(REIT) Financial Report for the Fiscal Period Ended February 2024
April 15, 2024
Listing: Tokyo Stock Exchange
URL: https://www.s-reit.co.jp/

REIT Securities Issuer:
TSE Code:
Representative:

SANKEI REAL ESTATE Inc.
2972
Yuichi Ota, Executive Director

Asset Management Company:
Representative:
Contact:

Sankei Building Asset Management Co., Ltd.
Yuichi Ota, President and Chief Executive Officer
Akio Watanabe, General Manager of Finance & IR Department
TEL: +81-3-5542-1316

Scheduled date of submission of semiannual securities report:
Scheduled date of commencement of distribution payment:

May 29, 2024
May 24, 2024

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

Yes
Yes (for institutional investors and analysts)(Amounts are rounded down to the nearest million yen)
1. Status of Management and Assets for the Fiscal Period Ended February 2024 (from September 1, 2023 to February 29, 2024)(1) Management Status(% figures are the rate of period-on-period increase (decrease))
Operating revenue
Operating income
Ordinary income
Net income
million yen%
million yen%
million yen%
million yen%
Fiscal period
7,778
182.7
1,229
(7.8)
1,038
(8.2)
1,037
(8.2)
ended Feb. 2024
ended Aug. 2023
2,751
(4.9)
1,334
7.3
1,130
4.9
1,129
4.9
Net income per unit

Return on equity

yen
Fiscal period
ended Feb. 2024
ended Aug. 2023

Ratio of ordinary income to Ratio of ordinary income tototal assets
operating revenue
%
%
%

2,220

2.1

1.0

13.3

2,418

2.2

1.0

41.1

(Note) Net income per unit is calculated by dividing net income by the daily weighted average number of investment units (fiscal period ended August 2023:
467,099 units; fiscal period ended February 2024: 467,099 units).

(2) Distribution
Distribution per
Total distribution
unit(excluding(excluding
distribution in
distribution inexcess of earnings)
excess of earnings)
Fiscal period
ended Feb. 2024
ended Aug. 2023

Distribution inexcess of
earnings per
unit

Total distribution
in excess ofearnings

Ratio ofdistribution to net
assetsPayout ratioyenmillion yen

yenmillion yen

%

%

2,221

1,037

-

-

100.0

2.1

2,418

1,129

-

-

100.0

2.2

(3) Financial Position

Fiscal period
ended Feb. 2024
ended Aug. 2023

Total assets
million yen

Net assets
million yen

104,802112,235

Equity ratio%

Net assets per unit
yen

50,47348.2

108,056

50,56545.1

108,253(4) Cash Flows

million yen

million yen

million yen

Cash andcash equivalents
at end of period
million yen

34,382(17,774)(7,930)17,014

1,583(7,275)

5,722

8,337

Cash flows fromoperating activities
Fiscal period
ended Feb. 2024
ended Aug. 2023

Cash flows frominvesting activities

Cash flows fromfinancing activities

2. Operating Forecasts for the Fiscal Period Ending August 2024 (from March 1, 2024 to August 31, 2024) and Operating Forecasts for
the Fiscal Period Ending February 2025 (from September 1, 2024 to February 28, 2025)(% figures are the rate of period-on-period increase (decrease))
Operating revenue
million yen

Operating income% million yen

Ordinary income% million yen

Net income% million yen

Distribution per unit
(excluding
Distribution in excess
distribution inof earnings per unit
excess of earnings)
%
yen
yen

Fiscal period
2,404(69.1)
1,234
0.4
1,032
(0.6)
1,031
(0.6)
2,208
ending Aug. 2024
2,442
1.6
1252
1.5
1,036
0.4
1,035
0.4
2,217
ending Feb. 2025
(Reference) Forecast net income per unit (Forecast net income / Forecast total number of investment units issued and outstanding at
end of period)
Fiscal period ending August 2024: 2,208 yen Fiscal period ending February 2025: 2,217 yen(Note)

Distribution per unit (excluding distribution in excess of earnings) is calculated based on the total number of investment units issued and outstanding
as of the date of this document of 467,099 units.

* Other(1) Changes in accounting policies, changes in accounting estimates, and retrospective restatements
i. Changes in accounting policies accompanying amendments to accounting standards, etc.: None
ii. Changes in accounting policies other than i.:Noneiii. Changes in accounting estimates:
None
iv. Retrospective restatements:
None(2) Total number of investment units issued and outstandingi.
Total number of investment units issued andFiscal period
Fiscal period
outstanding (including treasury investment units)
467,099 units
467,099 units
ended Aug. 2023
ended Feb. 2024
at end of period
Fiscal period
ii. Number of treasury investment units at end of
Fiscal period
0 units
0 units
periodended Aug. 2023
ended Feb. 2024
(Note) For the number of investment units serving as the basis for calculation of net income per unit, please refer to “Notes on
Per Unit Information” on page 22.

* Financial reports are exempt from audits by certified public accountants or audit corporations.
* Special remarks
The operating forecasts and other forward-looking statements contained in this document are based on information currently
available to and certain assumptions deemed reasonable by SANKEI REAL ESTATE. Accordingly, the actual results of operations, etc.
may differ materially due to various factors. In addition, the forecasts are not a guarantee of the amount of distribution. For theassumptions underlying the operating forecasts, matters of note in the use of the operating forecasts, etc., please refer to“Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending August 2024 (from March 1, 2024, to August 31, 2024)
and Fiscal Period Ending February 2025 (from September 1, 2024, to February 28, 2025)” on page 6.

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)
Table of Contents
1. Management Status ...................................................................................................................................................................... 2(1) Management Status ............................................................................................................................................................... 2(2) Investment Risks .................................................................................................................................................................... 7
2. Financial Statements ..................................................................................................................................................................... 8(1) Balance Sheet ........................................................................................................................................................................ 8(2) Statement of Income and Retained Earnings ....................................................................................................................... 10(3) Statement of Changes in Unitholders’ Equity ...................................................................................................................... 11(4) Statement of Cash Distributions .......................................................................................................................................... 12(5) Statement of Cash Flows...................................................................................................................................................... 13(6) Notes on the Going Concern Assumption ............................................................................................................................ 14(7) Notes on Matters Concerning Significant Accounting Policies ............................................................................................. 14(8) Notes to the Financial Statements ....................................................................................................................................... 15(9) Changes in Total Number of Investment Units Issued and Outstanding .............................................................................. 23
3. Reference Information ................................................................................................................................................................ 24(1) Information on Price of Assets Under Management, Etc. .................................................................................................... 24(2) Capital Expenditures for Real Estate Held ............................................................................................................................ 29-1-

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)

1.

Management Status(1) Management Status(Overview of the Fiscal Period under Review)i.
Brief History of the Investment Corporation
SANKEI REAL ESTATE was incorporated under the Act on Investment Trusts and Investment Corporations (Act No. 198 of1951, as amended; hereinafter, the “Investment Trusts Act”) with Sankei Building Asset Management Co., Ltd. (hereinafter,
the “Asset Management Company”) as the organizer and investments in capital of 100 million yen (1,000 units) on
November 19, 2018, and completed the registration with the Kanto Local Finance Bureau pursuant to Article 187 of theInvestment Trusts Act on December 17, 2018 (Registration No. 140 with the Director-General of the Kanto Local Finance
Bureau). Later, SANKEI REAL ESTATE was listed on the Real Estate Investment Trust Securities Market of Tokyo Stock
Exchange, Inc. on March 12, 2019 (TSE code: 2972).
In October 2023, SANKEI REAL ESTATE converted from an office-building-oriented REIT to a comprehensive REIT due tosome changes in its management guidelines of the Asset Management Company.
As of the last day of the fiscal period under review (February 29, 2024), the total number of investment units issued andoutstanding was 467,099 units and unitholders’ capital (net) was 49,435 million yen.
ii.

Management Environment
In the fiscal period under review (fiscal period ended February 29, 2024), although the Japanese economy continued toexperience high prices due to the soaring global prices of resources, energy, and raw materials, as well as the depreciationof the yen due to the difference in interest rates between Japan and the United States, the effects of these factors havebeen gradually subsiding. At the same time, the employment situation has been improving, and consumption trends arealso on a path to recovery. As a result of these changes in economic conditions, the accommodative monetary policy that
had been in place for many years was overhauled, and in addition to the lifting of negative interest rates, yield curve control
was also removed, making a step toward monetary normalization. In response to these environmental changes, the Nikkei
Stock Average has reached a new all-time high in the domestic financial instruments market, while the TSE REIT index has
shown a soft trend. The situation overseas is unpredictable, such as the situation in Ukraine and the Middle East, and theslowing trend of the Chinese economy. In addition, price trends and employment conditions in the United States, which
had been showing stable trend for a time from the economic and financial side, are still unsettled, and therefore, thesituation requires continued attention.
In this economic environment, the large-scale supply of new office buildings in the Tokyo metropolitan area last year in
the office building market, which is the main investment target of SANKEI REAL ESTATE, has been steadily clearing, and thevacancy rate has been improving in some regions, in combination with the gradual increase in the number of re-locations
for expansion and the increase in floor space within the facility due to the return to offices. However, such movements arelimited, as there are regional differences, and due to concerns about potential secondary vacancies brought about by large
amounts of new supply, the level of contracted rents has not improved.
Among the core asset group (Note), SANKEI REAL ESTATE is currently investing in the hotel market and the logistics market.
In the hotel market, the total number of guests and the occupancy rate of guest rooms according to the government officesurvey on lodging and travel have remained strong, partly exceeding the pre-COVID-19 levels, against the backdrop of a
rapid recovery in inbound demand. As for the logistics market, it is necessary to pay close attention to the so-called 2024
problem, which requires various measures due to the introduction of overtime work hour regulations for driving workers,
etc., but the logistics market continues to expand, as an increasing number of businesses are expanding their supply
networks in response to this problem.
(Note)

iii.

“Core asset group” refers to hotels, logistics facilities, and residential facilities (housing, student residences, health care facilities, andother asset types with residential functions).

Management Performance
SANKEI REAL ESTATE started to review its portfolio in March 2023, and has implemented a large-scale portfolio rebalancefollowing some changes to the Asset Management Company’s management guidelines in October 2023. We transferred
Shinagawa Seaside TS Tower in order to respond to anticipated structural changes in demand for office buildings and to
mitigate and eliminate the risk of a decline in revenues, and also transferred BREEZÉ TOWER, which has sufficientunrealized gains but is expected to see higher maintenance costs in the future (transfer price (Note 1): a total of 34,095
million yen). Using this as a source of capital, we acquired three hotel properties (Hotel Intergate Kyoto Shijo Shinmachi,
Hotel Intergate Kanazawa and Grids Premium Hotel Osaka Namba) for a total acquisition price (Note 1) of 16,850 million
yen. As a result of these measures, the portfolio of SANKEI REAL ESTATE as of the end of the current fiscal period is 16
properties and the size of assets (total acquisition price) is 86,077 million yen.
As of the end of the current fiscal period, we are still in the process of rebalancing our portfolio to convert to acomprehensive REIT. As for the management performance at the end of the fiscal period, the occupancy rate (Note 2) was
96.3%, and operating revenue was 7,778 million yen, an increase of 182.7% from the previous fiscal period, reflecting again on sale of real estate, etc. The appraisal value as of the last day of the fiscal period under review was 90,280 million
yen.
In addition, SANKEI REAL ESTATE decided to acquire “VESSEL HOTEL CAMPANA SUSUKINO” (40% co-ownership interest)and “S-GATE NIHONBASHI-HONCHO” (additional acquisition of 49% co-ownership interest) at a total acquisition price of
10,370 million yen on February 29, 2024, and acquired them on March 1, 2024 and April 1, 2024, respectively.

