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

(REIT) Summary of Financial Results for Fiscal Period Ended January 2017
March 15, 2017
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

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

April 28, 2017
April 21, 2017

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 January 2017 (from August 1, 2016 to January 31, 2017)(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
1,806
62.7
849
103.7
606
82.7
605
82.9
ended Jan. 2017
Fiscal period
1,110(23.9)
417(30.3)
331
94.5
330
95.8
ended July 2016
Net income
per unit
Fiscal period
ended Jan. 2017
Fiscal period
ended July 2016

Ratio of net income
to equityyen%

Ratio of ordinary income
to total assets%

Ratio of ordinary income
to operating revenue
%

2,138

2.8

1.4

33.6

2,025

2.0

1.0

29.9

(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
2,645
2,138
507
748
605
143
100.0
2.2
ended Jan. 2017
Fiscal period
2,618
2,026
592
427
330
96
100.0
2.0
ended July 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 2017
and the fiscal period ended July 2016 are 0.006 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(3) Financial Position
Total assets
mn yenFiscal period
ended Jan. 2017
Fiscal period
ended July 2016

Net assets

Equity ratio

Net assets per unit

mn yen%yen

55,82826,39747.3

93,276

33,611

16,21948.3

99,297Samty Residential Investment Corporation (3459) Summary of Financial Results for Fiscal Period Ended January 2017(4) Status of Cash FlowsNet cashprovided by (used in)operating activities
mn yenFiscal period
1,126
ended Jan. 2017
Fiscal period
577
ended July 20162.

Net cashprovided by (used in)investing activities
mn yenNet cashprovided by (used in)financing activities
mn yen(21,763)

21,257

1,705

(31)

(443)

1,085

mn yenForecasts of Management Status 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 ofin excess of
per unit
earnings)
earnings)
mn yen
%
yen
yen
yen

mn yen%mn yen%mn yen%Fiscal period
1,797
(0.5)
745 (12.3)
596
(1.5)
595
ending July 2017
(Reference) Forecast net income per unit for fiscal period ending July 2017: 2,105 yen*

Cash and cash equivalents
at end of period

(1.6)

2,625

2,105

520

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:NoNo③ Changes in accounting estimates:④ 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
Fiscal period ended January 2017
283,000 units
Fiscal period ended July 2016
163,340 units② Number of own investment units at end of period
Fiscal period ended January 2017
0 units
Fiscal period ended July 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 January 2017
Assumptions Underlying Forecasts of Management Status for Fiscal Period Ending July 2017
Item
Fiscal period

Assumption
・

Fiscal period ending July 2017 (from February 1, 2017 to July 31, 2017) (181 days)

・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.

Managed assets
・・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・・・・
Non‐operating
expenses

Interest‐bearing
liabilities

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 809 million yen.
Depreciation is calculated using the straight line method, and is assumed to be 436 million yen.
The property taxes and city planning taxes, etc. to be recorded as expenses are assumed to be 117 million yen.
Although the property taxes and city planning taxes, etc. for the properties acquired in August 2016 are notrecorded as expenses in the fiscal period ended January 2017, 46 million yen is assumed to be recorded as
expenses in the fiscal period ending July 2017. The amount is equivalent to 6 months of assumed annual
property taxes and city planning taxes, etc. of newly acquired properties
Repair expenses for buildings are assumed to be 17 million yen, based on the medium‐ to long‐term repair
plans prepared by the asset management company. However, the amounts could differ significantly from theassumed figures, as increased or additional repair expenses may arise due to unpredictable factors.
Interest expenses and other borrowing related expenses are assumed to be 140 million yen for the period
ending July 2017.

・ Expenses for issuance of investment corporation bonds are assumed to be 3 million yen.
・

Investment unit issuance expenses are assumed to be 4 million yen.

・Interest‐bearing liabilities due for repayment during the fiscal period ending July 2017 subsequent to the dateof this document are assumed to be financed through refinancing the entire amount, and the balance ofinterest‐bearing liabilities is assumed to be 28,750 million yen.

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 January 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 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 to respond 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 thesaid fiscal period to allocate funds preferentially for reinforcing its financial base through such measures as
reducing interest‐bearing liabilities. While depreciation for acquired assets (49 properties) is anticipated to be
436 million yen, the six‐month average of the sum total of the estimated urgent repair expenses, estimatedshort‐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. Accordingly, Samty Residential expects tohave 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 the said fiscal period as reserves for capital expenditures (CAPEX) to
maintain the building functions, etc., as funds equivalent to the estimated amount of working capital, etc. andas reserves in preparation for investments that should contribute to increasing portfolio earnings power asstated 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 July 2017, and anticipates 147 million yen as total distribution
in excess of earnings (Note). In this case, the payout ratios are anticipated to be 72.0%, and the total
distribution in excess of earnings is anticipated to be equivalent to 33.8% of the depreciation expected to
accrue in the said 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 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 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 4th fiscal period ending July
2017. 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 amountequivalent to 35% of depreciation in the fiscal period. Samty Residential believes as of today that it is appropriate toimplement distribution in excess of earnings for the 4th fiscal period ending July 2017 with payout ratio of 72.0% and theamount equivalent to 33.8% of depreciation. 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 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.