Samty Residential Investment Corporation (3459) Summary of Financial Results for Fiscal Period Ended January 2018

(REIT) Summary of Financial Results for Fiscal Period Ended January 2018
March 15, 2018
REIT Securities Issuer:
Securities Code:
Representative:

Samty Residential Investment Corporation(“Samty Residential”)
3459
Tetsuro Kawamoto, Executive Director

Listing: Tokyo Stock Exchange
URL: http://www.samty‐residential.com/en/

Asset Management Company: Samty Asset Management Co., Ltd.
Representative:
Yosuke Masuda, President

Inquiries: Takeshi Fujiwara
Director
Business Management Department
Phone: +81‐3‐5220‐3841

Scheduled date of submission of securities report:
Scheduled date of commencement of distribution payout:

April 27, 2018
April 23, 2018

Preparation of supplementary financial results briefing materials:
Holding of financial results briefing session:

Yes
Yes (for institutional investors and analysts)(Amounts are rounded down to the nearest million yen)1.

Status of Management and Assets for Fiscal Period Ended January 2018 (from August 1, 2017 to January 31, 2018)(1) Management Status(% figures are the rate of period‐on‐period increase (decrease))
Operating revenue
Operating income
Ordinary income
Net income
mn yen%mn yen%mn yen%mn yen%Fiscal period
1,834
(0.3)
789
4.0
620
1.0
619
1.0
ended Jan. 2018
Fiscal period
1,840
1.9
759
(10.7)
614
1.4
613
1.4
ended July 2017
Net income
per unit
Fiscal period
ended Jan. 2018
Fiscal period
ended July 2017

Ratio of net income
to equityyen%

Ratio of ordinary income
to total assets%

Ratio of ordinary income
to operating revenue
%

2,190

2.4

1.1

33.8

2,169

2.3

1.1

33.4

(2) Distribution Status
Distribution Distribution
Total
Total
Total
Ratio ofper unit
per unit
Distribution distribution distribution(including(excluding
in excess of(including(excluding
distribution
Payoutdistribution
ratio
todistribution distribution
earnings
distribution distribution in excess ofearnings
net assets
in excess of in excess of
per unit
in excess of in excess ofearnings)
earnings)
earnings)
earnings)
yen
yen
yen
mn yenmn yenmn yen%%Fiscal period
2,675
2,191
484
757
620
136
100.0
2.4
ended Jan. 2018
Fiscal period
2,670
2,169
501
755
613
141
100.0
2.3
ended July 2017
(Note 1) The entire amount of Total distribution in excess of earnings is refund of capital contribution to unitholders applicable to
distribution reducing unitholders’ capital for tax purpose.
(Note 2) The ratios of decrease in surplus, etc. from implementing distribution in excess of earnings (refund of capital contribution tounitholders applicable to distribution reducing unitholders’ capital for tax purpose) in the fiscal period ended January 2018
and the fiscal period ended July 2017 are 0.004 and 0.006, respectively.
(Note 3) Payout ratio is calculated by the following formula.
Total distribution (excluding distribution in excess of earnings) ÷ Net income × 100(3) Financial Position
Total assets
mn yenFiscal period
ended Jan. 2018
Fiscal period
ended July 2017

Net assets

Equity ratio

Net assets per unit

mn yen%yen

55,202

26,12647.3

92,321

55,52526,26247.3

92,800Samty Residential Investment Corporation (3459) Summary of Financial Results for Fiscal Period Ended January 2018(4) Status of Cash FlowsNet cashprovided by (used in)operating activities
mn yenFiscal period
1,028
ended Jan. 2018
Fiscal period
1,121
ended July 20172.

