-Bearing Liabilities

•••

41

Unitholders Composition

•••

44

ESG Initiatives
ESG Policy and Major Initiatives

•••

17

Overview of Asset Management Company and Reinforcement of Governance

•••

45

Acquisition of Environmental Certification from External Agencies

•••

18

Changes in Unit Price (December 3, 2014 – May 31, 2018)

•••

46

1. Summary

Executive summary
1Creation of a diversified REIT having residential properties and office buildings planned and developed by
Sekisui House as its core assets◼ On May 1, 2018, marked completion of merger between Sekisui House Reit, Inc. (SHR) and Sekisui House Residential Investment
Corporation (SHI)◼ The scale of assets has increased to JPY 440.8 billion through asset replacement implemented simultaneously with the merger byacquiring properties from the sponsor◼ After announcing the merger, Japan Credit Rating Agency, Ltd. (JCR) changed credit rating outlooks from AA- (Stable) ⇒ AA- (Positive)

2

Increased distribution per unit

◼ SHR’s distribution per unit for the fiscal period ended April 30, 2018 (the 7th fiscal period) and SHI’s merger consideration perunit for the fiscal period ended April 30, 2018 (the 25th fiscal period), its final fiscal period, both resulted above the forecast
respectively announced◼ Distribution per unit of the New SHR after the merger for the fiscal period ending October 31, 2018 (the 8th fiscal period) andthe fiscal period ending April 30, 2019 (the 9th fiscal period) have been revised upward to JPY 1,531 and JPY 1,526 respectively

3

Future growth strategy aiming further improvement in unitholder value◼ Aim for the asset scale of JPY 600 billion through external growth strategy that focuses on pipeline with Sekisui House Group◼ Continue operations that emphasize stability of income by developing a high-quality portfolio through priority investment inprime properties◼ Aim to enhance liquidity of investment units, valuation and credit rating with maintaining financial stability

3

2. Overview of the Merger

Overview of the Merger
On May 1, 2018, marked completion of merger and turned into a highly stable diversified REIT having high quality
residential properties and office buildings as its core assets
New Investment Corporation
Surviving Corporation<New SHR><SHR>
Sekisui House Reit, Inc.
MergerDiversified REIT focused on
office buildings

Dissolving Corporation<SHI>
Sekisui House Residential Investment
Corporation

A diversified REIT having residential
properties and office buildings as its coreassetsMergerResidential-oriented REIT

Asset Size
¥440.8 billion
Note
LTV (total asset basis)43.1%
Total Number of Investment Units Issued andOutstanding
3,762,091 units

Implemented 2-for-1 investment unit split(Total number of investment units after split:
1,938,000 units)

For each SHI investment unit, 1.65 SHR
investment units were allocated(Total number of investment units allocated:
1,824,091 units)

Note: LTV (total asset basis) = total amount of interest-bearing liabilities / total amount of assets (expected amount after the asset replacement on May 1, 2018) × 100■ Change in SHR’s Investment Unit Prices and Volume (November 1, 2017 – May 31, 2018)
SHR’s investment unit price(Note 1)(after the adjustment of the investment unit split)

80,000 yen

Mar 30, 2018
Jan 24, 2018

TSE REIT Index(Note 2)

Change in credit rating outlooks
JCR: AA- (Stable)→ AA- (Positive)

Merger announcement
Trading Volume(Note 1)

May 1, 2018
70,000 units
Completion of merger

60,000 units

75,000 yen

Status of SHR’s investment unit performanceJan. 24, 2018
(Merger announcement)toMay 31, 2018
(After completion of merger)

50,000 units
70,000 yen
40,000 units

Investment
unit price

Increased 3.7% after announcing the merger
Outperformed TSE REIT index by 5.7%

65,000 yen
Mar 27, 2018

30,000 units

Approved at the General
Meeting of Unitholders

60,000 yen

20,000 units

55,000 yen

Sales priceper day

Increased 40.9%(Note 3)

10,000 units

50,000 yen
Nov. 1
2017

Dec. 1

Jan. 42018

Feb. 1Mar. 1

Apr. 2

May 1

0 units
May 31

Note 1: 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 isbased on actual figures of “Investment Unit Price” before April 25, 2018 being divided by two and actual figures of “Trading Volume” being multiplied by two.
Note 2: Change in TSE REIT Index is indicated after converting the closing price of TSE REIT Index on January 24, 2018 to JPY68,850, 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 in order to make it easier to compare with the SHR”s Investment Unit Prices.
Note 3: The sales price per day is indicating increase rate for the sales price of the investment unit of SHR in a regular trading session based on comparison of average amount per day in April 2018 and May 2018.

4

2. Overview of the Merger

Portfolio

Outline of Portfolio after the Merger
SHR Note 1

SHI Note 1

Acquiredproperties

Sold properties

New SHR Note 2(after the merger)

Asset size

¥200.7 billion¥206.9 billion¥25.3 billion¥16.4 billion¥440.8 billion

Number of properties

6 properties

113 properties

6 properties

12 properties

113 properties

Based on actual results of the latest
fiscal period

Based on actual results of the latest
fiscal period

Based on appraised NOI

Based on actual results of the latest
fiscal period

Based on forecasts forthe 8th fiscal period

Before depreciation

4.2%

5.1%

4.8% Note 3

4.4% Note 4, Note5

4.4% Note 6

After depreciation

3.4%

3.6%

3.7% Note 3

2.7% Note 4, Note5

3.4% Note 6

7.3 years

10.7 years

4.5 years

14.1 years Note 5

8.6 years

NOI yield
Acquisition
price basis

Average building age Note 7

Type Ratio

Area Ratio

Retail Property, etc.
Hotel

Others
5.6% (13 properties)

0.6% (1 property)

15 or more years
Under 5 years
11.0% (13 properties)

4.0% (5 properties)
Nagoya area
5.2% (10 properties)

3.9% (1 property)

Asset Size

¥440.8Residential properties
53.8%(106 properties)

Greater Tokyo
66.6% (78 properties)

Three Major
Metropolitan
Areas Note 8

94.4%

billion
Office building

Building Age Ratio

10 or more but lessthan 15 years
28.2% (59 properties)

Averagebuilding age

8.6 years

Osaka area
22.6% (12 properties)

41.6% (6 properties)

5 or more but less than
10 years
56.7% (36 properties)

Note 1: For both SHR and SHI, data is based on settlement figures for the fiscal period ended April 30, 2018 and other information as of the end of that fiscal period.
Note 2: Figures based on the asset size as of the date of this document which reflect acquisition of 6 properties and sales of 12 properties completed on May 1, 2018 are indicated.
Note 3: Yield based on appraised NOI stated in appraisal reports for the acquired properties is stated (here and hereinafter). Projected depreciation for the acquired properties is used for the calculation of NOI yield after depreciation.
Note 4: Yield calculated on the basis of annualized actual NOI amounts of SHI for the fiscal period ended April 30, 2018 is stated (here and hereinafter). Actual depreciation for the same period is used for calculating NOI yield after depreciation.
Note 5: Calculated on the basis of the SHI acquisition prices.
Note 6: Calculated on the basis of the forecasts for the fiscal period ending October 31, 2018 (here and hereinafter).
Note 7: Weighted average of building age calculated on the basis of the building age as of May 1, 2018, the date of merger completion, and the acquisition price is stated respectively (here and hereinafter).
Note 8: The “Three Major Metropolitan Areas” are Greater Tokyo, Osaka Area and Nagoya Area (here and hereinafter). The “Greater Tokyo” includes Tokyo, Kanagawa Prefecture, Chiba Prefecture, and Saitama Prefecture; the “Osaka Area” includes Osaka
Prefecture, Kyoto Prefecture, Hyogo Prefecture, and Nara Prefecture; and the “Nagoya Area” includes Aichi Prefecture (here and hereinafter).
Note 9: As for Hommachi Garden City, Type ratio is stated as if the respective building under sectional ownership of office building portion and hotel portion were separate buildings according to the uses of each portion, and when calculating the area ratio andbuilding age ratio the property is treated as one property.

5

2. Overview of the Merger

Residential Properties (Residence) Portfolio
Asset size and number of properties
Total acquisition price:

Ratio of acquisition from Sekisui House Group¥237.3 billion in

106 properties
Acquisition fromthird-parties

Average acquisition price

Average acquisition price: ¥2.6 billion per property¥2.2 billion per property
Total
acquisition price

Forecast NOI yield

Acquisition from Sekisui House Group¥237.3 billion
106 properties

Before depreciation 4.6 %After depreciation 3.4 %(Based on forecast of 8th FP)
Ratio of prime properties Note 1¥90.5 billion 34 properties

Sekisui House¥106.7 billion (45.0%) 44 properties¥16.2 billion 10 properties

Sekiwa Real Estate
Companies

81.6 %(80 properties)

Average acquisition price: ¥1.6 billion per property

Diversification Status of Portfolio
Diversification status
by area(acquisition price basis)

15 or more years
6.3%
Greater Tokyo(4 properties)
77.0%(76 properties)

Others
9.2% (12 properties)
Nagoya area
7.0%
(9 properties)

Osaka area
6.8%
(9 properties)

Diversification status
by building age(acquisition price basis)Three Major
Metropolitan
Areas

Diversification status
by walking distance to station(acquisition price basis)

Under 5 years
18.6%(13 properties)

Average
Building Age

More than
10 minutes
6.8%(10 properties)

More than 5 minutes
and within 10 minutes
23.4%(33 properties)

9.7 years

90.8%
10 or more but lessthan 15 years
52.5% (59 properties)(based on the number of leasable residential units)

Within 3 minutes
36.0%(32 properties)

Within10-minute walk

93.2 %
5 or more but less than
10 years
22.6% (30 properties)

Diversification status
by floor area
100 m² or more
0.9% (85 units)

50 m² toless than 100 m²
24.0%(2,294 units)

30 m² toless than 50 m²
24.9% (2,384 units)More than 3 minutes
and within 5 minutes
33.8% (31 properties)

Averagearea per unit

37.3 m²
Less than 30 m²
50.2%(4,806 units)

Note 1: Ratio of prime properties is the ratio of properties that fall under prime properties within the owned assets calculated based on acquisition price and indicated by rounding to the first decimal place (here and hereinafter). Prime properties is
the title given to high-quality residential properties and commercial properties standing in strategic locations (here and hereinafter). Please refer to page 28 for “strategic location,” “high-quality” and “prime properties”.
Note 2: Ratios of diversification status above are indicated by rounding to the first decimal place. Accordingly, ratio totals may not add up to 100%.

6

2. Overview of the Merger

Commercial Properties (Office building, Hotel, Retail property, etc.) Portfolio
Asset size and number of properties
Total acquisition price:

Ratio of acquisition from Sekisui House Group¥203.4 billion in

7 properties

Acquisition fromthird-parties

Average acquisition price¥33.4 billion per property(average of 6 properties excluding Hamamatsu Plaza)Totalacquisition price

Forecast NOI yield

Acquisition from Sekisui House Group¥203.4 billion
7 properties

Before depreciation 4.1 %After depreciation 3.4 %(Based on forecast of 8th FP)
Ratio of prime properties¥200.7 billion (98.7%) 6 properties
Note: Acquisitions from Sekisui House Group mentioned above are all acquisitions
from Sekisui House, our sponsor.

100.0 %
(Hamamatsu Plaza is outside of the target)
Diversification Status of Portfolio Note 1
Diversification status
by area(acquisition price basis)
Nagoya area
3.1% (1 property)

Diversification status
by building age(acquisition price basis)

Others
1.3% (1 property)

Three Major
Metropolitan
Areas

15 or more years
1.3% (1 properties)

Greater Tokyo
54.6%(2 properties)

Osaka area
40.9%
(3 properties)

Under 5 years
2.2% (1 property)

5 or more but less than
10 years
96.5% (5 properties)

Hirokoji GA
3.1%

HK Yodoyabashi GA
2.2%

Average
Building Age

7.5 years

98.7%

Diversification statusby property(acquisition price basis)

Less than 10,000 m²
Hamamatsu Plaza
3.1%
1.3%
GC Shinagawa(1 property)
Gotenyama
29.3%

Ratio oftop 3 properties
Hommachi GC
27.4%

Hommachi Minami GC
11.4%

Diversification status
by total floor area Note 2(acquisition price basis)82.0 %

10,000 m² toless than 30,000 m²
28.8%(3 properties)

Gotenyama
SH Building
25.3%

50,000 m² or more
29.3% (1 property)

Total
floor area
30,000 m² or more

68.1 %
30,000 m² toless than 50,000 m²
38.8% (2 properties)

Note 1: Ratios of diversification status above are indicated by rounding to the first decimal place. Accordingly, ratio totals may not add up to 100%.
Note 2: Diversification status by total floor area is calculated based on floor area stated in the registry for the entire building. As for Hamamatsu Plaza, Xebio Building of Hamamatsu Plaza East, the building of Hamapla & Frespo Building that is located insites for other parts, and various facilities of gas station for Costco members are owned by the tenants and the sites are leased land. Thus, these are not included in the figure for total floor area.

72. Overview of the Merger

Utilization Policy of Negative Goodwill Arising in Conjunction with the Merger
Scheduled to record JPY 2.3 billion of gains on negative goodwill from the merger as extraordinary income in thefiscal period ending October 31, 2018 (the 8th fiscal period)
Goodwill calculation method

Utilization policy of negative goodwill

Calculated based on difference between “SHI net assets (fair value base)”and “merger consideration” as of time when merger took effect May 1,2018
Merger consideration (= total price of SHR’s investment unit allotted to SHI unitholders)= SHR’s investment unit price of JPY70,500 as of April 27 (closing price) × 1,824,091 units = JPY 128.5 billion

SHI BS (estimate for May 1)(fair value base)

AssumedLiabilities¥112.3 billion
Received Assets

Mergerconsideration

Negative goodwill arose as“net assets （fair value base)”
was larger than “merger
consideration”

8th Fiscal Period (ending Oct. 2018)
1. Make distributions for the amount equivalent to the discrepancies between accounting and taxation
purposes other than gains on negative goodwill (avoid occurrence of tax burden)
2. Make distributions for the amount equivalent to income decreased due to recording of loss on salesof Hamamatsu Plaza on accounting purposes
3. Reserve the amounts remaining as reserve for temporary difference adjustment (RTA) to the extent
the conduit requirements are satisfied (internal reserve)
9th Fiscal Period (ending Apr. 2019)4.

Negative goodwill of¥2.3 billion¥243.2 billion
Net Assets¥130.8 billion

Reverse RTA and appropriate it to the following distributions• Distributions for the amount equivalent to the discrepancies between accounting and taxation
purposes on depreciation and other factors (avoid occurrence of tax burden)• Distributions for the amount equivalent to income decreased due to absence of rent businessincome from Hamamatsu Plaza

Mergerconsideration

After 10th Fiscal Period (ending Oct. 2019)¥128.5 billion
5.

■ Discrepancies between accounting and taxation
purposes on depreciation and other factors
Discrepancies between accounting and taxation purposes on depreciation and otherfactors are scheduled to arise continuously even after the fiscal period ending
October 31, 2019 (the 10th fiscal period)
Occurrence of a tax burden is planned to be avoided through following methods
When amounts remain in the RTA
Reverse and distribute the amountequivalent to discrepancies between
accounting and taxation purposes

When reversal of RTA has completed
Make distributions in excess of earnings asallowance for temporary difference
adjustment (ATA)

RTA will be utilized flexibly, as long as there are amounts remaining in the RTA, including thereversal for appropriating it to the following distributions• Distributions for the amount equivalent to the discrepancies between accounting and taxation
purposes in each fiscal period, etc. (avoid occurrence of tax burden)• Distributions to stabilize or improve distribution levels

Although sales of Hamamatsu Plaza has not been officially decided, it is expected thata loss on sales of JPY 100 million will arise for accounting purposes but a loss on salesof JPY 1,057 million will arise for taxation purposes, assuming it will be sold at the endof the fiscal period ending October 31, 2018 (8th fiscal period) for the planned
acquisition prices as of the merger (appraisal price as of the end of the fiscal period
ended April 30, 2018).

8

2. Overview of the Merger

Financial Results After the Merger■ Financial Indices (as of the date of this document)■ Status of interest-bearing liabilities (as of the date of this document)

Total interest-bearing
liabilities

Total assets LTV

43.1%

Long-term debt ratio

100.0%¥197.9 billion

Financial Institution

Balance(billion yen)

Percentage

Balance(billion yen)

Financial Institution

Percentage

MUFG Bank, Ltd.

43.6

23.9%

Aozora Bank, Ltd.

2.2

1.2%

Sumitomo Mitsui Banking
Corporation

35.7

19.6%

Shinkin Central Bank

1.6

0.9%

Mizuho Bank, Ltd.

31.7

17.4%

The Senshu Ikeda Bank,
Ltd.

1.3

0.7%

Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust & Banking
Co., Ltd.

16.3

8.9%

The Shizuoka Bank, Ltd.

1.3

0.7%

12.2

6.7%

The 77 Bank, Ltd.