-2-

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)
SANKEI REAL ESTATE has sought to improve satisfaction through reinforcing and enhancing relations with existing tenants,
aiming to expand revenue and have stable growth of earnings from assets under management as in the previous fiscal
period. As the revision period approaches, some tenants are showing a certain attitude toward increasing rent as we
carefully explain to tenants the unique circumstances surrounding the coronavirus pandemic and the current trends in therental market. Repairs and capital expenditures were narrowed down to those that contribute to maintenance andimprovement of the competitiveness of the assets under management.
With the acquisition of three new properties during the period, the number of hotels owned by SANKEI REAL ESTATE is
now five in total as of the end of the period. The two properties we already own (Hotel Intergate Tokyo Kyobashi and HotelIntergate Hiroshima) contribute to the stability of our portfolio income by continuing to secure promised revenue evenduring the COVID-19 pandemic, based on the current contract for fixed rent. In addition, since all of the three newly
acquired properties (Hotel Intergate Kyoto Shijo Shinmachi, Hotel Intergate Kanazawa and Grids Premium Hotel Osaka
Namba) are located in high-profile tourist destinations and adopt both fixed and variable rents, they are expected tocontribute to an increase in profitability depending on market conditions, such as a recovery in inbound tourism andincreases in occupancy and the average unit price of guest rooms.
In the logistics market, demand for logistics facilities has been steadily increasing, not only because of activateddistribution but also because of the need to develop logistics networks triggered by the 2024 problem. SANKEI REAL ESTATE
will continue to strive to improve its presence by building on its management performance in this field.
Further, SANKEI REAL ESTATE, along with the Asset Management Company, continued to implement management that
carefully consider ESG, meaning the Environment, Social and Governance, for the purpose of sustainability of society andincreasing the medium- to long-term unitholder value based on the “Sustainability Policy” in the Asset Management
Company’s management guidelines during the fiscal period.
In December 2023, three of our properties (S-GATE NIHONBASHI-HONCHO, S-GATE AKIHABARA and S-GATE AKASAKA)
were evaluated by the Building-Housing Energy-efficiency Labeling System (BELS). As a result, SANKEI REAL ESTATE has
acquired environmental certification for a total of nine assets under management (four properties certified by DBJ Green
Building and five properties rated by BELS). And, as an investment corporation, we have received 2 stars and a Green Starin the GRESB Real Estate Rating.
(Note 1) “Acquisition price” and “transfer price” indicate the purchase price of real estate and trust beneficiary rights stated in each purchaseand sale agreement pertaining to the assets held by SANKEI REAL ESTATE (real estate or trust beneficiary rights in real estate as trust
assets; hereinafter collectively referred to as “Assets under Management”), rounded down to the nearest one million yen. The purchaseprice does not include consumption tax, local consumption tax, and various expenses required for acquisition or transfer. The same
shall apply hereinafter.
(Note 2) “Occupancy rate” is the ratio of total leased area to total leasable area, rounded to one decimal place. The total leasable area and thetotal leased area are calculated from the area equivalent to the equity interest of SANKEI REAL ESTATE in each asset under management.

iv.

Overview of Fund Procurement
During the fiscal period under review, we made a partial early repayment of short-term borrowings on September 29,
2023, using the partial transfer of properties carried out on August 31, 2023, as the source of repayment, and made an
early repayment of short-term borrowings on February 29, 2024, using the transfer of two properties carried out on
January 31, 2024, as the source of repayment.
As a result, as of the end of the fiscal period under review, the balance of loans outstanding was 50,200 million yen andthe ratio of interest-bearing liabilities to total assets (hereinafter, “LTV”) was 47.9%.

v.

Overview of Business Performance and Distribution
As a result of the management described above, business performance in the fiscal period under review was operating
revenue of 7,778 million yen, operating income of 1,229 million yen, ordinary income of 1,038 million yen, and net incomeof 1,037 million yen.
Concerning distribution, in accordance with SANKEI REAL ESTATE’s cash distribution policy (Article 36 of the articles ofincorporation), SANKEI REAL ESTATE intends to have the maximum amount of distribution of earnings included indeductible expenses by application of provisions for taxation on investment corporations (Article 67-15 of the Act on
Special Measures Concerning Taxation (Act No. 26 of 1957, as amended)). For the fiscal period under review, the decision
was made to distribute 1,037,426,879 yen, which is the entire amount of unappropriated retained earnings, excluding
fractions of distribution per unit of less than 1 yen. This resulted in distribution per unit of 2,221 yen.

(Outlook for the Next Fiscal Period)i.
General Management Outlook
The imbalances in supply and demand and the economic recovery overseas have led to rapid price increases in goods andservices, and the U.S. and Europe have been quick to tighten monetary policy. As a result, the domestic economy has been
plagued by cost-push inflation, but the effects are now starting to ease.
However, the U.S. market, which had started to show stable trend for a while, has turned to a situation where the directionis uncertain again. Although domestic monetary policy has also taken steps towards normalization, there has been someindication that it is not yet ready to engage in a full-scale rate hike, while long-term interest rates are gradually rising.
In this situation where the international direction is uncertain, domestic real estate sales transactions, which can be doneat relatively low costs, are booming. But the management environment is starting to look tough, with expected yields onthe decline.
Last year’s office building market showed signs of recovery, triggered by the removal of movement restrictions associatedwith reclassifying COVID-19 to a Category 5 disease. There have been concerns about an oversupply of large new buildings
as a so-called “2023 problem.” However, due to the trend of tenants returning to offices and demand for improvements-3-

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)
in the office environment resulting from work style reforms, such large new buildings have made relatively good progressin attracting tenants. On the other hand, in existing buildings, we are seeing large-scale returns of floors due to officereorganization, and cases are beginning to emerge where it is difficult to backfill secondary vacancies.
In 2024, a relatively stable supply-demand relationship is expected without a large new supply, and if the secondary
vacancy clearing proceeds smoothly, the rent for contracts due to tenant competition is expected to rise. However, in thenext year, 2025, a large supply is expected again, and the supply-demand trend needs to be monitored closely.
As for the hotel market, the number of foreign visitors to Japan has increased rapidly since October of the previous year.
In November of last year, the number of visitors to Japan for tourism purposes and the total number of visitors to Japanexceeded the same month of 2019 (provisional figures). Although some countries and regions, such as China, have yet tosee the number of visitors to Japan recover, the businesses are returning to their pre-coronavirus boom. The businessenvironment is expected to continue to be favorable for the two hotel properties that SANKEI REAL ESTATE has owned sofar, and stable revenues based on fixed rents are expected. For the three newly acquired properties, revenues are expected
to improve in accordance with market conditions by using both fixed and variable rents.
For the logistics market, further revitalization is expected, supported by the expansion of the e-commerce market andsolid demand, and stable growth is expected to continue, as efforts are being made to expand the distribution network in
response to the 2024 problem related to labor issues in the logistics market. The facilities owned by SANKEI REAL ESTATE
have fixed rent based on fixed-term building lease agreements with tenants, and stable revenues are expected.
(A) External Growth Strategy
As a result of the partial change in the management guidelines of the Asset Management Company implemented in
October 2023, SANKEI REAL ESTATE shifted from an office building-oriented REIT to a comprehensive REIT. And byreorganizing sub-assets that had previously served complementary roles into the core asset group, it decided to aim
for sustainable growth through these assets as well.
Based on the change in investment policy, the portfolio rebalancing implemented during the fiscal period changed
the investment ratio by asset type from 82.3% for office buildings and 17.7% for sub-assets in the fiscal period ended
August 2023 to 59.3% for office buildings and 40.7% for the core asset group. Aiming to become a REIT that canachieve sustainable growth, we will strive to maintain our portfolio and improve portfolio quality through continuous
rebalancing in order to further strengthen our portfolio.
In addition, at the end of the fiscal period, SANKEI REAL ESTATE, with the support of its sponsor, concluded a contract
to acquire a third-party property for the first time. With regard to the acquisition of properties in the future, SANKEIREAL ESTATE will make maximum use of the sponsor support while carefully monitoring real estate investment market
conditions, etc., and will continue external growth by acquiring properties owned by third parties utilizing thesourcing capabilities of Sankei Building as well as Sankei Building’s portfolio.
(B) Internal Growth Strategy
SANKEI REAL ESTATE aims for steady internal growth through reinforcement of the relations with existing tenants andimprovement in tenant satisfaction. Specifically, we will attempt to raise rents upon contract renewal if there is asignificant deviation from market rent and continue to implement strategic leasing such as activities to extend thecancellation notification period from tenants and disperse end dates of rental contracts from the viewpoint oftermination risk for properties where the end dates of multiple tenants are the same. Furthermore, we will also
continue to actively work to improve tenant satisfaction by conducting customer satisfaction surveys, improving thequality of hygiene, and carrying out planned maintenance and repairs.
SANKEI REAL ESTATE will utilize the Sankei Building Group’s comprehensive operation and management functions
ranging from real estate planning and development to lease-up, operation, and management through collaboration
within the Sankei Building Group with Sankei Building at the core.
In addition, SANKEI REAL ESTATE will execute the following measures, etc. to aim for greater revenue and stable
growth of earnings from assets under management.
(a) Strive to provide services for tenants’ comfortable use while strengthening and enhancing tenant relations inorder to maintain and improve tenant satisfaction so as to maintain and improve the occupancy rate and rent ofassets under management.
(b) Seek to maintain and improve the market competitiveness of assets under management through planning andimplementation of repairs and capital expenditures by taking into consideration the state and characteristics ofassets under management, real estate market conditions, tenant needs, and other factors and carefully
examining them.
(c) Strive to maintain and improve earnings by conducting agile leasing activities with a continual grasp of leasing
market trends.
(d) Adopt ongoing initiatives to reduce operating and management costs and consider the environment by
periodically verifying the validity of operations, management level, and costs of assets under management. In
doing so, the balance with the market competitiveness of assets under management and perspective of
maintaining and improving tenant satisfaction are taken into consideration.
(e) Conduct investment conscious of ESG, such as reduction of the environmental impact of assets undermanagement and cooperation with external stakeholders.

-4-Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)(C) Financial Strategy
SANKEI REAL ESTATE will conduct appropriate and sound financial management while considering agility of financing
activities, stability of cash flows, and other matters in order to secure stable earnings and steady growth of assets
under management over the medium to long term.
In addition, to secure financial soundness, the basic policy shall be to set the upper limit for the LTV at 60% in principle(however, the LTV may temporarily exceed the upper limit for the purpose of new asset acquisition, etc.). As a rule,
SANKEI REAL ESTATE will maintain an approximate range of 40% to 50% during normal operations.
(a) Equity Financing
Issuance of new investment units shall be performed in an agile manner with due consideration to investment
unit dilution while comprehensively taking into account capital market trends, the financial environment, timingof acquisition of real estate, etc. to be newly acquired, ratio of interest-bearing liabilities to total assets and otherfactors.
(b) Debt Financing
Upon borrowing, etc., fund procurement shall be executed in an appropriate manner by taking into account thebalance between interest rate trends, market levels, financial agility, long-term business relationships, andsecurity, and by considering the borrowing period, fixed or floating interest rate, provision of collateral or not,fees, and other terms and conditions of procurement of interest-bearing liabilities.
ii.

Significant Subsequent Events
Not applicable.

