Sekisui House SI Residential Investment Corporation

Sekisui House SI Residential Investment Corporation

22

ndSemi-Annual Report
22nd Fiscal Period

from April 1, 2016 to September 30, 2016

Sekisui House SI Residential Investment Corporation
3-1-31 Minami-Aoyama, Minato-ku, Tokyo

http://www.shsi-reit.co.jp/eng/Sekisui House SI Residential Investment Corporation (the Investment Corporation) is a J-REIT
investing in residential properties, with Sekisui House, Ltd. serving as the main sponsor.
Collaborative Structure with the Sekisui House GroupThe Investment Corporation has established a collaborative structurewith the Sekisui House Group, the top manufacturer in the housing industry, which makes it possible to manage the investment properties overtheir life cycles from acquisition to operation and administration.
Planning

Development

Ownership

Operation

Collaboration

Sekiwa Real Estate Group

Feedback of supply anddemand information onrental housing

Collaboration forplanning anddeveloping rental
housing

Collaboration as service
provider of operation andadministration as well as asupply source of properties

1

Served by Sekisui House,
Ltd. (Sekisui House),
a leading company inthe housing industry,
as the main sponsor

3

Strong and solid
financial base backed
by the credibilityof Sekisui House

Administration

with the Sekisui House GroupSekisui House, Ltd.

Features of the Investment Corporation

Feedback of mattersrelated to operation,
administration andsupply of properties

2

Portfolio of highly
competitive residential
properties centering on
Greater Tokyo/ Major Urban Areas

4

Working to obtainenvironmental
certifications throughasset management withenvironmental awareness

Outline of Portfolio Development Policy

Invests in real estate-related assets that are mainly used as residences
Sekisui House SI Asset Management Ltd.
Asset Management Company

Entrustment ofasset management

Sekisui House SI Residential Investment Corporation

1

Positions Greater Tokyo / Major Urban Areas as the focusedinvestment area, while conducting diversified investment inGreater Tokyo / Other Urban Areas and Major Cities Nationwide
Invests in properties comprised of a variety of residential types,
primarily Single and Compact Type residences

2

Sekisui House SI Residential Investment Corporation

To Our Unitholders
I would like to express our sincere gratitude for your continued and loyal patronage.

Performance Highlights
Cash Distribution per Unit

Let me report on the business results of Sekisui House SI Residential Investment Corporation (the “Investment Corporation”) for
the fiscal period ended September 2016 (22nd fiscal period).
The Investment Corporation makes it a basic strategy to build a portfolio that is centered on the high-quality rental residential
properties planned and developed by the Sekisui House Group, aiming to invest in real estate-related assets that are mainly used as
residences. As for the existing retail properties, the Investment Corporation will consider making decisions to dispose them at theappropriate time while endeavoring to continue their stable management for the moment.
Based on this policy, we disposed four suburban retail properties in November 2015. Following this move, we worked to enhance
our residential portfolio during the fiscal period under review by acquiring high-quality rental residences planned, developed orowned by the Sekisui House Group. Specifically, we acquired four properties, comprising Prime Maison SHIBUYA and Prime
Maison HATSUDAI from Sekisui House as well as Esty Maison UEMACHIDAI and Esty Maison KOBE-SANNOMIYA from Sekiwa
Real Estate Kansai, a wholly-owned subsidiary of Sekisui House.

Osamu Minami
Executive Director, Sekisui House
SI Residential Investment Corporation
President, Sekisui House
SI Asset Management, Ltd.

Moreover, we disposed b-town MINAMIAOYAMA, one of the two existing retail properties that we owned at the beginning of the
22nd fiscal period, for a price that brought us gain on sale. As of the end of the fiscal period, HAMAMATSU Plaza is the only retailproperty we own. We also disposed part (measured area: 6.62m2) of the land of Esty Maison HIGASHISHINJUKU, a residential
property, in the fiscal period under review for a price generating gain on sale for us. We had received an offer to purchase the said
land and, after investigating the impact of the disposition, determined that the disposition would not deteriorate the value of theproperty.
Due to the above, the number of properties we own increased to 111 properties as of the end of the 22nd fiscal period, with theasset size totaling 199.1 billion yen, and the ratio of residential properties in the entire portfolio rose to 98.1%. In terms of theoccupancy ratio of the entire portfolio for the fiscal period, the period-end occupancy ratio stood at 96.8% and the period averageoccupancy ratio was 96.5%, both remaining at high levels continuously.
In terms of financing, the Investment Corporation refinanced existing loans totaling 10 billion yen (all with floating interest rates andan average loan period of approximately 8 months) that matured in August 2016, working to shift to fixed interest rate debts andextend loan periods in an effort to further reinforce our financial base. Moreover, it made early repayment of an existing loan
totaling 1.5 billion yen by utilizing the proceeds from the disposition of b-town MINAMIAOYAMA. By doing so, we endeavored toconservatively control LTV and reduce borrowing costs.
As a result of these endeavors, the Investment Corporation posted operating revenue of 6,693 million yen, operating income of
2,739 million yen and net income of 2,192 million yen for the 22nd fiscal period, with cash distribution per unit coming to 2,145 yen.
Furthermore, after entering the fiscal period ending March 2017 (23rd fiscal period), the Investment Corporation issued newinvestment units through public offering in October 2016, and used the procured funds to acquire two residential properties – Prime
Maison SHIROKANE-TAKANAWA and Prime Maison ICHIGAYAYAMABUSHICHO – from Sekisui House on November 1, 2016.
Moreover, in line with the resolution regarding the implementation of the public offering, the Investment Corporation executed acommitment line contract with a maximum commitment line amount 10 billion yen in October 2016, in order to secure flexible andstable means for procuring funds.

22nd Fiscal Period Ended September 2016 Cash distribution per unit

Business Results and Cash Distributions

Summary of Management Results for the 22nd Fiscal Period Ended September 2016
Status of Business Results andCash Distributions

Financing Activities

3Mar. 2015

Sept. 2015

Mar. 2016

Sept. 2016

Fiscal Period

19th FP

20th FP

21st FP

22nd FP

6,411

6,543

6,693

6,857

6,845

2,743

2,741

2,739

2,975

2,948

Ordinary income (million yen)

2,305

2,211

2,214

2,193

2,412

2,401

Net income (million yen)

2,302

2,209

2,210

2,192

2,410

2,399

77

49

47

8

-

-

2,185

2,122

2,125

2,145

2,180

2,170

Provision for reserve for reduction entry (million yen)
Cash distribution per unit (yen)(Note 1) The values of respective items in the “Mar. 2017 23rd FP (Forecast)” and “Sept. 2017 24th FP (Forecast)” column are the figures as of November 15, 2016 (the announcement date of business results) calculated under certain assumptions.
The actual operating revenue, operating income, ordinary income, net income, provision for reserve for reduction entry and cash distribution per unit may be subject to change due to such factors as additional acquisitions or dispositions ofreal estate in the future, changes in the real estate and other markets and changes in the asset management environment and other conditions surrounding the Investment Corporation. In addition, the Investment Corporation does notguarantee any actual results or cash distribution amount in providing the forecast figures.
(Note 2) Cash distribution per unit for the fiscal period ended March 2015 (19th fiscal period), the fiscal period ended September 2015 (20th fiscal period), the fiscal period ended March 2016 (21st fiscal period) and the fiscal period ended September
2016 (22nd fiscal period) are calculated based on the amount of unappropriated retained earnings less the provision for reserve for reduction entry of 77 million yen, 49 million yen, 47 million yen and 8 million yen, respectively, divided by
the number of investment units issued as of the end of each fiscal period.

Changes in Business Results● Operating Revenue / Net Income

Operating revenue

7,000

2,500

6,000

2,185

2,122

2,125

2,145

19th FP(Mar. 31, 2015)

20th FP(Sept. 30, 2015)

21st FP(Mar. 31, 2016)

22nd FP(Sept. 30, 2016)

2,000

5,000
1,500

4,000
3,000

2,302

2,209

2,000

2,192

2,210

0

1,000
500

1,000
19th FP(Mar. 31, 2015)

20th FP(Sept. 30, 2015)

21st FP(Mar. 31, 2016)

22nd FP(Sept. 30, 2016)

0

Table of Contents

・Cash distribution per unit: ¥2,145 (up 0.7% over initial forecast)

Portfolio Management

・Conducted new borrowings (¥6.5 billion in total) to fund the acquisition of 4 residential properties acquired in April 2016

7

Further Reinforcement of Financial Base

9

Examples of Initiatives in CSR andEnvironmental Activities

・Disposed a retail property and a residential property (part of the land) with the intention of further reinforcing stability andenhancing the quality of the portfolio● Cash Distribution per Unit
(yen)

6,693

6,543

6,411

6,286

5

・Acquired 4 residential properties through the property pipelines of the Sekisui House GroupNet income(million yen)

Performance Highlights

・Conducted early repayment of an existing loan totaling ¥1.5 billion in September 2016 by utilizing part of proceeds from
disposition of a retail property

23rd FP (Forecast) 24th FP (Forecast)

2,814

4

・Conducted refinance of existing loans totaling ¥10 billion that matured in August 2016

Sept. 2017

6,286

To Our Unitholders

・Operating revenue: ¥6,693 million, operating income: ¥2,739 million, net income: ¥2,192 million, provision for reserve for
reduction entry: ¥8 million

Mar. 2017

Operating income (million yen)

3・Occupancy ratio (entire portfolio): 96.8% (at end of 22nd fiscal period (September 30, 2016))
Status of Portfolio Management

Settlement Date
Operating revenue (million yen)Catapulting on this public offering, the Investment Corporation will proactively implement measures for the new Phase III of its
growth strategy, as announced in May 2016, with an ongoing effort to maximize the interest of its unitholders.
We appreciate your continued support as in the past.

¥2,14522 Financial Section (Audited)
23 Financial Statements
I . Balance Sheet
II . Statement of Income and Retained Earnings
III. Statement of Changes in Net Assets
IV. Statement of Cash Distributions
V . Statement of Cash Flows

29 Notes to Financial Statements
50 Independent Auditor’s Report

10 Residential Portfolio Map

51 Overview of the Investment Corporation and Asset Management Company

11 Management Discussion and Analysis

53 Unitholders Information

4Portfolio Management
Changes in Asset Size

Endeavors to Reduce Costs of Investment Properties

The Investment Corporation acquired 4 properties from the Sekisui House Group at the beginning of the 22nd fiscal period, achieving the asset sizeof 200 billion yen. Meanwhile, the Investment Corporation disposed part of the land of Esty Maison HIGASHISHINJUKU in July 2016 and b-town
MINAMIAOYAMA in September 2016. These transactions left the asset size at 199.1 billion yen at the end of the 22nd fiscal period, with the ratioof residential properties at 98.1% against only a single retail property remaining in the portfolio.
Subsequently, the Investment Corporation acquired 2 properties from Sekisui House by using proceeds from issuance of new investment units
through public offering. As of December 31, 2016, the asset size stood at 207.6 billion yen with the ratio of residential properties at 98.2%.

Acquisition price(billion yen)

Number of properties(properties)

250

125
Residence (number of properties)

Other real estate in trust (retail property) (number of properties)

Residence (acquisition price)

Other real estate in trust (retail property) (acquisition price)

Changed power supply companies for some properties in order to reduce electricity use costs in common areas.
RegionProperty name

Properties in areas
covered by Tokyo
Electric Power Company

Esty Maison AZABUNAGASAKA and

Properties in areas
covered by Kansai ElectricPower Company Total

Esty Maison KYOBASHI and

11 other properties

Introduced at 54.5%

110 residential
60 properties ofproperties
in total

Total

200

47 other properties

Electricity use costs
Reduction rate
after change (estimate)Previous electricity
use costs

35

32

7.8％

Approx.
millionyen / year

14

9.5％

millionApprox.
yen / year

46

8.3％

Approx.
millionyen / year

Approx.
millionyen / year

Approx.
millionyen / year

15

Approx.
millionyen / year

millionApprox.
yen / year

50

Approx.
millionyen / year

Expected amount ofannual decrease

Approx.
millionyen / year

2.7

1.4
4.2

100
・ No special cost burden with the change

150・ Decrease in the electricity use costs contributes

in power supply companies

75

directly to the improvement of portfolio profitability(Note) “Expected amount of annual decrease” through introduction of new power supply companies are figures calculated by the Asset Management Company based on proposal materials prepared by new power supply companies.

100

101.0 110.2 128.7 141.4 151.7 171.0 188.7 191.0 193.8 199.1 207.6
billion yen

billion yen

billion yen

billion yen

billion yen

billion yen

billion yen

billion yen

billion yen

billion yen

billion yen

properties

properties

properties

properties

properties

properties

properties

properties

properties

properties

properties( 60 ) ( 66 ) ( 77 ) ( 89 ) ( 95 ) ( 99 ) ( 107 ) ( 110 ) ( 108 ) ( 111 ) ( 113 )0(Reference) Status of the Residential Portfolio
End of 21st FP (Mar. 31, 2016)
Residential portfolio (totaling 106 properties)

25■ Greater Tokyo / Major Urban Areas0
End of Mar. End of Sept. End of Mar. End of Sept. End of Mar. End of Sept. End of Mar. End of Sept. End of Mar. End of Sept.
As of
2012
2012
2013
2013
2014
2014
2015
2015
2016
2016
December 31,(13th FP)
(14th FP) (15th FP) (16th FP) (17th FP) (18th FP)(19th FP)
(20th FP)
(21st FP)
(22nd FP)
2016

Diversification status
by area50

50

Changes in Occupancy Ratio

97.2
97.0
95

96.6
96.5

100.0

100.0

96.2

96.4

96.0

96.3

100.0

96.4
96.2

100.0

100.0

96.8

96.3

96.7

96.2

Diversification statusby property age

100.0

Diversification status
by walking distance to station

100

100.0

Stable occupancy is maintained continuously
Other real estate in trust (retail property)

Entire portfolio

90

21st FPEnd of Apr. 2016

End of May 2016

End of June 2016

End of July 2016

End of Aug. 2016

End of Sept. 2016

22nd FP(Note) The occupancy ratio in the above graph indicates the ratio of total leased area to the total leasable area in each category for the properties of the corresponding category held by the Investment Corporation
as of the end of each month from March 2016 to September 2016, rounded to the first decimal place.

5

28.8％

■ Major Cities Nationwide (Classified according to the area where each property is located (based on the acquisition price))

28.8％
Greater Tokyo

71.2％

3.9％

27.6％
Greater Tokyo

67.2％

3.8％

71.2％

8.1％

Greater Tokyo

67.4％

3.6％

72.4％

10.4％

Averageproperty age

9.8 years

42.4％

68.7％

14.1％

Averageproperty age

41.4％
49.4％

9.7 years

Averageproperty age

39.7％
48.2％

9.3 years

46.2％■ Within 3 minutes ■ More than 3 minutes to within 5 minutes ■ More than 5 minutes to within 10 minutes ■ More than 10 minutes (Classified according to the walking minutes from station for each property (based on the acquisition price))

9.4％

9.1％

32.6％

Within10-minute walk

27.9％
■ Less than 30m2

Diversification status
by floor area

Residence

End of Mar. 2016

■ Greater Tokyo / Other Urban Areas

As of December 31, 2016
Residential portfolio (totaling 112 properties)■ Less than 5 years ■ 5 years to less than 10 years ■ 10 years or more (Classified according to the property age with December 31, 2016 as the reference date (based on the acquisition price))

In the 22nd fiscal period, the Investment Corporation conducted leasing activities with a focus on the optimum balance of occupancy and rent of each
property and each unit. Consequently, the occupancy ratio of the entire portfolio was 96.5% on average throughout the period and stood at 96.8%
as of the end of the 22nd fiscal period, continuing to stay at high levels similar to the preceding fiscal period.
（％）

End of 22nd FP (Sept. 30, 2016)
Residential portfolio (totaling 110 properties)

90.6％

27.4％

30.2％

■ 30m2 to less than 50m2

23.9％

37.9 ㎡

91.0％

Within10-minute walk

26.2％

■ 50m2 to less than 100m2

35.6％

91.3％

30.7％

0.7％
Average area
per unit

25.0％

Within10-minute walk

8.7％
32.8％

29.5％

■ 100m2 or more (Classified according to the area of each residential unit (based on the number of leasable residential units))

23.6％

0.6％
Average area
per unit

50.5％
25.2％

37.8 ㎡

23.4％

0.6％
Average area
per unit

50.6％
24.6％

37.6 ㎡

51.4％(Note 1) “Average property age” is calculated by seeking the weighted average of the building age of each property (with December 31, 2016 set as the base date) with the investment ratio calculated based on the acquisition price,rounded down to the nearest first decimal place.
(Note 2) “Average area per unit” is calculated based on the total leasable residential area owned properties and the total number of leasable residential units as of each point of time, rounded down to the nearest first decimal place.

6

Further Reinforcement of Financial Base
Changes in Period-Average Borrowing Cost Rates and Average Remaining Period of Borrowings

Status of Financial Soundness
As an indicator demonstrating the stability of its financial base, the Investment Corporation has been granted the following credit ratings from two
Japanese rating agencies. Moreover, the Investment Corporation is working to maintain the ratio of fixed interest rates, the ratio of long-term borrowings and the average remaining period of borrowings at current levels from the perspective of the stability of its financial base.

Status of Credit
Ratings

Japan Credit Rating Agency, Ltd. (JCR)

AA-（Stable）

Rating and Investment Information, Inc. (R&I)［Long-term issuer rating］(as of December 31, 2016)

Ratio of fixed interest rates

90.6％

Ratio of long-term borrowings

End of the 22nd FP (September 30, 2016)［Issuer rating］

97.2％

A＋（Stable）

End of the 22nd FP (September 30, 2016)

（％）
1.50

4.3

Average remaining period of borrowings

The Investment Corporation is conducting fund procurement with an intention to reinforce its financial base by reducing borrowing cost rates whileworking to lengthen borrowing periods under the low-interest rate environment. In the 22nd fiscal period, the Investment Corporation refinanced 10
billion yen in floating interest rate loans maturing in the fiscal period, of which 5.5 billion yen was refinanced to longer-term loans with fixed interest
rates that were lower than the average procurement interest rate as of the end of the 21st fiscal period. The period-average borrowing cost rate for the
22nd fiscal period stood at 0.95%, and the average remaining period of borrowings was 4.3 years as of the end of the fiscal period.

years

End of the 22nd FP (September 30, 2016)(Note 1) “Ratio of fixed interest rates” includes the interest rates of borrowings that have been practically fixed by concluding interest rate swap contracts, and “ratio of long-term borrowings” includes current portion of long-term loans
payable within one year. The ratios are rounded to the first decimal place.
(Note 2) “Average remaining period of borrowings” is the remaining period of interest-bearing debt to the repayment dates weighted average by the balance of interest-bearing debt, and is rounded down to the first decimal place.
The same follows hereafter.

1.25 %

1.25

4.9 years

1.20 %
4.5 years

Conclusion of Commitment Line Contract
As of October 7, 2016, the Investment Corporation concluded a commitment line contract with three Japanese megabanks in order to secure flexible
and stable means for procuring funds.

1.09 %

1.00

3.1 years

Date of contract

10.0 billion yen

October 7, 2016

5.0

4.3 years

4.2 years

Maximum commitment line amount

Average remaining
period of borrowings(right axis)

Period-average borrowing
cost rate (left axis)

1.38 %(year)
6.0

1.04 %

4.1 years

1.02 %

4.3 years
4.0

1.01 %

0.95%

3.2 years

0.75

Use of Funds

3.0● New property acquisitions● Refinancing (including redemption

0.50

of investment corporation bonds)

Commitment line period

Counterparty

From November 1, 2016
to October 31, 2017

Mizuho Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation● Renovation/repair work of

FP endedMar. 31, 2013
(15th FP)FP ended
Sept. 30, 2013
(16th FP)FP endedMar. 31, 2014
(17th FP)FP ended
Sept. 30, 2014
(18th FP)FP endedMar. 31, 2015
(19th FP)FP ended
Sept. 30, 2015
(20th FP)FP endedMar. 31, 2016
(21st FP)FP ended
Sept. 30, 2016
(22nd FP)

2.0

(Note) “Period-average borrowing cost rate” is calculated by using the formula below and is rounded to the second decimal place:
Period-average borrowing cost rate = Period borrowing cost (annualized) / Balance of period-average interest-bearing debt
Borrowing cost = Interest expenses (excluding break funding cost) + borrowing related expenses + interest expenses on investment corporation bonds

owned real estate

Status of Bank Formation
Maturity Ladder (as of End of the 22nd FP (September 30, 2016))
The Investment Corporation is promoting to diversify repayment dates of its borrowings with an aim to further enhance the stability of its financial base. Goingforward, it will work to flatten the repayment amount for each fiscal period within the maximum commitment line amount of 10 billion yen as a benchmark.
(million yen)

12,000Maximum
commitmentline amount

10,00010,0009,500
8,000

Early repayment asof Sept. 30, 2016

1,500
3,000

4,000

FP ended
Sept. 30, 2016
(22nd FP)FP endingMar. 31, 2017
(23rd FP)

9,900

8,792

6,100

Short-term loans payable

4,000

8,382

2,100

6,792

Investment corporation bonds

9,830

9,500
8,100

5,500

2,500
2,705

Long-term loans payable

2,000

2,000

7

2,500

5,705

6,000

0

10,882

Refinanced into
short-termborrowings

4,400

3,000

5,400

Lengthened theloan periods
through refinancing

4,900

4,100
6,500

3,000

3,600

1,900

FP ending
FP ending
FP ending
FP ending
FP ending
FP ending
FP ending
FP ending
FP ending
FP ending
FP ending
FP ending
FP ending
FP ending
FP ending
FP ending
FP ending
Sept. 30, 2017 Mar. 31, 2018 Sept. 30, 2018 Mar. 31, 2019 Sept. 30, 2019 Mar. 31, 2020 Sept. 30, 2020 Mar. 31, 2021 Sept. 30, 2021 Mar. 31, 2022 Sept. 30, 2022 Mar. 31, 2023 Sept. 30, 2023 Mar. 31, 2024 Sept. 30, 2024 Mar. 31, 2025 Sept. 30, 2025
(24th FP)
(25th FP)
(26th FP)
(27th FP)
(28th FP)
(29th FP)
(30th FP)
(31st FP)
(32nd FP)
(33rd FP)
(34th FP)
(35th FP)
(36th FP)
(37th FP)
(38th FP)
(39th FP)
(40th FP)The Investment Corporation has constructed the bank formation comprising 17 financial institutions centering on the three Japanese megabanks, based on
the credibility of Sekisui House.
The borrowing status of the Investment Corporation as of September 30, 2016 is as follows.
Outstanding Balance

Share
比率
（％）
(%)

Mizuho Bank, Ltd.

