Sekisui House SI Residential Investment Corporation

Sekisui House SI Residential Investment Corporation

20thSemi-Annual Report
20th Fiscal Period(from April 1, 2015 to September 30, 2015)

Sekisui House SI Residential Investment Corporation

Sekisui House SI Residential Investment Corporation

Sekisui House SI Residential Investment Corporation (the Investment Corporation) is a J-REIT
investing in residential properties, with Sekisui House, Ltd. serving as the main sponsor.
Features of
the Investment Corporation
本投資法人の特徴

Collaborative Structure with the Sekisui House GroupThe Investment Corporation has established a collaborative structurewith the Sekisui House Group, the top manufacturer in the housing industry, which makes it possible to manage the investment properties overtheir life cycles from acquisition to operation and administration.
Planning

Development

Ownership

Operation

Administration

Residential Portfolio Focused on Greater Tokyo
that Has a Deep and Broad Demand Base
Investment Ratio of
Residential Properties

Asset Size
Total acquisition
price¥184.2billion

Number of owned
properties

107

properties

As of December 31, 2015

Ratio of residential
properties
Number of residential
properties

97.1
105

Investment Ratio of Greater
Tokyo for Residential Properties%

Ratio of Greater Tokyo forresidential properties

properties

Number of residential
properties in Greater Tokyo

As of December 31, 2015

72.6
71

%

properties

As of December 31, 2015

Portfolio of Relatively New Properties Achieving High Occupancy
Occupancy Ratio

Collaboration

with the Sekisui House Group

Entire portfolio

Sekiwa Real Estate GroupSekisui House, Ltd.

96.0

%

Residential
properties

As of November 30, 2015

Average Property Age

95.8

%

Entire portfolio

9.0

years

Residential
properties

As of December 31, 2015

8.9

years

Credit Ratings Based on Stable Financial Base
Collaboration forplanning and developing
rental housing

Collaboration as service
provider of operation andadministration as well as asupply source of properties

Feedback on supply anddemand information onrental housing

Sekisui House SI Asset Management Ltd.
Asset Management Company

Entrustment ofasset management

Sekisui House SI Residential Investment Corporation

1

Status of Credit Ratings
Feedback on mattersrelated to operation,
administration andsupply of properties

Japan Credit Rating Agency, Ltd. (JCR)(Long-term issuer rating)AA-

Rating and Investment Information, Inc. (R&I)(Stable)(Issuer rating)

As of December 31, 2015

A+
(Stable)Outline of Portfolio Development Policy
Invests in real estate-related assets that are mainly used as residences

Positions Greater Tokyo/Major Urban Areas as the focused investment area while conducting diversified investment in Greater
Tokyo/Other Urban Areas and Major Cities Nationwide
Invests in properties comprised of a variety of residential types,
primarily Single and Compact Type residences

2

Sekisui House SI Residential Investment Corporation

To Our Unitholders
Dear Investors,

Performance Highlights
Distribution per Unit

I would like to express our sincere gratitude for your continued and loyal patronage.
Sekisui House SI Residential Investment Corporation (the “Investment Corporation”) was listed on the Real
Estate Investment Trust Securities Market of Tokyo Stock Exchange, Inc. (the TSE J-REIT market) in July
2005. Since then, the Investment Corporation has steadily accumulated a track record of securing stableearnings and solid growth in its investment properties from a medium- to long-term perspective. As weentered our eleventh year in July 2015, we would like to express our gratitude to our unitholders for the
support they have extended us. Now, let me report on the business results of the Investment Corporation
for the fiscal period ended September 2015 (20th fiscal period).
The Investment Corporation makes it a basic strategy to build a portfolio that is centered on the high-quality
rental residential properties planned and developed by the Sekisui House Group, aiming to invest in realestate-related assets that are mainly used as residences. As for the existing retail properties, the Investment
Corporation will consider disposing them at the appropriate time while endeavoring to continue their stable
management.
In the fiscal period under review as well, under the aforementioned policy, the Investment Corporationacquired Granmast KANAZAWA NISHIIZUMI and Granmast UNOMORI from Sekiwa Real Estate Chubu, Ltd.,a Sekisui House Group company, in April, and Esty Maison TSUTSUJIGAOKA in May and Esty Maison
KOHOKU TSUNASHIMA in July, respectively, through proprietary property acquisition routes of the AssetManagement Company. Meanwhile, of the existing retail properties, we disposed part of RINKU HAGURAZAKI
Plaza (sokochi) in April and b-toss IKEBUKURO in June by accurately taking opportunities in the booming
real estate transaction market, both at a price higher than the book value and the appraisal value.

Osamu Minami
Executive Director, Sekisui House SI Residential
Investment Corporation
Consequently, the number of properties owned increased to 110 as of the end of the 20th fiscal period, with
President, Sekisui House SI Asset Management, Ltd. the asset size totaling 191.0 billion yen. The ratio of residential properties in the entire portfolio rose to93.0%. In terms of the occupancy ratio of the entire portfolio for the fiscal period, the period-end occupancy
ratio stood at 96.7% and the period average occupancy ratio was 96.2%, both maintaining high levels.

On the financial side, the Investment Corporation newly borrowed 4.6 billion yen in total to partly fund theacquisition of Granmast KANAZAWA NISHIIZUMI and Granmast UNOMORI in April and Esty Maison
KOHOKU TSUNASHIMA in July. It also made early repayment of loans totaling 3.1billion yen in May andJune by utilizing proceeds from the disposition of existing retail properties mentioned above, among othersources. As such, we continued our efforts to maintain a stable financial base.
As a result of these endeavors, the Investment Corporation posted an operating revenue of 6,411 million
yen, operating income of 2,743 million yen and net income of 2,209 million yen for the 20th fiscal period.
Furthermore, on October 1, 2015 or at the very beginning of the 21st fiscal period ending March 2016, theInvestment Corporation acquired MAST LIFE HINO, located in Hino City, Tokyo, from Sekiwa Real Estate,Ltd. The acquisition increased its number of owned properties to 111 and expanded the asset size to 192.3
billion yen as of November 16, 2015 (the announcement date of business results for the 20th fiscal period).
Going forward, we will continue striving to maximize unitholder value by building a portfolio that is centeredon the high-quality rental residential properties planned and developed by the Sekisui House Group, while
taking into account the distribution levels, with an aim to further increase earnings through expansion ofasset size. We appreciate your continued support as in the past.

Summary of Management Results for the 20th Fiscal Period Ended September 2015
Business Results and CashDistributions

Financing Activities

Settlement Date

Sept. 2013

Mar. 2014

Sept. 2014

Mar. 2015

Sept. 2015

Mar. 2016

Fiscal Period

16th FP

17th FP

18th FP

19th FP

20th FP

21st FP (Forecast)

Operating revenue (million yen)

4,688

4,952

5,591

6,286

6,411

6,429

Operating income (million yen)

2,179

2,242

2,463

2,814

2,743

2,683

Ordinary income (million yen)

1,684

1,767

1,952

2,305

2,211

2,161

Net income (million yen)

1,681

1,765

1,950

2,302

2,209

2,158

-

-

-

77

49

-

2,107 (10,537)

2,212 (11,062)

2,131（10,655）

2,185 (10,925)

2,122 (10,610)

2,120 (10,600)

Provision for reserve for reduction entry (million yen)
Cash distribution per unit (yen)(Note 1) The values of respective items in the “Mar. 2016 21st FP (Forecast)” column are the figures that reflect the revisions announced on November 30, 2015 to the management status forecast for the fiscal period ending March 2016. The actual
operating revenue, operating income, ordinary income, net income, provision for reserve for reduction entry and distribution per unit may be subject to change due to such factors as additional acquisitions or dispositions of real properties in
the future, changes in the real estate and other markets and changes in the asset management environment and other conditions surrounding the Investment Corporation. In addition, the Investment Corporation does not guarantee any
actual results or distribution amount in providing the forecast figures. Furthermore, the Investment Corporation executed a five-for-one split of its investment units on April 1, 2014. Taking into account the effect of the investment unit split,
the distribution per unit for the fiscal period ended March 2014 (17th fiscal period) and before represents the figure obtained by dividing the actual distribution per unit for each period (figure in parenthesis) by 5. For the fiscal period ended
September 2014 (18th fiscal period) and after, the figure in parentheses for each period indicates the value obtained by multiplying the actual distribution per unit or the forecast by 5. The same follows hereafter.
(Note 2) Distribution per unit for the fiscal period ended March 2015 (19th fiscal period) and the fiscal period ended September 2015 (20th fiscal period) is calculated based on the amount of unappropriated retained earnings less the provision forreserve for reduction entry of 77 million yen and 49 million yen respectively, divided by the number of investment units issued as of the end of each fiscal period.

Changes in Business Results● Operating Revenue / Net Income

Operating revenue

Net income(million yen)

(yen)

7,000

6,000

2,500

6,411

6,286
5,591

5,000

● Cash Distribution per Unit

（11,062）
2,212（10,925）
2,185（10,610）2,122

16th FP
17th FP
18th FP
19th FP(Sept. 30, 2013) (Mar. 31, 2014) (Sept. 30, 2014) (Mar. 31, 2015)

20th FP(Sept. 30, 2015)（10,537）
2,107（10,655）
2,131

2,000

4,952

4,688

1,500

4,000
3,000
2,000

1,681

1,765

1,950

2,302

2,209

1,000
500

1,000
0

16th FP
17th FP
18th FP
19th FP
20th FP(Sept. 30, 2013) (Mar. 31, 2014) (Sept. 30, 2014) (Mar. 31, 2015) (Sept. 30, 2015)

0

Table of Contents
22 Financial Section (Audited)
23 Financial Statements

3

To Our Unitholders

・Cash distribution per unit: ¥2,122 (up 0.1% over initial forecast)4

Performance Highlights

・Conducted new borrowings (¥4.6 billion in total) to fund the acquisition of 3 residential properties purchased in April andJuly 2015

5

Portfolio Management

・Conducted early repayment of loans totaling ¥3.1 billion in May and June 2015 by utilizing proceeds from disposition ofretail properties

6

Further Reinforcement of Financial Base

29 Notes to Financial Statements

7

CSR and Environmental Activities

49 Independent Auditor’s Report

9

Portfolio Map

・Acquired 4 residential properties, of which 2 were acquired through the property pipelines of the Sekisui House Group andthe other 2 by utilizing proprietary property acquisition routes of the Asset Management Company
・Disposed part of RINKU HAGURAZAKI Plaza (sokochi) as well as b-toss IKEBUKURO, both of which are retail properties, with
the intention of further reinforcing portfolio stability

3

Business Results and Distribution

・Operating revenue: ¥6,411 million, operating income: ¥2,743 million, net income: ¥2,209 million, provision for reserve for
reduction entry: ¥49 million

・Occupancy ratio (entire portfolio): 96.7% (at end of 20th fiscal period (September 30, 2015))
Portfolio Management Status¥2,12220th Fiscal Period Ended September 2015 Cash distribution per unit

11 Management Discussion and Analysis

I. Balance Sheet
II. Statement of Income and Retained Earnings
III. Statement of Changes in Net Assets
IV. Statement of Cash Distributions
V. Statement of Cash Flows

51 Overview of the Investment Corporation

and Asset Management Company
53 Unitholders Information

4Portfolio Management

Further Reinforcement of Financial BaseIn an effort to secure stable rental income, the Investment Corporation implements strategic leasing activities to suit the building and area
characteristics and other features of individual properties it owns, in coordination with property management companies centering on
Sekiwa Real Estate companies.

The Investment Corporation is promoting further reinforcement of its financial base through financial strategies such as reducing borrowing
costs and lengthening borrowing periods, given the credibility of Sekisui House, Ltd.

Stabilization of the Financial Base

Changes in Occupancy Ratio
In the first half of the 20th fiscal period, some properties showed lower occupancy. Nevertheless, as the Investment Corporation conducted agile
and flexible leasing activities, the occupancy ratio of the entire portfolio was 96.2% on average throughout the fiscal period and stood at 96.7% asof the end of the period (September 30, 2015), continuing to stay at high levels.

(%)
100

100.0

99.8

99.8

100.0

100.0

100.0

100.0

The Investment Corporation is working to maintain the ratio of fixed interest rates, the ratio of long-term borrowings and the average remaining periodof borrowings at current levels from the perspective of stabilizing its financial base.

89.4 %

Ratio of fixedinterest rates

End of the 20th period (September 30, 2015)

97.4
96.2
96.7
95

95.4

95.8

96.0

96.3

96.5

96.7

95.0

95.2

95.5

95.7

96.0

Residence

Retail property

End of Apr. 2015

End of May 2015

End of June 2015

End of July 2015

19th FP

Entire portfolio

End of Aug. 2015

平均借入残存期間（右軸）

Diversification status
by area
Diversification statusby property age
Diversification status
by walking distance to station
Diversification status
by floor area

1.00

1.56 %

1.47%

2.1 years

2.3 years

3.1 years

3.2 years

1.38 %

1.25 %

4.9 years

4.5 years

4.3 years 4.5
3.0

1.20 %

1.09 %

1.04 %

1.02%

1.5

19th FP(Mar. 31, 2015)

20th FP(Sept. 30, 2015)0■ Greater Tokyo/Major Urban Areas ■Greater Tokyo/Other Urban Areas ■Major Cities Nationwide (Classified according to the area where each property is located (based on the acquisition price))

27.4%

27.6%
Greater Tokyo

72.6 %

3.1%

0

27.4%
Greater Tokyo

69.5%
Of these,Tokyo’s 23 wards
64.1%

72.4 %

3.5%

Greater Tokyo

69.0%
Of these,Tokyo’s 23 wards
62.1%

72.6 %

4.2%

68.5%
Of these,Tokyo’s 23 wards
61.7%■Less than 5 years ■5 years to less than 10 years ■10 years or more (Classified according to the property age with December 31, 2015 as the reference date (based on the acquisition price))

9.9%

23.5%
Averageproperty age

8.8 years

9.6%

24.8%

9.6%

24.6%

Averageproperty age

66.6%

8.9 years

Averageproperty age

65.6%

8.9 years

65.9%

9.8%

10.0%

32.4%
Within10-minute walk

27.9%

90.2 %

0.7%
Average area
per unit

27.4%

29.9%

■ 30m2 to less than 50m2

25.3%

39.2 m2

9.9%

31.5%

Within10-minute walk

29.6%
■ 50m2 to less than 100m2

90.0 %

Within10-minute walk

29.0%

29.4%

26.3%

0.7%
Average area
per unit

46.6%

28.8%

27.1%

39.6 m2

26.3%

0.7%
Average area
per unit

45.9%
27.1%

32.0%

90.1 %■ 100m2 or more (Classified according to the area of each residential unit)

39.6 m2

13th FP(Mar. 31, 2012)

14th FP(Sept. 30, 2012)

45.9%(Note 1) “Average property age” is calculated by seeking the weighted average of the building age of each property (with December 31, 2015 set as the base date) with the investment ratio calculated based on the acquisition price,rounded down to the first decimal place.
(Note 2) “Average area per unit” is calculated based on the total leasable residential area of owned properties and the total number of rentable residential units as of each point of time, rounded down to the first decimal place.

15th FP(Mar. 31, 2013)

16th FP(Sept. 30, 2013)

17th FP
18th FP(Mar. 31, 2014) (Sept. 30, 2014)(Note) “Period-average borrowing cost rate” is calculated by using the formula below and is rounded to the second decimal place:
Period-average borrowing cost rate = Period borrowing cost (annualized) / Balance of period-average interest-bearing debt
Borrowing cost = Interest expenses + borrowing related expenses + interest expenses on investment corporation bonds

Status of Bank Formation
The Investment Corporation has promoted construction of the bank formation comprising 17 financial institutions centering on the 3 Japanese
megabanks, based on the credibility of Sekisui House, Ltd.
The borrowing status of the Investment Corporation as of September 30, 2015 is as follows.
Financial Institution■Within 3 minutes ■More than 3 minutes to within 5 minutes ■More than 5 minutes to within 10 minutes ■More than 10 minutes (Classified according to minutes-walk from station for each property (based on the acquisition price))■ Less than 30m2

54.2 years

2.00(Reference) Status of the Residential Portfolio
As of December 31, 2015
Residential portfolio (totaling 105 properties)

6.0 (year)

期中平均借入コスト率（左軸）Period-average borrowing cost rate (left axis)
Average remaining period of borrowings (right axis)

End of Sept. 2015

(Note) The occupancy ratio in the above graph indicates the ratio of total leased area to the total leasable area in each category for the properties of the corresponding category held by the Investment Corporation as of theend of each month from March 2015 to September 2015, rounded to the first decimal place.

End of 20th FP (Sept. 30, 2015)
Residential portfolio (totaling 104 properties)

End of the 20th period (September 30, 2015)

In the fiscal period under review, the Investment Corporation achieved a further decrease in the period-average borrowing cost rate as it reduced
borrowing related expenses on top of the lowered spread upon refinancing in the 19th fiscal period contributing throughout the 20th fiscal period.

20th FPEnd of 19th FP (Mar. 31, 2015)
Residential portfolio (totaling 100 properties)

End of the 20th period (September 30, 2015)(Note 1) “Ratio of fixed interest rates” includes the interest rates of borrowings that have been practically fixed by concluding interest rate swap agreements, and “ratio of long-term borrowings” includes current portion of long-term loans
payable within one year. The ratios are rounded to the first decimal place.
(Note 2) “Average remaining period of borrowings” is the remaining period of interest-bearing debt to the repayment dates weighted average by the balance of interest-bearing debt, and is rounded down to the first decimal place. The same
follows hereafter.

(%) 3.00
End of Mar. 2015

4.3 years

Average remaining
period of borrowings

Changes in Period-Average Borrowing Cost Rate and Average Remaining Period of Borrowings

Stable occupancy is maintained continuously
90

95.4 %

Ratio of long-termborrowings

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mizuho Trust & Banking Co., Ltd.
Sumitomo Mitsui Trust Bank, Limited
Mitsubishi UFJ Trust and Banking Corporation
Development Bank of Japan Inc.
The Norinchukin Bank
Resona Bank, Limited.
The Bank of Fukuoka, Ltd.
Aozora Bank, Ltd.
Shinkin Central BankThe Senshu Ikeda Bank, Ltd.
The 77 Bank, Ltd.
The Hiroshima Bank, Ltd.
The Yamaguchi Bank, Ltd.
The Shizuoka Bank, Ltd.
Total debt

Outstanding Balance(million yen)

16,226
16,066
11,000
6,030
6,000
5,842
5,141
4,152
3,950
2,200
2,000
1,500
1,200
1,200
1,200
1,200
1,200
86,109

Share
(%)

18.8
18.7
12.8
7.0
7.0
6.8
6.0
4.8
4.6
2.6
2.3
1.7
1.4
1.4
1.4
1.4
1.4
100.0

1.4
1.4
1.4
1.4

1.4
1.7
2.3
2.6

18.8
4.6
4.8
6.0

18.7

6.8
7.0
7.0

12.8
Unit：%

6

CSR and Environmental Activities
The Investment Corporation established its Environmental Basic Policy, Sustainability Policy and objectives in the 19th fiscal period ended March 2015. In the fiscal period under review, it implemented the following initiatives as well as acquired recognition from outside agencies.

Environmental Basic Policy
Based on theof Sekisui House, Ltd.,

Society

Considerand Conduct

Governancethe main sponsor of the Investment Corporation,

Replaced lighting equipment incommon areas with LED lamps

Replaced air-conditioning units in
exclusive areas with energy-saving units

Intended to reduce energy consumption andgreenhouse gas (CO2) emissions in common areas

Intended to reduce energy consumption andgreenhouse gas (CO2) emissions in exclusive areas

20th fiscal period ended September 2015

20th fiscal period ended September 2015

Additionallyimplemented atproperties

Additionallyimplemented atproperties in total

Replacement
completed at

Replacement
completed at

14■ Approx.

481,492kwh annual reduction in electricity usage forecast■ Approx.

■ Approx.

211 ton annual reduction in greenhouse gas emissions forecast■ Approx.

162

units in total

13% annual reduction per unit in electricity usage forecast

112kg annual reduction per unit in greenhouse gas emissions forecast

Intended to counter the depletion of resources througha reduction in water usage in common areas

Intended to introduce facilities to enable tenants to continue
living safely and securely in the event of a disaster, as wellas contributing to areas in which we own properties

Implementation
completed at

9168

locations inlocations in

The Investment Corporation acquired the highest “Green Star” rating in the 2015 Global Real Estate Sustainability Benchmark (“GRESB”) Survey to realestate companies, the first ever for a residential J-REIT. Furthermore, the Investment Corporation was selected as “Sector Leader” in Asia’s Residential
Sector (ranked first).

units

Installed vending machines
equipped for disaster relief

Additionallyimplemented atAssessment Model
The GRESB survey evaluates two dimensions, “Management and Policy,” with respect to consideration for the environment, society andgovernance, and “Implementation and Measurement,” with respect to actual effort. The result is divided into four categories (“Green Star,” “Green
Talk,” “Green Walk” and “Green Starter”) based on the GRESB evaluation model.
100

Green Talk

595

properties
properties in total

water pressure can lead to a reduction in water usage, a single flow
control valve is estimated to result in an approx. 30% reduction inwater usage.