(Reference Information)
Acquisition of Assets
SANKEI REAL ESTATE decided to acquire real estate trust beneficiary rights on February 29, 2024, as described below,
and acquired them on April 1, 2024 and March 1, 2024, respectively.
Acquisition
Asset Property
Acquisition
price
Acquisition
Property nameLocation
Sellertype
numberasset(million yen)date
(Note 1)
Real estate
S-GATE NIHONBASHIOfficeChuo-ku,
trust
7,450 Not disclosed
A-3
HONCHO
April 1, 2024
buildings
Tokyo
beneficiary(Note 2) (Note 3)(additional acquisition)
rightReal estateCore
Chuo-ku,
trust
2,920 The Sankei
March 1,asset
B-7
VESSEL HOTEL CAMPANA
Sapporo-shi beneficiary(Note 2) Building Co., Ltd.
2024
group
SUSUKINO
right
Total (2 properties)
10,370(Note 1) “Acquisition price” is the sale and purchase price of each trust beneficiary right stated in the trust beneficiary right sale and purchaseagreement for each acquired asset, rounded down to the nearest million yen. The sale and purchase prices do not include consumption tax,
local consumption tax and the various expenses required for the acquisition.
(Note 2) The acquisition price for S-GATE NIHONBASHI-HONCHO is the figure equivalent to the (49%)* co-ownership interest additionally acquired by
SANKEI REAL ESTATE. The acquisition price of VESSEL HOTEL CAMPANA SUSUKINO is the figure equivalent to the co-ownership interest (40%)
acquired by SANKEI REAL ESTATE.
* Regarding S-GATE NIHONBASHI-HONCHO, SANKEI REAL ESTATE acquired 51% of the co-ownership interest in March 2019, and acquired
an additional 49% co-ownership interest after converting it into a trust beneficiary right. Therefore, as of the date of this document,
SANKEI REAL ESTATE holds all of the trust beneficiary rights pertaining to S-GATE NIHONBASHI-HONCHO.
(Note 3) The information has not been disclosed due to unavoidable circumstances, as consent for disclosure has not been obtained from the Seller.

iii.

Operating Forecasts
SANKEI REAL ESTATE’s operating forecasts for the fiscal period ending August 2024 (from March 1, 2024, to August 31,2024) and the fiscal period ending February 2025 (from September 1, 2024, to February 28, 2025) are as follows:
Operatingrevenue

OperatingincomeOrdinary
incomeNet income

Distribution per unit
Distribution in(excluding distribution excess of earnings
in excess of earnings)
per unit

million yen
million yen
million yen
million yen
yenyen
Fiscal period
2,404
1,234
1,032
1,031
2,208
ending Aug. 2024
Fiscal period
2,442
1,252
1,036
1,035
2,217
ending Feb. 2025
Furthermore, for the assumptions underlying the operating forecasts, please refer to “Assumptions Underlying the Operating
Forecasts for the Fiscal Period Ending August 2024 (from March 1, 2024, to August 31, 2024) and Fiscal Period Ending
February 2025 (from September 1, 2024, to February 28, 2025)” presented below.
(Note) The forecast figures above are the current forecasts calculated under certain assumptions. Accordingly, the actual operating revenue, operating
income, ordinary income, net income, distribution per unit, and distribution in excess of earnings per unit may vary due to changes in thecircumstances. In addition, the forecasts are not a guarantee of the amount of distribution.

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Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)
Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending August 2024 (from March 1, 2024, to August 31, 2024)
and the Fiscal Period Ending February 2025 (from September 1, 2024, to February 28, 2025)
Item

Accounting period

Assets undermanagement

Operating revenue

Operating expenses

Non-operating
expenses

Interest-bearing
liabilities

Number of investment
units issued andoutstanding

Assumptions
・Fiscal period ending August 2024 (11th fiscal period) (from March 1, 2024, to August 31, 2024) (184days)
・Fiscal period ending February 2025 (12th fiscal period) (from September 1, 2024, to February 28, 2025)(181 days)
・The assumption for the real estate and real estate trust beneficiary rights (16 properties in total) heldby SANKEI REAL ESTATE as of the date of this document (hereinafter, the “existing assets undermanagement”) is that there will be no change through to the end of the fiscal period ending February2025.
・In addition to the above, there is a possibility of changes due to the acquisition of other properties ordisposition of owned properties.
・Rent business revenue of the Existing Assets under Management is calculated by taking into accountvarious factors, such as lease agreements that have been concluded and are valid during the calculation
period of the Assumptions, tenant trends and market trends.
・The assumption is that there will be no delinquent or unpaid rent by tenants.
・The principal items of operating expenses are as follows.
(Unit: million yen)
Fiscal period ending Fiscal period ending
Aug. 2024
Feb. 2025
Total expenses related to rent business
847
862
Outsourcing expenses

121

125

Utilities expenses

107

103

Repair expenses
Property taxes

37
248

50
246

Depreciation

307

314

Other expenses related to rent business [Total]
322
327
Asset management fee
247
248
・Of expenses related to the rent business, which are the main operating expenses, expenses other thandepreciation are calculated on the basis of historical data and by taking into consideration the factors
causing fluctuation in each of the expenses.
・Depreciation is calculated using the straight-line method.
・In general, non-current asset tax, city planning tax, etc. are calculated on a pro rata basis andreimbursed at the time of property acquisition with the previous owner upon transactions of realestate, etc. At SANKEI REAL ESTATE, the amount equivalent to the reimbursement is included in the costof acquisition and thus not expensed in the business period in which the property acquisition date falls
in the case of the properties for which such reimbursement is made at the time of transaction. Noncurrent asset tax and city planning tax on assets acquired on February 1, 2024, will be recorded as
expenses from the fiscal period ending August 2025.
・Repair expenses for buildings is the amount estimated based on medium- to long-term repair plans
formulated by the Asset Management Company. However, repair expenses possibly increasing inamount or additionally arising from unforeseeable factors may result in repair expenses differing
materially from the forecast amount.
・Interest expenses and other borrowing-related expenses are estimated at 194 million yen for the fiscal
period ending August 2024 and 214 million yen for the fiscal period ending February 2025.
・Amortization of investment unit issuance expenses is assumed to be 6 million yen for the fiscal period
ending August 2024.
・The assumption is that total interest-bearing liabilities will be 50,200 million yen at the end of the fiscal
period ending August 2024 and 50,200 million yen at the end of the fiscal period ending February 2025.
・It is assumed that there will be no change in the outstanding amount of borrowings by the end of the
fiscal period ending February 2025.
・LTV is expected to be 47.9% at the end of August 2024 and 47.9% at the end of February 2025. LTV iscalculated by the following formula and rounded to one decimal place.
LTV = Total interest-bearing liabilities / Total assets × 100
・The assumption is that the total number of investment units issued and outstanding as of the date ofthis document is 467,099 units and that there will be no change in the number of investment units due
to issuance of new investment units, etc. until the end of the fiscal period ending February 2025.
・Distribution per unit (excluding distribution in excess of earnings) is calculated based on the expected
total number of investment units issued and outstanding at the end of August 2024 and February 2025,
which is 467,099 units.
-6-

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)
Item

Assumptions

Distribution per unit
(excluding distribution
in excess of earnings)

・Distribution per unit (excluding distribution in excess of earnings) is calculated based on the assumptionthat distribution of earnings will be in accordance with the policy on distribution of cash provided in
SANKEI REAL ESTATE’s articles of incorporation.
・Distribution per unit (excluding distribution in excess of earnings) may vary due to various factors, suchas fluctuations in rent business revenue accompanying a change in assets under management, change
in tenants or other event, or incurrence of unexpected repairs.

Distribution in excess of・No cash distribution in excess of earnings is planned to be made at this point in time.
earnings per unit
・The assumption is that there will be no amendment of laws and regulations, tax systems, accounting
standards, listing regulations provided by Tokyo Stock Exchange Inc., rules provided by The Investment
Other
Trusts Association, Japan, etc. that will impact the forecast figures above.
・The assumption is that there will be no unforeseen material change in general economic trends, realestate market conditions, etc.

(2) Investment Risks
Disclosure is omitted, because there is no significant change from “Investment Risks” in the semiannual securities report(submitted on November 29, 2023).

-7-

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)

2. Financial Statements(1) Balance Sheet(Unit: thousand yen)
9th fiscal period(as of Aug. 31, 2023)
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets
SoftwareTotal intangible assets
Investments and other assets
Long-term prepaid expenses
Deferred tax assets
Leasehold and guarantee deposits
Total investments and other assets
Total non-current assets
Deferred assets
Investment unit issuance costs
Total deferred assets
Total assets-8-

10th fiscal period(as of Feb. 29, 2024)

5,687,713
2,649,835
62,64578,865
166,96382
8,646,106

15,252,088
1,762,519
953,754
73,876
5,486
18,047,724

189,040(29,088)
159,952
544
(81)
463
604
(40)
564
2,457,766
21,225,884(2,169,707)
19,056,176
105,457(6,304)99,152
14,326(3,008)
11,31876,121(21,723)
54,397
81,618,833
5,886
103,464,511

189,290(32,666)
156,623
544
(94)
449
604
(100)
504
2,457,766
20,401,544(1,483,517)
18,918,027
111,450(7,666)
103,783
39,317(3,821)35,49625,456(8,277)
17,17864,939,537
86,629,368

8,806
8,806

7,068
7,068

94,32617
10,000104,343
103,577,662

102,677
9
10,000112,687
86,749,123

12,05012,050112,235,819

6,025
6,025
104,802,873

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)(Unit: thousand yen)
9th fiscal period(as of Aug. 31, 2023)
Liabilities
Current liabilities
Operating accounts payable
Short-term borrowings
Long-term loans due within one year
Accounts payable - otherAccrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Deposits received
Total current liabilities
Non-current liabilities
Long-term loans
Leasehold and guarantee deposits received
Leasehold and guarantee deposits received in trust
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Deduction from unitholders’ capital
Unitholders’ capital (net)
Surplus
Unappropriated retained earnings (undisposed
loss)
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets-9-

10th fiscal period(as of Feb. 29, 2024)

217,790
6,800,000
9,200,000
295,160
56,973957
397,611
10,184
16,978,677

219,486
7,600,000
492,122
52,901
795
182,108
326,433
346
8,874,193

41,000,000
88,716
3,603,120
44,691,837
61,670,515

42,600,000
88,012
2,767,538
45,455,551
54,329,745

49,442,685(7,136)49,435,549

49,442,685(7,136)49,435,549

1,129,754

1,037,578

1,129,754
50,565,304*1 50,565,304
112,235,819

1,037,578
50,473,128*1 50,473,128
104,802,873

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)(2) Statement of Income and Retained Earnings(Unit: thousand yen)
9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023
Operating revenue
Rent business revenue
Other rent business revenue
Gain on sale of real estate, etc.
Total operating revenue
Operating expenses
Expenses related to rent business
Loss on sale of real estate, etc.
Asset management fee
Asset custody fee
Administrative service fees
Remuneration for directors (and other officers)
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Reversal of distributions payable
Insurance claim income
Interest on tax refund
Other
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing-related expenses
Amortization of investment unit issuance expenses
Other
Total non-operating expenses
Ordinary income
Net income before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

10th fiscal period
From: Sept. 1, 2023
To: Feb. 29, 2024

*1 2,343,152- 10 -*1 2,214,154*1 243,748*1 147,053*2 164,424*2 5,417,202

2,751,326

7,778,411*1 1,110,607*1 1,141,048

245,773
2,192
8,170
3,600
46,384
1,416,727
1,334,598*3 5,060,134

40
639
9
689

42
545
462
427
9
1,487

139,180
57,5116,024
2,000
204,716
1,130,571
1,130,571
963
(4)
958
1,129,612
141
1,129,754

142,563
41,557
6,024
3,168
193,314
1,038,079
1,038,079
801
7
809
1,037,269
309
1,037,578