17,001

18.0

Sumitomo Mitsui Banking Corporation

16,741

17.8

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

10,75011.4

Mizuho Trust & Banking Co., Ltd.

8,030

8.5

Sumitomo Mitsui Trust Bank, Limited

6,850

7.3

Mitsubishi UFJ Trust and Banking Corporation

6,592

7.0

Development Bank of Japan Inc.

6,241

The Norinchukin Bank

4,752

Resona Bank, Limited.

4,550

The Bank of Fukuoka, Ltd.

2,400

Financial Institution(million yen)

5.0
4.8
2.5
2.3

Shinkin Central BankThe Senshu Ikeda Bank, Ltd.

1,300

1.4

The Shizuoka Bank, Ltd.

1,300

The 77 Bank, Ltd.

1,300
1,300

1.4

The Hiroshima Bank, Ltd.
The Yamaguchi Bank, Ltd.
Total debt

1,300
94,209

1.7

1.4
1.4
1.4
100.0

1.4
1.4

2.3
2.5

1.4

1.4

18.0
4.8

6.6

2,200
1,600

Aozora Bank, Ltd.

1.4
1.7

5.0
17.8

6.6
7.0
7.3

8.5

11.4

Unit: %

8

Sekisui House SI Residential Investment Corporation

Examples of Initiatives in CSR and Environmental Activities
Aiming to realize its basic principle of “providing high-quality residences through the J-REIT scheme” and “creating affluent and fulfilling
lifestyles,” the Investment Corporation conducts real estate investment management with due consideration given to the environment, society andgovernance, in accordance with the “Sustainability Vision” advocated by Sekisui House. The Investment Corporation is conscious of its societal
responsibilities, and has established sustainability policy and objectives which it complies with and implements across the breadth of its operations. Major
examples of its initiatives are presented below.

LED light fixture replacement work in common areas

Intended to reduce electricity
consumption and greenhouse gas (CO2)emissions in common areas
22nd fiscal period ended September 2016
Newly implemented at

5

Implemented at a total of■

25 properties

Expected decrease of approx.

474ton annually

Major Cities Nationwide(Kyoto City, Sapporo City, Kobe City and other areas)

Intended to reduce electricity
consumption and greenhouse gas (CO2)emissions in exclusive areas

140

Implemented at a total of

Electricity consumption (cumulative total):

Greenhouse gas emissions (cumulative total):

Major Cities Nationwide (Nagoya City)

Energy-saving conversion of air conditioners in exclusive areas

Newly implemented atproperties

912,793kwh annually

In order to mitigate the risks associated with unipolar concentration of the portfolio, including risks related to the local economy and earthquakes, theInvestment Corporation positions Greater Tokyo / Major Urban Areas as the focused investment area while conducting diversified investment in Greater
Tokyo / Other Urban Areas and Major Cities Nationwide.

Sapporo City, Hokkaido

3 properties

22nd fiscal period ended September 2016
units

393 units

Prime Maison HIGASHISAKURAGreater Tokyo / Major Urban Areas

Prime Maison GOKISO
Prime Maison ODORI KOEN

Major Cities Nationwide (Osaka City)

Total

Comparison of air conditioning units with
“2 Stars” energy efficiency and those with
“4 Stars” energy efficiency

Expected decrease of approx.

■

Residential Portfolio Map

Management that considers
the environment and society■

Greater Tokyo / Other Urban Areas

Electricity consumption:

Granmast KANAZAWA NISHIIZUMIExpected annual reductionof approx. 13%

■

Total

Greenhouse gas emissions:

Expected approx. 112kg annual reduction

Kanazawa City, Ishikawa

Realize a sustainable society
Prime Maison KITATANABE

Prime Maison YUHIGAOKA

Provide high-quality residences
through the J-REIT scheme
Five properties acquired DBJ
Green Building Certification

70 properties

Kyoto City, Kyoto

1 property

Continued participation in the 2016GRESB sustainability survey

Osaka City, Osaka

1 property

Nagoya City, Aichi

9 properties

6 properties

Major Cities Nationwide

Total

36 properties

10 properties

Greater Tokyo / Other Urban Areas

Fukuoka City, Fukuoka

Certification rank

Acquired superior “Green Star” rating in the 2016 GRESB

9 properties

sustainability survey and was selected as “Sector Leader”(ranked first) in Asia’s Residential Sector, both for the（4stars）

Prime Maison YOKOHAMA NIHON-ODORIYokkaichi City, Miesecond consecutive year Also acquiredin the GRESB rating that was introduced in fiscal 2016

Prime Maison SHINAGAWA

Certification rank

Certification rank

（3stars）（2stars）

Prime Maison GINZA EAST

DBJ Green Building Certification

Major Cities Nationwide (Fukuoka City)

Greater Tokyo / Major Urban Areas

Prime Maison MUSASHINONOMORIMAST LIFE HINO

Prime Maison GINZA EAST

Prime Maison EBISU

Esty Maison OJIMA

Participation in GRESB sustainability survey
MAST HAKATA

9

1 property

2“4 Stars” (five-level rating with the highest being “5 Stars”)

Prime Maison GOTENYAMA EAST

Kobe City, Hyogo
properties

Prime Maison CENTRAL PARK

Prime Maison GOTENYAMA EAST

10

Sekisui House SI Residential Investment Corporation

Management Discussion and Analysis
1. Changes in Operating Results and Other Management Data
Fiscal Period

Operating revenue(Rent revenue - real estate)
Operating expenses

19th Fiscal Period

20th Fiscal Period

21st Fiscal Period

22nd Fiscal Period(April 1, 2014 September 30, 2014)(October 1, 2014 March 31, 2015)(April 1, 2015 September 30, 2015)(October 1, 2015 March 31, 2016)(April 1, 2016 September 30, 2016)

Sekisui House SI Residential Investment Corporation (the “Investment Corporation”) is an investment corporation with Sekisui House, Ltd. (“Sekisui House”), a leading
company in the housing industry, serving as the main sponsor (Note 1), and has worked to establish a stable portfolio primarily comprising residential properties.

mm yen

5,591

6,286

6,411

6,543

6,693

mm yen（5,591）（6,134）（6,330）（6,332）（6,674）At the 6th General Meeting of Unitholders held on June 11, 2014, the Investment Corporation’s Articles of Incorporation was partially revised to remove retail properties,
which had previously been identified as a supplementary investment target, from its investment horizons and to solely invest in real estate related assets that are mainly used
(Note 2) as residences. With the revision, which was aimed at shifting the Investment Corporation into a REIT specialized in residential properties, its investment targets werelimited to residential properties. At the same time, it was resolved to change the Investment Corporation’s trade name from Sekisui House SI Investment Corporation to
Sekisui House SI Residential Investment Corporation in order to strongly demonstrate the shift of its investment targets.

mm yen

3,127

3,472

3,667

3,801

3,953

mm yen（2,560）（2,835）（2,975）（3,065）（3,218）Operating income

mm yen

2,463

2,814

2,743

2,741

2,739

Ordinary income

mm yen

1,952

2,305

2,211

2,214

2,193

(Expenses related to rent business )Net income(a)

mm yen

1,950

2,302

2,209

2,210

2,192

Total assets(b)

mm yen176,892

194,035

195,280

198,290203,257%（+12.8）（+9.7）（+0.6）（+1.5）（+2.5）

mm yen81,01091,227

91,213

91,26391,292%（+15.6）（+12.6）（-0.0）（+0.1）（+0.0）

mm yen79,05988,92588,92588,92588,925(Period-on-period variation)(c)

Net assets(Period-on-period variation)
Unitholders' capital
Investment units issued

(d)

units

915,240

1,018,110

1,018,110

1,018,110

1,018,110

Net assets per unit(c)/(d)yen

88,51289,60589,59089,63989,668

Total cash distributions(e)

mm yen

1,950

2,224

2,160

2,163

2,183

Cash distribution per unit(e)/(d)

yen

2,131

2,185

2,122

2,125

2,145

yen

（2,131）（2,185）（2,122）（2,125）（2,145）(Earnings distribution per unit )(Distribution in excess of earnings per unit )

yen

（-）

（-）

（-）

（-）

（-）

%

1.2
（2.3）

1.2
（2.5）

1.1
（2.3）

1.1
（2.2）

1.1（2.2）(Note 2)

%

2.6
（5.2）

2.7
（5.4）

2.4
（4.8）

2.4
（4.8）

2.4（4.8）(c)/(b)

%

45.8

47.0

46.7

46.0

44.9

（+1.1）（+1.2）（-0.3）（-0.7）（-1.1）

Ordinary income to total assets(Note 2)Return on unitholders’ equity
Unitholders’ equity ratio(Period-on-period variation)
Distribution payout ratio(Note 3)

%

99.9

96.6

97.7

97.8

99.6

(Note 4)

properties[Other reference information]
Number of investment properties
Total leasable area
(Note 4)

Period-end occupancy ratio
Depreciation
Capital expenditures
Leasing NOI (net operating income)(Note 2)

(1) Brief History of the Investment Corporation

18th Fiscal Period

Unit

Accounting Period

2. Asset Management Status for the 22nd Fiscal Period

99

107

110

108

111

2

m

357,494.91

399,249.82

400,210.45

368,622.60

376,936.98

%

97.1

97.4

96.7

97.2

96.8

mm yen

1,252

1,369

1,431

1,468

1,582

mm yen

68

153

97

293

302

mm yen

4,283

4,669

4,786

4,735

5,038

(Note 1) Consumption tax is not included in operating revenue, etc.
(Note 2) The indicators are calculated by using the following methods. In addition, annualized figures in accordance with the number of management days are provided in the parenthesis in parallel.

The Investment Corporation’s basic strategy is to build a portfolio that is centered on the high-quality rental residential properties developed by the Sekisui House Group (Note3) with Sekisui House as the core company. Under this strategy, it works to expand the asset size with a focus on maximizing the interests of its investors as well as toreinforce its financial base. By doing so, the Investment Corporation aims to become a leading company among REITs investing in residential properties.
(Note 1) “Sponsors” refers to Sekisui House and Spring Investment Co., Ltd. (“Spring Investment”), the shareholders of Sekisui House SI Asset Management, Ltd., to which the Investment Corporation entrusts the management of its assets (the “Asset Management Company”). Of theoutstanding shares of the Asset Management Company, 75% is held by Sekisui House and 25% by Spring Investment. As Sekisui House owns the majority of the Asset Management Company’s equity interest, it is described as the “main sponsor.” The same follows hereafter.
(Note 2) “Mainly used” means that a majority of the total exclusive area of the relevant real estate-related asset is allocated for a specific use. The same follows hereafter.
(Note 3) The Sekisui House Group refers to the group encompassing Sekisui House and its 205 subsidiaries and 23 affiliated companies (as of the end of January 2016). The same follows hereafter.

(2) Operating Environment and Asset Management Results1) Operating Environment
During the 22nd fiscal period, the Japanese economy remained on course for a modest recovery, although sluggishness was observed in exports and production due to theimpact of slowdown in emerging economies, among other factors.
The Tokyo Stock Exchange (TSE) REIT Index, which had remained flat at around 1,900 points, temporarily soared to 1,980 points in April 2016, partly due to expectations for
additional monetary easing measures possibly taken by the Bank of Japan (BOJ). In May, the figure fell in stages because of such factors as the impact of the negativeinterest rate policy by the BOJ finishing the first round, heightened uncertainty of the domestic economy and profit-taking sale by foreign investors associated with thestronger yen. It further dropped in the latter half of June because of the risk-averse mindset enhanced globally by the U.K.’s decision to leave the European Union (EU), or
Brexit. The index rebounded, however, as the long-term bond yields stably remained low in the negative domain while distribution yields increased amid the overall stock
market facing difficult conditions, among other reasons. By the end of June, the figure regained to the level before the Brexit decision, and subsequently remained solid at the
1,800 points level. However, the BOJ’s Monetary Policy Meeting held on September 20 and 21 decided to introduce the Quantitative and Qualitative Monetary Easing with
Yield Curve Control and announced that long-term yields of Japanese government bonds will remain around zero percent. Given this, the TSE REIT Index dropped,
temporarily falling below 1,800 points for the first time in three months. Later, the Index remained on a weak note at the 1,700 points level, against the backdrop of the longterm bond yields increasing on the observation of the U.S. interest rate hike to be made in October or thereafter, etc.
As for the land price trend, the national average dropped at a decelerated rate of decrease for residential land and turned to a level-off for commercial land from thedownward trend that had continued through last year, according to the government’s Prefectural Land Price Survey as of July 1, 2016. Presumably, this is a result of themarket being bolstered by housing demand encouraged by low interest rates and housing mortgage tax reduction and other measures, and also reflects such factors as
growing demand for stores and hotels due to an increase in foreign tourists. By area, the average in the three major metropolitan areas (the Greater Tokyo, Osaka Area andNagoya Area) indicates a generally stronger upward trend in the commercial land price. While the residential land price continued to rise at a pace that is moderate but
comparable with the previous year, the upward trend was observed to slow in the Nagoya Area. In regional areas, both the residential land and commercial land prices in thefour regional cities (Sapporo-shi, Sendai-shi, Hiroshima-shi and Fukuoka-shi) showed an increase at a higher pace than in the three major metropolitan areas, and areas otherthan these cities also demonstrated a lower rate of price decrease.
As for the rental housing market, the vacancy rate increased for rental apartments in the Greater Tokyo as supply became unbalanced versus demand due to an increase inconstruction of wooden and light gauge steel-framed rental apartments as countermeasures against the inheritance tax. With the rental condominiums (mainly withreinforced concrete structures) owned by J-REITs, however, both the occupancy ratio and rent levels have remained stable. In the Greater Tokyo/Major Urban Areas, theInvestment Corporation’s focused investment area, the supply and demand environment is expected to remain favorable for some time, as continued population inflow fromother areas allows expectations for stable demand for rental condominiums while supply continues to stay at a low level.

2) Asset Management Results

Ordinary income to total assets

Ordinary income / Average total assets
Average total assets = (Period-beginning total assets + Period-end total assets) / 2

A. Measures for maximizing the interests of unitholders

Return on unitholders’ equity

Net income / Average net assets
Average net assets = (Period-beginning net assets + Period-end net assets) / 2[Changes in the asset size]

Leasing NOI

Leasing income for the fiscal period(Rent revenue-real estate – Expenses related to rent business) + Depreciation(Note 3) Distribution payout ratio is calculated by using the following method, and is rounded down to the nearest specified unit.
Cash distribution per unit (excluding distribution in excess of earnings per unit) / Net income per unit
For the 18th and 19th fiscal periods, however, the following method is employed as the Investment Corporation issued new investment units in the periods.
Total cash distributions / Net income(Note 4) Number of investment properties indicates the number of properties that are considered to be single units respectively in light of common sense. In addition, the period-end occupancy ratio indicates the ratio of the total leased area to the total leasablearea as of the account closing date.

The Investment Corporation started the 22nd fiscal period with management of 108 properties it owned as of March 31, 2016, having total acquisition price of 193,890 million
yen (excluding, however, miscellaneous acquisition related expenses, fixed property taxes, city planning taxes, consumption taxes and local consumption taxes; the same follows
hereafter). The Investment Corporation acquired four residential properties in April 2016 (total acquisition price of 6,810 million yen). With the acquisition, the total acquisition
price of the properties owned by the Investment Corporation amounted to 200.7 billion yen, reaching the asset size of 200 billion yen that it laid out as a goal of its growthstrategy. Subsequently, the Investment Corporation disposed part of the land of a residential property in July 2016 and one of the existing retail properties (Note) in September
2016 (total acquisition price of 1,536 million yen). As a result, the properties owned by the Investment Corporation as of the end of the fiscal period under review totaled 111
properties (110 residential properties and a single retail property), with the total acquisition price amounting to 199,163 million yen (195,342 million yen for residential properties
and 3,820 million yen for the retail property).
(Note) Existing retail properties refer to real estate-related assets that are mainly used as retail facilities and that the Investment Corporation continuously holds. The same follows hereafter.

11

12

Sekisui House SI Residential Investment Corporation

In addition, in order to understand where its environmental awareness initiatives in comparison with others and use as reference for its future endeavors, the Investment
Corporation has worked to obtain environmental recognition and certifications by external assessment organizations.

The table below indicates the properties acquired or disposed during the 22nd fiscal period.

<Newly acquired properties>
Property No.

Property Name

Location

Acquisition Price(million yen)

Acquisition Date

Residence-114

Prime Maison SHIBUYA

Shibuya, Shibuya-ku, Tokyo

2,190

April 1, 2016

Residence-115

Prime Maison HATSUDAI

Hatsudai, Shibuya-ku, Tokyo

2,700

April 1, 2016

Residence-116

Esty Maison UEMACHIDAI

Uehonmachi-nishi, Chuo-ku, Osaka-shi, Osaka

950

April 1, 2016

Residence-117

Esty Maison KOBE-SANNOMIYA

Onoe-dori, Chuo-ku, Kobe-shi, Hyogo

970

April 1, 2016

Location

Disposition Price(million yen)

Esty Maison HIGASHISINJUKU (part of the land) (Note)

Shinjuku, Shinjuku-ku, Tokyo

23

July 29, 2016b-town MINAMIAOYAMAMinami-Aoyama, Minato-ku, Tokyo

1,560

September 16, 2016

Property No.

Property Name

Residence-75

Disposition Date

(Note) The Investment Corporation disposed part (measured area: 6.62m2) of the land of Esty Maison HIGASHISHINJUKU[Enhancing a residential portfolio centering on the property pipelines with the Sekisui House Group]
Utilizing the property pipelines of the Sekisui House Group, the Investment Corporation acquired two Prime Maison Series properties from Sekisui House in April 2016,
and acquired two residential properties from Sekiwa Real Estate Kansai, Ltd., the first acquisition from the company, which it had held in recognition of their values. On
the other hand, the Investment Corporation disposed one of its existing properties in September 2016. Consequently, the Investment Corporation owns only a single
existing retail property as of December 31, 2016.
Moreover, in October 2016 after the 22nd fiscal period was closed, the Investment Corporation issued new investment units through public offering, and used the funds
from the issuance to acquire two Prime Maison Series properties from Sekisui House in November 2016. As a result of these activities, the asset size of the Investment
Corporation’s portfolio stood at 207.6 billion yen in terms of the total acquisition price as of December 31, 2016 with the ratio of residential properties increasing from
97.2% at the end of the 21st fiscal period to 98.2% as of December 31, 2016.
Through these endeavors to enhance the residential portfolio centering on the property pipelines with the Sekisui House Group, the Investment Corporation worked tomitigate management risks in the future, successfully reinforcing the stability of the earning base of its portfolio even further.
B. Implementation of Leasing Activities and Measures to Enhance Property Value[Thoroughly managing and administrating leasing activities]
For the properties it owns, the Investment Corporation successfully kept the occupancy ratio of the entire portfolio at as high as 96.8% as of the end of the 22nd fiscal
period (September 30, 2016), and worked to enhance earnings by implementing measures to increase cash flows, such as raising rents and reducing downtime. In theopinion of the Investment Corporation, such a high occupancy ratio is an outcome of its highly competitive portfolio centering on residential properties that are “relatively
newly built” and “close to railroad stations” and comprise “Single and Compact Type” units, and is a result of having thoroughly implemented leasing management.
Specifically, as part of its leasing strategy, a system was established to allow management and control of the latest progress status in lease contracts and cancellations.
Moreover, collaboration with property management companies was strengthened to accelerate setting of leasing terms and conditions. This enabled timely grasp of thetenant needs trends, helping to shorten downtime. For residential units that had been vacant for a long time, flexible arrangements were made, such as modifying leasing
terms and conditions to more appropriate ones, in an effort to increase the occupancy ratios and generate earnings as soon as possible. For highly competitive
properties and residential units, endeavors were made to increase earnings by proactively taking such measures as raising rents upon tenant replacement and contract
renewals and obtaining key money upon concluding new contracts.
[Thoroughly controlling rent business costs]
On top of securing earnings based on thorough leasing management, the Investment Corporation and the Asset Management Company conduct thorough control of rent
business costs in order to secure stable cash flows.
Specifically, in accordance with liberalization of electricity retail sales in Japan, electric power suppliers were switched for some properties to those that provide power
supply less inexpensively than the current suppliers. In addition, LED light fixtures in common areas were continuously replaced to achieve cost reductions. Efforts werealso made to reduce costs by thoroughly examining the details of works to restore units to original conditions.
[Thoroughly implementing quality control of investment properties]
The Investment Corporation and the Asset Management Company aim to maintain and improve the occupancy ratios and rent levels by implementing optimum repairs
intended to maintain and enhance the value and competitiveness of the investment properties.
In the fiscal period under review, a renovation work was conducted for the residential units of Esty Maison GINZA, which is expected to achieve internal growth including
a rise in rents, to modify their floor plans and specifications to meet what tenants need. In addition, large-scale repairs based on the results of deterioration diagnosis
surveys, etc. were conducted systematically for three properties in an effort to reinforce the appeal of the owned properties.
Moreover, in accordance with an increase in the number of investment properties to manage, the Asset Management Company separated operations on developing long-term
repair plans as well as investigation and management, etc. of repair works for the investment properties, which had been the duties of the Asset Management Department, inthe 22nd fiscal period, and newly established the Engineering Management Department as of July 1, 2016 as a department specifically engaged in such operations.
C. Initiatives on CSR and Realizing a Sustainable Society
The Investment Corporation established its environmental basic policy, sustainability policy and environmental targets in the 19th fiscal period ended March 2015. Basedon these policies, the Investment Corporation has cooperated with Sekisui House, which was the first in the housing industry to be recognized as an Eco-First Company
by the Ministry of the Environment, to promote initiatives for energy-saving and environmental awareness in response to the requirements of the times through suchmeasures as enhancing energy efficiency of its owned properties and acquiring environmentally friendly properties.
In the 22nd fiscal period, the Investment Corporation promoted adoption of energy-efficient air-conditioning units and installation of LED lighting to its properties, which
it had conducted from time to time, as environmental-friendly measures.

