Semi-Annual Report
2nd Fiscal Period Ended October 31, 2015
（from May 1, 2015 to October 31, 2015）

Message to Our Unitholders
After its establishment on September 8, 2014, Sekisui House Reit, Inc. (“SHR”) was listed on the Tokyo
Stock Exchange Real Estate Investment Trust Section (the J-REIT market) on December 3, 2014 and it
has settled its accounts for the 2nd fiscal period (namely, the fiscal period ended October 2015). I, on
behalf of SHR, would like to extend my heartfelt thanks to unitholders as this could not have been
managed without your support.
I hereby report on the management status and financial results for the 2nd fiscal period of SHR.
In the fiscal period under review, SHR conducted its first public offering since its listing in May 2015 andacquired the sectional ownership right of Hommachi Garden City (with an acquisition price of 38.6
billion yen) with the funds procured, etc. With this acquisition, the asset size of SHR has grown from
114.3 billion yen comprising three properties to 152.9 billion yen comprising four properties withinapproximately six months of its listing, which means a growth in size of approximately 1.3 times. SHR
has made progress in the realization of its external growth and diversification of its portfolio.
In terms of debt finances, SHR obtained a short-term loan of 16.6 billion yen in May 2015 which wasused as part of the funds to acquire the property. In July of the same year, 13.1 billion yen of the shortterm loan was refinanced as a long-term loan, thereby diversifying dates for repayment of the loan andextending the term, as well as converting the fixed interest rate of the loan into a floating interest rate
through interest rate swaps, etc. at the same time.
As a result, SHR recorded operating revenue of 3,379 million yen, operating income of 2,290 million yen,ordinary income of 1,952 million yen and net income of 1,951 million yen, and the distribution per unit
declared was 2,458 yen, for the fiscal period ended October 2015.
By taking full advantage of the sponsor support from Sekisui House, which has an excellent track recordof developing commercial properties, SHR will continue to pursue the securing of stable earnings andsteady growth of its investment assets and thereby aim to maximize unitholder value.
I ask for the continued support and encouragement of unitholders.

Junichi Inoue
Executive Director of Sekisui House Reit, Inc.
President & Representative Director of Sekisui House Investment Advisors, Ltd.

1

Outline of asset management operation
1.

Developments in Asset Management in the Fiscal Period under Review(1) Brief History of the Investment Corporation
Sekisui House Reit, Inc. (“SHR”) is sponsored by Sekisui House, Ltd. (“Sekisui House”). Sekisui House, one of
the leading homebuilders in Japan, has an abundant development and management track record in the property
development business, and was established on September 8, 2014 and listed on the Tokyo Stock Exchange Real
Estate Investment Trust Section on December 3, 2014 (securities code: 3309).
SHR’s policy is to conduct asset management that pursues the securing of stable earnings over the medium tolong term and steady growth of its investment assets, mainly by investing in commercial properties (Note), in
particular commercial properties situated in strategic locations or have high quality that it refers to as prime
properties positioned as its core investment targets.
Based on the policy described above, SHR acquired three properties (for an aggregate acquisition price of
114,300 million yen) and, in effect, commenced management on the listing date December 3, 2014. In addition,
SHR acquired one property (with an acquisition price of 38,600 million yen) and the assets held by SHR as of
October 31, 2015 (that is, the end of the fiscal period under review) are four properties (with an aggregateacquisition price: 152,900 million yen).
(Note)“Commercial properties” refer to real estate mainly used for business purposes other than for residence, such as officebuildings, retail properties and hotels. Residence includes student dormitories, company housing and serviced housing for theelderly. The same shall apply hereinafter.