244,680
2,198
7,975
3,600
88,867
6,548,504
1,229,906

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)(3) Statement of Changes in Unitholders’ Equity
9th fiscal period (from March 1, 2023 to August 31, 2023)(Unit: thousand yen)
Unitholders’ equity

Balance at beginning of
periodChanges in items during
periodDistributions fromsurplus

Surplus
Deduction
Total
Unitholders’fromUnitholders’
Unappropriatedunitholders’capitalunitholders’ capital (net)retained earnings Total surplus
equitycapital(undisposed loss)

Total net
assets49,442,685(7,136) 49,435,549

1,076,805

1,076,805

50,512,354

50,512,354(1,076,663)(1,076,663)(1,076,663)(1,076,663)

1,129,612

1,129,612

1,129,612

1,129,612-

52,94952,94952,94952,949(7,136) 49,435,549

1,129,754

1,129,754

50,565,304

50,565,304

Net income
Total changes in items
during period
Balance at end of period*1 49,442,685-

10th fiscal period (from September 1, 2023 to February 29, 2024)(Unit: thousand yen)
Unitholders’ equity

Balance at beginning of
periodChanges in items during
periodDistributions fromsurplus

Surplus
Deduction
Total
Unitholders’fromUnitholders’
Unappropriatedunitholders’capitalunitholders’ capital (net)retained earnings Total surplus
equitycapital(undisposed loss)

Total net
assets49,442,685(7,136) 49,435,549

1,129,754

1,129,754

50,565,304

50,565,304(1,129,445)(1,129,445) (1,129,445)(1,129,445)

1,037,269

1,037,269

1,037,269

1,037,269-(92,175)(92,175)(92,175)(92,175)(7,136) 49,435,549

1,037,578

1,037,578

50,473,128

50,473,128

Net income
Total changes in items
during period
Balance at end of period*1 49,442,685-- 11 -

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)(4) Statement of Cash Distributions(Unit: yen)
9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023

10th fiscal period
From: Sept. 1, 2023
To: Feb. 29, 2024

I Unappropriated retained earnings

1,129,754,634

1,037,578,855

II Amount of distribution

1,129,445,382

1,037,426,879[Amount of distribution per unit][2,418][2,221]

III Retained earnings carried forward

309,252

151,976

Method of calculation of amount of
distribution

In accordance with the policy on
distribution specified in Article 36,
Paragraph 1 of SANKEI REAL ESTATE’s
articles of incorporation, the amountof distribution shall be limited to theamount of net income in excess of theamount equivalent to 90% of
distributable profit, as stipulated in
Article 67-15 of the Act on Special
Measures Concerning Taxation. Basedon such policy, the decision was madeto distribute 1,129,445,382 yen, whichis the largest integral multiple of thetotal number of investment units
issued and outstanding (467,099 units)
not in excess of unappropriatedretained earnings, as distribution of
earnings.
The distribution in excess of earnings
specified in Article 36, Paragraph 2 of
SANKEI REAL ESTATE’s articles ofincorporation will not be made.

In accordance with the policy on
distribution specified in Article 36,
Paragraph 1 of SANKEI REAL ESTATE’s
articles of incorporation, the amountof distribution shall be limited to theamount of net income in excess of theamount equivalent to 90% of
distributable profit, as stipulated in
Article 67-15 of the Act on Special
Measures Concerning Taxation. Basedon such policy, the decision was madeto distribute 1,037,426,879 yen, whichis the largest integral multiple of thetotal number of investment units
issued and outstanding (467,099 units)
not in excess of unappropriatedretained earnings, as distribution of
earnings.
The distribution in excess of earnings
specified in Article 36, Paragraph 2 of
SANKEI REAL ESTATE’s articles ofincorporation will not be made.

- 12 -

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)(5) Statement of Cash Flows(Unit: thousand yen)
9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023
Cash flows from operating activities
Net income before income taxes
Depreciation
Amortization of investment unit issuance expenses
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund
receivable
Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable - other
Increase (decrease) in consumption taxes payable
Increase (decrease) in advances received
Increase (decrease) in deposits received
Decrease (increase) in long-term prepaid expenses
Decrease in property, plant and equipment in trust
due to sale
Decrease (increase) in other assets
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Proceeds from leasehold and guarantee deposits
received
Refund of leasehold and guarantee deposits received
Proceeds from leasehold and guarantee deposits
received in trust
Refund of leasehold and guarantee deposits received
in trust
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from short-term loans
Repayment of short-term loans
Proceeds from long-term loans
Repayments of long-term loans
Distributions paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

10th fiscal period
From: Sept. 1, 2023
To: Feb. 29, 2024

1,130,571
322,1126,024(40)
139,180
1,832

1,038,079
317,3126,024(42)
142,563(891,108)(166,963)

166,963(16,070)(83,458)
8,101(38,660)(52,153)
9,507
9,230

4,989
(33,749)
12,737
182,108(71,177)(9,837)(8,351)

447,918

33,678,715(82)
1,717,050
40(132,950)(861)
1,583,278(5,404)34,529,823
42(146,635)(963)
34,382,266(7,125)(7,014,566)(249)(16,936,372)

5,231

1,301

(2,344)(3,730)306,551

549,773(554,915)(1,385,355)(8,000)(7,275,168)(17,774,632)

6,800,000(6,800,000)
5,900,000(5,900,000)(1,130,575)(7,930,575)
8,677,058
8,337,549*1 17,014,608

3,700,000(3,700,000)(1,077,059)
5,722,940
31,0508,306,499*1 8,337,549- 13 -

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)(6) Notes on the Going Concern Assumption
Not applicable.
(7) Notes on Matters Concerning Significant Accounting Policies
1.

Method of depreciation of noncurrent assets

2.

Accounting for deferred assets

3.

Standards for revenue andexpense recognition

4.

Scope of cash (cash and cash
equivalents) in the statement ofcash flows

5.

Other significant matters related
to the basis for preparation of
the financial statements(1) Property, plant and equipment (including trust assets)
The straight-line method is adopted. Furthermore, the useful lives of major property,
plant and equipment are as follows:
Buildings
3–69 years
Structures
6–59 years
Machinery and equipment
10–27 years
Tools, furniture and fixtures
3–10 years(2) Intangible assets
The straight-line method is adopted.
(3) Long-term prepaid expenses
The straight-line method is adopted.
Investment unit issuance costs
They are amortized by the straight-line method over 3 years.
(1) Standards for revenue recognition
The details of performance obligations concerning revenue from contracts withcustomers of SANKEI REAL ESTATE and the timing when the performance obligations
are normally satisfied (the normal time to recognize revenue) are as follows.
i. Sale of real estate, etc.
Revenue is recognized for the sale of real estate, etc. at the time the buyer who
is a customer gains control of the real estate, etc. through the performance ofdelivery obligations specified in a contract on the sale of real estate.
ii. Utilities reimbursement
Revenue is recognized for utilities reimbursement according to the supply ofelectricity, water, etc. to tenants who are customers based on the terms of leaseagreements for real estate and incidental agreements. For the utilities
reimbursement for which SANKEI REAL ESTATE is deemed to be an agent, the net
amount after deducting the amount to be paid to another party from the amountreceived from tenants as charges for electricity, gas, etc. provided by said party
is recorded as revenue.
(2) Accounting for non-current asset tax, etc.
For non-current asset tax, city planning tax, depreciable asset tax, etc. on real estateor trust beneficiary rights of real estate, the tax levied corresponding to the calculation
period is recorded as expenses related to rent business.
Furthermore, the amount equivalent to non-current asset tax, etc. in the initial fiscal
period paid by SANKEI REAL ESTATE upon acquisition of real estate or trust beneficiaryrights of real estate is included in the cost of acquisition of the real estate, etc. and notrecognized as expenses. In the previous fiscal period, the amount equivalent to noncurrent asset taxes included in the acquisition cost of real estate, etc. was 22,327
thousand yen. During the fiscal period under review, the amount equivalent to noncurrent asset taxes included in the acquisition cost of real estate, etc. was nil.
Cash and cash equivalents in the statement of cash flows comprise cash on hand and cashin trust, demand deposits and deposits in trust, and short-term investments with a maturityof three months or less from the date of acquisition that are readily convertible to cash andthat are subject to an insignificant risk of changes in value.
Accounting for trust beneficiary rights that have real estate, etc. as trust assets
Concerning trust beneficiary rights that have real estate, etc. as trust assets held, allaccounts of assets and liabilities within trust assets and all accounts of revenue andexpenses from the trust assets are recognized in the relevant account item of the balance
sheet and the statement of income and retained earnings.
Furthermore, the following material items of the trust assets recognized in the relevant
account item are separately listed on the balance sheet.
i.
Cash and deposits in trustii. Buildings in trust; Structures in trust; Machinery and equipment in trust; Tools,
furniture and fixtures in trust; Land in trust; Construction in progress in trustiii. Leasehold and guarantee deposits received in trust- 14 -

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)(8) Notes to the Financial Statements[Notes to the Balance Sheet]*1. Minimum net assets as provided in Article 67, Paragraph 4 of the Act on Investment Trusts and Investment Corporations(Unit: thousand yen)
9th fiscal period(as of Aug. 31, 2023)
50,00010th fiscal period(as of Feb. 29, 2024)
50,000[Notes to the Statement of Income and Retained Earnings]*1. Breakdown of operating income (loss) from real estate rent business(Unit: thousand yen)
9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023

10th fiscal period
From Sept. 1, 2023
To: Feb. 29, 2024

2,224,844

2,117,288

118,308

96,866

2,343,152

2,214,154

Utilities reimbursement

113,684

98,319Parking revenue

33,632

31,294

Termination penalties
Income from work to restore to theoriginal state
Other rental revenue

85,520

-

420

7,500

10,491

9,940

243,748

147,053

2,586,901

2,361,208

Outsourcing expenses

221,524

239,931

Utilities expenses

189,454

154,887

Property taxes

313,078

322,169

Land rent

1,818

1,590

Repair expenses

37,70476,809Insurance premium

7,097

6,987

Trust fee

4,090

4,924

320,905

315,574

14,933

18,173

1,110,607

1,141,048

1,110,607

1,141,048

1,476,293

1,220,160

A. Operating revenue from real estate rent
business
Rent business revenue
Rental revenue
Common area maintenance revenue
Total rent business revenue
Other rent business revenue

Total other rent business revenue
Total operating revenue from real estate
rent business
B. Operating expenses from real estate rent
business
Expenses related to rent business

Depreciation
Other expenses related to rent
business
Total expenses related to rent businessTotal operating expenses from real estate
rent business
C. Operating income (loss) from real estate
rent business [A−B]*2. Breakdown of gain on sale of real estate, etc.
9th fiscal period (from March 1, 2023 to August 31, 2023)(Unit: thousand yen)
BREEZÉ TOWER (1.55% quasi-co-ownership interest)
Revenue from sale of real estate, etc.
Cost of real estate, etc. sold
Other expenses related to sale
Gain on sale of real estate, etc.

- 15 -

620,000
447,918
7,656
164,424

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)
10th fiscal period (from September 1, 2023 to February 29, 2024)(Unit: thousand yen)
BREEZÉ TOWER (43.45% quasi-co-ownership interest)
Revenue from sale of real estate, etc.
Cost of real estate, etc. sold
Other expenses related to sale

17,995,000
12,521,932
55,865Gain on sale of real estate, etc.

5,417,202*3. Breakdown of loss on sale of real estate, etc.
9th fiscal period (from March 1, 2023 to August 31, 2023)
Not applicable.
10th fiscal period (from September 1, 2023 to February 29, 2024)(Unit: thousand yen)
Shinagawa Seaside TS Tower (50% quasi-co-ownership interest)
Revenue from sale of real estate, etc.
Cost of real estate, etc. sold
Other expenses related to sale
Loss on sale of real estate, etc.