13

Moreover, in the sustainability survey for real estate companies conducted in 2016 by Global Real Estate Sustainability Benchmark (“GRESB”)(Note 2), the Investment
Corporation acquired the “Green Star” rating, as it did in 2015, and was selected as “Sector Leader” (ranked first) in Asia’s Residential Sector for the second consecutive year,
the first such achievement among J-REITs investing in residential properties. On top of this, the Investment Corporation obtained “4 Stars” (five-level rating with the highest
being “5 Stars”) in the GRESB Rating that was introduced in 2016 to show a participant’s relative status of comprehensive scores.
Going forward, the Investment Corporation will continue to further promote its initiatives on realizing a sustainable society, including measures to mitigate environmental
burdens, with an aim to achieve its basic principal of “providing high-quality residences through the J-REIT scheme” and “creating affluent and fulfilling lifestyles.”<Disposed properties>

Retail-4

During the fiscal period under review, the Investment Corporation was granted the DBJ Green Building Certification (Note 1) for three of its owned properties (Prime
Maison GINZA EAST, Prime Maison YOKOHAMA NIHON-ODORI and Esty Maison OJIMA) by Development Bank of Japan Inc. Together with the two properties that werecertified in January 2015, the Investment Corporation has obtained the Certification for five properties (of which, three properties were given 4 Stars, a higher rank) to date.

(Note 1) The DBJ Green Building Certification System is designed to mark buildings by using a scoring model originally developed by Development Bank of Japan Inc. and select blue-chip real estate that meets the demands of the times. Its purpose is to promote real properties that
demonstrate environmental performance as well as security measures and disaster prevention measures and take into account the social requirements from various stakeholders surrounding the properties (“Green Buildings”).
(Note 2) The GRESB is a benchmark system established in 2009 primarily by major European pension funds, which played a major role in establishing the Principles for Responsible Investment (PRI), for the purpose of enhancing shareholder value by applying environmental, socialand governance (ESG) considerations to real estate investments.

(3) Summary of Fund Procurement
During the 22nd fiscal period, the Investment Corporation newly borrowed 6,500 million yen in long-term loans payable (loan period: approximately seven years and 11
months) in April 2016, in order to fund property acquisitions. In August 2016, it borrowed 3,600 million yen (loan period: approximately nine years), 1,900 million yen (loanperiod: eight years) and 4,500 million yen (loan period: approximately one year) to fund the refinance of loans totaling 10,000 million yen (comprising loans of 2.8 billion
yen, 1.2 billion yen and 6.0 billion yen with loan period of one year and two months, 11 months and six months, respectively) that matured, in an effort to lengthen
borrowing periods and diversify repayment dates. On the other hand, the Investment Corporation made early repayment of part (1,500 million yen) of the aforementioned
4,500 million yen in a loan with loan period of approximately one year in September 2016 by utilizing proceeds from disposition of an existing retail property.
As a result of the above, the Investment Corporation had the balance of interest-bearing debts standing at 108,709 million yen (3,000 million yen in short-term loans
payable, 91,209 million yen in long-term loans payable (including 12,205 million yen in current portion of long-term loans payable) and 14,500 million yen in investment
corporation bonds) as of September 30, 2016.
In addition, the Investment Corporation has been granted the following credit ratings as of December 31, 2016.
Credit Rating Agency

Issuer Rating

Japan Credit Rating Agency, Ltd. (JCR)

Long-term issuer rating
AA- (Stable)

Rating and Investment Information, Inc. (R&I)

Issuer rating
A+ (Stable)(4) Summary of Business Results and Distributions
As a result of these management efforts, the Investment Corporation posted operating revenue of 6,693 million yen, operating income of 2,739 million yen after
deducting such operating expenses as outsourcing expenses, utilities expenses and asset management fees, ordinary income of 2,193 million yen and net income of
2,192 million yen in the 22nd fiscal period.
Furthermore, the Investment Corporation decided to internally reserve part of the gain on sale of part of the land of Esty Maison HIGASHISHINJUKU it disposed in July
2016 and b-town MINAMIAOYAMA it disposed in September 2016 as reserve for reduction entry by applying to the Special Measures in Case Land or Other Property is
Acquired in Advance in 2009 or 2010 under Article 66-2 of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957; as amended) (the “Special Taxation
Measures Act”). Pursuant to this policy, the Investment Corporation decided to distribute the entire amount of the unappropriated retained earnings after deducting 8
million yen as the provision for reserve for reduction entry, which is within the scope of application to Article 66-2 of the Special Taxation Measures Act, with the aim ofhaving the maximum amount of profit distributions deducted as expenses based on application of the special provisions for taxation on investment corporations (Article
67-15 of the Special Taxation Measures Act).
As a result, the cash distribution per unit came to 2,145 yen for the 22nd fiscal period.

3. Future Management Policies and Vital Issues(1) Investment Environment
Looking ahead, the Japanese economy is anticipated to remain for some time in a state featuring a slower pace of recovery, with exports and production staying
somewhat stagnant due to the impact of slowdown in emerging economies and other factors, according to the Outlook for Economic Activity and Prices (October 2016)by BOJ. Subsequently, as domestic demand will follow an upward trend as a virtuous cycle from income to spending will continue in both the household and corporate
sectors, exports are anticipated to increase gradually in the face of such factors as emerging economies starting to outgrow the slowdown. However, attention must
continue to be paid to the risk of the Japanese economy being pushed downward by the heightened uncertainty in overseas economies, such as the business downswing
in emerging Asian countries including China and in countries exporting natural resources as well as the Brexit (the U.K. leaving the EU).
As for the fund procurement environment, the Monetary Policy Meeting of BOJ held on September 20 and 21, 2016 newly adopted the Quantitative and Qualitative
Monetary Easing with Yield Curve Control, a new framework of reinforced monetary easing, demonstrating the BOJ’s policy to control yield curve of government bonds.
In its policy, the BOJ targets to have long-term bond yields remain at around zero percent. Accordingly, it is expected that, by implementing this policy, the BOJ will keep
the low interest rate environment while suppressing excessive decreases or increases in long-term bond yields. In the J-REIT market, this is anticipated to lower the riskof rising long-term interest rates.
In the real estate transaction market, investors still remain highly willing to invest, backed by the favorable fund procurement environment, and competition overacquisition continues to be overheated. Although the expected return level has already reached the lowest level before the global financial crisis and there is less room fora further decrease, it is assumed that there will be a further inflow of investment monies into real estate as investment targets that are expected to generate relatively
high returns. As such, real estate prices will presumably rise moderately or stay at a high level.
Based on this view, the Investment Corporation will conduct acquisitions and management of assets by carefully discerning the asset management environment in termsof the business conditions including the future impact of the negative interest rate environment, the supply and demand balance status and the orientations of domestic
and foreign investors.

14

Sekisui House SI Residential Investment Corporation(2) Management Policy and Vital Issues

4. Significant Events Occurring after Settling the 22nd Fiscal Period

A. External Growth Strategy
With an aim to realize maximum value for its unitholders, the Investment Corporation endeavors to build a portfolio that centers on high-quality rental residential properties plannedand developed by the Sekisui House Group, for which Sekisui House, the main sponsor, serves as the core company.

(1) Issuance of New Investment Units
Based on the resolutions made at the board of directors’ meetings held on October 7 and October 19, 2016, the Investment Corporation issued new investment units as

In this endeavor, the Investment Corporation positions Greater Tokyo / Major Urban Areas as the focused investment area as well as the core area of its property portfolio. At thesame time, in order to mitigate the risks associated with heavy concentration of the portfolio on Greater Tokyo such as regional economic risks and earthquake risks, the Investment
Corporation will work to diversify investments to a certain degree as it investigates acquisitions of properties that allow expectations for stable rental demand, from among thoselocated in Greater Tokyo / Other Urban Areas and in Major Cities Nationwide including Major Urban Areas where use of the nationwide networks of the Sekisui House Group is
expected to prove effective as much as in Greater Tokyo / Major Urban Areas. As for the residential types as investment targets, the Investment Corporation will invest primarily inproperties comprised mainly of the Single and Compact Type residences for which relatively high rental demand and profitability can be expected, as well as in properties comprised
mainly of the Family Type residences for which stable earnings can be expected, giving due consideration to area characteristics. The Investment Corporation will also selectively
invest in properties comprised mainly of the Large Type residences after carefully analyzing site environments and such. Moreover, it will invest in student housing, company
housing and serviced housing for the elderly, after making comprehensive and careful analyses.
In terms of the property acquisition routes, the Investment Corporation will focus on utilizing the Sekisui House Group’s ability to supply properties, while also using property
information provided by Spring Investment, the co-sponsor, and endeavoring to acquire properties from outside sources by collecting property information through the proprietary
networks of the Asset Management Company. Even in the real estate market where prices are soaring, the Investment Corporation will acquire properties that it considers tocontribute to enhancing its profitability, in view of the areas and property characteristics, while working to keep the yields at proper levels. By doing so, the Investment Corporation
will aim to steadily achieve expansion of the asset size centering on high-quality rental residential properties.
As for HAMAMATSU Plaza, the sole existing retail property it owns as of December 31, 2016, the Investment Corporation will make efforts to achieve its stable management and, incooperation with Sekisui House, work to enhance the appeal and asset value of the entire facilities while investigating selling the property at an appropriate time. In addition, among
the residential properties it owns, the Investment Corporation will investigate replacement of low-yielding properties or those that are built many years ago and expected to generate
more repair expenses and other costs in the future, in an effort to enhance the quality of its portfolio.
B. Internal Growth Strategy
As stated above, the Asset Management Company newly established the Engineering Management Department in the 22nd fiscal period as a department specifically engaged indeveloping long-term repair plans as well as investigation and management, etc. of repair works for the investment properties. With this, the Asset Management Company will work
to thoroughly conduct quality control of the investment properties owned by the Investment Corporation, including implementation of refurbishments and renovations against aging
and obsolescence of their exclusive and common areas, which hamper leasing, at appropriate times. The Asset Management Company will also conduct a variety of repair works
that are intended to maximize cost performance. Through these measures, it aims to strengthen internal growth.
Moreover, in accordance with full liberalization of electricity retail sales in Japan, electric power suppliers have been switched for some properties, which should reduce costs for the
23rd fiscal period and thereafter. The Investment Corporation will also continuously replace lighting fixtures in common areas to LED lamps, and fully investigate the details andamounts of works to restore to original conditions, in an effort to reduce operational costs. In addition, for the costs related to management operations of owned properties, it will
also take cost reduction measures such as investigating and maximizing their cost performance.
Moreover, the Investment Corporation will further deepen business coordination with the property management companies in order to focus on enhancing occupancy ratios andreducing downtime as well as increasing rents and obtaining key money upon concluding new contracts, while working to maintain and improve the contract renewal ratio andincrease rents upon renewing existing contracts with tenants. By doing so, it will aim to enhance profitability.
For properties it acquires from the Sekisui House Group, the Investment Corporation will, in principle, consign property management services to the Sekiwa Real Estate Group (Note)in charge of the relevant areas in which the said properties are located, in order to improve the occupancy ratio and enhance the operational and administrative efficiency throughthe synergy effect with the Sekisui House Group. Moreover, the Investment Corporation has gradually unified the property management companies involved in the existing
residential properties to the Sekiwa Real Estate group. This is understood to have enabled the Investment Corporation to realize tenant attraction and efficient administration bytaking advantage of the Sekiwa Real Estate Group’s know-how on property management services, backed by the track record of lease management for approximately 576 thousand
units throughout Japan (as of July 31, 2016), and its nationwide networks. Going forward, the Investment Corporation will keep this policy in an aim to maintain and improve its
medium- and long-term performance. Furthermore, in an effort to establish the brand, the Investment Corporation is unifying the property name brands to “Esty Maison”, as a rule,
for residential properties it acquired from other than the Sekisui House Group. By doing so, and in combination with the “Prime Maison” brand for Sekisui House’s rental residential
properties and the “MAST” series brand for the Sekiwa Real Estate Group’s rental residential properties, the Investment Corporation will implement its comprehensive brand strategy
to demonstrate the superior quality of its properties.
(Note) “Sekiwa Real Estate Group” represents a group of companies comprising, as the core, the Sekiwa Real Estate companies (7 companies) and their subsidiaries and affiliates. Furthermore, the “Sekiwa Real Estate companies (7 companies)” refers to
the seven companies of Sekiwa Real Estate, Ltd., Sekiwa Real Estate Kanto, Ltd., Sekiwa Real Estate Tohoku, Ltd., Sekiwa Real Estate Chubu, Ltd., Sekiwa Real Estate Kansai, Ltd., Sekiwa Real Estate Chugoku, Ltd. and Sekiwa Real Estate Kyushu,
Ltd., which are wholly-owned subsidiaries of Sekisui House, and the core companies of the real estate division of the Sekisui House Group that are expanding nationwide presence in Japan. The same follows hereafter.

<Summary of the Investment Corporation’s Major Brands>
Brand Name

Prime Maison

Esty Maison

MAST Series

described below, in order to use the proceeds to fund acquisitions of specified assets and miscellaneous acquisition related expenses. Payment completed on October 26, 2016 forthe investment units issued through public offering. As for the new investment units issued through third-party allotment, Mizuho Securities Co., Ltd., the allottee, notified about
subscribing for the whole of the investment units to be offered (4,160 units). Payment completed on November 14, 2016.
As a result, unitholders’ capital increased to 98,633,978,945 yen, with the number of investment units issued and outstanding totaling 1,105,510 units.

[Issuance of investment units through public offering (public offering)]
Number of investment units outstanding:
83,240 units
Issue price (offer price):
114,855 yen per unit
Total issue price (total offer price):
9,560,530,200 yen
Paid-in amount (issue amount):
111,085 yen per unit
Total paid-in amount (total issue amount):
9,246,715,400 yen
Payment date:
October 26, 2016
Starting date for calculating distributions:
October 1, 2016
[Issuance of investment units by way of third-party allotment]
Number of investment units outstanding:
4,160 units
Paid-in amount (issue amount):
11,085 yen per unit
Total paid-in amount (total issue amount):
462,113,600 yen
Payment date:November 14, 2016
Starting date for calculating distributions:
October 1, 2016
Third party allottee:
Mizuho Securities Co., Ltd.
(Reference Information)

A. New Asset Acquisitions
The Investment Corporation acquired the following properties as of November 1, 2016.
Property No.

Location(Note)

Property Name

Acquisition Price(million yen)

Acquisition Date

Residence-118

Prime Maison SHIROKANE-TAKANAWA

Mita, Minato-ku, Tokyo

4,500

November 1, 2016

Residence-119

Prime Maison ICHIGAYAYAMABUSHICHO

Ichigaya Yamabushicho, Shinjuku-ku, Tokyo

4,000

November 1, 2016

(Note) The location is based on the indication in the registry.

B. Early Repayment of Existing Loans
As of December 9, 2016, the Investment Corporation conducted early repayment of part of the following borrowings.
Drawdown
Date

LenderLoan
Amount(millionyen)

Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

August31,2016

Total

Amount ofBalance at
Early
End of Period
Repayment(million yen)(million(Note 1)yen)

Balanceafter
Repayment
Repayment Interest Rate
Date
(million
yen)

1,500

1,000

600

400

1,500

1,000

600

400

1,500

1,000

600

400

4,500

3,000

1,800

1,200

0.20500%(Note 2)

August31, 2017

Repayment
MethodUse

CollateralLump-sum
repayment
uponmaturity

Funds forrepaymentof existingloans

Unsecured
andunguaranteed(Note 1) The amount of the short-term loans borrowed as of August 31, 2016 was initially 4.5 billion yen. Of the amount, the Investment Corporation made early repayment of 1.5 billion yen as of September 30, 2016.
(Note 2) The interest rate indicates the figure applicable as of the date of early repayment.

C. Establishment of Commitment LineThe Investment Corporation concluded a commitment line contract as of October 7, 2016, as described below.

Logo type

Maximum commitment line amount: 10,000,000,000 yen

Explanation on brand

Brand of Sekisui House

Proprietary Brand of theInvestment Corporation

Brand of the Sekiwa Real
Estate Group

High-quality urban rental condominiums
planned and developed by Sekisui House byutilizing its know-how or in which it invests
in recognition of the value

As a rule, high-quality urban rental
condominiums the Investment Corporationacquired from outside the Sekisui HouseGroup

As a rule, high-quality rental residential
properties planned and developed by the Sekiwa
Real Estate companies (7 companies), which
belong to the Sekisui House Group, or those inwhich they own in recognition of the value(3) Financial Strategy, etc.

November 1, 2016
October 31, 2017

Collateral

Unsecured and unguaranteed

Counterparty

Mizuho Bank, Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Sumitomo Mitsui Banking Corporation

Use of Funds

Funds for property acquisitions, refinancing (including redemption of investment corporation bonds) and renovation/repair work of real estate
the Investment Corporation owns.

D. Change of Asset Management Fee System and Determination of Applicable Fee Rates
With regard to the asset management fees paid to the Asset Management Company by the Investment Corporation, a shift was made to the asset management fee
system that focuses on the linkage with actual operating performance assets under management from the 23rd fiscal period ending March 2017. The fee rates applicablein the new asset management fee system were determined as of October 7, 2016, as described below.
Asset Management Fee System before Change

For the loan-to-value ratio (LTV), which represents the ratio of the balance of borrowings, investment corporation bonds and interest-bearing lease and guarantee deposits to thetotal of assets owned by the Investment Corporation, the Asset Management Guidelines of the Asset Management Company sets the ceiling at 60%. However, as the policy it has
followed to date, the Investment Corporation makes it a basic rule to maintain LTV at a conservative level, with the lower half of the 50% level as the target ceiling for the time being.
Furthermore, the Investment Corporation’s LTV, which stood at 53.5% as of the end of the 22nd fiscal period, is anticipated to be decreased to 50.6% as of December 31, 2016 due
to issuance of new investment units through public offering conducted in October 2016 and early repayment of part (1.8 billion yen) of an existing loan conducted on December 9,
2016.

Classification

Fee Calculation BaseFee Rate[Applicable Rate]

Asset management
fee 1Real estate appraisal
value, etc.

0.4%
per annum

On October 7, 2016 after the 22nd fiscal period was closed, the Investment Corporation concluded a commitment line contract in order to secure flexible and stable means for
procuring funds for acquisition of new properties, repayment of existing loans, redemption of investment corporation bonds and renovation/repair work of properties it owns.

Asset management
fee 2Income before
income taxes

3.0%

For future borrowings, the Investment Corporation will promote further reinforcement of its financial base by continuously taking these measures that contribute to achieving the goal.

15

Start date of commitment line
Ending date of commitment line

Asset Management Fee System after Change
Fee Rate

Fee Calculation BaseAmount of total assets at the end of theimmediately preceding fiscal period

Up to 200 billion yen
Above 200 billion yen

NOI(real estate rental income before depreciation)[Maximum Rate][Applicable Rate]

0.22% per annum

0.15% per annum
0.10% per annum

5.0%

4.0%

16

Sekisui House SI Residential Investment Corporation

5. Itemized Portfolio Assets
Property Name

The following table provides details of the assets (real estate and trust beneficiary interests in real estate as major entrusted property, etc.) owned by the Investment
Corporation as of September 30, 2016.

