AssetManagement
Company

Fiscal Period Ended February 2024
(10th Fiscal Period)
Financial Results Briefing Materials
May 1, 2024

SANKEI REAL ESTATE Inc.

Disclaimer
This document is for the purpose of providing information on SANKEI REAL ESTATE Inc. (hereinafter, “SANKEI REAL ESTATE”) and the information provided by thisdocument is not a disclosure document or asset management report pursuant to the Financial Instruments and Exchange Act, the Act on Investment Trusts andInvestment Corporations, associated Cabinet Orders, Cabinet Office Orders and Regulations and the Securities Listing Regulations of the Tokyo Stock Exchange.
Furthermore, this document was not prepared for the purpose of soliciting investment or recommending trading related to specific instruments. Please consult yourbroker for any purchase of SANKEI REAL ESTATE investment units. When making any investment, investors do so at their sole risk and discretion.
This document contains certain forward-looking statements on financial condition, management results and operations, statements on the plans and targets of Sankei
Building Asset Management Co., Ltd. (hereinafter, the “Asset Management Company”), which is the asset management company of SANKEI REAL ESTATE, andforward-looking statements and forecasts on future plans, management targets, strategies, etc. of SANKEI REAL ESTATE. These forward-looking statements are basedon information available to SANKEI REAL ESTATE and the Asset Management Company on the date of preparation of the document (or the relevant date if otherwise
specified in the document), and are based on certain suppositions and assumptions at the present time that were formulated based on multiple assumptions
concerning various internal and external environmental factors such as financial, economic, market, political and international conditions surrounding the operationsof SANKEI REAL ESTATE. However, there is no assurance that the above suppositions and assumptions are correct. Therefore, please be aware that such forwardlooking statements contain known and unknown risks and uncertainties that could cause the actual performance, management results, financial condition, etc. of
SANKEI REAL ESTATE to significantly differ from explicitly or implicitly stated forecasts. Therefore, this document does not provide any assurances of future
performance, investment results or fluctuations, etc., and actual results may differ significantly due to a variety of factors.
In addition to statements on SANKEI REAL ESTATE, this document contains diagrams and data, etc. prepared by the Asset Management Company based on
information provided to SANKEI REAL ESTATE and the Asset Management Company by a third party or information published by a third party, and contains analyses,
judgments and other views of SANKEI REAL ESTATE and the Asset Management Company on these. There may be different views on these, and SANKEI REAL ESTATEand the Asset Management Company may change their views in the future.
Careful attention has been given to the information provided in this document, but there are no assurances on the accuracy, fairness and completeness of theinformation regardless of information prepared by SANKEI REAL ESTATE or the Asset Management Company, or information received from a third party.
The content of this document may be changed or abolished without notice. SANKEI REAL ESTATE and the Asset Management Company do not have the obligation to
update or publish the content of this document (including forward-looking statements).
All rights to any part of this document belong to the Asset Management Company, and no part of this document shall be used, cited, reproduced, altered,disassembled, transmitted, etc. by any means, electronic or mechanical, for any purpose without permission.
Please contact below if you have any inquiries concerning this document.
Sankei Building Asset Management Co., Ltd.
Finance & IR Department
Phone: +81-3-5542-1316

1

SANKEI REAL ESTATE Inc.

Table of Contents

1.

Executive Summary

P.3

2.

Financial Results Highlights and Earnings Forecast

P.5

3.

Management Highlights and Future Growth Strategies P.11

4.

External Growth

P.15

5.

Internal Growth

P.20

6.

Financial Management

P.26

7.

ESG Initiatives

P.29

8.

Appendix

P.32

2

SANKEI REAL ESTATE Inc.

1. Executive Summary3

SANKEI REAL ESTATE Inc.

Executive Summary

Financial Results and Management Highlights◼ Completed the series of portfolio rebalancing steps that commenced in March 2023
➢ Conversion to a diversified REIT
The investment ratio is 60.6% and 39.4% for office buildings and the core asset group, respectively (as ofthe date of preparation of this material)➢ Improved portfolio quality (by improving the occupancy rate and lowering the average building age, etc.)◼ DPU for the fiscal period ended February 2024 (10th FP) is 2,221 yen (+171 yen from the forecast)

Future Growth Strategies◼ Seek to build a more resilient portfolio, in pursuit of a REIT that can deliver sustainable growth➢ Perform portfolio maintenance through continuous rebalancing to improve portfolio quality◼ Prepare to obtain a credit rating (will be assigned during the fiscal period ending August 2024 (11th FP))
◼ Additional acquisition of SANKEI REAL ESTATE’s investment units by the Sponsor (commenced in March 2024)➢ Support from the Sponsor that leads to SANKEI REAL ESTATE’s sustainable growth through same-boat
investment

4

SANKEI REAL ESTATE Inc.

2. Financial Results Highlights and Earnings Forecast

5

SANKEI REAL ESTATE Inc.

Financial Results Highlights (1) Summary
Financial Summary for Fiscal Period Ended February 2024
(10th FP)
Results

Comparison with previous fiscal
periodComparison with forecast

Operating revenue

7,778 million yen+5,165 million yen (+197.7%)+5,027 million yen (+182.7%)

Operating income

1,229 million yen+79 million yen (+6.9%)-104 million yen (-7.8%)

Net income

1,037 million yen+80 million yen (+8.4%)-92 million yen (-8.2%)

2,221 yen+171 yen (+8.3%)-197 yen (-8.1%)

Distribution per unit

Change in DPU

Change in asset size at end of period(Yen per unit)
2,500

2,305

(100 million yen)

2,418

2,221

2,050

1,200
966

1,000

966

1,028

964
860

2,000

+8.3%

966

800

673

673

715

715

1,500

600
434
1,000

400

500

200
0

0
FP ended Feb. 2023 FP ended Aug. 2023 FP ended Feb. 2024 FP ended Feb. 2024
(8th FP)(9th FP)(10th FP)
(10th FP)(Result)(Result)(Initial Forecast)(Result)

FP ended FP ended FP ended FP ended FP ended FP ended FP ended FP ended FP ended FP ended FP ending
Aug. 2019 Feb. 2020 Aug. 2020 Feb. 2021 Aug. 2021 Feb. 2022 Aug. 2022 Feb. 2023 Aug. 2023 Feb. 2024 Aug. 2024
(1st FP) (2nd FP) (3rd FP)(4th FP)(5th FP)(6th FP)(7th FP)(8th FP)(9th FP) (10th FP) (11th FP)* Unless otherwise specified, the amounts in this document are rounded down to the nearest unit and percentages are rounded to one decimal place. The same applies below.

(Assumption)

6

SANKEI REAL ESTATE Inc.

Financial Results Highlights (2) Summary of DPU
Summary of DPU (Comparison with Forecast)

Increase in rental
and CAM revenue+15(Yen per unit)

2,050

Increase inother rent
business
revenue+2

Decrease in Increase in gain on
expensessale of real estate,
related to rent
etc.
business+206+8

Increase in otheroperatingexpenses-62

Others+22,221◼ (Main breakdown)
Other property taxes (consumption tax
payment) -45, taxes and duties(consumption taxes receivable) -12

FP ended Feb. 2024
(10th FP)
(Forecast)

FP ended Feb. 2024
(10th FP)(Result)

DPU Summary (Comparison with Previous Fiscal Period)(Yen per unit)

2,418

Decrease in rental Decrease in other Increase in
and CAM revenue
expensesrent business-276
related torevenuerent business
-207
-65

◼ (Main breakdown)
Transferred properties (-439)(Shinagawa (-272), BREEZÉ (-167)),
Newly-acquired properties (+134)(Namba (+65), Kyoto (+42)), Settsu (+42)

FP ended Aug. 2023
(9th FP)(Result)

Increase ingain on saleof realestate, etc.
+412

◼ (Main breakdown)
Transferred properties (207) (Shinagawa (-188),
BREEZÉ (-19))

Increase in
otheroperatingexpenses-88

Decrease inborrowingcosts, etc.
+24

Others+32,221◼ (Main breakdown)
Other property taxes (consumption tax
payment) -59, taxes and duties(consumption taxes receivable) -9

FP ended Feb. 2024
(10th FP)(Result)
7

SANKEI REAL ESTATE Inc.

Financial Results Highlights (3) Profit and Loss Comparison(million yen)

Operating revenue
Total rent business revenue
Rental and CAM revenue

FP ended Aug. 2023
(9th FP) Results (A)FP ended Feb. 2024
(10th FP) Forecasts (B)FP ended Feb. 2024
(10th FP) Results (C)Comparison
with forecast(C-B)

Comparison
with previous
fiscal period
(C-A)

2,751

2,613

7,778

+5,165+5,027

2,586

2,353

2,361

+7

-225

2,343

2,207

2,214

+6

-128

Parking revenue

33

28

31

+3

-2

Utilities reimbursement

113

107

98

-9

-15

Other revenue

96

10

17

+6

-78

Gain on sale of real estate, etc.

164

260

5,417

+5,156+5,252

1,416

1,463

6,548

+5,085+5,131

Total expenses related to rent
business

1,110

1,144

1,141

-3

+30

Outsourcing expenses

221

239

239

+0

+18

Utilities expense

189

175

154

-20

-34

Operating expenses

Major Factors for the Difference(Comparison with Forecast) (C - B)
[Rent business revenue]◼ <Rental and CAM revenue>
Tokyo Sankei Building (+3), Namba (+3)
◼ <Parking revenue> Shinagawa (+3)
◼ <Utilities reimbursement> Hibiya (-2), Omori (-2)
◼ <Other revenue> Akihabara (+7)[Expenses related to rent business]◼ <Outsourcing expenses> Shinagawa (+11), Toyo (-6),
Omori (-2)
◼ <Utilities expense> BREEZÉ (-5), Shinagawa (-4), Hibiya(-2), Miyazakidai (-2), Hatchobori (-2)
◼ <Repair expenses> BREEZÉ (-26), Shinagawa (+22)◼ <Property taxes> Shinagawa (+14), BREEZÉ (+11)◼ <Other expenses> Akihabara (-3)

Repair expenses

37

86

76

-10

+39

Major Factors for the Difference

Property taxes

313

295

322

+26

+9

(Comparison with Previous Fiscal Period) (C - A)

Depreciation

320

314

315

+0

-5

Other expenses

27

33

31

-1

+3

Loss on sale of real estate, etc.

-

-

5,060

+5,060+5,060Operating income (loss) from rent
business

1,476

1,208

1,220

+11

-256

[Rent business revenue]◼ <Rental and CAM revenue>
Transferred properties (-205) (Shinagawa (-127),
BREEZÉ (-78)), Newly-acquired properties (+62) (Namba(+30), Kyoto (+19)), Settsu (+19)◼ <Utilities reimbursement> BREEZÉ (-7), Omori (-4)
◼ <Other revenue> Shinagawa (-85), Akihabara (+7)

Total other operating expenses

306

318

347

+28

+41

Asset management fee

245

244

244

+0

-1

Other expenses

60

74

102

+28

+42

Operating income

1,334

1,150

1,229

+79

-104

Non-operating income

0

-

1

+1

+0

Non-operating expenses

204

192

193

+0

-11

Ordinary income

1,130

958

1,038

+80

-92

Net income

1,129

957

1,037

+80

-92

2,418 yen

2,050 yen

2,221 yen

171 yen-197 yen

1,797

1,523

1,535

+12

-261

Distribution per unit
Rental NOI[Expenses related to rent business]◼ <Outsourcing expenses> Transferred properties (+17)(Shinagawa (+33), BREEZÉ (-16))◼ <Utilities expense> Transferred properties (-23) (BREEZÉ(-15), Shinagawa (-8)), Omori (-3), Toyo (-2), Miyazakidai(-1)◼ <Repair expenses> Transferred properties (+29)(Shinagawa (+26), BREEZÉ (+3)), Hibiya (+4), Omori (+4)
◼ <Depreciation> Transferred properties (-20) (BREEZÉ (11), Shinagawa (-8)), Namba (+5), Kanazawa (+4), Kyoto(+3)

8

SANKEI REAL ESTATE Inc.