Installed at

8

properties■ Installed vending machines which sell drinks in normal operations as

ordinary machines, can allow people to take drinks out easily andfree of charge during disasters and other emergencies.

The Investment Corporation

Europe average
50

Asia average
North America average

Assessment Points● Establishment of a policy for sustainability and management system of suchpolicy● Proactive implementation of measures
to mitigate environmental impact suchas energy-saving activities

Other average● Implementation of monitoring with anaim of enhancement of sustainability
performance

Green Starter0

20th fiscal period ended September 2015

Green Star
Australia &New Zealand average

GRESB average0■ Through the installation of flow control valves, which do not affect

7

100

Implemented installation of water-saving
equipment (flow control valves)

20th fiscal period ended September 2015

Provide high-quality residences through the J-REIT scheme

Global Real Estate Sustainability Benchmark (“GRESB”)

Case Studies of CSR and Environmental Activities

6

Realize a sustainable society

Real estate
investment
management

Management & Policy“Sustainability Vision”

Environment

Green Walk
50

Implementation & Measurement100● Establishment of a system of collaboration with stakeholders such as tenantsof properties

Overview of the Global Real Estate Sustainability Benchmark (“GRESB”)
The GRESB is a benchmark system for evaluating sustainability performance in the real estate sector, established in 2009 primarily by major
European pension fund groups, which played a major role in establishing the United Nations-backed Principles for Responsible Investment
Initiative, for the purpose of enhancing shareholder value by applying environmental, social and governance (ESG) considerations to real estate
investments. As of September 2015, 51 major institutional investors are GRESB members with total assets under management of approximately
732 trillion yen (approximately US$6.1 trillion [at a rate of 120 yen to the U.S. dollar]) and use GRESB in selecting investment objects anddiscussions with clients in which they invest.

8

Sekisui House SI Residential Investment Corporation

Portfolio Map
In order to mitigate the risks associated with unipolar concentration of the portfolio, including risks related to the local economy and earthquakes, theInvestment Corporation positions Greater Tokyo/Major Urban Areas as the focused investment area while conducting diversified investment in Greater
Tokyo/Other Urban Areas and Major Cities Nationwide.
Greater Tokyo/Major Urban Areas

Major Cities Nationwide (Osaka City)
Residence-20
Residence-23
Residence-28
Residence-29
Residence-41
Residence-59
Residence-60
Residence-72
Residence-73

Esty Maison KYOBASHI
Esty Maison MINAMIHORIE
Esty Maison JOTO
Esty Maison TSUKAMOTO
Esty Maison NISHINAKAJIMA
Prime Maison YUHIGAOKA
Prime Maison KITATANABE
Esty Maison KAWARAMACHI
Esty Maison NISHITENMA

Residence-1
Residence-3
Residence-4
Residence-5
Residence-6
Residence-8
Residence-10
Residence-12
Residence-14
Residence-15
Residence-16
Residence-17
Residence-19
Residence-21
Residence-22
Residence-24
Residence-25
Residence-26
Residence-27
Residence-30
Residence-31
Residence-33

Major Cities Nationwide (Fukuoka City)
Residence-35 Esty Maison TENJINHIGASHI I
Residence-36 Esty Maison TENJINHIGASHI II
Residence-46 Esty Maison HAKATAHIGASHI
Residence-47 Esty Maison KAMIGOFUKUResidence-55 MAST HAKATA
Residence-61 Prime Maison MOMOCHIHAMAResidence-67 Prime Maison TERIHA
Residence-93 Esty Maison YAKUIN
Residence-103 Prime Maison CENTRAL PARK

Esty Maison GINZA
Esty Maison AZABUNAGASAKA
Esty Maison EBISU II
Esty Maison EBISU
Esty Maison KANDA
Esty Maison KITASHINJUKU
Esty Maison ASAKUSA KOMAGATA
Esty Maison KAWASAKI
Esty Maison SHINKAWASAKI
Esty Maison YOKOHAMA
Esty Maison KAMEIDO
Esty Maison MEGURO
Esty Maison SUGAMO
Esty Maison MEGUROHONCHO
Esty Maison HAKURAKU
Esty Maison GOTANDA
Esty Maison OISENDAIZAKA
Esty Maison SHINAGAWA SEASIDE
Esty Maison MINAMIAZABU
Esty Maison KAWASAKI II
Esty Maison AZABUJUBAN
Esty Maison ITABASHIHONCHO

Residence-34
Residence-39
Residence-42
Residence-43
Residence-44
Residence-45
Residence-48
Residence-53
Residence-54
Residence-56
Residence-57
Residence-62
Residence-63
Residence-64
Residence-69
Residence-70
Residence-71
Residence-74
Residence-75
Residence-76
Residence-77
Residence-78

Esty Maison OIZUMIGAKUEN
Esty Maison HIGASHISHINAGAWA
Esty Maison ITABASHIKUYAKUSHOMAE
Esty Maison MUSASHIKOYAMA
Esty Maison SENDAGI
Esty Maison YOTSUYASAKAMACHI
Esty Maison SANGENJAYA
Esty Maison SANGENJAYA II
Esty Maison ITABASHI C6
Esty Maison KINSHICHO
Esty Maison MUSASHIKOGANEI
Esty Maison AKIHABARA
Esty Maison SASAZUKA
Prime Maison GINZA EAST
Esty Maison SENGOKU
Esty Maison DAIZAWA
Esty Maison TOGOSHI
Esty Maison SHIROKANEDAI
Esty Maison HIGASHISHINJUKU
Esty Maison MOTOAZABU
Esty Maison TORITSUDAIGAKU
Esty Maison MUSASHIKOYAMA II

Residence-79
Residence-80
Residence-81
Residence-82
Residence-83
Residence-84
Residence-85
Residence-86
Residence-87
Residence-88
Residence-89
Residence-90
Residence-91
Residence-94
Residence-95
Residence-98
Residence-99
Residence-104
Residence-105
Residence-106
Residence-110
Retail-4

Esty Maison NAKANO
Esty Maison SHINNAKANO
Esty Maison NAKANOFUJIMICHO
Esty Maison TETSUGAKUDO
Esty Maison KOENJI
Esty Maison OSHIAGE
Esty Maison AKABANE
Esty Maison OJI
Prime Maison WASEDA
Prime Maison HATCHOBORI
Prime Maison JINBOCHO
Prime Maison GOTENYAMA EAST
MAST LIFE AKIHABARA
Esty Maison KINSHICHO II
Esty Maison OJIMA
Prime Maison MORISHITA
Prime Maison SHINAGAWA
MAST LIFE YAHIRO
Prime Maison EBISU
Esty Maison SHIBAURA
Esty Maison KOHOKU TSUNASHIMA
b-town MINAMIAOYAMAGreater Tokyo/Other Urban Areas

Residence-11
Residence-18
Residence-40
Residence-50
Residence-109
Residence-111
Retail-5
Retail-8

Esty Maison MACHIDA
Esty Maison YACHIYO MIDORIGAOKA
Esty Maison HACHIOJIMINAMINO
Prime Maison MUSASHINONOMORI
Esty Maison TSUTSUJIGAOKAMAST LIFE HINO (Acquired in 21th FP)
KOJIMA × BIC CAMERA Kamifukuoka store(Disposed in 21st FP)(Note)
Joy Square YUGAWARA (Disposed in 21st FP)(Note) KOJIMA x BIC CAMERA Kamifukuoka store was formerly called KOJIMA NEW KAMIFUKUOKATEN but
the property name was changed to the present one as of June 22, 2015. The same follows hereafter.

Major Cities Nationwide (Nagoya City)
Residence-13
Residence-51
Residence-52
Residence-58
Residence-65
Residence-66
Residence-68
Residence-92
Residence-96
Residence-97

9Esty Maison IMAIKE
Prime Maison HIGASHISAKURA
Prime Maison KAYABAKOEN
Prime Maison GOKISO
Prime Maison TAKAMI
Prime Maison YADAMINAMI
Esty Maison HIGASHISHIRAKABE
Esty Maison AOIPrime Maison FUJIMIDAI
Esty Maison TSURUMAI

Major Cities Nationwide(Kyoto City, Sapporo City, Hamamatsu City and other areas)
Residence-37 Esty Maison SHIJONISHINOTOIN
Residence-100 Prime Maison ODORI KOEN
Residence-101 Prime Maison MINAMI 2-JO
Residence-102 Prime Maison KAMOKAMOGAWA
Residence-107 Granmast KANAZAWA NISHIIZUMIResidence-108 Granmast UNOMORIHAMAMATSU Plaza
Retail-1
RINKU HAGURAZAKI Plaza (Disposed in 21st FP)
Retail-3
Bell Plaza Shopping Center (Disposed in 21st FP)
Retail-910Sekisui House SI Residential Investment Corporation

Management Discussion and Analysis
Overview of Asset Management
1. Changes in Operating Results and Other Management Data
Fiscal Period
Accounting period
Operating revenue
Rent revenue - real estate
Operating expenses
Expenses related to rent business

2. Asset Management Status for the 20th Fiscal Period

18th Fiscal Period 19th Fiscal Period 20th Fiscal Period
17th Fiscal Period(April 1, 2015
(April 1, 2014
(October 1, 2014
(October 1, 2013
- March 31, 2014) - September 30, 2014) - March 31, 2015) - September 30, 2015)

Unit

16th Fiscal Period(April 1, 2013
- September 30, 2013)

mm yen

4,688

4,952

5,591

6,286

6,411

mm yen(4,683)(4,917)(5,591)(6,134)(6,330)mm yen

2,508

2,710

3,127

3,472

3,667

mm yen(2,066)(2,233)(2,560)(2,835)(2,975)

Operating income

mm yen

2,179

2,242

2,463

2,814

2,743

Ordinary income

mm yen

1,684

1,767

1,952

2,305

2,211

Sekisui House SI Residential Investment Corporation (the “Investment Corporation”) is an investment corporation sponsored by Sekisui House, Ltd. (“Sekisui House”), a
leading company in the housing industry, and Spring Investment Co., Ltd. (“Spring Investment”), an international fund manager, and has worked to establish a stableportfolio primarily comprising residential properties.
The Investment Corporation listed on the Real Estate Investment Trust Securities Market of Tokyo Stock Exchange, Inc. on July 28, 2005. Subsequently, as Sekisui Houseand Spring Investment were selected as new sponsors replacing the former sponsor, they acquired the outstanding shares of the asset management company to which
the Investment Corporation entrusts the management of its assets on March 8, 2010, with 75% equity interest held by Sekisui House and 25% by Spring Investment.
This firmly established a collaboration system with the two companies serving as joint sponsors for the Investment Corporation and the asset management company.
Later, at the Sixth General Meeting of Unitholders held on June 11, 2014, the Investment Corporation’s Articles of Incorporation was partially revised to remove retailproperties, which had previously been identified as a supplementary investment target, from its investment horizons and to solely invest in real estate related assets thatare mainly used (Note 1) as residences. At the same time, it was resolved to change the Investment Corporation’s trade name to Sekisui House SI Residential Investment
Corporation in order to strongly demonstrate the shift of its investment targets.

Net income(a)

mm yen

1,681

1,765

1,950

2,302

2,209

Total assets(b)

mm yen148,871

156,878

176,892

194,035

195,280%(+11.2)(+5.4)(+12.8)(+9.7)(+0.6)The Investment Corporation aims to become a leading company among REITs investing in residential properties by building a highly stable portfolio that is centered on
the high-quality rental residential properties developed by the Sekisui House Group (Note 2) as well as by working to reinforce its financial base, in an effort to maximize

mm yen69,97670,05981,01091,227

91,213the interests of its unitholders.

(Period-on-period variation)(c)

Net assets(Period-on-period variation)
Unitholder’s capital%(+18.2)(+0.1)(+15.6)(+12.6)(-0.0)

mm yen68,294

68,29479,05988,92588,925Investment units issued

(d)

units

159,605

159,605

915,240

1,018,110

1,018,110

Net assets per unit(c)/(d)yen

438,432(Note 5) 87,791

88,51289,60589,590Total cash distributions(e)

mm yen

1,681

1,765

1,950

2,224

2,160

Cash distribution per unit(e)/(d)yen

10,537

11,062

2,131

2,185

2,122

yen

(10,537)(11,062)(2,131)(2,185)(2,122)

Earnings distribution per unit

yen

(―)

(―)

(―)

(―)

(―)

%

1.2 (2.4)

1.2 (2.3)

1.2 (2.3)

1.2 (2.5)

1.1 (2.3)(Note 2)%2.6 (5.2)

2.5 (5.1)

2.6 (5.2)

2.7 (5.4)

2.4 (4.8)(c)/(b)

%

47.0

44.7

45.8

47.0

46.7

(2.8)

(-2.3)

(1.1)

(1.2)

(-0.3)(Note 3)

%

99.9

100.0

99.9

96.6

97.7

(Note 4)

properties

89

95

99

107

110

301,179.47

318,602.26

357,494.91

399,249.82

400,210.45

Distribution in excess of earnings per unit
Ordinary income to total assets(Note 2)Return on unitholders’ equity
Unitholders’ equity ratio(Period-on-period variation)
Distribution payout ratio[Other reference information]
Number of investment properties
Total leasable aream

2

(Note 4)

Period-end occupancy ratio
Depreciation
Capital expenditures
Leasing NOI (net operating income)(Note 2)

%

97.1

97.5

97.1

97.4

96.7

mm yen

1,018

1,073

1,252

1,369

1,431

mm yen

17

86

68

153

97

mm yen

3,636

3,757

4,283

4,669

4,786

(Note 1) Consumption tax is not included in operating revenue, etc.
(Note 2) The indicators are calculated by using the following methods. In addition, annualized figures in accordance with the number of management days are provided in the parenthesis in parallel.
Ordinary income to total assets

Ordinary income / Average total assets
Average total assets = (Period-beginning total assets + Period-end total assets) / 2

Return on unitholders’ equity

Net income / Average net assets
Average net assets = (Period-beginning net assets + Period-end net assets) / 2

Leasing NOI

Leasing income for the fiscal period (Rent revenue - real estate – Expenses related to rent business) + Depreciation(Note 3) Distribution payout ratio is calculated by using the following method, and is rounded down to the nearest specified unit.
Distribution per unit (excluding distribution in excess of earnings per unit) / Net income per unit
For the 16th, 18th and 19th fiscal periods, however, the following method is employed as the Investment Corporation issued new investment units in the periods.
Total cash distributions / Net income(Note 4) Number of investment properties indicates the number of properties that are considered to be single units respectively in light of common sense. In addition, the period-end occupancy ratio indicates the ratio of the total leased area to the total leasablearea as of the account closing date.
(Note 5) The Investment Corporation implemented a five-for-one split of its investment units with March 31, 2014 and April 1, 2014 as the record date and the effective date, respectively. Accordingly, net assets per unit have been calculated on the assumptionthat the split of investment units was conducted at the beginning of the 17th fiscal period. Furthermore, net assets per units for the 17th fiscal period stands at 438,957 yen when it is calculated without assuming that the split of investment units was
conducted at the beginning of the 17th fiscal period.

11(1) Brief History of the Investment Corporation(Note 1) “Mainly used” means that a majority of the total exclusive area of the relevant real estate-related asset is allocated for a specific use.
(Note 2) The Sekisui House Group refers to the group encompassing Sekisui House and its 194 subsidiaries and 20 affiliated companies (as of the end of July 2015).

(2) Investment Environment and Asset Management Results1) Operating Environment
During the 20th fiscal period, the Japanese economy presumably remained on course for a modest recovery, as witnessed by capital investment showing a moderate
upward trend in light of improved corporate earnings, etc. and by a steady improvement in the employment and income environments, although impacts of slowdown inemerging economies on Japan’s exports and production are observed.
Under these circumstances, the Tokyo Stock Exchange (TSE) REIT Index remained solid and generally within the range of 1,800 to 1,900 points through the end of June.
The figure dropped sharply in July and thereafter, however, as investors became more risk-averse due to the impact of the Greek debt problem and the Chinese stock
market plunge, among other reasons. Subsequently in September, the Index increased month-on-month for the first time in 5 months, given steady improvements
observed in the real estate fundamentals and long-term interest rates remaining stable at low levels. The figure marked the second consecutive month with an increase in
October, given the receding anticipation of a U.S. interest rate hike and other factors, and has remained solid thereafter.
As for the land price trend, the national average continued to show a downward trend both for residential land and commercial land, but the rate of decrease wasdecelerated, according to the government’s Prefectural Land Price Survey as of July 1, 2015. Presumably, the decelerating rate of decrease is a result of the market being
bolstered by housing demand encouraged by low interest rates and housing mortgage tax reduction and other measures, and also reflects such trends as a growing
willingness to invest in real estate in light of the favorable fund procurement environment resulting from the monetary easing measures.
By area, the average in the three major metropolitan areas (the Greater Tokyo, Osaka Area and Nagoya Area) indicates an increase at a higher rate in the commercial land
price and a continued rise in the residential land price, though at a mild pace. In these areas, land prices increased in slightly less than 70% of the surveyed sites forcommercial land and more than 40% for residential land, respectively. In regional areas, meanwhile, more than 70% of the surveyed sites showed a decrease in both theresidential land and commercial land prices. However, there was a larger number of sites with an increase or leveling-off. In particular, core regional cities demonstrated ahigher rate of price increase both for residential land and commercial land.
In terms of the demand trend for rental residential properties, the number of single-person households centering on young people is increasing in Greater Tokyo andsome major cities including government designated cities because of population inflow from other regions. In addition, there continue to be a decreased orientation forpossessing one’s own houses, primarily among young generations, due to changes of mind-sets such as turning away from buying their own homes as well as due tomore diversified lifestyles. Given these backgrounds, latent demand for rental residential properties remain solid, and rental condominiums featuring superior locations
and quality enjoy stable occupancy.
As for the supply trend for rental residential properties, supply has increased year-on-year for the 5 consecutive months until September as the impact of the drop
following the rush demand prior to the consumption tax rate hike in April 2014 has faded, according to the Statistics on Building Construction Starts (October 2015) by
the Ministry of Land, Infrastructure, Transport and Tourism. However, as the figure continues to remain at a low level, the supply and demand situation in the rental
residential properties market is believed to largely remain in good shape.
Meanwhile, according to the Monthly Report of Recent Economic and Financial Developments (November 2015) by the Bank of Japan, the labor supply and demandsituation demonstrated a clear improvement trend both for new opening ratio and effective opening-to-application ratio, and employee compensation also moderately
increased. Consumer spending has remained solid against the backdrop of a steady improvement in the employment and income environments. Accordingly, it isconsidered that rents for stores, which are influenced by private consumption trends, have been levelling off or recovering.

12

Sekisui House SI Residential Investment Corporation

2) Asset Management Results(3) Summary of Fund Procurement

A. Measures for maximizing the interests of unitholders

During the 20th fiscal period, the Investment Corporation newly borrowed 1,800 million yen in short-term loans payable (loan period: approximately 11 months) in April
2015 and 2,800 million yen in long-term loans payable in July 2015 (loan period: approximately a year and two months). On the other hand, the Investment Corporation
made early repayment of borrowings (3,100 million yen in total) in May and June 2015 by utilizing proceeds from dispositions of certain retail properties.

[Changes in the asset size]
The Investment Corporation started the 20th fiscal period with management of 107 properties it owned as of March 31, 2015, having total acquisition price of 188,771
million yen (excluding, however, miscellaneous acquisition related expenses, fixed property taxes, city planning taxes, consumption taxes and local consumption taxes;
the same follows hereafter). After acquiring two residential properties in April 2015, the Investment Corporation acquired a residential property in May and another in July
(total acquisition price of 5,301 million yen). On the other hand, it disposed part of a retail property in April 2015 and another retail property in June (total acquisition
price of 3,052 million yen). As a result, the properties owned by the Investment Corporation as of the end of the fiscal period under review totaled 110 properties (104residential properties and 6 retail properties), with the total acquisition price amounting to 191,020 million yen (177,579 million yen for residential properties and 13,441
million yen for retail properties).
The table below indicates the properties acquired or disposed during the 20th fiscal period.
<Newly acquired properties>
Property No.

Property Name

Location

Acquisition Price(million yen)

Acquisition Date

1,005

April 2, 2015

Residence-107

Granmast KANAZAWA NISHIIZUMI

Nishiizumi, Kanazawa-shi, Ishikawa

Residence-108

Granmast UNOMORIUnomori, Yokkaichi-shi, Mie745

April 2, 2015

Residence-109

Esty Maison TSUTSUJIGAOKA

Nishitsutsujigaoka, Chofu-shi, Tokyo871

May 14, 2015

Residence-110

Esty Maison KOHOKU TSUNASHIMA

Shin-yoshida Higashi, Kohoku-ku, Yokohama-shi,
Kanagawa

2,680

July 10, 2015

<Disposed properties>
Property No.