(2) Management Environment and Management Performance
Management Environment
In the fiscal period under review, the Japanese economy continued on a moderate recovery trend even while
showing weakness in some sections.
In the real estate transaction market, in addition to signs of improvement in the office rent level and vacancy
rate, supply of properties for sale are trending slightly downwards and so the appetite for investment continues
to be strong and the sense of overheating is increasing not only in major cities but even for properties in regional
cities.
In addition, in the office leasing market, reflecting the improvement in the employment situation and corporate
earnings leading to floor space expansions, relocations for greater floor space, etc. in major office areas, thevacancy rate showed an ongoing trend of gentle improvement, and the rent level also showed signs ofimprovement. On the other hand, in the environment surrounding retail properties, according to the Bank ofJapan’s Monthly Report of Recent Economic and Financial Developments (October 2015), sales at department
stores have continued to pick up following the decline in demand in response to the consumption tax hike(although demand temporarily increased right before the tax hike in efforts by consumers to avoid paying higher
taxes). Meanwhile, sales at supermarkets nationwide have shown relatively weak movements, while sales atconvenience stores have continued to show a moderate increasing trend. These, among other factors, suggestthat store rent, which is susceptible to private consumption trends, is on a recovery trend.
Management Performance
SHR acquired as assets in trust on May 19, 2015 a real estate trust beneficiary interest whose underlying asset
is the “Hommachi Garden City” real estate in Osaka City, Osaka. The acquisition was made at the price of
38,600 million yen. As a result, the assets held by SHR as of the end of the fiscal period under review are four
properties with an aggregate acquisition price of 152,900 million yen and total leasable area of 74,739.84m2. In
addition, of the four properties, master lease agreements with Sekisui House as lessee have been executed forthree properties and a long-term lease agreement with one tenant as lessee has been executed for one property,
resulting in occupancy rate as of the end of the fiscal period under review of 100.0%.

2

(3) Overview of Fund Procurementa. Issuance of New Investment Units
During the fiscal period under review, SHR issued new investment units through its first public offering (of154,200 units) on May 19, 2015 since its listing, and issued additional new investment units by way of thirdparty allotment (of 7,800 units) on June 12 of the same year. As a result, as of the end of the fiscal period underreview, unitholders’ capital is 87,743 million yen and the total number of investment units issued andoutstanding is 794,000 units.
b. Borrowing of Funds
For the acquisition of the aforementioned real estate trust beneficiary interest (the underlying asset of which is
one property), SHR procured short-term loans in the total amount of 16,600 million yen on May 19, 2015 to use
as funds for the acquisition and related expenses. Of these short-term loans, SHR conducted early repayment for
3,500 million yen on June 17, 2015 and July 22, 2015 using funds procured through the issuance of new
investment units by way of third-party allotment implemented on June 12, 2015 and the refund of consumption
taxes accompanying the acquisition of three properties on December 3, 2014, etc., respectively. 13,100 million
yen of short-term loans, excluding the repaid amount mentioned above, was refinanced as long-term loans on
July 31, 2015, thereby promoting extension of the term of interest-bearing liabilities, diversification of dates for
repayment and converting the fixed interest rate into a floating interest rate through interest rate swaps, etc.
As a result, as of the end of the fiscal period under review, the balance of interest-bearing liabilities is 68,100
million yen and the ratio of total interest-bearing liabilities (that is, the total amount of loan, investment
corporation bonds issued and short-term investment corporation bonds issued) to total assets (“LTV (total assets
basis)”) is 41.0%.
c. Credit Rating
The following is the rating status of SHR as of the end of the fiscal period under review.
Credit Rating Agency

Rating TypeJapan Credit Rating Agency, Ltd.
(JCR)

Long-term issuer rating : AA−
Rating outlook: Stable(4) Overview of Business Performance and Distributions
Results in the fiscal period under review are operating revenue of 3,379 million yen (an increase of 60.3% overthat of the previous fiscal period), operating income of 2,290 million yen (an increase of 44.9% over that of theprevious fiscal period) and ordinary income of 1,952 million yen (an increase of 92.4% over that of the previous
fiscal period), resulting in net income of 1,951 million yen (an increase of 92.6% over that of the previous fiscal
period). In addition, concerning distributions, the decision has been made to distribute the entire amount of
unappropriated retained earnings (excluding the portion in respect of which distribution per investment unit isless than 1 yen), with the intention of having the maximum amount of distribution of earnings included indeductible expenses based on the application of special tax treatment for investment corporations (Article 67-15
of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957, as amended)). As a result, thedistribution per investment unit is 2,458 yen.