16,100,000
21,156,783
3,351
5,060,134[Notes to the Statement of Changes in Unitholders’ Equity]*1. Total number of investment units authorized and total number of investment units issued and outstanding
9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023
Total number of investment units
authorized
Total number of investment units issued
and outstanding(Unit: units)
10th fiscal period
From: Sept. 1, 2023
To: Feb. 29, 2024

10,000,000

10,000,000

467,099

467,099[Notes to the Statement of Cash Flows]*1. Reconciliation of cash and cash equivalents at end of period to the amount of balance sheet items(Unit: thousand yen)
9th fiscal period
10th fiscal period
From: Mar. 1, 2023
From: Sept. 1, 2023
To: Aug. 31, 2023
To: Feb. 29, 2024
Cash and deposits
Cash and deposits in trust

5,687,713
2,649,835

15,252,088
1,762,519

Cash and cash equivalents

8,337,549

17,014,608[Notes on Lease Transactions]Operating lease transactions (as lessor)
Future minimum lease payments
9th fiscal period(as of Aug. 31, 2023)(Unit: thousand yen)
10th fiscal period(as of Feb. 29, 2024)

Due within 1 year

3,143,165

2,470,177

Due after 1 year
Total

15,588,904
18,732,069

16,679,094
19,149,271[Notes on Financial Instruments]
1. Matters concerning status of financial instruments(1) Policy for handling financial instruments
SANKEI REAL ESTATE shall procure funds in a well-balanced manner through borrowing from financial institutions,issuance of investment corporation bonds, issuance of new investment units, etc. to contribute to steady growth ofassets under management as well as efficient operation and stability of management.
Upon borrowing from financial institutions, issuance of investment corporation bonds, etc., the fund procurement shallbe in a manner that gives due consideration to the balance between agility in fund procurement and financial stability,
characteristics of to-be-acquired real estate, etc. Specifically, the procurement means, ratio of long-term debt, ratio of
fixed-rate debt, staggering of maturities, provision of collateral or not, etc. shall be considered. Upon borrowing, lenders- 16 -

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)
shall be limited to the qualified institutional investors provided in the Financial Instruments and Exchange Act (however,limited to the institutional investors provided in Article 67-15 of the Act on Special Measures Concerning Taxation).
Issuance of new investment units shall be for the purpose of expansion of asset size and enhancement of profitability,
and implementation decided by taking into account the LTV ratio, dilution of existing unitholders’ rights andaccompanying decline in transaction price of investment units, etc. and in light of the financial environment.
Derivative transactions may be conducted for the purpose of hedging the risk of fluctuation in interest rates and otherrisks on SANKEI REAL ESTATE arising from the concerned liabilities. No derivative transactions were conducted in thefiscal period under review.
(2) Description of financial instruments and associated risks, and risk management system
Loans are mainly for the purpose of procuring funds for acquisition of assets and funds for repayment of obligations.
Loans are exposed to the risk of inability to refinance upon becoming due for repayment, risk of rise in the interest rate
payable, etc., but the risks are mitigated by considering fund procurement that is well balanced through issuance ofinvestment units, etc. while also diversifying fund procurement sources and staggering maturities. In addition, the riskof rise in interest rates on SANKEI REAL ESTATE’s operations is managed by closely watching interest rate trends andkeeping the LTV under control in an appropriate manner.
(3) Supplementary explanation to matters concerning fair value, etc. of financial instruments
Certain assumptions, etc. are adopted in the calculation of the value of financial instruments. Accordingly, the concernedvalues may vary when different assumptions, etc. are adopted.
2. Matters concerning fair value, etc. of financial instruments
The following are the carrying amount and fair value as of August 31, 2023, and the amount of difference between these.
The notes to “cash and deposits, “cash and deposits in trust” and “short-term borrowings” are omitted because their fairvalues approximate their book values because they are settled in cash and in a short period of time. Furthermore“Leasehold and guarantee deposits received” and “Leasehold and guarantee deposits received in trust” are omitted
because the amounts are immaterial.
(Unit: thousand yen)
Carrying amount(1) Long-term loans due within one year
(2) Long-term loans

Fair value

9,200,000
41,000,000
50,200,000

Total liabilities

Amount of difference

9,207,868
40,720,139
49,928,008

7,868(279,860)(271,991)

The following are the carrying amount and fair value as of February 29, 2024, and the amount of difference between these.
Notes on “cash and deposits” and “cash and deposits in trust” are omitted as the fair value approximates the carrying
amount because they are cash or settled in a short period. Furthermore “Leasehold and guarantee deposits received” and“Leasehold and guarantee deposits received in trust” are omitted because the amounts are immaterial.
(Unit: thousand yen)
Carrying amount(1) Long-term loans due within one year
(2) Long-term loans
Total liabilities

Fair value

Amount of difference

7,600,000

7,598,568(1,431)42,600,000

42,330,138(269,861)

50,200,000

49,928,707(271,292)(Note 1) Method of calculation of the fair value of financial instruments(1) Long-term loans due within one year; (2) Long-term loans
Of long-term loans, because those with floating interest rates reflect market interest rates in a short period of time, the fair value approximates
the book value and thus they are stated at that book value. However, in the case of long-term loans with fixed interest rates, the fair value iscalculated based on the present value of their future cash flows discounted over the time to maturity and at the rate adjusted for credit risks.
(Note 2) Amount of repayment of loans scheduled to be due after the end of the fiscal period (August 31, 2023)
Due within
1 yearLong-term loans due within one year

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years(Unit: thousand yen)
Due after
5 years

9,200,000

-

-

-

-

-

-

9,100,000

10,500,000

12,100,000

9,300,000-

9,200,000

9,100,000

10,500,000

12,100,000

9,300,000-

Long-term loans
Total

Due after
1 to 2 years

Amount of repayment of loans scheduled to be due after the end of the fiscal period (February 29, 2024)
Due within
1 yearLong-term loans due within one year
Long-term loans
Total

Due after
1 to 2 years

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years(Unit: thousand yen)
Due after
5 years

7,600,000

-

-

-

-

-

-

11,000,000

16,400,000

9,600,000

5,600,000-

7,600,000

11,000,000

16,400,000

9,600,000

5,600,000-- 17 -

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)[Notes on Securities]
9th fiscal period (as of August 31, 2023)
Not applicable.
10th fiscal period (as of February 29, 2024)
Not applicable.
[Notes on Derivative Transactions]
9th fiscal period (as of August 31, 2023)
Not applicable.
10th fiscal period (as of February 29, 2024)
Not applicable.
[Notes on Retirement Benefits]
9th fiscal period (as of August 31, 2023)
Not applicable.
10th fiscal period (as of February 29, 2024)
Not applicable.
[Notes on Tax-Effect Accounting]
1. Breakdown of main causes for occurrence of deferred tax assets and deferred tax liabilities(Unit: thousand yen)
9th fiscal period(as of Aug. 31, 2023)

10th fiscal period(as of Feb. 29, 2024)

17

9

17
17

9
9

Deferred tax assets
Non-deductible accrued enterprise tax
Total deferred tax assets
Deferred tax assets, net

2. Reconciliation of significant differences between the statutory tax rate and the effective income tax rate
9th fiscal period(as of August 31, 2023)
Statutory tax rate

(Unit: %)10th fiscal period(as of February 29, 2024)

31.46

31.46

(31.43)(31.44)

Other

0.05

0.06

Effective income tax rate after applicationof tax-effect accounting

0.08

0.08

[Adjustments]
Deductible distribution payable[Notes on Equity Method Profit and Loss]
9th fiscal period (from March 1, 2023, to August 31, 2023)
Not applicable.
10th fiscal period (from September 1, 2023, to February 29, 2024)
Not applicable.
[Notes on Related-Party Transactions]
1. Parent company, major corporate unitholder, etc.
9th fiscal period (from March 1, 2023, to August 31, 2023)
Not applicable.
10th fiscal period (from September 1, 2023, to February 29, 2024)
Not applicable.

- 18 -

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)
2. Affiliated company, etc.
9th fiscal period (from March 1, 2023, to August 31, 2023)
Not applicable.
10th fiscal period (from September 1, 2023, to February 29, 2024)
Not applicable.
3. Fellow subsidiary, etc.
9th fiscal period (from March 1, 2023, to August 31, 2023)
Not applicable.
10th fiscal period (from September 1, 2023, to February 29, 2024)
Not applicable.
4. Director, major individual unitholder, etc.
9th fiscal period (from March 1, 2023 to August 31, 2023)
Description ofPercentage ofrelationship
Name of
Balance
Share capitalvoting rights,
Transaction
company,
Description ofat end ofConcurrent Businessor investments
etc. held by
Description ofamount AccountAttributeetc. or
Locationbusiness or
periodholding of relationshipin capital(in) SANKEItransaction(thousanditem
name ofoccupation(thousandpositions,(thousand yen)
REAL ESTATE
yen)
personyen)
etc. by(%)
directors
Executive
Director of
SANKEI REAL
Payment of
Executive Director of
ESTATE, andasset
SANKEI REAL ESTATE,
President andmanagement
Accounts
and President and Chief
318,393
Director Yuichi Ota
Chief Executive
fee to Assetpayable - 277,170
Executive Officer of(Note 4)
Officer ofManagement
other
Sankei Building Asset
Sankei Building
Company
Management Co., Ltd.
Asset
(Note 3)
Management
Co., Ltd.
(Note 1) Of the related-party transactions subject to disclosure, the related-party transactions including significant transactions are disclosed.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period includes consumption tax,
etc. Amounts are rounded down to the nearest thousand yen.
(Note 3) The payment of asset management fees is for transactions conducted by Yuichi Ota as representative of Sankei Building Asset Management
Co., Ltd., and the amount of the fees is subject to the terms and conditions provided in SANKEI REAL ESTATE’s articles of incorporation.
(Note 4) Asset management fees include fees related to the acquisition and transfer of properties (72,620 thousand yen) that are entered into the bookvalue of individual real estate, etc. or deducted from the transfer price.
(Note 5) Trading conditions are determined based on prevailing market conditions.

