Ichigo Preserves and Improves Real Estate[Provisional Translation Only]
This English translation of the original Japanese document is provided solely for information purposes.
Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

October 28, 2016
IssuerIchigo Office REIT Investment Corporation (8975)
1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Representative: Yoshihiro Takatsuka, Executive Director
www.ichigo-office.co.jp/english
Asset Management Company
Ichigo Investment Advisors Co., Ltd.
Representative: Wataru Orii, President
Inquiries: Hiroto Tajitsu, Head of Business Administration
Tel: +81-3-3502-4891

Earnings and Dividend Forecast Revisions for the April 2017 Fiscal Periodand Forecast for the October 2017 Fiscal Period
Ichigo Office REIT has amended its earnings and dividend forecast for the April 2017
fiscal period that was announced in “Financial Report for the Fiscal Period Ending April
2016” on June 14, 2016. It is also announcing its earnings and dividend forecast for theOctober 2017 fiscal period.
October 2016 fiscal period earnings will be announced on December 15, 2016, and thecurrent forecast is unchanged.

1. April 2017 Earnings and Dividend Forecast Revision

PreviousAnnounced
Forecast (A)Current
Amended
Forecast (B)Difference(B-A)
ChangeinDividend Dividend
Net
Excessofper
IncomeEarnings
Share(million yen)per
Share(yen)(yen)

Operating
Revenue(million yen)

Operating
Profit(million yen)

Recurring
Profit(million yen)

7,188

3,244

2,503

2,503

1,900

0

7,247

3,277

2,556

2,556

1,910

0+58+33+53+53+100+0.8%

+1.0%

+2.1%

+2.1%

+0.5%

－Forecast number of shares outstanding at the end of the fiscal period: 1,532,287 shares
The forecasts presented above are based on certain preconditions set forth in“Preconditions for the April 2017 Earnings Forecast” below. The actual operating
revenue, operating profit, recurring profit, net income, and dividend per share mayvary due to changes in circumstances such as asset acquisitions and dispositions,1tenant turnover, unexpected maintenance and repair costs and other expenses,changes in interest rates, and the issuance of new shares. These forecasts should not
be construed as a guarantee of such performance or results. Ichigo Office REIT will
make a forecast revision should there be a substantial discrepancy between theforecast and actual operating results.
2. April 2017 Earnings and Dividend Forecast Revision Rationale
Ichigo Office REIT is raising its earnings and dividend forecast due to better-thanforecast operating results, gains on sale from an asset sale in the October 2016 period,
loan repayment using proceeds from the sale (which reduces interest costs), and gains
on sale from an asset sale in the April 2017 period.1,2, 3
The revised April 2017 forecast reflects an increase in rental income and common
area services income of JPY 82 million, an increase in rental income of JPY 11
million as a result of the above-mentioned asset sale and asset acquisition, and adecrease in utilities revenue from tenants due to seasonal factors of JPY 33 million.
Ichigo Office REIT thus expects an increase in operating revenue of JPY 58 million
relative to the previous forecast.
Operating expenses are expected to increase by JPY 25 million and operating profit isexpected to increase by JPY 33 million due to an increase in rental expenses of JPY 3
million relative to the previous announced forecast. The increase in rental expenses isdue to an increase in service provider fees, property and city planning taxes, andbuilding maintenance and repair expenses of JPY 53 million, and a decrease inutilities expenses of JPY 49 million. Other than rental expenses, asset management
fees are expected to increase by JPY 14 million and other fees are expected toincrease by JPY 7 million. However, because interest expenses and borrowing-related
expenses are expected to decrease by JPY 20 million due to lower interest rates on
new loans executed in May 2016, recurring profit and net income will each increaseby JPY 53 million.
Ichigo Office REIT thus expects to increase its April 2017 dividend to JPY 1,910,
JPY 10 above its previous forecast, resulting in a total dividend to shareholders of
JPY 2,926 million. The dividend assumes a payment of JPY 164 million ofperformance fees to the asset management company to be paid from a reserve foradjustment of temporary differences, JPY 200 million of negative goodwill
amortization, and a dividend reserve reversal of JPY 6 million on gains on sale.
1