1.3

0.7%

Resona Bank, Limited

10.5

5.8%

The Hiroshima Bank, Ltd.

1.3

0.7%

With the following points recognized by JCR, the credit rating outlook waschanged on March 30, 2018

Development Bank ofJapan, Inc.

10.4

5.7%

The Yamaguchi Bank, Ltd.

1.3

0.7%

• Stable operation can be expected even after the merger through utilization of the integrated corporate strengthof the Sekisui House Group• Enhancement of the portfolio and diversification of properties will be achieved through expansion of asset size
resulting from the merger.

The Norinchukin Bank

8.9

4.9%

Loan Total

182.4

100.0%The Bank of Fukuoka, Ltd.

2.4

1.3%

Total Investment
Corporation Bonds

15.5

‒

Total Interest-Bearing
Liabilities

197.9

‒

Average remaining term ofinterest-bearing liabilities

Fixed interest rate
debt ratio

Average financing
interest rate

91.3%

0.77%

4.1 years■ Credit Rating Information

Rating agency

Before the change

After the change

JCR

AA－ (Stable)AA－ (Positive)■ Status of Diversification of repayment dates (as of the date of this document)(billion yen)

■ Status of Commitment Line■ Loans with fixed interest rate
■ Loans with floating interest rate
■ Investment corporation bondFinancial Institution

Maximum
Commitment Line
AmountContract Period

Mizuho Bank, Ltd.
MUFG Bank, Ltd.

November 1, 2017¥10.0 billion

to October 31, 2018
Sumitomo Mitsui Banking Corporation

FP ending
Oct. 31, 2018

FP endingApr. 30, 2019

FP ending
Oct. 31, 2019

FP endingApr. 30, 2020

FP ending
Oct. 31, 2020

FP endingApr. 30, 2021

FP ending
Oct. 31, 2021

FP endingApr. 30, 2022

FP ending
Oct. 31, 2022

FP endingApr. 30, 2023

FP ending
Oct. 31, 2023

FP endingApr. 30, 2024

FP ending
Oct. 31, 2024

FP endingApr. 30, 2025

FP ending
Oct. 31, 2025

FP endingApr. 30, 2026

FP ending
Oct. 31, 2026

FP endingApr. 30, 2027

FP ending
Oct. 31, 2027

9

3. Operating Results of SHR/SHI for Immediately Preceding FP

Occupancy Status of SHR and SHI■ Monthly occupancy ratio
SHR (5th FP to 7th FP)

Nov.
2016

Dec.

Jan.
2017

Feb.

Mar.

Apr.

SHI (23rd FP to 25th FP)

May█ Office building█ Hotel

June

Sept.

July

Aug.

Oct.

Nov.

Dec.

Jan.
2018

Feb.

Mar.

Apr.

■ Occupancy ratios for SHR
FP ended Apr. 2017
(5th FP)█ Residential properties

Total of properties owned by SHR

Oct. Nov.
2016

Dec.

Jan. Feb.
2017█ Other real estate in trust (retail property)

Mar.

Apr.

May

June

July

Aug. Sept.

Oct.

Total of properties owned by SHI

Nov.

Dec.

Jan. Feb.
2018

Mar.

Apr.

■ Occupancy ratios for SHI
FP ended Oct. 2017
(6th FP)FP ended Apr. 2018
(7th FP)FP ended Mar. 2017
(23rd FP)FP ended Sept. 2017(24th FP)FP ended Apr. 2018
(25th FP)As ofthe end of
the FP

Averageduring the FP

As of
the end of
the FP

Averageduring the FP

As of
the end of
the FP

Averageduring the FP

As of
the end of
the FP

Averageduring the FP

As of
the end of
the FP

Averageduring the FP

As of
the end of
the FP

Averageduring the FP

Officebuilding

100.0%

99.97%

100.0%

100.0%

100.0%

100.0%

Residential
properties

97.7%

97.0%

97.0%

96.8%

97.2%

97.2%

Hotel

－

－

100.0%

100.0%

100.0%

100.0%

Other real estatein trust(retail property)

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Total

100.0%

99.97%

100.0%

100.0%

100.0%

100.0%

Total

97.8%

97.1%

97.1%

96.9%

97.4%

97.3%

Note 1: Occupancy ratios in the above chart indicate the rate of total leased floor area to the total leasable floor area for the properties in each category owned by SHR and SHI as of the end of each month from November 2016 to April 2018 for SHR and from
October 2016 to April 2018 for SHI.
Note 2: Among occupancy ratios in the above table, “Average during the FP” figures for each period indicate the average of occupancy ratios as of the end of each month during the respective fiscal period of SHR and SHI.
Note 3: The figures above are rounded to the nearest first decimal place, except for those of office building for SHR’s fiscal period ended Apr. 2017 (5th FP).

10

3. Operating Results of SHR/SHI for Immediately Preceding FP

Rent Trends of Office Buildings and Hotel (Properties Owned by SHR)
Continue with operations emphasizing stability with a focus on fixed-rent type master lease agreements after the merger■ Status of lease agreements of portfolio properties
Property Name

HommachiMinami GC

GC Shinagawa Gotenyama

Gotenyama
SH Building

Hommachi GC

HK Yodoyabashi
GA

Hirokoji GA

Entire portfolio-

Photo of Properties

Fixed-Rent Type
Master Lease (ML)

Lease Type

Contract Period(ML/DL)

Period-end Contract
Unit Rent per Tsubo(ML/DL)

Portion originally Portion additionally Portion additionallyacquiredacquiredacquiredDec. 2014
May 2016
May 2017
tototoDec. 2019
Dec. 2019
Dec. 2019¥23,250
per tsubo¥23,250
per tsubo¥23,250
per tsubo

DirectLease(DL)-Dec. 2014
toDec. 2019

Office building
portionMay 2015
toMay 2020

HotelportionMay 2017
to
May 2020

Mar. 2011
toFeb. 2031

May 2016
to
May 2019

May 2016
to
May 2019-¥19,360
per tsubo¥29,280
per tsubo¥12,257
per tsubo¥30,000
per tsubo¥16,164
per tsubo¥23,363
per tsubo¥22,732
per tsubo■ Types of leasing scheme (concept)
GC Shinagawa Gotenyama
Hommachi Minami GC
Hommachi GC

Pass-Through Type
Master Lease (ML)■ Diversification of lease types(based on leased floor area) Note 1
HK Yodoyabashi GA
Hirokoji GA

Gotenyama SH Building

Leases with Fixed Rent

End-tenant

Tenant92.0%
Sekisui House

Fixed-rent type
LessorMLagreement

Sekisui House

Pass-through type

SHR

Lease agreement(Direct lease)

92.0% of leased floor area practicallyhas fixed-rent (including DL)■ Fixed-rent type ML (office building)■ Fixed-rent type ML (hotel)■ Direct lease (DL)■ Pass-through type ML
Note 1: The ratio of the leased floor area for each lease type under the relevant lease agreements (or, if a master lease agreement is concluded for the property, the master lease agreement), in respect of the properties, that are valid as of the date of thisdocument, to the total sum of the leased floor areas indicated in such lease agreements is indicated, rounded to the nearest first decimal place.
Note 2: Master lease, direct lease, Garden City and Garden Avenue may be abbreviated as ML, DL, GC and GA, respectively.

11

3. Operating Results of SHR/SHI for Immediately Preceding FP

Rent Trends of Residential Properties (Properties Owned by SHI) (1)■ Rent Trends in New Contracts■ Rent Trends in Contract Renewals

21st FP

22nd FP

23rd FP

24th FP

25th FP Note 2

887

885

944

880

1,030

Total increase
in rent(number of cases)¥1,576¥1,472¥1,871¥1,913thousandthousand

(327)

(327)

(391)

(450)

(522)

Total decrease
in rent(number of cases)-¥1,517-¥1,150-¥1,220
thousandthousand-¥873-¥1,336

(277)

(213)

(184)

(159)

No. of newcontracts

thousandthousand¥59

thousandthousand¥321

thousand21st FP

22nd FP

23rd FP

24th FP

25th FP Note 2

No. of contract
renewals

1,406

1,135

1,251

1,127

1,860

Total increase
in rent(number of cases)

thousandthousandthousandthousandthousand

(31)

(29)

(75)

(69)

(145)

thousandthousandthousand

-¥15

(2)

(4)

(2 )

(- )

thousand(212)

Total decrease
in rent(number of cases)¥868¥2,204thousand

¥62

¥91

-¥7

¥124

-¥17

(5)

thousandthousand¥650¥1,040thousandthousand

Change in rent (net)thousandthousandthousandThousandthousandRate of change
in rent against
previous rent Note 1

0.1%

0.3%

0.6%

1.0%

0.7%

Rate of change
in rent against
previous rent Note 1

0.0%

0.1%

0.1%

0.2%

0.1%

█ Decreased rent contract ratio

19.5%

24.1%

18.1%

20.6%

30.8%

28.7%

█ Increased rent contract ratio

0.1%

¥109

-¥63

thousand█ No rent change contract ratio

¥74

¥293

Change in rent (net)█ Increased rent contract ratio

¥55

¥216

█ No rent change contract ratio

0.4%

¥216

¥230

█ Decreased rent contract ratio

0.3%

0.2%

31.2%

31.9%

39.1%

39.0%

97.7%

51.1%
36.9%

36.9%

41.4%

21st FP

22nd FP

23rd FPGreater Tokyo /Major Urban Areas
Greater Tokyo /Other Urban Areas

No. of new contracts

91.9%

93.9%

24th FP

25th FP

21st FP

6.0%

2.6%

2.2%

Change in rent (net)

93.8%

50.7%

■ Rent Trends in New Contracts by Investment Area
25th FP

97.1%

22nd FP

23rd FP

7.8%

6.1%

24th FP

25th FP■ Rent Trends in Contract Renewals by Investment Area
Rate of change in rent
Note 1

25th FP

No. of contract
renewals

Change in rent (net)

1,234¥226 thousand

0.1%

100

¥4 thousand

0.0%

Rate of change in rent
Note 1638¥931 thousand

1.1%

68

¥34 thousand

0.5%Greater Tokyo /Major Urban Areas
Greater Tokyo /Other Urban Areas

Major Cities Nationwide

324-¥96 thousand-0.3%

Major Cities Nationwide

526

-

-

Total

1,030

¥868 thousand

0.7%

Total

1,860

¥230 thousand

0.1%

Note 1: The “Rate of change in rent against previous rent” and “Rate of change in rent” above are the ratio of the total change in rent (net) for each fiscal period for new or renewed contracts against the total of previous rent, and both ratios are rounded to thefirst decimal place.
Note 2: As SHI changed its business period of the 25th fiscal period to seven months, the figures represent those for a seven-month period from October 2017 to the end of April 2018.

12

3. Operating Results of SHR/SHI for Immediately Preceding FP

Rent Trends of Residential Properties (Properties Owned by SHI) (2)■ Trend in rent for occupied space by former investment area

Based on residential properties owned as of the end of the 25th FP (No properties were acquired or sold from the end of the 24th FP)
End of FP ended September 2017 (end of 24th FP)

End of FP ended April 2018 (end of 25th FP)

Amount of change in unit
rent per tsubo(against end of 24th FP)

Rate of change inunit rent per tsubo(against end of 24th FP)

Period-end
occupancy ratio

Period-end
unit rent per tsubo

Period-end
occupancy ratio

Period-end
unit rent per tsubo

Greater Tokyo /Major Urban Areas

96.8%¥13,122 per tsubo

96.7%¥13,144 per tsubo

+¥22

0.2%

Greater Tokyo /Other Urban Areas

95.4%¥8,735 per tsubo

96.5%¥8,766 per tsubo

+¥31

0.4%

Major Cities Nationwide

95.3%¥7,356 per tsubo

96.2%¥7,338 per tsubo

-¥18

-0.3%

Overall

96.2%¥10,886 per tsubo

96.5%¥10,880 per tsubo

-¥6

-0.1%

Note: The rent and the floor area of shops and offices in residential properties, as well as the rent and the floor area of residential properties in relation to which fixed-rent type master lease agreements have been concluded with master lease companies
are not included in calculating the above figures.

■ Changes in Key Money Acquisition Rate100%

■ Changes in Renewal Rate

Key Money Acquisition Rate improved to over

56.6%

54.2%

57.5%

60% level

59.2%

100%

75%

0%

50%
22nd FP

23rd FP

24th FP

87.4%

86.2%

21st FP

22nd FP

66.3%

50%

21st FP

Renewal Rate continuously secured around25th FP

80% level

84.5%

85.3%

23rd FP

24th FP

87.2%

25th FP13

4. Financial Forecast of New SHR

Financial Forecast for the FP Ending October 31, 2018 (8th FP) and April 30, 2019 (9th FP) of New SHR
Fiscal Period
ending October 2018 (8th FP)(Announced on June 15, 2018)

Forecast distribution¥1,531 per unit

Fiscal Period
ending April 2019 (9th FP)

Forecast distribution■ Overview of revision to financial forecast for the fiscal period ending
October 31, 2018 (8th FP)(Announced on June 15, 2018)¥1,526 per unit

■ Overview of revision to financial forecast for the fiscal period ending
April 30, 2019 (9th FP)

Financial forecast
announced on June 15, 2018

Financial forecast
announced on June 15, 2018

Operating revenue¥12,136 million

Operating revenue¥12,078 million

Operating income¥5,570 million

Operating income¥6,346 million

Ordinary income¥4,878 million

Ordinary income¥5,604 million

Net income¥5,603 million

Net income(of which, profit on negative goodwill)¥7,178 million(¥2,300 million)

Reserve for temporary difference
adjustment (RTA), etc.

-¥1,418 million

Drawdown of RTA¥139 million

Total distribution¥5,759 million

Total distribution¥5,740 million

Distribution per unit

Distribution per unit

¥1,531¥1,526[Reference]
Impact of appearance of property
and other asset taxes, etc. andconsumption tax hike in and after
fiscal period ending October31,
2019 (10th FP) (Forecast)• Amount of property and other asset
taxes, etc. appearing for properties
newly acquired on May 1, 2018

• Amount of increase in SG&A due toincrease in consumption tax
planned for October 2019

About 14 yen per unit/FP

About 8 yen per unit/FP

14

5. Growth Strategy

Future Growth Strategy
Seek to increase the asset size while maintaining a stable and high quality portfolio

Investment
strategy

Continue to make investment primarily in
Prime Properties with “strategic location”
and “high quality”

Investment ratio target by type uponachieving asset size of
600.0 billion yen

Asset Size:
Seek

Residential
properties

About 45%

Office building

About 45%

Hotel

About 10%Retail properties,
etc.

About 0 to10%¥600 billion¥440.8 billion¥200.7 billion(Reference)
Investment ratio by type as ofthe date of this document¥206.9 billion
Increase in asset
size due to themergerSHRSHINew SHRFP ended Apr. 2018
(7th FP)FP ended Apr. 2018
(25th FP)May 1, 2018
(8th FP)

External
growthstrategy◼ Utilization of Sekisui House’s property supply capability for residential properties, commercial properties, etc.

Internal
growthstrategy◼ Utilization of PM skills tailored to characteristics of properties of Sekisui House and Sekiwa Real Estate Group

Financialstrategy

Residence

53.8%

Office building

41.6%

Hotel

3.9%

Retail properties,
etc.