Property Name

17

Location (residence indication)

Form of Ownership

Total Leasable
Floor Area (m2)

Estimated Valueat End of Period(Note 1)(million yen)Book Value(million yen)

Residence-1

Esty Maison GINZA

3-11-19 Ginza, Chuo-ku, Tokyo

Trust beneficiary interests

5,515.43

6,130

4,737

Residence-3

Esty Maison AZABUNAGASAKA

5-13-12 Roppongi, Minato-ku, Tokyo

Trust beneficiary interests

2,019.10

1,690

1,614

Residence-4

Esty Maison EBISU II

4-13-1 Higashi, Shibuya-ku, Tokyo

Trust beneficiary interests

2,062.10

1,920

1,882

Residence-5

Esty Maison EBISU

1-13-4 Hiroo, Shibuya-ku, Tokyo

Trust beneficiary interests

781.02815

640

Residence-6

Esty Maison KANDA

2-3-4 Kandata-cho, Chiyoda-ku, Tokyo

Trust beneficiary interests

1,706.54

1,500

1,272

Residence-8

Esty Maison KITASHINJUKU

1-28-17 Kita-Shinjuku, Shinjuku-ku, Tokyo

Trust beneficiary interests

1,881.19

1,500

1,170

Residence-10

Esty Maison ASAKUSA KOMAGATA

1-10-9 Komagata, Taito-ku, Tokyo

Trust beneficiary interests

2,978.28

2,040

1,710

Residence-11

Esty Maison MACHIDA

2-1-17 Hara-machida, Machida-shi, Tokyo

Trust beneficiary interests

3,090.89

1,510

1,160

Residence-12

Esty Maison KAWASAKI

14-24 Ogawa-cho, Kawasaki-ku, Kawasaki-shi, Kanagawa

Trust beneficiary interests

3,741.01

2,350

1,830

Residence-14

Esty Maison SHINKAWASAKI

1-4 Furuichiba, Saiwai-ku, Kawasaki-shi, Kanagawa

Trust beneficiary interests

3,737.47

1,210

930

Residence-15

Esty Maison YOKOHAMA

3-33-1 Tsuruya-cho, Kanagawa-ku, Yokohama-shi, Kanagawa

Trust beneficiary interests

2,823.73

2,040

1,901

Residence-16

Esty Maison KAMEIDO

6-57-11 Kameido, Koto-ku, Tokyo

Trust beneficiary interests

2,279.21

1,520

1,420

Residence-17

Esty Maison MEGURO

2-10-12 Mita, Meguro-ku, Tokyo

Trust beneficiary interests

1,070.13

1,030

794

Residence-18

Esty Maison YACHIYO MIDORIGAOKA

1-2-8 Midorigaoka, Yachiyo-shi, Chiba

Trust beneficiary interests

4,815.26

1,180

1,173

Residence-19

Esty Maison SUGAMO

4-14-15 Sugamo, Toshima-ku, Tokyo

Trust beneficiary interests

2,619.17

1,580

1,454

Residence-20

Esty Maison KYOBASHI

2-7-10 Higashinoda-cho, Miyakojima-ku, Osaka-shi, Osaka

Trust beneficiary interests

4,613.04

2,880

2,307

Residence-21

Esty Maison MEGUROHONCHO

4-8-21 Megurohoncho, Meguro-ku, Tokyo

Trust beneficiary interests

1,656.02

1,100

1,118

Residence-22

Esty Maison HAKURAKU

1-18-19 Rokkakubashi, Kanagawa-ku, Yokohama-shi, Kanagawa Trust beneficiary interests

1,285.83

898

717

Residence-23

Esty Maison MINAMIHORIE

2-12-10 Minamihorie, Nishi-ku, Osaka-shi, Osaka

Trust beneficiary interests

1,804.48

1,010

947

Residence-24

Esty Maison GOTANDA

7-7-2 Nishi-Gotanda, Shinagawa-ku, Tokyo

Trust beneficiary interests

3,871.15

2,960

2,752

Residence-25

Esty Maison OISENDAIZAKA

5-9-10 Higashi-Oi, Shinagawa-ku, Tokyo

Trust beneficiary interests

2,979.85

2,590

2,229

Residence-26

Esty Maison SHINAGAWA SEASIDE

3-25-20 Higashi-Shinagawa, Shinagawa-ku, Tokyo, etc.

Trust beneficiary interests

2,602.30

1,980

1,980

Residence-27

Esty Maison MINAMIAZABU

1-10-8 Minamiazabu, Minato-ku, Tokyo

Trust beneficiary interests

1,082.12

1,190

1,198

Residence-28

Esty Maison JOTO

2-11-8 Noe, Joto-ku, Osaka-shi, Osaka

Trust beneficiary interests

2,065.92

949

979

Residence-29

Esty Maison TSUKAMOTO

2-13-5 Tsukamoto, Yodogawa-ku, Osaka-shi, Osaka

Trust beneficiary interests

2,321.04

1,050

1,120

Residence-30

Esty Maison KAWASAKI II

12-4 Ogawa-cho, Kawasaki-ku, Kawasaki-shi, Kanagawa

Trust beneficiary interests

2,824.86

1,920

1,727

Residence-31

Esty Maison AZABUJUBAN

1-11-1 Azabujuban, Minato-ku, Tokyo

Trust beneficiary interests

1,755.31

2,630

2,604

Residence-33

Esty Maison ITABASHIHONCHO

14-14 Yamato-cho, Itabashi-ku, Tokyo

Trust beneficiary interests

1,274.49

927

915

Residence-34

Esty Maison OIZUMIGAKUEN

2-12-15 Higashi-Oizumi, Nerima-ku, Tokyo

Trust beneficiary interests

1,362.36

778

795

Residence-35

Esty Maison TENJINHIGASHI I

4-3 Susaki-machi, Hakata-ku, Fukuoka-shi, Fukuoka

Trust beneficiary interests

1,058.82

352

381

Residence-36

Esty Maison TENJINHIGASHI II

6-12 Susaki-machi, Hakata-ku, Fukuoka-shi, Fukuoka

Trust beneficiary interests

1,943.72

714

717

Residence-37

Esty Maison SHIJONISHINOTOIN

697 Myodenji-cho, Shijo-sagaru, Nishinotoin-dori, Shimogyo-ku, Kyoto-shi, Kyoto Trust beneficiary interests

2,261.28

1,190

1,288

Residence-39

Esty Maison HIGASHISHINAGAWA

1-10-1 Higashi-Shinagawa, Shinagawa-ku, Tokyo

Trust beneficiary interests

2,936.72

2,310

2,446

Residence-40

Esty Maison HACHIOJIMINAMINO

3-2-8 Nishikatakura, Hachioji-shi, Tokyo

Trust beneficiary interests

2,155.16

875

887

Residence-41

Esty Maison NISHINAKAJIMA

2-8-21 Higashinakajima, Higashiyodogawa-ku, Osaka-shi, Osaka Trust beneficiary interests

3,643.42

1,900

1,926

Residence-42

Esty Maison ITABASHIKUYAKUSHOMAE

2-46-11 Itabashi, Itabashi-ku, Tokyo

Trust beneficiary interests

3,915.81

2,490

2,486

Residence-43

Esty Maison MUSASHIKOYAMA

3-1-7 Ebara, Shinagawa-ku, Tokyo

Trust beneficiary interests

1,176.78

1,020

948

Residence-44

Esty Maison SENDAGI

3-49-1 Sendagi, Bunkyo-ku, Tokyo

Trust beneficiary interests

897.30683

712

Residence-45

Esty Maison YOTSUYASAKAMACHI

6-20 Yotsuyasakamachi, Shinjuku-ku, Tokyo

Trust beneficiary interests

2,453.17

2,050

2,191

Residence-46

Esty Maison HAKATAHIGASHI

7-2-80 Yoshizuka, Hakata-ku, Fukuoka-shi, Fukuoka

Trust beneficiary interests

9,106.08

2,400

2,028

Residence-47

Esty Maison KAMIGOFUKU

13-3 Kamigofukumachi, Hakata-ku, Fukuoka-shi, Fukuoka

Trust beneficiary interests

2,261.91

803

811

Residence-48

Esty Maison SANGENJAYA

2-16-9 Sangenjaya, Setagaya-ku, Tokyo

Trust beneficiary interests

856.08860

837

Residence-50

Prime Maison MUSASHINONOMORI

5-15-3 Josuihoncho, Kodaira-shi, Tokyo

Trust beneficiary interests

3,924.58

1,780

1,490

Residence-51

Prime Maison HIGASHISAKURA

2-10-14 Higashisakura, Higashi-ku, Nagoya-shi, Aichi

Trust beneficiary interests

3,118.11

1,470

1,046

Residence-52

Prime Maison KAYABAKOEN

2-7-13 Kayaba, Chikusa-ku, Nagoya-shi, Aichi

Trust beneficiary interests

2,163.98

797

600

Residence-53

Esty Maison SANGENJAYA II

3-11-6 Shimouma, Setagaya-ku, Tokyo

Trust beneficiary interests

894.64

827

671

Residence-54

Esty Maison ITABASHI C6

32-16 Oyama-higashi-cho, Itabashi-ku, Tokyo

Trust beneficiary interests

4,036.66

2,540

2,119

Residence-55

MAST HAKATA

4-22-25 Hakata Ekimae, Hakata-ku, Fukuoka-shi, Fukuoka

Trust beneficiary interests

9,614.80

2,440

1,802

Residence-56

Esty Maison KINSHICHO

1-1-8 Kinshi, Sumida-ku, Tokyo

Trust beneficiary interests

1,611.54

1,250

1,035

Residence-57

Esty Maison MUSASHIKOGANEI

2-6-5 Honcho, Koganei-shi, Tokyo

Trust beneficiary interests

2,275.24

1,700

1,452

Residence-58

Prime Maison GOKISO

2-17-2 Ayuchitori, Showa-ku, Nagoya-shi, Aichi

Trust beneficiary interests

4,427.65

1,880

1,543

Residence-59

Prime Maison YUHIGAOKA

5-4-13 Ueshio, Tennoji-ku, Osaka-shi, Osaka

Trust beneficiary interests

2,040.35

917

762

Residence-60

Prime Maison KITATANABE

4-9-17 Kitatanabe, Higashisumiyoshi-ku, Osaka-shi, Osaka

Trust beneficiary interests

1,798.97

594

506

Residence-61

Prime Maison MOMOCHIHAMA

3-9-1 Momochihama, Sawara-ku Fukuoka-shi, Fukuoka

Trust beneficiary interests

7,514.76

1,990

1,787

Residence-62

Esty Maison AKIHABARA

3-4-2 Ueno, Taito-ku, Tokyo

Trust beneficiary interests

2,324.65

1,930

1,506

Location (residence indication)

Form of Ownership

Total Leasable
Floor Area (m2)

Estimated Valueat End of Period(Note 1)(million yen)Book Value(million yen)

Residence-63

Esty Maison SASAZUKA

1-61-17 Sasazuka, Shibuya-ku, Tokyo

Trust beneficiary interests

3,701.70

3,200

2,783

Residence-64

Prime Maison GINZA EAST

1-2-1 Tsukiji, Chuo-ku, Tokyo

Trust beneficiary interests

6,177.20

5,990

5,004

Residence-65

Prime Maison TAKAMI

2-6-7 Takami, Chikusa-ku, Nagoya-shi, Aichi

Trust beneficiary interests

2,016.79

1,010

865

Residence-66

Prime Maison YADAMINAMI

3-11-7 Yadaminami, Higashi-ku, Nagoya-shi, Aichi

Trust beneficiary interests

2,168.59

799

681

Residence-67

Prime Maison TERIHA

1-3-7 Kashiiteriha, Higashi-ku, Fukuoka-shi, Fukuoka

Trust beneficiary interests

6,728.20

1,280

1,055

Residence-68

Esty Maison HIGASHISHIRAKABE

3-9-36 Yoshino, Higashi-ku, Nagoya-shi, Aichi

Trust beneficiary interests

4,014.07

1,530

1,276

Residence-69

Esty Maison SENGOKU

4-6-17 Sengoku, Bunkyo-ku, Tokyo

Trust beneficiary interests

1,498.13

1,300

1,085

Residence-70

Esty Maison DAIZAWA

2-39-13 Daizawa, Setagaya-ku, Tokyo

Trust beneficiary interests

2,352.90

2,170

1,888

Residence-71

Esty Maison TOGOSHI

1-25-5 Togoshi, Shinagawa-ku, Tokyo

Trust beneficiary interests

1,943.17

1,660

1,371

Residence-72

Esty Maison KAWARAMACHI

3-2-10 Kawaramachi, Chuo-ku, Osaka-shi, Osaka

Trust beneficiary interests

3,486.48

1,860

1,581

Residence-73

Esty Maison NISHITENMA

5-15-3 Nishitenma, Kita-ku, Osaka-shi, Osaka

Trust beneficiary interests

2,877.90

1,630

1,388

Residence-74

Esty Maison SHIROKANEDAI

1-1-4 Kamiosaki, Shinagawa-ku, Tokyo

Trust beneficiary interests

2,675.11

2,250

1,962

Residence-75

Esty Maison HIGASHISHINJUKU

6-22-5 Shinjuku, Shinjuku-ku, Tokyo

Trust beneficiary interests

1,889.50

1,550

1,350

Residence-76

Esty Maison MOTOAZABU

3-6-6 Motoazabu, Minato-ku, Tokyo

Trust beneficiary interests

1,199.86

1,460

1,176

Residence-77

Esty Maison TORITSUDAIGAKU

2-7-17 Tairamachi, Meguro-ku, Tokyo

Trust beneficiary interests

1,035.78816

735

Residence-78

Esty Maison MUSASHIKOYAMA II

3-11-4 Koyama, Shinagawa-ku, Tokyo

Trust beneficiary interests

1,073.59

999

843

Residence-79

Esty Maison NAKANO

5-48-2 Chuo, Nakano-ku, Tokyo

Trust beneficiary interests

2,023.72

1,800

1,537

Residence-80

Esty Maison SHINNAKANO

6-10-7 Honcho, Nakano-ku, Tokyo

Trust beneficiary interests

1,107.57

972

845

Residence-81

Esty Maison NAKANOFUJIMICHO

5-13-1 Yayoicho, Nakano-ku, Tokyo

Trust beneficiary interests

1,299.60

946

864

Residence-82

Esty Maison TETSUGAKUDO

2-12-15 Matsugaoka, Nakano-ku, Tokyo

Trust beneficiary interests

1,531.89

1,110

947

Residence-83

Esty Maison KOENJI

5-25-26 Koenjiminami, Suginami-ku, Tokyo

Trust beneficiary interests

1,527.52

1,100

962

Residence-84

Esty Maison OSHIAGE

5-11-5 Narihira, Sumida-ku, Tokyo

Trust beneficiary interests

3,180.90

2,340

1,938

Residence-85

Esty Maison AKABANE

2-39-5 Akabane, Kita-ku, Tokyo

Trust beneficiary interests

4,302.84

3,140

2,692

Residence-86

Esty Maison OJI

2-25-8 Oji, Kita-ku, Tokyo

Trust beneficiary interests

2,289.44

1,590

1,363

Residence-87

Prime Maison WASEDA

544-11 Waseda Tsurumaki-cho, Shinjuku-ku, Tokyo

Trust beneficiary interests

1,650.66

1,520

1,254

Residence-88

Prime Maison HATCHOBORI

4-11-9 Hatchobori, Chuo-ku, Tokyo

Trust beneficiary interests

1,382.32

1,390

1,134

Residence-89

Prime Maison JINBOCHO

1-50-9 Kandajinbo-cho, Chiyoda-ku, Tokyo

Trust beneficiary interests

1,819.90

1,880

1,610

Residence-90

Prime Maison GOTENYAMA EAST

6-6-33 Kitashinagawa, Shinagawa-ku, Tokyo

Trust beneficiary interests

2,512.91

2,710

2,107

Residence-91

MAST LIFE AKIHABARA

50-6 Kanda Sakumagashi, Chiyoda-ku, Tokyo

Trust beneficiary interests

803.36524

478

Residence-92

Esty Maison AOI

1-14-20 Aoi, Higashi-ku, Nagoya-shi, Aichi

Trust beneficiary interests

4,809.68

2,410

2,114

Residence-93

Esty Maison YAKUIN

1-13-8 Hirao, Chuo-ku, Fukuoka-shi, Fukuoka

Trust beneficiary interests

5,213.51

2,280

2,054

Residence-94

Esty Maison KINSHICHO II

3-5-19 Kotobashi, Sumida-ku, Tokyo

Trust beneficiary interests

9,469.65

7,920

6,731

Residence-95

Esty Maison OJIMA

5-32-5 Ojima, Koto-ku, Tokyo

Trust beneficiary interests

9,905.97

8,510

7,134

Residence-96

Prime Maison FUJIMIDAI

1-25 Fujimidai, Chikusa-ku, Nagoya-shi, Aichi

Trust beneficiary interests

5,704.63

2,020

1,767

Residence-97

Esty Maison TSURUMAI

2-20-1 Chiyoda, Naka-ku, Nagoya-shi, Aichi

Trust beneficiary interests

13,812.40

4,340

3,843

Residence-98

Prime Maison MORISHITA

3-6-4 Morishita, Koto-ku, Tokyo

Trust beneficiary interests

2,180.78

1,870

1,753

Residence-99

Prime Maison SHINAGAWA

1-3-16 Kita-Shinagawa, Shinagawa-ku, Tokyo

Trust beneficiary interests

2,107.88

1,890

1,710

Residence-100 Prime Maison ODORI KOEN

6-5-2 Odori-Nishi, Chuo-ku, Sapporo-shi, Hokkaido

Trust beneficiary interests

7,360.37

3,020

2,713

Residence-101 Prime Maison MINAMI 2-JO

9-1-1 Minami 2jo Nishi, Chuo-ku, Sapporo-shi, Hokkaido

Trust beneficiary interests

6,019.09

1,870

1,505

Residence-102 Prime Maison KAMOKAMOGAWA

1-6-1 Minami 7jo Nishi, Chuo-ku, Sapporo-shi, Hokkaido

Trust beneficiary interests

4,102.08

1,200

996

Residence-103 Prime Maison CENTRAL PARK

4-2-5 Kashii Teriha, Higashi-ku, Fukuoka-shi, Fukuoka

Trust beneficiary interests

10,268.74

2,297

2,300

Residence-104 MAST LIFE YAHIRO

5-30-10 Yahiro, Sumida-ku, Tokyo

Trust beneficiary interests

3,409.16

1,830

1,707

Residence-105 Prime Maison EBISU

1-22-19 Ebisu, Shibuya-ku, Tokyo

Trust beneficiary interests

3,010.66

4,170

3,647

Residence-106 Esty Maison SHIBAURA

2-8-3 Shibaura, Minato-ku, Tokyo

Trust beneficiary interests

3,795.82

2,840

2,884

Residence-107 Granmast KANAZAWA NISHIIZUMI

2-155-1 Nishiizumi, Kanazawa-shi, Ishikawa

Trust beneficiary interests

4,634.50

1,070

1,049

Residence-108 Granmast UNOMORI

1-6-7 Unomori, Yokkaichi-shi, Mie

Trust beneficiary interests

2,280.00

801

772

Residence-109 Esty Maison TSUTSUJIGAOKA

1-14-19 Nishitsutsujigaoka, Chofu-shi, Tokyo, etc.

Trust beneficiary interests

1,849.70901

916

Residence-110 Esty Maison KOHOKU TSUNASHIMA

8-45-25 Shin-yoshida Higashi, Kohoku-ku, Yokohama-shi, Kanagawa, etc.

Trust beneficiary interests

6,867.48

2,700

2,855

Residence-111 MAST LIFE HINO

1-19-3 Shinmachi, Hino-shi, Tokyo

Trust beneficiary interests

2,827.55

1,370

1,345

Residence-112 Prime Maison YOKOHAMA NIHON-ODORI 1-4 Honcho, Naka-ku, Yokohama-shi, Kanagawa, etc.

Trust beneficiary interests

5,461.13

4,690

4,451

Residence-113 KOBE Women’s Student Housing

7-1-6 Koyocho Naka, Higashinada-ku, Kobe-shi, Hyogo

Trust beneficiary interests

15,341.68

5,760

6,169

Residence-114 Prime Maison SHIBUYA

3-10-4 Shibuya, Shibuya-ku, Tokyo

Trust beneficiary interests

1,972.59

2,300

2,243

Residence-115 Prime Maison HATSUDAI

1-45-2 Hatsudai, Shibuya-ku, Tokyo

Trust beneficiary interests

2,879.20

2,860

2,788

Residence-116 Esty Maison UEMACHIDAI

1-1-16 Uehonmachi-nishi, Chuo-ku, Osaka-shi, Osaka

Trust beneficiary interests

2,225.52

994

988

Residence-117 Esty Maison KOBE-SANNOMIYA

3-2-27 Onoe-dori, Chuo-ku, Kobe-shi, Hyogo

Trust beneficiary interests

2,007.00

975

1,011

362,819.85

212,053

189,327

14,117.13

2,597

3,666

Other real estate in trust (Retail property) subtotal

14,117.13

2,597

3,666

Total

376,936.98

214,650

192,994

Residence subtotal
Retail-1

HAMAMATSU Plaza (Note 2)1020-1 Kaminishi-cho, Higashi-ku, Hamamatsu-shi, Shizuoka, etc. Trust beneficiary interests(Note 1) The “Estimated Value at End of Period” indicates either the appraisal value or survey value by real estate appraisers with September 30, 2016 as the date of appraisal.
(Note 2) The real estate in trust is quasi-co-owned, and the figure represents the value obtained by multiplying the “leasable floor area” of the facility by 49%, which is the quasi-co-ownership interest of the Investment Corporation.

18

Sekisui House SI Residential Investment Corporation

6. Change in Rental Business Results

21st Fiscal Period (Oct. 1, 2015 – Mar. 31, 2016)

The following table provides changes in rental business results for each property in which the Investment Corporation has invested.

Residence

Use Property No.

