January 24, 2018

Real Estate Investment Trust Securities Issuer
1-31 Minami Aoyama 3-chome, Minato-ku, Tokyo
Sekisui House Residential Investment Corporation
Representative:
Osamu Minami, Executive Director(Securities Code: 8973)
Asset Management Company
1-31 Minami Aoyama 3-chome, Minato-ku, Tokyo
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 Forecast of Operating Results for the Fiscal Period Ending April 30, 2018 (Final Fiscal Period)and Merger Consideration
As announced in the “Notice Concerning Conclusion of a Merger Agreement between Sekisui House Reit, Inc. andSekisui House Residential Investment Corporation” released today, Sekisui House Residential Investment Corporation(“SHI”) intends to implement an absorption-type merger (the “Investment Corporation Merger”) on the effective date ofMay 1, 2018, with Sekisui House Reit, Inc. (“SHR”) as the surviving corporation and SHI as the dissolving corporation,and executed a merger agreement (the “Investment Corporation Merger Agreement”) today. In relation to this, SHIintends to submit a proposal to its general meeting of unitholders, which is scheduled to be held on March 27, 2018,
regarding an amendment of its articles of incorporation to change its fiscal period end dates from March 31 and
September 30 to April 30 and October 31, respectively. Provided that such amendment of the articles of incorporation isapproved at the general meeting of unitholders, SHI’s final fiscal period, if the Investment Corporation Merger comes intoeffect, is scheduled to be the seven-month period from October 1, 2017 to April 30, 2018 (the “fiscal period ending April30, 2018”). Further, the change in the fiscal period end dates will be effective immediately following approvals ofInvestment Corporation Merger and an amendment of its articles of incorporation at the general meeting of unitholders.
Earnings forecasts for the fiscal period ending March 31, 2018 (October 1, 2017 to March 31, 2018) and for the fiscal
period ending September 30, 2018 (April 1, 2018 to September 30, 2018) were announced in “Financial Report for theFiscal Period ended September 30, 2017” released on November 15, 2017. In connection with the execution of theInvestment Corporation Merger Agreement, SHI hereby releases the following details regarding earnings forecasts for thefiscal period ending April 30, 2018 (October 1, 2017 to April 30, 2018), which will be its final fiscal period if theproposal to amend the articles of incorporation as described above is adopted and approved at the general meeting ofunitholders and the Investment Corporation Merger comes into effect, and the forecasted merger consideration in theform of cash distributions to be paid instead of cash distributions for the final fiscal period.

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Earnings forecasts and forecasted merger consideration in the form of cash distributions for the final fiscal period(fiscal period ending April 30, 2018 (October 1, 2017 to April 30, 2018))

Fiscal period
ending April30, 2018
(seven months)

OperatingRevenue(Million yen)

Operating Income(Million yen)

Ordinary Income(Million yen)

Net Income(Million yen)

MergerConsideration inthe Form of CashDistributions perUnit
(yen)

8,149

3,375

2,772

2,770

2,700

Note 1: The period in question for the earnings forecast for the fiscal period ending April 30, 2018 and the forecasted merger
consideration in the form of cash distributions is the seven-month period from October 1, 2017 until April 30, 2018.
Note 2: Forecast total number of outstanding units at the end of the fiscal period: 1,105,510 units
Note 3: The above forecasted figures are the estimated figures as of today calculated based on certain assumptions, on theDisclaimer: 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.