10th fiscal period (from September 1, 2023 to February 29, 2024)
Description of
Share capital
Percentage ofBalancerelationshipTransaction
orvoting rights,
at end of
Description ofConcurrent Business
investments
etc. held by
Description of amount Account period
Attribute
Locationbusiness or
holding of relationshipin capital(in) SANKEItransaction (thousand
item (thousand
occupation
positions,(thousand
REAL ESTATE
yen)
yen)
etc. byyen)(%)
directors
Executive
Director of
SANKEI REAL
Payment of
Executive Director of
ESTATE, andasset
SANKEI REAL ESTATE, andPresident andmanagement
Accounts
President and Chief
467,165
Director Yuichi Ota
Chief Executive
fee to Assetpayable - 454,499
Executive Officer of(Note 4)
Officer ofManagement
other
Sankei Building Asset
Sankei Building
Company
Management Co., Ltd.
Asset
(Note 3)
Management
Co., Ltd.
(Note 1) Of the related-party transactions subject to disclosure, the related-party transactions including significant transactions are disclosed.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period includes consumption tax,
etc. Amounts are rounded down to the nearest thousand yen.
(Note 3) The payment of asset management fees is for transactions conducted by Yuichi Ota as representative of Sankei Building Asset Management
Co., Ltd., and the amount of the fees is subject to the terms and conditions provided in SANKEI REAL ESTATE’s articles of incorporation.
(Note 4) Asset management fees include fees related to the acquisition and transfer of properties (222,485 thousand yen) that are entered into thebook value of individual real estate, etc. or deducted from the transfer price.
(Note 5) Trading conditions are determined based on prevailing market conditions.
Name ofcompany,
etc. orname ofperson[Notes on Asset Retirement Obligations]
9th fiscal period (from March 1, 2023, to August 31, 2023)
Not applicable.
- 19 -

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)
10th fiscal period (from September 1, 2023, to February 29, 2024)
Not applicable.
[Notes on Investment and Rental Properties]
SANKEI REAL ESTATE owns office buildings, etc. for the purpose of earning revenue from leasing. The carrying amount,amount of change during period and fair value of these investment and rental properties are as follows:(Unit: thousand yen)
9th fiscal period
10th fiscal period
From: Mar. 1, 2023
From: Sept. 1, 2023
To: Aug. 31, 2023
To: Feb. 29, 2024
Carrying amount
Balance at beginning of period
97,259,835
103,458,625
Amount of change during period
Balance at end of period
Fair value at end of period

6,198,790(16,829,257)

103,458,625
108,340,000

86,629,368
90,280,000(Note 1) The carrying amount is the amount obtained by subtracting the accumulated depreciation from the acquisition cost.
(Note 2) Of the amount of changes during the period, the main increase in the previous fiscal period was due to the acquisition of one new property
and the acquisition of one additional property (two properties total: 6,748,166 thousand yen (including incidental expenses related toacquisition)), the main decrease was due to the partial transfer of one property (447,918 thousand yen), while the main increase in thecurrent fiscal period was due to the acquisition of three new properties (three properties total: 17,053,244 thousand yen (including incidental
expenses related to acquisition)), and the main decrease was due to the transfer of two properties (two properties total: 33,678,715
thousand yen).
(Note 3) Fair value at end of period is the appraisal value by an external real estate appraiser.

Furthermore, the income (loss) concerning investment and rental properties is presented in “Notes to the Statement of
Income and Retained Earnings.”[Notes on Revenue Recognition]
1. Information breaking down revenue from contracts with customers
9th fiscal period (from March 1, 2023 to August 31, 2023)(Unit: thousand yen)

Sale of real estate, etc.

Revenue from contracts with customers(Note 1)620,000

Utilities reimbursement

Sales to external customers(Note 2) 164,424

113,684

113,684

Other-

2,473,216

Total

733,684

2,751,326(Note 1) Rent business revenue, etc. subject to ASBJ Statement No. 13 “Accounting Standard for Lease Transactions” and the transfer of real estate,etc. subject to The Japanese Institute of Certified Public Accountants Accounting Committee Report No. 15 “Practical Guidelines on
Accounting of Transferors for the Securitization of Real Estate Utilizing Special Purpose Companies” are not included in the above amounts
because they are excluded from application of the Revenue Recognition Accounting Standard. The main revenues from contracts withcustomers are revenue from the sale of real estate, etc. and utilities reimbursement.
(Note 2) As for sale of real estate, etc. the amount obtained by deducting the cost of selling real estate, etc. and other selling expenses from theincome from the sale of real estate, etc. is recorded as profit or loss on the sale of real estate, etc. in the statement of income and retained
earnings in accordance with Article 48, Paragraph 2 of the Regulations on Accounting for Investment Corporations (Cabinet Office Ordinance
No. 47 of 2006).

10th fiscal period (from September 1, 2023 to February 29, 2024)(Unit: thousand yen)

Sale of real estate, etc.

Revenue from contracts with customers(Note 1)
34,095,000

Utilities reimbursement

Sales to external customers(Note 2) 5,417,202

98,31998,319Other-

2,262,889

Total

34,193,319

7,778,411(Note 1) Rent business revenue, etc. subject to ASBJ Statement No. 13 “Accounting Standard for Lease Transactions” and the transfer of real estate,etc. subject to The Japanese Institute of Certified Public Accountants Accounting Committee Report No. 15 “Practical Guidelines on
Accounting of Transferors for the Securitization of Real Estate Utilizing Special Purpose Companies” are not included in the above amounts
because they are excluded from application of the Revenue Recognition Accounting Standard. The main revenues from contracts withcustomers are revenue from the sale of real estate, etc. and utilities reimbursement.
(Note 2) As for sale of real estate, etc. the amount obtained by deducting the cost of selling real estate, etc. and other selling expenses from theincome from the sale of real estate, etc. is recorded as profit or loss on the sale of real estate, etc. in the statement of income and retained
earnings in accordance with Article 48, Paragraph 2 of the Regulations on Accounting for Investment Corporations (Cabinet Office Ordinance
No. 47 of 2006). SANKEI REAL ESTATE records a gain on sale of real estate, etc. as operating revenue and loss on sale of real estate, etc. as
operating expenses, so the table above only shows the amount of gain on sale of real estate, etc.

- 20 -

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)
2. Information forming the basis for understanding revenue from contracts with customers
9th fiscal period (from March 1, 2023, to August 31, 2023)
Matters related to significant accounting policies are as stated in the notes.
10th fiscal period (from September 1, 2023, to February 29, 2024)
Matters related to significant accounting policies are as stated in the notes.
3. Information on relationship between satisfaction of performance obligations based on contracts with customers and cash
flows from such contracts, and the amount and timing of revenue expected to be recognized from the next fiscal period
from contracts with customers that exist at the end of the fiscal period under review(1) Balance of contract assets and contract liabilities, etc.
(Unit: thousand yen)
10th fiscal period
From: Sept. 1, 2023
To: Feb. 29, 2024

9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023
Receivables from contracts with customers (Balanceat beginning of period)

25,127

26,66826,66822,439Contract assets (Balance at beginning of period)--

Contract assets (Balance at end of period)--

Contract liabilities (Balance at beginning of period)--

Contract liabilities (Balance at end of period)--

Receivables from contracts with customers (Balanceat end of period)(2) Transaction price allocated to remaining performance obligations
9th fiscal period (from March 1, 2023, to August 31, 2023)
Revenue is recognized for utilities reimbursement using the amount for which there is a right to claim in accordancewith section 19 of the Implementation Guidance on Accounting Standard for Revenue Recognition because there
is a right to receive an amount of consideration directly corresponding to the value for the lessee, who is acustomer, for the portion for which performance is completed by the end of the period. Therefore, the provisionsof section 80-22(2) of the Revenue Recognition Accounting Standard apply, and the transaction prices allocated toremaining performance obligations are not included in the notes.
10th fiscal period (from September 1, 2023, to February 29, 2024)
Revenue is recognized for utilities reimbursement using the amount for which there is a right to claim in accordancewith section 19 of the Implementation Guidance on Accounting Standard for Revenue Recognition because there
is a right to receive an amount of consideration directly corresponding to the value for the lessee, who is acustomer, for the portion for which performance is completed by the end of the period. Therefore, the provisionsof section 80-22(2) of the Revenue Recognition Accounting Standard apply, and the transaction prices allocated toremaining performance obligations are not included in the notes.
[Notes on Segment Information, etc.]
1. Segment information
The information is omitted since SANKEI REAL ESTATE has a single segment—the real estate rent business.
2. Related information
9th fiscal period (from March 1, 2023, to August 31, 2023)(1) Information by product and service
The information is omitted since operating revenue to external customers for a single group of products and services
exceeds 90% of operating revenue on the statement of income and retained earnings.
(2) Information by geographic areai.
Operating revenue
The information is omitted since operating revenue to external customers in Japan exceeds 90% of operating
revenue on the statement of income and retained earnings.
ii. Property, plant and equipment
The information is omitted since the amount of property, plant and equipment located in Japan exceeds 90% of
the amount of property, plant and equipment on the balance sheet.

- 21 -

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)(3) Information by major customer
Name of customer
GRANVISTA Hotels & Resorts Co., Ltd.

Operating revenue
325,755(Unit: thousand yen)
Related segment
Real estate rent business10th fiscal period (from September 1, 2023 to February 29, 2024)(1) Information by product and service
The information is omitted since operating revenue to external customers for a single group of products and services
exceeds 90% of operating revenue on the statement of income and retained earnings.
(2) Information by geographic area
i. Operating revenue
The information is omitted since operating revenue to external customers in Japan exceeds 90% of operating
revenue on the statement of income and retained earnings.
ii. Property, plant and equipment
The information is omitted since the amount of property, plant and equipment located in Japan exceeds 90% of
the amount of property, plant and equipment on the balance sheet.
(3) Information by major customer
The information is omitted because operating revenues from individual customers are all less than 10% of operating
revenues on the Statement of Income and Retained Earnings.
[Notes on Per Unit Information]
9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023

10th fiscal period
From: Sept. 1, 2023
To: Feb. 29, 2024

Net assets per unit

108,253 yen

108,056 yen

Net income per unit

2,418 yen

2,220 yen

(Note 1) Net income per unit is calculated by dividing net income by the period’s daily weighted average number of investment units (fiscal period
ended August 2023: 467,099 units; fiscal period ended February 2024: 467,099 units). In addition, diluted net income per unit is not stated,because there are no diluted investment units.
(Note 2) The basis for calculation of net income per unit is as follows:

9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023
Net income (thousand yen)Amount not available to common unitholders(thousand yen)
Net income attributable to common investment units(thousand yen)
Average number of investment units during period(units)[Notes on Significant Subsequent Events]
Not applicable.

- 22 -

10th fiscal period
From: Sept. 1, 2023
To: Feb. 29, 2024

1,129,612

1,037,269--

1,129,612

1,037,269

467,099

467,099

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)(9) Changes in Total Number of Investment Units Issued and Outstanding
Changes in the unitholders’ capital and the total number of investment units issued and outstanding over the past five years
are as follows:
Total number of investment
Unitholders’ capital (net)units issued and outstanding Remarks(thousand yen) (Note 1)(units)Date
Description
Increase
Increase
Balance
Balance(Decrease)(Decrease)
Capital increase throughMar. 11, 2019
21,928,467
22,028,467
227,238
228,238 (Note 2)
public offering
Capital increase throughApr. 10, 2019
1,096,433
23,124,900
11,362
239,600 (Note 3)
third-party allotment
Capital increase throughSept. 2, 201912,777,138
35,902,038
111,619
351,219 (Note 4)
public offering
Capital increase throughSept. 26, 2019
638,862
36,540,901
5,581
356,800 (Note 5)
third-party allotment
Capital increase throughSept. 1, 2021
12,287,452
48,828,353
105,047
461,847 (Note 6)
public offering
Capital increase throughSept. 29, 2021
614,33149,442,685
5,252
467,099 (Note 7)
third-party allotment
Cash distribution in
Nov. 22, 2021
excess of earnings(7,136)49,435,549
467,099 (Note 8)(contribution refund)(Note 1) The amount obtained by subtracting the deduction from unitholders’ capital from unitholders’ capital.
(Note 2) New investment units were issued through public offering at an issue price of 100,000 yen (paid-in amount of 96,500 yen) per unit for the
purpose of procuring funds for acquisition of new properties.
(Note 3) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in
amount of 96,500 yen per unit.
(Note 4) New investment units were issued through public offering at an issue price of 118,734 yen (paid-in amount of 114,471 yen) per unit for the
purpose of procuring funds for acquisition of new properties.
(Note 5) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in
amount of 114,471 yen per unit.
(Note 6) New investment units were issued through public offering at an issue price of 121,327 yen (paid-in amount of 116,971 yen) per unit for the
purpose of procuring funds for acquisition of new properties.
(Note 7) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in
amount of 116,971 yen per unit.
(Note 8) A cash distribution in excess of earnings of 20 yen per unit (contribution refund that falls under distribution through the reduction inunitholders’ capital for tax purposes) as the cash distribution for the 5th fiscal period (ended August 2021) resolved at SANKEI REAL ESTATE’s
board of directors’ meeting held on October 15, 2021, and payment of the distribution commenced on November 22, 2021.