19

Property Name

Property Name

22nd Fiscal Period (Apr. 1, 2016 – Sept. 30, 2016)

Rent Revenue
throughout
Period(million yen)

Ratio to Total
Rent
Revenues(%)

Occupancy
Number of
Tenants at End Ratio at End of
Periodof Period(Note 2) (%)(Note 1)

Rent Revenue
throughout
Period(million yen)

Ratio to Total
Rent
Revenues(%)

Residence-1

Esty Maison GINZA

1

95.2

168

2.7

1

97.7

174

2.6

Residence-3

Esty Maison AZABUNAGASAKA

1

91.4

50

0.8

1

88.4

47

0.7

Residence-4

Esty Maison EBISU II

1

97.8

54

0.9

1

91.8

55

0.8

Residence-5

Esty Maison EBISU

1

93.5

23

0.4

1

96.1

23

0.3

Residence-6

Esty Maison KANDA

1

98.7

45

0.7

1

96.0

44

0.7

Residence-8

Esty Maison KITASHINJUKU

1

97.4

45

0.7

1

94.0

46

0.7

Residence-10

Esty Maison ASAKUSA KOMAGATA

1

96.4

65

1.0

1

100.0

66

1.0

Residence-11

Esty Maison MACHIDA

1

96.4

52

0.8

1

90.8

51

0.8

Residence-12

Esty Maison KAWASAKI

1

99.3

75

1.2

1

94.5

75

1.1

Residence-13

Esty Maison IMAIKE

-

-

9

0.1

-

-

-

-

Residence-14

Etsy Maison SHINKAWASAKI

1

100.0

32

0.5

1

100.0

32

0.5

Residence-15

Esty Maison YOKOHAMA

1

100.0

74

1.2

1

100.0

65

1.0

Residence-16

Esty Maison KAMEIDO

1

95.9

52

0.8

1

98.9

52

0.8

Residence-17

Esty Maison MEGURO

1

97.5

31

0.5

1

92.5

29

0.4

Residence-18

Esty Maison YACHIYO MIDORIGAOKA

1

96.9

43

0.7

1

98.4

44

0.7

Residence-19

Esty Maison SUGAMO

1

100.0

46

0.7

1

100.0

48

0.7

Residence-20

Esty Maison KYOBASHI

1

96.1

90

1.4

1

96.7

92

1.4

Residence-21

Esty Maison MEGUROHONCHO

1

93.4

32

0.5

1

93.0

31

0.5

Residence-22

Esty Maison HAKURAKU

1

98.3

31

0.5

1

96.5

31

0.5

Residence-23

Esty Maison MINAMIHORIE

1

100.0

34

0.5

1

92.1

33

0.5

Residence-24

Esty Maison GOTANDA

1

93.5

91

1.4

1

98.6

93

1.4

Residence-25

Esty Maison OISENDAIZAKA

1

98.7

78

1.2

1

100.0

81

1.2

Residence-26

Esty Maison SHINAGAWA SEASIDE

1

95.3

60

1.0

1

97.3

66

1.0

Residence-27

Esty Maison MINAMIAZABU

1

98.1

35

0.6

1

100.0

36

0.5

Residence-28

Esty Maison JOTO

1

97.0

32

0.5

1

95.5

32

0.5

Residence-29

Esty Maison TSUKAMOTO

1

97.9

39

0.6

1

90.6

38

0.6

Residence-30

Esty Maison KAWASAKI II

1

97.7

61

1.0

1

96.1

59

0.9

Residence-31

Esty Maison AZABUJUBAN

1

96.8

63

1.0

1

91.4

65

1.0

Residence-33

Esty Maison ITABASHIHONCHO

1

95.4

28

0.4

1

98.4

29

0.4

Residence-34

Esty Maison OIZUMIGAKUEN

1

98.3

26

0.4

1

96.6

26

0.4

Residence-35

Esty Maison TENJINHIGASHI I

1

100.0

15

0.2

1

97.8

15

0.2

Residence-36

Esty Maison TENJINHIGASHI II

1

100.0

28

0.4

1

97.6

28

0.4

Residence-37

Esty Maison SHIJONISHINOTOIN

1

92.0

40

0.6

1

92.9

37

0.6

Residence-39

Esty Maison HIGASHISHINAGAWA

1

88.1

69

1.1

1

94.8

66

1.0

Residence-40

Esty Maison HACHIOJIMINAMINO

1

96.5

32

0.5

1

94.2

32

0.5

Residence-41

Esty Maison NISHINAKAJIMA

1

93.2

64

1.0

1

96.4

64

1.0

Residence-42

Esty Maison ITABASHIKUYAKUSHOMAE

1

96.8

76

1.2

1

93.5

76

1.1

Residence-43

Esty Maison MUSASHIKOYAMA

1

96.4

31

0.5

1

95.6

30

0.5

Residence-44

Esty Maison SENDAGI

1

93.1

23

0.4

1

100.0

21

0.3

Residence-45

Esty Maison YOTSUYASAKAMACHI

1

95.3

58

0.9

1

97.0

57

0.9

Residence-46

Esty Maison HAKATAHIGASHI

1

95.6

84

1.3

1

97.1

85

1.3

Residence-47

Esty Maison KAMIGOFUKU

1

98.5

28

0.4

1

100.0

28

0.4

Residence-48

Esty Maison SANGENJAYA

1

100.0

24

0.4

1

100.0

24

0.4

Residence-50

Prime Maison MUSASHINONOMORI

1

96.2

63

1.0

1

96.5

63

0.9

Residence-51

Prime Maison HIGASHISAKURA

1

96.3

52

0.8

1

88.0

51

0.8

Residence-52

Prime Maison KAYABAKOEN

1

96.1

28

0.4

1

96.5

28

0.4

Residence-53

Esty Maison SANGENJAYA II

1

97.0

23

0.4

1

100.0

23

0.3

Residence-54

Esty Maison ITABASHI C6

1

96.6

76

1.2

1

93.8

79

1.2

Residence-55

MAST HAKATA

1

100.0

93

1.5

1

100.0

93

1.4

Residence-56

Esty Maison KINSHICHO

1

100.0

35

0.6

1

100.0

35

0.5

Residence-57

Esty Maison MUSASHIKOGANEI

1

96.1

53

0.8

1

97.1

50

0.8

Residence-58

Prime Maison GOKISO

1

96.7

65

1.0

1

98.4

63

1.0

Residence-59

Prime Maison YUHIGAOKA

1

100.0

30

0.5

1

88.7

29

0.4

Residence-60

Prime Maison KITATANABE

1

95.5

21

0.3

1

88.5

22

0.3

Residence-61

Prime Maison MOMOCHIHAMA

1

100.0

69

1.1

1

100.0

69

1.0

Residence-62

Esty Maison AKIHABARA

1

96.2

57

0.9

1

96.2

55

0.8

Rent Revenue
throughout
Period(million yen)

22nd Fiscal Period (Apr. 1, 2016 – Sept. 30, 2016)

Ratio to Total
Rent
Revenues(%)

Occupancy
Number of
Tenants at End Ratio at End of
Periodof Period(Note 2) (%)(Note 1)

Rent Revenue
throughout
Period(million yen)

Ratio to Total
Rent
Revenues
(%)

1

96.3

86

1.4

1

97.6

89

1.3

Residence-64 Prime Maison GINZA EAST

1

95.1

164

2.6

1

94.8

166

2.5

Residence-65 Prime Maison TAKAMI

1

89.4

31

0.5

1

96.1

33

0.5

Residence-66 Prime Maison YADAMINAMI

1

100.0

28

0.5

1

100.0

29

0.4

Residence-67 Prime Maison TERIHA

1

100.0

51

0.8

1

100.0

51

0.8

Residence-68 Esty Maison HIGASHISHIRAKABE

1

100.0

47

0.8

1

100.0

48

0.7

Residence-69 Esty Maison SENGOKU

1

98.4

36

0.6

1

97.0

36

0.5

Residence-70 Esty Maison DAIZAWA

1

92.1

57

0.9

1

97.6

56

0.8

Residence-71 Esty Maison TOGOSHI

1

98.9

49

0.8

1

97.9

48

0.7

Residence-72 Esty Maison KAWARAMACHI

1

94.9

59

0.9

1

96.3

59

0.9

Residence-73 Esty Maison NISHITENMA

1

95.8

52

0.8

1

96.3

50

0.8

Residence-74 Esty Maison SHIROKANEDAI

1

100.0

63

1.0

1

94.1

64

1.0

Residence-75 Esty Maison HIGASHISHINJUKU

1

100.0

46

0.7

1

87.9

43

0.7

Residence-76 Esty Maison MOTOAZABU

1

100.0

41

0.7

1

84.2

38

0.6

Residence-77 Esty Maison TORITSUDAIGAKU

1

96.0

24

0.4

1

94.3

23

0.4

Residence-78 Esty Maison MUSASHIKOYAMA II

1

97.8

29

0.5

1

97.3

28

0.4

Residence-79 Esty Maison NAKANO

1

98.9

51

0.8

1

95.3

50

0.8

Residence-80 Esty Maison SHINNAKANO

1

91.9

29

0.5

1

100.0

28

0.4

Residence-81 Esty Maison NAKANOFUJIMICHO

1

87.0

27

0.4

1

95.5

26

0.4

Residence-82 Esty Maison TETSUGAKUDO

1

100.0

32

0.5

1

85.7

31

0.5

Residence-83 Esty Maison KOENJI

1

95.4

31

0.5

1

95.8

32

0.5

Residence-84 Esty Maison OSHIAGE

1

96.8

68

1.1

1

99.1

70

1.0

Residence-85 Esty Maison AKABANE

1

91.0

91

1.4

1

86.2

79

1.2

Residence-86 Esty Maison OJI

1

96.5

46

0.7

1

97.7

46

0.7

Residence-87 Prime Maison WASEDA

1

94.5

42

0.7

1

91.9

41

0.6

Residence-88 Prime Maison HATCHOBORI

1

100.0

39

0.6

1

95.0

37

0.6

Residence-89 Prime Maison JINBOCHO

1

97.3

51

0.8

1

100.0

50

0.8

Residence-90 Prime Maison GOTENYAMA EAST

1

95.7

73

1.2

1

95.5

72

1.1

Residence-91 MAST LIFE AKIHABARA

1

100.0

15

0.2

1

100.0

15

0.2

Residence-92 Esty Maison AOI

1

95.7

75

1.2

1

95.4

74

1.1

Residence-93 Esty Maison YAKUIN

1

97.4

74

1.2

1

95.8

71

1.1

Residence-94 Esty Maison KINSHICHO II

1

97.4

217

3.4

1

98.2

218

3.3

Residence-95 Esty Maison OJIMA

1

96.2

236

3.7

1

95.5

236

3.5

Residence-96 Prime Maison FUJIMIDAI

1

95.5

69

1.1

1

91.1

71

1.1

Residence-97 Esty Maison TSURUMAI

1

100.0

155

2.4

1

100.0

155

2.3

Residence-98 Prime Maison MORISHITA

1

98.9

61

1.0

1

97.7

56

0.8

Residence-99 Prime Maison SHINAGAWA

1

96.9

56

0.9

1

98.8

57

0.9

Residence-100 Prime Maison ODORI KOEN

1

90.2

109

1.7

1

95.0

116

1.7

Residence-101 Prime Maison MINAMI 2-JO

1

99.1

67

1.1

1

100.0

68

1.0

Residence-102 Prime Maison KAMOKAMOGAWA

1

98.2

45

0.7

1

99.2

46

0.7

Residence-103 Prime Maison CENTRAL PARK

1

97.3

84

1.3

1

94.4

85

1.3

Residence-104 MAST LIFE YAHIRO

1

100.0

56

0.9

1

100.0

56

0.8

Residence-105 Prime Maison EBISU

1

95.2

106

1.7

1

95.4

111

1.7

Residence-106 Esty Maison SHIBAURA

1

94.4

79

1.3

1

92.8

75

1.1

Residence-107 Granmast KANAZAWA NISHIIZUMI

1

100.0

41

0.6

1

100.0

41

0.6

Residence-108 Granmast UNOMORI

1

100.0

26

0.4

1

100.0

26

0.4

Residence-109 Esty Maison TSUTSUJIGAOKA

1

94.1

29

0.5

1

100.0

29

0.4

Residence-110 Esty Maison KOHOKU TSUNASHIMA

1

100.0

79

1.3

1

100.0

83

1.2

Residence-111 MAST LIFE HINO

1

95.8

49

0.8

1

100.0

47

0.7

Residence-112 Prime Maison YOKOHAMA NIHON-ODORI

1

94.5

46

0.7

1

96.0

136

2.0

Residence-113 KOBE Women’s Student Housing

1

100.0

36

0.6

1

100.0

222

3.3

Residence-114 Prime Maison SHIBUYA

-

-

-

-

1

96.6

61

0.9

Residence-115 Prime Maison HATSUDAI

-

-

-

-

1

100.0

76

1.1

Residence-116 Esty Maison UEMACHIDAI

-

-

-

-

1

94.0

31

0.5

Residence-117 Esty Maison KOBE-SANNOMIYA

-

-

-

-

1

93.2

30

0.5

106

97.0

6,108

96.5

110

96.7

6,556

98.2

Residence-63

Residence

21st Fiscal Period (Oct. 1, 2015 – Mar. 31, 2016)
Occupancy
Number of
Tenants at End Ratio at End of
Periodof Period(Note 2) (%)(Note 1)

Use Property No.

Occupancy
Number of
Tenants at End Ratio at End of
Periodof Period(Note 2) (%)(Note 1)

Esty Maison SASAZUKA

Residence Subtotal

20

Sekisui House SI Residential Investment Corporation

21st Fiscal Period (Oct. 1, 2015 – Mar. 31, 2016)

Other Real Estate in Trust (Retail property)

Use Property No.

Occupancy
Number of
Tenants at End Ratio at End of
Periodof Period(Note 2) (%)(Note 1)

Property NameRent Revenue
throughout
Period(million yen)

22nd Fiscal Period (Apr. 1, 2016 – Sept. 30, 2016)

Ratio to Total
Rent
Revenues(%)

Occupancy
Number of
Tenants at End Ratio at End of
Periodof Period(Note 2) (%)(Note 1)

Rent Revenue
throughout
Period(million yen)

Ratio to Total
Rent
Revenues(%)

Retail-1

HAMAMATSU Plaza

4

100.0

84

1.3

4

100.0

87

1.3

Retail-3

RINKU HAGURAZAKI Plaza

0.8

-

-

b-town MINAMIAOYAMA

100.0

49

Retail-4

1

33

0.5

0.5

Retail-5

KOJIMA × BIC CAMERA Kamifukuoka store

-

-

13

0.2

-

-

31

-

25

0.4

Retail-9

Bell Plaza Shopping Center

100.0

-

-

Joy Square YUGAWARA--

Retail-8

118

1.8

96.8

6,674

100.0

-

-

-

100.0

17

0.3

Other real estate in trust (Retail property) subtotal

5

223

3.5

4

Total

111

97.2

6,332

100.0

114

Financial Section (Audited)-(Note 1) The “Number of Tenants” indicates the number of lessees (including master-lease companies) that are in direct lease agreement with the trustees for each asset already acquired as of the end of fiscal period. Furthermore, the “Master-lease
Company” represents the lessee that has concluded a lease agreement for the entire building with the Investment Corporation or the trustee for the purpose of subleasing the property to third parties.
(Note 2) Of the properties that are subleased by the lessees to sublessees, for those from which the Investment Corporation receives rents that may vary depending on the leasing status to the sublessees, the indicated occupancy ratio is based on theoccupancy status of the sublessees (the ratio of the leased floor area to the leasable floor area at the end of the relevant calculation period).

7. Capital Expenditures in the 22nd Fiscal Period
The following are the overview of works that fall under the category of the capital expenditures that the Investment Corporation conducted in real estate in trustin the 22nd fiscal period. In addition, the capital expenditure for the fiscal period under review totaled 302 million yen. Combining this with the 218 million yen
in repair expenses, which were classified as expenses for the fiscal period, the Investment Corporation conducted construction of 521 million yen.
Real Estate Properties, etc. Name (Location)

PurposeExpenditures(million yen)

PeriodEsty Maison MACHIDA(Machida-shi, Tokyo)

Large-scale renovation

From: May 2016
To: September 2016

78

Esty Maison EBISU II(Shibuya-ku, Tokyo)

Large-scale renovation

From: May 2016
To: September 2016

60

Esty Maison KANDA(Chiyoda-ku, Tokyo)

Large-scale renovation

From: May 2016
To: September 2016

46

Esty Maison TSURUMAI(Nagoya-shi, Aichi)

Renovation of exclusive areas

From: April 2016
To: September 201617

From: August 2016
To: September 201614

Prime Maison ODORI KOEN and other 4 properties
LED light fixture replacement work in common areas(Sapporo-shi, Hokkaido and other)
Others
Total

Contents

Financial Statements
Balance Sheet
Statement of Income and Retained Earnings
Statement of Changes in Net Assets
Statement of Cash Distributions
Statement of Cash Flows
Notes to Financial Statements
Independent Auditor’s Report

84
302

23
25
26
27
28
29
50

8. Transactions with Interested Parties, Etc.
(1) Transaction Status
Transaction Amount, Etc.

Category

Purchase Amount, Etc.

Sale Amount, Etc.

6,810,000 thousand yen

1,583,500 thousand yen

4,890,000 thousand yen (71.8%)- thousand yen (-%)

Sekiwa Real Estate Kansai Ltd.

1,920,000 thousand yen (28.2%)- thousand yen (-%)

Total

6,810,000 thousand yen (100.0%)- thousand yen (-%)

Total Amount
Breakdown of Transactions with Interested Parties, Etc.
Sekisui House Ltd.

(2) Amount of Fees, Etc.
Category

Property Management Fees

Brokerage Fees

Total Fees, Etc.
(A) (thousand yen)

484,166

146,207

Breakdown of Transactions with Interested Parties, Etc.
Paid Party

Paid Amount(B) (thousand yen)

Ratio to Total Amount(B/A) (%)

Sekiwa Real Estate Ltd.

242,287

50.0

Sekiwa Real Estate Chubu, Ltd.

52,893

10.9

Sekiwa Real Estate Kansai, Ltd.

9,367

1.9

Sekiwa Real Estate Kyushu, Ltd.

16,906

3.5

Sekiwa Kanri Kansai Co., Ltd.

44,771

9.2

Sekiwa Real Estate Ltd.

89,637

61.3

Sekiwa Real Estate Chubu, Ltd.

5,991

4.1

Sekiwa Real Estate Kansai, Ltd.

873

0.6

Sekiwa Real Estate Kyushu, Ltd.

1,763

1.2

Sekiwa Kanri Kansai Co., Ltd

4,952

3.4

(Note) Interested parties, etc. refers to the interested parties of the Asset Management Company and is designated in Article 123 of the Enforcement Order of the Act on Investment Trusts and Investment Corporations and Article 26-1-27 of the regulation
on management reports in investment trusts and investment corporations of the Investment Trusts Association, Japan.

21

22Sekisui House SI Residential Investment Corporation

Financial Statements(1) Balance Sheet(Thousand yen)
21st Fiscal Period(As of March 31, 2016)
AssetsCurrent assets

21st Fiscal Period(As of March 31, 2016)

22nd Fiscal Period(As of September 30, 2016)

Liabilities
Current liabilities

Cash and deposits
Cash and deposits in trust
Operating accounts receivable

3,428,890
5,016,055
153,167

4,001,779
5,007,948
112,962

Consumption taxes receivable
Prepaid expenses

129,092

1,264
169,216

Deferred tax assets
Other

238
10,88234
249

Allowance for doubtful accounts(4,503)(3,818)8,733,823

9,289,637

Total current assets(Thousand yen)

22nd Fiscal Period(As of September 30, 2016)

Non-current assets

Operating accounts payable
Short-term loans payable
Current portion of long-term loans payable
Accounts payable – other336,786
7,200,000
12,300,000
638,446

412,2673,000,000
12,205,000
601,937

Accrued expenses
Income taxes payable

54,0793,798

55,9401,295

Accrued consumption taxes
Advances received

17,913
237,827

236,797

Other
Total current liabilities

12,322

12,77920,801,174

16,526,017

14,500,000
69,709,500

14,500,000
79,004,500

Property, plant and equipment
Buildings in trust
Accumulated depreciation

101,392,020(13,697,199)

103,979,697(15,100,421)

Investment corporation bonds
Long-term loans payable

Buildings in trust, net

87,694,821

88,879,276

Tenant leasehold and security deposits in trust

2,016,256

1,934,556

878,502900,614

Total non-current liabilities

86,225,756

95,439,056

Accumulated depreciation(193,509)(218,092)

107,026,930

111,965,074

Structures in trust, net

684,992

682,522

1,926,908(506,550)

1,972,641(572,081)

88,925,149

88,925,149

1,420,357

1,400,560

207,186(71,023)

263,641(86,492)

127,423

174,521

127,423

174,521

Unappropriated retained earnings

2,210,581

2,192,416

Total surplus

2,338,004

2,366,937

91,263,154

91,292,087

Structures in trust

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

Non-current liabilities

Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus
Voluntary retained earnings
Reserve for reduction entry
Total voluntary retained earnings

136,163

177,148

98,617,010

101,708,485-

52,047

188,553,346

192,900,040

Total unitholders’ equity

148,001293

145,982-

Total liabilities and net assets

162

246

148,456

146,229

242,672
367,336
138,969

242,672
450,323
144,827

748,977

837,823

189,450,780

193,884,092

Investment corporation bond issuance costs

67,28659,740Investment unit issuance costs

38,19523,691

Total deferred assets

105,482

83,431

198,290,085

203,257,161

Land in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets
Leasehold rights in trust
Trademark rights
Other
Total intangible assets
Investments and other assets
Lease and guarantee deposits
Long-term prepaid expenses
Other
Total investments and other assets
Total non-current assets

Total net assets

91,263,154

91,292,087

198,290,085

203,257,161

See accompanying “Notes to Financial Statements”.