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premise that the Investment Corporation Merger will come into effect. The actual operating revenue, operating income,ordinary income, net income, and merger consideration in the form of cash distributions per unit may vary due totrends in the real estate market and the like, and changes in the investment environment and other conditions
surrounding SHI. The forecasts should not be construed as a guarantee of the amount of merger consideration in theform of cash distributions.
Note 4: As the proceeds of cash distributions for SHI’s final fiscal period, SHR as the surviving corporation after theInvestment Corporation Merger intends, based on the amount of distributable profit of SHI, to distribute merger
consideration in the form of cash distributions to the unitholders listed or recorded on the final unitholders register ofSHI (excluding the unitholders of SHI who have demanded purchase of their investment units pursuant to theprovisions of Article 149-3 of the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951, asamended) (excluding unitholders who have withdrawn those purchase demands); the “Unitholders Subject toAllocation”) or to the registered investment unit pledgees of their investment units as of April 30, 2018, which is theday immediately preceding the effective date of the Investment Corporation Merger, in an amount equivalent to themerger consideration in the form of cash distributions for the final fiscal period (i.e., the amount of distributable profitof SHI as of the day immediately preceding the effective date of the Investment Corporation Merger divided by thenumber of investment units that is obtained by deducting (a) the number of investment units held by unitholders otherthan the Unitholders Subject to Allocation from (b) the total number of outstanding investment units of SHI as of theday immediately preceding the effective date of the Investment Corporation Merger (fractions of yen to be roundeddown to the nearest whole yen)). As a result, the amount of merger consideration in the form of cash distributions willvary depending on the status of exercise of put option of investment units. Because the status of such exercise cannot
be confirmed at present, the forecasted figures above assume that put option of investment units is not exercised.
Note 5: Amounts less than one unit have been rounded down.

[Reference] Forecast of operating results for the fiscal period ending March 31, 2018 (October 1, 2017 to March 31,2018)(as announced in “Financial Report for the Fiscal Period ended September 30, 2017” dated November 15, 2017)

Fiscal periodending March
31, 2018

Operating
Revenue(Million yen)

Operating
Income(Million yen)

Ordinary
Income(Million yen)

Net Income(Million yen)

Distributions
per Unit (notincluding
distributions inexcess ofearnings)
(yen)

6,965

2,986

2,467

2,465

2,230

Distributions
in Excess ofEarnings perUnit(yen)0Note 1: For the assumptions underlying the forecast of operating result for the fiscal period ending March 31, 2018, pleasesee “Financial Report for the Fiscal Period ended September 30, 2017” released by SHI on November 15, 2017.
Note 2: Amounts less than one unit have been rounded down.

2.

Reason for Announcement
Earnings forecasts for the fiscal period ending March 31, 2018 (October 1, 2017 to March 31, 2018) and for the fiscal
period ending September 30, 2018 (April 1, 2018 to September 30, 2018) were announced in “Financial Report for theFiscal Period ended September 30, 2017” released on November 15, 2017. In connection with the execution of theInvestment Corporation Merger Agreement, however, SHI intends to submit a proposal to its general meeting ofunitholders, which is scheduled to be held on March 27, 2018, regarding an amendment of its articles of incorporation tochange the ends of its fiscal period from the current last days of March and September to the last days of April andOctober. Provided that the amendment is approved at the general meeting of unitholders, the seven months from October
1, 2017 to April 30, 2018 will be SHI’s final fiscal period if the Investment Corporation Merger comes into effect, andSHI hereby announces the following details regarding earnings forecasts for the fiscal period ending April 30, 2018
(October 1, 2017 to April 30, 2018) and forecasted cash distributions on merger to be paid as the proceeds of merger
consideration in the form of cash distributions for the final fiscal period.
SHI is releasing the earnings forecasts for the fiscal period ending April 30, 2018 (October 1, 2017 to April 30, 2018)
and the forecasted merger consideration in the form of cash distributions as forecasts as of the present, on the assumptionthat the proposals pertaining to the approval of the Investment Corporation Merger Agreement and to the amendment ofthe articles of incorporation to change the end of the fiscal period as set forth above will be adopted and approved at thegeneral meeting of unitholders scheduled to be held on March 27, 2018. During the fiscal year ending April 30, 2018,¥124 million in expenses related to the Investment Corporation Merger are expected to be recorded. SHI plans todrawdown the full amount of the ¥214 million established out of the portion of the gain on sale of property that it has
internally retained to date as reserve for reduction entry, and to use that as the source of the payment of 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.