Earnings Forecast (1) Summary of DPU
Summary of DPU (Comparison with Forecast)(Yen per unit)

Increase in rental
and CAMrevenue
+144

2,221

Decrease in
expenses related torent business+629

Decrease in otherrent businessrevenue-53

Decrease in
otheroperatingexpenses+54

Decrease in gainon sale of realestate, etc.
-764

◼ (Main breakdown)
Transferred properties (-916)(BREEZÉ (-886), Shinagawa (30)), Newly-acquired properties(+1,113) (Namba (+313),
Nihonbashi (+264), Kyoto(+247)), Omori (-48)

Increase in rent
business
revenue+82

2,208

Increase in otheroperating expenses-10

Rent business
Increase in
expenses-33

Others-23

2,217

Increase in nonoperating
expenses, etc.
-30

◼ (Main breakdown)
Nihonbashi (+58), Omori (-17), Akihabara(+15), Kyoto (+10)◼ (Main breakdown)
Transferred properties (+985)(Shinagawa (+539), BREEZÉ(+445)), Newly-acquired
properties (‐247) (Nihonbashi (70), Namba (-67), Kyoto (-44)),
Settsu (-26)

Increase from theprevious earnings
forecast+95 yenPrevious earnings
forecast(Oct. 2023)
2,113 yen

FP ended Feb. 2024
(10th FP)(Result)

FP ending Aug. 2024
(11th FP)
(Forecast)

FP ending Feb. 2025
(12th FP)
(Forecast)

9SANKEI REAL ESTATE Inc.

Earnings Forecast (2) Profit and Loss Comparison(million yen)
Operating revenue
Total rent business revenue
Rental and CAM revenue

FP ended Feb. 2024
(10th FP) Results (A)FP ending Aug. 2024
(11th FP) Forecasts (B)Comparison with
Previous FP Results(B-A)

FP ending Feb. 2025
(12th FP) Forecasts(C)

Comparison with
Previous FP Forecasts
(C-B)

7,778

2,404

-5,374

2,442

+38

2,361

2,404

+42

2,442

+38

2,214

2,281

+67

2,320

+39

Parking revenue

31

26

-5

25

-0

Utilities reimbursement

98

86

-11

86

+0

Other revenue

17

9

-7

9

-0

Gain on sale of real estate, etc.

5,417

-

-5,417

-

±0

6,548

1,169

-5,3791,189+20

Total expenses related to rent
business

1,141

847

-293

862

+15

Outsourcing expenses

239

121

-117

125

+3

Utilities expense

154

107

-47

103

-4

Operating expenses

Repair expenses

76

37

-39

50

+12

Property taxes

322

248

-73

246

-1

Depreciation

315

307

-7

314

+6

Major Factors for the Difference(Comparison with Previous FP Results) (B - A)
[Rent business revenue]◼ <Rental and CAM revenue>
Transferred properties (-428) (BREEZÉ (-414),
Shinagawa (-14)), Newly-acquired properties (+520)(Namba (+146) Nihonbashi (+123), Kyoto (+115)), Omori(-22)◼ <Utilities reimbursement> Transferred properties (-19)(BREEZÉ (-16), Shinagawa (-3)), Nihonbashi (+5) (newlyacquired portion)◼ <Other revenue> Akihabara (-7)[Expenses related to rent business]◼ <Outsourcing expenses> Transferred properties (-139),
Newly-acquired properties (+8), Toyo (+6), Akihabara(+4)◼ <Utilities expense> Transferred properties (-60), Newlyacquired properties (+6), Omori (+3)
◼ <Repair expenses> Transferred properties (-49) Hibiya(+3)◼ <Property taxes> Transferred properties (-95), Fixed
property tax and city planning tax expensed on
properties acquired in 9th FP (+15) (Settsu (+12),
Akasaka (+3))◼ <Depreciation> Transferred properties (-103), Newlyacquired properties (+90)

Other expenses

31

24

-7

22

-1

Major Factors for the Difference

Loss on sale of real estate, etc.

5,060

-

-5,060-±0(Comparison with Previous FP Forecasts) (C - B)

Operating income (loss) from rent
business

1,220

1,557

+336

1,579

+22

Total other operating expenses

347

322

-24

327

+4

Asset management fee

244

247

+2

248

+1

Other expenses

102

75

-27

78

+3

[Rent business revenue]◼ <Rental and CAM revenue>
Newly-acquired properties (+31) (Nihonbashi (+24),
Kyoto (+4)), Akihabara (+6), Omori (-4), Hatchobori (+2),
Hibiya (+2)
◼ <Parking revenue> Omori (-1)
◼ <Utilities reimbursement> Omori (-2)

Operating income

1,229

1,234

+4

1,252

+18

Non-operating income

1

-

-1

-

±0

Non-operating expenses

193

202

+9

216

+13

Ordinary income

1,038

1,032

-5

1,036

+4

Net income

1,037

1,031

-5

1,035

+4

2,221 yen

2,208 yen

-13

2,217 yen

+9 yen

1,535

1,864

+329

1,894

+29

Distribution per unit
Rental NOI[Expenses related to rent business]◼ <Outsourcing expenses> Omori (+13), Akihabara (-4),
Toyo (-4)◼ <Utilities expense> Omori (-3)◼ <Repair expenses> Nihonbashi (+7), Akihabara (+4),
Hibiya (-4), Miyazakidai (+2)
◼ <Depreciation> Nihonbashi (+3) (newly-acquired
portion), Omori (+1)

10

SANKEI REAL ESTATE Inc.

3. Management Highlights and Future Growth Strategies

11

SANKEI REAL ESTATE Inc.

Management Highlights (1) Change in Portfolio Rebalancing
Rebalancing Part 1 (9th FP)

Acquisition

Asset type

Office buildings

Logistics facilities

S-GATE AKASAKA

SANKEILOGI Settsu

Acquiredproperty

Rebalancing Part 2 (10th FP)
Asset type

Hotel
Hotel Intergate Kyoto
Shijo Shinmachi

Asset type

Hotel Intergate Kanazawa

Grids Premium Hotel
Osaka Namba

Acquiredproperty

Acquisition
price
Acquisition
period

1.4 billion yen

5.2 billion yen

March 2023

Asset type

Office buildings

Acquisition
price
Acquisition
period

5.8 billion yen

3.2 billion yen

7.8 billion yen

February 2024

Office buildings
S-GATE NIHONBASHIHONCHO

2.9 billion yen

7.4 billion yen

March 2024

April 2024

Acquisition
price
Acquisition
periodAsset replacement
Asset type

Office buildings

BREEZÉ TOWER

Transferredproperty

Hotel
VESSEL HOTEL CAMPANASUSUKINO

Acquiredproperty

Asset replacement

Transfer

Rebalancing Part 3 (11th FP)

BREEZÉ TOWER

Shinagawa Seaside TS
Tower

17.9 billion yen

16.1 billion yen

Transferredproperty

Transfer price

600 million yen

Transfer priceTransferred period

August 2023

Transferred period

January 2024

Gain on transfer

164 million yen

Gain on transfer

357 million yen

Period-end Data

* Figures are as of the date of preparation of this material.

Fiscal period

FP ended Aug. 2023 (9th FP)

Asset size

102.8 billion yen

Investment ratio byasset type

Office buildings: 82.3%
Core asset group: 17.7%

Appraisal NOI yield

4.0%

Occupancy rate

85.6%

Average building age

19.1 years

Fiscal period

Fiscal Period Ended February
2024 (10th Fiscal Period)

Asset size

86.0 billion yen

Investment ratio byasset type

Office buildings: 59.3%
Core asset group: 40.7%

Appraisal NOI yield

4.1%

Occupancy rate

96.3%

Average building age

17.0 years

Fiscal period

FP ending Aug. 2024 (11th FP)

Asset size

96.4 billion yen

Investment ratio byasset type

Office buildings: 60.6%
Core asset group: 39.4%

Appraisal NOI yield

4.0%

Occupancy rate

96.6%

Average building age

15.8 years

12

SANKEI REAL ESTATE Inc.

Management Highlights (2) Summary of Portfolio
Investment Ratio by AssetType

Investment Ratio byGeographic Area

Logistics facilities
5.4%

Core asset group
39.4%

Hotel
33.9%

Others20.9%

More than 5
minutes
23.1%

Greater
Osaka
19.5%

Office buildings
60.6%

Percentage by Walking Timeto the Nearest Station

Greater
Tokyo
59.6%

Percentage of Sponsor
Development

Within 1
minute33.3%

Percentage by Building Age
More than
30 years
23.6%

Others34.0%
Sponsor
66.0%

More than 3
More than 1
minutes, but
within 5 minutes minute, but within
3 minutes
25.8%
17.8%

More than 20 years,
but within 30 years
13.0%

Within 10
years
63.4%

Summary by Asset Type
Total acquisition priceInvestment ratio

Number of properties

Occupancy rate

Appraisal NOI yield

Average building age

58.4 billion yen

60.6%

10

93.9%

3.9%

23.0 years

Hotel

32.7 billion yen

33.9%

6

100.0%

4.2%

5.3 years

Logistics facilities

5.2 billion yen

5.4%

1

100.0%

4.0%

1.5 years

Total/Average

96.4 billion yen

100.0%

17

96.6%

4.0%

15.8 years

Office buildings
Core
asset
group

* Figures are as of the date of preparation of this material.

13

SANKEI REAL ESTATE Inc.

Future Growth Strategies
Improve portfolio resilience

Approach to investment in office buildings◼ Perform portfolio maintenance through continuous
rebalancing to improve portfolio quality

Percentage by total floor area of office buildings

Investment policy
By Asset TypeBy geographic area

Office buildings

50-70 Approx. %Core asset group30-50 approx. %Others◼ From the conventional “close, new, and large” to“close, new, and mid-sized (or high-spec)”

Greater Tokyo, Greater Osaka,
70 % or more
Greater Nagoya
Cities designated by
30% or lessgovernment ordinance, etc.

Up to 10 approx. %Financial Strategy: Acquisition of credit rating, etc.
◼ Aim to acquire a credit rating during the FP ending Aug.
2024 (11th FP)◼ Implement appropriate funding cost control in
response to changes in the financial environment, withlong-term fixed cost as the basic policy

10,000m2 or more Less than 3,000m2
3.5%
21.4%

78.6%
3,000m2 or more but
less than 10,000m2
75.1%

Diversification offunding methods
Control of funding
costStandard LTV ratio during normal operations is 45 to 50%.
After acquiring a credit rating, will consider issuinginvestment corporation bonds depending on market
conditions
Depending on market trends, funding will be
implemented with floating interest rates in order tomitigate the effect of long-term interest rate hikes* Figures are as of the date of preparation of this material.
“An office building with a total floor area of 3,000 m2 or
more but less than 10,000 m2” is defined as “a mid-sized
office building”.