Property Name

Location

Disposition Price(million yen)

Disposition Date

Retail-3

RINKU HAGURAZAKI Plaza (land section for which
Tajiri-cho, Sennan-gun, Osaka, etc.
Kojima Co., Ltd. was the lessee)(Note)

1,150

April 28, 2015

Retail-7

b–toss IKEBUKURO

2,050

June 12, 2015

Nishiikebukuro, Toshima-ku, Tokyo(Note) RINKU HAGURAZAKI Plaza is a retail property comprised of three sections where Kohnan Shoji Co., Ltd., AEONTOWN Co., Ltd. and Kojima Co., Ltd. respectively have fixed-term land leasehold rights for business purposes as the lessees. These sections are
separated from each other by roads. Of RINKU HAGURAZAKI Plaza, the portion disposed in the 20th fiscal period represents the real estate trust beneficiary interest in the section where Kojima Co., Ltd. had fixed-term land leasehold rights for businesspurposes as the lessee as of the disposition date.

In addition, the Investment Corporation has been granted the following credit ratings as of December 31, 2015 in light of the stable financial base established throughthese endeavors.
Credit Rating Agency

Issuer Rating

Japan Credit Rating Agency, Ltd. (JCR)

Long-term issuer rating
AA- (Stable)

Rating and Investment Information, Inc. (R&I)

Issuer rating
A+ (Stable)(4) Summary of Business Results and Distributions
As a result of these management efforts, the Investment Corporation posted operating revenue of 6,411 million yen, operating income of 2,743 million yen after
deducting such operating expenses as outsourcing expenses, utilities expenses and asset management fees, ordinary income of 2,211 million yen and net income of
2,209 million yen in the 20th fiscal period.
Furthermore, the Investment Corporation decided to internally reserve part of the gain on sale of part of RINKU HAGURAZAKI Plaza (land section for which Kojima Co.,
Ltd. was the lessee) and b–toss IKEBUKURO as reserve for reduction entry by applying to the Special Measures in Case Land or Other Property is Acquired in Advancein 2009 or 2010 under Article 66-2 of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957; as amended) (the “Special Taxation Measures Act”).
Pursuant to this policy, the Investment Corporation decided to distribute the entire amount of the unappropriated retained earnings after deducting 49 million yen as theprovision for reserve for reduction entry, which is within the scope of application to Article 66-2 of the Special Taxation Measures Act, and excluding the fractions lessthan one yen per investment unit, with the aim of having the maximum amount of profit distributions deducted as expenses based on application of the special
provisions for taxation on investment corporations (Article 67-15 of the Special Taxation Measures Act).
As a result, the cash distribution per unit came to 2,122 yen for the 20th fiscal period.

3. Future Management Policies and Vital Issues[Building a residential portfolio centering on the property pipelines with the Sekisui House Group](1) Investment Environment

The Investment Corporation acquired two MAST Series properties from Sekiwa Real Estate Chubu, Ltd. in April 2015, while acquiring two properties in May and July
2015 through the proprietary routes of the asset management company. Moreover, the Investment Corporation disposed part of a retail property in April 2015 andanother retail property in June 2015. Through these series of initiatives, the Investment Corporation was able to further reinforce the stability of the earning base byenhancing the residential portfolio.

Looking ahead, the Japanese economy is expected to recover moderately, given the employment and income environments continuing to show an improvement as wellas various political measures proving effective, according to the Outlook for Economic Activity and Prices (October 2015) by the Bank of Japan. Exports are anticipatedto stay within a level-off range for some time but will subsequently rise gradually as emerging economies start to outgrow the slowdown. In terms of domestic demand,a virtuous cycle from income to spending will presumably keep running firmly in both the household and corporate sectors, as companies keep their proactive attitude
toward investment and consumer spending remains solid. However, attention must continue to be paid to the impact of the changes in the global monetary environment
including concerns about a slowdown in the Chinese economy and the trends of the U.S. monetary policy.

B. Implementation of Leasing Activities and Measures to Enhance Property Value
During the fiscal period, the Investment Corporation conducted leasing activities by paying attention to the trends in the surrounding rental markets in accordance withthe property locations, residential types and tenant classifications. At the same time, it took various measures aiming to enhance property values and tenant satisfaction.
Specifically, as measures to enhance leases, the Investment Corporation created added value by implementing renewals of aged and obsolete exclusive areas in a timely
manner and introducing new facilities intended for better amenities, and installed model rooms. Moreover, it endeavored to improve tenant satisfaction by investigating
the resident questionnaire results and fed back what can be improved to the relevant properties. Consequently, the occupancy ratio of the entire residential properties
stood at 96.0% as of the end of the 20th fiscal period. Moreover, while endeavoring to increase incidental revenue by such measures as installing mobile phone basestations at its properties and to keep the rent levels upon tenant replacement and contract renewals, the Investment Corporation proactively worked to raise rents formore competitive residential units, which started to produce results. The Investment Corporation also implemented measures that are not only environmentally friendly
but also helpful to reduce operational costs, such as introduction of LED lighting to common areas and installation of water-saving equipment.

In the real estate transaction market, the increase in real estate prices attributed to the expansion of the “quantitative and qualitative monetary easing” announced by the
Bank of Japan on October 31, 2014 will probably continue going forward, amid the intensifying competition over properties due to diversification of market participants
and the rents entering the upward phase. On the other hand, supply of new properties including high-quality rental residential properties, etc. is projected to remain at alow level over a medium term, primarily because of the increase in construction costs, among other factors. Accordingly, the expected investment return will presumably
continue to show a decreasing trend for some time, given that the acquisition environment will become even more difficult. Based on this view, the Investment
Corporation will conduct acquisitions and management of assets by carefully discerning the asset management environment in terms of the business and interest rate
trends, the supply and demand balance status and the orientations of domestic and foreign investors.

For retail properties, stable occupancy has been maintained from the beginning of the fiscal period, with the occupancy ratio of the entire retail properties standing at
100.0% as of September 30, 2015.

(2) Management Policy and Vital Issues

As a result of these endeavors, the occupancy ratio of the entire portfolio was 96.7% as of the end of the fiscal period under review.
Initiatives on CSR and Realizing a Sustainable Society
The Investment Corporation established its Environmental Basic Policy, Sustainability Policy and environmental targets in the 19th fiscal period ended March 2015. Basedon these policies, the Investment Corporation has promoted initiatives for energy-saving and environmental awareness in response to the requirements of the times
through such measures as enhancing energy efficiency of its owned properties and acquiring environmentally friendly properties. For such reasons, the Investment
Corporation has cooperated with Sekisui House, the main sponsor, which was the first in the housing industry to be recognized as an Eco-First Company by the Ministryof the Environment.
In addition, the Investment Corporation is working to obtain environmental recognition and certifications by external assessment institutions in order to grasp its positionin the environmental awareness initiatives and use them as references. Following the acquisition of DBJ Green Building Certification in the previous fiscal year for certain
buildings recognized as “Properties with exceptionally high environmental & social awareness” the Investment Corporation participated in the sustainability
responsiveness survey by the Global Real Estate Sustainability Benchmark (GRESB) (Note) of real estate business operators in the 20th fiscal period. As a result, it
acquired the highest “Green Star” ranking, the first ever for a residential J-REIT, and was selected as a “Sector Leader” in Asia’s Residential Sector (ranked first).
Going forward, the Investment Corporation will continue to further promote its initiatives on realizing a sustainable society, including measures to mitigate theenvironmental impact, with an aim to achieve its basic idea of “providing high-quality residences through the J-REIT scheme” and “creating affluent and fulfilling lifestyles.”(Note) The Global Real Estate Sustainability Benchmark (GRESB) is a benchmark system established in 2009 primarily by major European pension fund groups, which played a major role in establishing the United Nation-backed Principles for Responsible
Investment Initiative, with the aim of enhancing shareholder value by applying environmental, social and governance considerations to real estate investments.

13

As a result of the above, the Investment Corporation had the balance of interest-bearing debts standing at 100,609 million yen (4,650 million yen in short-term loans
payable, 81,459 million yen in long-term loans payable (including 6,350 million yen in current portion of long-term loans payable) and 14,500 million yen in investment
corporation bonds) as of September 30, 2015.

A. External Growth Strategy
With an aim to realize maximum value for its unitholders, the Investment Corporation endeavors to build a portfolio that centers on high-quality rental residential
properties planned and developed by the Sekisui House Group, for which Sekisui House, the main sponsor, serves as the core company.
In this endeavor, the Investment Corporation positions Greater Tokyo / Major Urban Areas as the focused investment area as well as the core area of its property portfolio,
while setting Greater Tokyo / Other Urban Areas as areas to achieve a risk distribution effect for the Greater Tokyo residential portfolio. Moreover, in order to mitigate the risk
associated with heavy concentration of the portfolio on Greater Tokyo, the Investment Corporation will work to diversify investments to a certain degree as it investigatesacquisitions of properties that allow expectations for stable rental demand, carefully selected from among properties located in major metropolitan areas and Major Cities
Nationwide by making the best use of the nationwide networks of the Sekisui House Group. As for the residential types as investment targets, the Investment Corporation
will invest primarily in properties comprised mainly of the Single and Compact Type residences for which relatively high rental demand and profitability can be expected, as
well as in properties comprised mainly of the Family Type residences for which stable earnings can be expected, giving due consideration to area characteristics. The
Investment Corporation will also selectively invest in properties comprised mainly of the Large Type residences after carefully analyzing site environments and such.
In terms of the property acquisition routes, the Investment Corporation will focus on utilizing the Sekisui House Group’s ability to supply properties, while also using
property information provided by Spring Investment, the co-sponsor, and endeavoring to acquire properties from outside sources by collecting property information
through the proprietary networks of the asset management company. Even in the real estate market where prices are soaring, the Investment Corporation will acquire
properties that it considers to contribute to enhancing its profitability, in view of the areas and property characteristics, while working to keep the yields at proper levels.
By doing so, the Investment Corporation will aim to steadily achieve expansion of the asset size centering on high-quality rental residential properties.
As for existing retail properties it owns, the Investment Corporation will investigate selling them as a rule, while making efforts to achieve their stable management incooperation with Sekisui House.

14

Sekisui House SI Residential Investment Corporation

B. Internal Growth Strategy

4. Significant Events Occurring after Settling the 20th Fiscal Period

The Investment Corporation will continue to implement various measures to enhance cash flows from its owned properties. For residential properties, it will conduct
large-scale repairs in a planned manner on top of building renovation and unit renewal work that it has been implementing at any time. At the same time, the Investment
Corporation will work to reinforce property competitiveness and reduce operational costs by continuously conducting such initiatives as replacement of common area
lighting to LED lamps. In addition, it will further strengthen coordination with the property management companies in an effort to enhance occupancy ratios and maintainand improve the contract renewal ratio. It will also focus on increasing rents upon concluding new contracts and renewing existing contracts with tenants, and on
obtaining key money upon concluding new contracts. Moreover, the Investment Corporation will aim to increase revenues by endeavoring to improve the occupancy
ratios of the parking lots at its properties.

The Investment Corporation conducted the following significant event after the end of the 20th fiscal period (September 30, 2015).

For properties it acquires from the Sekisui House Group, the Investment Corporation will, in principle, consign property management services to the Sekiwa Real EstateGroup (Note) companies that cover the areas in which the said properties are located, in order to improve the occupancy ratio and enhance the operational andadministrative efficiency through the synergy effect with the Sekisui House Group. Moreover, the Investment Corporation has gradually unified the property managementcompanies involved in the existing residential properties to the Sekiwa Real Estate companies. This is understood to have enabled the Investment Corporation to realize
tenant attraction and efficient administration by taking advantage of the Sekiwa Real Estate Group’s know-how on property management services, backed by the trackrecord of lease management for approximately 561,000 units throughout Japan (as of October 31, 2015), and its nationwide networks. Going forward, the Investment
Corporation will keep this policy in an aim to maintain and improve its medium- and long-term performance. Furthermore, in an effort to establish the brand, theInvestment Corporation is unifying the property name brands to “Esty Maison”, as a rule, for residential properties it acquired from other than the Sekisui House Group.
By doing so, and in combination with the “Prime Maison” brand for Sekisui House’s rental residential properties and the “MAST” series brand for the Sekiwa Real EstateGroup’s rental residential properties, the Investment Corporation will implement its comprehensive brand strategy to demonstrate the superior quality of its properties.
(Note) “Sekiwa Real Estate Group” represents a group of companies comprising, as the core, the Sekiwa Real Estate companies which are wholly-owned subsidiaries of Sekisui House and expanding nationwide presence in Japan, and their subsidiaries andaffiliates. Furthermore, the “Sekiwa Real Estate companies” refers to the seven companies of Sekiwa Real Estate, Ltd., Sekiwa Real Estate Kanto, Ltd., Sekiwa Real Estate Tohoku, Ltd., Sekiwa Real Estate Chubu, Ltd., Sekiwa Real Estate Kansai, Ltd.,
Sekiwa Real Estate Chugoku, Ltd. and Sekiwa Real Estate Kyushu, Ltd., which are wholly-owned subsidiaries of Sekisui House, Ltd. and the core companies of the real estate division of the Sekisui House Group.

<Summary of the Investment Corporation’s Major Brands>
Brand Name

Prime Maison

Disposition of Owned Properties
The Investment Corporation disposed the following assets as an inseparable transaction under special provisions.
[Four retail properties of RINKU HAGURAZAKI Plaza (Note 1), KOJIMA x BIC CAMERA Kamifukuoka store, Joy Square Yugawara and Bell Plaza Shopping Center]
Disposed assets:

Trust beneficiary interests in real estate

Disposition price:

8,500 million yen

Agreement execution date and disposition date:November 30, 2015

Buyer:– (Note 2)(Note 1) As described in (2) Investment Environment and Asset Management Results, 2) Asset Management Results, A. Measures for maximizing the interests of unitholders [Changes in the asset size], the Investment Corporation disposed part of the property on
April 28, 2015. The portion disposed as of November 30, 2015 represents the real estate trust beneficiary interest in the section where Kohnan Shoji Co., Ltd. and AEONTOWN Co., Ltd. respectively had fixed-term land leasehold rights for businesspurposes as the lessees as of the disposition date.
(Note 2) The buyers are not disclosed as consent on disclosure has not been obtained from the buyers.

(Reference Information)
A. New Asset Acquisition

Esty Maison

MAST Series

The Investment Corporation acquired the following property as of October 1, 2015.
Property No.
Residence-111

Logo type

Location(Note)

Property Name
MAST LIFE HINO

Shinmachi, Hino-shi, Tokyo

Acquisition Price(million yen)

Acquisition Date

1,290

October 1, 2015

(Note) The “Location” represents the indication in the registry of the building.

B. Borrowing of Funds
The Investment Corporation borrowed funds as follows in order to allocate them for acquiring real estate trust beneficiary interests and for other purposes

Explanation on brand

Brand of Sekisui House

Proprietary Brand of theInvestment Corporation

Brand of the Sekiwa Real
Estate Group

High-quality urban rental condominiums
planned and developed by Sekisui House byutilizing its know-how or in which it invests
in recognition of the value

As a rule, high-quality urban rental
condominiums the Investment Corporationacquired from outside the Sekisui HouseGroup

As a rule, high-quality rental residential
properties planned and developed by the
Sekiwa Real Estate companies, which
belong to the Sekisui House Group, or thosein which they own in recognition of the value

LenderDrawdown Date

Loan amount(million yen)

October 1, 2015

400

Mizuho Bank, Ltd.

400

Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

400

Total

1,200

Interest Rate

Fixed/
Floating

Repayment Date

Repayment
Method0.30500%(Note)

Floating

August 31, 2016

Lump-sum
repayment

Use

CollateralFunds forUnsecuredacquisition of realandestate beneficiary
unguaranteedinterest, etc.

(Note) The interest rate is applicable for the period from November 30, 2015 to December 30, 2015.

As for the retail properties, which are characterized by the fact that their earnings are impacted by the changes in the business climate and the competition environment
in surrounding areas, the Investment Corporation will maintain close communications with the tenants on a daily basis and promptly respond to problems that may
occur, in order to cope with such changes as soon as possible. By doing so, the Investment Corporation endeavors to maintain and enhance the value of the facilities.
(3) Financial Strategy, Etc.
For the loan-to-value ratio (LTV), which represents the ratio of the balance of borrowings, investment corporation bonds and interest-bearing lease and guarantee
deposits to the total of assets owned by the Investment Corporation, the Asset Management Guidelines of the asset management company sets the ceiling at 60%.
However, as the policy it has followed to date, the Investment Corporation makes it a basic rule to maintain LTV at a conservative level, with the lower half of the 50%
level as the target ceiling for the time being. Meanwhile, the Investment Corporation will investigate diversification of the fund procurement means and conduct fundprocurement through appropriate means, paying close attention to the market environment.

C. Early Repayment of Existing Borrowings
The Investment Corporation made early repayment of the following borrowings for the full amount as of December 7, 2015.
LenderDrawdown Date

Mizuho Bank, Ltd.

Loan amount(million yen)
950

Sumitomo Mitsui Banking Corporation

March 31, 2015

950

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

950

Mizuho Bank, Ltd.

600

Sumitomo Mitsui Banking Corporation

April 2, 2015

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

600

Development Bank of Japan Inc.
Mizuho Bank, Ltd.

600
2,000

May 9, 2011

Sumitomo Mitsui Banking Corporation

425
425

Mizuho Bank, Ltd.

200

Sumitomo Mitsui Banking Corporation

January 15, 2015200

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

300

Total

8,200

Interest Rate

Fixed/
Floating

Repayment Date

Repayment
Method0.30500%(Note)

Use

CollateralFunds foracquisition of realestate beneficiaryinterest, etc.

Floating
0.30500%(Note)
February 29, 2016

Lump-sum
repayment

1.57000%(Note)

Fixed

Funds forrepayment ofexistingborrowings

0.33000%(Note)

Floating

Funds foracquisition of realestate beneficiaryinterest, etc.

Unsecured
andunguaranteed(Note) The interest rates indicate the figures as of the early repayment date.

15

16

Sekisui House SI Residential Investment Corporation

5. Itemized Portfolio Assets
The following table provides details of the assets (real estate and trust beneficiary interests in real estate as major entrusted property, etc.) owned by the Investment
Corporation as of September 30, 2015.