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consideration in the form of cash distributions.
In addition, the earnings forecast for the fiscal year ending March 31, 2018 (October 1, 2017 to March 31, 2018) set
forth above under Reference does not take into account the Investment Corporation Merger coming into effect, and it
assumes that there would not be an Investment Corporation Merger or any related transactions, etc.(Note)
For forecasts regarding earnings and distributions per unit for SHR as the surviving corporation after the Investment
Corporation Merger, please see “Notice Concerning the Forecast of Operating Results and Distributions Subsequent tothe Merger of Sekisui House Reit, Inc. and Sekisui House Residential Investment Corporation for the Fiscal Periods
Ending October 31, 2018 and April 30, 2019” announced by SHR and SHI today.
Note: As announced in “Notice Concerning Acquisition of Trust Beneficiary Interests in Domestic Real Estate and Leases (PrimeMaison Shirokanedai Tower and Five Other Properties) and Sale and Cancellation of Leases (Esty Maison Machida and Eleven
Other Properties)” that was released by SHR and SHI today, SHI has decided, with the Investment Corporation Merger, to sell
12 residential properties out of its portfolio assets on May 1, 2018 (the effective date of the Investment Corporation Merger) fora total planned sale price of ¥ 16.4 billion (the “Asset Sale”) to third parties, and to acquire six residential properties fromSekisui House, Ltd. for a total planned acquisition price of ¥ 25.3 billion on the same date (the “Asset Acquisition”; hereinafterreferred to collectively with the Asset Sale as the “Asset Replacement”). The Investment Corporation Merger coming into effectis not a condition precedent under the sale and purchase agreement pertaining to the Asset Replacement. Accordingly, the Asset
Replacement is scheduled to take place even if the Investment Corporation Merger is not implemented due to a failure to obtainan approval of the Investment Corporation Merger Agreement at the general meeting of unitholders of either SHI or SHR or due
to other grounds. In that case, SHI will examine and discuss changing, by agreement with Sekisui House, Ltd., all or part of theassets it will acquire through the Asset Acquisition or the conditions for the sale and purchase under the sale and purchaseagreement pertaining to the Asset Acquisition (including, but not limited to, changing the acquisition price and the timing of theacquisition), or taking other appropriate measures, while taking into consideration the impact of the Asset Replacement on thefinancial condition of SHI. Earnings forecasts for SHI if the Investment Corporation Merger is not implemented and otherfuture projections are undetermined at this time.

*Address of the website of the investment corporation
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.

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Appendix

Assumptions for earnings forecasts for the fiscal period ending April 30, 2018 (final fiscal period) (seven-monthperiod) and forecasted merger consideration in the form of cash distributions
Item
Accounting Period

Assumptions

 Fiscal year ending April 30, 2018 (25th Term): October 1, 2017 to April 30, 2018 (212 days) It is assumed that through April 30, 2018 there will be no changes (e.g., acquisition of new properties orAssets underManagementsale of existing properties) in the 113 properties currently held by SHI as of today. Any changes in assets
scheduled to be acquired or sold on May 1, 2018 are not taken into consideration as this date is not part ofthe 25th fiscal period ending April 30, 2018. In reality, there may be changes due to changes in assets
under management.

 Based on lease agreements in effect as of today, leasing business revenue calculation takes intoconsideration the competitiveness of properties and changes in tenants expected as of today.
Operating Revenue Rent levels are calculated in consideration of competing properties in the surrounding area, market trends
and the like.

 Operating revenue assumes that tenants will not be delinquent on rent or fail to pay rent.
 Among leasing business expenses, which are the primary operating expenses, expenses other thandepreciation and amortization have been calculated by reflecting the factors behind the fluctuation inexpenses based on information as of today and past results.