0.6%

Medium-term asset size
target◼ Utilization of property acquisition opportunities centering on residential properties from Sekiwa Real Estate companies◼ Strengthening of know-how and information gathering network unique to the asset management company◼ Maintenance and improvement of real estate value through renovation, value-enhancement, etc.
◼ Adoption of leasing schemes in accordance with property characteristics

Seek to enhanceunitholder value while
paying attention to thelevel of distribution

Distribution target
Aim to achieve
distribution per unit of
1,600 yen at an earlystage◼ Increase of total market value and enhancement of liquidity of investment units by way of public offering at an appropriate timing◼ Conservative LTV control by setting maximum total assets LTV at around 45%◼ Fund procurement mainly with long-terms and fixed interest rates, diversification of repayment deadlines and reduction of interest rates

15

5. Growth Strategy

Increase of varied growth opportunities by utilizing the integrated corporate strength of Sekisui House Group
Support from Sekisui House Group for External Growth Enhancing Growth Potential■ Sekisui House Group’s Property Trading with SHR and SHI■ Sekisui House Group Business Strategies
The development business of the Sekisui House Group promote the creation of quality
communities through environment creation-oriented development and promote stable growthby increasing the asset turnover ratio.
• Custom detached houses• Rental housing• Remodeling• Real estate
management fees

Trip Base business

Built-to-OrderBusiness

Acquisitions
Use

Number of Properties/
Acquisition (planned) price

Use

Number of Properties/
Assignment (planned) price

Office Buildings,
Hotels6 properties / ¥200.7 billion

Retail Properties

1 property / ¥10.8 billion
1 property / ¥0.7 billion

Residential
properties Note1

44 properties / ¥95.4 billion

Residential
properties

Total

50 properties / ¥296.1billion

Total

Residential• Australia market• China market• U.S. market• Singapore market

Supplied
Development
Housing
Business
Business
Overseas
Business• Houses for sale
• Condominiums• Urban redevelopment

Completed Properties

Properties Under
Construction Note 3

2 properties / 85 units

7 properties / 1,038 units

Source: Sekisui House

Location

Unacquired Floor Area Ratio Note 5

Garden City Shinagawa Gotenyama

Shinagawa-ku, Tokyo

19.0%

Hommachi Minami Garden City

Osaka-shi, Osaka

43.6%

2006

2010

Planned Properties Note 4

5 properties(All in 23 wards of Tokyo)

Prime Maison Mita Tsunamachi(Minato-ku, Tokyo)■ Main Projects in Sekisui House’s Urban Redevelopment Business Note 2, Note 6
1993

2 properties / ¥11.6 billion■ Prime Maison Planned and Developed by Sekisui House Note 2■ Office Buildings Developed by Sekisui House for which SHR
has Preferential Negotiating Rights Note 2
Property Name

Sales

2013

2011

(Provisional name)Prime Maison Egotanomori(Nakano-ku, Tokyo)

2015

Main Future Projects(Provisional name) Note 4 (Provisional name) Note 4
Akasaka 5-chome PJ
MM21-44 PJ

Umeda Sky Building(Shinumeda City)

Akasaka
Garden City

Hommachi
Garden City
(Acquired property)

Garden City
Shinagawa
Gotenyama(Acquired Property) Note 7

Gotenyama SH
Building(Acquired Property)

Hirokoji
Hommachi
Garden Avenue
Minami(Acquired
Property)
Garden City
(Acquired Property) Note 7Grand Front Osaka

The Ritz-Carlton,
Kyoto

HK Yodoyabashi
Garden Avenue(Acquired Property)

Otemon Tower
JX Building

Note 1: As to acquisition prices of residential properties, SHI’s acquisition prices are indicated for those acquired by SHI and SHR’s acquisition prices are indicated for those acquired by SHR.
Note 2: As of the date of this document, there are no specific acquisition plans for the properties indicated as Prime Maison Planned and Developed by Sekisui House, Office Buildings Developed by Sekisui House for which SHR has Preferential Negotiating Rights orMain Projects in Sekisui House’s Urban Redevelopment Business.
Note 3: The images presented for properties under construction are images of the planned completed structures based on design drawings and the actual buildings may differ.
Note 4: Projects currently under consideration by Sekisui House; subject to change or cancellation without notice.
Note 5: The “unacquired floor area ratio” is the ratio of the unacquired floor area for which SHR has preferential negotiating rights to the total exclusive-use floor area of the building.
Note 6: The indicated properties include joint ventures with other companies and properties that have been sold.
Note 7: SHR has acquired a portion and has preferential negotiating rights for the remain.

16

6. ESG Initiatives

ESG Policy and Major Initiatives■ ESG policy

Sekisui House, the sponsor of SHR, upholds"Sustainable Vision" *Provision of “bases for sustainable living”
for residents

Compliance with and implementation of the
Sustainability Policy established by the asset
management company
Real estate investment management with due
consideration given to the environment, society
and governance (ESG)

Provision of sustainable bases of operation
for tenant companies* The “Sustainability Vision” of Sekisui House
In order to contribute to the formulation of a sustainable society, Sekisui House Group indicates the creation and provision of the “Four Key Values” as their “Sustainability Vision”: Environmental value, Economic value,
Social value, and Homeowner value.

■ Major ESG initiatives

Acquisition of
DBJ Green Building Certification

Participation in the GRESB assessment

Reduction of CO2 emissions(Residential properties/As of April 30, 2018)• Replacement of light fixture in common areas with LED
Electricity consumption (expected)
Annual reduction of approx.

1,270,496 kwh

CO2 emissions (expected)[Acquisition status of DBJ Green Building Certification][Acquisition status of GRESB assessment]• Received the certification in June 2018 for all of 6
residential properties acquired simultaneously with themerger• GRESB assessment in FY2017

38 out of 113 owned properties have received thecertification

55.0% of the portfolio (based on acquisition price)• GRESB assessment: Green Star• GRESB rating: 3 Stars

Total of

44 properties

Annual reduction of approx.

647 t-CO2• Replacement of air conditioners in exclusive areas withenergy-efficient models
Electricity consumption (expected)• GRESB Public Disclosure: C (global average)• Participation in the Health & Wellbeing Module

Annual reduction of approx.

• The asset management company became a GRESB
member in June 2018.

186,205 kwh

CO2 emissions (expected)
Total of

836 A/C units

Annual reduction of approx.

88 t-CO

2

Note: For details of ESG, please refer to page 38 to page 40 of Appendix; and for details of reinforcement of governance at the asset management company, please refer to page 45.

175. ESG Initiatives

Acquisition of Environmental Certification from External Agencies
Received DBJ Green Building Certification in June 2018 for all of 6 properties acquired simultaneously with the merger■ Acquisition status of DBJ Green Building Certification

3 Stars

4 Stars

Prime Maison
Shirokanedai tower

Prime Maison
Gotenyama West

Prime Maison
Daikanyama

Prime Maison
OtsukaPrime Maison
Asakusabashi

Esty Maison Toyosu
Residence■ Record of acquisition of DBJ Green Building Certification (as of the date of this document)

Acquired DBJ Green Building Certification for 38 properties of 113 owned properties, accounting for 55.0% of the portfolio (basedon acquisition price)•

All of 38 properties having acquired the certification have certification with “3 Stars” or above.

•

Both an office building (Garden City Shinagawa Gotenyama) and a residential property (Prime Maison Shinagawa) have acquired the highest ranking of “5 Stars”
In addition to the three properties above,<Residence>Prime Maison Musashinonomori
Prime Maison Kayabakoen

In addition to the three properties above,

5 Stars

4 Stars

Total 2 properties

Total 14 properties

Office building

Residence

Office building

Residence<Office building>
HK Yodoyabashi Garden Avenue
Hirokoji Garden Avenue
Hommachi Garden City
(Office building portion)

3 Stars

Total 22 properties
Residence

Residence<Residence>Prime Maison Shibaura
MAST Hakata
Esty Maison Ebisu II
Esty Maison Kyobashi

Prime Maison Yokohama Nihon-odori
Prime Maison Shirokane-takanawa
Prime Maison Gotenyama East
Prime Maison Odorikoen
Prime Maison Hatsudai
Esty Maison Ginza
Garden City
Shinagawa Gotenyama

Prime Maison
Shinagawa

Hommachi Minami
Garden City

Prime Maison
Ginza East

Prime Maison Takami
Prime Maison Teriha
Prime Maison Minami 2-joPrime Maison Kamokamogawa
Prime Maison Central Park
Prime Maison Ebisu

Prime Maison
Ichigayayamabushicho

Esty Maison
Ojima

Esty Maison Nishitenma
Esty Maison Shirokanedai
Esty Maison Akabane
Esty Maison Morishita
KOBE Women’s Student Housing

The DBJ Green Building Certification System recognizes outstanding properties that respond to the demands of the times. The system was established based on a proprietary scoring model developed by the Development Bank of Japan, andserves to improve the environmental functionality of buildings while encouraging the prevalence of properties that demonstrate awareness of societal demands.

18

Asset acquired in the 8th fiscal period
Prime Maison Daikanyama

Appendix

Appendix

Balance Sheet■ Balance Sheet of SHR (7th Fiscal Period Ended April 2018)(unit: thousand yen)
6th Fiscal Period
October 31, 2017

7th Fiscal Period
April 30, 2018

6th Fiscal Period
October 31, 2017

AssetsLiabilities

Current assets
Cash and deposits
Cash and deposits in trust

Current liabilities
1,756,618

2,607,767

Operating accounts payable

6,518,376

7,005,235

Current portion of long-term loans payable

Operating accounts receivable

19,33018,804

Prepaid expenses

76,19896,3817

21372,744-

Deferred tax assets
Consumption taxes receivable

Other
Total current assets-

133

8,743,275

9,728,343

172,924

143,489

14,000,000-

Accounts payable – other402,587

414,997

Accrued expenses

82,23891,512

Income taxes payable
Accrued consumption taxes

Other
Total current liabilities

743

1,048

-

318,392-

0

14,658,493

969,440

Non-current liabilities

Non-current assets

Investment corporation bonds

5,000,000

5,000,000

59,654,248

Long-term loans payable

65,400,000

79,400,000

Property, plant and equipment
Buildings in trust

7th Fiscal Period
April 30, 2018

59,604,170

Accumulated depreciation-3,399,530-4,121,631

Tenant leasehold and security deposits in trust

9,268,730

9,269,955

Buildings in trust, net

56,204,639

55,532,616

Total non-current liabilities

79,668,730

93,669,955

Structures in trust

683,807684,357

Total liabilities

94,327,223

94,639,396

Accumulated depreciation-52,592-61,803

Structures in trust, net

110,189,294

110,189,294
2,621,502

631,215

622,554

Machinery and equipment in trust

921

921

Accumulated depreciation

-58

-93

Machinery and equipment in trust, net

862

827

Tools, furniture and fixtures in trust

1,259

3,053

Accumulated depreciation

-447

-638

Net assets

Tools, furniture and fixtures in trust, net

811

2,414

Unitholders’ equity

Land in trust

141,218,283

141,218,283

Unitholders’ capital

Total property, plant and equipment

198,055,813

197,376,695

Surplus
Unappropriated retained earnings

2,626,016

Other

3,147

2,412

Total surplus

2,626,016

2,621,502

Total intangible assets

3,147

2,412

Total unitholders’ equity

112,815,310

112,810,796

Total net assets

112,815,310

112,810,796

Lease and guarantee deposits

20,181

20,181Long-term prepaid expenses

227,164

246,911

Total investments and other assets

247,345

267,092

198,306,306

197,646,200

Investment corporation bond issuance costs

35,04532,125Investment unit issuance costs

57,90743,523

Total deferred assets

92,95275,648207,142,534

207,450,193

Total liabilities and net assets

207,142,534

207,450,193

Intangible assets

Investments and other assets

Total non-current assets
Deferred assets

Total assets

Note: As of the date of this document, audit procedures for the financial documents based on the Act on Investment Trusts and Investment Corporations have been completed but audit procedures for the financial statements based on the Financial
Instruments and Exchange Act have not been completed yet.

21Appendix

Statement of Income and Retained Earnings■ Profit and Loss Statement of SHR (7th Fiscal Period Ended April 2018)(unit: thousand yen)
6th Fiscal Period
From May 1, 2017 to October 31, 2017

7th Fiscal Period
From November 1, 2017 to April 30, 2018

Operating revenue
Rent revenue - real estate
Other lease business revenue
Total operating revenue

4,550,426

4,629,845

30,081

25,7424,580,508

4,655,588

1,178,033

1,223,022

359,562

370,434

Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee

3,526

3,786

Administrative service fees

11,485

12,732

Directors’ compensations

3,600

3,600

Other operating expenses

36,61447,548

Total operating expenses

1,592,823

1,661,123

Operating income

2,987,685

2,994,464

Non-operating income
Interest income

46

39Interest on refund

-

1,442

46

1,482

293,464

296,306

Total non-operating income
Non-operating expenses
Interest expenses
Interest expenses on investment corporation bond

5,568

6,959

Borrowing related expenses

43,16052,322

Amortization of investment unit issuance costs
Amortization of investment corporation bondissuance costs
Other

14,384

14,384

2,258

2,919

2,416

537

Total non-operating expenses

361,252

373,430

Ordinary Income

2,626,479

2,622,516

Income before income taxes

2,626,479

2,622,516

Income taxes – current

750

1,054

Income taxes – deferred

9

-14

759

1,039

2,625,719

2,621,476

Total income taxes
Net income
Retained earnings brought forward

296

26

Unappropriated retained earnings

2,626,016

2,621,502

Note: As of the date of this document, audit procedures for the financial documents based on the Act on Investment Trusts and Investment
Corporations have been completed but audit procedures for the financial statements based on the Financial Instruments and Exchange Act havenot been completed yet.

22

Appendix

Balance Sheet■ Balance Sheet of SHI (25th Fiscal Period Ended April 2018 (Unaudited))(unit: thousand yen)
24th Fiscal Period
September 30, 2017

25th Fiscal Period
April 30, 2018

24th Fiscal Period
September 30, 2017

Assets25th Fiscal Period
April 30, 2018

Liabilities

Current assets

Current liabilities
5,259,432

5,882,205

Operating accounts payable249,227

277,859

4,658,956

5,511,714

Current portion of investment corporation bonds

4,000,000

2,500,000

Operating accounts receivable

115,509

120,088

14,882,000

167,210

197,009

Current portion of long-term loans payable
Accounts payable – other

4,600,000

Prepaid expenses

657,587

611,873

Deferred tax assets

76

81

Accrued expenses

52,886102,291

Other

623

80,583

Income taxes payable

1,917

2,124

-2,499- 1,882

Accrued consumption taxes

19,927

9,905

10,199,308

11,789,799

Advances received

245,694

238,795

Cash and deposits
Cash and deposits in trust

Allowance for doubtful accounts

Total current assets
Non-current assets

Other

Property, plant and equipment

Total current liabilities

4,423

5,704

9,831,663

18,630,554

Buildings in trust

106,390,873

106,936,616

Non-current liabilities

Accumulated depreciation- 17,796,436- 19,540,950

Investment corporation bonds

10,500,000

8,000,000

Buildings in trust, net

88,594,437

87,395,666

Long-term loans payable

86,432,500

80,150,500

Structures in trust

987,265

987,605

Tenant leasehold and security deposits in trust

1,903,196

1,877,018

Accumulated depreciation- 269,583- 300,730

Total non-current liabilities

98,835,696

90,027,518

717,682

686,875

Total liabilities

108,667,360

108,658,073

2,029,841

2,031,290

98,633,97898,633,978

Reserve for reduction entry

214,718

214,718

Total voluntary retained earnings

214,718

214,718

2,493,073

2,841,576

Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation- 685,360- 763,676

Machinery and equipment in trust, net

1,344,481

1,267,613

Tools, furniture and fixtures in trust

349,478

402,779

Accumulated depreciation- 120,455- 147,961

229,023

254,817

107,828,487

107,828,487

35,856

128,908

198,749,967

197,562,369

141,946

139,59198

83

142,044

139,675

Unappropriated retained earnings

2,707,792

3,056,295

Lease and guarantee deposits

242,662

242,662

Total unitholders’ equity

101,341,771

101,690,274

Long-term prepaid expenses

438,169

386,883

Total net assets

101,341,771

101,690,274

Other

158,778

166,741

Total liabilities and net assets

210,009,131

210,348,347

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

Unitholders’ capital
Surplus

Total surplus

839,609796,287

199,731,621

198,498,332

Investment corporation bond issuance costs

44,68836,743

Investment unit issuance costs

33,512

23,472

Total deferred assets

78,20160,215210,009,131

210,348,347

Total investments and other assets

Unitholders’ equity

Voluntary retained earnings

Investments and other assets

Total non-current assets

Net assets

Deferred assets

Total assets

Note: As of the date of this document, audit procedures for the financial statements based on the Financial Instruments and Exchange Act have not been completed yet.

23

Appendix

Statement of Income and Retained Earnings■ Profit and Loss Statement of SHI (25th Fiscal Period Ended April 2018 (Unaudited))(unit: thousand yen)
24th Fiscal Period
From April 1, 2017 to September 30, 2017

25th Fiscal Period
From October 1, 2017 to April 30, 2018

Operating revenue
Rent revenue - real estate

6,916,462

8,174,332

Total operating revenue

6,916,462

8,174,332

Operating expenses
Expenses related to rent business

3,298,248

3,885,818

Asset management fee

364,317426,954

Asset custody fee

16,52919,273Administrative service fees

37,232

43,110

Directors’ compensations

3,600

4,200

Merger-related expenses-

129,226

1,672

212

Other operating expenses

193,109

221,863

Total operating expenses

3,914,711

4,730,658

Operating income

3,001,751

3,443,674

Provision of allowance for doubtful accounts

Non-operating income
Interest income

44

49

Reversal of distributions payable

255

747

30,000-

Settlement received
Other

215

2

30,515799

Interest expenses
Interest expenses on investment corporationbonds
Amortization of investment corporation bondissuance costs
Borrowing related expenses

379,879

436,750

56,68961,123

7,546

7,945

76,787

84,919Amortization of investment unit issuance costs

16,301

10,040Total non-operating income
Non-operating expenses

Other

108

138

537,313600,917

Ordinary Income

2,494,953

2,843,555

Income before income taxes

2,494,953

2,843,555

Income taxes – current

1,923

2,132

Income taxes – deferred

- 44

-4

1,879

2,127

2,493,073

2,841,427

Total non-operating expenses

Total income taxes
Net income
Retained earnings brought forward-

148

Unappropriated retained earnings

2,493,073

2,841,576

Note: As of the date of this document, audit procedures for the financial statements based on the Financial Instruments and Exchange Act have not been completed yet.