Property Name

Location (residence indication)

Form of Ownership

Total Leasable
Floor Area(m2)

Estimated Valueat End of Period(Note 1)(million yen)Book Value(million yen)

Property Name

Location (residence indication)

Form of Ownership

Total Leasable
Floor Area(m2)

Estimated Valueat End of Period(Note 1)(million yen)Book Value(million yen)

Residence-1

Esty Maison GINZA

3-11-19 Ginza, Chuo-ku, Tokyo

Trust beneficiary interests

5,515.43

5,970

4,786

Residence-63

Esty Maison SASAZUKA

1-61-17 Sasazuka, Shibuya-ku, Tokyo

Trust beneficiary interests

3,701.70

3,060

2,810

Residence-3

Esty Maison AZABUNAGASAKA

5-13-12 Roppongi, Minato-ku, Tokyo

Trust beneficiary interests

2,019.10

1,660

1,632

Residence-64

Prime Maison GINZA EAST

1-2-1 Tsukiji, Chuo-ku, Tokyo

Trust beneficiary interests

6,177.20

5,740

5,085

Residence-4

Esty Maison EBISU II

4-13-1 Higashi, Shibuya-ku, Tokyo

Trust beneficiary interests

2,062.10

1,870

1,839

Residence-65

Prime Maison TAKAMI

2-6-7 Takami, Chikusa-ku, Nagoya-shi, Aichi

Trust beneficiary interests

2,016.79985

883

Residence-5

Esty Maison EBISU

1-13-4 Hiroo, Shibuya-ku, Tokyo

Trust beneficiary interests

781.02807

646

Residence-66

Prime Maison YADAMINAMI

3-11-7 Yadaminami, Higashi-ku, Nagoya-shi, Aichi

Trust beneficiary interests

2,168.59

768

696

Residence-6

Esty Maison KANDA

2-3-4 Kandata-cho, Chiyoda-ku, Tokyo

Trust beneficiary interests

1,706.54

1,460

1,239

Residence-67

Prime Maison TERIHA

1-3-7 Kashiiteriha, Higashi-ku, Fukuoka-Shi, Fukuoka

Trust beneficiary interests

6,728.20

1,240

1,078

Residence-8

Esty Maison KITASHINJUKU

1-28-17 Kita-Shinjuku, Shinjuku-ku, Tokyo

Trust beneficiary interests

1,881.19

1,460

1,184

Residence-68

Esty Maison HIGASHISHIRAKABE

3-9-36 Yoshino, Higashi-ku, Nagoya-shi, Aichi

Trust beneficiary interests

4,014.07

1,490

1,307

Residence-10

Esty Maison ASAKUSA KOMAGATA

1-10-9 Komagata, Taito-ku, Tokyo

Trust beneficiary interests

2,978.28

2,000

1,667

Residence-69

Esty Maison SENGOKU

4-6-17 Sengoku, Bunkyo-ku, Tokyo

Trust beneficiary interests

1,498.13

1,240

1,098

Residence-11

Esty Maison MACHIDA

2-1-17 Hara-machida, Machida-shi, Tokyo

Trust beneficiary interests

3,090.89

1,470

1,110

Residence-70

Esty Maison DAIZAWA

2-39-13 Daizawa, Setagaya-ku, Tokyo

Trust beneficiary interests

2,352.90

2,060

1,908

Residence-12

Esty Maison KAWASAKI

14-24 Ogawa-cho, Kawasaki-ku, Kawasaki-shi, Kanagawa

Trust beneficiary interests

3,741.01

2,320

1,858

Residence-71

Esty Maison TOGOSHI

1-25-5 Togoshi, Shinagawa-ku, Tokyo

Trust beneficiary interests

1,943.17

1,600

1,392

Residence-13

Esty Maison IMAIKE

3-12-28 Imaike, Chikusa-ku, Nagoya-shi, Aichi

Trust beneficiary interests

1,296.22

204

266

Residence-72

Esty Maison KAWARAMACHI

3-2-10 Kawaramachi, Chuo-ku, Osaka-shi, Osaka

Trust beneficiary interests

3,486.48

1,830

1,613

Residence-14

Esty Maison SHINKAWASAKI

1-4 Furuichiba, Saiwai-ku, Kawasaki-shi, Kanagawa

Trust beneficiary interests

3,737.47

1,190

941

Residence-73

Esty Maison NISHITENMA

5-15-3 Nishitenma, Kita-ku, Osaka-shi, Osaka

Trust beneficiary interests

2,877.90

1,610

1,416

Residence-15

Esty Maison YOKOHAMA

3-33-1 Tsuruya-cho, Kanagawa-ku, Yokohama-shi, Kanagawa

Trust beneficiary interests

2,823.73

2,060

1,935

Residence-74

Esty Maison SHIROKANEDAI

1-1-4 Kamiosaki, Shinagawa-ku, Tokyo

Trust beneficiary interests

2,675.11

2,230

1,982

Residence-16

Esty Maison KAMEIDO

6-57-11 Kameido, Koto-ku, Tokyo

Trust beneficiary interests

2,279.21

1,450

1,446

Residence-75

Esty Maison HIGASHISHINJUKU

6-22-5 Shinjuku, Shinjuku-ku, Tokyo

Trust beneficiary interests

1,889.50

1,520

1,381

Residence-17

Esty Maison MEGURO

2-10-12 Mita, Meguro-ku, Tokyo

Trust beneficiary interests

1,070.13

1,030

804

Residence-76

Esty Maison MOTOAZABU

3-6-6 Motoazabu, Minato-ku, Tokyo

Trust beneficiary interests

1,199.86

1,440

1,190

Residence-18

Esty Maison YACHIYO MIDORIGAOKA

1-2-8 Midorigaoka, Yachiyo-shi, Chiba

Trust beneficiary interests

4,815.26

1,140

1,185

Residence-77

Esty Maison TORITSUDAIGAKU

2-7-17 Tairamachi, Meguro-ku, Tokyo

Trust beneficiary interests

1,035.78804

744

Residence-19

Esty Maison SUGAMO

4-14-15 Sugamo, Toshima-ku, Tokyo

Trust beneficiary interests

2,619.17

1,580

1,470

Residence-78

Esty Maison MUSASHIKOYAMA II

3-11-4 Koyama, Shinagawa-ku, Tokyo

Trust beneficiary interests

1,073.59

957

856

Residence-20

Esty Maison KYOBASHI

2-7-10 Higashinoda-cho, Miyakojima-ku, Osaka-shi, Osaka

Trust beneficiary interests

4,613.04

2,770

2,366

Residence-79

Esty Maison NAKANO

5-48-2 Chuo, Nakano-ku, Tokyo

Trust beneficiary interests

2,023.72

1,720

1,561

Residence-21

Esty Maison MEGUROHONCHO

4-8-21 Megurohoncho, Meguro-ku, Tokyo

Trust beneficiary interests

1,656.02

1,050

1,130

Residence-80

Esty Maison SHINNAKANO

6-10-7 Honcho, Nakano-ku, Tokyo

Trust beneficiary interests

1,107.57

934

858

Residence-22

Esty Maison HAKURAKU

1-18-19 Rokkakubashi, Kanagawa-ku, Yokohama-shi, Kanagawa Trust beneficiary interests

1,285.83

855

731

Residence-81

Esty Maison NAKANOFUJIMICHO

5-13-1 Yayoicho, Nakano-ku, Tokyo

Trust beneficiary interests

1,299.60

940

876

Residence-23

Esty Maison MINAMIHORIE

2-12-10 Minamihorie, Nishi-ku, Osaka-shi, Osaka

Trust beneficiary interests

1,804.48

998

963

Residence-82

Esty Maison TETSUGAKUDO

2-12-15 Matsugaoka, Nakano-ku, Tokyo

Trust beneficiary interests

1,531.89

1,100

964

Residence-24

Esty Maison GOTANDA

7-7-2 Nishi-Gotanda, Shinagawa-ku, Tokyo

Trust beneficiary interests

3,871.15

2,830

2,787

Residence-83

Esty Maison KOENJI

5-25-26 Koenjiminami, Suginami-ku, Tokyo

Trust beneficiary interests

1,527.52

1,090

975

Residence-25

Esty Maison OISENDAIZAKA

5-9-10 Higashi-Oi, Shinagawa-ku, Tokyo

Trust beneficiary interests

2,979.85

2,540

2,254

Residence-84

Esty Maison OSHIAGE

5-11-5 Narihira, Sumida-ku, Tokyo

Trust beneficiary interests

3,180.90

2,300

1,973

Residence-26

Esty Maison SHINAGAWA SEASIDE

3-25-20 Higashi-Shinagawa, Shinagawa-ku, Tokyo, etc.

Trust beneficiary interests

2,602.30

2,010

2,008

Residence-85

Esty Maison AKABANE

2-39-5 Akabane, Kita-ku, Tokyo

Trust beneficiary interests

4,302.84

3,050

2,749

Residence-27

Esty Maison MINAMIAZABU

1-10-8 Minamiazabu, Minato-ku, Tokyo

Trust beneficiary interests

1,082.12

1,180

1,211

Residence-86

Esty Maison OJI

2-25-8 Oji, Kita-ku, Tokyo

Trust beneficiary interests

2,289.44

1,520

1,391

Residence-28

Esty Maison JOTO

2-11-8 Noe, Joto-ku, Osaka-shi, Osaka

Trust beneficiary interests

2,065.92954

993

Residence-87

Prime Maison WASEDA

544-11 Waseda Tsurumaki-cho, Shinjuku-ku, Tokyo

Trust beneficiary interests

1,650.66

1,490

1,276

Residence-29

Esty Maison TSUKAMOTO

2-13-5 Tsukamoto, Yodogawa-ku, Osaka-shi, Osaka

Trust beneficiary interests

2,321.04

1,050

1,135

Residence-88

Prime Maison HATCHOBORI

4-11-9 Hatchobori, Chuo-ku, Tokyo

Trust beneficiary interests

1,382.32

1,350

1,155

Residence-30

Esty Maison KAWASAKI II

12-4 Ogawa-cho, Kawasaki-ku, Kawasaki-shi, Kanagawa

Trust beneficiary interests

2,824.86

1,950

1,750

Residence-89

Prime Maison JINBOCHO

1-50-9 Kandajinbo-cho, Chiyoda-ku, Tokyo

Trust beneficiary interests

1,819.90

1,790

1,635

Residence-31

Esty Maison AZABUJUBAN

1-11-1 Azabujuban, Minato-ku, Tokyo

Trust beneficiary interests

1,755.31

2,610

2,618

Residence-90

Prime Maison GOTENYAMA EAST

6-6-33 Kitashinagawa, Shinagawa-ku, Tokyo

Trust beneficiary interests

2,512.91

2,570

2,127

Residence-33

Esty Maison ITABASHIHONCHO

14-14 Yamato-cho, Itabashi-ku, Tokyo

Trust beneficiary interests

1,274.49

943

927

Residence-91

MAST LIFE AKIHABARA

50-6 Kanda Sakumagashi, Chiyoda-ku, Tokyo

Trust beneficiary interests

803.36511

485

Residence-34

Esty Maison OIZUMIGAKUEN

2-12-15 Higashi-Oizumi, Nerima-ku, Tokyo

Trust beneficiary interests

1,362.36

823

807

Residence-92

Esty Maison AOI

1-14-20 Aoi, Higashi-ku, Nagoya-shi, Aichi

Trust beneficiary interests

4,809.68

2,320

2,164

Residence-35

Esty Maison TENJINHIGASHI I

4-3 Susaki-machi, Hakata-ku, Fukuoka-shi, Fukuoka

Trust beneficiary interests

1,058.82

389

391

Residence-93

Esty Maison YAKUIN

1-13-8 Hirao, Chuo-ku, Fukuoka-shi, Fukuoka

Trust beneficiary interests

5,213.51

2,260

2,089

Residence-36

Esty Maison TENJINHIGASHI II

6-12 Susaki-machi, Hakata-ku, Fukuoka-shi, Fukuoka

Trust beneficiary interests

1,943.72

718

736

Residence-94

Esty Maison KINSHICHO II

3-5-19 Kotobashi, Sumida-ku, Tokyo

Trust beneficiary interests

9,469.65

7,720

6,861

Residence-37

Esty Maison SHIJONISHINOTOIN

697 Myodenji-cho, Shijo-sagaru, Nishinotoin-dori, Shimogyo-ku, Kyoto-shi, Kyoto Trust beneficiary interests

2,261.28

1,140

1,312

Residence-95

Esty Maison OJIMA

5-32-5 Ojima, Koto-ku, Tokyo

Trust beneficiary interests

9,905.97

8,340

7,261

Residence-39

Esty Maison HIGASHISHINAGAWA

1-10-1 Higashi-Shinagawa, Shinagawa-ku, Tokyo

Trust beneficiary interests

2,936.72

2,370

2,479

Residence-96

Prime Maison FUJIMIDAI

1-25 Fujimidai, Chikusa-ku, Nagoya-shi, Aichi

Trust beneficiary interests

5,704.63

1,930

1,799

Residence-40

Esty Maison HACHIOJIMINAMINO

3-2-8 Nishikatakura, Hachioji-shi, Tokyo

Trust beneficiary interests

2,155.16855

903

Residence-97

Esty Maison TSURUMAI

2-20-1 Chiyoda, Naka-ku, Nagoya-shi, Aichi

Trust beneficiary interests

13,812.40

4,160

3,889

Residence-41

Esty Maison NISHINAKAJIMA

2-8-21 Higashinakajima, Higashiyodogawa-ku, Osaka-shi, Osaka Trust beneficiary interests

3,643.42

1,880

1,971

Residence-98

Prime Maison MORISHITA

3-6-4 Morishita, Koto-ku, Tokyo

Trust beneficiary interests

2,180.78

1,830

1,776

Residence-42

Esty Maison ITABASHIKUYAKUSHOMAE

2-46-11 Itabashi, Itabashi-ku, Tokyo

Trust beneficiary interests

3,915.81

2,540

2,519

Residence-99

Prime Maison SHINAGAWA

1-3-16 Kita-Shinagawa, Shinagawa-ku, Tokyo

Trust beneficiary interests

2,107.88

1,790

1,728

Residence-43

Esty Maison MUSASHIKOYAMA

3-1-7 Ebara, Shinagawa-ku, Tokyo

Trust beneficiary interests

1,176.78

1,050

963

Residence-100 Prime Maison ODORI KOEN

6-5-2 Odori-Nishi, Chuo-ku, Sapporo-shi, Hokkaido

Trust beneficiary interests

7,360.37

2,980

2,745

Residence-44

Esty Maison SENDAGI

3-49-1 Sendagi, Bunkyo-ku, Tokyo

Trust beneficiary interests

897.30709

724

Residence-101 Prime Maison MINAMI 2-JO

9-1-1 Minami 2jo Nishi, Chuo-ku, Sapporo-shi, Hokkaido

Trust beneficiary interests

6,019.09

1,780

1,528

Residence-45

Esty Maison YOTSUYASAKAMACHI

6-20 Yotsuyasakamachi, Shinjuku-ku, Tokyo

Trust beneficiary interests

2,453.17

1,990

2,222

Residence-102 Prime Maison KAMOKAMOGAWA

1-6-1 Minami 7jo Nishi, Chuo-ku, Sapporo-shi, Hokkaido

Trust beneficiary interests

4,102.08

1,160

1,011

Residence-46

Esty Maison HAKATAHIGASHI

7-2-80 Yoshizuka, Hakata-ku, Fukuoka-shi, Fukuoka

Trust beneficiary interests

9,106.08

2,440

2,071

Residence-103 Prime Maison CENTRAL PARK

4-2-5 Kashii Teriha, Higashi-ku, Fukuoka-shi, Fukuoka

Trust beneficiary interests

10,268.74

2,273

2,326

Residence-47

Esty Maison KAMIGOFUKU

13-3 Kamigofukumachi, Hakata-ku, Fukuoka-shi, Fukuoka

Trust beneficiary interests

2,261.91856

831

Residence-104 MAST LIFE YAHIRO

5-30-10 Yahiro, Sumida-ku, Tokyo

Trust beneficiary interests

3,409.16

1,770

1,729

Residence-48

Esty Maison SANGENJAYA

2-16-9 Sangenjaya, Setagaya-ku, Tokyo

Trust beneficiary interests

856.08840

850

Residence-105 Prime Maison EBISU

1-22-19 Ebisu, Shibuya-ku, Tokyo

Trust beneficiary interests

3,010.66

4,070

3,672

Residence-50

Prime Maison MUSASHINONOMORI

5-15-3 Josuihoncho, Kodaira-shi, Tokyo

Trust beneficiary interests

3,924.58

1,850

1,508

Residence-106 Esty Maison SHIBAURA

2-8-3 Shibaura, Minato-ku, Tokyo

Trust beneficiary interests

3,795.82

2,780

2,850

Residence-51

Prime Maison HIGASHISAKURA

2-10-14 Higashisakura, Higashi-ku, Nagoya-shi, Aichi

Trust beneficiary interests

3,118.11

1,400

1,070

Residence-107 Granmast KANAZAWA NISHIIZUMI

2-155-1 Nishiizumi, Kanazawa-shi, Ishikawa

Trust beneficiary interests

4,634.50

1,050

1,069

Residence-52

Prime Maison KAYABAKOEN

2-7-13 Kayaba, Chikusa-ku, Nagoya-shi, Aichi

Trust beneficiary interests

2,163.98

756

611

Residence-108 Granmast UNOMORI

1-6-7 Unomori, Yokkaichi-shi, Mie

Trust beneficiary interests

2,280.00

771

788

Residence-53

Esty Maison SANGENJAYA II

3-11-6 Shimouma, Setagaya-ku, Tokyo

Trust beneficiary interests

894.64

819

683

Residence-109 Esty Maison TSUTSUJIGAOKA

1-14-19 Nishitsutsujigaoka, Chofu-shi, Tokyo, etc.

Trust beneficiary interests

1,849.70

909

926

Residence-54

Esty Maison ITABASHI C6

32-16 Oyama-higashi-cho, Itabashi-ku, Tokyo

Trust beneficiary interests

4,036.66

2,430

2,160

Residence-55

MAST HAKATA

4-22-25 Hakata Ekimae, Hakata-ku, Fukuoka-shi, Fukuoka

Trust beneficiary interests

9,614.80

2,380

1,853

Residence-110 Esty Maison KOHOKU TSUNASHIMA

8-45-25 Shin-yoshida Higashi, Kohoku-ku, Yokohama-shi,
Trust beneficiary interests
Kanagawa, etc.

6,867.48

2,708

2,882

Residence-56

Esty Maison KINSHICHO

1-1-8 Kinshi, Sumida-ku, Tokyo

Trust beneficiary interests

1,611.54

1,230

1,057

Residence-57

Esty Maison MUSASHIKOGANEI

2-6-5 Honcho, Koganei-shi, Tokyo

Trust beneficiary interests

2,275.24

1,630

1,470

Residence-58

Prime Maison GOKISO

2-17-2 Ayuchitori, Showa-ku, Nagoya-shi, Aichi

Trust beneficiary interests

4,427.65

1,820

1,579

Residence-59

Prime Maison YUHIGAOKA

5-4-13 Ueshio, Tennoji-ku, Osaka-shi, Osaka

Trust beneficiary interests

2,040.35

904

780

Residence-60

Prime Maison KITATANABE

4-9-17 Kitatanabe, Higashisumiyoshi-ku, Osaka-shi, Osaka

Trust beneficiary interests

1,798.97

594

Residence-61

Prime Maison MOMOCHIHAMA

3-9-1 Momochihama, Sawara-ku Fukuoka-shi, Fukuoka

Trust beneficiary interests

7,514.76

1,970

Residence-62

Esty Maison AKIHABARA

3-4-2 Ueno, Taito-ku, Tokyo

Trust beneficiary interests

2,324.65

1,860

1,533

Residence subtotal

331,401.40

189,194

172,889

Retail-1

HAMAMATSU Plaza (Note 2)1020-1 Kaminishi-cho, Higashi-ku, Hamamatsu-shi, Shizuoka, etc.

Trust beneficiary interests

14,117.13

2,440

3,631

Retail-3

RINKU HAGURAZAKI Plaza

605-1 Kashoji Tajiri-cho, Sennan-gun, Osaka, etc.

Trust beneficiary interests

39,931.54

4,010

3,653

Retail-4

b-town MINAMIAOYAMA

3-6-7 Minamiaoyama, Minato-ku, Tokyo

Trust beneficiary interests

769.93

1,140

1,501

519

Retail-5

KOJIMA × BIC CAMERA Kamifukuoka store 5-10-18 Kamifukuoka, Fujimino-shi, Saitama

Trust beneficiary interests

3,413.40

1,140

1,247

1,799

Retail-8

Joy Square YUGAWARA

1-1617-54 Chuo, Yugawaramachi, Ashigarashimo-gun,Trust beneficiary interests
Kanagawa

4,404.35

1,580

1,702

Retail-9

Bell Plaza Shopping Center

1647-7 Nakamaruko, Ueda-shi, Nagano, etc.

6,172.70

1,190

1,375

Other real estate in trust (Retail property) subtotal

Trust beneficiary interests

68,809.05

11,50013,113

Total

400,210.45

200,694

186,002(Note 1) The “Estimated Value at End of Period” indicates either the appraisal value or survey value by real estate appraisers with September 30, 2015 as the date of appraisal.
(Note 2) The real estate in trust is quasi-co-owned, and the figure represents the value obtained by multiplying the “leasable floor area” of the facility by 49%, which is the quasi-co-ownership interest of the Investment Corporation.

17

18

Sekisui House SI Residential Investment Corporation

6. Changes in Rental Business Results
The following table provides changes in rental business results for each property in which the Investment Corporation has invested.
19th Fiscal Period (Oct. 1, 2014 – Mar. 31, 2015)
Property Name

Occupancy
Rental Revenue
Number ofthroughout
Tenants at End Ratio at End of
PeriodPeriodof Period(Note 2) (%)(Note 1)(million yen)

Ratio to Total
RentalRevenues(%)

Occupancy
Number of
Rental Revenue
Tenants at End Ratio at End of
throughout
Periodof Period
Period(Note 2) (%)(Note 1)(million yen)

Ratio to Total
RentalRevenues(%)

Use Property No.