Net cashprovided by (used in)investing activities
mn yenNet cashprovided by (used in)financing activities
mn yen

(58)

(956)

1,655

(292)

(892)

1,641

mn yenForecasts of Management Status for Fiscal Period Ending July 2018 (from February 1, 2018 to July 31, 2018) and January 2019(from August 1, 2018 to January 31, 2019)(% figures are the rate of period‐on‐period increase (decrease))

Operatingrevenue

OperatingincomeOrdinary
incomeDistribution
Distribution
per unit
per unit Distribution(including
Net income(excluding in excess of
distribution
distribution earnings
in excess ofin excess of
per unit
earnings)
earnings)
mn yen
%
yen
yen
yen

mn yen%mn yen%mn yen%Fiscal period
2,869 56.4
1,395 76.6
994 60.2
993 60.2
ending July 2018
Fiscal period
2,851 (0.6)
1,285 (7.9)
1,009
1.5
1,008
1.5
ending Jan. 2019
(Reference) Forecast net income per unit for fiscal period ending July 2018: 2,175 yen.
Forecast net income per unit for fiscal period ending January 2019: 2,207 yen.
*

Cash and cash equivalents
at end of period

2,670

2,175

495

2,700

2,207

493

Other
(1) Changes in Accounting Policies, Changes in Accounting Estimates and Retrospective Restatement① Changes in accounting policies accompanying amendments to accounting standards, etc.: No② Changes in accounting policies other than ①:No③ Changes in accounting estimates:
No④ Retrospective restatement:No(2) Total Number of Investment Units Issued and Outstanding① Total number of investment units issued and outstanding (including own investment units) at end of period
283,000 units
Fiscal period ended January 2018
Fiscal period ended July 2017
283,000 units② Number of own investment units at end of period
Fiscal period ended January 2018
0 units
Fiscal period ended July 2017
0 units*

Presentation of the status of implementation of audit procedures
At the time of disclosure of this summary of financial results, audit procedures for financial statements pursuant to the Financial
Instruments and Exchange Act have not been completed.

*

Explanation of the appropriate use of the forecast of management status, and other matters of special note
The management status outlook and other forward‐looking statements contained in this document are based on information
currently available to and certain assumptions deemed reasonable by Samty Residential, and actual management status, etc.
may differ materially due to various factors. In addition, the forecast is not a guarantee of the amount of distributions.

Samty Residential Investment Corporation (3459) Summary of Financial Results for Fiscal Period Ended January 2018
Assumptions Underlying Forecasts of Management Status for Fiscal Period Ending July 2018 and for Fiscal Period Ending January 2019
Item
Fiscal period

Assumption
・ Fiscal period ending July 2018 (from February 1, 2018 to July 31, 2018) (181 days)
・ Fiscal period ending January 2019 (from August 1, 2018 to January 31, 2019) (184 days)・Managed assets

It is assumed that Samty Residential will continue to own the real estate or the trust beneficiary interests inreal estate for 82 properties it owns as of today through the end of the fiscal period ending January 2019, andthat no other property will be newly acquired.
・ In practice, change may arise due to acquisition of new properties or disposition of owned properties, etc.
・Operatingrevenue

Real estate rent revenue is calculated on the basis of historical data (or the past results disclosed by theprevious owners, etc. for the periods for which Samty Residential does not have past results) and by taking
into account the status of leasing.
・ Distributions received through equity interest in silent partnership is assumed by taking into account thestatus of occupancy of real estate in trust supporting the cash flow of GK Bridge Fourth, the operator, and theestimated value of expenses accrued at the operator.
・ Operating revenue is based on the assumption that there will be no accrual of gain or loss on the sale of realestate or other properties.
・・・

Operatingexpenses・・

Expenses related to the rent business, which are the principal operating expenses, are calculated on the basisof past results of Samty Residential (or the past results disclosed by the previous owners, etc. for the periods
for which Samty Residential does not have past results), taking into account the fluctuation factors of
expenses.
Real estate rent income (excluding gain on sales of real estate properties) after deducting expenses related to
the rent business (including depreciation) is assumed to be 1,676 million yen for the period ending July 2018
and 1,671 million yen for the period ending January 2019.
The property taxes and city planning taxes, etc. to be recorded as expenses are assumed to be 115 million yen
for the period ending July 2018 and 115 million yen for the period ending January 2019. Since the property
taxes and city planning taxes, etc. in the fiscal periods ending July 2018 and January 2019 for the 33 properties
acquired on February 1, 2018 and March 1, 2018 (“Newly Acquired Assets”) were settled at the time ofacquisition by prorating for the period with the seller and the total amount of 126 million yen, which isequivalent to such settlement, will be included in the acquisition costs for the properties, the amount will not
be recorded as expenses. Although they were settled at the time of acquisition by prorating for the periodwith the seller, the amount equivalent to such settlement will not be recorded as expenses as it will be
included in the acquisition costs at Samty Residential. The total property taxes and city planning taxes, etc.
that will be included in the acquisition costs for Newly Acquired Assets are assumed to be 126 million yen and66 million yen is assumed to be recorded as expenses from the fiscal period ending July 2019.
Depreciation is calculated using the straight line method and is assumed to be 646 million yen for the period
ending July 2018 and 643 million yen for the period ending January 2019.
Repair expenses for buildings are assumed to be 33 million yen for the period ending July 2018 and 54 million
yen for the period ending January 2019, based on the medium‐ to long‐term repair plans prepared by theasset management company. However, the amounts could differ significantly from the assumed figures, as
increased or additional repair expenses may arise due to unpredictable factors.