24Appendix

Overview of SHR’s Business Results for Fiscal Period Ended April 30, 2018 (7th FP)■ Comparison with forecasts
Financial report forecast(announced on Dec. 13, 2017)

Results for
FP ended Apr. 30, 2018
(7th FP) 181 days

Major breakdown of comparison with forecasts

ChangeOperating revenue¥4,646 million¥4,655 million+¥9 million+0.2%

Operating income and expenses

Operating income¥2,992 million¥2,994 million+¥1 million+0.0%

Property-related operating income

Ordinary income¥2,617 million¥2,622 million+¥4 million+0.2%

Net income¥2,616 million¥2,621 million+¥4 million+0.2%¥2,700¥2,705+¥5+0.2%• Increase in NOIAmount affecting
income+¥9 million

Increase in SG&A
(Selling, general and administrative expenses)-¥8 million

Non-operating income and expenses
Distribution per unit

■ Comparison with previous FP

Increase in non-operating income+¥1 million

Decrease in non-operating expenses+¥1 million

Results for
FP ended Oct. 31, 2017
(6th FP) 184 days

Results for
FP ended Apr. 30, 2018
(7th FP) 181 days

Operating revenue¥4,580 million¥4,655 million+¥75 million+1.6%

Operating income¥2,987 million¥2,994 million+¥6 million+0.2%

Ordinary income¥2,626 million¥2,622 million-¥3 million-0.2%

Net income¥2,625 million¥2,621 million-¥4 million-0.2%• Increase in NOI• Full-year contribution of properties
acquired in the 6th FP• Increase in NOI of existing properties¥2,710¥2,705-¥5-0.2%• Increase in depreciation

Distribution per unit

Major breakdown of comparison with previous FP

ChangeOperating income and expenses

Amount affecting
incomeProperty-related operating income+¥31 million+¥24 million+¥6 million-¥1 million

Increase in SG&A-¥23 million

Non-operating income and expenses
Increase in non-operating expenses■ NOI and NOI yield result by type
FP ended October 31, 2017 (6th FP)-¥12 million

FP ended April 2018 (7th FP)

NOINOI Yield

NOI
after depreciation

NOI yield
after depreciationNOI

NOI Yield

NOI
after depreciation

NOI yield
after depreciation

Office building¥3,787 million

4.1%¥3,126 million

3.4%¥3,804 million

4.1%¥3,142 million

3.4%

Hotel

¥344 million

4.6%¥275 million

3.7%¥359 million

4.2%¥289 million

3.4%

Total

¥4,132 million

4.2%¥3,402 million

3.4%¥4,164 million

4.1%¥3,432 million

3.4%

Note: Amounts of less than the indicated unit are rounded down, and percentages are rounded to the first decimal place. Yield is calculated by dividing annualized NOI and NOI after depreciation of the portfolio assets by total acquisition price of the portfolio
assets, and indicated rounded to the first decimal place25Appendix

Overview of SHI’s Business Results for Fiscal Period Ended April 30, 2018 (25th FP)■ Comparison with forecasts
Forecast at the time of merger
announcement(announced on January 24, 2018)

Results for
FP ended Apr. 30, 2018
(25th FP) 212 days

Major breakdown of comparison with forecasts

ChangeOperating revenue¥8,149 million¥8,174 million+¥24 million+0.3%

Operating income and expenses

Operating income¥3,375 million¥3,443 million+¥68 million+2.0%

Property-related operating income

Ordinary income¥2,772 million¥2,843 million+¥71 million+2.6%

Net income¥2,770 million¥2,841 million+¥71 million+2.6%

Drawdown of reserve for
reduction entry¥214 million¥214 million--

Amount affecting
income• Increase in NOI+¥62 million• Increase in depreciation-¥12 million

Decrease in SG&A

¥2,700Merger consideration per unit

¥2,764+¥64+¥18 million(Selling, general and administrative expenses)+2.4%

Non-operating income and expenses
Decrease in non-operating expenses+¥1 million■ Comparison with previous FP
Major breakdown of comparison with previous FP

Results for
FP ended Sep. 31, 2017(24th FP) 183 days

Results for
FP ended Apr. 30, 2018
(25th FP) 212 days

Operating revenue¥6,916 million¥8,174 million+¥1,257 million+18.2%

Operating income and expenses

Operating income¥3,001 million¥3,443 million+¥441 million+14.7%

Property-related operating income

Ordinary income¥2,494 million¥2,843 million+¥348 million+14.0%Net income¥2,493 million¥2,841 million+¥348 million+14.0%

Drawdown of reserve for
reduction entry-¥214 million+¥214 million¥2,255Merger consideration per unit

¥2,764

Change+¥509[Major factors for difference]
Change of the 25th FP business period from 6 months to 7 months

Total• Increase in depreciation-¥281 million-¥228 million-¥129 million

Non-operating income and expenses
Decrease in non-operating income-¥29 million

Increase in non-operating expenses-¥63 million

FP ended September 31, 2017 (24th FP)

Retail properties+¥952 million• Accrual of merger-related expenses+22.6%■ NOI and NOI yield result by type

Residential properties• Increase in NOI

Increase in SG&A-

Amount affecting
incomeFP ended April 2018 (25th FP)

NOINOI Yield

NOI
after depreciation

NOI yield
after depreciationNOI

NOI Yield

NOI
after depreciation

NOI yield
after depreciation¥5,155 million

5.1%¥3,562 million

3.5%¥6,086 million

5.2%¥4,213 million

3.6%¥65 million

3.4%¥55 million

2.9%¥86 million

3.9%¥74 million

3.4%¥5,220 million

5.0%¥3,618 million

3.5%¥6,172 million

5.1%¥4,288 million

3.6%

Note: Amounts of less than the indicated unit are rounded down, and percentages are rounded to the first decimal place. Yield is calculated by dividing annualized NOI and NOI after depreciation of the portfolio assets by total acquisition price of the portfolio
assets, and indicated rounded to the first decimal place

26

Appendix

Portfolio Development Policy■ Portfolio Development Policy by Type
Build a portfolio with “residential properties” as “bases and centers of human life” and “office buildings” as “business activity bases”, as core assets
Investment in hotels that are expected to continue growing

Asset Category

Type

Examples of Specific Asset Types

Core Assets
Residential Properties

Residence

Office building

Commercial Properties

Hotel

Retail property,
etc.

Investment Ratio by
Type

New SHR

Investment ratio target bytype upon achieving
an asset size of
600 billion yen(acquisition price basis)(As of the date of thisdocument)

Residences
Student dormitories
Company housing

30‒55%

53.8%

Around 45%

Office buildings
Data centers30‒55%

41.6%

Around 45%

HotelsService apartments

0‒30%

3.9%

Around 10%

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

0‒10%

0.6%

Around 0‒10%■ Investment Areas by Asset Category
Priority investment areas will be set in light of the characteristics of each asset category
Regarding overseas real estate investments: investments in residences and commercial properties will be allowed, but will maintain a cautious stance for now
Asset Category

Priority Investment Area

Investment Ratio by
Area(acquisition price basis)

New SHR(As of the date of thisdocument)

Residential Properties

Greater Tokyo

Not less than

70%

77.0%

Commercial Properties

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

Not less than

80%

98.7%
27

Appendix

Continuous investment in prime properties
Priority investment in Prime Properties will be continued with the aim of enhancing the quality of the portfolio■ Prime Properties centered on “Strategic Location” and “High Quality”
Strategic Location

Residential Properties

Commercial Properties

High Quality

Sites suited for “bases for sustainable living” for residents

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

Sites suited for “sustainable bases of operation” 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 the neighborhoods andthe like■ Elements of Strategic Locations and High Quality

Strategic Location
High Quality

Economic Zones

BCP/Safety

Functionality/Livability

Convenience

Brand

Environmental
consideration

28

Appendix

Overview of Assets Acquired (6 properties in all)
Property Name

Prime Maison
Shirokanedai tower

Prime Maison
OtsukaPrime Maison
Asakusabashi

Prime Maison
Daikanyama

Prime Maison
Gotenyama West

Esty Maison Toyosu
Residence Note 2

Appearance

SellerSponsor (Sekisui House)

Location

Shinagawa-ku, Tokyo

Toshima-ku, Tokyo

Taito-ku, Tokyo

Meguro-ku, Tokyo

Shinagawa-ku, Tokyo

Koto-ku, Tokyo

Acquisition Price¥7,950 million¥3,700 million¥1,680 million¥2,520 million¥3,400 million¥6,050 million

Appraisal Value Note 1¥8,570 million¥3,970 million¥1,800 million¥2,730 million¥3,680 million¥6,460 million

Beforedepreciation

4.4%

4.6%

4.6%

4.5%

4.5%

5.7%

After
depreciation

3.8%

3.8%

3.9%

3.9%

3.8%

3.3%

End of Mar.
2018

97.0%

88.6%

95.0%

74.6%

89.3%

98.4%

End of Apr.
2018

98.1%

85.7%

93.1%

79.6%

89.3%

99.4%

Jan. 12, 2017(1.3 years)

Jan. 18, 2011(7.3 years)

Feb. 28, 2008
(10.2 years)

Appraisal NOI Yield(acquisition pricebasis)

Occupancy Rate

Acquisition Date
Completion Date
(Building Age Note 1)

May 1, 2018
May 20, 2016
(2.0 years)

Jan. 11, 2017(1.3 years)

Oct. 7, 2016(1.6 years)

Note 1: Appraisal values are as of April 1, 2018, and building ages are as of May 1, 2018.
Note 2: The property name of the “Esty Maison Toyosu Residence” is “Toyosu Residence” as of the date of this document, but there is a plan to change the property brand name to “Esty Maison”, and therefore, the name after the change is stated (here and hereafter).

29

Appendix

Overview of Assets Sold (12 properties in all)
Property nameEsty Maison
MachidaEsty Maison
Shinkawasaki

Esty Maison
Megurohoncho

Esty Maison
Tenjinhigashi I

Esty Maison
Tenjinhigashi II

Osaka-shi, Osaka

Fukuoka-shi, Fukuoka

Fukuoka-shi, Fukuoka

Undisclosed

Buyer
Location

Esty Maison
Joto

Machida-shi, Tokyo

Kawasaki-shi, Kanagawa

Meguro-ku, Tokyo

Undisclosed

Sale PriceAppraisal Value Note

1,570 million yen

1,250 million yen

1,130 million yen

951 million yen

364 million yen

738 million yen

NOI Yield

5.1%

5.1%

3.3%

3.9%

4.4%

5.0%

(Before depreciation)

May 1, 2018

Sale Date
Completion Date
(Building Age Note)Feb. 23, 2004
(14.2 years)

Mar. 5, 1999
(19.2 years)

Feb. 22, 2006
(12.2 years)

Aug. 31, 2006
(11.7 years)

Jan. 31, 2007
(11.3 years)

May 23, 2007
(11.0 years)

Property nameEsty Maison
Shijonishinotoin

Esty Maison
Hachiojiminamino

Esty Maison
Nishinakajima

Esty Maison
Kawaramachi

Esty Maison
Shibaura

Esty Maison
Tsutsujigaoka

Osaka-shi, Osaka

Minato-ku, Tokyo

Chofu-shi, Tokyo

Undisclosed

Buyer
Location

Kyoto-shi, Kyoto

Hachioji-shi, Tokyo

Osaka-shi, Osaka

Undisclosed

Sale PriceAppraisal Value Note

1,180 million yen

873 million yen

1,900 million yen

1,980 million yen

2,960 million yen

918 million yen

NOI Yield

3.7%

4.7%

4.1%

4.9%

4.6%

4.3%

Oct. 17, 2006
(11.5 years)

Aug. 26, 1996
(21.7 years)

Mar. 9, 2002
(16.2 years)(Before depreciation)

May 1, 2018

Sale Date
Completion Date
(Building Age Note)

Apr. 8, 2008
(10.1 years)

Mar. 6, 2007
(11.2 years)

Apr. 18, 2007
(11.0 years)

Note: Appraisal values are as of April 30, 2018, and building ages are as of May 1, 2018.

30

Appendix

Portfolio Map
As of the date of this document
Nagoya area

Osaka area
Higashiyodogawa-ku

Residence

Yodogawa-ku

Kita-kuNishiyodogawa-ku

51

Tsurumi-ku

Fukushima-ku
Nishi-ku

Konohana-ku

Nishi-ku

Miyakojima-ku

55

15

13

５
１ ４ Chuo-ku
３
96

Nakamura-ku

Retail Property, etc.

（outline characters: property number）

Higashi-ku
49
78
35

74

48

Naka-ku

Meito-ku
Chikusa-ku

41 Showa-ku

Higashinari-ku
Nakagawa-ku

Tennoji-ku

６

Hotel

79

42

Naniwa-ku

Minato-ku

34

Joto-ku

Office Building

Moriyama-ku

Kita-ku

Asahi-ku

20

Atsuta-ku

Mizuho-ku
Tempaku-ku

Ikuno-ku

Taisho-ku
Minato-ku

Nishinari-ku

Minami-ku

Abeno-ku

43

82
83 84

Midori-ku
Higashisumiyoshi-ku
Hirano-ku

Suminoe-ku

Itabashi-ku

Greater Tokyo

67

23
37 26

Nerima-ku

Adachi-ku

Kita-ku
68

24
Toshima-ku
33 Kodaira-shi

Koganei-shi
40

Suginami-ku
Mitaka-shi

Hino-shi91
Setagaya-ku

Fukuoka-shi

88

Higashi-ku
Kawasaki-shi

31
44

Chuo-ku
75

64

59

85
50

30

97 93

89

1

Katsushika-ku
Arakawa-ku

Sumida-ku
52 28
Taito-ku
86
Bunkyo-ku 45
７66
65
Shinjuku
69
61
108
６ -ku
10
39
73
71
５
99
62
100 7677
57
63
29
Chuo-ku95
Chiyoda-ku
80
46
70
Shibuya-ku
Koto-ku
1
47
94 ３
２ Minato
53-ku
４ 58 22
104
87 19
32
106
11
98
36 Meguro
101
-ku
56

Nakano-ku
Musashino-shi

12102

Edogawa-ku

105 721681 25
２ １60 27 54
18
Shinagawa-ku
17

Ota-ku38
Hakata-ku

Nishi-ku

90
Minami-ku
Jonan-ku

８
21

Yokohama-shi

Sawara-ku

14

９

92

31

Appendix

List of Portfolio (1)■ Properties owned as of the date of this document
Acquisition Price(million yen)

Investment
Ratio
(%)

Leasable Area(m²)

Chuo-ku, Tokyo

6,540

1.5

5,515.43

Minato-ku, Tokyo

1,790

0.4

2,019.10

Esty Maison Ebisu II

Shibuya-ku, Tokyo

2,040

0.5

2,062.10

Esty Maison Ebisu

Shibuya-ku, Tokyo

873

0.2

781.02★

Esty Maison Kanda

Chiyoda-ku, Tokyo

1,610

0.4

1,706.54★

Esty Maison Kitashinjuku

Shinjuku-ku, Tokyo

1,590

0.4

1,881.19★

Esty Maison Asakusakomagata

Taito-ku, Tokyo

2,190

0.5

Esty Maison Kawasaki

Kawasaki-shi, Kanagawa

2,400

0.5

Property
No.

PP
Property

R001★

Esty Maison Ginza

R002

★

Esty Maison Azabunagasaka

R003

★

R004

★

R005
R006
R007

R008

Property nameLocation

Occupancy
Rate(%)

Location

Acquisition Price(million yen)

Investment
Ratio
(%)

Leasable Area(m²)

Prime Maison Gokiso

Nagoya-shi, Aichi

1,950

0.4

4,427.65

92.6

Oct. 2008

Prime Maison Yuhigaoka

Osaka-shi, Osaka

909

0.2

2,040.35

100.0

Feb. 2007★

Prime Maison Kitatanabe

Osaka-shi, Osaka

601

0.1

1,798.97

100.0

Jun. 2006★

Prime Maison Momochihama

Fukuoka-shi, Fukuoka

1,940

0.4

7,514.76

100.0

Feb. 1996★

Esty Maison Akihabara

Taito-ku, Tokyo

1,930

0.4

2,324.65

100.0

Feb. 2006

Esty Maison Sasazuka

Shibuya-ku, Tokyo

3,340

0.8

3,701.70

96.7

Sep. 2004★

Prime Maison Ginza East

Chuo-ku, Tokyo

6,250

1.4

6,177.20

96.5

Feb. 2006★

Prime Maison Takami

Nagoya-shi, Aichi

1,050

0.2

2,016.79

92.7

Aug. 2008

Completion Date

Property
No.