3

2.

Status of Capital Increase, etc.
The following is the increase/(decrease) in unitholders’ capital and the total number of investment units issued
and outstanding since the establishment of SHR through to October 31, 2015.

Date

Event

Increase(Decrease)
September 8, 2014

Total number ofinvestment units
issued and outstanding(units)Unitholders’ capital(million yen)

Private placement forincorporation

Balance

Increase(Decrease)

Note

Balance

200

200

2,000

2,000

(Note 1)

December 2, 2014

Public offering

63,69063,890600,000

602,000(Note 2)

December 24, 2014

Third-party allotment

3,184

67,07430,000632,000(Note 3)

May 19, 2015

Public offering

19,67386,748154,200

786,200(Note 4)

June 12, 2015

Third-party allotment

995

87,7437,800

794,000(Note 5)(Note 1) New investment units were issued at an offer price of 100,000 yen per unit upon the establishment of SHR.
(Note 2) New investment units were issued at an offer price of 110,000 yen (with the issue price being 106,150 yen) per unit throughpublic offering.
(Note 3) New investment units were issued at an issue price of 106,150 yen per unit by way of third-party allotment.
(Note 4) New investment units were issued at an offer price of 131,917 yen per unit (with the issue price being 127,587 yen per unit)
through a public offering.
(Note 5) New investment units were issued at an issue price of 127,587 yen by way of third-party allotment.

[Changes in Market Price of Investment Securities]
The following is the fiscal period high and low (closing price) on the Tokyo Stock Exchange Real Estate
Investment Trust Section on which SHR investment securities are listed.

(Note)

Fiscal period

1st fiscal period
From: Sept. 8, 2014
To: Apr. 30, 2015

2nd fiscal period
From: May. 1, 2015
To: Oct. 31, 2015

High (yen)148,600

142,500

Low (yen)

131,700

111,400

SHR investment securities were listed on the Tokyo Stock Exchange Real Estate Investment Trust Section on December 3,
2014.

4

3.

Performance of Distribution, etc.
Distribution per unit for the fiscal period under review (that is, the 2nd fiscal period) is 2,458 yen. The policy is
to distribute almost the entire amount of unappropriated retained earnings with the intention of applying thespecial treatment of corporation tax under which the amount equivalent to distribution of earnings is deductible
from the taxable income of investment corporations as deductible expenses (Article 67-15 of the Act on Special
Measures Concerning Taxation).
1st fiscal period
From: Sept. 8, 2014
To: Apr. 30, 2015

2nd fiscal period
From: May. 1, 2015
To: Oct. 31, 2015

1,013,381

1,951,805

Amount of accumulated earnings (thousand yen)

285

153

Total amount of cash distribution (thousand yen)

1,013,096

1,951,652[1,603][2,458]1,013,096

1,951,652[1,603][2,458]

Total amount of refund of investments in capital out of the total
amount of cash distribution (thousand yen)--[Amount of refund of investments in capital per unit] (yen)

[-]

[-]

Fiscal period
Total amount of unappropriated retained earnings (thousand yen)[Distribution per unit] (yen)Total amount of distribution of earnings out of the total amount ofcash distribution (thousand yen)[Distribution of earnings per unit] (yen)

4. Future Management Policy(1) Future Trends Outlook
The future Japanese economic outlook is that, amid ongoing improvement in the employment and income
situation, moderate economic recovery is expected, in part due to the effects of the government’s various
measures. However, as U.S. financial policy heads towards normalization, there is a risk of the economies ofChina and other emerging countries in Asia taking a downward swing, thereby suppressing the Japanese
economy, and so it may be important to pay attention to the impact of prolonged fluctuations in the financial andcapital markets.
In the office leasing market, there is strong office demand backed by the recovery in the employment situationand corporate earnings, which is expected to lead to the continued gradual improvement in the vacancy rate.
Meanwhile, there are hopes for movement in the recovery in rent levels, although such trends are expected to be
gentle.
Amid such hopes for the full-fledged recovery of the office leasing market, the real estate transaction market isin an environment where caution must be exercised regarding the timing of fund procurement due to theslightly unstable movements in the financial and capital markets caused by concerns that the Chinese economy
will take a downward swing and such other concerns. However, competition for property acquisition continues tobe overheated and the current situation where the formation of real estate prices, factoring in the expected
future increase in rental income, leads to the lowering of expected cap rates is expected to continue for sometime into the future.