Deferred assets

Total assets

23

24

Sekisui House SI Residential Investment Corporation(2) Statement of Income and Retained Earnings(3) Statement of Changes in Net Assets(Thousand yen)
22nd Fiscal Period(April 1, 2016 –September 30, 2016)

21st Fiscal Period(October 1, 2015 –March 31, 2016)

21st fiscal period (from October 1, 2015 to March 31, 2016)(Thousand yen)
Unitholders’ equity
SurplusOperating revenue
Rent revenue - real estate

6,332,700

6,674,711

210,403

18,431

6,543,103

6,693,142

3,065,906
471,120
15,666

3,218,278
484,273
15,84735,447
3,600
3,638
205,900

35,9683,600
449
195,040

3,801,279

3,953,458

2,741,823

2,739,684

830
288
-

57
263
206

1,119

527

Interest expenses
Interest expenses on investment corporation

382,82156,269395,333
56,491bonds
Amortization of investment corporation bondissuance costs

7,546

7,546

Borrowing related expenses
Amortization of investment unit issuance costs
Other

67,453
14,503108

72,304
14,503108

Total non-operating expenses

528,703546,288

Ordinary income

2,214,239

2,193,924

Income before income taxes

2,214,239

2,193,924

Income taxes - current
Income taxes - deferred

3,925
(181)

1,303
203

Total income taxes

3,744

1,507

2,210,494

2,192,416

Gain on sales of real estate properties
Total operating revenue

Unitholders’capitalOperating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Directors’ compensations
Provision of allowance for doubtful accounts
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Reversal of distributions payable
Other
Total non-operating income

Balance as of
October 1, 2015
Changes of items during
the fiscal period
Provision for reserve
for reduction entry
Distribution fromsurplus88,925,149

Voluntary retained
earnings

Unappropria
ted retained
Reserve
Total
forvoluntary earnings
reduction retainedentry
earnings
77,9882,209,951

2,287,939

91,213,089

91,213,089

49,43549,435(49,435)---(2,160,429)(2,160,429)(2,160,429) (2,160,429)

2,210,494

2,210,494

2,210,494

2,210,494-

49,43549,435629

50,06550,06550,06588,925,149

127,423

127,423

2,210,581

2,338,004

91,263,154

91,263,154

22nd fiscal period (from April 1, 2016 to September 30, 2016)(Thousand yen)

Non-operating expenses

Net income
Retained earnings brought forward

86-

Unappropriated retained earnings

2,210,581

2,192,416

See accompanying “Notes to Financial Statements”.

Total Net
Assets77,988Net Income
Total changes of items
during the fiscal period
Balance as ofMarch 31, 2016

Total
surplusTotal
unitholders’equityUnitholders’ equity
Surplus
Unitholders’capitalBalance as ofApril 1, 2016
Changes of items during
the fiscal period
Provision for reserve
for reduction entry
Distribution fromsurplus88,925,149

Voluntary retained
earnings

Unappropria
ted retained
Reserve
Total
forvoluntary earnings
reduction retainedentry
earnings

Total
unitholders’equityTotal Net
Assets127,423

127,423

2,210,581

2,338,004

91,263,154

91,263,154

47,09747,097(47,097)---(2,163,483)(2,163,483)(2,163,483) (2,163,483)

2,192,416

2,192,416

2,192,416

2,192,416

Net Income
Total changes of items
during the fiscal period
Balance as of
September 30, 2016

Total
surplus-47,09747,097(18,164)

28,93228,93228,932

88,925,149

174,521

174,521

2,192,416

2,366,937

91,292,087

91,292,087

See accompanying “Notes to Financial Statements”.

25

26

Sekisui House SI Residential Investment Corporation(4) Statement of Cash Distributions
Item(5) Statement of Cash Flows

21st Fiscal Period(October 1, 2015 – March 31, 2016)

I. Unappropriated retained earnings

2,210,581,192 yen

2,192,416,724 yen

II. Cash distributions

2,163,483,750 yen

2,183,845,950 yen(2,125 yen)

(2,145 yen)

Provision for reserve for reduction
entry

47,097,442 yen

8,570,774 yen

IV. Retained earnings carried forward

0 yen

0 yen

As provided in Article 34-1-2 of its
Articlesof
Incorporation,
theInvestment Corporation makes it a

As provided in Article 34-1-2 of its
Articlesof
Incorporation,
theInvestment Corporation makes it abasic policy to make cash distributions
in excess of the amount equivalent to
90% of the distributable income
amount as stipulated in Article 67-15 of
the Act on Special Measures
Concerning Taxation. Following thisbasic policy to make cash distributions
in excess of the amount equivalent to
90% of the distributable income
amount as stipulated in Article 67-15 of
the Act on Special Measures
Concerning Taxation. Following thispolicy, and in consideration of the factthat individual unitholders must
calculate the capital gains or losses forcash distributions in excess ofpolicy, and in consideration of the factthat individual unitholders must
calculate the capital gains or losses forcash distributions in excess ofearnings

earnings(Cash distributions per unit)
III. Voluntary retained earnings

Method for calculating cash
distributions

when

the

Investment

when

the

Investment

Corporation distributes cash in excessof earnings as stipulated in Article
34-1-4 of its Articles of Incorporation,
the Investment Corporation distributed

Corporation distributes cash in excessof earnings as stipulated in Article
34-1-4 of its Articles of Incorporation,
the Investment Corporation distributed

2,163,483,750 yen, which is the entire

2,183,845,950 yen, which is the entire

amount of the unappropriated retained
earnings after deducting the provision
for reserve for reduction entry, as
stipulated in Article 66-2 of the Act onamount of the unappropriated retained
earnings after deducting the provision
for reserve for reduction entry, as
stipulated in Article 66-2 of the Act on

SpecialTaxation.

SpecialTaxation.

Measures

Concerning

Measures

Concerning(Thousand yen)
21st Fiscal Period(October 1, 2015 –March 31, 2016)

22nd Fiscal Period(April 1, 2016 – September 30, 2016)

22nd Fiscal Period(April 1, 2016 –September 30, 2016)

Cash flows from operating activities

2,214,239
1,468,539

2,193,924
1,582,665

7,546

7,546

Amortization of investment unit issuance costs

14,503

14,503

Increase (decrease) in allowance for doubtful accounts

3,411
(830)
439,091(685)(57)
451,824(21,858)
27,88840,205(23,556)

22,175(1,264)(2,656)

Income before income taxes
Depreciation
Amortization of investment corporation bond issuance
costs

Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in prepaid expenses
Decrease (increase) in consumption taxes receivable
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable - other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in advances received
Decrease in property, plant and equipment in trust due

17,026

23,078(20,719)(52,508)8,240,718(17,913)(1,030)1,502,287

to saleDecrease (increase) in long-term prepaid expenses
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities

8,814(99,555)(2,429)11,08012,365,609

5,680,397

830(440,372)

57(449,964)(1,603)(3,807)

11,924,463

5,226,683(12,290,967)-(7,411,375)(43)

225,239

140,160(456,288)(221,860)(8,587)(5,857)(12,530,603)(7,498,977)

7,200,000(4,650,000)
4,100,000

4,500,000(8,700,000)
12,000,000(3,550,000)(2,160,005)(2,800,000)(2,162,923)

939,994

2,837,076

Cash flows from investing activities
Purchase of property, plant and equipment in trust
Purchase of intangible assets
Proceeds from tenant leasehold and security deposits
in trust
Repayments of tenant leasehold and security deposits
in trust
Decrease (increase) in investments and other assets,
net
Net cash used in investing activities
Cash flows from financing activities
Proceeds from short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Dividends paid
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents

333,854564,782

Cash and cash equivalents at the beginning of period

8,111,090

8,444,945

Cash and cash equivalents at the end of period

8,444,945

9,009,728

See accompanying “Notes to Financial Statements”.

27

28

Sekisui House SI Residential Investment Corporation

Notes to Financial Statements
1. Organization
Sekisui House SI Residential Investment Corporation (the “Investment Corporation”) is a Japanese real estate
investment corporation established in April 2005 under the Act on Investment Trusts and Investment
Corporations (the “Investment Trusts Act”) and listed on the Tokyo Stock Exchange in July 2005. Since March
2010, it has been sponsored by Sekisui House, Ltd., a leading company in the housing industry, and Spring
Investment Co., Ltd., an international fund manager, and has worked to establish a stable portfolio primarily
comprising residential properties. In June 2014, the Investment Corporation changed its name to the present
one to demonstrate its new strategy of solely investing in real properties that are mainly used as residences
while removing retail properties, which had previously been identified as a supplementary investment target,from its investment horizons. The Investment Corporation is externally managed by a licensed asset
management company, Sekisui House SI Asset Management, Ltd.

2. Basis of Presentation
The Investment Corporation maintains its accounting records and prepares its financial statements inaccordance with accounting principles generally accepted in Japan (“Japanese GAAP”), including provisions
set forth in the Financial Instruments and Exchange Act, the Investment Trusts Act, the Companies Act and therelated regulations, which are different in certain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards.
The accompanying financial statements are a translation of the financial statements of the Investment
Corporation, which were prepared in accordance with Japanese GAAP and were presented in its Securities
Report filed with the Kanto Local Finance Bureau. In preparing the accompanying financial statements, certain
reclassifications and modifications have been made to the financial statements issued domestically in order topresent them in a format more familiar to readers outside Japan. In addition, the notes to financial statements
include certain information which might not be required under Japanese GAAP but is presented herein as
additional information.
The Investment Corporation’s fiscal period is a six-month period, which ends at the end of March and
September of each year. The Investment Corporation does not prepare consolidated financial statements as it
has no subsidiaries.
Unless otherwise specified, amounts have been rounded down to the nearest thousand yen in theaccompanying financial statements and the notes thereto. As a result, the total shown in the financial
statements and notes thereto do not necessarily agree with the sum of the individual account balances.

3. Summary of Significant Accounting Policies
1. Depreciation method for
non-current assets

2. Accounting for deferredassets29(1) Property, plant and equipment
Depreciation is calculated using the straight-line method.
The estimated useful lives of major property, plant and equipment are as
follows:
Buildings in trust3 – 66 years
Structures in trust3 – 50 years
Machinery and equipment in trust
7 – 48 years
Tools, furniture and fixtures in trust2 – 15 years(2) Intangible assets
Intangible assets are amortized utilizing the straight-line method.
Leasehold rights in trust are amortized on a straight-line basis over theremaining life of each contract.
(1) Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized utilizing thestraight-line method over the redemption periods.
(2) Investment unit issuance costs
Investment unit issuance costs are amortized utilizing the straight-line
method (over 3 years).

3. Standards for recording
allowance

Allowance for doubtful accounts
For allowance for doubtful accounts against possible losses arising fromdefault on receivables, uncollectable amount is estimated and recorded
by investigating collectability on a case-by-case examination for doubtful
and other specific receivables.
4. Standards for recording
Accounting treatment of property taxes, etc.
Property taxes, city planning taxes and depreciable asset taxes
revenues and expenses(“property taxes, etc.”) assessed for the real estate owned by theInvestment Corporation are charged as expenses at an amountattributable to each fiscal period as expenses related to rent business.
Property taxes etc. that the Investment Corporation pays to the seller inconnection with acquisition of real estate (including trust beneficiaryinterests in real estate as entrusted property) as they are deemed to be
attributable to the Investment Corporation are included in theacquisition cost of the acquired real estate, instead of expenses.
Property taxes, etc. capitalized as a part of the acquisition cost
amounted to 29,241 thousand yen for the 21st fiscal period and 29,900
thousand yen for the 22nd fiscal period, respectively.
5. Method of hedge accounting (1) Method of hedge accounting
Special accounting is applied for interest rate swap transactions.
(2) Hedging instruments and hedged items
Hedging instrument: interest rate swap transactions
Hedged items: interest expenses on loans payable(3) Hedging policy
Based on its basic policy for risk management, the Investment
Corporation utilizes derivative transactions in order to hedge risks
designated in its Articles of Incorporation.
(4) Method for assessing the effectiveness of hedging
Assessment of the effectiveness of hedging is omitted as requirements
are satisfied for special accounting for interest rate swap transactions.
6. Scope of funds (cash and
The funds (cash and cash equivalents) in the statements of cash flows
cash equivalents) in theconsist of cash on hand and cash in trust; deposits that can be withdrawn atstatement of cash flows
any time and deposits in trust; and short-term investments with a maturity of 3
months or less from the date of acquisition, which are readily convertible tocash and bear only an insignificant risk of value fluctuation.
7. Other significant items(1) Accounting methods for trust beneficiary interests in real estate, etc. as
fundamental to preparing
entrusted property
the financial statements
Regarding trust beneficiary interests in real estate, etc. as entrusted
property, all asset and liability accounts of the entrusted properties aswell as all revenue and expense accounts generated by the entrusted
properties are recorded in relevant accounts on the balance sheet andstatement of income and retained earnings.
Furthermore, the following accounts are considered material and thusstated separately in the balance sheet related to entrusted properties
from the relevant accounts.
1) Cash and deposits in trust2) Buildings in trust, structures in trust, machinery and equipment intrust, tools, furniture and fixtures in trust, land in trust andconstruction in progress in trust3) Leasehold rights in trust4) Tenant leasehold and security deposits in trust(2) Accounting for consumption taxes
National and local consumption taxes are excluded from the transaction
amounts. Non-deductible consumption taxes for acquisition of assets areincluded in the acquisition cost of each asset.

30

Sekisui House SI Residential Investment Corporation

4. Note to Balance Sheet

22nd Fiscal Period (from April 1, 2016 to September 30, 2016)(Thousand yen)

Minimum total net assets designated in Article 67-4 of the Investment Trusts Act

Esty Maison HIGASHISHINJUKU(part of land)
Revenue from sales of real estate
Cost of real estate sold
Other sales expenses(Thousand yen)

21st Fiscal Period(As of March 31, 2016)

22nd Fiscal Period(As of September 30, 2016)
50,00050,000b-town MINAMIAOYAMA

Breakdown of real estate rental revenues and expenses
21st Fiscal Period(October 1, 2015 –March 31, 2016)

6,120,483

6,470,566

212,216

204,144

Total real estate rental revenue

6,332,700

6,674,711

B. Real estate rental expenses
Expenses related to rent businessOutsourcing expenses

604,056

631,260

Utilities expenses

92,10786,735

Insurance expenses

7,334

7,771

Repair expenses

225,891

218,848

Property and other taxes

371,609

380,518

Trust fees

45,29743,254

Other

251,204

267,339

1,468,403

1,582,549

Total real estate rental expenses

3,065,906

C. Real estate rental revenues andexpenses (A – B)

3,266,794

1,555,653
4,346

Gain on sales of real estate properties

Total number of authorized investment
units and total number of investment units
issued(Thousand yen)

Total number of authorized investment units

10,000,000 units

10,000,000 units

Total number of investment units issued

1,018,110 units

1,018,110 units

7. Notes to Statement of Cash Flows
Reconciliation of the Cash and cash equivalents at the end of period in the statement of cash flows with thecorresponding accounts on the balance sheet

300,000
265,338
12,475Gain on sales of real estate properties

Gain on sales of real estate properties(Thousand yen)
22nd Fiscal Period(April 1, 2016 –September 30, 2016)

21st Fiscal Period(October 1, 2015 –March 31, 2016)
Cash and deposits

3,428,890

4,001,779

3,218,278

Cash and deposits in trust

5,016,055

5,007,948

3,456,432

Cash and cash equivalents

8,444,945

9,009,728

Future lease payable equivalents

Due within one year

24,648(Thousand yen)
22nd Fiscal Period(As of September 30, 2016)
24,648Due after one year

879,112866,788

Total

903,760

891,436

21st Fiscal Period(As of March 31, 2016)
1,875,009(Thousand yen)
22nd Fiscal Period(As of September 30, 2016)
1,663,229

Esty Maison IMAIKE

RINKU HAGURAZAKI Plaza, KOJIMAx BIC CAMERA Kamifukuoka store,
Joy Square YUGAWARA and Bell
Plaza Shopping Center
Revenue from sales of real estate
Cost of real estate sold
Other sales expenses

22nd Fiscal Period(April 1, 2016 –September 30, 2016)

Operating lease transactions as lessee

21st Fiscal Period (from October 1, 2015 to March 31, 2016)

Revenue from sales of real estate
Cost of real estate sold
Other sales expenses

21st Fiscal Period(October 1, 2015 –March 31, 2016)

8. Lease Transactions

Breakdown of gain on sales of real estate properties

31

1,560,000
1,495,133
60,519

6. Notes to Statement of Changes in Net Assets

Other revenue

Depreciation

Revenue from sales of real estate
Cost of real estate sold
Other sales expenses(Thousand yen)
22nd Fiscal Period(April 1, 2016 –September 30, 2016)

Rent revenue - real estate
Rents

9,415
14,084Gain on sales of real estate properties

5. Notes to Statement of Income and Retained Earnings

A. Real estate rental revenues

23,5007,154
2,261

277,813
22,186

Operating lease transactions as lessor
Future lease receivable equivalents

7,975,267
336,515

21st Fiscal Period(As of March 31, 2016)

8,500,000

Due within one year
Due after one year

6,126,026

5,630,344

8,311,783

Total

8,001,035

7,293,574

188,216

32

Sekisui House SI Residential Investment Corporation

9. Financial Instruments

21st Fiscal Period (As of March 31, 2016)
Book Value Recordedon the Balance Sheet

1. Matters Concerning Status of Financial Instruments(1) Policy on Handling Financial Instruments
The Investment Corporation raises necessary funds (through additional issuance of investment units,
borrowings and issuance of investment corporation bonds) in light of its financial plans and surplus fundmanagement plans. With regard to surplus fund management, the Investment Corporation focuses onsafety and liquidity, and manages them as interest-bearing ordinary bank deposits or short-term time
deposits in order to avoid market risks as much as possible. As for derivative transactions, the Investment
Corporation may use them to hedge against interest rate fluctuation risks, and will not conduct any
speculative transactions.
(2) Description of Financial Instruments and Associated Risks, and Risk Management Structure
Operating accounts receivable are exposed to credit risks of customers. In order to mitigate such risks, theInvestment Corporation works to select tenants by taking into account the tenants’ credibility and has
established a management system for controlling the status of rent payment.
Lease and guarantee deposits from rental properties are exposed to credit risks of the companies to dobusiness with. In order to mitigate such risks, the Investment Corporation works to periodically grasp thefinancial conditions, etc. of such companies.
The possibility, conditions and subsequent burden of interest payments for borrowings and issuance ofinvestment corporation bonds are impacted by the interest rate situations and other factors. Thus, there is
no guarantee that the Investment Corporation can successfully make borrowings or issue investment
corporation bonds at a time when and under the conditions that it prefers. In addition, if borrowings are
made at floating interest rates, interest payments may increase due to later fluctuations in the interest
rates. Depending on the lending attitude of financial institutions, new borrowings may not be possible or
the Investment Corporation may have to borrow funds under disadvantageous conditions in terms ofinterest rates, collateral provision and financial covenants, etc.
Concerning the market risks (interest rate fluctuation risk, etc.) related to the above-mentioned borrowings
and investment corporation bonds, the Investment Corporation works to mitigate them in accordance with
the Derivative Transactions Handling and Risk Management Regulations, an internal rule designated by
the Asset Management Company.
Moreover, for the management of liquidity risk related to fund raising (risk of failing to execute repaymenton the repayment dates), the department in charge at the Asset Management Company prepares andupdates cash flow plans in a timely manner based on reports from its respective departments. The liquidity
risk is also managed by such measures as maintaining liquidity on hand at a certain level.
(3) Supplementary Explanation on Matters Concerning Fair Value, etc. of Financial Instruments
The fair value of financial instruments, aside from values based on market price, include values based onreasonable calculations when there is no market price. Certain variable factors are adopted in calculating
those values, and there may be cases where the values will vary when different assumptions are adopted.
As for the contract value and other conditions of derivative transactions indicated in “2. Matters Concerning
Fair Value, Etc. of Financial Instruments”, the value itself is not an indicator showing the market risks
related to such transactions.

(Thousand yen)
Fair Value

Difference(1) Cash and deposits

3,428,890

3,428,890-(2) Cash and deposits in trust

5,016,055

5,016,055-

153,167

153,167-(4,503)(4,503)-

148,663

148,663-

8,593,609

8,593,609-(4) Operating accounts payable

336,786

336,786-(5) Short-term loans payable

7,200,000

7,200,000-(6) Current portion of long-term loans
payable12,300,000

12,362,929

62,929(7) Investment corporation bonds

14,500,000

14,643,879

143,879(8) Long-term loans payable

69,709,500

70,882,883

1,173,383

Total of liabilities

104,046,286

105,426,479

1,380,192---(3) Operating accounts receivable
Allowance for doubtful accounts

Total of assets(9) Derivative transactions

22nd Fiscal Period (As of September 30, 2016)
Book Value Recordedon the Balance Sheet(Thousand yen)
Fair Value

Difference(1) Cash and deposits

4,001,779

4,001,779-(2) Cash and deposits in trust

5,007,948

5,007,948-

112,962

112,962-(3,818)(3,818)-109,143

109,143-

9,118,872

9,118,872-(4) Operating accounts payable

412,267

412,267-(5) Short-term loans payable

3,000,000

3,000,000-(6) Current portion of long-term loans
payable12,205,000

12,244,468

39,468(7) Investment corporation bonds

14,500,000

14,697,914

197,914(8) Long-term loans payable

79,004,500

80,236,082

1,231,582

Total of liabilities

109,121,767

110,590,733

1,468,965---(3) Operating accounts receivable
Allowance for doubtful accounts

Total of assets(9) Derivative transactions

2. Matters Concerning Fair Value, etc. of Financial Instruments
The following are the book values recorded on the balance sheet, fair values and the difference between
these amounts. The following tables do not include those for which determining the fair value is recognized to
be extremely difficult.

33

34

Sekisui House SI Residential Investment Corporation(Note 1) Calculation method for fair value of financial instruments and matters concerning derivative transactions(1) Cash and deposits, (2) Cash and deposits in trust and (3) Operating accounts receivable
As these are settled within a short period of time, the fair value is approximately the same as the book value
and is thus stated at that book value.
In calculating the fair value of operating accounts receivable, it is difficult to determine the credit risk
individually. Accordingly, allowance for doubtful accounts is deemed as credit risk.
(4) Operating accounts payable and (5) Short-term loans payable
As these are settled within a short period of time, the fair value is approximately the same as the book value
and is thus stated at that book value.
(6) Current portion of long-term loans payable and (8) Long-term loans payable
The fair value of those with floating interest rates is based on the book value, as it reflects the market interest
rate within a short period of time and thus is considered to be nearly equal to the book value. (However, thefair value of certain long-term loans payable with floating interest rates that qualifies for the special
accounting of interest rate swaps [see Note “11. Derivative Transactions ”] is based on the method of
calculating by discounting the sum of its principal and interest payments net of any cash flows from theinterest-rate swap by a reasonably estimated rate assumed as being applicable to a new similar borrowing to
be made by the Investment Corporation.) The present value of those with fixed interest rates is based on themethod of discounting the combined total of principal and interest by a reasonably estimated rate assumed as
being applicable to a new similar borrowing to be made by the Investment Corporation.
(7) Investment corporation bonds
As the investment corporation bonds of the Investment Corporation are traded over the counter throughnegotiations, it is difficult to indicate the fair value as the market price. The present value is based on themethod of calculating by discounting the combined total of principal and interest by a reasonably estimatedrate assumed as being applicable to a similar bond issuance.