Additional acquisition of investment units by the Sponsor◼ Total number of investment units to be acquired: Up to46,652 units◼ Acquisition period: Up to 220 business days from March
6, 2024◼ Acquisition method: Market purchase entrusted to asecurities company
Before theacquisition

Present funding policy
LTV control

Percentage of mid-sized or
high-spec office buildings:

Number of investment units
issued and outstanding
Number of units held bySponsor(Share of units owned)

Units to be acquired After the acquisition(maximum)(maximum)

467,099 units

467,099 units

467,099 units

17,479 units(3.74%)

46,652 units(9.98%)

64,131 units(13.72%)* Each share of units owned above is rounded down to two decimal places.

14

SANKEI REAL ESTATE Inc.

4. External Growth

15

SANKEI REAL ESTATE Inc.

Overview of Newly-Acquired Properties (10th FP)
B-4

Hotel Intergate Kyoto Shijo Shinmachi

Sponsor support
Core asset group

Sponsor support

Hotel Intergate Kanazawa

Core asset group

Acquisition dateFebruary 1, 2024

Structure / size

Steel Construction,
5 floors above ground

Acquisition dateFebruary 1, 2024

Structure / size

Acquisition price5,800 million yen

Number of guest
rooms

153

Acquisition price3,250 million yen

Number of guest
rooms

Appraisal value

5,890 million yen

Operator

Appraisal NOI yield

4.1%

Contract form

Location
Construction
completion

GRANVISTA Hotels &Resorts
Fixed-term building lease(fixed and variable)

Appraisal value

3,290 million yen

Operator

Appraisal NOI yield

4.8%

Contract form

Nakagyo-ku, Kyoto-shi

Location

Kanazawa-shi, Ishikawa

November 2017

Construction
completion

January 2019

◼ The first property of the sponsor brand INTERGATE HOTELS series◼ Located within walking distance of the Shijo Karasuma crossing, the business center of
Kyoto-shi, and within easy reach of Kyoto Station, which is used by nearly half of tourists◼ A hotel specializing in lodging that was designed based on the concept of “a hotel where
you stay like you are a resident of Kyoto,” it boasts an impressive exterior latticereminiscent of Kyomachiya and a modern Japanese interior that blends Eastern andWestern sensibilities*

B-5

Appraisal value is calculated based on prices as of the end of FP ended February 2024 (10th FP).

Steel Construction,
12 floors above ground
166
GRANVISTA Hotels &Resorts
Fixed-term building lease(fixed and variable)◼ The fourth property of the sponsor brand INTERGATE HOTELS series◼ Located close to Hyakumangoku-dori street in central Kanazawa-shi, where needs haveincreased since the opening of the Hokuriku Shinkansen, between Musashi-ga-tsuji andKorinbo, it is in a good location with famous tourist spots such as Kenrokuen, Omi-cho
Market, and 21st Century Museum of Contemporary Art, Kanazawa, accessible by foot◼ At the coffee counter, which is located at the center of the first floor lounge and resembles
a chasen (tea whisk) representing Kanazawa’s tea ceremony culture, coffee or original
cocktails are served depending on the time of day, and workshops and events are held

16

SANKEI REAL ESTATE Inc.

Overview of Newly-Acquired Properties (10th FP)
B-6

Grids Premium Hotel Osaka Namba

Sponsor support
Core asset group

Sponsor brands

Value experience-type hotel
INTERGATE HOTELS
A hotel brand developed by Sankei Building andoperated and managed by its group company
GRANVISTA Hotels & Resorts

February 1, 2024

Structure / size

Steel Construction, 11
floors above ground

Acquisition price7,800 million yen

Number of guest
rooms

142

Appraisal value

7,870 million yen

Operator

AB Accommo

Contract form

Fixed-term building lease(fixed and variable)

Acquisition date

Appraisal NOI yield

4.1%

Location

Naniwa-ku, Osaka-shi

Construction
completion

January 2021

◼ The first premium-line property of the new series of the sponsor brand GRIDS◼ An 11-story hotel located in the Minami area, which is one of the busiest areas in Osakaand a popular area bustling with many tourists, it is in a good location accessible within 1minute walk from Namba Station on the Osaka Metro Midosuji Line, the Sennichimae Line,and the Yotsubashi Line, 2-minute walk from Namba Station on the Nankai Main Line, and5-minute walk from JR Namba Station◼ While following the GRIDS concept, all rooms are private accommodations designed
primarily for Millennials and Generation Z guests who want to enjoy their own journey likea resident*

Appraisal value is calculated based on prices as of the end of FP ended February 2024 (10th FP).

Lifestyle-type hotel
GRIDS
A hotel based on the concept of “THE TRAVELLERS’
HUB: connecting travels, people and hearts” where itis easy for visiting guests to find new enjoyment andconnections while coming in contact with Japanesetradition and culture

High-grade, mid-sized office building
S-GATEA high-grade, mid-sized office that has beendeveloped from the perspective of people who willlead the next generation of entrepreneurs, pursuingand sublimating various factors that businesses
require in an office, such as future work styles and theenvironment

17

SANKEI REAL ESTATE Inc.

Overview of Newly-Acquired Properties (11th FP)
A-3

S-GATE NIHONBASHI-HONCHO(49% co-ownership interest => 100%
ownership)

AM Company's unique route
Office buildings

B-7

VESSEL HOTEL CAMPANA SUSUKINO(Co-ownership interest 40%)

Sponsor support
Core asset group

Awarded Agoda 2023 GOLDCIRCLE AWARD(February 26, 2024)
Acquisition dateSpring 1, 2024

Structure / size

Steel Construction, 11
floors above ground

Acquisition date

March 1, 2024

Structure / size

Acquisition price7,450 million yen

Occupancy rate

100.0%

Acquisition price

2,920 million yen

Number of guest
rooms

Appraisal value

7,480 million yen

Appraisal value

Appraisal NOI yield

3.3%

Location
Construction
completion

2,930 million yen

Operator

Appraisal NOI yield

4.2%

Contract form

Chuo-ku, Tokyo

Location

Chuo-ku,
Sapporo-shi

Oct. 2018

Construction
completion

March 2019

◼ The fourth property of the high-grade, mid-sized office building S-GATE Series◼ Located in the Nihonbashi area, a traditional business hub where long-established shops,
department stores, and pharmaceutical companies have stores and offices, it has access tofour stations and six lines, including Mitsukoshimae Station on the Tokyo Metro Ginza Lineand Hanzomon Line, Nihonbashi Station, Ningyocho Station, and Shin-Nihonbashi Station◼ Located on a corner facing Showa-dori Street and boasting high visibility, it has theappearance of a heavy grid design* Appraisal value is calculated based on prices as of the end of February 1, 2024. The occupancy
rate of S-GATE NIHONBASHI-HONCHO is as of the date of preparation of this material.

Steel Construction, 13
floors above ground296 rooms
Vessel Hotel
Development
Fixed-term building lease(fixed)◼ Located within a 4-minute walk from Susukino Station on the Nanboku Line of the Sapporo
Municipal Subway, and within walking distance of Odori Park, a famous venue that hosts
the Sapporo Snow Festival in February and the Sapporo Autumn Fest in September everyyear◼ A 13-story, steel-framed hotel with a total of 296 rooms, it was completed in March 2019
based on the concept of “Japanese relaxation and culture.” A large, spacious bath with asauna for guests on the second floor, and guest rooms from the third to the 13th floors* The Agoda 2023 GOLD CIRCLE AWARD is awarded to a global facility partner that
demonstrates the highest quality of online booking travel experience.

18

SANKEI REAL ESTATE Inc.

Sponsor’s Branding Strategy
Urban development business
Office buildings

Hotel

Logistics facilities

Residential facilities

SANKEILOGI Atsugi

Rental residences developed by Sankei Building

S-GATE OTEMACHI KITA
Hotel Intergate
Osaka Umeda

Grids Premium
Hotel Otaru

Elderly facilities
Sankei Building Well Care
SANKEILOGI Kashiwanoha

Examples of recent development◼ The LEFOND ETUDE series of student
residences, including LEFOND ETUDE
Kokubunji, have been completed
successively (as of March 14, 2024)◼ GRIDS PREMIUM HOTEL Kumamoto,the third property of the GRIDSPREMIUM HOTEL series, will open on
April 1, 2024 (as of March 25, 2024)* The dates in the above Examples of Recent Development are the dates on which Sankei Building Co., Ltd. disclosed the respective projects.

19

SANKEI REAL ESTATE Inc.

5. Internal Growth

20

SANKEI REAL ESTATE Inc.

Internal growth (1) Portfolio
Change in Portfolio Yields

Change in Occupancy Rate at Period-end

NOI yield (against book value)
5.0%

4.3%

4.0%

NOI yield after depreciation (against book value)
4.6%

Core asset group

Portfolio
96.3%

93.4%
85.6%

3.8%

4.0%

3.7%

3.0%

100.0%

Office buildings
99.1%
94.2%

3.2%
2.0%

3.5%

3.5%

2.9%

2.8%

80.0%

60.0%
1.0%
0.0%

40.0%
FP ended Feb.
2022
(6th FP)FP ended Aug.
2022
(7th FP)FP ended Feb.
2023
(8th FP)FP ended Aug.
2023
(9th FP)FP ended Feb.
2024
(10th FP)

Change in Depreciation and CAPEX(million yen)
350

Depreciation
309

306

250

320
212

219

150

73

111

83

50
0
FP ended Feb.
2022
(6th FP)FP ended Aug.
2022
(7th FP)FP ended Feb.
2023
(8th FP)

Percentage by Contract Form

Percentage by Lease Period

Ordinary building
lease agreement
34.9%

10 years or
more
47.0%

315

200

100

FP ended Feb.
2024
(10th FP)

Status of Lease Agreement

CAPEX

296

300

FP ended Feb.
FP ended Aug.
FP ended Feb.
FP ended Aug.
2022
2022
2023
2023
(6th FP)(7th FP)(8th FP)(9th FP)* The above figures indicate the portfolio occupancy rates.

FP ended Aug.
2023
(9th FP)FP ended Feb.
2024
(10th FP)

Fixed-termbuilding
lease agreement
65.1%

Less than 3 years
34.8%

3 years or more
Less than 5 years
5 years or more 9.0%
Less than 10 years
9.2%* Figures are as of the date of preparation of this material.

21

SANKEI REAL ESTATE Inc.