5(2) Future Management Policy and Challenges to Address
In the next and subsequent fiscal periods, SHR will continue to focus on prime properties, commercial properties
situated in strategic locations or that are of a high quality, as its core commercial property investment targets.
By implementing growth strategies that take full advantage of the real estate development and operation
capabilities and other strengths of Sekisui House, which has established an extensive track record of developing
and operating commercial properties, SHR will, through the support of its sponsor, pursue the securing of stableearnings over the medium to long term and steady growth of its investment assets and thereby aim to maximize
unitholder value. Meanwhile at Sekisui House Investment Advisors, Ltd. (the “Asset Management Company”),
investment opportunities will also be explored through its own initiatives in efforts to advance portfolio
diversification.
SHR’s policy is to set as its core investment areas the Three major metropolitan areas with Three large cities,
namely the Tokyo 23 Wards, Osaka City and Nagoya City, all of which SHR has knowledge in the course ofdevelopments made by Sekisui House (Note).
SHR has executed a pipeline support agreement with Sekisui House. This agreement provides for utilization of
the urban redevelopment business track record and know-how of Sekisui House, allowing SHR to seek fromSekisui House property acquisition support for external growth (pipeline support). Specifically, such support will(a) grant to SHR preferential negotiation rights with regard to the sale of domestic real estate, etc. owned ordeveloped by Sekisui House, (b) provide SHR with information on real estate, etc. owned or developed in Japanby third parties, (c) provide SHR with warehousing functions, and (d) provide SHR with support for
redevelopment of owned properties. In addition, SHR can seek from Sekisui House (a) property management
services for owned assets, and (b) in relation to management of owned assets for internal growth, (i) technologies
and know-how that contribute to the improvement of tenant satisfaction or factors, including energy-efficiency
and eco-friendliness, that contribute to the enhancement of property value, (ii) personnel support, including
provision of know-how required for the operation of SHR, and (iii) support for matters such as negotiation ofmaster lease agreements.
By implementing growth strategies that take full advantage of the versatile support from Sekisui House forexternal growth and internal growth as described above, SHR will pursue the securing of stable earnings andsteady growth of its investment assets and thereby aim to maximize unitholder value.
(Note)The “Three large cities” refers to the Tokyo 23 wards, Osaka City and Nagoya City. In addition, the “Three major metropolitan
areas” refer to “Greater Tokyo,” the “Osaka area” and the “Nagoya area,” where “Greater Tokyo” refers to Tokyo, Kanagawa
Prefecture, Chiba Prefecture and Saitama Prefecture, the “Osaka area” refers to Osaka Prefecture, Kyoto Prefecture, Hyogo
Prefecture and Nara Prefecture and the “Nagoya area” refers to Aichi Prefecture.

(3) Financial Strategy
SHR has adopted as its policy to conduct stable and sound financial operations in order to secure stable earnings
over the medium to long term and enhance unitholder value. Specifically, the policy is to form strong and stablebusiness relationships with leading domestic financial institutions, centering on megabanks, bolstered by thecreditworthiness of the sponsor Sekisui House, and also to reduce refinancing risks and risks of fluctuations ininterest rates by exploring the extension of borrowing periods and working to diversify dates for repayment, etc.,
while pursuing the optimum balance between fixed-rate and floating-rate debts.
In addition, the LTV (total assets basis) policy is to manage it at a conservative level between 40% and 50% withattention paid to the securing of funding capacity.
SHR’s LTV (total assets basis), which was 42.5% as of the end of the previous fiscal period, has decreased to
41.0% as a result of the issuance of new investment units through the public offering, etc. implemented in May
2015. Besides considering the utilization of the funding capacity generated by this decrease in LTV (total assets
basis), SHR will work to diversify the procurement methods for direct and indirect financing, including issuanceof investment corporation bonds, by comprehensively taking into account the market environment, SHR’s
financial standing and other factors.

