January 24, 2018
Real Estate Investment Trust Securities Issuer
Sekisui House Reit, Inc.
Representative:

Junichi Inoue, Executive Director(Securities Code: 3309)

Asset Management Company
Sekisui House Investment Advisors, Ltd.
Representative:

Junichi Inoue,
President & Representative Director

Inquiries:

Atsuhiro Kida,
Director & General Manager
Management Division
TEL: +81-3-6447-4870 (main)

Real Estate Investment Trust Securities Issuer
Sekisui House Residential Investment Corporation
Representative:

Osamu Minami, Executive Director(Securities Code: 8973)

Asset Management Company
Sekisui House Asset Management, Ltd.
Representative:

Osamu Minami,President & Representative Director

Inquiries:

Yoshiya Sasaki, General Manager
IR & Financial Affairs Department
TEL: +81-3-5770-8973 (main)

Notice Concerning Conclusion of a Merger Agreement between Sekisui House Investment Advisors, Ltd. andSekisui House Asset Management, Ltd., Which Are the Asset Management Companies
Sekisui House Investment Advisors, Ltd. (“SHIA”), which is the asset management company for Sekisui House Reit, Inc.
(“SHR”), and Sekisui House Asset Management, Ltd. (“SHAM,” and, collectively with SHIA, the “Two AssetManagement Companies”), which is the asset management company for Sekisui House Residential Investment
Corporation (“SHI,” and, collectively with SHR, the “Two Investment Corporations”), today at the respective board ofdirectors meetings of the Two Asset Management Companies resolved to execute an absorption-type merger (the “AssetManagement Company Merger”), with May 1, 2018 as the effective date, whereby SHIA will be the surviving company
and SHAM will be the dissolving company in the merger, and today executed a merger agreement (the “Asset Management
To unitholders in the United States:
This exchange offer or business combination is made for the securities of a foreign company. The offer is subject to disclosure
requirements of a foreign country that are different from those of the United States. Financial statements included in the document, if any,
have been prepared in accordance with foreign accounting standards that may not be comparable to the financial statements of UnitedStates companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the federal securities laws, since the issuer islocated in a foreign country, and some or all of its officers may be residents of a foreign country. You may not be able to sue a foreigncompany or its officers in a foreign court for violations of the U.S. securities laws. It may be difficult to compel a foreign company and its
affiliates to subject themselves to a U.S. court’s judgment.
You should be aware that the issuer may purchase securities otherwise than under the exchange offer, such as in open market or privately
negotiated purchases.
Disclaimer: This translation is for informational purposes only. If there is any discrepancy between the Japanese version of the English translation, the Japanese version shall prevail.

1Company Merger Agreement”) to that effect as set forth below.
1.

Purpose of the Asset Management Company Merger
As stated in the “Notice Concerning Conclusion of a Merger Agreement between Sekisui House Reit, Inc. and Sekisui

House Residential Investment Corporation,” which the Two Investment Corporations released today, the Two Investment
Corporations today concluded a merger agreement, with May 1, 2018 as the effective date, whereby it is planned that SHR
will be the surviving corporation and SHI will be the dissolving corporation in an absorption-type merger (the “InvestmentCorporation Merger”).
In conjunction with this, in order to provide for the effective management of the assets held by the surviving corporation(“New SHR”) subsequent to the Investment Corporation Merger, the Two Asset Management Companies will also, subject
to the Investment Corporation Merger becoming effective, merge, effective as of the same date.
2.

Thinking in regard to Conflict of Interests
The Two Asset Management Companies are both wholly-owned subsidiaries of Sekisui House, Ltd. (“Sekisui House”)

and are sister companies having the same parent company. During the period until the effective date of the InvestmentCorporation Merger, as in the past, the Two Asset Management Companies will appropriately and stringently continue toobserve all applicable laws and regulations and internal company rules concerning conflict of interests and will continue,
independently from one another, asset management aimed at maximizing value for the unitholders in each of the TwoInvestment Corporations.
3.

