Samty Residential Investment Corporation (3459) Summary of Financial Results for Fiscal Period Ended July 2017

(REIT) Summary of Financial Results for Fiscal Period Ended July 2016
REIT Securities Issuer:
Securities Code:
Representative:

September 14, 2016
Listing: Tokyo Stock Exchange

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

URL: http://www.samty‐residential.com/en/

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

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

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

October 28, 2016
October 21, 2016

Preparation of supplementary financial results briefing materials: Yes
Holding of financial results briefing session:
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 July 2016 (from February 1, 2016 to July 31, 2016)(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
1,110(23.9)
417(30.3)
331
94.5
330
95.8
ended Jul. 2016
Fiscal period
1,458
–
598
–
170
–
168
–
ended Jan. 2016
Net income
per unit

Ratio of net income
to equity

Ratio of ordinary income
to total assets%

Ratio of ordinary income
to operating revenue%

yen%
Fiscal period
2,025
2.0
1.0
29.9
ended Jul. 2016
Fiscal period
1,501
2.1
1.0
11.7
ended Jan. 2016
(Note 1) The calculation period for the fiscal period ended January 2016 of Samty Residential is a period of 322 days from March 16,
2015 to January 31, 2016.
(Note 2) Net income per unit in the fiscal period ended January 2016 calculated by dividing net income by the daily weighted average
number of investment units (112,527 units).
(Note 3) Percentage figures for operating revenue, operating income, ordinary income and net income are the rate of period‐on‐period
increase (decrease), but are not applicable for the fiscal period ended January 2016 because it is the first fiscal period.
(2) Distribution Status
Distribution Distribution
Total
Total
per unit
per unit
Distribution distribution distribution
Total
Ratio of(including(excluding
in excess of(including(excluding
distribution
Payoutdistribution
distribution distribution
earnings
distribution distribution in excess ofratio
toin excess of in excess of
per unit
in excess of in excess ofearnings
net assets
earnings)
earnings)
earnings)
earnings)
yen
yen
yen
mn yenmn yenmn yen%%Fiscal period
2,618
2,026
592
427
330
96
100.0
2.0
ended July 2016
Fiscal period
1,810
1,034
776
295
168
126
100.0
1.0
ended Jan. 2016
(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 2016
and the fiscal period ended July 2016 are 0.008 and 0.004, respectively.
(Note 3) Payout ratio is calculated by the following formula.
Total distribution (excluding distribution in excess of earnings) ÷ Net income × 100

Samty Residential Investment Corporation (3459) Summary of Financial Results for Fiscal Period Ended July 2017
(3) Financial Position
Total assets
mn yenFiscal period
ended July 2016
Fiscal period
ended Jan. 2016

Equity ratio%yen

33,611

16,21948.3

99,29733,89016,18447.8

99,081

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

(31)

(443)

1,085

(32,780)

33,119982

Cash and cash equivalents
at end of period
mn yenForecasts of Management Status for Fiscal Period Ending January 2017 (from August 1, 2016 to January 31, 2017) and for Fiscal
Period Ending July 2017 (from February 1, 2017 to July 31, 2017)(% 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 of
per unit
in excess ofearnings)
earnings)
mn yen
%
yen
yen
yen

mn yen%mn yen%mn yen%Fiscal period
1,790 61.2
834 100.0
582 75.7
581 75.9
ending Jan. 2017
Fiscal period
1,791
0.1
740 (11.3)
589
1.2
588
1.2
ending July 2017
(Reference) Forecast net income per unit for fiscal period ending January 2017: 2,056 yen
Forecast net income per unit for fiscal period ending July 2017: 2,081 yen*

Net assets per unit

mn yen(4) Status of Cash FlowsNet cashprovided by (used in)operating activities
mn yenFiscal period
577
ended July 2016
Fiscal period
643
ended Jan. 20162.

Net assets

2,600

2,056

544

2,625

2,081

544

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
163,340 units
Fiscal period ended July 2016
Fiscal period ended January 2016
163,340 units② Number of own investment units at end of period
Fiscal period ended July 2016
0 units
Fiscal period ended January 2016
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 July 2017
Assumptions Underlying Forecasts of Management Status for Fiscal Period Ending January 2017 and Fiscal Period Ending July 2017
Item
Fiscal period

Assumption
・ Fiscal period ending January 2017 (from August 1, 2016 to January 31, 2017) (184 days)
・ Fiscal period ending July 2017 (from February 1, 2017 to July 31, 2017) (181 days)・Managed assets
・