5.

Significant Subsequent Events
Not applicable.

6Outline of the Investment Corporation
1.

Status of Capital
As of end of 1st fiscal
period(Apr. 30, 2015)

As of end of 2nd fiscal
period(Oct. 31, 2015)

10,000,000

10,000,000

Total number of investment units issued and outstanding (units)

632,000

794,000

Unitholders’ capital (million yen)

67,07487,743

Number of unitholders (persons)

16,00518,089Fiscal period
Total number of investment units authorized (units)

2.

Matters Concerning Investment Units
Of the unitholders as of the end of the fiscal period under review, the following are the top ten unitholders interms of investment unitholding ratio.
Number of units
owned(units)Percentage of
owned units tototal units issued
and outstanding(%)

Japan Trustee Services Bank, Ltd. (Trust Account)

191,711

24.14

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

64,778

8.16

Sekisui House, Ltd.

63,300

7.97

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

59,367

7.48

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

33,237

4.19

Goldman Sachs International

22,7202.86

SIX SIS Ltd.

9,579

1.21

The Hokuriku Bank, Ltd.

7,143

0.90

The Hokkoku Bank, Ltd.

7,022

0.88

Trust & Custody Services Bank, Ltd. (Taxable Money Trust Account)

6,829

0.86

465,686

58.65

Name

Total
(Note)

7

Percentage of owned units to total units issued and outstanding is rounded to two decimal places.

3.

Matters Concerning Directors, etc.

(1) The following sets forth the executive director, supervisory directors and independent auditor of SHR in thefiscal period under review.
Position
Executive
Director

Name

Junichi Inoue

Key concurrently held position, etc.

Total amount of compensationfor each position during period(thousand yen)

President & Representative Director,－

Sekisui House Investment Advisors, Ltd.
Auditor, K-GOLD International Corporation

Supervisory
Director

Shigeru Nomura

1,800

Inspector, View Communications
Outside Director, Eiken Chemical Co., Ltd.
Tatsushi Omiya

Independent
AuditorDirector, Shigeru Nomura Certified Public
Accountant Office

Auditor, QB Net Co., Ltd.
Partner, City Law Offices

Ernst & Young
ShinNihon LLC

1,800
9,000
(Note 2)－

(Note 1) None of the executive director or supervisory directors owns SHR investment units in his own name or in the name of anotherperson. In addition, supervisory directors may be directors of other corporations other than those stated above, but none ofthem, including those above, has vested interest in SHR.
(Note 2) The total amount of compensation stated above is an approximate amount and includes compensation for auditing English
financial statements.

(2) Policy for determining whether to dismiss or refuse the Reappointment of Independent Auditor
Dismissal of the independent auditor is subject to consideration at a meeting of the board of directors of SHR inaccordance with the provisions of the Act on Investment Trusts and Investment Corporations (Act No. 198 of1951, as amended) (the “Investment Trusts Act”). Refusal of reappointment of the independent auditor is also
subject to consideration at a meeting of the board of directors of SHR by taking into account the quality of audits,amount of audit fee and various other circumstances in a comprehensive manner.

4.

Asset Management Company, Asset Custodian and Administrative AgentsThe following sets forth the asset management company, asset custodian and administrative agents of SHR as ofthe end of the fiscal period under review.
Entrustment category

Name

Asset Management Company

Sekisui House Investment Advisors, Ltd.

Asset Custodian

Mitsubishi UFJ Trust and Banking Corporation

Administrative Agent (Transfer Agent)Mizuho Trust & Banking Co., Ltd.