Internal Growth (2) Office Buildings
Change in Rent Revision Performance

Change in Average Rent Unit Price

Percentages of rent revision results (Leased area basis)
Increase
100%

0.1%

No change

Decrease

3.7%

0.0%

(yen)
20,0000.0%

17,315

16,98916,718FP ended Feb.
2022
(6th FP)FP ended Aug.
2022
(7th FP)FP ended Feb.
2023
(8th FP)FP ended Aug.
2023
(9th FP)

15,702

15,00018.7%
80%

17,03934.1%
10,000

60%

82.1%

96.2%

95.2%

81.3%

40%

5,000
0

65.8%
20%
17.9%
0%

FP ended Feb.
2024
(10th FP)

4.7%

FP ended Feb.
2022
(6th FP)

0.0%
FP ended Aug.
2022
(7th FP)

0.1%
FP ended Feb.
2023
(8th FP)FP ended Aug.
2023
(9th FP)FP ended Feb.
2024
(10th FP)FP ended
Feb. 2022(6th FP)FP endedAug. 2022(7th FP)FP ended
Feb. 2023(8th FP)FP endedAug. 2023(9th FP)FP ended
Feb. 2024(10th FP)

Number oftargeted tenants

11 cases

17 cases

24 cases

30 cases

14 cases

Increase

2 cases

12 cases

1 case12 cases

4 cases◼ Steadily maintained the occupancy rate at 100%

No change

8 cases

0 cases

18 cases

16 cases

10 casesA-6

Decrease

1 case5 cases

5 cases

2 cases

0 casesTargeted leasedarea(tsubo)

1,725

705

2,600

10,885

1,333

Rate of rent
increase

5.2%

0.0%

6.1%

4.3%

38.5%

Rent Revision Examples
A-5

Hibiya Sankei Building◼ Careful relations with tenants during the COVID19 pandemic have paid off, resulting in the
renewal of contracts with a large increase in rent

Hatchobori Sankei Building◼ Persistent negotiations with tenants with a rent
gap have paid off, resulting in the renewal of
fixed-term contracts with a large increase in rent
◼ Steadily maintained the occupancy rate at 100%
* Examples of revisions during the FP ended Feb. 2024 (10th FP).

22SANKEI REAL ESTATE Inc.

Internal Growth (2) Office Buildings
Change in Rent Gap

Leasing Priority Properties+10.0%

A-7◼ Turn up needs for branch offices of companies
headquartered in central Tokyo◼ Target relocation from neighboring areas or along railway
lines, short-term lending, etc. in advance

+0.8%
0.0%
-1.5%

-2.6%

-2.9%

-2.5%

-10.0%FP ended Feb.
2022
(6th FP)FP ended Aug.
2022
(7th FP)FP ended Feb.
2023
(8th FP)FP ended Aug.
2023
(9th FP)FP ended Feb.
2024
(10th FP)

Scheduled Renewal with Contract Revision/
Renewal and Progress
Contract revision/renewal area

Contract revision/renewal planned area

4,000

◼ Period average 96.6%
FP ending Feb. 2025 (12th FP)◼ End of period 98.6%

2,594 tsubos(Percentage of total leased area: 13.6%)
2,000◼ Make proposals for differentiation from competing
properties (first floor ceiling height of 3,000 mm, availabilityof heavy-duty zone and water supply and drainage service)◼ Enhance efforts to approach companies with parking needs
for business cars
◼ Turn up needs for companies expecting to reduce officecosts and increase floor space◼ End of period 96.8%

0 tsubos (Progress rate 0％)0

Omori Park Building

FP ending Aug. 2024 (11th FP)

8,942 tsubos(Percentage of total leased area: 49.3%)
FP ending Feb. 2025
(12th FP)

A-8

Assumed Occupancy Rate of Portfolio

8,720 tsubos (Progress rate 97.5％)

FP ending Aug. 2024
(11th FP)Toyo Park Building

6,000* The above total leased area refers to office buildings.

8,000

10,000(tsubo)◼ Period average 97.7%
23

SANKEI REAL ESTATE Inc.

Internal Growth (3) Hotels
Percentage of Hotel Revenue to Rent Business
Revenue
FP ending Aug. 2024 (11th FP)

Fixed/Variable Ratio of Three Variable Rent
Properties in Earnings Forecast

FP ending Feb. 2025 (12th FP)

FP ending Aug. 2024 (11th FP)

FP ending Feb. 2025 (12th FP)

Floating
42.3%

Floating
43.9%

Hotel
32.6%

Hotel
32.7%

Fixed
56.1%

Fixed
57.7%

* Assumption value as of the date of preparation of this material.

* Assumption value as of the date of preparation of this material.

Current Investment Status of Three Variable Rent
Properties
Hotel Intergate Kyoto Shijo Shinmachi(yen)

Hotel Intergate Kanazawa

Grids Premium Hotel Osaka Namba(yen)
100.0%(yen)

16,000100.0%

20,00080.0%

16,00080.0%

12,00060.0%

12,000

60.0%
8,000

40.0%

8,000

20.0%

4,000
0

100.0%

20,000February

March

Occupancy rate(right axis)

72.8%

85.3%

ADR (left axis)

13,976

RevPAR (left axis)

10,168

4,000

0.0%

0

February

March

Occupancy rate(right axis)

82.4%

81.5%

19,738ADR (left axis)

10,067

16,829

RevPAR (left axis)

8,296

80.0%

16,00060.0%

12,000

40.0%

8,000

40.0%

20.0%

4,000

20.0%

0.0%

0

February

March

Occupancy rate(right axis)

82.8%

86.8%

13,225ADR (left axis)

19,16820,52010,779

RevPAR (left axis)

15,86317,807* The above shows actual values from February to March 2024, but the values for March are preliminary and subject to change.

0.0%

24

SANKEI REAL ESTATE Inc.

MEMO

25

SANKEI REAL ESTATE Inc.

6. Financial Management

26

SANKEI REAL ESTATE Inc.

Financial Management (1)Current Finance Status

Financial Highlights (as of March 12, 2024)

Summary of Repayment of Refinance (Before Refinancing)
Balance of interestbearing liabilities

Ratio of long-term
debt

LTV

50.2 billion yen

91.4%

47.9%

Average financing
interest rate

Ratio of fixed-rate
debt

Average remaining
time to maturity

0.55%

88.2%

Repayment
AmountBorrowingdateYears ofborrowing

Borrowing rate

Fixed/Variable

3,300
million yen

Mar, 12,2019

5.0 years

0.49096%

Fixed

Summary of Funding of Refinance (After Refinancing)

2.4 years

Amountfinanced

BorrowingdateYears ofborrowing

Borrowing rate

Fixed/Variable

3,300
million yen

Mar. 12,2024

4.5 years

1.10593%

Fixed* LTV is total assets LTV as of the end of February 2024 (10th FP).

Maturity Ladder for Interest-Bearing Liabilities(as of March 12, 2024)
Refinancing of long-term loans(million yen)
12,0009,000

10,200
3,300

6,000
3,000

Repayment ofshort-term loans
4,300

6,200
4,800

6,200

5,900

5,600
3,700

3,300

6,400

0
FP ending Aug. FP ending Feb. FP ending Aug. FP ending Feb. FP ending Aug. FP ending Feb. FP ending Aug. FP ending Feb. FP ending Aug. FP ending Feb.
2024
2025
2025
2026
2026
2027
2027
2028
2028
2029
(11th FP)
(12th FP)
(13th FP)
(14th FP)
(15th FP)
(16th FP)
(17th FP)
(18th FP)
(19th FP)
(20th FP)27

SANKEI REAL ESTATE Inc.

Financial Management (2)Change in LTV

Lender Formation (as of March 12, 2024)
50.8%

52.0%
50.0%
48.0%

47.3%

47.5%

47.1%

47.9%

47.4%

The Nishi-Nippon
City Bank
Aozora Bank
2.0%
4.0%

Chiba Bank
0.6%
Mizuho Bank
24.9%

Resona Bank
7.5%

46.0%
44.0%

Kansai Mirai Bank
1.2%

LTV ratio during normal operations

SBI Shinsei Bank
8.1%

42.0%
40.0%
FP ended Aug. FP ended Feb. FP ended Aug. FP ended Feb. FP ended Aug. FP ended Feb.
2021
2022
2022
2023
2023
2024
(5th FP)(6th FP)(7th FP)(8th FP)(9th FP)(10th FP)

Sumitomo Mitsui Trust
Bank
9.0%
Mizuho Trust & Banking
Development Bank of
9.2%
Japan
15.3%

Change in Ratio of Fixed-rate Debt
100.0%

100.0%

87.5%

90.0%
80.0%

Sumitomo Mitsui
Banking
18.1%

88.2%

88.1%

88.2%

73.0%

70.0%
60.0%
50.0%
FP ended Aug. FP ended Feb. FP ended Aug. FP ended Feb. FP ended Aug. FP ended Feb.
2021
2022
2022
2023
2023
2024
(5th FP)(6th FP)(7th FP)(8th FP)(9th FP)(10th FP)

Lender name

Borrowing amount

Lender name(million yen)
Borrowing amountMizuho Bank

12,500Resona Bank

3,780

Sumitomo Mitsui
Banking

9,100

Aozora Bank

2,000

Development Bank of
Japan

7,700

The Nishi-Nippon City
Bank

1,000

Mizuho Trust & Banking

4,640

Kansai Mirai Bank

600

Sumitomo Mitsui Trust
Bank

4,500

Chiba Bank300

SBI Shinsei Bank

4,080

Total

50,20028

SANKEI REAL ESTATE Inc.

7. ESG Initiatives

29

SANKEI REAL ESTATE Inc.

ESG Initiatives (1)Topics◼

External Evaluation and Global Initiatives

Recently-certified properties

GRESB Real Estate Assessment

SANKEI REAL ESTATE obtained a “2 Star” rating among fivelevels of overall scores in the 2023 GRESB Global Real
Estate Assessment.
S-GATE

S-GATENIHONBASHI HONCHOAKIHABARA

S-GATE AKASAKA

TCFD

◼

Considering the purchase of a FIT Non-fossil Certificate

Various Rules Associated with ESG

The Asset Management Company expresses its support for the
TCFD (Task Force on Climate-related Financial Disclosures)
recommendations and participates in the TCFD Consortium, anorganization of domestic supporting companies.

Sustainability Policy

Sustainability Promotion System(1)

Preserving the Earth environment and reducing theenvironmental load of assets under management◼ Chief Sustainability Officer: Executive Deputy President◼ Sustainability Promotion System Rules

Serving the local community◼ Chief Executive Officer: General Manager, Sustainability
Promotion Office◼ Energy Conservation Policy

(2)
(3)

Cooperating with external stakeholders(4)

Working with executives and employees(5)

Observing compliance and establishing/maintaining aninternal control system◼ EMS operational manual(6)

Disclosing ESG information and securing transparency◼ Policy on climate change and resilience◼ Sustainability Promotion Committee: Examining andplanning various policies, targets, and measures related
to sustainability

Internal regulations, policies, etc.

◼ GHG Emissions Reduction Policy◼ Policy on sustainable procurement◼ Water Conservation Policy

30

SANKEI REAL ESTATE Inc.