Overview of the Asset Management Company Merger(1) Schedule of the Asset Management Company Merger
Board of Directors meeting to approve the Asset Management CompanyMerger Agreement(Two Asset Management Companies)
Date of conclusion of Asset Management Company Merger Agreement(Two Asset Management Companies)
Date of approval of the Asset Management Company Merger Agreementby shareholders (SHAM)
Effective date of the Asset Management Company Merger

January 24, 2018

March 27, 2018

(tentative)

May 1, 2018

(tentative)

Registration date of the Asset Management Company Merger

Early May 2018

(tentative)

Date of notification to the Prime Minister

Early May 2018

(tentative)

Note: With respect to the Asset Management Company Merger, because SHIA will satisfy the requirements for a simplified
merger under the provisions of Article 796, Paragraph 2 of the Companies Act (Act No. 86 of 2005, including subsequentamendments, the “Companies Act”), SHIA does not plan to seek a general meeting of shareholders resolution of approval ofthe Asset Management Company Merger Agreement. SHAM plans to obtain the agreement of all shareholders for the AssetManagement Company Merger without convening a general meeting of shareholders pursuant to the provisions of Article
319, paragraph 1 of the Companies Act.

(2) Form of the Merger
SHIA will be the surviving company under an absorption-type merger and SHAM will be dissolved in theprocess of the Asset Management Company Merger.
(3) Allotment under the Asset Management Company Merger
Because the Two Asset Management Companies are both wholly-owned subsidiaries of Sekisui House, SHIA
will not allot shares or monies, etc. to shareholders of SHAM in the Asset Management Company Merger.

Disclaimer: This translation is for informational purposes only. If there is any discrepancy between the Japanese version of the English translation, the Japanese version shall prevail.

24.

Overview of the Parties to the Asset Management Company Merger
Surviving company in the absorptiontype merger(1) NameSekisui House Investment Advisors, Ltd.
(2)

Address

1-6-6 Motoakasaka, Minato-ku, Tokyo(3)

Name and title ofrepresentative(4)Business(5)(6)

CapitalDate of incorporation(7)

Net assets(8)

Total assets

Junichi Inoue, President &Representative Director
Asset management for a real estate
investment trust (J-REIT)
400 million yen
February 17, 2014
668 million yen(as of January 31, 2017)
779 million yen(as of January 31, 2017)

(9)
(10)

(11)

Dissolving company in the absorptiontype merger
Sekisui House Asset Management, Ltd.
3-1-31 Minami-Aoyama, Minato-ku,
TokyoOsamu Minami, President &Representative Director
Asset management for a real estate
investment trust (J-REIT)
200 million yen
July 28, 2004
905 million yen(as of March 31, 2017)
976 million yen(as of March 31, 2017)

Majority shareholder andSekisui House, Ltd. 100%
Sekisui House, Ltd. 100%
shareholding ratio
Relationships between the investment corporations and the asset management companies with counterparty
companies
There are no capital relationships that need to be noted between the parties to theCapital relationships
Asset Management Company Merger and the Two Investment Corporations.
There are no personnel relationships that need to be noted between the parties to thePersonnel relationships
Asset Management Company Merger and the Two Investment Corporations.
There are no business relationships that need to be noted between the parties to theBusiness relationships
Asset Management Company Merger and the Two Investment Corporations.
Because the parties to the Asset Management Company Merger are both whollyowned subsidiaries of Sekisui House and have the same parent company, they
Status as related parties
mutually fall under related parties.
The Two Investment Corporations do not fall under related parties.
Business performance and financial condition for the last three years

Net assets

January
2015323SHIAJanuary
2016
459

January
2017
668

March2015
782

SHAM
March
2016
911

March
2017
905

Total assets

328

535

779

997

1,102

976

40,42557,49983,593

195,616

227,871

226,405

Amount of sales

81

478

631

1,018

1,132

941

Operating income

(115)