Administrative Agent (Administrative Agent forOperation of Administrative Instruments)

Mitsubishi UFJ Trust and Banking Corporation

8

Condition of investment assets
1.

Composition of Assets of the Investment Corporation
The following sets forth the composition of assets of SHR as of the end of the fiscal period under review.

Type ofasset

Geographical area,
etc.
(Note 1)Three major
metropolitan areas

As of end of 1st fiscal period(Apr. 30, 2015)

As of end of 2nd fiscal period(Oct. 31, 2015)

Total
amount held(million yen)

As a percentage of
total assets
(%)

Total
amount held(million yen)

As a percentage of
total assets(%)(Note 2)

(Note 3)(Note 2)

(Note 3)

114,108

88.1

152,371

91.8

Other areas

－

－

－

－

Total of real estate in trust

114,108

88.1

152,371

91.8

Deposits and other assets

15,374

11.9

13,628

8.2

Total amount of assets

129,482

100.0

165,999

100.0

Real estatein trust(Note 1) Under “Geographical area, etc.,” the “Three major metropolitan areas” refer to “Greater Tokyo,” the “Osaka area” and the“Nagoya area,” where “Greater Tokyo” refers to Tokyo, Kanagawa Prefecture, Chiba Prefecture and Saitama Prefecture, the“Osaka area” refers to Osaka Prefecture, Kyoto Prefecture, Hyogo Prefecture and Nara Prefecture and the “Nagoya area”
refers to Aichi Prefecture.
(Note 2) “Total amount held” is the carrying amount (for real estate in trust, the depreciated book value) as of the end of the fiscal
period under review, rounded down to the nearest million yen.
(Note 3) Figures under the heading “As a percentage of total assets” have been rounded to one decimal place.
(Note 4) SHR does not own any overseas real estate, etc. as of the end of the fiscal period under review.

2.

Major Portfolio Assets
The following sets forth an overview of the portfolio assets of SHR as of the end of the fiscal period under review.
Name ofreal estate, etc.

Garden City
Shinagawa Gotenyama
Gotenyama SH
Building
Hommachi Minami
Garden City
Hommachi Garden
City
Total

Book value(millionyen)(Note 1)

Leasablearea(m2)(Note 2)

Leasedarea(m2)(Note 3)

Occupancy
rate(%)(Note 4)

As a percentage of
total property-related
operating revenue(%) (Note 5)

39,54521,033.47

21,033.47

100.0

26.3

51,281

19,999.97

19,999.97

100.0

32.2

22,916

16,699.46

16,699.46

100.0

17.4

38,627

17,006.94

17,006.94

100.0

24.2

152,371

74,739.84

74,739.84

100.0

100.0

Main use

Officebuilding
Officebuilding
Officebuilding
Officebuilding－(Note 1) “Book value” refers to the depreciated book value of each property as of the end of the fiscal period under review, rounded
down to the nearest million yen. As such, the sum total of the “book value” of each property may not match the figure
indicated in the column for the total.
(Note 2) “Leasable area” refers to the floor area available for leasing based on the lease agreement or building drawing, etc. for each
property that is valid as of the end of the fiscal period under review.
(Note 3) “Leased area” refers to the sum total of the leased area indicated in the respective lease agreements for each property that are
valid as of the end of the fiscal period under review.
(Note 4) “Occupancy rate” refers to the ratio of leased area to leasable area of each property as of the end of the fiscal period underreview, rounded to one decimal place. The figure indicated in the total column is the occupancy rate of the entire portfolio,
which is the ratio of leased area of all properties to leasable area of all properties.
(Note 5) Figures under the heading “As a percentage of total property-related operating revenue” indicate the ratio of property-related

9operating revenue to total property-related operating revenue, rounded to one decimal place. As such, the sum total of the
figures in respect of each property may not match the figure indicated in the column for the total. The same shall apply
hereinafter.

3.

Itemization of Assets (Real Estate, etc.) in the Portfolio
The following sets forth an overview of the assets held by SHR as of the end of the fiscal period under review.
Name ofreal estate, etc.