- 23 -

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)
3.

Reference Information(1) Information on Price of Assets Under Management, Etc.
i. Investment Status
9th fiscal period(as of Aug. 31, 2023)
Type of asset

Asset type

Geographic area
(Note 1)

10th fiscal period(as of Feb. 29, 2024)

Total amount
As a
Total amount
As a
held
percentage ofheldpercentage of(million yen) total assets (million yen) total assets(Note 2)(%) (Note 3)(Note 2)(%) (Note 3)

Greater Tokyo, Greater Osakaand Greater Nagoya
Cities designated by
Office buildings
government ordinance(excluding above), core cities
and major regional cities
Real estate
Greater Tokyo, Greater Osakaand Greater Nagoya
Core asset
Cities designated bygroup
government ordinance(excluding above), core cities
and major regional cities
Greater Tokyo, Greater Osakaand Greater Nagoya
Cities designated by
Office buildings
government ordinance(excluding above), core cities
and major regional cities
Greater Tokyo, Greater Osakaand Greater Nagoya
Core asset
Cities designated bygroup
government ordinance(excluding above), core cities
and major regional cities
Real estate intrust
Greater Tokyo, Greater Osakaand Greater Nagoya
Cities designated byHotelsgovernment ordinance(excluding above), core cities
and major regional cities
Greater Tokyo, Greater Osakaand Greater Nagoya
Logistics
Cities designated byfacilities
government ordinance(excluding above), core cities
and major regional cities
Subtotal
Deposits and other assets
Total assets

2,618

2.3

2,615

2.5

-

-

-

-

-

-

-

-

-

-

-

-

72,64664.7

38,87937.1

10,167

9.1

10,141

9.7

8,871

7.9

27,882

26.6

9,154

8.2

7,110

6.8

8,871

7.9

22,595

21.6

3,847

3.4

7,110

6.8

5,307

4.7

5,287

5.0

-

-

-

-

103,458
8,777

92.2
7.8

86,62918,173

82.7
17.3

112,235

100.0

104,802100.0(Note 1) “Greater Tokyo” refers to Tokyo, Kanagawa Prefecture, Saitama Prefecture and Chiba Prefecture.
The “Greater Osaka” refers to Osaka Prefecture, Hyogo Prefecture and Kyoto Prefecture, and is limited to ordinance-designated cities, corecities and major regional cities.
The “Greater Nagoya” refers to Aichi Prefecture, Gifu Prefecture and Mie Prefecture, and is limited to ordinance-designated cities, core cities
and major regional cities.
“Core cities” refers to cities with a population of 200,000 or more (excluding Greater Tokyo, Greater Osaka and Greater Nagoya, and other
cities designated by government ordinance).
“Major regional cities” are cities, towns and villages with a population of less than 200,000 that have been determined by the AssetManagement Company to have a certain level of demand for specific asset types.
(Note 2) “Total amount held” is based on the carrying amount (in the case of real estate and real estate in trust, the depreciated book value), rounded
down to the nearest million yen. Furthermore, the total amount held for real estate in trust with hotel as the asset type includes the bookvalue of movables incidental to hotels.
(Note 3) “As a percentage of total assets” is rounded to one decimal place.
(Note 4) These are stated based on the category after the change of the management guideline dated October 16, 2023. Accordingly, the “Totalamount held” and “As a percentage of total assets” for “SANKEILOGI Settsu,” which were listed in “Cities designated by government ordinance(excluding the above), core cities and major regional cities” in the previous period are shown in the “Greater Tokyo, Greater Osaka and Greater
Nagoya” for both the previous period and the current period.

- 24 -

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)
9th fiscal period(as of Aug. 31, 2023)

10th fiscal period(as of Feb. 29, 2024)

Total liabilities

As a percentage of total
assets(%) (Note 2)
61,67054.9

Total net assets
Total assets

50,565112,235

Amount(million yen) (Note 1)

45.1
100.0

As a percentage of total
assets(%) (Note 2)
54,32951.8

Amount(million yen) (Note 1)

50,473
104,802

48.2
100.0

(Note 1) The amounts of total liabilities, total net assets and total assets amounts are based on the carrying amount, rounded down to the nearest
million yen.
(Note 2) “As a percentage of total assets” is rounded to one decimal place.

- 25 -

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)
ii.

Investment Assets
As of February 29, 2024, the assets under management of SANKEI REAL ESTATE are as follows:(a)Portfolio List
The property name, location, acquisition price, investment ratio, book value and appraisal value of the Assets underManagement of SANKEI REAL ESTATE are as follows:
Acquisition priceBook value
Appraisal value(Note 1)
Property
Asset type
Property nameLocation(million yen)(million yen)numberPrice
Investment ratio(Note 2)
(Note 3)(million yen)(%)
Tokyo Sankei Building
A-1
Chiyoda-ku, Tokyo
2,509
2.9
2,615
2,560
(Note 4)S-GATE NIHONBASHIA-3
Chuo-ku, Tokyo
6,698
7.8
6,617
7,790
HONCHO (Note 4)

Officebuildings

A-4

S-GATE AKIHABARA

Chiyoda-ku, Tokyo

2,055

2.4

2,014

2,720

A-5

Hibiya Sankei Building

Chiyoda-ku, Tokyo

5,829

6.8

6,054

6,740

A-6

Hatchobori Sankei
Building

Chuo-ku, Tokyo

4,959

5.8

4,979

5,150

A-7

Toyo Park Building

Koto-ku, Tokyo

3,782

4.4

3,871

3,490

A-9

Omori Park Building

Ota-ku, Tokyo

5,400

6.3

5,474

5,260

A-10

S-GATE AKASAKA

Minato-ku, Tokyo

7,000

8.1

7,030

7,400

A-11

Miyazakidai Garden
Office

2,800

3.3

2,837

2,710

A-12

Hitachi Kyusyu Building

10,00011.6

10,141

10,300SubtotalCore asset
group

Miyamae-ku,
Kawasaki-shi,
Kanagawa
Sawara-ku,
Fukuoka-shi,
Fukuoka-

51,034

59.3

51,63654,120

B-1

Hotel Intergate Tokyo
KyobashiChuo-ku, Tokyo

8,961

10.4

8,844

9,360

B-2

Hotel Intergate
Hiroshima

Naka-ku,
Hiroshima-shi,
Hiroshima

3,990

4.6

3,821

4,200

B-3

SANKEILOGI Settsu

Settsu-shi, Osaka

5,242

6.1

5,287

5,550

Hotel Intergate Kyoto
Shijo Shinmachi
Hotel Intergate
Kanazawa
Grids Premium Hotel
Osaka Namba

Nakagyo-ku,
Kyoto-shi, Kyoto
Kanazawa-shi,Ishikawa
Naniwa-ku,
Osaka-shi, Osaka

5,800

6.7

5,867

5,890

3,250

3.8

3,288

3,290

7,800

9.1

7,883

7,870

B-4
B-5
B-6

Subtotal-

35,04340.7

34,99336,160Total-

86,077100.0

86,62990,280(Note 1) “Acquisition price” is the sale and purchase price of each real estate and trust beneficiary right stated in each sale and purchase agreement for theassets under management, rounded down to the nearest million yen. The sale and purchase prices do not include consumption tax, local consumption
tax and the various expenses required for the acquisition. “Investment ratio” is the proportion of the acquisition price of each asset under management
to the sum total amount of acquisition prices, rounded to one decimal place.
(Note 2) “Book value” is the depreciated book value for each asset under management as of February 29, 2024, rounded down to the nearest million yen.
(Note 3) “Appraisal value” is the appraisal value with an appraisal date of February 29, 2024, stated in each real estate appraisal report. The appraisal of each
asset under management is entrusted to Japan Real Estate Institute, The Tanizawa Sōgō Appraisal Co., Ltd. and Daiwa Real Estate Appraisal Co., Ltd.
(Note 4) The acquisition price, book value and appraisal are the figures equivalent to the co-ownership interest (2% for “Tokyo Sankei Building” and 51% for “SGATE NIHONBASHI-HONCHO”) held by SANKEI REAL ESTATE as of February 29, 2024.

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Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)(b)

Overview of Buildings and Leasing
The property name, construction completion, total rental revenue, lease and guarantee deposits, total leasable area, totalleased area and occupancy rate of the asset under management of SANKEI REAL ESTATE are as follows:
Lease and
Total rental
Total leasable
Total leased Occupancy
Construction
guarantee
Asset Property
revenue
area
area
rate
deposits
Property namecompletion(million yen)
(m2)
(m2)
(%)
type number(million yen)
(Note 1)
(Note 2)
(Note 4)(Note 5)(Note 6)(Note 3)
Tokyo Sankei
A-1
Sept. 28, 2000
10187
881.68880.12
99.8
Building (Note 7)
S-GATE
A-3 NIHONBASHIOct. 31, 2018
308
308
3,171.83
3,171.83
100.0
HONCHO (Note 7)
A-4 S-GATE AKIHABARA Sept. 29, 2017
111
111
1,681.55
1,435.18
85.3
Hibiya Sankei
June 25, 1992
375
303
3,439.61
3,439.61
100.0
A-5
Building
Hatchobori Sankei
OfficeSept. 1, 1965
310
262
5,594.90
5,594.90
100.0
A-6
Buildingbuildings
June 18, 1991
152
135
4,224.52
3,170.61
75.1
A-7 Toyo Park Building
A-9 Omori Park Building May 31, 1993
180
169
7,469.72
4,902.82
65.6
Not disclosed Not disclosed
A-10 S-GATE AKASAKA
July 31, 2015
3,308.10
3,308.10
100.0(Note 8)(Note 8)Miyazakidai Garden
A-11
Feb. 4, 1993
153
144
3,687.53
3,687.53
100.0
OfficeHitachi Kyusyu
Not disclosed Not disclosed
A-12
Feb. 29, 1996
26,513.33
26,513.33
100.0
Building(Note 8)(Note 8)Subtotal (average)
2,500
2,065
59,972.78
56,104.03
93.5
Hotel Intergate
Jan. 18, 2018
413
206
6,006.53
6,006.53
100.0
B-1
Tokyo Kyobashi
Hotel Intergate
Oct. 31, 2018
237
118
9,160.15
9,160.15
100.0
B-2
Hiroshima
Oct. 1, 2022
237
118
14,748.33
14,748.33
100.0
B-3 SANKEILOGI Settsu
Core
Hotel Intergate
asset
B-4 Kyoto Shijo
Nov. 30, 2017
237
148
6,029.40
6,029.40
100.0
group
Shinmachi
Hotel Intergate
B-5
Jan. 15, 2019149
93
5,177.73
5,177.73
100.0
Kanazawa
Grids Premium HotelNot disclosed
B-6
Jan. 12, 2021
45
4,353.79
4,353.79
100.0
Osaka Namba(Note 8)Subtotal (average)
1,455
731
45,475.93
45,475.93
100.0
Total (average)
3,956
2,796
105,448.71
101,579.96
96.3(Note 1) “Construction completion” indicates the date of new construction completion stated in the registry of the main building for each Asset underManagement. If there are multiple main buildings, the date of the oldest building stated in the registry is indicated.
(Note 2) “Total rental revenue” is the amount calculated by annualizing the monthly rent. (Only the rent for the rental accommodation, excluding usage fees forincidental parts such as warehouses that are not the main asset type, signboards, parking lots, etc., but including common service charges, etc. Free
rent and rent holidays (*1) will not be taken into consideration. As for rents that include floating rents in agreements with the tenants, the rents arecalculated without taking floating rents into consideration. Consumption tax, etc. are not included. The same shall apply hereinafter.) This is for thebuilding stated in the lease agreement for each Asset under Management effective as of February 29, 2024, rounded down to the nearest million yen.
The amount calculated by annualizing the monthly rent stated in the lease agreement concluded with the end tenant with respect to the portion in the
pass-through-type master lease agreement (*2) is indicated when a pass-through-type master lease agreement has been concluded for the Asset underManagement.
(*1) “Free rent” refers to measures temporarily reducing rent or other amounts for mainly tenants newly moving in which temporarily reduce costs
associated with moving so as to encourage them to move in. “Rent holiday” refers to an agreement on measures temporarily reducing rent orother amount on a regular or irregular basis for a certain period of time during a tenant’s period of occupancy. The same shall apply hereinafter.
Unless otherwise stated, calculations are made without taking free rent or rent holiday into consideration when calculating monthly rent, etc.
in this document.
(*2) “Pass-through-type master lease agreement” refers to master lease agreements that have no rent guarantee.
(Note 3) “Lease and guarantee deposits” is the total amount of lease and guarantee deposits under the lease agreement for each Asset under Management as
of February 29, 2024 (including the amount expected to be received under each lease agreement; in addition, lease and guarantee deposits pertaining
to attached parts such as warehouses, signboards and parking lots which are not the main asset types are not included) are rounded down to thenearest one million yen. The amount of lease deposits stated in the lease agreement concluded with the end tenant with respect to the portion in the
pass-through-type master lease agreement is indicated when a pass-through-type master lease agreement has been concluded for the Assets underManagement.
(Note 4) “Total leasable area” is the area (excluding area of incidental parts such as warehouses, signboards, parking lots, etc. that are not the main asset types)
expected to be leasable based on the lease agreement, drawing, etc. of the buildings for each asset under management as of February 29, 2024, rounded
down to two decimal places.
(Note 5) “Total leased area” is the total leased area (excluding area of incidental parts such as warehouses, signboards, parking lots, etc. that are not the main
asset types) stated in the lease agreement (excluding lease agreements under which the lease period is yet to commence) for each asset undermanagement of February 29, 2024, rounded down to two decimal places. With respect to the portion which comes under the pass-through-type master
lease agreement, the total area for which the lease agreement has actually been concluded with the end tenant and for which the lease period hascommenced is indicated, rounded down to two decimal places.
(Note 6) “Occupancy rate” is the ratio of total leased area to total leasable area for each asset under management as of February 29, 2024, rounded to one
decimal place. Each subtotal and total portfolio column indicates the ratio of the total leased area to the total leasable area of each asset undermanagement, rounded to one decimal place.
(Note 7) The total rental revenue, lease and guarantee deposits, total leasable area and total leased area are the figures equivalent to the co-ownership interest(2% for “Tokyo Sankei Building” and 51% for “S-GATE NIHONBASHI-HONCHO”) held by SANKEI REAL ESTATE.
(Note 8) Not disclosed due to unavoidable circumstances in that it 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.