Property Name

Occupancy
Rental Revenue
Number ofthroughout
Tenants at End Ratio at End of
PeriodPeriodof Period(Note 2) (%)(Note 1)(million yen)

20th Fiscal Period (Apr. 1, 2015 – Sept. 30, 2015)

Ratio to Total
RentalRevenues(%)

Occupancy
Number of
Rental Revenue
Tenants at End Ratio at End of
throughout
Periodof Period
Period(Note 2) (%)(Note 1)(million yen)

Ratio to Total
RentalRevenues(%)

Esty Maison GINZA

1

100.0

177

2.9

1

97.6

173

2.7

Residence-65

Prime Maison TAKAMI

1

92.4

33

0.5

1

89.3

31

Residence-3

Esty Maison AZABUNAGASAKA

1

85.3

45

0.7

1

98.0

46

0.7

Residence-66

Prime Maison YADAMINAMI

1

96.2

27

0.4

1

95.7

27

0.4

Residence-4

Esty Maison EBISU II

1

95.7

56

0.9

1

83.8

50

0.8

Residence-67 Prime Maison TERIHA

1

100.0

51

0.8

1

100.0

51

0.8

Residence-5

Esty Maison EBISU

1

96.1

23

0.4

1

96.1

24

0.4

Residence-68 Esty Maison HIGASHISHIRAKABE

1

100.0

47

0.8

1

100.0

47

0.7

Residence-6

Esty Maison KANDA

1

100.0

45

0.7

1

93.2

44

0.7

Residence-69 Esty Maison SENGOKU

1

89.7

37

0.6

1

98.4

35

0.6

Residence-8

Esty Maison KITASHINJUKU

1

94.2

44

0.7

1

98.1

46

0.7

Residence-70 Esty Maison DAIZAWA

1

93.4

58

1.0

1

95.4

56

0.9

Residence-10

Esty Maison ASAKUSA KOMAGATA

1

96.5

63

1.0

1

95.6

64

1.0

Residence-71 Esty Maison TOGOSHI

1

98.9

48

0.8

1

100.0

49

0.8

Residence-11

Esty Maison MACHIDA

1

95.8

53

0.9

1

95.8

53

0.8

Residence-72 Esty Maison KAWARAMACHI

1

99.0

61

1.0

1

94.5

60

1.0

Residence-12

Esty Maison KAWASAKI

1

98.0

76

1.2

1

94.0

75

1.2

Residence-73 Esty Maison NISHITENMA

1

93.3

53

0.9

1

95.5

52

0.8

Residence-13

Esty Maison IMAIKE

1

96.9

15

0.3

1

91.4

14

0.2

Residence-74 Esty Maison SHIROKANEDAI

1

97.9

58

0.9

1

95.8

60

1.0

Residence-14

Esty Maison SHINKAWASAKI

1

100.0

32

0.5

1

100.0

32

0.5

Residence-75 Esty Maison HIGASHISHINJUKU

1

92.2

41

0.7

1

97.9

44

0.7

Residence-15

Esty Maison YOKOHAMA

1

100.0

62

1.0

1

100.0

65

1.0

Residence-76 Esty Maison MOTOAZABU

1

100.0

40

0.7

1

100.0

41

0.6

Residence-16

Esty Maison KAMEIDO

1

98.9

52

0.9

1

89.6

51

0.8

Residence-77 Esty Maison TORITSUDAIGAKU

1

93.5

23

0.4

1

87.1

22

0.4

Residence-17

Esty Maison MEGURO

1

91.8

29

0.5

1

97.5

30

0.5

Residence-78 Esty Maison MUSASHIKOYAMA II

1

100.0

29

0.5

1

100.0

30

0.5

Residence-18

Esty Maison YACHIYO MIDORIGAOKA

1

98.4

44

0.7

1

91.4

43

0.7

Residence-79 Esty Maison NAKANO

1

98.9

51

0.8

1

95.2

50

0.8

Residence-19

Esty Maison SUGAMO

1

94.7

48

0.8

1

92.5

47

0.7

Residence-80 Esty Maison SHINNAKANO

1

98.0

28

0.5

1

98.0

28

0.4

Residence-20

Esty Maison KYOBASHI

1

97.0

92

1.5

1

93.9

84

1.3

Residence-81 Esty Maison NAKANOFUJIMICHO

1

87.4

27

0.4

1

90.8

26

0.4

Residence-21

Esty Maison MEGUROHONCHO

1

96.9

32

0.5

1

89.8

32

0.5

Residence-82 Esty Maison TETSUGAKUDO

1

80.6

30

0.5

1

90.0

27

0.4

Residence-22

Esty Maison HAKURAKU

1

98.2

30

0.5

1

92.9

30

0.5

Residence-83 Esty Maison KOENJI

1

96.7

30

0.5

1

96.6

33

0.5

Residence-23

Esty Maison MINAMIHORIE

1

98.6

35

0.6

1

95.4

34

0.5

Residence-84 Esty Maison OSHIAGE

1

96.7

69

1.1

1

98.4

67

1.1

Residence-24

Esty Maison GOTANDA

1

96.0

92

1.5

1

91.3

90

1.4

Residence-85 Esty Maison AKABANE

1

98.8

96

1.6

1

100.0

93

1.5

Residence-25

Esty Maison OISENDAIZAKA

1

99.2

80

1.3

1

99.2

78

1.2

Residence-86 Esty Maison OJI

1

94.0

46

0.8

1

94.4

45

0.7

Residence-26

Esty Maison SHINAGAWA SEASIDE

1

98.2

64

1.1

1

91.1

63

1.0

Residence-87 Prime Maison WASEDA

1

97.6

42

0.7

1

98.5

43

0.7

Residence-27

Esty Maison MINAMIAZABU

1

98.1

35

0.6

1

98.1

35

0.6

Residence-28

Esty Maison JOTO

1

97.0

32

0.5

1

93.6

32

0.5

Residence-29

Esty Maison TSUKAMOTO

1

88.5

37

0.6

1

95.8

39

0.6

Residence-90 Prime Maison GOTENYAMA EAST

1

92.2

75

1.2

1

95.3

76

1.2

Residence-30

Esty Maison KAWASAKI II

1

96.1

67

1.1

1

93.5

61

1.0

Residence-91 MAST LIFE AKIHABARA

1

100.0

15

0.2

1

100.0

15

0.2

Residence-31

Esty Maison AZABUJUBAN

1

100.0

67

1.1

1

92.6

66

1.0

Residence-92 Esty Maison AOI

1

94.5

77

1.3

1

93.1

71

1.1

Residence-33

Esty Maison ITABASHIHONCHO

1

95.4

29

0.5

1

89.2

27

0.4

Residence-93 Esty Maison YAKUIN

1

96.7

74

1.2

1

96.9

72

1.1

Residence-34

Esty Maison OIZUMIGAKUEN

1

91.2

24

0.4

1

93.2

24

0.4

Residence-94 Esty Maison KINSHICHO II

1

95.2

210

3.4

1

96.5

214

3.4

Residence-35

Esty Maison TENJINHIGASHI I

1

97.8

15

0.3

1

93.5

15

0.2

Residence-95 Esty Maison OJIMA

1

98.8

239

3.9

1

98.9

238

3.8

Residence-36

Esty Maison TENJINHIGASHI II

1

98.8

27

0.4

1

95.1

28

0.4

Residence-96 Prime Maison FUJIMIDAI

1

88.7

68

1.1

1

92.4

67

1.1

Residence-37

Esty Maison SHIJONISHINOTOIN

1

97.8

46

0.8

1

95.6

40

0.6

Residence-97 Esty Maison TSURUMAI

1

100.0

155

2.5

1

100.0

155

2.5

Residence-39

Esty Maison HIGASHISHINAGAWA

1

97.6

72

1.2

1

92.3

68

1.1

Residence-98 Prime Maison MORISHITA

1

97.7

44

0.7

1

97.7

57

0.9

Residence-40

Esty Maison HACHIOJIMINAMINO

1

98.8

33

0.5

1

95.3

33

0.5

Residence-99 Prime Maison SHINAGAWA

1

97.3

42

0.7

1

96.0

54

0.9

Residence

Residence-1

0.5

Residence-88 Prime Maison HATCHOBORI

1

93.2

38

0.6

1

96.9

37

0.6

Residence-89 Prime Maison JINBOCHO

1

98.6

53

0.9

1

100.0

53

0.8

Residence-41

Esty Maison NISHINAKAJIMA

1

91.5

61

1.0

1

93.0

63

1.0

Residence-100 Prime Maison ODORI KOEN

1

94.1

93

1.5

1

90.9

108

1.7

Residence-42

Esty Maison ITABASHIKUYAKUSHOMAE

1

92.8

73

1.2

1

95.1

76

1.2

Residence-101 Prime Maison MINAMI 2-JO

1

98.3

52

0.9

1

100.0

64

1.0

Residence-43

Esty Maison MUSASHIKOYAMA

1

97.4

31

0.5

1

96.0

31

0.5

Residence-102 Prime Maison KAMOKAMOGAWA

1

98.0

35

0.6

1

97.4

45

0.7

Residence-44

Esty Maison SENDAGI

1

97.7

22

0.4

1

95.8

21

0.3

Residence-103 Prime Maison CENTRAL PARK

1

91.4

70

1.1

1

94.3

77

1.2

Residence-45

Esty Maison YOTSUYASAKAMACHI

1

98.1

54

0.9

1

96.7

58

0.9

Residence-104 MAST LIFE YAHIRO

1

100.0

45

0.7

1

100.0

56

0.9

Residence-46

Esty Maison HAKATAHIGASHI

1

98.9

85

1.4

1

94.7

84

1.3

Residence-105 Prime Maison EBISU

1

99.0

45

0.7

1

99.2

106

1.7

Residence-47

Esty Maison KAMIGOFUKU

1

97.0

28

0.5

1

92.5

28

0.4

Residence-106 Esty Maison SHIBAURA

1

95.8

0

0.0

1

91.6

77

1.2

Residence-48

Esty Maison SANGENJAYA

1

100.0

24

0.4

1

100.0

23

0.4

Residence-107 Granmast KANAZAWA NISHIIZUMI

-

-

-

-

1

100.0

40

0.6

Residence-50

Prime Maison MUSASHINONOMORI

1

97.6

63

1.0

1

96.4

62

1.0

Residence-108 Granmast UNOMORI

-

-

-

-

1

100.0

26

0.4

Residence-51

Prime Maison HIGASHISAKURA

1

97.3

53

0.9

1

95.8

51

0.8

Residence-109 Esty Maison TSUTSUJIGAOKA

-

-

-

-

1

92.3

19

0.3

Residence-52

Prime Maison KAYABAKOEN

1

100.0

29

0.5

1

92.4

28

0.4

Residence-110 Esty Maison KOHOKU TSUNASHIMA

-

-

-

-

1

100.0

36

0.6

Residence-53

Esty Maison SANGENJAYA II

1

100.0

23

0.4

1

91.2

23

0.4

Residence-54

Esty Maison ITABASHI C6

1

94.6

77

1.3

1

91.1

77

1.2

Residence-55

MAST HAKATA

1

100.0

93

1.5

1

100.0

93

1.5

Residence-56

Esty Maison KINSHICHO

1

97.3

35

0.6

1

97.2

35

0.6

Residence-57

Esty Maison MUSASHIKOGANEI

1

93.2

53

0.9

1

97.1

51

0.8

Residence-58

Prime Maison GOKISO

1

90.7

64

1.1

1

96.7

64

1.0

Residence-59

Prime Maison YUHIGAOKA

1

100.0

30

0.5

1

100.0

31

0.5

Residence-60

Prime Maison KITATANABE

1

100.0

23

0.4

1

91.4

21

0.3

Residence-61

Prime Maison MOMOCHIHAMA

1

100.0

68

1.1

1

100.0

69

1.1

Residence-62

Esty Maison AKIHABARA

1

100.0

55

0.9

1

97.5

56

0.9

Residence-63

Esty Maison SASAZUKA

1

97.8

91

1.5

1

88.2

86

1.4

Residence-64

Prime Maison GINZA EAST

1

97.3

165

2.7

1

96.3

162

2.6

Other Real Estate in Trust (Retail property)

Residence

Use Property No.

19th Fiscal Period (Oct. 1, 2014 – Mar. 31, 2015)

20th Fiscal Period (Apr. 1, 2015 – Sept. 30, 2015)

Residence subtotal

100

96.7

5,570

90.8

104

96.0

5,855

92.5

Retail-1

HAMAMATSU Plaza

4

100.0

100

1.6

4

100.0

90

1.4

Retail-3

RINKU HAGURAZAKI Plaza

3

100.0

182

3.0

2

100.0

151

2.4

Retail-4

b-town MINAMIAOYAMA

1

100.0

32

0.5

1

100.0

33

0.5

Retail-5

KOJIMA × BIC CAMERA Kamifukuoka store

1

100.0

48

0.8

1

100.0

40

0.6

Retail-7

b-toss IKEBUKURO

1

100.0

64

1.1

-

-

23

0.4

Retail-8

Joy Square YUGAWARA

1

100.0

80

1.3

1

100.0

79

1.3

Retail-9

Bell Plaza Shopping Center

1

100.0

54

0.9

1

100.0

54

0.9

12

100.0

564

9.2

10

100.0

474

7.5

112

97.4

6,134

100.0

114

96.7

6,330

100.0

Other real estate in trust (Retail property) subtotal
Total(Note 1) The “Number of Tenants” indicates the number of lessees (including master-lease companies) that are in direct lease agreement with the trustees for each asset already acquired as of the end of fiscal period. Furthermore, the “Master-lease
Company” represents the lessee that has concluded a lease agreement for the entire building with the Investment Corporation or the trustee for the purpose of subleasing the property to third parties.
(Note 2) Of the properties that are subleased by the lessees to sublessees, for those from which the Investment Corporation receives rents that may vary depending on the leasing status to the sublessees, the indicated occupancy ratio is based on theoccupancy status of the sublessees (the ratio of the leased floor area to the leasable floor area at the end of the relevant calculation period).

19

20

Sekisui House SI Residential Investment Corporation

7. Capital Expenditures in the 20th Fiscal Period
The following are the overview of works that fall under the category of the capital expenditures the Investment Corporation conducted in real estate in trust in
the 20th fiscal period. In addition, the capital expenditure for the fiscal period under review totaled 97 million yen. Combining this with the 171 million yen in
repair expenses, which were classified as expenses for the fiscal period, the Investment Corporation conducted construction of 268 million yen.
Real Estate Property Name (Location)

PurposeFinancial Section (Audited)

Expenditures(million yen)

PeriodEsty Maison TSURUMAI(Nagoya-shi, Aichi)

Renovation of exclusive areas

From: April 2015
To: September 201518

MAST HAKATA and other 5 properties(Fukuoka-shi, Fukuoka and others)

Installation of LEDs for the lighting equipment ofcommon areas

From: April 2015
To: May 201516

Others

63
Total

97

8. Transactions with Interested Parties, Etc.
(1) Transaction Status
Transaction Amount, Etc.

Category

Purchase Amount, Etc.

Sale Amount, Etc.

5,301,563 thousand yen

3,200,000 thousand yen

Sekiwa Real Estate Chubu, Ltd.

1,750,000 thousand yen (33.0%)- thousand yen (-%)

Total

1,750,000 thousand yen (33.0%)- thousand yen (-%)

Total Amount
Breakdown of Transactions with Interested Parties, Etc.

Contents(2) Amount of Fees, Etc.

Category

Property Management Fees

Brokerage Fees

Total Fees, Etc.
(A) (thousand yen)

443,530

128,922

Breakdown of Transactions with Interested Parties, Etc.
Paid Party

Paid Amount(B) (thousand yen)

Ratio to Total Amount(B/A) (%)

Sekiwa Real Estate Ltd.

213,704

48.2

Sekiwa Real Estate Chubu, Ltd.

52,620

11.9

Sekiwa Real Estate Kansai, Ltd.

25,262

5.7

Sekiwa Real Estate Kyushu, Ltd.

16,904

3.8

Sekiwa Real Estate Ltd.

70,49954.7

Sekiwa Real Estate Chubu, Ltd.

8,694

6.7

Sekiwa Real Estate Kansai, Ltd.

6,084

4.7

Sekiwa Real Estate Kyushu, Ltd.

2,292

1.8

Financial Statements
Balance Sheet
Statement of Income and Retained Earnings
Statement of Changes in Net Assets
Statement of Cash Distributions
Statement of Cash Flows
Notes to Financial Statements
Independent Auditor’s Report

23
25
26
27
28
29
49

(Note) Interested parties, etc. refers to the interested parties of the asset management company and is designated in Article 123 of the Enforcement Order of the Act on Investment Trusts and Investment Corporations and Article 26-1-27 of the regulation
on management reports in investment trusts and investment corporations of the Investment Trusts Association, Japan.

21

22Sekisui House SI Residential Investment Corporation

Financial Statements(1) Balance Sheet(Thousand yen)
19th Fiscal Period(As of March 31, 2015)
Assets2,941,105
5,128,664

3,141,338
4,969,752

Operating accounts receivable
Prepaid expenses

177,233
139,619

131,308
162,509

Deferred tax assets
Consumption taxes receivable

132
39,85256-

Other
Allowance for doubtful accounts

392(1,965)

2,272(1,092)

8,425,035

8,406,145

Total current assets

19th Fiscal Period(As of March 31, 2015)

20th Fiscal Period(As of September 30, 2015)

Liabilities
Current liabilities

Current assets
Cash and deposits
Cash and deposits in trust(Thousand yen)

20th Fiscal Period(As of September 30, 2015)

Operating accounts payable

413,818

256,5053,850,000
5,650,000

4,650,000
6,350,000

Accounts payable – other538,448

562,861

Accrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Other

58,0902,545
286,678
13,12855,361
1,476
38,632
290,336
5,851

10,812,711

12,211,025

14,500,000
75,109,500

14,500,000
75,109,500

Short-term loans payable
Current portion of long-term loans payable

Total current liabilities

Non-current assets

Non-current liabilities

Property, plant and equipment
Buildings in trust
Accumulated depreciation

91,755,319(11,426,535)

94,630,254(12,698,031)

Investment corporation bonds
Long-term loans payable

Buildings in trust, net

80,328,783

81,932,222

Tenant leasehold and security deposits in trust

2,385,824

2,247,305

709,720

760,950

Total non-current liabilities

91,995,324

91,856,805

Accumulated depreciation(161,054)(181,940)

102,808,035

104,067,831

Structures in trust, net

548,666

579,009

1,733,045(381,382)

1,769,631(443,633)

88,925,149

88,925,149

1,351,662

1,325,998

135,744(51,990)

171,783(62,591)-

77,988Structures in trust

Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation

83,753

109,192

Land in trust

Tools, furniture and fixtures in trust, net

102,216,751

101,906,410

Total property, plant and equipment

184,529,619

185,852,834

Leasehold rights in trust
Trademark rights
Other

152,037865
535

150,019511
201

Total intangible assets

153,438

150,732

Investments and other assets
Lease and guarantee deposits

235,667

242,672

Long-term prepaid expenses
Other

417,468
125,152

370,621130,382

Intangible assets

Total investments and other assets
Total non-current assets

778,288743,675

185,461,345

186,747,242

82,37967,202

74,833
52,699Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus
Voluntary retained earnings
Reserve for reduction entry
Total voluntary retained earnings
Unappropriated retained earnings
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets-

77,9882,302,778

2,209,951

2,302,778

2,287,939

91,227,928

91,213,089

91,227,928

91,213,089

194,035,963

195,280,920

See accompanying “Notes to the Financial Statements”.

Deferred assets
Investment corporation bond issuance costs
Investment unit issuance costs
Total deferred assets
Total assets

23

149,582

127,532

194,035,963

195,280,920

24Sekisui House SI Residential Investment Corporation(2) Statement of Income and Retained Earnings(3) Statement of Changes in Net Assets(Thousand yen)
20th Fiscal Period(April 1, 2015 –September 30, 2015)

19th Fiscal Period(October 1, 2014 –March 31, 2015)

19th fiscal period (from October 1, 2014 to March 31, 2015)(Thousand yen)
Unitholders’ equity

Operating revenue
Rent revenue - real estate
Gain on sales of real estate properties

6,134,681

6,330,724

152,133

81,031

6,286,815

6,411,756

2,835,075
417,097
14,751

2,975,490
458,937
15,90033,9403,600
467
167,141

36,2693,600
1,040
176,719

3,472,074

3,667,959

2,814,740

2,743,797

Interest income
Reversal of distributions payable

863
226

760
254

Interest on tax refund
Compensation income
Other

39
-

15
2,500
31

1,129

3,562

Interest expenses
Interest expenses on investment corporation

371,253
56,058389,72156,677bonds
Amortization of investment corporation bond

7,505

7,546

issuance costs
Borrowing related expenses
Amortization of investment unit issuance costs

62,345
13,54767,364
14,503108

109

510,820535,922

Ordinary income

2,305,049

2,211,437

Income before income taxes

2,305,049

2,211,437

Income taxes - current
Income taxes - deferred

2,721
(33)

1,630
76

Total income taxes

2,687

1,706

2,302,362

2,209,731

Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Directors’ compensations
Provision of allowance for doubtful accounts
Other operating expenses
Total operating expenses
Operating income
Non-operating income

Total non-operating income

Balance as of
October 1, 2014
Changes of items during
the fiscal period
Issuance of new
investment units
Distribution fromsurplus

Total non-operating expenses

Net income
Retained earnings brought forward

416

220

Unappropriated retained earnings

2,302,778

2,209,951

Unappropriatedretainedearnings

Total surplus

1,950,792

1,950,792

79,059,711

9,865,438

Total unitholders’ Total Net Assets
equity81,010,504

81,010,504

9,865,438

9,865,438(1,950,376)(1,950,376)(1,950,376)(1,950,376)

2,302,362

2,302,362

2,302,362

2,302,362

9,865,438

351,985

351,985

10,217,424

10,217,424

88,925,149

2,302,778

2,302,778

91,227,928

91,227,928

Net Income
Total changes of items
during the fiscal period
Balance as ofMarch 31, 2015

20th fiscal period (from April 1, 2015 to September 30, 2015)(Thousand yen)
Unitholders’ equity
Surplus
Unitholders’capitalNon-operating expenses

Other

Surplus

Unitholders’capitalBalance as ofApril 1, 2015
Changes of items during
the fiscal period
Provision for reserve
for reduction entry
Distribution fromsurplus88,925,149

Voluntary retained
earnings

Total
Unappropria
unitholders’
ted retained Total surplus
Reserve
Total
equityforvoluntary earnings
reduction retainedentry
earnings--

2,302,778

2,302,778

91,227,928

91,227,928

77,98877,988(77,988)---(2,224,570)(2,224,570)(2,224,570) (2,224,570)

2,209,731

2,209,731

2,209,731

2,209,731

Net Income
Total changes of items
during the fiscal period
Balance as of
September 30, 2015

Total Net
Assets-77,98877,988(92,827)(14,839)(14,839)(14,839)

88,925,149

77,98877,9882,209,951

2,287,939

91,213,089

91,213,089

See accompanying “Notes to the Financial Statements”.