Location

Type of ownership

Garden City
Shinagawa Gotenyama

6-7-29 Kitashinagawa,Shinagawa-ku, Tokyo

Gotenyama SH
Building

6-5-17 Kitashinagawa,

Hommachi Minami
Garden City

3-6-1 Kitakyuhojimachi,
Chuo-ku, Osaka-shi, Osaka

Hommachi Garden
City

3-6-4 Hommachi, Chuo-ku,
Osaka-shi, Osaka

Real estate trust
beneficiaryinterests
Real estate trust
beneficiaryinterests
Real estate trust
beneficiaryinterests
Real estate trust
beneficiaryinterests

－

－

Total

Shinagawa-ku, Tokyo

Book value
at end of period(million yen)
(Note 1)

Estimated value
at end of period(million yen)
(Note 2)39,54542,20051,28154,80022,916

26,20038,627

41,100152,371

164,300(Note 1) “Book value at end of period” refers to the book value after depreciation of each property as of the end of the fiscal period
under review, rounded down to the nearest million yen. As such, the sum total of the figures in respect of each property may
not match the figure indicated in the column for the total.
(Note 2) “Estimated value at end of period” refers to the value stated in each real estate appraisal report (based on real estateappraisal reports prepared by Daiwa Real Estate Appraisal Co., Ltd., The Tanizawa Sōgō Appraisal Co., Ltd., Richi Appraisal
Institute Co., Ltd. and Japan Real Estate Institute with the end of the fiscal period under review as the date of value),rounded down to the nearest million yen.

The following sets forth the status of leasing of real estate, etc. held by SHR.
1st fiscal period
2nd fiscal period
From: Sept. 8, 2014
From: May 1, 2015
To: Apr. 30, 2015
To: Oct. 31, 2015
PropertyPropertyAs a
relatedrelatedNumber
Occupanc
percentag
Number
Occupanc
operatingoperatingofy ratee of totalofy raterevenuerevenue
Name oftenants[at end of
propertytenants[at end of[during[duringreal estate,[at end of
fiscalrelated[at end of
fiscalfiscalfiscaletc.
fiscalperiod]operatingfiscalperiod]period]period]period](%)
revenueperiod](%)(million(million(Note 1)
(Note 2)(%)
(Note 1)
(Note 2)yen)
yen)(Note 3)(Note 3)
Garden City
Shinagawa
1
100.0
730
34.6
1
100.0
887
Gotenyama
Gotenyama
1
100.0
895
42.5
1
100.0
1,088
SH Building
HommachiMinami
1
100.0
482
22.9
1
100.0
586
Garden City
Hommachi
－
－
－
－
1
100.0
816
Garden City
Total
3
100.0
2,108
100.0
4
100.0
3,379

As a
percentag
e of total
propertyrelated
operatingrevenue
(%)

26.3
32.2
17.4
24.2
100.0

(Note 1) “Number of tenants” refers to the sum total of the number of tenants under the respective lease agreements for each property
indicated in the lease agreement for the property that is valid as of the end of each fiscal period. In cases where a fixed-renttype master lease agreement, based on which a fixed amount of rent is received regardless of fluctuations in rent from endtenants, has been executed for the concerned property, the number of lessees under the master lease agreement is stated as
the number of tenants.

10(Note 2) “Occupancy rate” refers to the ratio of leased area to leasable area of each property as of the end of each fiscal period, rounded
to one decimal place. The total column indicates the occupancy rate of the entire portfolio, which indicates the ratio of leased
area of all properties to leasable area of all properties.
(Note 3) “Property-related operating revenue” refers to the sum total of property-related operating revenue in each fiscal period in
respect of each property, rounded down to the nearest million yen. As such, the sum of “Property-related operating revenue” inrespect of each property may not match the figure indicated in the column for the total.

4.

Table of Status of Contract Amount, etc. and Fair Value of Specified Transactions
The following sets forth the status of contract amount, etc. and fair value of specified transactions at SHR as ofthe end of the fiscal period under review.