・

Non‐operating
expenses

Approximately 26 million yen is expected as expenses for issuance of new investment units through third‐
party allotment. It will be depreciated over three years based on the straight line method, thus 8 million yen in
the fiscal period ending July 2018 and 9 million yen in the fiscal period ending January 2019 are assumed as
expenses for issuance of new investment units including the abovementioned amount.
・ Approximately 28 million yen is expected as expenses for issuance of investment corporation bonds. It will be
depreciated over the period up to the redemption date based on the straight line method, and 6 million yen in
the fiscal period ending July 2018 and 6 million yen in the fiscal period ending January 2019 are assumed as
expenses for issuance of investment corporation bonds including the aforementioned amount.
・ Interest expenses and other borrowing related expenses are assumed to be 385 million yen for the period
ending July 2018 and 260 million yen for the period ending January 2019.

・
Interest‐bearing
liabilities

Calculated under assumption that repayment of the entire amount of short‐term loans (Term Loan 5) using
cash on hand as well as refinancing of the entire amount of other interest‐bearing liabilities maturing during
the fiscal period ending July 2018 and the fiscal period ending January 2019 are conducted, total interest‐
bearing liabilities is assumed to be 44,600 million yen at the end of the fiscal period ending July 2018 and
44,600 million yen at the end of the fiscal period ending January 2019.

Samty Residential Investment Corporation (3459) Summary of Financial Results for Fiscal Period Ended January 2018
Item

Assumption

Investment units

・ The total number of investment units issued and outstanding is assumed to be 456,600 units, which is thefigure as of today.
・ It is assumed that there will be no change in the number of investment units due to issuance of new
investment units, etc. through the end of the fiscal period ending January 2019.

Distribution
per unit(excluding
distribution
in excess ofearnings)

・ Distribution per unit (excluding distribution in excess of earnings) is calculated on the assumption that theamount of earnings is distributed pursuant to the cash distribution method stipulated in Samty Residential’s
Articles of Incorporation.
・ There is the possibility that the distribution per unit (excluding distribution in excess of earnings) may vary due
to various factors, including changes of managed assets, variation in real estate rental revenue in accordancewith changes of tenants, and occurrence of unpredicted repairs.

Samty Residential Investment Corporation (3459) Summary of Financial Results for Fiscal Period Ended January 2018
Item

Assumption
・ Distribution in excess of earnings per unit is calculated pursuant to the cash distribution method stipulated in
Samty Residential’s Articles of Incorporation as well as the asset management company’s internal regulations.
・ As of today, Samty Residential believes that no significant deterioration is likely to take place for the current
external economic environment, the real estate market conditions and Samty Residential’s financial conditions.
・ Samty Residential anticipates that there will be ample opportunities, etc. to acquire new properties asinvestments that should contribute to increasing portfolio earnings power in the fiscal periods ending July 2018
and January 2019, although part of the real estate transaction market appears to be overheated. Accordingly, it
is highly necessary to reserve certain amounts of funds to make it possible to respond to such opportunities
flexibly. On the other hand, in consideration of such factors as Samty Residential’s financial conditions and theprospect of its ability to refinance interest‐bearing liabilities, Samty Residential considers itself not to be in aposition in the said fiscal periods to allocate funds preferentially for reinforcing its financial base through suchmeasures as reducing interest‐bearing liabilities. While depreciation for acquired assets (82 properties) is
anticipated to be 646 million yen in the fiscal period ending July 2018 and 643 million yen in the fiscal period
ending January 2019, the six‐month average of the sum total of the estimated urgent repair expenses,
estimated short‐term repair expenses and estimated long‐term repair expenses for the said 82 properties
described in the building condition survey reports will be only 87 million yen (estimated amounts of 87 million
yen for the fiscal period ending July 2018, and of 86 million yen for the fiscal period ending January 2019).
Accordingly, Samty Residential expects to have residual free cash flow even after making certain reserves fromthe cash and deposits on hand equivalent to the depreciation amount at the end of the said fiscal period as
reserves for capital expenditures (CAPEX) to maintain the building functions, etc., as funds equivalent to theestimated amount of working capital, etc. and as reserves in preparation for investments that should
contribute to increasing portfolio earnings power as stated above.