See accompanying “Notes to the Financial Statements”.

25

26

Sekisui House SI Residential Investment Corporation(4) Statement of Cash Distributions(5) Statement of Cash Flows

19th Fiscal Period(October 1, 2014 – March 31, 2015)

20th Fiscal Period(April 1, 2015 – September 30, 2015)

I. Unappropriated retained earnings

2,302,778,596 yen

2,209,951,548 yen

II. Cash distributions

2,224,570,350 yen

2,160,429,420 yen(2,185 yen)

(2,122 yen)

Provision for reserve for reduction
entry

77,988,021 yen

49,435,695 yen

IV. Retained earnings carried forward

220,225 yen

86,433 yen

As provided in Article 34-1-2 of its
Articlesof
Incorporation,
theInvestment Corporation makes it a

As provided in Article 34-1-2 of its
Articlesof
Incorporation,
theInvestment Corporation makes it abasic policy to make cash distributions
in excess of the amount equivalent to
90% of the distributable income
amount as stipulated in Article 67-15 ofbasic policy to make cash distributions
in excess of the amount equivalent to
90% of the distributable income
amount as stipulated in Article 67-15 of

the Act on Special Measures
Concerning Taxation. Following thisthe Act on Special Measures
Concerning Taxation. Following thispolicy, and in consideration of the factthatindividual
unitholder
must
calculate the capital gains or losses forthe cash distributions in excess ofpolicy, and in consideration of the factthatindividual
unitholder
must
calculate the capital gains or losses forthe cash distributions in excess ofearnings

earnings

Item(Cash distributions per unit)
III. Voluntary retained earnings

Method for calculating cash
distributions

when

the

Investment

when

the

Investment

Corporation distributes cash in excessof earnings as stipulated in Article
34-1-4 of its Articles of Incorporation,
the Investment Corporation distributed

Corporation distributes cash in excessof earnings as stipulated in Article
34-1-4 of its Articles of Incorporation,
the Investment Corporation distributed

2,224,570,350 yen, which is the entire

2,160,429,420 yen, which is the entire

amount of the unappropriated retained
earnings after deducting the provision
for reserve for reduction entry, as
stipulated in Article 66-2 of the Act onamount of the unappropriated retained
earnings after deducting the provision
for reserve for reduction entry, as
stipulated in Article 66-2 of the Act on

SpecialMeasures
Concerning
Taxation, and excluding the fractions

SpecialMeasures
Concerning
Taxation, and excluding the fractions

less than one yen per investment unit.

less than one yen per investment unit.

(Thousand yen)
19th Fiscal Period(October 1, 2014 –March 31, 2015)

20th Fiscal Period(April 1, 2015 –September 30, 2015)

Cash flows from operating activities
Income before income taxes
Depreciation
Amortization of investment corporation bond issuance

2,305,049
1,370,428

2,211,437
1,431,514

7,505

7,546

13,547283

14,503(872)(863)
427,312(760)
446,398(32,197)
16,16629,234104,169

45,924(27,728)
39,852(96,361)

64,100(17,248)

49,596
38,632
3,657

1,013,276

3,050,207

costs
Amortization of investment unit issuance costs
Increase (decrease) in allowance for doubtful accounts
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in prepaid expenses
Decrease (increase) in consumption taxes receivable
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable - other

Increase (decrease) in accrued consumption taxes
Increase (decrease) in advances received
Decrease due to sale of property, plant and equipmentin trust
Decrease (increase) in long-term prepaid expenses
Other, net
Subtotal(94,576)

51,685639(9,412)5,206,827

7,255,821

863

760

Income taxes paid

(433,413)(2,255)(449,127)(2,699)Net cash provided by operating activities

4,772,022

6,804,754(19,664,034)(1,084)
257,606(5,888,720)
175,051(175,589)(313,570)(4,782)(12,234)(19,587,884)(6,039,473)

3,850,000(8,700,000)
18,150,000(6,650,000)

1,800,000(1,000,000)
2,800,000(2,100,000)

Dividends paid

9,819,679(1,949,232)(2,223,959)

Net cash provided by financing activities

14,520,447(723,959)

Interest income received
Interest expenses paid

Cash flows from investing activities
Purchase of property, plant and equipment in trust
Purchase of intangible assets
Proceeds from tenant leasehold and security deposits
in trust
Repayments of tenant leasehold and security deposits
in trust
Decrease (increase) in investments and other assets,
net
Net cash used in investing activities
Cash flows from financing activities
Proceeds from short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of investment units

Net increase (decrease) in cash and cash equivalents(295,414)

41,321

Cash and cash equivalents at the beginning of period

8,365,184

8,069,769

Cash and cash equivalents at the end of period

8,069,769

8,111,090

See accompanying “Notes to the Financial Statements”.

27

28

Sekisui House SI Residential Investment Corporation

Notes to Financial Statements
1. Organization
Sekisui House SI Residential Investment Corporation (the “Investment Corporation”) is a Japanese real estate
investment corporation established in April 2005 under the Act on Investment Trusts and Investment
Corporations (the “Investment Trusts Act”) and listed on the Tokyo Stock Exchange in July 2005. Since March
2010, it has been sponsored by Sekisui House, Ltd., a leading company in the housing industry, and Spring
Investment Co., Ltd., an international fund manager, and has worked to establish a stable portfolio primarily
comprising residential properties. In June 2014, the Investment Corporation changed its name to the present
one to demonstrate its new strategy of solely investing in real properties that are mainly used as residences
while removing retail properties, which had previously been identified as a supplementary investment target,from its investment horizons. The Investment Corporation is externally managed by a licensed asset
management company, Sekisui House SI Asset Management, Ltd.

2. Basis of Presentation
The Investment Corporation maintains its accounting records and prepares its financial statements inaccordance with accounting principles generally accepted in Japan (“Japanese GAAP”), including provisions
set forth in the Financial Instruments and Exchange Act, the Investment Trusts Act, the Companies Act and therelated regulations, which are different in certain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards.
The accompanying financial statements are basically a translation of the financial statements of the Investment
Corporation, which were prepared in accordance with Japanese GAAP and were presented in its Securities
Report filed with the Kanto Local Finance Bureau. In preparing the accompanying financial statements, certain
reclassifications and modifications have been made to the financial statements issued domestically in order topresent them in a format which is more familiar to readers outside Japan. In addition, the notes to financial
statements include certain information which might not be required under Japanese GAAP but is presented
herein as additional information.
The Investment Corporation’s fiscal period is a six-month period, which ends at the end of March and
September of each year. The Investment Corporation does not prepare consolidated financial statements as it
has no subsidiaries.
Unless otherwise specified, amounts have been rounded down to the nearest thousand yen in theaccompanying financial statements and the notes thereto. As a result, the total shown in the financial
statements and notes thereto do not necessarily agree with the sum of the individual account balances.

3. Summary of Significant Accounting Policies
1. Depreciation method for
non-current assets

2. Accounting for deferredassets29(1) Property, plant and equipment
Depreciation is calculated using the straight-line method.
The estimated useful lives of major property, plant and equipment are as
follows:
Buildings in trust3 – 66 years
Structures in trust3 – 36 years
Machinery and equipment in trust3 – 29 years
Tools, furniture and fixtures in trust2 – 15 years(2) Intangible assets
Intangible assets are amortized utilizing the straight-line method.
Leasehold rights in trust are amortized on a straight-line basis over theremaining life of each contract.
(1) Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized utilizing thestraight-line method over the redemption periods.
(2) Investment unit issuance costs
Investment unit issuance costs are amortized utilizing the straight-line
method (over 3 years).

3. Standards for recording
allowance

Allowance for doubtful accounts
For allowance for doubtful accounts against possible losses arising fromdefault on receivables, uncollectable amount is estimated and recorded
by investigating collectability on a case-by-case examination for doubtful
and other specific receivables.
4. Standards for recording
Accounting treatment of property taxes, etc.
Property taxes, city planning taxes and depreciable asset taxes
revenues and expenses(“property taxes, etc.”) assessed for the real estate owned by theInvestment Corporation are charged as expenses at an amountattributable to each fiscal period as expenses related to rent business.
Property taxes etc. that the Investment Corporation pays to the seller inconnection with purchase of real estate (including trust beneficiaryinterests in real estate as entrusted property) as they are deemed to be
attributable to the Investment Corporation are included in theacquisition cost of the acquired real estate, instead of expenses.
Property taxes, etc. capitalized as a part of the acquisition cost
amounted to 17,432 thousand yen for the 19th fiscal period and 25,707
thousand yen for the 20th fiscal period, respectively.
5. Method of hedge accounting (1) Method of hedge accounting
Special accounting is applied for interest rate swap transactions.
(2) Hedging instruments and hedged items
Hedging instrument: interest rate swap transactions
Hedged items: interest expenses on loans payable(3) Hedging policy
Based on its basic policy for risk management, the Investment
Corporation utilizes derivative transactions in order to hedge risks
designated in its Articles of Incorporation.
(4) Method for assessing the effectiveness of hedging
Assessment of the effectiveness of hedging is omitted as requirements
are satisfied for special accounting for interest rate swap transactions.
6. Scope of funds (cash and
The funds (cash and cash equivalents) in the statements of cash flows
cash equivalents) in theconsist of cash on hand and cash in trust; deposits that can be withdrawn atstatement of cash flows
any time and deposits in trust; and short-term investments with a maturity of 3
months or less from the date of acquisition, which are readily convertible tocash and bear only an insignificant risk of value fluctuation.
7. Other significant items(1) Accounting methods for trust beneficiary interests in real estate, etc. as
fundamental to preparing
entrusted property
the financial statements
Regarding trust beneficiary interests in real estate, etc. as entrusted
property, all asset and liability accounts of the entrusted properties aswell as all revenue and expense accounts generated by the entrusted
properties are recorded in relevant accounts on the balance sheet andstatement of income and retained earnings.
Furthermore, the following accounts are considered material and thusstated separately in the balance sheet related to entrusted properties
from the relevant accounts.
1) Cash and deposits in trust2) Buildings in trust, structures in trust, machinery and equipment intrust, tools, furniture and fixtures in trust and land in trust3) Leasehold rights in trust4) Tenant leasehold and security deposits in trust(2) Accounting for consumption taxes
National and local consumption taxes are excluded from the transaction
amounts. Non-deductible consumption taxes for acquisition of assets areincluded in the acquisition cost of each asset.

30

Sekisui House SI Residential Investment Corporation

4. Note to Balance Sheet

20th Fiscal Period (from April 1, 2015 to September 30, 2015)(Thousand yen)

Minimum total net assets designated in Article 67-4 of the Investment Trusts Act(Thousand yen)
19th Fiscal Period(As of March 31, 2015)

RINKU HAGURAZAKI Plaza (land20th Fiscal Period(As of September 30, 2015)
50,000section for which Kojima Co., Ltd. was
the lessee)

50,000

Revenue from sales of real estate

5. Notes to Statement of Income and Retained Earnings(Thousand yen)

10,762

5,911,526

6,141,793

223,154

188,931

6,134,681

6,330,724

Expenses related to rent businessOutsourcing expenses

559,345572,913

Utilities expenses

123,823

114,778

Insurance expenses

6,670

7,148

Repair expenses

165,718

171,157

Property and other taxes

287,329

379,071

Trust fees

45,247

46,373Other277,351

253,043

1,369,589

1,431,003

2,835,075

2,975,490

3,299,606

3,355,234

C. Real estate rental revenues andexpenses (A – B)

Breakdown of gain on sales of real estate properties
19th Fiscal Period (from October 1, 2014 to March 31, 2015)(Thousand yen)b-town JINGUMAE II
Revenue from sales of real estate
Cost of real estate sold
Other sales expenses
Gain on sales of real estate properties

31

2,050,000

Cost of real estate sold

1,968,522

Other sales expenses

58,1682,026,691

1,200,000
1,013,276
34,59019th Fiscal Period(October 1, 2014 –March 31, 2015)

20th Fiscal Period(April 1, 2015 –September 30, 2015)

Total number of authorized investment
units and total number of investment units
issuedTotal number of authorized investment units

10,000,000 units

10,000,000 units

Total number of investment units issued

1,018,110 units

1,018,110 units

7. Notes to Statement of Cash Flows
Reconciliation of the Cash and cash equivalents at the end of period in the statement of cash flows with thecorresponding accounts on the balance sheet(Thousand yen)
20th Fiscal Period(April 1, 2015 –September 30, 2015)

19th Fiscal Period(October 1, 2014 –March 31, 2015)
Cash and deposits

2,941,105

3,141,338

Cash and deposits in trust

5,128,664

4,969,752

Cash and cash equivalents

8,069,769

8,111,090

8. Lease Transactions
Operating lease transactions as lessee
Future lease payable equivalents(Thousand yen)
19th Fiscal Period(As of March 31, 2015)

1,047,866
152,133

23,308

6. Notes to Statement of Changes in Net Assets

B. Real estate rental expenses

Total real estate rental expenses

57,722Gain on sales of real estate properties

Other revenue

Depreciation

1,092,277

Revenue from sales of real estate

Rent revenue - real estate

Total real estate rental revenue

Other sales expenses

b-toss IKEBUKURO

20th Fiscal Period(April 1, 2015 –September 30, 2015)

A. Real estate rental revenues
Rents

1,081,515

Gain on sales of real estate properties

Breakdown of real estate rental revenues and expenses
19th Fiscal Period(October 1, 2014 –March 31, 2015)

1,150,000

Cost of real estate sold20th Fiscal Period(As of September 30, 2015)

Due within one year

24,58824,588Due after one year

901,560

889,266

Total

926,148

913,854

32

Sekisui House SI Residential Investment Corporation

Operating lease transactions as lessor
Future lease receivable equivalents(Thousand yen)
19th Fiscal Period(As of March 31, 2015)

20th Fiscal Period(As of September 30, 2015)

Due within one year

1,402,092

1,592,239

Due after one year

2,723,965

2,665,308

Total

4,126,058

4,257,547

9. Financial Instruments

As for the contract value and other conditions of derivative transactions indicated in “2. Matters Concerning
Fair Value, Etc. of Financial Instruments”, the value itself is not an indicator showing the market risks related
to such transactions.
2. Matters Concerning Fair Value, Etc. of Financial Instruments
The following are the book values recorded on the balance sheet, fair values and the difference between theseamounts. The following tables do not include those for which determining the fair value is recognized to be
extremely difficult.
19th Fiscal Period (As of March 31, 2015)

1. Matters Concerning Status of Financial Instruments(1) Policy on Handling Financial Instruments
The Investment Corporation raises necessary funds (through additional issuance of investment units,
borrowings and issuance of investment corporation bonds) in light of its financial plans and surplus fundmanagement plans. With regard to surplus fund management, the Investment Corporation focuses onsafety and liquidity, and manages them as interest-bearing ordinary bank deposits or short-term time
deposits in order to avoid market risks as much as possible. As for derivative transactions, the Investment
Corporation may use them to hedge against interest rate fluctuation risks, and will not conduct any
speculative transactions.
(2) Description of Financial Instruments and Associated Risks, and Risk Management Structure
Operating accounts receivable are exposed to credit risks of customers. In order to mitigate such risks, theInvestment Corporation works to select tenants by taking into account the tenants’ credibility and has
established a management system for controlling the status of rent payment.
Lease and guarantee deposits from rental properties are exposed to credit risks of the companies to dobusiness with. In order to mitigate such risks, the Investment Corporation works to periodically grasp thefinancial conditions, etc. of such companies.
The possibility, conditions and subsequent burden of interest payments for borrowings and issuance ofinvestment corporation bonds are impacted by the interest rate situations and other factors. Thus, there is
no guarantee that the Investment Corporation can successfully make borrowings or issue investment
corporation bonds at a time when and under the conditions that it prefers. In addition, if borrowings are
made at floating interest rates, interest payments may increase due to later fluctuations in the interest rates.
Depending on the lending attitude of financial institutions, new borrowings may not be possible or theInvestment Corporation may have to borrow funds under disadvantageous conditions in terms of interest
rates, collateral provision and financial covenants, etc.
Concerning the market risks (interest rate fluctuation risk, etc.) related to the above-mentioned borrowings
and investment corporation bonds, the Investment Corporation works to mitigate them in accordance with
the Derivative Transactions Handling and Risk Management Regulations, an internal rule designated by the
Asset Management Company.
Moreover, for the management of liquidity risk related to fund raising (risk of failing to execute repayment on
the repayment dates), the department in charge at the Asset Management Company prepares and updates
cash flow plans in a timely manner based on reports from its respective departments. The liquidity risk isalso managed by such measures as maintaining liquidity on hand at a certain level.
(3) Supplementary Explanation on Matters Concerning Fair Value, etc. of Financial Instruments
The fair value of financial instruments, aside from values based on market price, include values based onreasonable calculations when there is no market price. Certain variable factors are adopted in calculating
those values, and there may be cases where the values will vary when different assumptions are adopted.

33

Book Value Recordedon the Balance Sheet(Thousand yen)
Fair Value

Difference(1) Cash and deposits

2,941,105

2,941,105-(2) Cash and deposits in trust

5,128,664

5,128,664-

177,233

177,233-(1,965)(1,965)-

175,268

175,268-

8,245,038

8,245,038-(4) Operating accounts payable

413,818

413,818-(5) Short-term loans payable

3,850,000

3,850,000-(6) Current portion of long-term loans
payable5,650,000

5,681,529

31,529(7) Investment corporation bonds

14,500,000

14,314,837(185,162)(8) Long-term loans payable

75,109,500

75,127,767

18,267

Total of liabilities

99,523,318

99,387,952(135,365)---(3) Operating accounts receivable
Allowance for doubtful accounts

Total of assets(9) Derivative transactions

20th Fiscal Period (As of September 30, 2015)
Book Value Recordedon the Balance Sheet(Thousand yen)
Fair Value

Difference(1) Cash and deposits

3,141,338

3,141,338-(2) Cash and deposits in trust

4,969,752

4,969,752-

131,308

131,308-(1,092)(1,092)-130,216130,216-

8,241,307

8,241,307-(4) Operating accounts payable

256,505

256,505-(5) Short-term loans payable

4,650,000

4,650,000-(6) Current portion of long-term loans
payable6,350,000

6,360,009

10,009(7) Investment corporation bonds

14,500,000

14,394,622(105,377)(8) Long-term loans payable

75,109,500

75,394,749

285,249

Total of liabilities

100,866,005

101,055,887

189,881---(3) Operating accounts receivable
Allowance for doubtful accounts

Total of assets(9) Derivative transactions

34

Sekisui House SI Residential Investment Corporation(Note 1) Calculation method for fair value of financial instruments and matters concerning derivative transactions(1) Cash and deposits, (2) Cash and deposits in trust and (3) Operating accounts receivable
As these are settled within a short period of time, the fair value is approximately the same as the book value
and is thus stated at that book value.
In calculating the fair value of operating accounts receivable, it is difficult to determine the credit risk
individually. Accordingly, allowance for doubtful accounts is deemed as credit risk.
(4) Operating accounts payable and (5) Short-term loans payable
As these are settled within a short period of time, the fair value is approximately the same as the book value
and is thus stated at that book value.
(6) Current portion of long-term loans payable and (8) Long-term loans payable
The fair value of those with floating interest rates is based on the book value, as it reflects the market interest
rate within a short period of time and thus is considered to be nearly equal to the book value. (However, the fairvalue of certain long-term loans payable with floating interest rates that qualifies for the special accounting ofinterest rate swaps [see Note “11. Derivative Transactions”] is based on the method of calculating bydiscounting the sum of its principal and interest payments net of any cash flows from the interest-rate swap by
a reasonably estimated rate assumed as being applicable to a new similar borrowing to be made by theInvestment Corporation.) The present value of those with fixed interest rates is based on the method of
discounting the combined total of principal and interest by a reasonably estimated rate assumed as being
applicable to a new similar borrowing to be made by the Investment Corporation.
(7) Investment corporation bonds
As the investment corporation bonds of the Investment Corporation are traded over the counter throughnegotiations, it is difficult to indicate the fair value as the market price. The present value is based on themethod of calculating by discounting the combined total of principal and interest by a reasonably estimatedrate assumed as being applicable to a similar bond issuance.
(9) Derivative transactions(Note 3) Scheduled redemption and repayment amount of investment corporation bonds and borrowings
19th Fiscal Period (As of March 31, 2015)
Due in 1 Yearor Less(1) Short-term loans
payable(2) Investment
corporation bonds(3) Long-term loans
payableTotal of liabilities(Note 2) Scheduled redemption amount of monetary claims(Thousand yen)