- 27 -

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)(c) Overview of Real Estate Appraisal Reports
The following is an overview of each real estate appraisal report prepared by Japan Real Estate Institute, The Tanizawa Sōgō
Appraisal Co., Ltd. and Daiwa Real Estate Appraisal Co., Ltd. upon being entrusted by SANKEI REAL ESTATE and the AssetManagement Company with regard to the appraisal of the assets under management of SANKEI REAL ESTATE. The
concerned real estate appraisal reports are the appraising appraisal company’s judgment and opinion at a certain point intime and are not a guarantee of the validity or accuracy of the content thereof, possibility of transaction at the concerned
appraisal value, etc. Furthermore, there is no special vested interest between Japan Real Estate Institute, The Tanizawa
Sōgō Appraisal Co., Ltd. or Daiwa Real Estate Appraisal Co., Ltd. and SANKEI REAL ESTATE or the Asset Management
Company.
Overview of appraisal report
Direct capitalization
DCF method
methodIndicated
Appraisalvalue by
Indicated
Indicated
Asset Property
value
Property nameAppraiser
cost
value
by
value
by
type
number(million yen)
Discount Terminal
approachincomeCap
rateincome(Note 1)rate
cap rate(million
approach(%)
approach
(%)
(%)
yen)
(million(millionyen)
yen)Tokyo Sankei
Japan Real
A-1
Building
2,560
2,600
2.3
2,520
2.0
2.4
2,750
Estate Institute(Note 2)S-GATENIHONBASHI- Japan Real
A-3
7,790
7,850
3.2
7,720
2.9
3.3
7,100
HONCHO
Estate Institute(Note 2)S-GATE
Japan Real
A-4
2,720
2,740
3.2
2,690
3.0
3.3
2,500
AKIHABARA
Estate InstituteHibiya Sankei Japan Real
A-5
6,740
6,830
2.8
6,650
2.6
2.9
7,160
Building
Estate Institute
OfficeHatchobori
The Tanizawa
A-6
5,150
5,230
4.1
5,110
4.2
4.3
5,770
buildings
Sankei Building Sōgō Appraisal
Toyo Park
Japan Real
A-7
3,490
3,540
3.6
3,430
3.4
3.7
3,040
Building
Estate Institute
Omori Park
Japan Real
A-9
5,260
5,350
3.7
5,160
3.5
3.8
5,610
Building
Estate Institute
S-GATE
Japan Real
A-10
7,400
7,490
3.1
7,300
2.9
3.2
6,750
AKASAKA
Estate InstituteMiyazakidai
Japan Real
A-11
2,710
2,730
4.5
2,680
4.3
4.6
2,330
Garden Office Estate InstituteHitachi Kyusyu Japan RealA-12
10,30010,400
4.2
10,2004.0
4.3
13,200
Building
Estate InstituteSubtotal
54,12054,76053,46056,210Hotel Intergate Daiwa Real
B-1
9,360
9,540
3.6
9,280
3.4
3.8
9,050
Tokyo Kyobashi Estate Appraisal
Hotel Intergate Japan Real
B-2
4,200
4,220
4.5
4,180
4.3
4.6
4,530
Hiroshima
Estate Institute
SANKEILOGIJapan Real
B-3
5,550
5,640
3.7
5,450
3.5
3.9
5,180
SettsuEstate InstituteCore
Hotel Intergate
assetJapan Real
B-4
Kyoto Shijo
5,890
5,950
3.9
5,830
3.7
4.0
5,550
group
Estate InstituteShinmachi
Hotel Intergate Japan Real
B-5
3,290
3,330
4.6
3,250
4.4
4.7
2,550
Kanazawa
Estate Institute
Grids Premium
Japan Real
B-6
Hotel Osaka
7,870
7,940
3.9
7,800
3.7
4.0
5,310
Estate Institute
Namba
Subtotal
36,16036,62035,79032,170Total
90,28091,38089,25088,380(Note 1) “Appraisal value” is the appraisal value with an appraisal date of February 29, 2024, stated in each real estate appraisal report.
(Note 2) The appraisal value, indicated value by income approach based on direct capitalization method, indicated value by income approach basedon the DCF method and indicated value by cost approach are the figures equivalent to the co-ownership interest (2% for “Tokyo Sankei
Building” and 51% for “S-GATE NIHONBASHI-HONCHO”) held by SANKEI REAL ESTATE.

- 28 -

Financial Results for the Fiscal Period Ended February 29, 2024 (REIT) Sankei Real Estate Inc. (2972)(2) Capital Expenditures for Real Estate Heldi. Schedule of Capital Expenditures
Of scheduled capital expenditures associated with renovation work, etc. currently planned for Assets under Management
held by SANKEI REAL ESTATE as of February 29, 2024, the major ones (10 million yen or more) are as follows: The estimatedconstruction costs below may include the portion separately charged to expenses in accounting.

Name of real estate, etc.
(Location)

Hibiya Sankei Building(Chiyoda-ku, Tokyo)
Hibiya Sankei Building(Chiyoda-ku, Tokyo)
Hibiya Sankei Building(Chiyoda-ku, Tokyo)
Hatchobori Sankei Building(Chuo-ku, Tokyo)
Omori Park Building(Ota-ku, Tokyo)
Omori Park Building(Ota-ku, Tokyo)
Miyazakidai Garden Office(Miyamae-ku, Kawasaki-shi)
Hitachi Kyusyu Building(Sawara-ku, Fukuoka-shi)
Hitachi Kyusyu Building(Sawara-ku, Fukuoka-shi)
Hitachi Kyusyu Building(Sawara-ku, Fukuoka-shi)ii.

Scheduled period

Replacement of SP pump andsurrounding valves
Air conditioner outdoor unit
update (11th floor)
Air Conditioning Outdoor Unit
Update (4th floor)
Waterproofing (Tower Houses,
Roofs, etc.)
Individual air conditioning
renovation work 1 floor
Absorption cold/hot water
generator control panel update
Waterproofing work (rooftop
and tower)

From: Mar. 1, 2024
To: Mar. 31, 2024
From: May 1, 2024
To: May 31, 2024
From: Nov. 1, 2024
To: Nov. 30, 2024
From: Dec. 1, 2024
To: Dec. 31, 2024
From: Dec. 1, 2024
To: Dec. 31, 2024
From: Feb. 1, 2025
To: Feb. 28, 2025
From: Dec. 1, 2024
To: Dec. 30, 2024
From: Nov. 1, 2024
To: Nov. 30, 2024
From: Nov. 1, 2024
To: Nov. 30, 2024
From: Dec. 1, 2024
To: Dec. 31, 2024

VCB replacement
Updating district heating andcooling cold water intake valves
Updating the district heating andcooling hot water intake valve

22

-

-

15

-

-

17

-

-

35

-

-

18

-

-

25

-

-

12

-

-

15

-

-

13

-

-

17

Capital Expenditures during the Period
Construction works falling under the category of capital expenditures of 10 million yen or more conducted in the fiscal period
under review for Assets under Management held by SANKEI REAL ESTATE as of February 29, 2024, are as follows: For the
fiscal period under review, capital expenditures amounted to 111 million yen and repair expenses separately charged to
expenses amounted to 76 million yen for a combined total of 188 million yen of construction works implemented.

Name of real estate, etc.
(Location)
Omori Park Building(Ota-ku, Tokyo)
Omori Park Building(Ota-ku, Tokyo)

iii.

PurposeExpected construction cost
(million yen)Amount of
Total
Total
payment
amountamountduringalready
periodpaid

PurposeAmount of payment(million yen)

PeriodDC Power Supply Body Update
Individual air conditioning
renovation work 1 floor

From: Sept. 1, 2023
To: Jan. 28, 2024
From: Sept. 1, 2023
To: Feb. 12, 2024

15
16

Other

79

Total

111

Cash Reserves for Long-Term Repair Plans
Based on long-term repair plans formulated on a property-by-property basis, SANKEI REAL ESTATE makes the following
provision of reserve for repairs from cash flows during the fiscal period for the purpose of allocating to medium- to long-term
future large-scale repairs and other funds.
(Unit: thousand yen)

Business period

6th fiscal period
From: Sept. 1, 2021
To: Feb. 28, 2022

7th fiscal period
From: Mar. 1, 2022
To: Aug. 31, 2022

8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023

9th fiscal period
From: Mar. 1, 2023
To: Aug. 31, 2023

10th fiscal period
From: Sept. 1, 2023
To: Feb. 29, 2024

Balance of reserve at
beginning of period

209,678

262,349

303,132

324,485

370,002

Provision of reserve
during period

85,56759,80159,801

72,811

78,124

Reversal of reserve
during period

32,89519,01938,44827,295

154,789

Reserve carriedforward262,349

303,132

324,485

370,002

293,338- 29 -