ESG Initiatives (2)Environment

Social◼ Energy consumption reduction targets◼ Introduction of a share service for electric micromobility<Long-term target 1>➢ Reduce annual energy consumption intensity within the scope
managed by the owner by 5% from the base year (2019) by 2025

<Long-term target ２>➢ Reduce annual energy consumption intensity within the scope
managed by tenants by 1% from the base year (2019) by 2025

◼ GHG emission reduction targets<Scope 1 + Scope 2>➢ The single-year target is to reduce energy consumption intensity by
1% compared with the previous year for Scope 1 + Scope 2➢ Reduce by 5% from the base year (2019) in the medium to long term
(5 years)<Scope 3>➢ Reduce by 1% from the base year (2019) in the medium to long term
(5 years)◼ Status of environmental certificates
DBJ Green Building Certification

BELS Evaluation

Governance◼ The Asset Management Company publishes a report of its fiduciary duty
policy (policy for Customer-Oriented Business Conduct) on an annual basis◼ Intensify same-boat investment by the Sponsor (up to 220 business days
from March 6, 2024)◼ Contribution to SDGs (Sustainable Development Goals)
SANKEI REAL ESTATE’s efforts have contributed to the following SDGs.
Target 3:

★★★★
1
★★★★
3

★★★
1

★★★
2
★★
2

Ensuring prevention of the spread of infectious
diseases, flexible work styles
Target 7: LEDs, solar power, reduction of heat load
Target 8: Rooftop terraces (worker-friendly buildings)
Target 11: Green Building certification, seismic dampers,
stockpiles
Target 12: Appropriate treatment and recycling ofindustrial waste
Target 13: Disaster countermeasures, intake of people
having difficulty returning home

31

SANKEI REAL ESTATE Inc.

8. Appendix

32

SANKEI REAL ESTATE Inc.

Balance Sheet(thousand yen)
Fiscal Period Ended February
FP ended Aug. 2023 (9th FP)
2024 (10th Fiscal Period)
AssetsFiscal Period Ended February
FP ended Aug. 2023 (9th FP)
2024 (10th Fiscal Period)
Liabilities

Current assets

Current liabilities

Cash and deposits

5,687,713

15,252,088

Operating accounts payable

Cash and deposits in trust

2,649,835

1,762,519

Short-term loans

6,800,000-

62,645

953,754

Long-term loans due within one year

9,200,000

7,600,000

Prepaid expenses

78,86573,876

Accounts payable - other295,160

492,122

Consumption taxes receivable

166,963-

Accrued expenses

56,97352,901

82

5,486

8,646,106

18,047,724

Operating accounts receivable

OthersTotal current assets

Income taxes payable
Consumption taxes payable

217,790

219,486

957

795

-

182,108
326,433

Non-current assets

Advances received

397,611

Property, plant and equipment

Deposits received

10,184346

16,978,677

8,874,193

41,000,000

42,600,000

Buildings, net

159,952

156,623

Structures, net

463

449

Non-current liabilities

Tools, furniture and fixtures, net

564

504

Long-term loans

Land2,457,766

2,457,766

Lease and guarantee deposits received

Buildings in trust, net

19,056,176

18,918,027

Structures in trust, net

99,152

103,783

Machinery and equipment in trust, net

11,31835,496

Total liabilities

Tools, furniture and fixtures in trust, net

54,397

17,178

Net assets

81,618,833

64,939,537

5,886

-

103,464,511

86,629,368

Land in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets

8,806

7,068

Total intangible assets

8,806

7,068

94,326102,677

Investments and other assets
Deferred tax assets
Lease and guarantee deposits
Total investments and other assets

17

9

10,00010,000104,343

112,687

103,577,662

86,749,123

Investment unit issuance costs

12,0506,025

Total deferred assets

12,0506,025

112,235,819

104,802,873

Total non-current assets

88,71688,012

Lease and guarantee deposits received in trust

3,603,120

2,767,538

Total non-current liabilities

44,691,837

45,455,551

61,670,515

54,329,745

49,442,685

49,442,685

Unitholders’ equity
Unitholders’ capital
Deduction from unitholders’ capital
Unitholders’ capital (net)

Software

Long-term prepaid expenses

Total current liabilities

Surplus
Unappropriated retained earnings (undisposed
loss)
Total surplus
Total unitholders’ equity-7,136-7,13649,435,549

49,435,549

1,129,754

1,037,578

1,129,754

1,037,578

50,565,304

50,473,128

Total net assets

50,565,304

50,473,128

Total liabilities and net assets

112,235,819

104,802,873

Deferred assets

Total assets

33

SANKEI REAL ESTATE Inc.

Statement of Income and Retained Earnings(thousand yen)
Fiscal Period Ended February
FP ended Aug. 2023 (9th FP)
2024 (10th Fiscal Period)
Operating revenue
Rent business revenue

2,343,152

2,214,154

Other rent business revenue

243,748

147,053

Gain on sale of real estate, etc.

164,424

5,417,202

2,751,326

7,778,411

1,110,607

1,141,048-

5,060,134

245,773244,680

Asset custody fee

2,192

2,198

Administrative service fees

8,170

7,975

Remuneration for directors (and other officers)

3,600

3,600

Other operating expenses

46,384

88,867

Total operating expenses

1,416,727

6,548,504

Operating income

1,334,598

1,229,906

Total operating revenue

Operating expenses
Expenses related to rent business
Loss on sale of real estate, etc.
Asset management fee

Non-operating income
Interest income

40

42

Reversal of distributions payable

639

545

Insurance claim income-

462

Interest on refund-

427

Others

9

9

689

1,487

Interest expenses

139,180

142,563

Borrowing related expenses

57,511

41,557

Amortization of investment unit issuance expenses

6,024

6,024

Others

2,000

3,168

204,716

193,314

Ordinary income

1,130,571

1,038,079

Net income before income taxes

1,130,571

1,038,079

Income taxes - current

963

801

Income taxes - deferred-4

7

Total income taxes

958

809

1,129,612

1,037,269

Total non-operating income
Non-operating expenses

Total non-operating expenses

Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

141

309

1,129,754

1,037,578

34

SANKEI REAL ESTATE Inc.

Statement of Cash Flows(thousand yen)
Fiscal Period Ended February
FP ended Aug. 2023 (9th FP)
2024 (10th Fiscal Period)
Cash flows from operating activities
Net income before income taxes
Depreciation

Fiscal Period Ended February
FP ended Aug. 2023 (9th FP)
2024 (10th Fiscal Period)
Cash flows from investing activities

1,130,571

1,038,079

322,112317,312

6,024

6,024

-40

-42

Purchase of property, plant and equipment

Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund
receivable
Decrease (increase) in prepaid expenses-16,070

4,989

Purchase of property, plant and equipment in trust
Proceeds from lease and guarantee deposits
received
Refund of lease and guarantee deposits received
Proceeds from lease and guarantee deposits
received in trust
Refund of lease and guarantee deposits received intrust
OthersIncrease (decrease) in operating accounts payable-83,458-33,749

Net cash provided by (used in) investing activities

Amortization of investment unit issuance expenses
Interest income

Interest expenses

139,180

142,563

1,832-891,108-166,963

166,963-7,125-249-7,014,566-16,936,372-8,000--7,275,168-17,774,632

5,231

1,301

-2,344-3,730306,551

549,773-554,915-1,385,355

Increase (decrease) in accounts payable - other

8,101

12,737

Cash flows from financing activities

Increase (decrease) in consumption taxes payable-38,660

182,108

Proceeds from short-term loans

6,800,000-

Increase (decrease) in advances received-52,153-71,177

Repayments of short-term loans--6,800,000

Increase (decrease) in deposits received

9,507-9,837

Proceeds from long-term loans

3,700,000

5,900,000

Decrease (increase) in long-term prepaid expenses
Decrease due to the sale of property, plant andequipment in trust
Decrease (increase) in other assets

9,230-8,351

Repayments of long-term loans-3,700,000-5,900,000

447,918

33,678,715

Distributions paid

-1,077,059-1,130,575

Net cash provided by (used in) financing activities

5,722,940-7,930,575

Net increase (decrease) in cash and cash equivalents

31,0508,677,058

SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities-82-5,404

1,717,050

34,529,823

40

42-132,950-146,635

-861

-963

1,583,278

34,382,266

Cash and cash equivalents at beginning of period

8,306,499

8,337,549

Cash and cash equivalents at end of period

8,337,549

17,014,608

35

SANKEI REAL ESTATE Inc.

Status of Loans

Category

Loan amount(million yen)Interest rate

Fixed/Variable

Borrowing period

Borrowing date

Maturity date

4,300

0.32923%Fixed

4.5 years

Mar. 12, 2020

Sep. 12, 2024

4,800

0.36978%

Fixed

4.0 years

Mar. 12, 2021

Mar. 12, 2025

6,200

0.29655%

Fixed

4.0 years

Sep. 2, 2021

Sep. 2, 2025

6,200

0.35542%Fixed

5.0 years

Sep. 2, 2021

Sep. 2, 2026

4,300

0.38044%Fixed

4.5 years

Oct. 1, 2021

Apr. 1, 2026

5,600

0.77500%

Fixed

6.0 years

Mar. 14, 2022

Mar. 14, 2028

5,900

0.79285%Fixed

4.5 years

Sep. 5, 2022

Mar. 5, 2027

3,700

1.02763%Fixed

4.5 years

Mar. 13, 2023

Sep. 13, 2027

5,900

0.45205%

Floating

2.6 years

Sep. 4, 2023

Apr. 1, 2026

3,300

1.10593%Fixed

4.5 years

Mar. 12, 2024

Sep. 12, 2028

50,2000.55788%-

4.5 years

Long-term loans

Total/Average

Repayment
methodDescription

Lump-sum
repayment atmaturity

Unsecured/
Nonguaranteed-* Figures are as of March 12, 2024.

36

SANKEI REAL ESTATE Inc.

Statement of Income from Rent Business by Property (1)(thousand yen)
Property number

A-1

A-2

A-3

A-4

A-5

Asset type
Property name

A-6

A-7

A-8

A-9

A-10

Toyo Park
Building

ShinagawaSeaside TS
Tower

Omori Park
Building

S-GATEAKASAKA

Office buildings
Tokyo Sankei
Building

BREEZÉTOWER

S-GATENIHONBASHIHONCHO

S-GATEAKIHABARA

Hibiya Sankei
Building

Hatchobori
Sankei
Building

Rent business revenue

62,468437,835

163,716

70,610200,831

176,564

87,506

121,302

Rental revenue

54,841

351,723

154,379

59,167

185,684

145,552

70,164

98,108

Common area
maintenance revenue

2,021

62,337

-

-

2,124

13,790

5,937

7,069

Utilities
reimbursement

4,270

16,355

6,312

3,507

10,22011,491

8,384

10,801

Parking revenue

798

6,502

2,854

384

1,662

4,180

2,790

4,680

Other rental revenue

536

916

170

7,551

1,140

1,548

230

643

34,226208,01446,552

26,871

99,53463,51337,01972,792

Outsourcing expenses

5,721

54,998

9,189

6,106

16,273

16,949

8,652

Utilities expense

4,188

32,920

6,731

3,689

12,157

14,512

9,247

20,803

Property taxes

12,91243,517

11,207

4,972

56,888

10,648

8,039

16,614

683

907

-

-

-

-

-

-

Repair expenses

1,955

17,268

425

2,832

7,136

2,448

1,130

6,677

Insurance premium

100

728

341

152

378

548

258

492

-

91

250

1,074

250

250

350

350

Depreciation

3,652

51,346

18,068

7,639

6,181

17,714

9,112

12,563

Other expenses related
to rent business

5,012

6,236

338

404

268

442

227

351

Operating income (loss)
from rent business

28,242229,820

117,164

43,738101,297

113,050

50,486

48,510NOI

31,895281,167

135,232

51,378

107,479

130,764

59,59961,074

Expenses related torent businessLand rent

Trust fee

(Not disclosed)

14,939(Not disclosed)

37

SANKEI REAL ESTATE Inc.