PP
Property

97.7

Feb. 2005

R041

★

100.0

Jan. 2004

R042

★

100.0

Jun. 2003

R043

92.8

Oct. 2004

R044

97.4

Feb. 2004

R045

96.4

Aug. 2004

R046

2,978.28

100.0

Jul. 2004

R047

3,741.01

97.5

Jul. 2004

R048

Property name

Occupancy
Rate(%)

Completion Date

Esty Maison Yokohama

Yokohama-shi, Kanagawa

2,110

0.5

2,823.73

100.0

Jan. 2007

R049★

Prime Maison Yadaminami

Nagoya-shi, Aichi

812

0.2

2,168.59

96.1

Jul. 2007

R010★

Esty Maison Kameido

Koto-ku, Tokyo

1,580

0.4

2,279.21

98.0

Nov. 2005

R050★

Prime Maison Teriha

Fukuoka-shi, Fukuoka

1,260

0.3

6,728.20

100.0

Aug. 2005

R011★

Esty Maison Meguro

Meguro-ku, Tokyo

1,060

0.2

1,070.13

97.5

Nov. 2005

R051★

Esty Maison Higashishirakabe

Nagoya-shi, Aichi

1,580

0.4

4,014.07

100.0

Feb. 2006

Esty Maison Sugamo

Toshima-ku, Tokyo

1,630

0.4

2,619.17

100.0

Feb. 2007

R052★

Esty Maison Sengoku

Bunkyo-ku, Tokyo

1,360

0.3

1,498.13

100.0

Aug. 2009

Esty Maison Kyobashi

Osaka-shi, Osaka

2,970

0.7

4,613.04

96.7

Mar. 2006

R053★

Esty Maison Daizawa

Setagaya-ku, Tokyo

2,270

0.5

2,352.90

91.1

Feb. 2010

Esty Maison Hakuraku

Yokohama-shi, Kanagawa

931

0.2

1,285.83

93.1

Feb. 2006

R054

Esty Maison Togoshi

Shinagawa-ku, Tokyo

1,770

0.4

1,943.17

100.0

Jun. 2009

Feb. 2007

R055★

Esty Maison Nishitemma

Osaka-shi, Osaka

1,680

0.4

2,877.90

95.3

Nov. 2007
Sep. 2003

R009

R012
R013

★

R014
R015

★

Esty Maison Minamihorie

Osaka-shi, Osaka

1,060

0.2

1,804.48

95.4

R016

★

Esty Maison Gotanda

Shinagawa-ku, Tokyo

3,110

0.7

3,871.15

91.1

Mar. 2006

R056★

Esty Maison Shirokanedai

Shinagawa-ku, Tokyo

2,400

0.5

2,675.11

100.0

R017

★

Esty Maison Oisendaizaka

Shinagawa-ku, Tokyo

2,720

0.6

2,979.85

97.9

Aug. 2006

R057★

Esty Maison Higashishinjuku

Shinjuku-ku, Tokyo

1,680

0.4

1,889.50

94.8

Apr. 2009

Esty Maison Shinagawa Seaside

Shinagawa-ku, Tokyo

2,050

0.5

2,602.30

95.2

Jun. 2006

R058★

Esty Maison Motoazabu

Minato-ku, Tokyo

1,540

0.3

1,199.86

100.0

Nov. 2009

Esty Maison Toritsudaigaku

Meguro-ku, Tokyo

861

0.2

1,035.78

91.8

Feb. 2009

Esty Maison Musashikoyama II

Shinagawa-ku, Tokyo

1,030

0.2

1,073.59

97.3

May 2009
Jun. 2009

R018
R019

★

Esty Maison Minamiazabu

Minato-ku, Tokyo

1,250

0.3

1,082.12

86.5

Aug. 2006

R059

R020

★

Esty Maison Tsukamoto

Osaka-shi, Osaka

1,080

0.2

2,321.04

96.9

Aug. 2006

R060

R021

Esty Maison Kawasaki II

Kawasaki-shi, Kanagawa

1,910

0.4

2,824.86

99.3

Feb. 2007

R061

Esty Maison Nakano

Nakano-ku, Tokyo

1,870

0.4

2,023.72

96.5

R022

Esty Maison Azabujuban

Minato-ku, Tokyo

2,690

0.6

1,755.31

98.9

Feb. 2007

R062

Esty Maison Shinnakano

Nakano-ku, Tokyo

1,020

0.2

1,107.57

100.0

Oct. 2009

R023

Esty Maison Itabashihoncho

Itabashi-ku, Tokyo

937

0.2

1,274.49

98.5

Feb. 2007

R063

Esty Maison Nakanofujimicho

Nakano-ku, Tokyo

984

0.2

1,299.60

95.4

Feb. 2009

R024★

Esty Maison Oizumigakuen

Nerima-ku, Tokyo

790

0.2

1,362.36

92.9

Feb. 2007

R064

Esty Maison Tetsugakudo

Nakano-ku, Tokyo

1,160

0.3

1,531.89

97.6

Oct. 2009

R025★

Esty Maison Higashishinagawa

Shinagawa-ku, Tokyo

2,390

0.5

2,936.72

88.8

May 2008

R065

Esty Maison Koenji

Suginami-ku, Tokyo

1,160

0.3

1,527.52

96.6

Mar. 2009

R026★

Esty Maison Itabashikuyakushomae

Itabashi-ku, Tokyo

2,540

0.6

3,915.81

96.0

Apr. 2007

R066★

Esty Maison Oshiage

Sumida-ku, Tokyo

2,490

0.6

3,180.90

98.8

Apr. 2010

Esty Maison Musashikoyama

Shinagawa-ku, Tokyo

1,050

0.2

1,176.78

94.0

Nov. 2007

R067★

Esty Maison Akabane

Kita-ku, Tokyo

3,290

0.7

4,302.84

98.8

Nov. 2009

R027
R028

★

Esty Maison Sendagi

Bunkyo-ku, Tokyo

698

0.2

897.30100.0Jan. 2008

R068

Esty Maison Oji

Kita-ku, Tokyo

1,650

0.4

2,289.44

97.8

Jul. 2010

R029★

Esty Maison Yotsuyasakamachi

Shinjuku-ku, Tokyo

2,090

0.5

2,453.17

98.2

Mar. 2008

R069★

Prime Maison Waseda

Shinjuku-ku, Tokyo

1,580

0.4

1,650.66

89.4

Nov. 2012

R030★

Esty Maison Hakatahigashi

Fukuoka-shi, Fukuoka

2,400

0.5

9,106.08

98.0

Nov. 2007

R070★

Prime Maison Hatchobori

Chuo-ku, Tokyo

1,460

0.3

1,382.32

96.9

Nov. 2012

Esty Maison Kamigofuku

Fukuoka-shi, Fukuoka

821

0.2

2,261.91

95.7

Mar. 2008

R071★

Prime Maison Jimbocho

Chiyoda-ku, Tokyo

1,960

0.4

1,819.90

97.3

Mar. 2013

R031
R032

★

Esty Maison Sangenjaya

Setagaya-ku, Tokyo

822

0.2

856.0897.2

Jan. 2008

R072★

Prime Maison Gotenyama East

Shinagawa-ku, Tokyo

2,910

0.7

2,512.91

95.5

Jan. 2011

R033★

Prime Maison Musashinonomori

Kodaira-shi, Tokyo

1,850

0.4

3,924.58

94.0

Dec. 2007

R073★

MAST LIFE Akihabara

Chiyoda-ku, Tokyo

555

0.1

803.36100.0

Oct. 2006

R034★

Prime Maison Higashisakura

Nagoya-shi, Aichi

1,500

0.3

3,118.11

94.5

Feb. 2008

R074★

Esty Maison Aoi

Nagoya-shi, Aichi

2,460

0.6

4,809.68

92.1

Oct. 2007

R035★

Prime Maison Kayabakoen

Nagoya-shi, Aichi

801

0.2

2,163.98

96.1

Nov. 2006

R075★

Esty Maison Yakuin

Fukuoka-shi, Fukuoka

2,430

0.6

5,213.51

97.5

Feb. 2006

R036★

Esty Maison Sangenjaya II

Setagaya-ku, Tokyo

785

0.2

894.64

92.2

Jan. 2008

R076★

Esty Maison Kinshicho II

Sumida-ku, Tokyo

8,250

1.9

9,469.65

97.6

Jan. 2008

R037★

Esty Maison Itabashi C6

Itabashi-ku, Tokyo

2,560

0.6

4,036.66

93.6

Mar. 2008

R077★

Esty Maison Ojima

Koto-ku, Tokyo

8,630

2.0

9,905.97

97.7

Sep. 2007

R038★

MAST Hakata

Fukuoka-shi, Fukuoka

2,360

0.5

9,614.80

100.0Jan. 2005

R078★

Prime Maison Fujimidai

Nagoya-shi, Aichi

2,070

0.5

5,704.63

94.3

Apr. 2007

R039★

Esty Maison Kinshicho

Sumida-ku, Tokyo

1,260

0.3

1,611.54

98.6

Sep. 2006

R079★

Esty Maison Tsurumai

Nagoya-shi, Aichi

4,490

1.0

13,812.40

100.0

Nov. 1999

R040★

Esty Maison Musashikoganei

Koganei-shi, Tokyo

1,790

0.4

2,275.24

97.1

Feb. 2005

R080★

Prime Maison Morishita

Koto-ku, Tokyo

1,930

0.4

2,180.78

98.9

May 2013

Note: Notes regarding this page can be found on the following page.

32

Appendix

List of Portfolio (2)Property
PP
No.
Property

Property nameLocation

Acquisition Price(million yen)

Investment
Ratio
(%)

Leasable Area(m²)

Occupancy
Completion Date
Rate
(%)

Property
PP
No.
Property

Location

Property nameAcquisition Price(million yen)

Investment
Ratio
(%)

Leasable Area(m²)

Occupancy
Rate(%)

Completion Date

R081

★

Prime Maison Shinagawa

Shinagawa-ku, Tokyo

1,960

0.4

2,107.88

97.1

Feb. 2014

O001★

Garden City Shinagawa Gotenyama

Shinagawa-ku, Tokyo

59,60013.5

31,236.34

100.0

Feb. 2011

R082★

Prime Maison Odorikoen

Sapporo-shi, Hokkaido

3,160

0.7

7,360.37

93.7

Dec. 2008

O002★

Gotenyama SH Building

Shinagawa-ku, Tokyo

51,50011.7

19,999.97

100.0

Feb. 2011

R083★

Prime Maison Minami 2-jo

Sapporo-shi, Hokkaido

1,930

0.4

6,019.09

99.2

Nov. 2009

O003★

Hommachi Minami Garden City

Osaka-shi, Osaka

23,1005.2

16,699.46

100.0

Feb. 2011

R084★

Prime Maison Kamokamogawa

Sapporo-shi, Hokkaido

1,250

0.3

4,102.08

98.2

Oct. 2009

38,6008.8

17,006.94

100.0

May 2010

R085★

Osaka-shi, Osaka

Prime Maison Central Park

Fukuoka-shi, Fukuoka

2,309

0.5

10,268.74

99.3

Feb. 2011

R086★

MAST LIFE Yahiro

Sumida-ku, Tokyo

1,910

0.4

3,409.16

100.0

R087

★

O004

★

Jan. 2011

O005★

HK Yodoyabashi Garden Avenue

Osaka-shi, Osaka

4,400

1.0

4,554.52

100.0

Jul. 2015

O006★

Hirokoji Garden Avenue

Nagoya-shi, Aichi

6,350

1.4

4,442.75

100.0

Mar. 2011

183,550

41.6

93,939.98

100.0

Location

Acquisition Price(million yen)

Investment
Ratio
(%)

Leasable Area(m²)

Occupancy
Rate(%)

Osaka-shi, Osaka

17,2003.9

18,092.98

100.0

17,2003.9

18,092.98

100.0

Acquisition Price(million yen)

Investment
Ratio
(%)

Leasable Area(m²)

Occupancy
Rate
(%)

2,729

0.6

15,958.49

100.0

2,729

0.6

15,958.49

100.0

Leasable Area(m²)

Occupancy
Rate(%)

Prime Maison Ebisu

Shibuya-ku, Tokyo

4,360

1.0

3,010.66

94.7

Jun. 2014

R088

Granmast Kanazawa Nishiizumi

Kanazawa-shi, Ishikawa

1,080

0.2

4,634.50

100.0

Sep. 2007

R089

Granmast Unomori

Yokkaichi-shi, Mie

830

0.2

2,280.00

100.0

Apr. 2009

R090

Esty Maison Kohoku Tsunashima

Yokohama-shi, Kanagawa

2,750

0.6

6,867.48

100.0

Note 52,827.55

97.1

Jan. 2010

R091★

MAST LIFE Hino

Hino-shi, Tokyo

1,390

0.3

R092

★

Prime Maison Yokohama Nihon-odori

Yokohama-shi, Kanagawa

4,870

1.1

5,461.13

94.9

Jun. 2014

Kobe Women’s Student Housing

Kobe-shi, Hyogo

5,880

1.3

15,341.68

100.0

Feb. 2002

R093
R094

★

Prime Maison Shibuya

Shibuya-ku, Tokyo

2,430

0.6

1,972.59

100.0

Jul. 2014

R095★

Prime Maison Hatsudai

Shibuya-ku, Tokyo

3,010

0.7

2,879.20

90.3

Dec. 2014

R096

Esty Maison Uemachidai

Osaka-shi, Osaka

1,040

0.2

2,225.52

91.9

Aug. 2005

R097

Esty Maison Kobe-sannomiya

Kobe-shi, Hyogo

971

0.2

2,007.00

93.2

Mar. 2007

R098★

Prime Maison Shirokane-takanawa

Minato-ku, Tokyo

4,900

1.1

3,923.76

94.5

Jun. 2015

R099★

Prime Maison Ichigayayamabushicho

Shinjuku-ku, Tokyo

4,220

1.0

4,099.04

99.1

Oct. 2015

R100★

Esty Maison Morishita

Sumida-ku, Tokyo

655

0.1

748.92100.0

Feb. 2017

R101★

Prime Maison Shirokanedai Tower

Shinagawa-ku, Tokyo

7,950

1.8

6,772.89-

May 2016

R102★

Prime Maison Otsuka

Toshima-ku, Tokyo

3,700

0.8

3,921.35-

Jan. 2017

R103★

Prime Maison Asakusabashi

Taito-ku, Tokyo

1,680

0.4

2,033.06-

Oct. 2016

R104★

Prime Maison Daikanyama

Meguro-ku, Tokyo

2,520

0.6

1,779.17-

Jan. 2017

R105★

Prime Maison Gotenyama West

Shinagawa-ku, Tokyo

3,400

0.8

3,569.73-

Jan. 2011

R106★

Esty Maison Toyosu Residence

Koto-ku, Tokyo

6,050

1.4

23,538.73-

Feb. 2008

237,395

53.8

377,646.54

97.3

Residence Subtotal

Hommachi Garden City
(Office building portion)

Office Building Properties Subtotal

Property
PP
No.
Property

H001★

Property name

Hommachi Garden City
(Hotel portion)
Hotel Property Subtotal

Property
PP
No.
Property

C001

Location

Property nameHamamatsu Plaza

Hamamatsu-shi, Shizuoka

Retail Property, etc. Subtotal

Completion Date

May 2010

Completion Date

Nov. 2000■ Overview of Portfolio
Type

Number ofproperties

Number of PP
Properties

AcquisitionPrice(million yen)

PP Ratio(%)

Investment
Ratio
(%)

Average
Building Age

Residence

106

80

81.6

237,395

53.8

377,646.54

97.3

9.7 years

Office Building

6

6

100.0

183,550

41.6

93,939.98

100.0

7.3 years

Hotel

1

1

100.0

17,2003.9

18,092.98

100.0

8.0 years

Retail Property, etc.

1

-

-

2,729

0.6

15,958.49

100.0

17.5 years

Total

113

86

90.0

440,874100.0

505,637.99

98.0

8.6 years

Note 1: “PP Properties” are assets that fall under the category of Prime Properties. Hamamatsu Plaza (retail property, etc.) is not included in the target of assessment of Prime Properties. For Prime Properties, please refer to page 28.
Note 2: “Acquisition Price” is the appraisal value as of April 30, 2018, the day before the effective date of the merger, as for the assets succeeded from SHI. As for the assets held by SHR, the acquisition price is indicated. Amounts are rounded down to thenearest million yen.
Note 3: “Investment Ratio” indicates the ratio of acquisition prices of each asset to the total acquisition prices of assets held. Figures are rounded to the nearest first decimal place.
Note 4: “Occupancy Rate” is indicated based on the information as of April 30, 2018. Therefore, “Prime Maison Shirokanedai Tower,” “Prime Maison Otsuka,” “Prime Maison Asakusabashi,” “Prime Maison Daikanyama,” “Prime Maison Gotenyama West” and“Esty Maison Toyosu Residence,” which were acquired on May 1, 2018, are not included.
Note 5: “Esty Maison Kohoku Tsunashima” comprises three buildings (East, West, and Annex), and the “completion dates” are March 2002, October 2002, and September 2002, respectively.
Note 6: Data on “Hommachi Garden City” is stated as if the office building portion and hotel portion were separate buildings according to the uses of each portion, and when calculating the total number of properties, the property is treated as one property.
Therefore, items in the total column of “Number of Properties” and “Number of PP Properties” in the Overview of Portfolio differ from the total for each item.
Note 7: “PP Ratio” in the Overview of Portfolio indicates the ratio based on acquisition price. Figures in the total column of “PP Ratio” are calculated by excluding Hamamatsu Plaza (retail property, etc.) which is not included in the target of assessment ofPrime Properties.
Note 8: “Average Building Age” in the Overview of Portfolio are stated as the weighted average calculated on the basis of the building age as of May 1, 2018 based on the acquisition price.