Due after 1
Due after 2
Due after 3
Due after 4
Due in 1 Year
year through Years through Years through Years throughor Less
2 Years
3 Years
4 Years
5 Years

Total of assets

-

-

-

-

-

5,128,664

-

-

-

-

-

177,233

-

-

-

-

-

8,247,003

-

-

-

-

(Thousand yen)

Due after 1
Due after 2
Due after 3
Due after 4
Due in 1 Year
year through Years through Years through Years throughor Less
2 Years
3 Years
4 Years
5 Years(2) Cash and deposits intrust(3) Operating accounts
receivable
Total of assets

35

Due after
5 Years

2,941,105

20th Fiscal Period (As of September 30, 2015)(1) Cash and deposits

-

-

-

-

-

-

4,000,000

2,500,000

2,000,000

6,000,000

5,650,000

9,500,000

4,805,000

10,882,000

6,792,500

43,130,000

9,500,000

9,500,000

8,805,000

13,382,000

8,792,500

49,130,000

Due after 1
Due after 2
Due after 3
Due after 4
year through Years through Years through Years through2 Years
3 Years
4 Years
5 Years(Thousand yen)
Due after
5 Years

4,650,000

-

-

-

-

-

-

-

4,000,000

2,500,000

2,000,000

6,000,000

6,350,000

12,205,000

4,600,000

8,382,000

12,292,500

37,630,000

11,000,000

12,205,000

8,600,000

10,882,000

14,292,500

43,630,000

Category

19th Fiscal Period (As of March 31, 2015)(2) Cash and deposits intrust(3) Operating accounts
receivable-

Due in 1 Yearor Less

Total of liabilities

Due after
5 Years

3,850,000

20th Fiscal Period (As of September 30, 2015)(1) Short-term loans
payable(2) Investment
corporation bonds(3) Long-term loans
payable(Thousand yen)

(Note 4) Financial instruments for which discerning of fair value is recognized to be extremely difficult

See Note “11. Derivative Transactions.”(1) Cash and deposits

Due after 1
Due after 2
Due after 3
Due after 4
year through Years through Years through Years through2 Years
3 Years
4 Years
5 Years

Due after
5 Years

19th Fiscal Period(As of March 31, 2015)(Thousand yen)
20th Fiscal Period(As of September 30, 2015)(1) Lease and guarantee deposits

235,667

242,672(2) Tenant leasehold and security
deposits in trust

2,385,824

2,247,305

(1)

(2)

Lease and guarantee deposits
Lease and guarantee deposits are not subject to disclosure of fair value because discerning of fair value is recognized to be
extremely difficult as reasonable estimation of cash flows is impossible since there is no market price and also since it isdifficult to calculate the deposit period in effect.
Tenant leasehold and security deposits in trust
Tenant leasehold and security deposits in trust, which are deposited by the tenants of rental properties, are not subject todisclosure of fair value because reasonable estimation of cash flows is recognized to be extremely difficult since there is nomarket price and also since it is difficult to calculate the deposit period in effect.

10. Securities
19th Fiscal Period (As of March 31, 2015)
Not applicable

3,141,338

-

-

-

-

-

4,969,752

-

-

-

-

-

131,308

-

-

-

-

-

8,242,399

-

-

-

-

-

20th Fiscal Period (As of September 30, 2015)
Not applicable36

Sekisui House SI Residential Investment Corporation

11. Derivative Transactions

13. Income Taxes

1. Derivatives to which hedge accounting is not applied

1. Deferred tax assets and liabilities consisted of the following:

19th Fiscal Period (As of March 31, 2015)
Not applicable
20th Fiscal Period (As of September 30, 2015)
Not applicable

19th Fiscal Period(As of March 31, 2015)
Deferred tax assets:
Amortization of leasehold rights in trust

2. Derivatives to which hedge accounting is applied
19th Fiscal Period (As of March 31, 2015)
The following is the contract amount or amount equivalent to the principal provided in the contract, etc. as ofbalance sheet date for each method of hedge accounting.

Method of Hedge
Accounting

Type of Derivative
Main Hedged Item
Transactions

Contract Amount (Note 1)
Of Which,over 1 Year

Fair
Value

(Thousand yen)Calculation
Method for
the Fair
Value

Interest rate swap
transaction
Long-term loans
71,609,500
71,609,500 (Note 2)
Receivable floating;payablePayable fixed(Note 1) The contract amount of interest rate swaps is indicated based on the notional principal amount.
(Note 2) Transactions for which special accounting for interest rate swaps is applied are combined with long-term loans
payable, the hedged item. Accordingly, their fair value is included in the fair value of the relevant long-term loans
payable (See Note “Financial Instruments” 2. Matters Concerning Fair Value, Etc. of Financial Instruments (Note1) (8) Long-term loans payable.).
Special accounting
for interest rate
swaps

20th Fiscal Period (As of September 30, 2015)
The following is the contract amount or amount equivalent to the principal provided in the contract, etc. as of
the balance sheet date for each method of hedge accounting.

Method of Hedge
Accounting

Type of Derivative
Transactions

Contract Amount (Note 1)
Main Hedged Item

(Thousand yen)
20th Fiscal Period(As of September 30, 2015)

Of Which, over
1 Year(Thousand yen)Calculation
Fair
Method for
Value
the Fair
Value

Interest rate swap
transaction
Long-term loans
71,609,500
71,609,500 (Note 2)
Receivable floating;payablePayable fixed(Note 1) The contract amount of interest rate swaps is indicated based on the notional principal amount.
(Note 2) Transactions for which special accounting for interest rate swaps is applied are combined with long-term loans
payable, the hedged item. Accordingly, their fair value is included in the fair value of the relevant long-term loans
payable (See Note “Financial Instruments” 2. Matters Concerning Fair Value, Etc. of Financial Instruments (Note1) (8) Long-term loans payable.).

Special accounting
for interest rate
swaps

12. Retirement Benefits

4,129

4,781

427

352

132

56

Amount of allowance for doubtful accounts notdeductible from taxable income
Amount of accrued business taxes not deductible
from taxable income
Subtotal deferred tax assets

4,689

5,191

Valuation allowance(4,557)(5,134)

Total deferred tax assets
Deferred tax assets, net

132

56

132

56

2. Reconciliation of the statutory tax rate to the Effective Income Tax Rate
19th Fiscal Period(As of March 31, 2015)

20th Fiscal Period(As of September 30, 2015)

Statutory tax rate
(Adjustment)

34.15%

32.31%

Deductible cash distributions
Provision for reserve for reduction entry(32.96%)(1.16%)(31.56%)(0.72%)

Other

0.09%

0.05%

Effective income tax rate

0.12%

0.08%

14. Equity Method Income and Retained Earnings
19th Fiscal Period (from October 1, 2014 to March 31, 2015)
Not applicable as the Investment Corporation does not have any affiliated companies
20th Fiscal Period (from April 1, 2015 to September 30, 2015)
Not applicable as the Investment Corporation does not have any affiliated companies

15. Assets Retirement Obligations
19th Fiscal Period (from October 1, 2014 to March 31, 2015)
Not applicable
20th Fiscal Period (from April 1, 2015 to September 30, 2015)
Not applicable

19th Fiscal Period (As of March 31, 2015)
Not applicable as the Investment Corporation does not have any retirement benefit plan
20th Fiscal Period (As of September 30, 2015)
Not applicable as the Investment Corporation does not have any retirement benefit plan

37

38

Sekisui House SI Residential Investment Corporation

16. Transactions with Related Parties

20th Fiscal Period (from April 1, 2015 to September 30, 2015)

1. Parent Company and Major Corporation Unitholders
19th Fiscal Period (from October 1, 2014 to March 31, 2015)
Not applicable

Classification Name

20th Fiscal Period (from April 1, 2015 to September 30, 2015)
Not applicable

20th Fiscal Period (from April 1, 2015 to September 30, 2015)
Not applicable
3. Sister Companies
19th Fiscal Period (from October 1, 2014 to March 31, 2015)
Not applicable
20th Fiscal Period (from April 1, 2015 to September 30, 2015)
Not applicable
4. Directors and Major Individual Unitholders
19th Fiscal Period (from October 1, 2014 to March 31, 2015)

Classification NameBusiness
Description or
Occupation

Description ofTransaction

Transaction
AmountCategory(thousandyen)

Balance atthe End of
Period(thousandyen)

Payment of asset
management fees to
Accounts
Sekisui House SI
516,937
payable–474,053
Asset Management,
Executive Director(Note 2)otherLtd.
of the Investment
Director and(Note 1)
Corporation and
Osamu
President ofPayment of institution
its close
Minami Sekisui House SI
operation andrelatives
AccountsAssetadministration fees toManagement, Ltd.
Sekisui House SI
1,400 payable –1,512
Asset Management,
other
Ltd.
(Note 3)(Note 1) The transaction was conducted by Osamu Minami as representative of a third party (Sekisui House SI AssetManagement, Ltd.), and the fees are based on the terms and conditions designated in the Articles of Incorporationof the Investment Corporation.
(Note 2) The figure includes 90,240 thousand yen as asset management fees related to property acquisitions, which havebeen capitalized in the book value of individual real properties, and 9,600 thousand yen of asset management
fees related to property disposition, which have been recorded in other sales expenses.
(Note 3) The transaction was conducted by Osamu Minami as representative of a third party (Sekisui House SI AssetManagement, Ltd.), and the fees are based on the institution operation and administration agreement.
(Note 4) Of the amounts in the above table, consumption taxes are not included in the transaction amount but are includedin the balance at the end of period.

39

Description ofTransaction

Transaction
AmountCategory(thousandyen)

Balance atthe End of
Period(thousandyen)

Payment of asset
management fees to
Accounts
Sekisui House SI
519,950
payable–495,652
Asset Management,
Executive Director(Note 2)otherLtd.
of the Investment
Director and(Note 1)
Corporation and
Osamu
President ofPayment of institution
its close
Minami Sekisui House SI
operation andrelatives
AccountsAssetadministration fees toManagement, Ltd.
Sekisui House SI
1,400 payable –1,512
Asset Management,
other
Ltd.
(Note 3)(Note 1) The transaction was conducted by Osamu Minami as representative of a third party (Sekisui House SI AssetManagement, Ltd.), and the fees are based on the terms and conditions designated in the Articles of Incorporationof the Investment Corporation.
(Note 2) The figure includes 35,412 thousand yen as asset management fees related to property acquisitions, which havebeen capitalized in the book value of individual real properties, and 25,600 thousand yen of asset management
fees related to property disposition, which have been recorded in other sales expenses.
(Note 3) The transaction was conducted by Osamu Minami as representative of a third party (Sekisui House SI AssetManagement, Ltd.), and the fees are based on the institution operation and administration agreement.
(Note 4) Of the amounts in the above table, consumption taxes are not included in the transaction amount but are includedin the balance at the end of period.

2. Subsidiaries and Affiliates
19th Fiscal Period (from October 1, 2014 to March 31, 2015)
Not applicable

Share of
VotingRights [orOwnershipof Such intheInvestment
Corporation]

Business
Description or
Occupation

Share of
VotingRights [orOwnershipof Such intheInvestment
Corporation]

17. Segment Information[Segment Information]
Descriptions are omitted as the Investment Corporation has a single business segment of real estateleasing business.
[Related Information]
19th Fiscal Period (from October 1, 2014 to March 31, 2015)(1) Information by product and service
Descriptions are omitted as the Investment Corporation’s operating revenue under single product/service
classification for outside customers exceeds 90% of operating revenue recorded in the statement ofincome and retained earnings.
(2) Information by region(a) Operating revenue
Descriptions are omitted as the Investment Corporation’s operating revenue for outside customers inJapan exceeds 90% of operating revenue recorded in the statement of income and retained earnings.
(b) Property, plant and equipment
Descriptions are omitted as the amount of the Investment Corporation’s property, plant and equipment
located in Japan exceeds 90% of property, plant and equipment recorded in the balance sheet.
(3) Information by major customer
Descriptions are omitted as the Investment Corporation’s operating revenue for any individual outside
customer is less than 10% of operating revenue recorded in the statement of income and retained
earnings.
20th Fiscal Period (from April 1, 2015 to September 30, 2015)(1) Information by product and service
Descriptions are omitted as the Investment Corporation’s operating revenue under single product/service
classification for outside customers exceeds 90% of operating revenue recorded in the statement ofincome and retained earnings.
(2) Information by region(a) Operating revenue
Descriptions are omitted as the Investment Corporation’s operating revenue for outside customers inJapan exceeds 90% of operating revenue recorded in the statement of income and retained earnings.

40

Sekisui House SI Residential Investment Corporation(b) Property, plant and equipment
Descriptions are omitted as the amount of the Investment Corporation’s property, plant and equipment
located in Japan exceeds 90% of property, plant and equipment recorded in the balance sheet.
(3) Information by major customer
Descriptions are omitted as the Investment Corporation’s operating revenue for any individual outside
customer is less than 10% of operating revenue recorded in the statement of income and retained
earnings.

18. Per Unit Information
19th Fiscal Period
20th Fiscal Period
Period(October 1, 2014 –(April 1, 2015 –Item
March 31, 2015)
September 30, 2015)
Net assets per unit
89,605 yen
89,590 yen
Net income per unit
2,289 yen
2,170 yen
(Note 1) Diluted net income per unit has not been presented since no warrants or convertible bonds are outstanding.
(Note 2) Net income per unit has been calculated based on the following data:
PeriodItem
Net Income (thousand yen)Amount not attributable to ordinary
unitholders (thousand yen)
Net income attributable to ordinary
investment units (thousand yen)
Average number of units during the
fiscal period (units)

19th Fiscal Period(October 1, 2014 –March 31, 2015)
2,302,362

20th Fiscal Period(April 1, 2015 –September 30, 2015)
2,209,731--

2,302,362

2,209,731

1,005,513

1,018,110

19. Rental Properties
The Investment Corporation owns assets as trust beneficiary interests in real estate as entrusted property,
which comprises rental residential properties and rental retail properties. The real estate rental revenues andexpenses for the relevant rental properties amounted to 3,299,606 thousand yen for the 19th fiscal period and3,355,234 thousand yen for the 20th fiscal period, respectively. The following table provides the book value
recorded on the balance sheet, amount of change during the period and fair value of these rental properties.
19th Fiscal Period(October 1, 2014 –March 31, 2015)(Thousand yen)
20th Fiscal Period(April 1, 2015 –September 30, 2015)

Book value recorded on the balance sheet
Balance at the beginning of period
167,353,736
184,681,786
Amount of net change during period
17,328,049
1,321,189
Balance at the end of period
184,681,786
186,002,975
Fair value at the end of period
194,662,100
200,694,200(Note 1) Book value recorded on the balance sheet indicates the book value less accumulated depreciation.
(Note 2) Net change during the 19th fiscal period is comprised of increases primarily attributable to new acquisitions of 9
properties (19,557,719 thousand yen) and decrease primarily attributable to disposition of b-town JINGUMAE II(1,013,276 thousand yen) and depreciation (1,369,589 thousand yen). Net change during the 20th fiscal period iscomprised of increases primarily attributable to new acquisitions of 4 properties (5,696,499 thousand yen) anddecrease primarily attributable to disposition of part of RINKU HAGURAZAKI Plaza (sokochi) and b-toss
IKEBUKURO (3,050,037 thousand yen) and depreciation (1,431,003 thousand yen).
(Note 3) Pursuant to the Articles of Incorporation, the fair value at the end of period indicates the appraisal value or
surveyed value provided by outside real estate appraisers with appraisal dates of March 31, 2015 and September
30, 2015, respectively.

20. Significant Subsequent Events[Disposition of Owned Properties]
The Investment Corporation disposed the following assets as an inseparable transaction under special
provisions.

41[Four retail properties of RINKU HAGURAZAKI Plaza, KOJIMA x BIC CAMERA Kamifukuoka store, Joy
Square Yugawara and Bell Plaza Shopping Center]
Disposed assets:
Trust beneficiary interests in real estate
Disposition price:
8,500 million yen
Agreement execution dateand disposition date:November 30, 2015
Buyer:- See Note below
Impact on earnings:
The Investment Corporation plans to record approximately 187 million yen of gainon sale of real estate properties for the 21st fiscal period (October 1, 2015 - March
31, 2016).
(Note) The buyers are not disclosed as consent on disclosure has not been obtained from the buyers.

21. Detailed Schedules
1. Schedule of Securities
Not applicable
Real estate trust beneficiary interests are included in the Summary of Detailed Schedule of Real Properties.
2. Schedule of Contract Amount, Etc. and Fair Value of Derivative Transactions and Forward Exchange
Transactions(Thousand yen)Contract Amount (Note 1)

Category

Type

Transaction other thanmarket transaction

Interest rate swap
transactions
Receive float /pay fixed

Fair Value(Note 2)

Of Which,over 1 Year

Total

71,609,500

71,609,500

71,609,500

71,609,500-(Note 1) The contract amount of interest rate swaps is indicated based on the notional principal amount.
(Note 2) Description of fair value is omitted as the transactions satisfy the requirements for special accounting under theaccounting standards for financial instruments.

3. Summary of Detailed Schedule of Real Properties

Type of Assets(Million yen)
Net
Balance Increase Decrease Balance as
Balance as
as of during duringofof
RemarksorDepreciation
April
the
the
September
September
Accumulated
duringthe
1, 2015 Period Period 30, 201530, 2015
Amortization
PeriodAccumulated
Depreciation

Buildings in trust 91,755
Structures intrust
Machinery andProperty, equipment inplant and trust
equipment Tools, furnitureand fixtures intrust
Land in trust
Total

Intangible
assetsLeasehold rights
in trust
Trademarkrights
Other
Total

3,177

302

94,63012,698

1,335

81,932(Note)

709

51

0

760

181

20

579

(Note)

1,733

36

－

1,769

443

62

1,325

(Note)

135

36

－

171

62

10

109

(Note)

102,216

2,500

2,810

101,906－－

101,906(Note)

196,550

5,802

3,113

199,239

13,386

1,428

185,852

164

－

－

164

14

2

150

1

－

0

0

0

0

0

6

－

－

6

6

0

0

172

－

0

172

21

2

150

(Note)(Note) The amount of increase during the 20th fiscal period is primarily attributable to the acquisition of Granmast

42

Sekisui House SI Residential Investment Corporation

6. Schedule of Loans Payable
KANAZAWA NISHIIZUMI, Granmast UNOMORI, Esty Maison TSUTSUJIGAOKA and Esty Maison KOHOKUTSUNASHIMA. The amount of decrease during the 20th fiscal period is attributable to the sale of part of RINKU
HAGURAZAKI Plaza (sokochi) and b-toss IKEBUKURO.

Category

Lender

4. Schedule of Other Specified Assets
Not applicable
Real estate trust beneficiary interests are included in the Summary of Detailed Schedule of Real Properties.

Mizuho Bank, Ltd.

5. Schedule of Investment Corporation Bonds

NameFirst Series
Unsecured
Investment
Corporation
Bonds
SecondSeriesUnsecured
Investment
Corporation
Bonds
Third Series
Unsecured
Investment
Corporation
Bonds
Fourth Series
Unsecured
Investment
Corporation
Bonds
Fifth Series
Unsecured
Investment
Corporation
Bonds

Balance
Balance as Decrease
as of
Couponof April 1, during the
September Rate2015
Period30, 2015(%)(million yen) (million yen)(million yen)

Issue Date

February 28,
2013

4,000

-

4,000

0.630

Redemption
Date

February 28,
2018

Purpose Collateral

Short-termloanspayable(Note 1) Unsecured

February 28,
2014

February 28,
2014

August 29,
2014

-

2,500

-

3,000

-

3,000

Total

-

14,500

-

2,000

2,500

3,000

3,000

1.000

0.374

1.069

0.871

February 28,
2020

February 28,
2019

February 28,2024

August 30,
2024(Note 2) Unsecured(Note 2) Unsecured－

Mizuho Bank, Ltd.

950

－

－

950

Sumitomo Mitsui Banking
Corporation

950

－

－

950

950

－

－

950

Mizuho Bank, Ltd.

－

600

－

600

Sumitomo Mitsui Banking
Corporation

－

600

－

600

－

600

－

600

3,850

1,800

1,000

4,650

2,000

－

－

2,000

Mizuho Bank, Ltd.

425

－

－

425

Sumitomo Mitsui Banking
Corporation

425

－

－

425

Aozora Bank, Ltd.

100

－

－

100

Shinkin Central Bank

100

－

－

100

Mizuho Bank, Ltd.

200

－

－

200

Mizuho Trust & Banking
Co., Ltd.

200

－

－

200

200

－

－

200

100

－

－

100

100

－

－

100

Mitsubishi UFJ Trust andBanking Corporation

300

－

－

300

Resona Bank, Limited

200

－

－

200

1,200

－

－

1,200

The Bank of Fukuoka, Ltd.