It is assumed that Samty Residential will continue to own the real estate or the trust beneficiary interests inreal estate for 49 properties it owns as of today through the end of the fiscal period ending July 2017, and thatno 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 and by taking into account the status ofleasing.
・ Operating revenue is based on the assumption that there will be no accrual of gain or loss on sales of realestate 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 1,021 million yen for the period ending January
2017 and 975 million yen for the period ending July 2017.
Depreciation is calculated using the straight line method, and is assumed to be 440 million yen for the period
ending January 2017 and 440 million yen for the period ending July 2017.
The property taxes and city planning taxes, etc. to be recorded as expenses are assumed to be 71 million yen
for the period ending January 2017 and 117 million yen for the period ending July 2017. Since the property
taxes and city planning taxes, etc. in the fiscal period ending January 2017 for the 20 properties acquired on
August 1 and August 2, 2016 were settled at the time of acquisition by prorating for the period with the seller
and the total amount of 30 million yen, which is equivalent to such settlement, will be included in theacquisition costs for the properties, the amount will not be recorded as expenses.
Repair expenses for buildings are assumed to be 13 million yen for the period ending January 2017 and 13
million yen for the period ending July 2017, 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
expensesIssuance of new investment units through public offering, which was resolved at the meeting of Samty
Residential’s board of directors held on July 11, 2016 of 5 million yen for the fiscal period ending January 2017
and 5 million yen for the fiscal period ending July 2017 are expected.
・ Expenses for issuance of investment corporation bonds of 3 million yen in the fiscal period ending January
2017 and 3 million yen in the fiscal period ending July 2017 are expected.
・ Interest expenses and other borrowing related expenses are assumed to be 242 million yen for the period
ending January 2017 and 141 million yen for the period ending July 2017.
・

Interest‐bearing
liabilities

Interest‐bearing liabilities due for repayment during the fiscal period ending January 2017 and the fiscal period
ending July 2017 subsequent to the date of this document are assumed to be financed through refinancing theentire amount, and the balance of interest‐bearing liabilities is assumed to be 28,750 million yen for theperiod ending January 2017 and 28,750 million yen for the period ending July 2017.

Investment units

・ The total number of investment units issued and outstanding is assumed to be 283,000 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 July 2017.

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 July 2017

Item

Distribution
in excess ofearnings
per unit

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 period ending January
2017 and the fiscal period ending July 2017, 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 torespond to such opportunities flexibly. On the other hand, in consideration of such factors as Samty
Residential’s financial conditions and the prospect of its ability to refinance interest‐bearing liabilities, Samty
Residential considers itself to not be in a position in the said two fiscal periods to allocate funds preferentiallyfor reinforcing its financial base through such measures as reducing interest‐bearing liabilities. Whiledepreciation for acquired assets (49 properties) is anticipated to be 440 million yen for the fiscal period ending
January 2017 and 440 million yen for the fiscal period ending July 2017, the six‐month average of the sum totalof the estimated urgent repair expenses, estimated short‐term repair expenses and estimated long‐term repair
expenses for the said 49 properties described in the building condition survey reports will be only 49 million
yen (Estimate is 49 million yen for the fiscal period ending January 2017 and 49 million yen for the fiscal period
ending July 2017). Accordingly, Samty Residential expects to have residual free cash flow even after making
certain reserves from the cash and deposits on hand equivalent to the depreciation amount at the end of eachfiscal periods as reserves for capital expenditures (CAPEX) to maintain the building functions, etc., as funds
equivalent to the estimated amount of working capital, etc. and as reserves in preparation for investments thatshould contribute to increasing portfolio earnings power as stated above.
・ Considering the above, Samty Residential believes as of today that it is appropriate to implement distribution
in excess of earnings for the fiscal period ending January 2017 and the fiscal period ending July 2017, andanticipates 154 million yen for each period as total distribution in excess of earnings (Note). In this case, thepayout ratios are anticipated to be 72.0% and 72.2%, and the total distribution in excess of earnings isanticipated to be equivalent to 35.0% for each period and of the depreciation expected to accrue in each fiscal
period.
(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 3rd fiscal period ending January
2017 and the 4th fiscal period ending July 2017 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 3rd fiscal period ending January 2017 and the 4th fiscal period ending July 2017 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 3rd fiscal period ending January 2017 and the 4th fiscal period ending July 2017. In addition, Samty
Residential believes as of today that it is appropriate to implement distribution in excess of earnings for the 3rd fiscal period
ending January 2017 and the 4th fiscal period ending July 2017 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 amountequivalent to 35% of depreciation in the fiscal period. 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 3rd fiscal period ending January 2017 and the 4th
fiscal period ending July 2017 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.