212

308

586

665

475

Ordinary income

(117)

212

308

586

665

475

Net income

(76)

136

208

374

443

328

Net income per share (yen)(9,574)

17,07326,093

93,635110,962

82,026

Distributions per share (yen)--22,50078,707

83,493

95,176

Accounting term

Net assets per share (yen)(Unit: million yen unless otherwise noted)

Disclaimer: This translation is for informational purposes only. If there is any discrepancy between the Japanese version of the English translation, the Japanese version shall prevail.

35.

Status after the Asset Management Company Merger
Surviving company in the absorption-type merger(1)

NameSekisui House Asset Management, Ltd. (tentative) (Note 1)(currently Sekisui House Investment Advisors, Ltd.)(2)

Address

4-15-1 Akasaka, Minato-ku, Tokyo (tentative) (Note 2)(3)

Name and title ofrepresentative

Junichi Inoue, President & Representative Director(4)

Business

Asset management for a real estate investment trust (J-REIT)(5)

Capital

400 million yen(There will be no capital increase as a result of the Asset Management CompanyMerger.)(6)

Accounting periodJanuary(7)

Net assets

1,574 million yen (Note 3)(8)

Total assets

1,755 million yen (Note 3)

Note 1:
Note 2:
Note 3:

6.

It is planned that, simultaneously with the effectiveness of the Asset Management Company Merger, SHIA will change its
corporate name to “Sekisui House Asset Management, Ltd.”
It is planned that SHIA will move its head office on May 1, 2018, the effective date of the Asset Management CompanyMerger. Details will be notified as soon as they are finalized.
Net assets were calculated by simple addition of SHIA’s net assets as of January 31, 2017 and SHAM’s net assets as ofMarch 31, 2017, and total assets were similarly calculated by simple addition of SHIA’s total assets as of January 31, 2017
and SHAM’s total assets as of March 31, 2017, and the actual amounts of net assets and total assets of the surviving
company after the Asset Management Company Merger will differ from the calculated amounts.

Future Outlook(1) Changes to the Investment Corporations’ Asset Management Entrustment Agreements
Following the Investment Corporation Merger, SHR expects to continue to entrust asset management functions
to SHIA as it is currently doing. As far as regards the asset management entrustment agreement between SHR andSHIA, subject to the Investment Corporation Merger and the Amendment of the Articles of Incorporation (See“(5) Changes to Investment Policy” below) becoming effective, SHR and SHIA plan to conclude a revised
agreement incorporating changes necessitated by the Amendment of the Articles of Incorporation.
SHI, upon obtaining approval from a general meeting of unitholders, plans to cancel its asset management
entrustment agreement with SHAM, subject to the Investment Corporation Merger becoming effective, on theeffective date of the Investment Corporation Merger.
(2) Changes to the Structure of the Asset Management Company
Any changes will be notified as soon as they are decided.
(3) Changes to the Investment Management Decision-making Structure
Any changes will be notified as soon as they are decided.
(4) Changes to Rules regarding Compliance and Interested Parties, etc.
Any changes will be notified as soon as they are decided.
(5) Changes to Investment Policy
Based on the Investment Corporation Merger, in order to transform itself, as New SHR, into a “diversifiedREIT” with a high degree of stability and having as its core assets high-quality residential properties and officebuildings, SHR, subject to the Investment Corporation Merger becoming effective, plans to put before its general
meeting of unitholders scheduled for March 27, 2018, a resolution for amendment of its articles of incorporation

Disclaimer: This translation is for informational purposes only. If there is any discrepancy between the Japanese version of the English translation, the Japanese version shall prevail.