Statement of Income from Rent Business by Property (2)(thousand yen)
Property number
Asset type

Property name

A-11

A-12

B-1

B-2

Office buildings
Miyazakidai
GardenOfficeHitachi
KyusyuBuilding

B-3
Logistics
facilities

Hotel
Hotel
IntergateTokyo
Kyobashi

HotelIntergate
Hiroshima

B-4

B-5

B-6

Hotel

SANKEILOGI
SettsuHotelIntergate
Kyoto Shijo
Shinmachi

Total

Grids
Premium
Hotel Osaka
Namba

Hotel
Intergate
Kanazawa

Rent business revenue

92,019206,955

118,800

119,334

19,79012,48030,6932,361,208

Rental revenue

73,087

206,955

118,800

118,531

19,79012,48030,693

2,117,288

3,587

-

-

-

-

-

-

96,866

12,477

-

-

-

-

-

-

98,319Parking revenue

1,542

-

-

-

-

-

-

31,294

Other rental revenue

1,325

-

-

802

-

-

-

17,44039,90255,70643,902

21,678

4,091

4,456

5,818

1,141,048

1,200

1,200

900

150

150

150

239,931

Common area
maintenance revenue
Utilities
reimbursement

Expenses related torent businessOutsourcing expenses

6,384

Utilities expense

13,448

-

-

-

-

-

-

154,887

Property taxes

6,502

26,906

15,888----322,169

-

-

-

-

-

-

-

1,590

Repair expenses

3,996

-

420

-

-

-

-

76,809Insurance premium

232

543

529

382

62

49

56

6,987

Trust fee

350

250

250

350

55

55

55

4,924

8,279

26,77025,57220,002

3,823

4,201

5,556

315,574

709

36

42

44

-

-

-

18,173

52,117

151,248

74,89797,655

15,698

8,023

24,874

1,220,160

60,396

178,018

100,469

117,657

19,522

12,22530,431

1,535,734

Land rent

Depreciation
Other expenses related
to rent business
Operating income (loss)
from rent business
NOI(Not disclosed)

38

SANKEI REAL ESTATE Inc.

Key Performance Indicators (KPIs)
FP ended Aug.
2020
(3rd FP)FP ended Feb.
2021
(4th FP)FP ended Aug.
2021
(5th FP)FP ended Feb.
2022
(6th FP)FP ended Aug.
2022
(7th FP)FP ended Feb.
2023
(8th FP)FP ended Aug.
2023
(9th FP)FP ended Feb.
2024
(10th FP)NOI yield (against book value)

4.2%

4.4%

4.5%

4.3%

4.6%

3.8%

3.5%

3.5%

NOI yield (against appraisal value)

3.8%

4.0%

4.1%

4.0%

4.3%

3.5%

3.3%

3.4%

NOI yield after depreciation(against book value)

3.6%

3.8%

3.8%

3.7%

4.0%

3.2%

2.9%

2.8%

NOI yield after depreciation(against appraisal value)

3.2%

3.4%

3.5%

3.4%

3.7%

3.0%

2.7%

2.7%

Implied cap rate (before depreciation)

4.7%

4.3%

4.0%

4.4%

5.0%

4.3%

3.7%

4.1%

Implied cap rate (after depreciation)

4.0%

3.7%

3.5%

3.7%

4.3%

3.6%

3.1%

3.2%

FFO (million yen)

1,122

1,243

1,242

1,698

1,785

1,372

1,286

995

AFFO (million yen)

1,068

1,201

1,185

1,624

1,701

1,160

1,066

883

FFO per unit

3,147 yen

3,485 yen

3,482 yen

3,635 yen

3,821 yen

2,938 yen

2,753 yen

2,131 yenEPS2,532 yen

2,849 yen

2,841 yen

2,978 yen

3,158 yen

2,304 yen

2,418 yen

2,220 yen

Distribution per unit

2,532 yen

2,849 yen

2,862 yen

2,979 yen

3,158 yen

2,305 yen

2,418 yen

2,221 yen

5.6%

5.2%

4.4%

5.5%

6.5%

5.3%

5.2%

5.2%

90,800 yen

110,200 yen

129,600 yen

108,200 yen

97,200 yen

86,400 yen

93,300 yen

84,800 yen

NAV multiple

0.7x

0.9x

1.0x

0.9x

0.8x

0.7x

0.8x

0.7x

FFO multiple

14.4x

15.8x

18.6x

14.9x

12.7x

14.7x

16.9x

19.9x

Payout ratio (FFO)

80.4%

81.7%

82.2%

81.9%

82.6%

78.4%

87.8%

104.2%

Payout ratio (AFFO)

84.5%

84.6%

86.1%

85.7%

86.7%

92.8%

105.9%

117.4%

PER

17.9x

19.3x

22.8x

18.2x

15.4x

18.8x

19.3x

19.1x

PBR

0.9x

1.1x

1.2x

1.0x

0.9x

0.8x

0.9x

0.8x

ROE

4.8%

5.4%

5.4%

5.5%

5.8%

4.3%

4.5%

4.1%

Distribution yield
Investment unit price at end of period

39

SANKEI REAL ESTATE Inc.

Change in NAV per Unit (after Deduction of Distribution)

Net assets per unit

Unrealized gains per unit

(Yen per unit)

123,491
120,000

108,184
11,670114,157
11,744

121,641

122,507123,268

122,093

120,762

16,25721,07819,227

20,114

17,433

116,286

113,651

14,927

10,450

7,816

90,00060,00096,515

102,413

102,413

102,413102,393

105,835

105,836

105,836

105,836

105,836

FP ended Aug.
2019
(1st FP)FP ended Feb.
2020
(2nd FP)FP ended Aug.
2020
(3rd FP)FP ended Feb.
2021
(4th FP)FP ended Aug.
2021
(5th FP)FP ended Feb.
2022
(6th FP)FP ended Aug.
2022
(7th FP)FP ended Feb.
2023
(8th FP)FP ended Aug.
2023
(9th FP)FP ended Feb.
2024
(10th FP)

30,000040

SANKEI REAL ESTATE Inc.

Portfolio List (1)Property number

A-1

A-3

A-4

A-5

Asset type

A-6

A-7

A-9

A-10

A-11

Hatchobori
Sankei Building

Toyo Park
Building

Omori Park
Building

S-GATEAKASAKA

Miyazakidai
Garden OfficeChuo-ku, Tokyo

Koto-ku, Tokyo

Ota-ku, Tokyo

Minato-ku, Tokyo

Miyamae-ku,
Kawasaki-shi

Office buildings
Tokyo Sankei
Building

S-GATENIHONBASHIHONCHO

S-GATEAKIHABARA

Hibiya Sankei
Building

Chiyoda-ku, Tokyo

Chuo-ku, Tokyo

Construction
completion

Sep. 2000

Oct. 2018

Sep. 2017

Jun. 1992

Sep. 1965

Jun. 1991

May 1993

Jul. 2015

Feb. 1993

Acquisition
year/month

March 2019

March 2019

March 2019

March 2019

March 2019

March 2019

Sep. 2019

Oct. 2020

Sep. 2021

Acquisition price(million yen)

2,509

14,148

2,055

5,829

4,959

3,782

5,400

7,000

2,800

Appraisal value(million yen)

2,560

15,270

2,720

6,740

5,150

3,490

5,260

7,400

2,710

Appraisal NOI yield

2.5%

3.5%

4.4%

3.6%

5.0%

3.8%

3.8%

3.3%

4.5%

Occupancy rate

99.8%

100.0%

85.3%

100.0%

100.0%

75.1%

65.6%

100.0%

100.0%PML value

2.3%

2.0%

2.2%

3.1%

0.3%

9.0%

5.6%

4.6%

9.5%

Property nameLocation

Chiyoda-ku, Tokyo Chiyoda-ku, Tokyo* Figures are as of the date of preparation of this material. The same applies below. Acquisition year/month is initial acquisition year/month.

41

SANKEI REAL ESTATE Inc.

Portfolio List (2)Property number
Asset type

A-12

B-1

Office buildings
Hitachi Kyusyu
Building

B-2
Hotel

Hotel Intergate
Tokyo Kyobashi

B-3

B-4

Logistics facilities
Hotel Intergate
Hiroshima

SANKEILOGI
Settsu

B-5

B-6

B-7

Grids Premium
Hotel Osaka
Namba

VESSEL HOTELCAMPANASUSUKINO

Hotel
Hotel Intergate
Kyoto Shijo
Shinmachi

Hotel Intergate
Kanazawa

Total/Average
Property nameLocation

Sawara-ku,
Fukuoka-shi

Chuo-ku, Tokyo

Naka-ku,
Hiroshima-shi

Settsu-shi,
Osaka

Nakagyo-ku,
Kyoto-shiKanazawa-shi,Ishikawa

Naniwa-ku,
Osaka-shi

Chuo-ku,
Sapporo-shi-

Construction
completion

Feb. 1996

Jan. 2018

Oct. 2018

Oct. 2022

November 2017

January 2019

January 2021

March 2019-

Acquisition
year/month

Sep. 2021

March 2019

Sep. 2019

March 2023

February 2024

February 2024

February 2024

March 2024-

Acquisition price(million yen)

10,000

8,961

3,990

5,242

5,800

3,250

7,800

2,920

96,447

Appraisal value(million yen)

10,300

9,360

4,200

5,550

5,890

3,290

7,870

2,930

100,690

Appraisal NOI yield

4.7%

3.9%

4.9%

4.0%

4.1%

4.8%

4.1%

4.2%

4.0%

Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

96.6%

PML value

2.5%

1.8%

2.1%

6.9%

10.5%

3.5%

7.2%

0.9%

-

42

SANKEI REAL ESTATE Inc.