For details of the October 2016 period asset sale, please refer to the September 23,
2016 release “Sale of Portfolio Asset (Ichigo Yokosuka Building).”2
For details of the loan repayment, please refer to the October 6, 2016 release“Notice of Partial Repayment of Existing Loan.”3
For details of the April 2017 period asset sale, please refer to the October 14, 2016
release “Office Asset Acquisition (Ichigo Shibuya Udagawacho Building).”2

3. October 2017 Earnings and Dividend Forecast RationaleOctober
2017

OperatingRevenue(million yen)

OperatingProfit(million yen)

Recurring
Profit(million yen)

7,333

3,328

2,591

NetDividend
Incomeper Share(million yen)
(yen)
2,590

Dividend in
Excess ofEarnings perShare(yen)1,920

Forecast number of shares outstanding at the end of the fiscal period: 1,532,287 shares
The forecasts presented above are based on certain preconditions set forth in“Preconditions for the October 2017 Earnings Forecast” below. The actual operating
revenue, operating profit, recurring profit, net income, and dividend per share mayvary due to changes in circumstances such as asset acquisitions and dispositions,
tenant turnover, unexpected maintenance and repair costs and other expenses,changes in interest rates, and the issuance of new shares. These forecasts should not
be construed as a guarantee of such performance or results. Ichigo Office REIT will
make a forecast revision should there be a substantial discrepancy between theforecast and actual operating results.

4. October 2017 Earnings and Dividend Forecast RationaleOctober 2017 operating revenue is expected to increase by JPY 86 million relative tothe April 2017 period forecast, primarily due to an increase in rental income andcommon area services income and seasonal factors such as higher utilities revenue
from tenants. However, operating expenses are expected to increase by JPY 35
million owing to an increase in property tax from some of the assets acquired in theOctober 2016 period and the to-be acquired asset in the April 2017 period and anincrease in utilities expenses due to seasonal factors.
Operating profit is thus expected to increase by JPY 51 million. Recurring profit andnet income are each forecast to increase by JPY 34 million, because Ichigo Office
REIT expects an increase in borrowing-related expenses related to refinancing anexisting loan which matures on October 31, 2017.
The October 2017 dividend is thus forecast to be JPY 1,920, JPY 10 higher than theApril 2017 dividend. The total dividend payout is forecast to be JPY 2,941 million,
which assumes a payment of JPY 127 million of performance fees to the asset
management company to be paid from a reserve for adjustment of temporary
differences, JPY 200 million of negative goodwill amortization, and a dividend
reserve reversal of JPY 22 million on gains on sale.

30Preconditions for the April 2017 Earnings Forecast
ItemPeriod

Preconditions
April 2017 Fiscal Period: November 1, 2016 – April 30, 2017 (181 days)

Portfolio Assets• 86 assets, which is the total of 85 assets as of today and 1 asset newly
acquiring on November 2, 2016. The forecast assumes there will be no
additional acquisitions or sales through April 2017.
• The number of assets may change due to acquisitions or sales.

Number of Shares• 1,532,287 shares issued and outstanding

Operating Revenue• Rent revenue is calculated conservatively based on lease contracts that are ineffect as of today while taking into consideration such factors as historical
rents, the competitiveness of the properties, and market conditions.
• Total occupancy: 97.2% as of April 30, 2017

Operating Expenses• Among rental activity expenses, Ichigo Office REIT’s principal operating
expenses other than depreciation are calculated based on historical data while
taking into consideration variable expenses.
• Property and city planning taxes: JPY 559 million. The prorated property andcity planning taxes related to acquisitions in the October 2016 period and theabove-mentioned acquisition will be included in the acquisition cost andshall be excluded from operating expenses.
• Building maintenance and repair expenses: JPY129 million. However,expenses for each period may differ significantly from these estimatedamounts for reasons including the variability of maintenance and repair
expenses, costs due to unexpected building damage, etc.
• Service provider expenses including property management fees: JPY 658
million• Depreciation: JPY 925 million. Depreciation has been calculated byincluding the depreciation for future additional capital expenditures in thedepreciation amount using the straight-line method.
• Performance fees as part of asset management fees: JPY 163 million• Actual operating expenses may differ significantly from assumptions due tounforeseeable factors.