Distribution
in excess ofearnings
per unit・Considering the above, Samty Residential believes as of today that it is appropriate to implement distribution
in excess of earnings for the fiscal periods ending July 2018 and January 2019 and anticipates 226 million yen
and 225 million yen as total distribution in excess of earnings for each fiscal period (Note). In this case, thepayout ratio for each period is anticipated to be 74.4% and 74.6%, and total distribution in excess of earnings isanticipated to be equivalent to 35.0% for each period of depreciation expected to accrue in each of the said
fiscal periods.
(Note) Distribution in excess of earnings shall be implemented only when the total continuous appraisal value of the real estate
properties owned by Samty Residential at the end of each fiscal periods (refers to the appraisal value indicated in the realestate appraisal reports or (the investigated value indicated in the valuation reports (appraised value at end of period))
obtained for the real estate properties owned by Samty Residential with the fiscal period end as the date of value; the same
follows hereafter) is greater than the total adjusted book value of the owned real estate properties (refers to the bookvalue of the respective owned real estate properties at the end of the fiscal period of Samty Residential, after deducting theamount equivalent to the incidental expenses upon acquisition of the owned real estate properties; the same follows
hereafter) plus total reserves for the planned construction work amount (capital expenditures) of the repair and renewal
expenses scheduled for the next fiscal period as well as other planned reserves. If these requirements are not satisfied,therefore, Samty Residential will not implement distribution in excess of earnings for the 6th fiscal period ending July 2018
and 7th fiscal period ending January 2019 despite the above forecast.
Moreover, if any significant deterioration or other changes newly occur in the external economic environment, the realestate market conditions or Samty Residential’s financial conditions, etc. or if any major changes, etc. in Samty Residential’s
financial conditions (including, but not limited to, LTV level and conflicts with financial covenants established for Samty
Residential’s borrowings) occur as a result of new borrowing of funds or issuance of investment corporation bonds inaccompanying acquisition of new assets (including to‐be‐acquired assets), the policy as of today to implement distribution
in excess of earnings for the 6th fiscal period ending July 2018 as part of the cash management may be changed and,despite the above forecast, distribution in excess of earnings may not be implemented for the 6th fiscal period ending July
2018 and 7th fiscal period ending January 2019. In addition, Samty Residential, in pursuant to the cash management policy,
has a policy to determine every fiscal period whether to implement distribution in excess of earnings with target payout
ratio (the ratio of total cash distribution, including distribution in excess of earnings, to net income and depreciation
combined) of around 70% and up to the amount equivalent to 35% of depreciation in the fiscal period. Samty Residential
believes as of today that it is appropriate to implement distribution in excess of earnings for the 6th fiscal period ending July
2018 and the 7th fiscal period ending January 2019 with payout ratio of 74.4% and 74.6%, respectively, and amountequivalent to 35.0% of depreciation for each. However, such an amount or percentage may be reviewed if there newly
arises a major change in the revenue and expense structure of the portfolio due to significant additions of new assets, etc.
or important changes take place in the financial environment and the real estate investment trust market conditions, etc. As
a result, the amount of distribution in excess of earnings for the 6th fiscal period ending July 2018 and 7th fiscal period
ending January 2019 as anticipated above may be changed.

Other・ It is assumed that there will be no revision to laws and regulations, tax system, accounting standards,
regulations applying to publicly listed companies and rules of The Investment Trusts Association, Japan, etc.
that will impact the aforementioned forecast figures.
・ It is also assumed that there will be no unexpected material changes in general economic trends and realestate market conditions, etc.