33

Appendix

Overview of Appraisal (1)■ Properties owned as of the date of this document
Property No.

Property Name

Estimated Value at the End
of Period (million yen)
As of Apr. 30, 2018

Difference from
Previous Period

Book Value(million yen)

Discount Rate (%)

Direct Capitalization (%)

Terminal Capitalization Rate (%)

Unrealized
Gain/Loss(million yen)

As of Apr. 30, 2018

Period on period

As of Apr. 30, 2018

Period on period

As of Apr. 30, 2018

Period on period

Appraisal NOI(million yen)

R001

Esty Maison Ginza

6,540

150

4,656

1,883

4.0

-0.1

4.2

-0.1

4.2

-0.1

273

R002

Esty Maison Azabunagasaka

1,790

30

1,597

192

4.1

-0.1

4.2

-0.1

4.3

-0.1

77

R003

Esty Maison Ebisu II

2,040

40

1,875

164

4.1

-0.1

4.2

-0.1

4.3

-0.1

88

R004

Esty Maison Ebisu

873

18

631

241

4.0

-0.1

4.1

-0.1

4.2

-0.1

37

R005

Esty Maison Kanda

1,610

40

1,255

354

4.1

-0.1

4.2

-0.1

4.3

-0.1

69

R006

Esty Maison Kitashinjuku

1,590

40

1,198

391

4.3

-0.1

4.3

-0.1

4.5

-0.1

70

R007

Esty Maison Asakusakomagata

2,190

50

1,676

513

4.3

-0.1

4.3

-0.1

4.5

-0.1

99

R008

Esty Maison Kawasaki

2,400

40

1,782

617

4.4

-0.1

4.4

-0.1

4.6

-0.1

113

R009

Esty Maison Yokohama

2,110

-20

1,847

262

4.5

0.0

4.3

0.0

4.7

0.0

101

R010

Esty Maison Kameido

1,580

0

1,447

132

4.5

0.0

4.3

0.0

4.7

0.0

77

R011

Esty Maison Meguro

1,060

0

778

281

4.2

0.0

4.0

0.0

4.4

0.0

47

R012

Esty Maison Sugamo

1,630

40

1,489

140

4.2

-0.1

4.0

-0.1

4.4

-0.1

72

R013

Esty Maison Kyobashi

2,970

0

2,211

758

4.7

0.0

4.6

0.0

4.8

0.0

145

R014

Esty Maison Hakuraku

931

-1

693

237

4.6

0.0

4.4

0.0

4.8

0.0

46

R015

Esty Maison Minamihorie

1,060

20

926

133

4.5

-0.1

4.3

-0.1

4.7

-0.1

51

R016

Esty Maison Gotanda

3,110

20

2,700

409

4.4

0.0

4.1

0.0

4.6

0.0

143

R017

Esty Maison Oisendaizaka

2,720

-10

2,190

529

4.2

0.0

4.0

0.0

4.4

0.0

120

R018

Esty Maison Shinagawa Seaside

2,050

40

1,937

112

4.2

-0.1

4.0

-0.1

4.4

-0.1

95

R019

Esty Maison Minamiazabu

1,250

30

1,176

73

3.9

-0.1

3.7

-0.1

4.1

-0.1

53

R020

Esty Maison Tsukamoto

1,080

0

1,093

-13

5.0

0.0

4.8

0.0

5.2

0.0

57

R021

Esty Maison Kawasaki II

1,910

50

1,692

217

4.4

-0.1

4.2

-0.1

4.6

-0.1

93

R022

Esty Maison Azabujuban

2,690

70

2,581

108

3.9

-0.1

3.7

-0.1

4.1

-0.1

109

R023

Esty Maison Itabashihoncho

937

10

896

40

4.3

-0.1

4.1

-0.1

4.5

-0.1

43

R024

Esty Maison Oizumigakuen

790

17

777

12

4.4

-0.1

4.2

-0.1

4.6

-0.1

38

R025

Esty Maison Higashishinagawa

2,390

-10

2,395

-5

4.3

0.0

4.1

0.0

4.5

0.0

111

R026

Esty Maison Itabashikuyakushomae

2,540

60

2,433

106

4.3

-0.1

4.1

-0.1

4.5

-0.1

118

R027

Esty Maison Musashikoyama

1,050

10

924

125

4.3

0.0

4.1

0.0

4.5

0.0

48

R028

Esty Maison Sendagi

698

1

695

2

4.3

0.0

4.1

0.0

4.5

0.0

32

R029

Esty Maison Yotsuyasakamachi

2,090

0

2,143

-53

4.2

0.0

4.0

0.0

4.4

0.0

91

R030

Esty Maison Hakatahigashi

2,400

0

2,140

259

5.1

0.0

5.1

0.0

5.2

0.0

132

R031

Esty Maison Kamigofuku

821

0

782

38

4.9

0.0

4.9

0.0

5.0

0.0

45

R032

Esty Maison Sangenjaya

822

-2

819

2

4.2

0.0

4.3

0.0

4.4

0.0

38

R033

Prime Maison Musashinonomori

1,850

-10

1,461

388

4.8

0.0

4.7

0.0

5.0

0.0

97

R034

Prime Maison Higashisakura

1,500

10

1,007

492

4.8

0.0

4.7

0.0

5.0

0.0

76

R035

Prime Maison Kayabakoen

801

14

583

217

5.0

-0.1

4.9

-0.1

5.2

-0.1

43

R036

Esty Maison Sangenjaya II

785

-1

653

131

4.3

0.0

4.4

0.0

4.5

0.0

37

R037

Esty Maison Itabashi C6

2,560

-80

2,141

418

4.4

0.1

4.2

0.1

4.6

0.1

120

R038

MAST Hakata

2,360

0

1,718

641

5.1

0.0

4.5

0.0

5.3

0.0

134

R039

Esty Maison Kinshicho

1,260

40

1,000

259

4.2

-0.1

4.0

-0.1

4.4

-0.1

57

R040

Esty Maison Musashikoganei

1,790

50

1,498

291

4.4

-0.1

4.5

-0.1

4.6

-0.1

82

Note: Notes regarding this page can be found on page 37.

34

Appendix

Overview of Appraisal (2)Property No.

Property Name

Estimated Value at the End
of Period (million yen)
As of Apr. 30, 2018

Difference from
Previous Period

Book Value(million yen)

Discount Rate (%)

Direct Capitalization (%)

Terminal Capitalization Rate (%)

Unrealized
Gain/Loss(million yen)

As of Apr. 30, 2018

Period on period

As of Apr. 30, 2018

Period on period

As of Apr. 30, 2018

Period on period

Appraisal NOI(million yen)

R041

Prime Maison Gokiso

1,950

60

1,486

463

4.7

-0.1

4.7

-0.1

4.9

-0.1

98

R042

Prime Maison Yuhigaoka

909

0

735

173

4.7

0.0

4.5

0.0

4.9

0.0

44

R043

Prime Maison Kitatanabe

601

0

488

112

5.0

0.0

4.8

0.0

5.2

0.0

32

R044

Prime Maison Momochihama

1,940

40

1,879

60

5.0

-0.1

4.7

-0.1

5.2

-0.1

110

R045

Esty Maison Akihabara

1,930

-50

1,454

475

4.2

-0.1

4.0

-0.1

4.4

-0.1

88

R046

Esty Maison Sasazuka

3,340

-10

2,738

601

4.2

0.0

4.0

0.0

4.4

0.0

146

R047

Prime Maison Ginza East

6,250

90

4,875

1,374

4.0

-0.1

3.8

-0.1

4.2

-0.1

262

R048

Prime Maison Takami

1,050

0

839

210

4.5

-0.1

4.6

-0.1

4.7

-0.1

50

R049

Prime Maison Yadaminami

812

-9

657

154

5.0

-0.1

4.9

-0.1

5.2

-0.1

43

R050

Prime Maison Teriha

1,260

-100

1,191

68

5.1

0.0

4.9

0.0

5.3

0.0

75

R051

Esty Maison Higashishirakabe

1,580

0

1,228

351

4.9

-0.1

4.8

-0.1

5.1

-0.1

82

R052

Esty Maison Sengoku

1,360

0

1,064

295

4.0

0.0

3.8

0.0

4.2

0.0

56

R053

Esty Maison Daizawa

2,270

-10

1,857

412

4.0

0.0

3.8

0.0

4.2

0.0

93

R054

Esty Maison Togoshi

1,770

40

1,339

430

4.1

-0.1

4.2

-0.1

4.3

-0.1

74

R055

Esty Maison Nishitemma

1,680

0

1,350

329

4.6

0.0

4.7

0.0

4.8

0.0

80

R056

Esty Maison Shirokanedai

2,400

10

1,931

468

4.1

0.0

3.9

0.0

4.3

0.0

102

R057

Esty Maison Higashishinjuku

1,680

40

1,310

369

4.1

-0.1

4.2

-0.1

4.3

-0.1

71

R058

Esty Maison Motoazabu

1,540

30

1,154

385

3.9

-0.1

4.0

-0.1

4.1

-0.1

62

R059

Esty Maison Toritsudaigaku

861

19

721

139

4.0

-0.1

4.1

-0.1

4.2

-0.1

36

R060

Esty Maison Musashikoyama II

1,030

-10

821

208

4.1

0.0

3.9

0.0

4.3

0.0

44

R061

Esty Maison Nakano

1,870

0

1,498

371

4.1

0.0

3.9

0.0

4.3

0.0

79

R062

Esty Maison Shinnakano

1,020

0

824

195

4.2

0.0

4.0

0.0

4.4

0.0

44

R063

Esty Maison Nakanofujimicho

984

17

845

138

4.2

-0.1

4.3

-0.1

4.4

-0.1

43

R064

Esty Maison Tetsugakudo

1,160

-10

920

239

4.2

0.0

4.0

0.0

4.4

0.0

51

R065

Esty Maison Koenji

1,160

20

942

217

4.1

-0.1

4.2

-0.1

4.3

-0.1

49

R066

Esty Maison Oshiage

2,490

50

1,883

606

4.3

-0.1

4.3

-0.1

4.5

-0.1

110

R067

Esty Maison Akabane

3,290

-10

2,603

686

4.3

0.0

4.1

0.0

4.5

0.0

146

R068

Esty Maison Oji

1,650

-10

1,318

331

4.3

0.0

4.1

0.0

4.5

0.0

73

R069

Prime Maison Waseda

1,580

0

1,219

360

4.1

0.0

3.9

0.0

4.3

0.0

66

R070

Prime Maison Hatchobori

1,460

0

1,099

360

4.1

0.0

3.9

0.0

4.3

0.0

61

R071

Prime Maison Jimbocho

1,960

40

1,569

390

4.1

-0.1

3.9

-0.1

4.3

-0.1

82

R072

Prime Maison Gotenyama East

2,910

90

2,076

833

3.9

-0.1

3.7

-0.1

4.1

-0.1

117

R073

MAST LIFE Akihabara

555

0

466

88

4.3

0.0

4.1

0.0

4.5

0.0

26

R074

Esty Maison Aoi

2,460

-30

2,038

421

4.8

0.0

4.8

0.0

5.0

0.0

123

R075

Esty Maison Yakuin

2,430

60

1,993

436

4.6

-0.1

4.7

-0.1

4.8

-0.1

117

R076

Esty Maison Kinshicho II

8,250

-90

6,526

1,723

4.3

0.1

4.1

0.1

4.5

0.1

365

R077

Esty Maison Ojima

8,630

-100

6,930

1,699

4.3

0.1

4.1

0.1

4.5

0.1

382

R078

Prime Maison Fujimidai

2,070

-10

1,740

329

5.0

0.0

4.8

0.0

5.2

0.0

109

R079

Esty Maison Tsurumai

4,490

-10

3,764

725

5.0

0.0

4.8

0.0

5.2

0.0

235

R080

Prime Maison Morishita

1,930

10

1,712

217

4.3

-0.1

4.3

-0.1

4.5

-0.1

85

Note: Notes regarding this page can be found on page 37.

35

Appendix

Overview of Appraisal (3)Property No.

Property Name

Estimated Value at the End
of Period (million yen)
As of Apr. 30, 2018

Difference from
Previous Period

Book Value(million yen)

Discount Rate (%)

Direct Capitalization (%)

Terminal Capitalization Rate (%)

Unrealized
Gain/Loss(million yen)

As of Apr. 30, 2018

Period on period

As of Apr. 30, 2018

Period on period

As of Apr. 30, 2018

Appraisal NOI(million yen)

Period on period

R081

Prime Maison Shinagawa

1,960

-20

1,680

279

4.2

0.0

4.0

0.0

4.4

0.0

85

R082

Prime Maison Odorikoen

3,160

0

2,652

507

4.9

0.0

4.7

0.0

5.1

0.0

163

R083

Prime Maison Minami 2-jo

1,930

-10

1,463

466

5.0

0.0

4.8

0.0

5.2

0.0

102

R084

Prime Maison Kamokamogawa

1,250

0

968

281

5.0

0.0

4.8

0.0

5.2

0.0

66

R085

Prime Maison Central Park

2,309

0

2,246

62

5.2

0.0

5.0

0.0

5.3

0.0

125

R086

MAST LIFE Yahiro

1,910

0

1,673

236

4.5

0.0

4.3

0.0

4.7

0.0

89

R087

Prime Maison Ebisu

4,360

0

3,606

753

4.0

0.0

3.8

0.0

4.2

0.0

179

R088

Granmast Kanazawa Nishiizumi

1,080

-10

1,018

61

5.3

0.0

5.1

0.0

5.5

0.0

61

R089

Granmast Unomori

830

0

748

81

5.2

0.0

5.0

0.0

5.4

0.0

46

R090

Esty Maison Kohoku Tsunashima

2,750

-1

2,858

-108

4.7

0.0

4.5

0.0

4.9

0.0

140

R091

MAST LIFE Hino

1,390

0

1,311

78

4.8

0.0

4.6

0.0

4.9

0.0

70

R092

Prime Maison Yokohama Nihon-odori

4,870

80

4,354

515

4.3

-0.1

4.1

-0.1

4.5

-0.1

215

R093

Kobe Women’s Student Housing

5,880

0

5,909

-29

5.2

0.0

5.0

0.0

5.4

0.0

325

R094

Prime Maison Shibuya

2,430

70

2,224

205

4.0

-0.1

3.8

-0.1

4.2

-0.1

99

R095

Prime Maison Hatsudai

3,010

70

2,750

259

4.1

-0.1

3.9

-0.1

4.3

-0.1

127

R096

Esty Maison Uemachidai

1,040

20

971

68

4.5

-0.1

4.2

-0.1

4.7

-0.1

51

R097

Esty Maison Kobe-sannomiya

971

-5

989

-18

4.7

0.0

4.5

0.0

4.9

0.0

52

R098

Prime Maison Shirokane-takanawa

4,900

100

4,578

321

4.0

-0.1

3.8

-0.1

4.2

-0.1

202

R099

Prime Maison Ichigayayamabushicho

4,220

0

4,072

147

4.1

0.0

3.9

0.0

4.3

0.0

180

R100

Esty Maison Morishita

655

12

652

2

4.3

-0.1

4.1

-0.1

4.5

-0.1

28

R101

Prime Maison Shirokanedai Tower

8,570

-

-

-

4.0

-

4.1

-

4.2

-

351

R102

Prime Maison Otsuka

3,970

-

-

-

4.2

-

4.3

-

4.4

-

171

R103

Prime Maison Asakusabashi

1,800

-

-

-

4.2

-

4.3

-

4.4

-

78

R104

Prime Maison Daikanyama

2,730

-

-

-

4.0

-

4.1

-

4.2

-

113

R105

Prime Maison Gotenyama West

3,680

-

-

-

4.0

-

4.1

-

4.2

-

152

R106

Esty Maison Toyosu Residence

6,460

-

-

-

-

-

4.5

-

-

-

343

Residence Total

239,305

1,219

179,346

32,748

4.4

-

4.3

-

4.6

-

11,048O001

Garden City Shinagawa Gotenyama

71,300300

58,826

12,473

3.3

0.0

3.0

0.0

3.5

0.0

2,430

O002

Gotenyama SH Building

58,500050,583

7,916

3.5

0.0

3.5

0.0

3.7

0.0

2,064

O003

Hommachi Minami Garden City

29,100500

22,374

6,725

3.7

-0.1

3.4

-0.1

3.9

-0.1

1,128

O004

Hommachi Garden City

44,700100

37,705

6,994

3.5

0.0

3.3

0.0

3.7

0.0

1,594

O005

HK Yodoyabashi Garden Avenue

5,590

20

4,368

1,221

4.0

0.0

4.0

0.0

4.1

0.0

235

O006

Hirokoji Garden Avenue

7,150

40

6,304

845

4.2

0.0

4.0

0.0

4.4

0.0

308

Office Building Total

216,340960

180,163

36,176

3.7

-

3.5

-

3.9

-

7,762

Hommachi Garden City

17,700017,213

486

3.8

0.0

3.6

0.0

4.0

0.0

691

Hotel Total

17,700017,213

486

3.8

-

3.6

-

4.0

-

691

Hamamatsu Plaza

2,729

-161

3,694

-965

5.8

-0.1

5.5

-0.1

5.9

-0.1

96

Retail Property, etc. Total

2,729

-161

3,694

-965

5.8

-

5.5

-

5.9

-

96

476,074

2,017

380,417

68,447

4.4

-

4.3

-

4.6

-

19,595H001

C001

Portfolio Total

Note: Notes regarding this page can be found on page 37.