4(the “Amendment of the Articles of Incorporation”), etc. with a view to establishing new investment policies andinvestment targets, etc. SHIA also plans to change its investment policies with regard to the management
guidelines of New SHR. The specific changes will be notified as soon as they are finalized.
For a summary of the details of the Amendment of the Articles of Incorporation and changes to investment
policies, please refer to the “Notice Concerning Conclusion of a Merger Agreement between Sekisui House Reit,
Inc. and Sekisui House Residential Investment Corporation” released today by the Two Investment Corporations.
(6) Changes to the Agreement with the Sponsor, etc.
SHIA today concluded, subject to the Investment Corporation Merger becoming effective, a sponsor support
agreement among SHR and SHIA with Sekisui House (the “New Sponsor Support Agreement”) by and among
New SHR and SHIA and Sekisui House, with the effective date being the effective date of the Investment
Corporation Merger. The New Sponsor Support Agreement in substance consolidates the prior Sponsor Support
Agreement and Pipeline Support Agreement (collectively the “Prior Sponsor Support Agreements”) concluded byand among the same parties, and the prior agreement of first right of refusal concluded by SHI and SHAM withSekisui House (the “Prior Agreement of First Right of Refusal”).
In conjunction with this, the Two Investment Corporations and the Two Asset Management Companies haverespectively agreed with Sekisui House to cancel the Prior Sponsor Support Agreements and the Prior Agreementof First Right of Refusal, subject to the Investment Corporation Merger becoming effective, on the effective dateof the Investment Corporation Merger.
Changes to the agreements of first right of refusal of SHI and SHAM with respectively each of the pipeline
support companies other than Sekisui House — Sekiwa Real Estate, Ltd., Sekiwa Real Estate Kansai, Ltd.,Sekiwa Real Estate Kanto, Ltd., Sekiwa Real Estate Kyushu, Ltd., Sekiwa Real Estate Chugoku, Ltd., Sekiwa
Real Estate Chubu, Ltd. and Sekiwa Real Estate Tohoku, Ltd. — have not yet been decided, but discussions areplanned to provide for the continuation of those agreements subsequent to the Investment Corporation Merger andnotification will be made as soon as the matters are finalized.
(7) Prospects for the Continued Listing of the Investment Corporation
The Investment Corporation Merger is planned as an absorption-type merger with SHR as the surviving
corporation and SHI being dissolved in accordance with Article 143, item (iv) of the Act on Investment Trusts andInvestment Corporations (Act No. 198 of 1951, including subsequent amendments, the same applying hereinafter)
and the investment units issued by SHI are expected to be delisted on April 25, 2018, three business days prior to
the effective date of the Investment Corporation Merger, in accordance with the delisting criteria stipulated by theTokyo Stock Exchange, Inc. (the “Tokyo Stock Exchange”). As consideration for the Investment CorporationMerger, each of SHI’s unitholders will be allocated New SHR investment units in accordance with the number ofSHI investment units they held, thus becoming SHR unitholders, and because the SHR investment units are listedon the Tokyo Stock Exchange, the unitholders will continue to have the opportunity to trade their investment units
on the Tokyo Stock Exchange Real Estate Investment Trust Securities Market.
(8) Future Policies
All procedures for required notices and filings concerning this transaction pursuant to the Financial Instruments
and Exchange Act (Act No. 25 of 1948, including subsequent amendments), the Building Lots and Buildings
Transaction Business Act (Act No. 176 of 1952, including subsequent amendments) and the Act on Investment
Trusts and Investment Corporations and other applicable laws, regulations and ordinances will be followed.

Disclaimer: This translation is for informational purposes only. If there is any discrepancy between the Japanese version of the English translation, the Japanese version shall prevail.

5*Addresses of the websites of the Two Investment Corporations
Sekisui House Reit, Inc.:

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

Sekisui House Residential Investment Corporation:

http://www.shi-reit.co.jp/eng/Disclaimer: This translation is for informational purposes only. If there is any discrepancy between the Japanese version of the English translation, the Japanese version shall prevail.

6