(Note 3) Scheduled redemption and repayment amount of investment corporation bonds and borrowings
21st Fiscal Period (As of March 31, 2016)
Due in 1 Yearor Less(1) Short-term loans
payable(2) Investment
corporation bonds(3) Long-term loans
payableTotal of liabilities(Thousand yen)

Due after 1 Due after 2
Due after 3
Due after 4
Due in 1 Year
year through Years through Years through Years throughor Less
2 Years
3 Years
4 Years
5 Years(1) Cash and deposits(2) Cash and deposits intrust(3) Operating accounts
receivable
Total of assets

3,428,890

-

-

-

-

-

5,016,055

-

-

-

-

-

153,167

-

-

-

-

-

8,598,113

-

-

-

-

-

22nd Fiscal Period (As of September 30, 2016)(Thousand yen)

Due after 1 Due after 2
Due after 3
Due after 4
Due in 1 Year
year through Years through Years through Years throughor Less
2 Years
3 Years
4 Years
5 Years(1) Cash and deposits(2) Cash and deposits intrust(3) Operating accounts
receivable
Total of assets

-

-

-

-

-

-

4,000,000

2,500,000

2,000,000-

6,000,000

12,300,000

4,805,000

10,882,000

6,792,500

15,400,000

31,830,000

19,500,000

8,805,000

13,382,000

8,792,500

15,400,000

37,830,000

Due in 1 Yearor Less(1) Short-term loans
payable(2) Investment
corporation bonds(3) Long-term loans
payableTotal of liabilities

Due after
5 Years

4,001,779

-

-

-

-

-

5,007,948

-

-

-

-

-

112,962

-

-

-

-

-

9,122,690

-

-

-

-

-

(Thousand yen)
Due after 1 year Due after 2
Due after 3
Due after 4
Due after
through
Years through Years through Years through5 Years
2 Years
3 Years
4 Years
5 Years

3,000,000

-

-

-

-

-

-

4,000,000

2,500,000

2,000,000-

6,000,000

12,205,000

4,600,000

8,382,000

12,292,500

14,300,000

39,430,000

15,205,000

8,600,000

10,882,000

14,292,500

14,300,000

45,430,000(Note 4) Financial instruments for which discerning of fair value is recognized to be extremely difficult
21st Fiscal Period(As of March 31, 2016)(Thousand yen)
22nd Fiscal Period(As of September 30, 2016)(1) Lease and guarantee deposits

242,672

242,672(2) Tenant leasehold and security
deposits in trust

2,016,256

1,934,556(1)

Due after
5 Years

Due after
5 Years

7,200,000

Category

21st Fiscal Period (As of March 31, 2016)(Thousand yen)

22nd Fiscal Period (As of September 30, 2016)(9) Derivative transactions
See Note “11. Derivative Transactions”.
(Note 2) Scheduled redemption amount of monetary claims

Due after 1
Due after 2
Due after 3
Due after 4
year through Years through Years through Years through2 Years
3 Years
4 Years
5 Years(2)

Lease and guarantee deposits
Lease and guarantee deposits are not subject to disclosure of fair value because discerning of fair value is recognized to be
extremely difficult as reasonable estimation of cash flows is impossible since there is no market price and also since it isdifficult to calculate the deposit period in effect.
Tenant leasehold and security deposits in trust
Tenant leasehold and security deposits in trust, which are deposited by the tenants of rental properties, are not subject todisclosure of fair value because reasonable estimation of cash flows is recognized to be extremely difficult since there is nomarket price and also since it is difficult to calculate the deposit period in effect.

10. Securities
21st Fiscal Period (As of March 31, 2016)
Not applicable
22nd Fiscal Period (As of September 30, 2016)
Not applicable

11. Derivative Transactions
1. Derivatives to which hedge accounting is not applied
21st Fiscal Period (As of March 31, 2016)
Not applicable
22nd Fiscal Period (As of September 30, 2016)
Not applicable35

36

Sekisui House SI Residential Investment Corporation

2. Derivatives to which hedge accounting is applied

2. Reconciliation of the statutory tax rate to the Effective Income Tax Rate

21st Fiscal Period (As of March 31, 2016)
The following is the contract amount or amount equivalent to the principal provided in the contract, etc. asof the balance sheet date for each method of hedge accounting.

Statutory tax rate
(Adjustment)

32.31%

31.74%

Deductible cash distributions
Provision for reserve for reduction entry(31.57%)(0.69%)(31.59%)(0.12%)

Method of Hedge
Accounting

Type of Derivative
Transactions

Contract Amount (Note 1)
Main Hedged Item

Of Which,over 1 Year

(Thousand yen)Calculation
Fair
Method for
Value
the Fair
Value

Interest rate swap
Specialtransaction
Long-term loans
accounting for
73,509,500
64,009,500 (Note 2)
Receivable floating;payableinterest rate swaps
Payable fixed(Note 1) The contract amount of interest rate swaps is indicated based on the notional principal amount.
(Note 2) Transactions for which special accounting for interest rate swaps is applied are combined with long-term loans
payable, the hedged item. Accordingly, their fair value is included in the fair value of the relevant long-term loans
payable (See Note “9. Financial Instruments” 2. Matters Concerning Fair Value, etc. of Financial Instruments(Note 1) (8) Long-term loans payable.).

22nd Fiscal Period (As of September 30, 2016)
The following is the contract amount or amount equivalent to the principal provided in the contract, etc. asof balance sheet date for each method of hedge accounting.
Method of Hedge
Accounting

Type of Derivative
Main Hedged Item
Transactions

Contract Amount (Note 1)
Of Which,over 1 Year

(Thousand yen)Calculation
Fair
Method for
Value
the Fair
Value

Interest rate swap
Special accounting
transaction
Long-term loans
for interest rate
73,509,500
61,304,500 (Note 2)
Receivable floating;payableswaps
Payable fixed(Note 1) The contract amount of interest rate swaps is indicated based on the notional principal amount.
(Note 2) Transactions for which special accounting for interest rate swaps is applied are combined with long-term loans
payable, the hedged item. Accordingly, their fair value is included in the fair value of the relevant long-term loans
payable (See Note “9. Financial Instruments” 2. Matters Concerning Fair Value, etc. of Financial Instruments(Note 1) (8) Long-term loans payable.).

12. Retirement Benefits

0.12%

0.04%

Effective income tax rate

0.17%

0.07%

14. Equity Method Income and Retained Earnings
21st Fiscal Period (from October 1, 2015 to March 31, 2016)
Not applicable as the Investment Corporation does not have any affiliated companies.
22nd Fiscal Period (from April 1, 2016 to September 30, 2016)
Not applicable as the Investment Corporation does not have any affiliated companies.

15. Assets Retirement Obligations
21st Fiscal Period (from October 1, 2015 to March 31, 2016)
Not applicable
22nd Fiscal Period (from April 1, 2016 to September 30, 2016)
Not applicable

16. Transactions with Related Parties
1. Parent Company and Major Corporation Unitholders
21st Fiscal Period (from October 1, 2015 to March 31, 2016)
Not applicable
22nd Fiscal Period (from April 1, 2016 to September 30, 2016)
Not applicable
2. Subsidiaries and Affiliates
21st Fiscal Period (from October 1, 2015 to March 31, 2016)
Not applicable

22nd Fiscal Period (As of September 30, 2016)
Not applicable as the Investment Corporation does not have any retirement benefit plan.

22nd Fiscal Period (from April 1, 2016 to September 30, 2016)
Not applicable

13. Income Taxes

3. Sister Companies
21st Fiscal Period (from October 1, 2015 to March 31, 2016)
Not applicable

21st Fiscal Period(As of March 31, 2016)(Thousand yen)
22nd Fiscal Period(As of September 30, 2016)

Deferred tax assets:
Amortization of leasehold rights in trust

5,338

5,978

1,429

1,211

238

34

Amount of allowance for doubtful accounts notdeductible from taxable income
Amount of accrued business taxes not deductible
from taxable income
Subtotal deferred tax assets

7,005

7,225

Valuation allowance(6,767)(7,190)Total deferred tax assets
Deferred tax assets, net

238

34

238

34

22nd Fiscal Period(As of September 30, 2016)

Other

21st Fiscal Period (As of March 31, 2016)
Not applicable as the Investment Corporation does not have any retirement benefit plan.

1. Deferred tax assets and deferred tax liabilities consisted of the following:37

21st Fiscal Period(As of March 31, 2016)

22nd Fiscal Period (from April 1, 2016 to September 30, 2016)
Not applicable38

17. Segment Information

4. Directors and Major Individual Unitholders
21st Fiscal Period (from October 1, 2015 to March 31, 2016)

Classification Name

Share of
VotingRights [orBusiness
Ownership
Description orof Such in
Occupation
theInvestment
Corporation]

Description ofTransaction

Balance atTransaction
the End ofAmountCategory
Period(thousand(thousand
yen)
yen)

Payment of asset
Accounts
management fees to609,360
Sekisui House SI
Executive Director
payable 558,058(Note 2)
Asset Management,of the Investment
other
Director andLtd. (Note 1)
Corporation and
Osamu
President ofPayment of institution
its close
Minami Sekisui House SI
operation andrelatives
AccountsAssetadministration fees to
1,400 payable 1,512
Management, Ltd.
Sekisui House SI
other
Asset Management,
Ltd. (Note 3)(Note 1) The transaction was conducted by Osamu Minami as representative of a third party (Sekisui House SI AssetManagement, Ltd.), and the fees are based on the terms and conditions designated in the Articles ofIncorporation of the Investment Corporation.
(Note 2) The figure includes 67,840 thousand yen as asset management fees related to property acquisitions, which havebeen capitalized in the book value of individual real properties, and 70,400 thousand yen of asset management
fees related to property disposition, which have been recorded in other sales expenses.
(Note 3) The transaction was conducted by Osamu Minami as representative of a third party (Sekisui House SI AssetManagement, Ltd.), and the fees are based on the institution operation and administration agreement.
(Note 4) Of the amounts in the above table, consumption taxes are not included in the transaction amount but areincluded in the balance at the end of period.

22nd Fiscal Period (from April 1, 2016 to September 30, 2016)

Classification Name

Share of
VotingRights [orBusiness
Ownership
Description orof Such in
Occupation
theInvestment
Corporation]

Description ofTransaction

Balance atTransaction
the End ofAmountCategory
Period(thousand(thousand
yen)
yen)

Payment of asset
Accounts
management fees to524,181Sekisui House SI
Executive Director
payable 536,493(Note 2)
Asset Management,of the Investment
other
Director andLtd. (Note 1)
Corporation and
Osamu
President ofPayment of institution
its close
Minami Sekisui House SI
operation andrelatives
AccountsAssetadministration fees to
6,100 payable 1,512
Management, Ltd.
Sekisui House SI
other
Asset Management,
Ltd. (Note 3)(Note 1) The transaction was conducted by Osamu Minami as representative of a third party (Sekisui House SI AssetManagement, Ltd.), and the fees are based on the terms and conditions designated in the Articles ofIncorporation of the Investment Corporation.
(Note 2) The figure includes 27,240 thousand yen as asset management fees related to property acquisitions, which havebeen capitalized in the book value of individual real properties, and 12,668 thousand yen of asset management
fees related to property disposition, which have been recorded in other sales expenses.
(Note 3) The transaction was conducted by Osamu Minami as representative of a third party (Sekisui House SI AssetManagement, Ltd.), and the fees are based on the institution operation and administration agreement.
(Note 4) Of the amounts in the above table, consumption taxes are not included in the transaction amount but areincluded in the balance at the end of period.

39[Segment Information]
Descriptions are omitted as the Investment Corporation has a single business segment of real estateleasing business.
[Related Information]
21st Fiscal Period (from October 1, 2015 to March 31, 2016)(1) Information by product and service
Descriptions are omitted as the Investment Corporation’s operating revenue under single product/service
classification for outside customers exceeds 90% of operating revenue recorded in the statement ofincome and retained earnings.
(2) Information by region(a) Operating revenue
Descriptions are omitted as the Investment Corporation’s operating revenue for outside customers inJapan exceeds 90% of operating revenue recorded in the statement of income and retained earnings.
(b) Property, plant and equipment
Descriptions are omitted as the amount of the Investment Corporation’s property, plant andequipment located in Japan exceeds 90% of property, plant and equipment recorded in the balance
sheet.
(3) Information by major customer
Descriptions are omitted as the Investment Corporation’s operating revenue for any individual outside
customer is less than 10% of operating revenue recorded in the statement of income and retained
earnings.
22nd Fiscal Period (from April 1, 2016 to September 30, 2016)(1) Information by product and service
Descriptions are omitted as the Investment Corporation’s operating revenue under single product/service
classification for outside customers exceeds 90% of operating revenue recorded in the statement ofincome and retained earnings.
(2) Information by region(a) Operating revenue
Descriptions are omitted as the Investment Corporation’s operating revenue for outside customers inJapan exceeds 90% of operating revenue recorded in the statement of income and retained earnings.
(b) Property, plant and equipment
Descriptions are omitted as the amount of the Investment Corporation’s property, plant andequipment located in Japan exceeds 90% of property, plant and equipment recorded in the balance
sheet.
(3) Information by major customer
Descriptions are omitted as the Investment Corporation’s operating revenue for any individual outside
customer is less than 10% of operating revenue recorded in the statement of income and retained
earnings.

18. Per Unit Information
21st Fiscal Period
22nd Fiscal Period(October 1, 2015 –(April 1, 2016 –March 31, 2016)
September 30, 2016)
Net assets per unit
89,639 yen
89,668 yen
Net income per unit
2,171 yen
2,153 yen
(Note 1) Diluted net income per unit has not been presented since no warrants or convertible bonds are outstanding.
(Note 2) Net income per unit has been calculated based on the following data:
Item

PeriodPeriodItem
Net Income (thousand yen)Amount not attributable to ordinary
unitholders (thousand yen)
Net income attributable to ordinary
investment units (thousand yen)
Average number of units during the
fiscal period (units)

21st Fiscal Period(October 1, 2015 –March 31, 2016)
2,210,494

22nd Fiscal Period(April 1, 2016 –September 30, 2016)
2,192,416--

2,210,494

2,192,416

1,018,110

1,018,11040

Sekisui House SI Residential Investment Corporation

19. Rental Properties

21. Detailed Schedules

The Investment Corporation owns assets as trust beneficiary interests in real estate as entrusted property,
which comprises rental residential properties and rental retail properties. Real estate rental revenues andexpenses for the relevant rental properties amounted to 3,266,794 thousand yen for the 21st fiscal period
and 3,456,432 thousand yen for the 22nd fiscal period, respectively. The following table provides the bookvalue recorded on the balance sheet, amount of change during the period and fair value of these rental
properties.

1. Schedule of Securities
Not applicable
Real estate trust beneficiary interests are included in the Summary of Detailed Schedule of Real Properties.

21st Fiscal Period(October 1, 2015 –March 31, 2016)(Thousand yen)
22nd Fiscal Period(April 1, 2016–
September 30, 2016)

Book value recorded on the balance sheet
Balance at the beginning of period
186,002,975
188,701,461
Amount of net change during period
2,698,486
4,292,620
Balance at the end of period
188,701,461
192,994,081
Fair value at the end of period
207,565,700
214,650,000(Note 1) Book value recorded on the balance sheet indicates the book value less accumulated depreciation.
(Note 2) Net change during the 21st fiscal period is comprised of increases primarily attributable to new acquisitions of 3
properties (12,113,113 thousand yen) and decrease primarily attributable to disposition of Esty Maison IMAIKE,RINKU HAGURAZAKI Plaza, KOJIMA × BIC CAMERA Kamifukuoka store, Joy Square YUGAWARA and Bell
Plaza Shopping Center (8,240,605 thousand yen) and depreciation (1,468,403 thousand yen). Net change
during the 22nd fiscal period is comprised of increases primarily attributable to new acquisitions of 4 properties(7,061,224 thousand yen) and decrease primarily attributable to disposition of Esty Maison HIGASHISHINJUKU(part of the land) and b-town MINAMIAOYAMA (1,502,287 thousand yen) and depreciation (1,582,549 thousandyen).
(Note 3) Pursuant to the Articles of Incorporation, the fair value at the end of period indicates the appraisal value or
surveyed value provided by outside real estate appraisers with the respective appraisal dates of March 31, 2016
and September 30, 2016.

20. Significant Subsequent Events[Issuance of New Investment Units]
Based on the resolutions made at the board of directors’ meetings held on October 7 and October 19, 2016,
the Investment Corporation issued new investment units as described below, in order to use the proceeds tofund acquisitions of specified assets and expenses incidental to the acquisitions. Payment was completed on
October 26, 2016 for the investment units issued through public offering. As for the new investment units
issued through third-party allotment, Mizuho Securities Co., Ltd., the allottee, notified about subscribing for
the whole of the investment units offered (4,160 units). Payment was completed on November 14, 2016. As aresult, unitholders’ capital increased to 98,633,978,945 yen, with the number of investment units issued andoutstanding totaling 1,105,510 units.
<Issuance of investment units through public offering (public offering)>
Number of investment units issued:
83,240 units
Issue price (offer price):
114,855 yen per unit
Total issue price (total offer price):
9,560,530,200 yen
Paid-in amount (issue amount):
111,085 yen per unit
Total paid-in amount (total issue amount):
9,246,715,400 yen
Payment date:
October 26, 2016
Starting date for calculating distributions:
October 1, 2016
<Issuance of investment units by way of third-party allotment>
Number of investment units issued:
4,160 units
Paid-in amount (issue amount):
111,085 yen per unit
Total paid-in amount (total issue amount):
462,113,600 yen
Payment date:November 14, 2016
Starting date for calculating distributions:
October 1, 2016
Third party allottee:
Mizuho Securities Co., Ltd.

41

2. Schedule of Contract Amount, Etc. and Fair Value of Derivative Transactions and Forward Exchange
Transactions(Thousand yen)

Category

Type

Transaction other thanmarket transaction

Interest rate swap
transaction
Receivable floating;payable fixed

Total

Contract Amount (Note 1)
Of Which,over 1 Year73,509,500

61,304,500

73,509,500

61,304,500

Fair Value(Note 2)-

(Note 1) The contract amount of interest rate swaps is indicated based on the notional principal amount.
(Note 2) Description of fair value is omitted as the transactions satisfy the requirements for special accounting under theaccounting standards for financial instruments.

3. Summary of Detailed Schedule of Real Properties(Million yen)

Accumulated Depreciation Net Balance
Balance Increase Decrease Balance
as ofduringduring
as of
as of
or
Depreciation
Type of Assets
Remarks
April 1,thethe
September Accumulated during the September
2016
PeriodPeriod30, 2016
30, 2016
Amortization
PeriodBuildings in trust 101,392
2,879
292
103,979
15,1001,474
88,879(Note)
Structures in trust
878
22
0
900
218
24
682
(Note)
Machinery and
1,926
45
1,972
572
65
1,400
(Note)
equipment in trust
Property,
Tools, furnitureplant andand fixtures in
207
56
263
86
15
177
(Note)
equipment trust
Land in trust
98,617
4,373
1,281
101,708
101,708(Note)
Construction in
52
52
52
progress in trust
Total
203,0217,429
1,574
208,877
15,977
1,580
192,900
Leasehold rights
164
164
18
2
145
in trust
Intangible
Trademark rights
0000(Note)
assets
Other
6
0
6
6
0
0
Total
171
0
0
171
25
2
146

(Note) The amount of increase during the 22nd fiscal period is primarily attributable to the acquisition of Prime Maison
SHIBUYA, Prime Maison HATSUDAI, Esty Maison UEMACHIDAI and Esty Maison KOBE-SANNOMIYA. The
amount of decrease during the 22nd fiscal period is attributable to the disposition of Esty Maison
HIGASHISHINJUKU (part of land) and b-town MINAMIAOYAMA.

4. Schedule of Other Specified Assets
Not applicable
Real estate trust beneficiary interests are included in the Summary of Detailed Schedule of Real Properties.

42

Sekisui House SI Residential Investment Corporation

6. Schedule of Loans Payable

5. Schedule of Investment Corporation Bonds
NameFirst Series
Unsecured
Investment
Corporation Bonds
Second Series
Unsecured
Investment
Corporation Bonds
Third Series
Unsecured
Investment
Corporation Bonds
Fourth Series
Unsecured
Investment
Corporation Bonds
Fifth Series
Unsecured
Investment
Corporation Bonds
Total

Issue Date

February 28,
2013

Decrease Balance as of
Balance as of
Couponduring the
September
April 1, 2016
Rate
Period30, 2016(million yen)(%)(million yen) (million yen)
4,000

-

4,000

0.630

Category

Redemption
Date

Purpose Collateral

LenderMizuho Bank, Ltd.

February 28,
2018

February 28,
2013

2,000

-

2,000

1.000

February 28,
2020

February 28,
2014

2,500

-

2,500

0.374

February 28,
2019

February 28,
2014

3,000

-

3,000

1.069

February 28,2024

August 29,
2014

3,000

-

3,000

0.871

August 30,
2024

14,500-14,500Unsecured

4,000

2,500

2,000

-

400

-

400

-

400

-

400

-

2,000

-

2,000

-

2,000

-

2,000

-

2,000

-

2,000

-

-

1,500

500

1,000

-

1,500

500

1,000

-

1,500

500

1,000

Subtotal

7,200

4,500

8,700

3,000

Aozora Bank, Ltd.