Non-operating
Expenses• Interest expenses: JPY 527 million• Borrowing-related expenses: JPY 193 million

Borrowings• Total borrowings: JPY 99,914 million as of April 30, 2017

Dividend per Share• The dividend forecast assumes that distributions will comply with thedividend distribution policy stipulated in Ichigo Office REIT’s Articles ofIncorporation.
• Dividends for the April 2017 period are assumed to be JPY 2,926 million,
which is the total amount of unappropriated retained earnings of JPY 2,556
million, a JPY 364 million reserve for adjustment of temporary differences(including JPY 200 million corresponding to amortization of negative
goodwill), and a JPY 6 million dividend reserve . The whole amount of JPY
2,926 million will be distributed excluding any fraction of less than 1 yen pershare.
• The dividend per share amount is subject to change due to such factors as
tenant turnover, property changes, unexpected maintenance and repair costs
and other expenses, fluctuations in interest rates, and the issuance ofadditional shares.

4

Dividend Distribution
in Excess of Earnings
per Share• Ichigo Office REIT does not plan on making any dividend distribution inexcess of earnings per share or retained earnings.

Other• This forecast assumes that there are no material revisions to laws andregulations, the tax system, accounting standards, listing rules of the Tokyo
Stock Exchange, and rules of the Investment Trusts Association, Japan, andno material changes in the state of the economy and real estate market
conditions.

5Preconditions for the October 2017 Earnings Forecast
Item
PeriodPortfolio Assets

Number of Shares

Operating Revenue

Preconditions
October 2017 Fiscal Period: May 1, 2017 – October 31, 2017 (184 days)• 86 assets, which is the total of 85 assets as of today and 1 asset newly
acquiring on November 2, 2016. The forecast assumes there will be noadditional acquisitions or sales through October 2017.
• The total number of portfolio assets may change due to acquisitions orsales.
• 1,532,287 shares issued and outstanding, with no additional new issuance
until the end of October 2017.
• Rent revenue is calculated conservatively based on lease contracts that arein effect as of today while taking into consideration such factors ashistorical rents, the competitiveness of the properties, and marketconditions.
• Total occupancy: 96.8% as of October 31, 2017

Operating Expenses• Among rental activity expenses, Ichigo Office REIT’s principal operating
expenses other than depreciation are calculated based on historical data
while taking into consideration variable expenses.
• Property and city planning taxes: JPY 598 million.
• The amount for building maintenance and repair expenses is estimated to be
JPY 114 million for the October 2017 period. However, expenses for eachperiod may differ significantly from these estimated amounts for reasons
including the variability of maintenance and repair expenses, costs due tounexpected building damage, etc.
• Service provider expenses including property management fees: JPY 651
million• Depreciation：JPY 930 million. Depreciation has been calculated byincluding the depreciation for future additional capital expenditures in thedepreciation amount using the straight-line method. .
• Performance fees as part of asset management fees are estimated to be JPY
127 million for the October 2017 period.
• Actual operating expenses may differ significantly from assumptions due tounforeseeable factors.

Non-operatingExpenses• Interest expenses: JPY 535 million• Borrowing-related expenses: JPY 202 million

Borrowings• Total borrowings: JPY 99,780 million as of October 31, 2017.

Dividend per Share• The dividend forecast assumes that distributions will comply with thedividend distribution policy stipulated in Ichigo Office REIT’s Articles ofIncorporation.
• Dividends for the October 2017 period are assumed to be JPY 2,941
million, which is the total amount of unappropriated retained earnings of
JPY 2,591 million, a JPY 327 million reserve for adjustment of temporary
differences (including JPY 200 million corresponding to amortization ofnegative goodwill), and a JPY 22 million dividend reserve. The wholeamount of JPY 2,941 million will be distributed excluding any fraction ofless than 1 yen per share.
• The dividend per share amount is subject to change due to such factors as
tenant turnover, property changes, unexpected maintenance and repair costs
and other expenses, fluctuations in interest rates, and the issuance ofadditional shares.

6

Dividend Distribution
in Excess of Earnings
per Share• Ichigo Office REIT does not plan on making any dividend distribution inexcess of earnings per share or retained earnings.

Other• This forecast assumes that there are no material revisions to laws andregulations, the tax system, accounting standards, listing rules of the Tokyo
Stock Exchange, and rules of the Investment Trusts Association, Japan, andno material changes in the state of the economy and real estate market
conditions.

7