36

Appendix

Overview of Appraisal (4)■ Assets Sold as of May 1, 2018
Property Name

Estimated Value at the End
of Period (million yen)
As of Apr. 30, 2018

Difference from
Previous Period

Book Value(million yen)

Unrealized
Gain/Loss(million yen)

Discount Rate (%)

Direct Capitalization (%)
As of Apr. 30, 2018

As of Apr. 30, 2018

Period on period

Terminal Capitalization Rate (%)

Period on period

As of Apr. 30, 2018

Appraisal NOI(million yen)

Period on period

Esty Maison Machida

1,570

20

1,115

454

4.7

-0.1

4.6

-0.1

4.9

-0.1

77

Esty Maison Shinkawasaki

1,250

20

966

283

5.0

-0.1

3.8

-0.1

5.2

-0.1

69

Esty Maison Megurohoncho

1,130

0

1,137

-7

4.2

0.0

4.0

0.0

4.4

0.0

49

Esty Maison Joto

951

0

959

-8

5.0

0.0

4.8

0.0

5.2

0.0

50

Esty Maison Tenjinhigashi I

364

0

367

-3

5.1

0.0

4.9

0.0

5.3

0.0

21

Esty Maison Tenjinhigashi II

738

0

689

48

5.1

0.0

4.9

0.0

5.3

0.0

40

Esty Maison Shijonishinotoin

1,180

10

1,248

-68

4.9

0.0

4.7

0.0

5.1

0.0

62

Esty Maison Hachiojiminamino

873

-2

861

11

5.0

0.0

4.9

0.0

5.1

0.0

50

Esty Maison Nishinakajima

1,900

0

1,853

46

4.9

0.0

4.7

0.0

5.1

0.0

98

Esty Maison Kawaramachi

1,980

40

1,526

453

4.6

-0.1

4.7

-0.1

4.8

-0.1

95

Esty Maison Shibaura

2,960

50

2,859

100

4.2

-0.1

4.0

-0.1

4.4

-0.1

137

Esty Maison Tsutsujigaoka
Total

918

5

947

-29

4.4

-0.1

4.5

-0.1

4.6

-0.1

44

15,814143

14,532

1,281

4.8

-

4.5

-

5.0

-

798

Note 1: Amounts of less than one million yen are rounded down.
Note 2: “Estimated Value at the end of Period,” “Direct Capitalization Rate,” “Discount Rate,” “Terminal Capitalization Rate” and “Appraisal NOI” are the amount based on real estate appraisal as of April 30, 2018 by real estate appraisers while the figures for“Prime Maison Shirokanedai Tower,” “Prime Maison Otsuka,” “Prime Maison Asakusabashi,” “Prime Maison Daikanyama,” “Prime Maison Gotenyama West” and Esty Maison Toyosu Residence,” which were acquired on May 1, 2018, are the amountbased on real estate appraisal as of April 1, 2018 by real estate appraisers. “Book Value” indicates the amount recorded on the balance sheets of SHR and SHI as of April 30, 2018.
Note 3: “Direct Capitalization Rate,” “Discount Rate” and “Terminal Capitalization Rate” in Residence Total, Office Building Total, Hotel Total, Retail Property, etc. Total and Portfolio Total are the simple averages of the figures for the owned properties
indicated above, and are rounded to the first decimal place. Also, when part of an owned asset is a leased land, such part is excluded from the basis of the calculation of the simple average.
Note 4: A fixed-rent type master lease agreement has been concluded with Sekiwa Real Estate Kyushu, Ltd. with regard to Prime Maison MOMOCHIHAMA. In calculating the period-end estimated value as of April 30, 2018, the property’s discount rate until
the expiry of the agreement is 4.7% (Period on period: -0.1%) and the discount rate after expiry of the agreement is 4.9% (Period on period: -0.1%). Also, a fixed-rent type master lease agreement has been concluded with Sekiwa Real Estate Chubu,Ltd. with regard to Esty Maison HIGASHI SHIRAKABE. In calculating the period-end estimated value as of April 30, 2018, the property’s discount rate until the expiry of the agreement is 4.8% (Period on period: 0.0%) and the discount rate after
expiry of the agreement is 4.9% (Period on period: -0.1%). For the sake of convenience, the above chart shows the discount rates until the expiry of the agreements.
Note 5: Part of the land of Prime Maison CENTRAL PARK (Lot: 23-32) is leased land and the income approach value for the leased land is calculated by the DCF method, and thus no “Direct Capitalization Rate” or “Terminal Capitalization Rate” for theleased land are established. Therefore, the “Direct Capitalization Rate” and “Terminal Capitalization Rate” in the above table only indicate those for the residential portion. The “Discount Rate” of the leased land portion are calculated to be 4.7%
(Period on period: 0.0%), at the fiscal period ended April 30, 2018 by the DCF method.
Note 6: As for Esty Maison Toyosu Residence, capitalization method over a definite term is adopted as the right to use the land is a fixed-term land leasehold and thus the income period is limited. Therefore, no “Direct Capitalization Rate” or “Terminal
Capitalization Rate” are established. In calculating the appraisal value as of April 1, 2018, the discount rate is 4.5% but the discount rate upon the assessment of sale price after the expiry of the holding period is 4.7%. For the sake of convenience,
the above chart shows the discount rates until the expiry of the holding period.
Note 7: In calculating “Difference from Previous Period” and “Period on Period,” the comparison between the figures as of September 30, 2017 and that as of April 30, 2018 is indicated for residences and retail properties owned by SHI and comparison
between the figures as of October 31, 2017 and that as of April 30, 2018 is indicated for office buildings and hotels owned by SHR. Residence Total, Office Building Total, Hotel Total, Retail Property, etc. Total and Portfolio Total indicate theaggregate amount of changes of properties owned. “Difference from Previous Period” and “Period on Period” are not indicated for the 6 properties that were newly acquired on May 1, 2018.
Note 8: Hamamatsu Plaza is a commercial complex centered on Costco Hamamatsu Warehouse, which opened on September 1, 2017, and, as of the date of this document, is comprised of the Costco Hamamatsu Warehouse Building, Xebio Building,
Akachan Honpo Building, Hamapla & Frespo Building, a management building and a gas station for Costco members in the Hamamatsu Plaza East area, and Hamamatsu West Building (being constructed as of the date of this document) as well as
the Hamamatsu Plaza Sports Building (Zexis) in the Hamamatsu Plaza West area. SHR holds only 49% quasi-co-ownership of trust beneficiary interests in real estate of Hamamatsu Plaza East, excluding building of Costco Hamamatsu Warehouseand underlying land. Therefore, the “Estimated Value at End of Period” and “Book Value” above are the amounts that correspond to SHR’s 49% quasi-co-ownership.
Note 9: As mentioned in Note 8 above, the Hamapla & Frespo Building and the gas station for Costco Members located in the Hamamatsu Plaza East area are leased land; therefore, the DCF method was used to calculate the income approach value for theleased land portion, and “Direct Capitalization Rate” and “Terminal Capitalization Rate” are not indicated. In addition, “Discount Rate” in the table above is indicated for the property excluding the Hamapla & Frespo Building and the gas station for
Costco Members. The discount rates as of April 30, 2018 for leased land for the Hamapla & Frespo Building and the gas station for Costco Members, calculated using the DCF method, are both 4.7% (period-on-period: -0.1%).

37

Appendix

ESG initiatives of Sekisui House
Corporate Philosophy<Development of Philosophy and Value Creation>

4 Values and 13 Guidelines
EnergySekisui House defined “a sustainable society” in 2005 as the vision to aspire under
the corporate philosophy of “love of humanity,” announcing in connection four
values—environmental, economic, social and homeowner—in order to attain andconfirm this goal, which is intended to achieve balanced management, and has beenproactive in pursuing such efforts as issuing a “sustainability report” each year.

Our Stance:

Longevity

Resources
ComfortTruth and trust
Chemical substances

Environmental
value

Homeowner
value
Prosperity

Ecosystems
Sustainability

Ourfundamental
philosophy:

Knowledge andtechnology

Love ofhumanity

Our objective:

Our business focus:

Superior quality andleading technology

Comfortable housing andecologically sound communities

Economic
value

Coexistence andco-prosperity

Socialvalue

Relationships withlocal culture

Regional economy
Fair profits and social sharing

Human resource development<Main Initiatives of Sekisui House and Accolade from Third Parties>

Environment
Ｅ

Ｓ
Ｇ

Ｅ

Ｓ
Ｇ

Ｅ

Ｓ
Ｇ

Ｅ

Ｅ

Selected by RobecoSAM in Swiss for the “Gold Class,”
the highest rank in the residential construction divisionof “RobecoSAM Sustainability Award 2018,” for 3
consecutive years. (73 companies around the world
and 5 Japanese companies were selected)

SocialＳ

Introduction of retirement system at the age of 70 for
the President and Representative Director

Ｇ

Appointment of outside female executives

Ｇ

Transparency and revitalization of operation of
the Board of Directors

Ｓ

Ｓ

Obtained “Eruboshi” Certification from Minister of
Health, Labor and Welfare based on the Act on
Promotion of Women's Participation and Advancementin the Workplace

Ｓ

Obtained “Kurumin” Certification from Minister of Health,
Labor and Welfare based on the Act on Advancement of
Measures to Support Raising Next-Generation Children

Ｇ

Establishment of management meeting

Ｓ

Received “Minister of State for Special Missions Award”
as an advanced company empowering female
employees in 2017Ｇ

Clarification of the divisions of directors

Ｇ

Evaluation of effectiveness of the Board of Directors

Selected by FTSE Group in the U.K. for “FTSE4Good
Global Index” and “FTSE4Good Japan Index” brandReceived FY2017 Environment Minister's Award for
Global Warming Prevention Activities/Organizer: Ministryof the Environment and 27th Grand Prize for the Global
Environment Award/Organizer: Fuji Sankei GroupＧ

Selected by the Ministry of Economy, Trade andIndustry and the Tokyo Stock Exchange for theNadeshiko brand 2018 as a company that promotes theactive participation of women. (The only company thatwas selected five times in the residential andconstruction industry)

Selected by S&P Dow Jones Indices in the U.S. andRobeco SAM in Swiss for the Dow Jones Sustainability
World Index (DJSI World) for two consecutive years.

Obtained the first certification of “SBT （ Science
Based Targets） Initiative” in Japan in the residential
industry concerning CO2 reduction

Selected by the Ministry of Economy, Trade andIndustry for the New Diversity Management Selection
100 as a company that promotes diversity management

GovernanceＥ

Ｓ

Selected as brand of “MSCI Japan ESG SelectLeaders” and “MSCI Japan Empowering Women Index”
Ｇ provided by MSCI

38

Appendix

Sustainablility Policy of Asset Management Company

1. Compliance with ESG-related Laws and Regulations and Rules
We implement in-house training for the purpose of enhancing knowledge with regard to ESGrelated laws, regulations and rules, and abide by such laws, regulations and rules in conducting
real estate investment management with considerations given to ESG.

2. Initiatives for a Low-Carbon Society and the Efficient Use of Energy
To plan for the achievement of a low-carbon society and actively promote the efficient use ofenergy, we have set reduction targets for energy use at the properties held by SHR inaccordance with laws and regulations and shall follow a plan-do-check-act (PDCA) cycle toachieve the targets.

3. Water and Resource Saving Measures
We shall actively contribute to the creation of a recycling-based society by promoting measuresand public awareness activities for reducing water use and implementing the three Rs (reduce,reuse and recycle) in relation to resources.

4. Biodiversity
In accordance with the "Gohon no ki" (Five Trees) Planning promoted by Sekisui House, we
conduct maintenance and management of planting and other greenery measures, centering ontree species with consideration given to the native vegetation and other ecosystem matters. By
doing so, we aim to realize harmony with nature and the surrounding environment.

6. Contributing to Regions and Communities
We create activity and prosperity by participating in local events and through other means, in aneffort to find common interest with the regions and communities as well as to invigorate them.

7. Cooperation with Stakeholders
To implement initiatives based on this policy, we shall strive to cooperate with property
management companies and other partners, residents of residential properties, tenantcompanies and facility users of commercial properties, and other stakeholders.

8. Supply Chain Management
We adopt the perspectives of green procurement and corporate social responsibilities in ourinvestment and management operations in order to promote ESG awareness through our
supply chains.

9. Information Disclosure
While regularly monitoring our action measures, etc. regarding ESG, we disclose information
concerning sustainability performance on our website and through other media. In addition, we
will continue our efforts to acquire environmental certification and recognition from outsideassessment agencies.

5. Comfort and Safety
We shall provide high-quality homes where residents of residential properties can lead theirlives in comfort, as well as convenient, safe and comfortable spaces that contribute toenhancing the productivity of tenant companies in commercial properties.
We will also promote the installation of facilities to ensure that residents can live safely andsecurely in the event of a disaster alongside the provision of “sustainable bases of operation” totenant companies with considerations given to their business continuity plans (BCPs).

◼ “Gohon no ki” (Five Trees) Planning Promoted by Sekisui House“Gohon no ki” (Five Trees) Planning is a Sekisui House original proposal for the creation of gardens andcommunities where the ecosystem is taken into consideration and local indigenous trees are used forgardening. In this planning, “Five Trees” indicates that Japanese indigenous trees will be promoted as“three trees for birds and two trees for butterflies.”

39

Appendix

Examples of Initiatives for ESG
Initiatives for a Low-Carbon Society and the Efficient Use of Energy
Introduction of environmentally friendly facilities
Solar power generation panels

Garden City Shinagawa Gotenyama

Low-e double-glazed windows

Hommachi Minami Garden City

Prime Maison Gotenyama West

Replacement of lights for common areas with LED
lighting in residential properties

Promotion of energy-saving of air conditioners forcommon areas in residential properties

Implemented at a total of
44 properties

Replaced a total of
836 A/C units

Electricity consumption

Electricity consumption

Expected total annual reduction of
Around 1,270,496 kwh

Expected total annual reduction of
Around 186,205 kwh

Greenhouse gas emissions

Greenhouse gas emissions

Expected total annual reduction of
Around 647 t-CO2

Expected total annual reduction of
Around 88 t-CO2

LED lighting

HK Yodoyabashi Garden Avenue

Biodiversity Activities
Wall garden

Contributing to Regions and Communities
Disaster-relief vending machines

Installing automated external defibrillators(AED)

Comfort and Safety Measures
Emergency electricity supply unit

24-hour disaster prevention center

Garden City Shinagawa Gotenyama

Garden City Shinagawa Gotenyama

Installing emergency cabinets forelevators

Distribution of stockpiled emergency
supplies to tenants“Gohon no ki” (Five Trees) Planning
Promoted by Sekisui House
ExamplesPrime Maison Yokohama Nihon-odori

Rooftop garden

Rooftop garden

Prime Maison Ginza East, etc
Concert held in entrance hall

Christmas tree display

Example of Esty Maison Ojima
Hommachi Garden City

Garden City Shinagawa Gotenyama

Hommachi Garden City

Hommachi Garden City

Note: The above examples are examples of initiatives for ESG implemented by SHR or SHI by the date of this document. The figures for expected reductions above are estimated by Asset Management Company based on materials provided by the
replacement work operator and materials published by the Agency for Natural Resources and Energy of the Ministry of Economy, Trade and Industry; there is no guarantee that the expected reductions will be realized.

40

Appendix

Overview of Interest-Bearing Liabilities (1)■ Loans

As of the date of this document
Balance(million yen)Interest Rate

3,882

1.15475%Note 2

Aug. 2, 2012

Feb. 28, 2019

MUFG Bank, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Mizuho Trust & Banking Co., Ltd.

4,500

0.89900%

Note 2Feb. 8, 2013

Feb. 28, 2019

MUFG Bank, Ltd., Mizuho Bank, Ltd., Mizuho Trust & Banking Co., Ltd., Resona Bank, Limited

5,242

1.02225%Note 2

Feb. 28, 2013

Feb. 28, 2020

2,500

Base Rate(JBA 3-month JPY TIBOR)+0.40000％

Aug. 30, 2013

Term

LenderMizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Development Bank of Japan Inc.

Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, Mizuho Trust & Banking Co., Ltd.,
Aozora Bank, Ltd.
MUFG Bank, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited, Mizuho Trust & Banking Co., Ltd., Resona Bank,
Limited, Aozora Bank, Ltd.

Long

Drawdown Date

Repayment Date

Aug. 31, 2018

5,500

1.17200%Note 2

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

1,800

1.17350%

Note 2

Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation

1,550

0.79614%Note 2

MUFG Bank, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, Mizuho Trust& Banking Co., Ltd., Resona Bank, Limited, The Senshu Ikeda Bank, Ltd., The Yamaguchi Bank, Ltd.

3,900

0.95225%Note 2

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

4,680

1.11000%Note 2

Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, The Bank of Fukuoka, Ltd., Shinkin Central Bank, The Shizuoka Bank,
Ltd.

2,100

0.97300%Note 2

Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation

4,400

0.83600%

Note 2

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

5,400

0.96475%Note 2

MUFG Bank, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, Mizuho Trust& Banking Co., Ltd., Resona Bank, Limited
Development Bank of Japan Inc., The Norinchukin Bank

14,0000.65830%Note 2

MUFG Bank, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, Mizuho Trust& Banking Co., Ltd., Resona Bank, Limited
Development Bank of Japan Inc., The Norinchukin Bank

17,0000.94060%Note 2

MUFG Bank, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, Development
Bank of Japan Inc.

10,0001.47450%Note 2

Nov. 30, 2024

Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, The Norinchukin Bank, Shinkin Central Bank, The Senshu Ikeda Bank,
Ltd., The Shizuoka Bank, Ltd., The 77 Bank, Ltd., The Hiroshima Bank, Ltd.
MUFG Bank, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Resona Bank, Limited, The Norinchukin Bank, The
Bank of Fukuoka, Ltd.

3,900

0.62800%

Note 2Feb. 26, 2021

3,350

0.73975%Note 2

Feb. 28, 2022

Development Bank of Japan Inc.

1,000

0.85250%

MUFG Bank, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, Mizuho Trust& Banking Co., Ltd., Resona Bank, Limited, The Norinchukin Bank, The Bank of Fukuoka, Ltd., Aozora Bank, Ltd.
Shinkin Central Bank, The Senshu Ikeda Bank, Ltd., The Shizuoka Bank, Ltd., The 77 Bank, Ltd., The Hiroshima Bank, Ltd., The
Yamaguchi Bank, Ltd.

7,100

0.86650%Note 2

Feb. 28, 2023

MUFG Bank, Ltd.

1,650

0.61760%

Nov. 30, 2020

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

5,350

0.62760%

Aug. 31, 2020
Jan. 31, 2014

Feb. 28, 2022
Feb. 28, 2020Feb. 28, 2014

Feb. 26, 2021
Feb. 28, 2022

Mar. 28, 2014

Feb. 26, 2021
Aug. 31, 2021

Aug. 29, 2014
Aug. 31, 2022
Nov. 30, 2019
Dec. 3, 2014

Feb. 27, 2015

Note 2

UnsecuredandUnguaranteed

Nov. 30, 2021

Feb. 28, 2023

Nov. 30, 2020

MUFG Bank, Ltd.

700

0.88470%

Development Bank of Japan Inc.

650

0.88500%

Nov. 30, 2022

1,650

0.89470%Note 2

Nov. 30, 2022

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

Remarks

Jul. 31, 2015

Nov. 30, 2022

Note: Footnotes regarding this page can be found on page 43.

41

Appendix

Overview of Interest-Bearing Liabilities (2)Term

Lender
MUFG Bank, Ltd.

Balance(million yen)Interest Rate

750

1.00850%

Drawdown Date

Repayment Date

Remarks

Nov. 30, 2023
Jul. 31, 2015

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

2,350

1.01850%Note 2

Mizuho Bank, Ltd., Development Bank of Japan Inc.

2,200

0.67400%

Nov. 30, 2023
Aug. 31, 2023
Jan. 29, 2016

0.68030%

Note 2

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

1,900

Aug. 31, 2023

MUFG Bank, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, Mizuho
Trust & Banking Co., Ltd., Resona Bank, Limited
The Norinchukin Bank, Aozora Bank, Ltd., The Yamaguchi Bank, Ltd.

4,750

Base Rate(JBA 1-month JPY TIBOR)+0.42500％

MUFG Bank, Ltd., Development Bank of Japan Inc., The Bank of Fukuoka, Ltd., Shinkin Central Bank, The Senshu Ikeda Bank,
Ltd., The Shizuoka Bank, Ltd., The 77 Bank, Ltd., The Hiroshima Bank, Ltd.

1,750

0.50500%

Feb. 29, 2024

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

1,900

0.49500%

Aug. 30, 2024

600

0.57000%

MUFG Bank, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Development Bank of Japan Inc.

3,000

0.59750%

Aug. 29, 2025

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

4,050

Base Rate(JBA 1-month JPY TIBOR)+0.22500％

Nov. 30, 2020

MUFG Bank, Ltd.

1,810

0.60500%

MUFG Bank, Ltd., Mizuho Bank, Ltd.

1,340

0.67000%

Sep. 8, 2026

Sumitomo Mitsui Banking Corporation

1,600

0.31000%

Aug. 31, 2020

600

0.61000%

Feb. 28, 2025

Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited, Mizuho Trust & Banking Co., Ltd., Resona Bank, Limited, Shinkin
Central Bank

1,800

0.67000%

MUFG Bank, Ltd.

1,500

0.72500%

Feb. 27, 2026

MUFG Bank, Ltd., Mizuho Bank, Ltd., Development Bank of Japan Inc., The Bank of Fukuoka, Ltd., Aozora Bank, Ltd., The
Yamaguchi Bank, Ltd.

4,000

0.77880%

Feb. 27, 2026

Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, Resona Bank, Limited, The Norinchukin Bank

1,860

Base Rate(JBA 1-month JPY TIBOR)+0.20000％

Aug. 31, 2021

990

0.37000%

MUFG Bank, Ltd., Mizuho Bank, Ltd., Mizuho Trust & Banking Co., Ltd., Development Bank of Japan Inc.

1,250

0.45254%

Nov. 30, 2023

Mizuho Bank, Ltd., The Norinchukin Bank

2,528

0.61380%

Aug. 29, 2025

750

0.32000%

Jul. 13, 2022

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

5,050

0.34800%Note 2

MUFG Bank, Ltd., Development Bank of Japan Inc.

1,200

0.35341%

Feb. 29, 2024
Apr. 1, 2016

MUFG Bank, Ltd.

Long

MUFG Bank, Ltd.

MUFG Bank, Ltd.

MUFG Bank, Ltd.

Aug. 31, 2016

Sep. 9, 2016

Feb. 28, 2017

Aug. 31, 2017

Nov. 30, 2017

Aug. 29, 2025

Sep. 8, 2026
UnsecuredandUnguaranteed

Feb. 28, 2025

Nov. 30, 2023

Jul. 13, 2022
Jul. 13, 2022

Note: Footnotes regarding this page can be found on page 43.

42

Appendix

Overview of Interest-Bearing Liabilities (3)Term

Lender
MUFG Bank, Ltd.

Long

Balance(million yen)Interest Rate

750

0.34000%

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

5,050

0.41800%Note 2

MUFG Bank, Ltd., Development Bank of Japan Inc.

1,200

0.42622%

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

4,000

Base Rate(JBA 1-month JPY TIBOR)+0.18000％500

0.56500%

MUFG Bank, Ltd.

Drawdown Date

Repayment Date

Remarks

May 31, 2023
Nov. 30, 2017

May 31, 2023
May 31, 2023

Feb. 27, 2018

Feb. 28, 2019

UnsecuredandUnguaranteed

Feb. 27, 2026
Feb. 28, 2018

MUFG Bank, Ltd., Mizuho Bank, Ltd., The 77 Bank, Ltd., The Hiroshima Bank, Ltd.

1,600

0.63500%

MUFG Bank, Ltd.

1,900

0.70000%

Feb. 27, 2026
Aug. 31, 2027
May 31, 2018

Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation
Total Loans

6,100
182,432

0.78300%

Note 2

Aug. 31, 2027

-

-

-

-

Issue Amount(million yen)Interest Rate

Issue Date

Redemption Date

Remarks

Sekisui House Residential Investment Corporation Second Series Unsecured Investment Corporation Bonds(with a clause that ranks them pari passu among specified investment corporation bonds)

2,000

1.00000%

Feb. 28, 2013

Feb. 28, 2020

Sekisui House Residential Investment Corporation Third Series Unsecured Investment Corporation Bonds(with a clause that ranks them pari passu among specified investment corporation bonds)

2,500

0.37400%

Feb. 28, 2014

Feb. 28, 2019

Sekisui House Residential Investment Corporation Fourth Series Unsecured Investment Corporation Bonds(with a clause that ranks them pari passu among specified investment corporation bonds)

3,000

1.06900%

Feb. 28, 2014

Feb. 28, 2024

Sekisui House Residential Investment Corporation Fifth Series Unsecured Investment Corporation Bonds(with a clause that ranks them pari passu among specified investment corporation bonds)

3,000

0.87100%

Aug. 29, 2014

Aug. 30, 2024

Sekisui House Reit, Inc. First Series Unsecured Investment Corporation Bonds(with a clause that ranks them pari passu among specified investment corporation bonds)

2,000

0.34000%

Sep. 8, 2016

Sep. 8, 2026

Sekisui House Reit, Inc. Second Series Unsecured Investment Corporation Bonds(with a clause that ranks them pari passu among specified investment corporation bonds)

3,000

0.24000%

Jul. 13, 2017

Jul. 13, 2022

Total Investment Corporation Bonds

15,500----Total Interest-Bearing Liabilities

197,932

-

-

-

-

■ Investment Corporation Bonds
Name

UnsecuredandUnguaranteed

Note 1: Amounts of less than one million yen are rounded down.
Note 2: Interest rate swap agreements are concluded in order to avoid the risk of rising interest rates, and the interest rates indicated are the rates fixed with the interest rate swap agreements.

43Appendix

Unitholders Composition■ Breakdown of the number of unitholders and number ofinvestment units by unitholder type

Number of Investment Units Owned

Sekisui House Reit, Inc.
(SHR)

Sekisui House Residential Investment Corporation(SHI)

FP ended April 2018

FP ended April 2018

Unitholders

Unitholders■ Major shareholders of SHR immediately before the merger

Investment Units

Ratio
(%)

Investment
Units(units)

Ratio(%)

Unitholders

Unitholders

Investment Units

Ratio
(%)

Investment
Units(units)Ratio(%)

Individuals and others

12,38995.61

90,646

9.35

9,597

94.97

106,114

9.60

Financial institutions

144

1.11

651,304

67.21

129

1.28

701,583

63.46

City banks

0

0.00

0

0.00

0

0.00

0

0.00

Company Name

Number of Investment
Units Owned(units)

Ratio(%)

Japan Trustee Services Bank, Ltd. (Trust Account)

262,107

27.05

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

157,431

16.25

Sekisui House, Ltd.

65,2006.73

48,212

4.98

25,3592.62

16,218

1.67

THE HACHIJUNI BANK, LTD.

12,818

1.32

State Street Bank-West Pension Fund Clients-Exempt 505233

10,388

1.07

Trust & Custody Services Bank, Ltd.
(Securities Investment Trust Account)
The Nomura Trust and Banking Co., Ltd.
(Investment Trust Account)
State Street Bank and Trust Company
505012

Regional banks

25

0.19

79,610

8.22

35

0.35

166,462

15.06

THE HOKURIKU BANK, LTD.

10,098

1.04

Trust banks

10

0.08

507,593

52.38

12

0.12

460,497

41.65

Stitching Pension Fund Metal en Technique

10,004

1.03

Total

617,835

63.76

Life insurers

5

0.04

11,573

1.19

2

0.02

6,616

0.60

Casualty insurers

2

0.02

1,601

0.17

3

0.03

10,4490.95

Shinkin banks

56

0.43

32,298

3.33

47

0.47

39,911

3.61

Others46

0.35

18,629

1.92

30

0.30

17,648

1.60

Non-financial
corporations

241

1.86

88,182

9.10

200

1.98

72,506

6.56

Non-Japanese
corporations

167

1.29

128,128

13.22

167

1.65

193,958

17.54

Securities companies

17

0.13

10,740

1.11

12

0.12

31,3492.84

12,958100.00969,000

100.0010,105100.001,105,510

100.00■ Major shareholders of SHI immediately before the merger
Number of Investment Units Owned

Total

Note: Percentages on this page are rounded to the nearest second decimal place.

Company Name

Number of Investment
Units Owned(units)

Ratio(%)

Japan Trustee Services Bank, Ltd. (Trust Account)

224,957

20.35

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

150,517

13.62

Sekisui House, Ltd.

39,000

3.53

Citigroup Global Markets Japan Inc.

27,170

2.46

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

27,0292.44

BARCLAYS CAPITAL SECURITIES LIMITED

22,1582.00

Mitsubishi UFJ Trust and Banking Corporation

20,753

1.88

DEUTSCHE BANK AG LOMDON-GPF CLIENTSOMNI-FULL
TAX 613

19,915

1.80

State Street Bank-West Pension Fund Clients-Exempt 505233

18,816

1.70

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

18,182

1.64

Total

568,497

51.42

44

Appendix

Overview of Asset Management Company and Reinforcement of Governance■ Overview of Asset Management Company■ Reinforcement of governance catapulting on the merger

Corporate nameSekisui House Asset Management, Ltd.

•

Newly established the Internal Control Promotion Department which controls and supervises risk
management, internal audit, legal affairs, etc.

Head office

4-15-1 Akasaka, Minato-ku, Tokyo•

Capital

400 million yen

President &Representative
Director

At the Investment Committee which plays an important role in the decision-making process, increased thenumber of external committee members from one (real estate appraiser) to two (real estate appraiser andlawyer).

Junichi Inoue

Number of employees

60

Shareholder

Sekisui House, Ltd. (100%)<Organizational Structure>

Licensed for building lots and buildings transaction business
License No.(1) 96411 issued by the Governor of Tokyo

Licenses andregistration, etc.

General Meeting of
Shareholders

Certified as an entrustment-based agency
License No.82 issued by the Minister of Land, Infrastructure,
Transportation and Tourism

Statutory Auditor

Board of Directors

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

Investment
Committee

Compliance
Committee■ Asset Management Fee
Compliance Officer

Management Fee I(linked to total assets)

Total assets × 0.15%
President

Management Fee II(linked to performance)(DPU Note 2× Operating income Note 3×0.002%)
x 2 (split ratio)

Management Fee III(acquisition fees)

Acquisition purchase price × 0.3%
(Transactions with related parties: None)

Management Fee IV(disposition fees)

Sale price × 0.3%
(Transactions with related parties: None)

Management Fee V(merger fees)

Value of Real Estate-Related Assets held by investment
corporation×0.4%

Internal Control
Promotion
Department

Business Strategy
Department

Real Estate Division

Real Estate
Investment
No. 1 Dept.

Real Estate
Investment
No. 2 Dept.

Real EstateManagement
No. 1 Dept.

Real EstateManagement
No. 2 Dept.

Real EstateManagement
No. 3 Dept.

Real Estate
Accounting
Department

Engineering
Management
Department

Finance
Department

Investor
Relations
Department

General
Accounting
Department

GeneralAffairs
Department

Note 1: With regard to rates, unless otherwise specified, applicable rates or expected rates are stated instead of maximum rates.
Note 2: Calculated as the distributable amount of before deduction of Management Fee II divided by the total number of issued investment units.
Note 3: Operating Income of before deduction of Management Fee II.

45

Appendix

Changes in Unit Price (December 3, 2014 – May 31, 2018)(yen)(units)Trading Volume
TSE REIT Index
Investment Unit Price of SHR

Dec.
2014 2015

Mar.

Jun.

Sep.

Dec.
2016

Mar.

Jun.

Sep.

Dec.
2017

Mar.

Jun.

Sep.

Dec.

Mar.

2018
(Source) Tokyo Stock Exchange

Note 1: As a two-for-one split of investment units was implemented on May 1, 2018, investment units have been traded at one-second (the ex-rights) unit price on and after April 25, 2018. In consideration of the impact of the split, the above graph is basedon actual figures of “Investment Unit Price” for April 25, 2018 and earlier being divided by two and actual figures of “Trading Volume” being multiplied by two.
Note 2: For easier comparison with change in price of SHR, change in TSE REIT Index is converted by setting the closing price of TSE REIT Index on SHR’s listing date (December 3, 2014) as 66,000 yen, which is an amount obtained after applying adjustment for
the two-for-one split to the closing price of regular trading of SHR investment unit as of the same day. “TSE REIT Index” refers to the weighted average-type index of market capitalization of all REIT counters.

46