Summary of Appraisal(million yen)

Property
number

Property name

A-1

Tokyo Sankei Building

A-2

BREEZÉ TOWER

A-3S-GATE NIHONBASHI-HONCHO

A-4
A-5

Acquisition
price

End of FP ended Aug. 2023
(9th FP)Appraisal
value

2,509

Directdistributionyield

End of FP ended Feb. 2024 (10th FP)
Appraisal
value

Difference with previous FP

Book value

Unrealized
gain/loss

Directdistribution
yield

2,615

-55

2.3%

Directdistribution
yield
±0

2,570

2.3%

17,380

3.5%

6,698

7,750

3.2%

7,790

6,617

+1,172

3.2%

S-GATE AKIHABARA

2,055

2,690

3.3%

2,720

2,014

+705

Hibiya Sankei Building

5,829

6,630

2.8%

6,740

6,054

+685

A-6

Hatchobori Sankei Building

4,959

5,470

4.1%

5,150

4,979

A-7

Toyo Park Building

3,782

3,900

3.7%

3,490

3,871

A-8

Shinagawa Seaside TS Tower

17,3503.4%

A-9

Omori Park Building

5,400

5,270

3.7%

5,260

5,474

-214

3.7%

-10

±0

A-10

S-GATE AKASAKA

7,000

7,400

3.1%

7,400

7,030

+369

3.1%

±0

±0

A-11

Miyazakidai Garden Office

2,800

2,710

4.5%

2,710

2,837

-127

4.5%

±0

±0

A-12

Hitachi Kyusyu Building

10,00010,3004.2%

10,30010,141

+158

4.2%

±0

±0

Subtotal

51,03489,42054,12051,6362,483

B-1

Hotel Intergate Tokyo Kyobashi

8,961

9,190

3.7%

9,360

8,844

+515

3.6%

+170

-0.1

B-2

Hotel Intergate Hiroshima

3,990

4,180

4.5%

4,200

3,821

+378

4.5%

+20

±0

B-3

SANKEILOGI Settsu

5,242

5,550

3.7%

5,550

5,287

+262

3.7%

±0

±0

B-4

Hotel Intergate Kyoto Shijo Shinmachi

5,800

-

-

5,890

5,867

+22

3.9%

-

-

B-5

Hotel Intergate Kanazawa

3,250

-

-

3,290

3,288

+1

4.6%

-

-

B-6

Grids Premium Hotel Osaka Namba

7,800

-

-

7,870

7,883

-13

3.9%

-

-

Subtotal

35,04318,920-36,16034,993+1,166

-

-

-

Total

86,077

108,340-

90,28086,629+3,650

-

-

-

-

-

-

2,560

Appraisal
value

-

-

-

-

-

-

-10
-

+40

±0

3.2%

+30

-0.1

2.8%

+110

±0

+170

4.1%

-320

±0

-381

3.6%

-410

-0.1

-

-

-

-

-

-

-

* The above acquisition prices are as of the end of FP ended February 2024 (10th FP). However, due to the transfer of BREEZÉ TOWER and Shinagawa Seaside TS Tower as of January 31,
2024 and the additional acquisition of S-GATE NIHONBASHI-HONCHO as of April 1, 2024, the current acquisition prices differ from the above-mentioned prices.

43

SANKEI REAL ESTATE Inc.

Portfolio Matrix
Appraisal NOI Yield x Area × Acquisition Price
Area

5.5%

Tokyo 23 wards(Other than thecentral 3 wards ofTokyo)

Central 3 wards of Tokyo(Chiyoda, Chuo, and Minato wards)●: Office buildings ●: Core asset group

GreaterTokyo(Excluding Tokyo)Other ordinancedesignated cities
Core cities, major
regional cities

Greater Osaka, Greater
NagoyaHatchobori Sankei
Building
5.0%

Hotel Intergate Hiroshima

5.0%

4.9%
Miyazakidai
Garden Office

4.5%

S-GATE AKIHABARA

4.5%

4.0%

3.5%

Hotel Intergate
Tokyo Kyobashi
S-GATENIHONBASHIHONCHO
3.5%

Toyo Park Building
3.8%

Omori Park Building

3.6%
Hibiya Sankei
Building

3.8%

4.1%

Hitachi Kyusyu
Building

4.1%

Hotel Intergate Kyoto
Shijo Shinmachi

4.0%

4.2%

VESSEL HOTELCAMPANA SUSUKINOSANKEILOGI Settsu

3.3%

S-GATE AKASAKA

3.0%

2.5%

3.9%

Hotel Intergate
Kanazawa

Grids Premium Hotel
Osaka Namba

4.4%

Appraisal NOI
Yield

4.8%
4.7%

2.5%

Tokyo Sankei Building

2.0%* Figures are as of the date of preparation of this material. The size of the bubble represents the acquisition price.

44

SANKEI REAL ESTATE Inc.

Status of Tenants
Top 10 tenants (as of the date of preparation of this material)
Name of end tenant

Total leased area % of portfolio’s(m2)
total leased area

Property name

Hitachi, Ltd.

26,513.33

24.3%

Hitachi Kyusyu Building

GRANVISTA Hotels &Resorts Co., Ltd.

26,373.81

24.2%

Four properties, including
Hotel Intergate Tokyo
Kyobashi

Keishin K.K.

14,489.59

13.3%

SANKEILOGI Settsu

Konoike Construction
Co., Ltd.

4,985.76

4.6%

S-GATE NIHONBASHIHONCHO

Vessel Hotel
Development Co., Ltd.

4,427.11

4.1%

VESSEL HOTEL CAMPANASUSUKINO

AB Accommo Co., Ltd.

4,353.79

4.0%

Grids Premium Hotel
Osaka Namba

Hakuhodo DY HoldingsInc.

3,147.12

2.9%

S-GATE AKASAKA

Toyo Sangyo Co., Ltd.

1,509.72

1.4%

Omori Park Building

loginet-japan Co., Ltd.

Not disclosed

Not disclosed

S-GATE NIHONBASHIHONCHO

Ryochi Keiei Co., Ltd.

1,159.72

1.1%

Tenant attributes (as of the date of preparation of this material)

Wholesale & retail IT
3.3%
3.0%

Others2.6%

Construction & realestate
6.4%
Services
8.0%

Hotel
32.2%

Transportation &communications
16.0%
Manufacturing
28.5%

Miyazakidai Garden Office* The information is “Not disclosed” due to unavoidable circumstances in that such contains
information for which consent for disclosure has not been obtained from the tenant, relevant
party, etc. or information from which confidential information can be derived.

45

SANKEI REAL ESTATE Inc.

Status of Unitholders
Breakdown of Investment Units by Unitholder Type
Financial institutions

Securities companies

Other Japanese corporations

Non-Japanese corporations, etc.

Major Unitholders (as of End of FP Ended Feb. 2024 (10th FP)
Number of units
owned(units)Share of units
owned
(%)

Custody Bank of Japan, Ltd. (Trust Account)

104,288

22.32

The Master Trust Bank of Japan, Ltd. (Trust
Account)

94,443

20.21

The Nomura Trust and Banking Co., Ltd.
(Investment Trust Account)

26,491

5.67

The Sankei Building Co., Ltd.

17,4793.74

JP MORGAN CHASE BANK 385771

6,722

1.43

The Bank of Yokohama, Ltd.

5,691

1.21

The Hyakujushi Bank, Ltd.

3,500

0.74

JP MORGAN CHASE BANK 385794

3,319

0.71

JP MORGAN CHASE BANK 380755

3,139

0.67

Bell House Co., Ltd.

3,105

0.66

268,177

57.41

Name of unitholder

Individuals/Other
100%
16.1%
80%

60%

18.2%
5.9%
2.0%

24.5%

25.6%

25.0%

22.1%

11.1%
6.9%
4.4%

10.7%
7.1%
5.4%

9.6%
7.2%
2.6%

11.0%
7.3%
2.2%

53.2%

51.2%

55.6%

57.4%

40%
57.7%
20%
0%
FP ended Feb.
2022
(6th FP)FP ended Aug.
2022
(7th FP)FP ended Feb.
2023
(8th FP)FP ended Aug.
2023
(9th FP)FP ended Feb.
2024
(10th FP)

Number of Unitholders by Unitholder Type(as of End of FP Ended Feb. 2024 (10th FP)
Number ofunitholders
Financial
institutions
Securities
companies
Other Japanese
corporations
Non-Japanese
corporations, etc.
Individuals/Other
Total

Share of units
owned

Number ofunits

Share of units
owned

46

0.4%

267,971

57.4%

23

0.2%

10,496

2.2%

229

1.7%

34,030

7.3%

172

1.3%

51,432

11.0%

12,651
13,12196.4%
100.0%

103,170467,099 units

22.1%
100.0%

Total* Each share of units owned above is rounded down to two decimal places.

46

SANKEI REAL ESTATE Inc.

Profile of the Asset Management Company
Trade name

Sankei Building Asset Management Co., Ltd.

Location of head office2-3-4 Uchikanda, Chiyoda-ku, Tokyo

Established

April 13, 2018

Directors and auditors

5 directors, 1 auditor

Capital

100 million yen

Director-General of the Kanto Local Finance Bureau
Registration (FIBO) No. 3094

Shareholder composition

The Sankei Building Co., Ltd. (100%)

Main line of business

Investment management business, investment advisory
and agency business, type II financial instruments business

Financial instruments
business registration
Real estate brokerage
licenseDiscretionary transaction
agency, etc. approval

Governor of Tokyo License (2) No. 102209
Minister of Land, Infrastructure, Transport and Tourism
Approval No. 125

47

SANKEI REAL ESTATE Inc.

Change in Investment Unit Price(Yen per unit)

Volume (right axis)

SANKEI REAL ESTATE Inc. (left axis)(units)TSE REIT Index (left axis)

140,000

30,000120,000

25,000100,000
20,00080,00015,00060,00010,00040,0005,000

3/12/2024

2/12/2024

1/12/2024

12/12/2023

11/12/2023

9/12/2023

10/12/2023

8/12/2023

7/12/2023

6/12/2023

5/12/2023

4/12/2023

3/12/2023

2/12/2023

1/12/2023

12/12/2022

11/12/2022

9/12/2022

10/12/2022

8/12/2022

7/12/2022

6/12/2022

5/12/2022

4/12/2022

3/12/2022

2/12/2022

1/12/2022

12/12/2021

11/12/2021

9/12/2021

10/12/2021

8/12/2021

7/12/2021

6/12/2021

5/12/2021

4/12/2021

3/12/2021

2/12/2021

1/12/2021

12/12/2020

11/12/2020

9/12/2020

10/12/2020

8/12/2020

7/12/2020

6/12/2020

5/12/2020

4/12/2020

3/12/2020

2/12/2020

1/12/2020

12/12/2019

11/12/2019

9/12/201910/12/2019

8/12/2019

7/12/20196/12/20195/12/2019

4/12/20190

3/12/2019

20,000* The above graph shows the change from March 12, 2019 (listing date) to March 29, 2024. The closing price of the TSE REIT Index on March 12, 2019 (1,854.41 pts)
is converted into the offering price of SANKEI REAL ESTATE at the time of listing to show the relative performance with the change in unit prices (closing prices) of
SANKEI REAL ESTATE.

048

SANKEI REAL ESTATE Inc.