 Management expenses are anticipated to be about ¥789 million.
 With respect to property taxes and city planning taxes and the like on portfolio real estate, of the taxation
amount assessed and determined, the amount corresponding to the relevant accounting period is accounted
for as leasing business expenses. Property taxes and city planning taxes and the like accounted for as
leasing business expenses are anticipated to be about ¥479 million. Furthermore, although generally insale and purchase of real estate, property tax and city planning tax and the like are calculated
proportionally by period with the previous owner and settled at the time of acquisition, the amount equal
to such a settlement is included in the acquisition cost and not recorded as expenses.
Operating Expenses

 The 2018 amount of property tax and city planning tax and the like on the assets under management
acquired by SHI on and after January 1, 2017 will not be recorded as leasing business expenses for thefiscal period ending April 30, 2018. Instead, they will be accounted for as leasing business expenses for
SHR as the surviving corporation after the Investment Corporation Merger starting in the fiscal year
ending October 31, 2018.

 The amount of building repair expenses that is anticipated to be necessary for the relevant accounting
period is recorded as expenses. However, the actual repair expenses for the relevant accounting period
may be significantly different from the forecasted amount due to, for example, possibility of repair
expenses for unforeseen repairs, the amount generally tends to vary significantly from year to year, andthey are not regularly occurring expenses.

 Depreciation and amortization are calculated using the straight-line method including incidental expenses
and future additional capital expenditure, and are anticipated to be about ¥1,871 million in the fiscal
period ending April 30, 2018.

 Interest expenses, interest on investment corporation bonds, and financing-related expenses areanticipated to total about ¥584 million in the fiscal period ending April 30, 2018.
Non-OperatingExpenses

 Amortization of investment corporation bond issuance expenses is anticipated to be about ¥7 million in
the fiscal period ending April 30, 2018.
 Amortization of investment unit issuance expenses is anticipated to be about ¥10 million in the fiscal
period ending April 30, 2018.

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.

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ItemAssumptions

 As of today, SHI holds an interest-bearing liability balance of ¥105,532 million (long-term borrowing of¥91,032 million (of which ¥4,600 million in long-term borrowing is scheduled to be repaid within oneyear) and investment corporation bonds of ¥14,500 million (of which ¥4,000 million in investment
corporation bonds is scheduled to be redeemed within one year)), and its LTV ratio is 50.3% (estimated).

 It is assumed that the entire amount of the ¥2,100 million of borrowing and the ¥4,000 million ofInterest-bearing
Liabilities

investment corporation bonds with repayment deadlines and redemption deadlines in the fiscal period
ending April 30, 2018 will be refinanced.

 It is assumed that there will be no new borrowing or the like other than the above. Therefore, it is assumed
that the LTV ratio at the end of the fiscal period ending April 30, 2018 will be the same level as of today.

 The following formula is used in the calculation of the LTV ratio and the result is rounded off after thefirst decimal place.
LTV ratio = total amount of interest-bearing liabilities ÷ total amount of assets × 100
Total Number ofInvestment Units
Outstanding It is assumed that the number of investment units outstanding as of today is 1,105,510 units, and it isassumed that subsequently no change will be made through the additional issuance of investment units orthe like through the end of the fiscal period ending April 30, 2018.

 Merger consideration in the form of cash distributions (merger consideration in the form of cash
distributions per unit) will be paid as the proceeds of cash distributions for the fiscal period ending April
30, 2018 (the final fiscal period) and are calculated on the assumption of the cash distribution policy
stipulated in SHI’s articles of incorporation.

 SHI plans to drawdown the full amount of the ¥214 million established out of the part of gain on sale ofMerger Considerationin the Form of CashDistributions per Unit

property that it has internally retained to date as reserve for reduction entry, and to use that as the sourceof the payment of merger consideration in the form of cash distributions.

 The merger consideration in the form of cash distributions per unit may change due to various factors,
including the status of the exercise of put option of investment units in relation to the Investment
Corporation Merger, expenses related to the Investment Corporation Merger, changes in assets undermanagement, changes in rent income following changes in tenants and the like, and the occurrence of
unexpected repairs.

 It is assumed that there will be no changes in legislation, taxation, accounting standards, listing
Other

regulations, and rules and requirements imposed by The Investment Trusts Association, Japan that would
impact the aforementioned forecasts.

 It is assumed that there will be no unforeseen material changes in general economic trends and real estatemarket conditions and the like.

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.

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