100

-

-

100

Shinkin Central Bank

100

-

-

100

Mizuho Bank, Ltd.

200

-

-

200

200

-

-

200

200

-

-

200

100

-

-

100

100

-

-

100

300

-

-

300

Resona Bank, Limited

200

-

-

200

Development Bank ofJapan Inc.

1,200

-

-

1,200

The Bank of Fukuoka, Ltd.

500

-

-

500

Mizuho Bank, Ltd.

Sumitomo Mitsui Banking
Corporation
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking
Corporation
The Bank ofTokyo-Mitsubishi UFJ, Ltd.

Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation-

Long-term
loans
payable43

400

Mizuho Bank, Ltd.

(Note 2)

(Note 1) The proceeds are used as funds for repayment of borrowings and acquisition of real estate trust beneficiaryinterests, etc.
(Note 2) The proceeds are used as funds for repayment of borrowings, etc.
(Note 3) These investment corporation bonds are equipped with pari passu clause among specified investment
corporation bonds.
(Note 4) Amounts of investment corporation bonds to be redeemed annually within five years after the date of the balance
sheet are as follows.
(Million yen)Due in 1 YearDue after 1 YearDue after 2 Years
Due after 3 Years
Due after 4 Yearsor Less
through 2 Years
through 3 Years
through 4 Years
through 5 Years--

Mizuho Bank, Ltd.
Short-termloanspayableIncrease Decrease Balance
duringduringas of
Averagethethe
SeptemberInterest Rate
PeriodPeriod30, 2016(Note 1)(million (million(million
yen)
yen)
yen)

400

Sumitomo Mitsui Banking
Corporation
The Bank ofTokyo-Mitsubishi UFJ, Ltd.

(Note 1)

Balance
as ofApril 1,
2016
(million
yen)

400

-

-

400

Sumitomo Mitsui Banking
Corporation

1,100

-

-

1,100

The Bank ofTokyo-Mitsubishi UFJ, Ltd.

1,300

-

-

1,300

The Yamaguchi Bank, Ltd.

500

-

-

500

Development Bank ofJapan Inc.

941

-

-

941

Mizuho Bank, Ltd.

1,470

-

-

1,470

Sumitomo Mitsui Banking
Corporation

1,470

-

-

1,470

The Norinchukin Bank

2,352

-

-

2,352

Mizuho Bank, Ltd.

176

-

-

176

Sumitomo Mitsui Banking
Corporation

176

-

-

176

Mizuho Bank, Ltd.

750

-

-

750

Mizuho Trust & Banking
Co., Ltd.

2,250

-

-

2,250

Sumitomo Mitsui Banking
Corporation

750

-

-

750

The Bank ofTokyo-Mitsubishi UFJ, Ltd.

750

-

-

750

0.21614%

Repayment
Date

Repayment
Purpose
MethodRemarks

August 31,
2016(Note 4)Lump-sumupon
maturity

Unsecured/
Unguaranteed

0.21614%

August 31,
2016

0.20682%

August 31,
2017(Note 2)

(Note 5)

1.18975%

February 28,
2017(Note 3)(Note 4)

1.19475%

1.15475%

February 28,
2017
Lump-sum(Note 3)upon
maturity(Note 6)
Unsecured/
Unguaranteed

February 28,
2019(Note 5)0.95750%

August 31,
2017(Note 3)0.89900%

February 28,
2019(Note 4)44

Sekisui House SI Residential Investment Corporation

Category
LenderMizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation

500

-

-

Category
Repayment
Date

Repayment
Purpose
MethodRemarks

Lender400

Mizuho Bank, Ltd.

500

Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ, Ltd.

1.02225%

February 28,2020

Balance Increase Decrease Balance
as ofduringduringas of
Average
April 1,thethe
SeptemberInterest Rate
2016
PeriodPeriod30, 2016(Note 1)(million (million (million (million
yen)
yen)
yen)
yen)
300

-

-

300

300

-

-

300

400

-

-

400

800

-

-

800

400

-

-

400

980

-

-

980

500

-

-

500

1,500

-

-

1,500

500

-

-

500

-

-

1,700

2,142

-

-

2,142

Resona Bank, Limited

500

-

-

500

The 77 Bank, Ltd.

500

-

-

500

The Hiroshima Bank, Ltd.

500

-

-

500

Mizuho Bank, Ltd.

100

-

-

100

500

-

-

500

500

-

-

500

Resona Bank, Limited

800

-

-

800

Aozora Bank, Ltd.

200

-

-

200

The Senshu Ikeda Bank,
Ltd.

500

-

-

500

Shinkin Central Bank

200

-

-

200

Mizuho Bank, Ltd.

400

-

-

400

Mizuho Bank, Ltd.

300

-

-

300

500

-

-

500

400

-

-

400

500

-

-

500

300

-

-

300

500

-

-

500

200

-

-

200

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

500

-

-

500

700

-

-

700

The Yamaguchi Bank, Ltd.

500

-

-

500

500

-

-

500

Resona Bank, Limited

500

-

-

500

200

-

-

200

Mizuho Bank, Ltd.

Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation
Resona Bank, Limited

Mizuho Bank, Ltd.

(Note 5)0.75600%

0.65475%

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

February 28,
2018

February 28,
2017(Note 3)Lump-sumupon
maturity(Note 4)
Unsecured/
Unguaranteed

Long-term
loans
payable

405

-

-

405

1,145

-

-

1,145

Aozora Bank, Ltd.

1,000

-

-

1,000

Sumitomo Mitsui Banking
Corporation

Mizuho Bank, Ltd.

500

-

-

500

The Shizuoka Bank, Ltd.

500

-

-

500

200

-

-

200

Shinkin Central Bank

500

-

-

500

The Bank of Fukuoka, Ltd.

500

-

-

500

Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Trust
Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation
Resona Bank, Limited

August 31,
2020

2,500

-

-

2,500

600

-

-

600

Mizuho Bank, Ltd.

300

-

-

300

Sumitomo Mitsui Banking
Corporation

300

-

-

300

2,500

-

-

2,500

2,000

-

-

2,000

900

-

-

900

Mizuho Bank, Ltd.

2,450

-

-

2,450

Sumitomo Mitsui Banking
Corporation

1,950

-

-

1,950

200

-

-

200

500

-

-

500

Aozora Bank, Ltd.

500

-

-

500

Mizuho Bank, Ltd.

200

-

-

200

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

45

400

Increase Decrease Balance
duringduringas of
Averagethethe
SeptemberInterest Rate
PeriodPeriod30, 2016(Note 1)(million (million(million
yen)
yen)
yen)

1,700

The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation

Long-term
loans
payableBalance
as ofApril 1,
2016
(million
yen)

200

-

-

200

1,100

-

-

1,100

500

-

-

500

1.17200%(Note 5)

Mizuho Bank, Ltd.

0.47471%

August 31,
2018

Sumitomo Mitsui Banking
Corporation
The Bank ofTokyo-Mitsubishi UFJ, Ltd.

Repayment Repayment
PurposeDate
Method1.17350%

February 28,
2022

1.11000%

February 28,
2022

Remarks(Note 4)(Note 5)0.95225%

February 26,
2021

0.79614%February 28,
2020

0.97300%

February 26,
2021

0.96475%

August 31,
2022

Lump-sumupon
maturity

Unsecured/
Unguaranteed(Note 4)(Note 5)0.83600%

August 31,
2021

46

Sekisui House SI Residential Investment Corporation

Category
LenderCategory
Remarks

LenderAozora Bank, Ltd.

200

-

-

200

Mizuho Bank, Ltd.

The Senshu Ikeda Bank,
Ltd.

200

-

-

200

The Shizuoka Bank, Ltd.

200

-

-

200

The 77 Bank, Ltd.

200

-

-

200

Shinkin Central Bank

200

-

-

200

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

The Norinchukin Bank

500

-

-

500

The Hiroshima Bank, Ltd.

200

-

-

200

The Bank of Fukuoka, Ltd.

700

-

-

700

1,000

-

-

1,000

800

-

-

800

600

-

-

600

300

-

-

300

800

-

-

800

500

-

-

500

The Yamaguchi Bank, Ltd.

200

-

-

200

Resona Bank, Limited

500

-

-

500

Mizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation

Long-term
loans
payableBalance Increase Decrease Balance
as ofduringduringas of
Average
April 1,thethe
September
Repayment Repayment
Interest Rate
Purpose2016
PeriodPeriod30, 2016
Date
Method(Note 1)(million (million (million(million
yen)
yen)
yen)
yen)

Development Bank ofJapan Inc.

1,000

The Norinchukin Bank

800

-

-

800

The Bank of Fukuoka, Ltd.

500

-

-

500

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
The Bank ofTokyo-Mitsubishi UFJ, Ltd.

-

-

1,000

0.86650%

February 28,
2023

0.85250%

450

-

-

450

1,000

-

-

1,000

450

-

-

450

2,100

-

-

2,100

Mizuho Bank, Ltd.

100

-

-

100

Aozora Bank, Ltd.

-

200

-

200

The Norinchukin Bank

-

300

-

300

Mizuho Bank, Ltd.

-

1,100

-

1,100

-

500

-

500

-

1,100

-

1,100

-

450

-

450

-

700

-

700

The Yamaguchi Bank, Ltd.

-

100

-

100

Resona Bank, Limited

-

300

-

300

The Senshu Ikeda Bank, Ltd.

-

100

-

100

The Shizuoka Bank, Ltd.

-

100

-

100

The 77 Bank, Ltd.

-

100

-

100

Shinkin Central Bank

-

100

-

100

Development Bank of Japan
Inc.

-

600

-

600

The Hiroshima Bank, Ltd.

-

100

-

100

-

200

-

200

-

450

-

450

-

400

-

400

-

800

-

800

-

800

-

800

-

1,000

-

1,000

-

600

-

600

The Norinchukin Bank

-

300

-

300

Mizuho Bank, Ltd.

-

200

-

200

-

500

-

500

-

200

-

200

-

400

-

400

-

300

-

300

82,00912,0002,800

91,20989,20916,50011,50094,209Mizuho Trust & Banking Co.,
Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank,
LimitedThe Bank ofTokyo-Mitsubishi UFJ, Ltd.

(Note 5)February 28,
2023

Lump-sumupon
maturity

Unsecured/
Unguaranteed

Long-term
loans
payable

500

-

-

500

500

-

-

500

300

-

-

300

The Bank of Fukuoka, Ltd.
Mitsubishi UFJ Trust andBanking Corporation
Development Bank of JapanInc.

0.73975%

February 28,
2022

Resona Bank, Limited

750

-

-

750

The Senshu Ikeda Bank,
Ltd.

500

-

-

500

The Shizuoka Bank, Ltd.

500

-

-

500

Mizuho Bank, Ltd.

The 77 Bank, Ltd.

500

-

-

500

Shinkin Central Bank

500

-

-

500

The Norinchukin Bank

500

-

-

500

The Hiroshima Bank, Ltd.

500

-

-

500

Sumitomo Mitsui Banking
Corporation
Mitsubishi UFJ Trust andBanking Corporation
The Bank ofTokyo-Mitsubishi UFJ, Ltd.

Mizuho Bank, Ltd.

600

-

-

600

Sumitomo Mitsui Banking
Corporation

300

-

-

300

Mizuho Bank, Ltd.

700

-

700

-

700

-

700

-

700

-

700

-

700

-

700

-

Sumitomo Mitsui Banking
Corporation
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation

0.62800%

0.21614%February 26,
2021

August 31,
2016(Note 4)

Mizuho Trust & Banking Co.,
Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank,
LimitedResona Bank, Limited
Subtotal
Total

47

Balance Increase Decrease Balance
as ofduringduringas of
Average
April 1,thethe
September
Repayment Repayment
Interest Rate
Purpose2016
PeriodPeriod30, 2016
Date
Method(Note 1)(million (million (million(million
yen)
yen)
yen)
yen)

0.68030%

August 31,
2023

0.67400%

August 31,
2023

0.46442%

February 29,2024

Remarks(Note 4)Lump-sumupon
maturity
0.50500%

February 29,
2024

0.59750%

August 29,2025

0.57000%

August 29,
2025

Unsecured/
Unguaranteed(Note 5)0.49500%

August 30,
2024

48

Sekisui House SI Residential Investment Corporation(Note 1) The “average interest rate” is a weighted-average figure during the fiscal period and is rounded to the fifth
decimal place. Furthermore, the average interest rate of borrowings for which the Investment Corporation
conducted interest rate swap transactions for the purpose of hedging the interest rate fluctuation risk is the rate
obtained by taking into account the effect of interest rate swaps.
(Note 2) The Investment Corporation borrowed short-term loans payable initially totaling 4.5 billion yen on August 31,
2016. Of the amount, the Investment Corporation made early repayment for 1.5 billion yen on September 30,
2016 and for 1.8 billion yen on December 9, 2016. The amount of the early repayment to each lender is 1.1
billion yen respectively.
(Note 3) These loans are recorded in the current liabilities on the balance sheet as current portion of long-term loans
payable as of the end of the 22nd fiscal period.
(Note 4) These loans are used as funds for the acquisition of real estate trust beneficiary interests, etc.
(Note 5) These loans are used as funds for repayment of existing borrowings.
(Note 6) These loans are used as funds for redemption of the Second Series Unsecured Investment Corporation Bonds(with pari passu clause among specified investment corporation bonds and with limitations on resale among
qualified institutional investors) issued in March 2007.
(Note 7) Amounts of long-term loans payable to be repaid annually within five years after the date of the balance sheet are
as follows.
(Million yen)Due in 1 Yearor Less

12,20549

Due after 1 Yearthrough 2 Years

4,600

Due after 2 Years
through 3 Years

8,382

Due after 3 Years
through 4 Years

12,292

Due after 4 Years
through 5 Years

14,30050

Sekisui House SI Residential Investment Corporation

Overview of the Investment Corporation
Trade Name

Overview of the Asset Management Company
Corporate Name

Sekisui House SI Asset Management, Ltd.

3-1-31 Minami-Aoyama, Minato-ku, Tokyo
Tel: +81-3-5770-8973 (main number)Head Office3-1-31 Minami-Aoyama, Minato-ku, Tokyo
Tel: +81-3-5770-8973 (main number)

Osamu Minami, Executive Director

Paid-in Capital

200 million yen

Sekisui House SI Asset Management, Ltd.

Shareholders

Sekisui House, Ltd
Spring Investment Co., Ltd.

Sekisui House SI Residential Investment Corporation

Address
Representative

Asset Management Company

75%
25%

Osamu Minami
Nobuyoshi Sato
Senior Managing Director: Koji Sakamoto (in charge of IR & Financial Affairs Department, Engineering Management Department,
President:

Fiscal Term

End of March and end of September

Executive Vice President:

Directors
April 20, 2005

History

May 19, 2005
July 28, 2005

Registration and Establishment under Article 166 of the Act Concerning Investment Trusts andInvestment Corporations (Investment Trusts Act)
Implementation of registration by the Prime Minister under Article 187 of the Investment Trusts
Act. (registration number: Director of Kanto Local Finance Bureau No.33)
Listed on the Real Estate Investment Trust Section of the Tokyo Stock Exchange

Organizational Structure

Specific Related Corporation/
Pipeline Support Companies

negotiation rights, etc.

● Asset Management

Agreement● Institutional
Management Agreement● Agreement concerning preferential

provision of property information● Agreement concerning preferential
negotiation rights, etc.
● Agreement concerning preferential
negotiation rights

Sekisui House
SI Residential
Investment Corporation

The asset management of the Investment Corporation is entrusted to Sekisui House SI Asset Management, Ltd., the asset management company.
The following diagram shows the organizational chart of the asset management company and its institutions in charge of compliance. Furthermore,“Engineering Management Department” was newly established as of July 1, 2016, as a department that is dedicatedly engaged in preparing long-term
repair plans and investigating and controlling large-scale repairs, etc. for the investment properties of the Investment Corporation.

Sekiwa Real Estate Kansai, Ltd.

Sekiwa Real Estate Tohoku, Ltd. Sekiwa Real Estate Chugoku, Ltd.
Sekiwa Real Estate Kyushu, Ltd.

Entrustment Agreement

Statutory Auditor
Organ to discuss and decide on basic andimportant compliance matters, etc.

Board of Directors

Mizuho Trust &Banking Co., Ltd.

Compliance Committee
Investment Committee

Compliance Committee

Board of Directors
Executive
Director:
Supervisory
Director:
Supervisory
Director:

Organs in charge of compliance
Mizuho Trust &Banking Co., Ltd.

Compliance Officer

Osamu Minami
Kaoru Takamatsu

President

Mikio Koyano● Financial Agency Agreement

The Compliance Committee consists of
the Compliance Officer, President andexternal experts in compliance.

Transfer Agent

Agreement

Independent Auditor

51

EstablishedObtained license as asset management agent for investment corporation under the Investment
Trusts Act (approval number: No. 41 licensed by the Prime Minister)● Asset Custody Agreement● Transfer Agency Services

Spring Investment Co., Ltd.

Sekiwa Real Estate Chubu, Ltd.

April 18, 2005

Administrator(Accounting) &Custodian

General Meeting ofUnitholders

Pipeline Support Companies

Sekiwa Real Estate Kanto, Ltd.

July 28, 2004

History

General Meeting of
Shareholders● General Administrative Affairs● Agreement concerning preferential

Sekisui House SI
Asset Management, Ltd.

Auditor (part-time):

Investment Corporation

Sekisui House, Ltd.
Sekiwa Real Estate, Ltd.

(Institutional management)

Director (part-time):

Masaki Katsura (in charge of Asset Management Department)
Yoshiki Inazawa (Senior Manager, Accounting & Finance Department, Sekisui House, Ltd.)
Naoki Kawamura (Section Manager, Legal Department, Sekisui House, Ltd.)

Structure to Manage the Investment Corporation

Based on its Articles of Incorporation, the Investment Corporation manages the funds paid in by the unitholders by investing primarily in real estate andrelated assets.
The following diagram indicates the operational roles and assignments of the companies involved in the management and administration of the Investment Corporation.

Asset Management Company & Administrator

Real Estate Investment Department and Management Department)

Director:

Investment Corporation
Bond Administrator

Risk Management andCompliance Office

The Bank of TokyoMitsubishi UFJ, Ltd.

Compliance Officer
The Compliance Officer is responsible
for managing the overall compliance of
the Asset Management Company. The
Compliance Officer shall be selectedbased on having sufficient examining
and supervising capabilities to ensurecompliance with laws, regulations andvarious rules by the Asset Management
Company.
Risk Management and Compliance Office

Ernst & Young ShinNihon LLC

Real Estate
Investment Department

Asset Management
Department

Engineering
Management Department

IR & Financial
Affairs Department

Management
Department

The Risk Management and Compliance
Office monitors operations with regard torisk management and compliance withlaws, regulations and various rules, etc.

52Sekisui House SI Residential Investment Corporation

Unitholders Information

MEMO

Changes in Investment Unit Price and Transaction Volume in the Last Two Years (September 30, 2014 – September 30, 2016)(Investment unit price: yen)

200,000

Investment unit priceTransaction volume

Market capitalization: 117,693 million yen (as of September 30, 2016)
High (closing price) in the 22nd fiscal period: 126,700 yen (July 28, 2016)(Transaction volume: units)

30,000Low (closing price) in the 22nd fiscal period: 107,500 yen (June 27, 2016)
Period-end investment unit price in the 22nd fiscal period: 115,600 yen (September 30, 2016)
150,000

20,000100,000

10,00050,000
Sept. 30,2014
(18th FP)0
Dec. 31

Jun. 30

Mar. 31,2015(19th FP)

Sept. 30,2015
(20th FP)

Dec. 31Mar. 31,2016(21st FP)

Jun. 30

Sept. 30,2016
(22nd FP)

Unitholder Composition
Financial Institutions (including securities companies)● Number of Unitholders

135（1.23%）

End of 22nd FP (Sept. 30, 2016)
10,935 unitholders

Foreign firms

Individuals and others

158（1.44%）
10,427（95.35%）

215（1.97%）
136（1.14%）

End of 21st FP (Mar. 31, 2016)
11,958 unitholders

Other domestic firms

147（1.23%）
11,448（95.74%）

227（1.90%）● Number of Investment Units

93,332 units（9.17%）

End of 22nd FP (Sept. 30, 2016)

140,339 units（13.78%） 110,442 units（10.85%）

673,997 units（66.20%）

1,018,110 units

End of 21st FP (Mar. 31, 2016)

152,950 units（15.02%） 121,106 units（11.90%）

651,771 units（64.02%）

1,018,110 units

92,283 units（9.06%）

Major Unitholders
The following table shows the 10 largest unitholders according to the ratio of their owned investment units to the total number of investment units
issued as of September 30, 2016.
Name / Company Name

Number of Investment
Units Owned (units)

Ratio of Investment Units Owned toTotal Investment Units Issued(%) (Note)

Japan Trustee Services Bank, Ltd. (Trust Account)

286,100

28.10

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

61,019

5.99

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

49,770

4.88

Sekisui House, Ltd.

39,000

3.83

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

34,995

3.43

THE FUJI FIRE AND MARINE INSURANCE COMPANY, LIMITED

20,630

2.02

THE HACHIJUNI BANK, LTD.

19,754

1.94

DEUTSCHE BANK AG LONDON-PB NON-TREATY CLIENTS 613

19,386

1.90

The Hokuriku Bank, Ltd.

16,517

1.62

Spring Investors Co., Ltd.

13,0001.27

560,171

55.02

Total
(Note) The ratios of investment units owned to total investment units issued are rounded down to the nearest second decimal place.

53

54