500

－

－

500

Mizuho Bank, Ltd.

400

－

－

400

The Bank ofTokyo-Mitsubishi UFJ, Ltd.

Corporation
Sumitomo Mitsui Trust
Bank, Limited(Note 1) The proceeds are used as funds for repayment of borrowings and acquisition of real estate trust beneficiaryinterests, etc.
(Note 2) The proceeds are used as funds for repayment of borrowings, etc.
(Note 3) These investment corporation bonds are equipped with pari passu clause among specified investment corporation
bonds.
(Note 4) Amounts of investment corporation bonds to be redeemed within five years after the date of the balance sheet are
as follows.
(Million yen)Due in 1 YearDue after 1 YearDue after 2 Years
Due after 3 Years
Due after 4 Yearsor Less
through 2 Years
through 3 Years
through 4 Years
through 5 Years--

Sumitomo Mitsui Banking

14,500

4,000

2,500

2,000

The Bank ofLong-term
loans
payableTokyo-Mitsubishi UFJ, Ltd.

Development Bank ofJapan Inc.

Sumitomo Mitsui Banking

1,100

－

－

1,100

The Bank ofTokyo-Mitsubishi UFJ, Ltd.

1,300

－

－

1,300

The Yamaguchi Bank, Ltd.

500

－

－

500

941

－

－

941

Mizuho Bank, Ltd.

1,470

－

－

1,470

Sumitomo Mitsui Banking
Corporation

1,470

－

－

1,470

Corporation

Development Bank ofJapan Inc.

43

－

500

Development Bank ofJapan Inc.

(Note 2) Unsecured

500－

Subtotal(Note 1) Unsecured－

500

Tokyo-Mitsubishi UFJ, Ltd.

2,000

500

Sumitomo Mitsui Banking
Corporation

The Bank ofFebruary 28,
2013

Balance
Balance
Increase Decrease
as of
as of
duringduringAverage
September
April 1,
Repayment
the Period the Period
Interest Rate30, 2015
2015
Date(million (million(Note 1)(million(million
yen)
yen)
yen)
yen)

0.33000%

August 31,
2015(Note 2)0.30500%

February 29,
2016(Note 3)0.30500%

Repayment
Purpose
MethodLump-sumupon
maturity

Unsecured/(Note 6) Unguaranteed

February 29,
2016(Note 3)February 29,
2016
1.57000%(Note 3)(Note 4)(Note 7)

February 28,
2017(Note 6)

1.18975%

Remarks

Lump-sumupon
maturity

Unsecured/
Unguaranteed

1.19475%

February 28,
2017(Note 8)1.15475%

February 28,
2019(Note 7)44

Sekisui House SI Residential Investment Corporation

Category

Lender
The Norinchukin Bank
Mizuho Bank, Ltd.

2,352
176

－
－

－
－

Category
Repayment
Purpose
MethodRemarks

Lender

2,352
176

0.95750%

August 31,
2017(Note 7)

1,000

－

－

1,000

Mizuho Bank, Ltd.

500

－

－

500

200

－

－

200

2,500

－

－

2,500

600

－

－

600

200

－

－

200

176

－

－

176

Mizuho Trust & Banking
Co., Ltd.

Mizuho Bank, Ltd.

750

－

－

750

Sumitomo Mitsui Trust

2,250

－

－

2,250

Sumitomo Mitsui Banking

February 28,
2019

The Bank ofTokyo-Mitsubishi UFJ, Ltd.

(Note 6)

Mitsubishi UFJ Trust and

750－

The Bank ofTokyo-Mitsubishi UFJ, Ltd.

750

－

－

750

Resona Bank, Limited

500

－

－

500

Mizuho Bank, Ltd.

400

－

－

400

Aozora Bank, Ltd.

500

－

－

500

500

－

－

500

Mizuho Bank, Ltd.

200

－

－

200

200

－

－

200

1,100

－

－

1,100

500

－

－

500

Mizuho Bank, Ltd.

300

－

－

300

Sumitomo Mitsui Banking
Corporation

300

－

－

300

400

－

－

400

The Bank ofTokyo-Mitsubishi UFJ, Ltd.

800

－

－

800

Mizuho Bank, Ltd.

400

－

－

400

980

－

－

980

500

－

－

500

1,500

－

－

1,500

Mitsubishi UFJ Trust andBanking Corporation

500

－

－

500

Resona Bank, Limited

800

－

－

800

The Senshu Ikeda Bank,
Ltd.

500

－

－

500

Mizuho Bank, Ltd.

400

－

－

400

500

－

－

500

500

－

－

500

500

－

－

500

Mitsubishi UFJ Trust andBanking Corporation

500

－

－

500

The Yamaguchi Bank, Ltd.

500

－

－

500

Resona Bank, Limited

500

－

－

500

Corporation

Mizuho Trust & Banking
Co., Ltd.
The Bank ofTokyo-Mitsubishi UFJ, Ltd.

－

750

Bank, Limited
0.89900%

1,700

－

－

1,700

2,142

－

－

2,142

Resona Bank, Limited

500

－

－

500

The 77 Bank, Ltd.

500

－

－

500

The Hiroshima Bank, Ltd.

500

－

－

500

Mitsubishi UFJ Trust andBanking Corporation

Mizuho Bank, Ltd.
The Bank of

100

－

－

100

500

－

－

500

Mitsubishi UFJ Trust andBanking Corporation

500

－

－

500

Aozora Bank, Ltd.

200

－

－

200

Shinkin Central Bank

200

－

－

200

Mizuho Bank, Ltd.

300

－

－

300

Tokyo-Mitsubishi UFJ, Ltd.

Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking

400

－

－

－

－

300

200

－

－

200

700

－

－

700

Mitsubishi UFJ Trust andBanking Corporation

500

－

－

500

Resona Bank, Limited

200

－

－

200

Sumitomo Mitsui Trust
Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ, Ltd.

Banking Corporation

1.02225%

Mizuho Trust & Banking

February 28,
2020

Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited(Note 7)Lump-sumupon
maturity
0.75600%

Unsecured/
Unguaranteed

February 28,
2018

Long-term
loans
payableSumitomo Mitsui Trust
Bank, Limited

Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited

400

300

Corporation

0.65475%

February 28,
2017(Note 6)

Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited

45

Balance
Balance
Increase Decrease
as of
as of
duringduringAverage
September
April 1,
Repayment
the Period the Period
Interest Rate30, 2015
2015
Date(million (million(Note 1)(million(million
yen)
yen)
yen)
yen)

Aozora Bank, Ltd.

Sumitomo Mitsui Banking
Corporation

Mizuho Trust & Banking
Co., Ltd.

Long-term
loans
payableBalance
Balance
Increase Decrease
as of
as of
duringduringAverage
September
April 1,
Repayment
the Period the Period
Interest Rate30, 2015
2015
Date(million (million(Note 1)(million(million
yen)
yen)
yen)
yen)

1.17200%

Repayment
Purpose
MethodRemarks

August 31,
2020(Note 7)0.57120%

August 31,
2018

1.17350%

February 28,
2022

1.11000%(Note 6)
Lump-sumupon
maturity

Unsecured/
Unguaranteed

February 28,
2022(Note 7)0.95225%

February 26,
2021

46

Sekisui House SI Residential Investment Corporation

Category

LenderMizuho Bank, Ltd.

405

－

－

405

Sumitomo Mitsui Banking
Corporation

1,145

－

－

1,145

The Shizuoka Bank, Ltd.

500

－

－

500

Shinkin Central Bank

500

－

－

500

Repayment
Purpose
MethodRemarks

LenderFebruary 28,
2020(Note 7)

February 26,
2021

Development Bank ofJapan Inc.

1,000

－

－

1,000

The Norinchukin Bank

800

－

－

800

The Bank of Fukuoka, Ltd.

500

－

－

500

Mizuho Bank, Ltd.

500

－

－

500

Sumitomo Mitsui Banking
Corporation

－

－

500

Mizuho Bank, Ltd.

300

－

－

300

The Bank of

Sumitomo Mitsui Banking
Corporation

300

－

300

Resona Bank, Limited－

Mizuho Bank, Ltd.

2,500

－

－

2,500

Sumitomo Mitsui Banking
Corporation

2,000

－

－

2,000

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
The Bank ofTokyo-Mitsubishi UFJ, Ltd.

900
2,450

－
－

－
－

800

－

600

200

800

－

600

200

－

900

1,950

200

－

－

200

The Senshu Ikeda Bank,
Ltd.

200

－

－

200

The Shizuoka Bank, Ltd.

200

－

－

200

The 77 Bank, Ltd.

200

－

－

200

Shinkin Central Bank

200

－

－

200

The Norinchukin Bank

500

－

－

500

The Hiroshima Bank, Ltd.

200

－

－

200

The Bank of Fukuoka, Ltd.

700

－

－

700

1,000

－

－

1,000

800

－

－

800

600

－

－

600

300

－

－

300

800

－

－

800

500

－

－

500

The Yamaguchi Bank, Ltd.

200

－

－

200

Resona Bank, Limited

500

－

－

500

Mizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation

－

－

500

300

－

－

300

750

－

－

750

500

－

－

500

The Shizuoka Bank, Ltd.

500

－

－

500

The 77 Bank, Ltd.

500

－

－

500

Shinkin Central Bank

500

－

－

500

The Norinchukin Bank

500

－

－

500

The Hiroshima Bank, Ltd.

500

－

－

500

Mizuho Bank, Ltd.

600

－

－

600

Sumitomo Mitsui Banking
Corporation

300

－

－

300

Mizuho Bank, Ltd.

－

700

－

700

Sumitomo Mitsui Banking

－

700

－

700

The Senshu Ikeda Bank,
Ltd.
0.96475%

August 31,
2022

Long-term
loans
payable(Note 7)0.83600%

0.33000%

300

Aozora Bank, Ltd.

500

Tokyo-Mitsubishi UFJ, Ltd.

2,450

－

1,200

(Note 6)

900

1,950

－

0.97300%

August 31,
2021

February 29,
2016(Note 4)(Note 5)(Note 6)

Corporation

Lump-sumupon
maturity

Unsecured/
Unguaranteed

The Bank ofTokyo-Mitsubishi UFJ, Ltd.

－

700

－

700

－

700

－

700

Subtotal

80,759

2,800

2,100

81,459Total

84,609

4,600

3,100

86,109Mitsubishi UFJ Trust andBanking Corporation

0.86650%

February 28,
2023(Note 7)

Increase Decrease Balance
as ofduringduringAverage
April 1, the Period the Period September
RepaymentInterest Rate
30,
2015
2015
Date
(million (million(Note
1)(million(million
yen)
yen)
yen)
yen)
as of

500

Tokyo-Mitsubishi UFJ, Ltd.

47

0.79614%

Balance

Category

The Bank of Fukuoka, Ltd.

The Bank ofLong-term
loans
payableBalance
Balance
Increase Decrease
as of
as of
duringduringAverage
September
April 1,
Repayment
the Period the Period
Interest Rate30, 2015
2015
Date(million (million(Note 1)(million(million
yen)
yen)
yen)
yen)

0.85250%0.73975%

Repayment
MethodPurposeRemarks

February 28,
2023

February 28,
2022(Note 7)0.62800%

February 26,
2021

0.30500%

August 31,
2016(Note 4)Lump-sumupon
maturity

Unsecured/
Unguaranteed(Note 6)(Note 1) The “average interest rate” is a weighted-average figure during the fiscal period and is rounded to the fifth
decimal place. Furthermore, the average interest rate of borrowings for which the Investment Corporation
conducted interest rate swap transactions for the purpose of hedging the interest rate fluctuation risk is the rate
obtained by taking into account the effect of interest rate swaps.
(Note 2) The Investment Corporation made early repayment of the full amount of these loans on May 29, 2015.
(Note 3) The Investment Corporation made early repayment of the full amount of these loans on December 7, 2015.
(Note 4) These loans are recorded in the current liabilities on the balance sheet as current portion of long-term loans
payable as of the end of the 20th fiscal period.
(Note 5) The Investment Corporation made early repayment of these loans partly on June 30, 2015 and of the full amountof the balance remaining as of the end of the 20th fiscal period on December 7, 2015.
(Note 6) These loans are used as funds for the acquisition of real estate trust beneficiary interests, etc.
(Note 7) These loans are used as funds for repayment of existing borrowings.
(Note 8) These loans are used as funds for redemption of the Second Series Unsecured Investment Corporation Bonds(with pari passu clause among specified investment corporation bonds and with limitations on resale among
qualified institutional investors) issued in March 2007.
(Note 9) Amounts of long-term loans payable to be repaid within five years after the date of the balance sheet are as
follows.

Due in 1 Yearor Less

6,350

Due after 1 Yearthrough 2 Years

12,205Due after 2 Years
through 3 Years

4,600

Due after 3 Years
through 4 Years

8,382(Million yen)

Due after 4 Years
through 5 Years

12,29248

Sekisui House SI Residential Investment Corporation

MEMO

49

50

Sekisui House SI Residential Investment Corporation

Overview of the Investment Corporation
Trade Name

Overview of Asset Management Company

Sekisui House SI Residential Investment Corporation
3-1-31 Minami-Aoyama, Minato-ku, Tokyo
Tel: +81-3-5770-8973 (main number)

Address
Representative

Osamu Minami

Executive Director

Sekisui House SI Asset Management, Ltd.

Asset Management Company

Corporate Name

Sekisui House SI Asset Management, Ltd.

Head Office3-1-31 Minami-Aoyama, Minato-ku, Tokyo
Tel: +81-3-5770-8973 (main number)

Paid-in Capital

200 million yen

Shareholders

Sekisui House, Ltd
Spring Investment Co., Ltd.

Osamu Minami
Nobuyoshi Sato
Senior Managing Director: Koji Sakamoto (in charge of IR & Financial Affairs Department, Real Estate Investment Department and Management Department)
Director:
Masaki Katsura (in charge of Asset Management Department)
Director (part-time):
Yoshiki Inazawa (Senior Manager, Accounting & Finance Department, Sekisui House, Ltd.)
Auditor (part-time):
Naoki Kawamura (Section Manager, Legal Department, Sekisui House, Ltd.)
President:

End of March and end of September

Fiscal Term

Executive Vice President:

Directors
April 20, 2005

History

May 19, 2005
July 28, 2005

75%
25%

Registration and Establishment under Article 166 of the Act Concerning Investment Trusts andInvestment Corporations (Investment Trusts Act).
Implementation of registration by the Prime Minister under Article 187 of the Investment Trusts
Act. (registration number: Director of Kanto Local Finance Bureau No.33)
Listed on the Real Estate Investment Trust Section of the Tokyo Stock Exchange

Organizational Structure

July 28, 2004

History

April 18, 2005

EstablishedObtained license as asset management agent for investment corporation under the Investment
Trusts Act (approval number: No. 41 licensed by the Prime Minister)

Structure to Manage the Investment Corporation

Based on its Articles of Incorporation, the Investment Corporation manages the funds paid in by the unitholders by investing primarily in real estate andrelated assets.
The following diagram indicates the operational roles and assignments of the companies involved in the management and administration of the Investment Corporation.
Specific Related Corporation/
Pipeline Support Companies

The asset management of the Investment Corporation is entrusted to Sekisui House SI Asset Management, Ltd., the asset management company.
The following diagram shows the organizational chart of the asset management company and its organs in charge of compliance.

General Meeting of
Shareholders

Investment Corporation

Sekisui House, Ltd.
Sekiwa Real Estate, Ltd.
● Agreement concerning preferential

negotiation rights, etc.

Sekisui House
SI Residential
Investment Corporation● General Administrative Affairs

Entrustment Agreement● Asset Custody Agreement

Administrator(Accounting) &Custodian

Statutory Auditor
Organ to discuss and decide on basic andimportant compliance matters, etc.

Mizuho Trust &Banking Co., Ltd.

Board of Directors
Compliance Committee

Asset Management Company & Administrator(Institutional management)

Sekisui House SI
Asset Management, Ltd.

● Asset Management

Agreement● Institutional
Management
Agreement

Investment Committee

General Meeting ofUnitholders● Transfer Agency Services● Agreement concerning preferential

provision of property information● Agreement concerning preferential

negotiation rights, etc.

● Agreement concerning preferential

negotiation rights

Executive
Director:
Supervisory
Director:
Supervisory
Director:

Kaoru Takamatsu

President

Mikio Koyano
Agreement

Independent Auditor
Spring Investment Co., Ltd.
Sekiwa Real Estate Kansai, Ltd.

Sekiwa Real Estate Chubu, Ltd.

51

Sekiwa Real Estate Kyushu, Ltd.

Compliance Officer

Osamu Minami

Pipeline Support Companies

Sekiwa Real Estate Tohoku, Ltd. Sekiwa Real Estate Chugoku, Ltd.

Organs in charge of compliance

Mizuho Trust &Banking Co., Ltd.

● Financial Agency

Ernst & Young

The Compliance Committee consists of
the Compliance Officer, President andexternal experts in compliance.

Transfer Agent

Agreement

Board of Directors

Sekiwa Real Estate Kanto, Ltd.

Compliance Committee

Investment Corporation
Bond Administrator

Risk Management andCompliance Office

The Bank ofTokyo-Mitsubishi UFJ, Ltd.

Compliance Officer
The Compliance Officer is responsible
for managing the overall compliance of
the Asset Management Company. The
Compliance Officer shall be selectedbased on having sufficient examining
and supervising capabilities to ensurecompliance with laws, regulations andvarious rules by the Asset Management
Company.
Risk Management and Compliance Office

ShinNihon LLC

Real Estate
Investment Department

Asset Management
Department

IR & Financial
Affairs Department

Management
Department

The Risk Management and Compliance
Office monitors operations with regard torisk management and compliance withlaws, regulations and various rules, etc.

52Sekisui House SI Residential Investment Corporation

Unitholders Information

MEMO

Changes in Investment Unit Price and Transaction Volume in the Last Two Years (Sept. 30, 2013 - Sept. 30, 2015)(Investment unit price: yen)Transaction volume (Transaction volume: units)
30,000Market capitalization: 104,254 million yen (as of September 30, 2015)
High (closing price) in the 20th fiscal period: 138,700 yen (May 11, 2015)
Low (closing price) in the 20th fiscal period: 99,100 yen (September 9, 2015)
Period-end investment unit price in the 20th fiscal period: 102,400 yen (September 30, 2015)
Investment unit price

200,000

150,000

20,000100,000

10,00050,000

Sept. 30,2013
(16th FP)Mar. 31,2014(17th FP)

Dec. 31

June 30

Sept. 30,2014
(18th FP)Mar. 31,2015(19th FP)

Dec. 310June 30

Sept. 30,2015
(20th FP)

(Note) As a five-for-one split of the investment units was implemented on April 1, 2014, the investment units have been traded at one-fifth (the ex-rights) unit price on and after March 27, 2014.
In consideration of the impact of the split, the above graph is based on the actual figures of “Investment unit price” for March 27, 2014 and earlier being divided by five and actual figuresof “Trading volume” being multiplied by five.

Unitholder Composition● Number of Unitholders

Financial Institutions (including securities companies)

133 (1.11%)

End of 20th FP (Sept. 30, 2015)
11,943 unitholders

Foreign firms

Individuals and others

Other domestic firms

Foreign firms

Individuals and others

11,465 (96.00%)
225 (1.88%)
Financial Institutions (including securities companies)

138 (1.10%)

125 (1.00%)

End of 19th FP (Mar. 31, 2015)
12,532 unitholders

Other domestic firms

120 (1.00%)

12,028 (95.98%)
241 (1.92%)● Number of Investment Units

End of 20th FP (Sept. 30, 2015)
1,018,110 units

End of 19th FP (Mar. 31, 2015)
1,018,110 units

684,260 units (67.21%)

91,822 units (9.02%) 117,126 units (11.50%) 124,902 units (12.27%)

669,049 units (65.71%)

92,151 units (9.05%) 128,048 units (12.58%) 128,862 units (12.66%)

Major Unitholders
The following table shows the 10 largest unitholders according to the ratio of their owned investment units to the total number of investment units issued as of
September 30, 2015.

Name / Company Name

Investment Units Owned(units)Ratio of Investment Units Owned
to Total Investment Units Issued(%) (Note)

Japan Trustee Services Bank, Ltd. (Trust Account)245,758

24.13

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

84,584

8.30

Trust & Custody Services Bank, Ltd. (Securities Investment Trust Account)

59,358

5.83

Sekisui House, Ltd.

39,000

3.83

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

36,128

3.54

Nomura Bank (Luxembourg) S.A

23,035

2.26

THE FUJI FIRE AND MARINE INSURANCE COMPANY, LIMITED

20,630

2.02

The Hachijuni Bank, Ltd.

19,754

1.94

Mizuho Trust & Banking Co., Ltd.

18,8301.84

BNY for GCM Client Accounts (E) BD

15,416

1.51

562,493

55.24

Total
Note: The ratios of investment units owned to total investment units issued are rounded down to the nearest second decimal place.

53

54