Notes (1)[Page 6]
1.
The “Comparison with the forecast” of “Financial Summary for Fiscal Period Ended February 2024 (10th FP)” is shown in yen, except for certain items shown in millions of yen for consistency with other disclosure documents. The
same applies below.
[Page 13]
1.
“Core asset group” refers to hotels, logistics facilities, and residential facilities (asset types with residential and other functions, such as residences, student residences, and healthcare facilities).
2.
“Percentage by Walking Time to the Nearest Station” is the percentage in terms of acquisition price, after classifying them by the number of minutes required to walk from the nearest station assuming that it takes one minute totravel a road distance of 80 meters.
3.
“Percentage by Building Age” states the percentage in terms of acquisition price, after categorizing assets held by building age as of the date of preparation of this material.
[Page 14]
1.
“Cities designated by government ordinance, etc.” refers to cities designated by government ordinance, excluding Greater Tokyo, Greater Osaka and Greater Nagoya, core cities, and major regional cities.
[Page 21]
1.
“Portfolio yield” refers to the NOI yield calculated using the following formula for assets held. The same applies below. Portfolio yield = Portfolio NOI (annualized) / Period-end book value
2.
“Period-end occupancy rate” indicates the percentage of the total leased area(*ii) against the total leasable area(*i) of each of the acquired assets as of each base date.
i.
“Total leasable area” is the total area believed to be leasable (not including area for storage facilities, billboards, parking areas, etc. that are not the main use) based on lease agreements or building drawings, etc.,
pertaining to each of the acquired assets as of each base date shown.
ii.
“Total leased area” is the total leased area (not including area for storage facilities, billboards, parking areas, etc. that are not main use) shown in lease agreements for the building pertaining to each of the acquired
assets as of each base date shown (excluding, however, lease agreements for which the lease period has not commenced). For the portion covered by a pass-through master lease, this is the total of the area for which alease agreement has actually been concluded with an end tenant for said portion, and the lease period has commenced.
3.
“Percentage by Contract Form” is the percentage of assets held based on leased area by contract form.
4.
“Percentage by Lease Period” is the percentage of assets held based on leased area by lease period.
[Page 22]1.
“Change in Rent Revision Performance” applies to the assets acquired by SANKEI REAL ESTATE as of the end of each fiscal period that are categorized as “Office Buildings.” For example, for the fiscal period ended February 2024, rent
revision under lease agreements occurring in the period from September 1, 2023 until the end of February 2024 (limited to those for which a lease agreement was concluded or renewed during the relevant period) was agreed to by
14 tenants with a total of 1,333 tsubos in area. Assuming the revised area is 100%, on a leased area basis, monthly rent was increased in 17.9%, renewed at the same level (maintained) in 82.1%, and reduced in 0.0%. Changes in floor
space were treated as rent revision performance, and if there was no change in the current rent per unit, it is regarded as being maintained.
2.
“Rate of rent increase” refers to the figure calculated by dividing the difference between the total monthly rent after renewal and the total monthly rent before renewal by the total monthly rent before renewal for lease agreements
renewed during each period (for example, from September 1, 2023 to the end of February 2024 for the FP ended February 2024), with increased rent (calculated for renewal with rent revision/renewal of agreements with existing
tenants, limited to lease agreements concluded or renewed during the relevant period).
3.
“Average Rent Unit Price” is calculated using “Rental and CAM revenue upon the most recent settlement / 6 months / Leasable area x Occupancy rate of office building.”[Page 23]
1.
“Rent Gap” refers to the figure arrived at when the amount of difference between the average rent for SANKEI REAL ESTATE’s office building portfolio(*i) and the market rent(*ii) is divided by the market rent. SANKEI REAL ESTATE
believes there is room for negotiation with tenants to increase rent when revising rent if the figure is negative. This applies to the assets acquired by SANKEI REAL ESTATE as of the end of each fiscal period that are categorized as“Office Buildings.”i.
“Average rent of the office building portfolio” is calculated using the weighted average, based on leased area, of the total amount of monthly rent specified in lease agreements concluded as of the end of each period,
for the office building portfolio* (including CAM). Furthermore, it does not take into consideration free rent and rent holidays as of the same day and is based on the rent as of the end of each period, if there is anagreement to change rent in the future. Furthermore, if agreements with tenants include variable rent, calculation is made without taking into consideration variable rent. (Consumption tax, etc. is not included.)ii.
“Market rent” is calculated using the weighted average, based on leased area, of the total median value of assumed new contract rent (typical floorplate) (including CAM) as of March 2024 for office buildings subject torent gap calculation within the acquired assets of SANKEI REAL ESTATE shown in the market report prepared by CBRE. Market rent is assessed by CBRE using its own methodology assuming the conclusion of newcontracts with new tenants as of March 2024 based on information collected by CBRE and the objectivity of the assessment, and the validity and accuracy of the assessment content are not guaranteed. In particular,
actual new contract rent fluctuates due to factors such as whether it is for a new tenant or rent revision with an existing tenant, the timing of the rent revision, the timing of moving in, the contract area and the region,and for this reason the rent in the CBRE-assessed rent may not be realized. Furthermore, the amount and level of actual new contract rent for the office building portfolio are not guaranteed, and there are no
assurances or promises that the rent increases equivalent to the “rent gap” will be made.
2.
“Scheduled Renewal with Contract Revision/Renewal and Progress” applies to lease agreements concluded as of April 1, 2024, stating the area subject to renewal with rent revision/renewal in the fiscal period ending August 2024
(11th FP) and the fiscal period ending February 2025 (12th FP).
3.
“Percentage of total leased area” is the value calculated by dividing the total contract revision/renewal (planned) area for each contract revision/renewal period by the total leased area for each period.
4.
“Progress rate” is the value calculated by dividing the total leased area for lease contracts that have been concluded as of April 1, 2024, and whose revision/renewal has been completed by the contract revision/renewal (planned)
area for each contract revision/renewal period.
[Page 27]
1.
“Balance of interest-bearing liabilities” shows the figure as of the date of disclosure.
2.
“Ratio of long-term debt” is the ratio of the balance of the long-term interest-bearing debt (not including the current portion) included in the balance of interest-bearing liabilities as of the date of disclosure.
3.
“LTV” is the balance of interest-bearing liabilities divided by the amount of total assets and multiplied by 100.
4.
“Average financing interest rate” is calculated using the weighted average, based the balance of interest-bearing debt, of the anticipated applicable interest rate of each interest-bearing liability as of the date of disclosure.
Calculations are on an interest payable basis and do not include arrangement fee and other borrowing-related expenses.
5.
“Ratio of fixed interest rate” refers to the ratio of the balance of interest-bearing liabilities with fixed interest included in the balance of interest-bearing liabilities as of the date of disclosure.
6.
“Average remaining time to maturity” refers to the period determined by the weighted average, based on the balance of each interest-bearing liability, of the period until the repayment date or redemption date of each interestbearing liability as of the date of disclosure.

49

SANKEI REAL ESTATE Inc.

Notes (2)[Page 30]1.
BELS, the Building-Housing Energy-efficiency Labeling System, is a third-party evaluation system that evaluates energy-saving performance of buildings based on evaluation standards set by the Ministry of Land, Infrastructure,
Transport and Tourism.
2.
DBJ Green Building Certification is a certification system established by Development Bank of Japan Inc. (DBJ) in April 2011 to support properties that give proper care to the environment and society (Green Building). Besides theapplicable properties’ environmental performance, based on comprehensive evaluation, including various efforts for stakeholders, such as consideration to disaster prevention or local communities, it evaluates and certifies realestate needed for society and economy and supports those initiatives. The certification was obtained by The Sankei Building Co., Ltd. for Tokyo Sankei Building.
3.
GRESB is the name of an annual benchmark assessment measuring consideration for the environment, society and governance (ESG) in real estate companies and funds, and the organization that manages this. It was founded in 2009by a group of major European pension funds leading the Principles for Responsible Investment (PRI).
[Page 39]
1.
NOI yield (against book value) = (Operating income from real estate rent business + depreciation) x 2 / Book value of real estate for lease NOI yield (against appraisal value) = (Operating income from real estate rent business +depreciation) x 2 / Appraisal value of real estate for lease2.
NOI yield after depreciation (against book value) = Operating income from real estate rent business x 2 / Book value of real estate for lease NOI yield after depreciation (against appraisal value) = Operating income from real estate
rent business x 2 / Appraisal value of real estate for lease3.
Implied cap rate (before depreciation) = NOI (Annualized; current FP result x 2) / (Total fair value + Interest-bearing liabilities – Cash and deposits + Leasehold deposits received) Implied cap rate (after depreciation) = NOI after
depreciation (Annualized; current FP result x 2) / (Total fair value + Interest-bearing liabilities – Cash and deposits + Leasehold deposits received)
4.
FFO = Net profit + Depreciation – Gain/loss on sale of real estate, etc. (including loss on retirement of non-current assets)
5.
AFFO = FFO – Capital expenditure
6.
FFO per unit = FFO / Total number of investment units issued and outstanding at end of period
7.
EPS = Net profit / Total number of investment units issued and outstanding at end of period
8.
Distribution per unit = Total distribution / Total number of investment units issued and outstanding at end of period
9.
Distribution yield = Distribution per unit (Annualized; current FP result x 2) / Investment unit price at end of period
10. NAV multiple = Investment unit price at end of period / NAV per unit
11. FFO multiple = Investment unit price / FFO per unit (Annualized; most recent FP result x 2)
12. Payout ratio (FFO) = Total distribution / FFO
13. Payout ratio (AFFO) = Total distribution / AFFO
14. PER (Price Earnings Ratio) = Investment unit price at end of period / EPS (Annualized; most recent FP result x 2)
15. PBR (Price Book-value Ratio) = Investment unit price at end of period / Net assets per unit
16. ROE (Return on equity) = Net profit (Annualized; most recent FP result x 2) / Net assets[Page 40]
1.
The actual values of NAV per unit in each period are calculated as follows. Actual value of NAV per unit = Net assets per unit(*i) at end of each FP + Unrealized gain (loss) at end of each FP(*ii) / Number of investment units issued andoutstanding at end of each FPi.
“Net assets per unit” is obtained using the following formula. Net assets per unit = Net assets at end of FP (after deducting distributions at the end of each FP) / Number of investment units issued and outstanding at
end of FP
ii.
“Unrealized gain/loss at end of FP” is obtained using the following equation. It is referred to as “unrealized gain” if the result is positive and “unrealized loss” if negative. This is simply shown as “Unrealized gain” or“Unrealized loss” in the graph. Unrealized gain/loss at end of FP = Total appraisal value of assets held by SANKEI REAL ESTATE at end of FP - Total book value of assets held by SANKEI REAL ESTATE at end of FP“Number of investment units issued and outstanding at the end of each FP” is the number of investment units issued and outstanding at the end of each fiscal period.
[Pages 41 and 42]
1.
“PML value” refers to the probable maximum loss ratio in earthquake risk analysis, which is represented by the percentage of the probable maximum loss in relation to the replacement cost (value in the event of reconstructing thebuilding) in the event of the largest anticipated earthquake during the period of use of the building (PML = probable maximum loss / replacement cost x 100).
[Page 44]
1.
“Portfolio matrix” is the balance and distribution of areas and yield, etc. in the overall assets acquired by SANKEI REAL ESTATE.
2.
“Appraisal NOI yield” refers to the ratio of the net operating income derived by the direct capitalization method shown on the real estate appraisal report against the acquisition price. “Acquisition price” is shown as the transaction
price of real estate and trust beneficiary rights shown on the transaction agreement pertaining to each of the acquired assets, excluding consumption tax, local consumption tax, and the various expenses required for the acquisition.
3.
“Greater Tokyo” refers to Tokyo, Kanagawa, Saitama, and Chiba prefectures.
4.
“Core cities” refers to cities that are municipalities with population of 200,000 or more (excluding Greater Tokyo, Greater Osaka and Greater Nagoya, and other cities designated by government ordinance), and “major regional cities”
refers to cities that are municipalities with population of less than 200,000 and the Asset Management Company has deemed certain demand can be found for specific asset types.
[Page 45]
1.
“% of portfolio’s total leased area of Top 10 tenants” refers to the total leased area expressed as a percentage of the entire portfolio’s total leased area. “Total leased area” and “% of portfolio’s total leased area” for properties
leased through a master lessee are calculated using the areas stated in the lease agreements concluded with end tenants as the areas leased to the end tenants.
2.
“Tenant attribute” is the percentage of assets held classified by tenant business type based on leased area.

50

Asset Management Company