Category

Transaction other thanmarket transaction

Type

Contract amount, etc.
(thousand yen) (Note 1)
Of which,due after 1 year

Fair value(thousand yen)
(Note 2)

Interest rate swap transaction
Floating interest rate receivableand fixed interest rate payable

50,350,000

50,350,000－(Note 1) The contract amount, etc. of interest rate swap transactions is based on notional principal amounts.
(Note 2) The fair value is omitted because the transaction meets the criteria for special accounting under the Accounting Standards for
Financial Instruments.

5.

Status of Other Assets
Trust beneficiary interests that have real estate as the main assets in trust are stated in “3. Itemization ofAssets (Real Estate, etc.) in the Portfolio” above. As of the end of the fiscal period under review, there are no
specified assets other than real estate, etc. and asset-backed securities, etc. in the portfolio.

6.

Status of Holding of Assets by Country and Region
As of the end of the fiscal period under review, there are no overseas real estate, etc. in countries and regions
other than Japan in the portfolio.

11Capital expenditures for property
1.

Schedule of Capital Expenditures
The main scheduled amount of capital expenditures accompanying renovation work, etc. currently planned for
assets held by SHR, is as follows. However, there may possibly be a portion of the scheduled amount for thework that may end up being classified as expenses in the accounting process.
Scheduled amount (thousand yen)
(Note)Name of real estate, etc.
(location)

PurposeScheduled period

Payment
for theTotalamountAmountfiscalperiodalreadypaid

underreview
Hommachi Garden City
(Chuo-ku, Osaka City,
Osaka)(Note)

2.

Power meter

From: January 2016exchange work

To: January 2016

3,425

-

-

The scheduled amount refers to the amount arrived at by multiplying the full amount required for the work by the ratio of
SHR’s ownership in the real estate trust beneficiary interest.

Capital Expenditures During Period
The overview of capital expenditures conducted by SHR for its assets during the fiscal period under review is asfollows. Total capital expenditures during the fiscal period under review was 3,096 thousand yen and, together
with 10,652 thousand yen of repair expenses charged to expenses in the fiscal period under review, work
amounting to 13,748 thousand yen was implemented.
Name of real estate, etc.
(location)

Hommachi Garden City
(Chuo-ku, Osaka City,
Osaka)

3.

Purpose

PeriodPartition work in exclusive area

From: September 2015

on 4F

To: September 2015

Payment amount(thousand yen)
2,100

Cash Reserves for Long-Term Repair Plans
No cash was reserved for long-term repair plans as of the end of the fiscal period under review.

12Condition of expenses
Itemization of Expenses Pertaining to Management, etc.
(Unit: thousand yen)
Item
Asset management fee

1st fiscal period
From: Sept. 8, 2014
To: Apr. 30, 2015

2nd fiscal period
From: May 1, 2015
To: Oct. 31, 2015

143,170

246,331

Asset custody fee

1,381

2,579

Administrative service fees

3,813

10,774

Directors’ compensations

4,800

3,600

Other expenses

7,632

35,771

160,798

299,056

Total(Note)

13

In addition to the amounts shown above in respect of asset management fees, management fees of 57,900 thousand yen forproperty acquisition were included in the book value of real estate, etc. in the 2nd fiscal period.

Condition of investment transactions
1.

Status, etc. of Sale and Purchase of Real Estate, etc. and Asset-Backed Securities, etc.
Acquisition
Name ofreal estate, etc.

Hommachi Garden
City

May 19,2015

Total(Note)

2.

Acquisition
date－

Disposition

Acquisition
price(million yen)
(Note)

Disposition
date

Disposition
price(million yen)
(Note)

Book value(million yen)

Gain (Loss)on sale(million yen)

38,600－－－－38,600－－－－“Acquisition price” and “Disposition price” refer to the sale and purchase price as stated in the sale and purchase agreement
for the property held (excluding consumption tax and local consumption tax, as well as commissions and other various
expenses; rounded down to the nearest million yen). The same shall apply hereinafter.

Status, etc. in respect of Sale and Purchase of Other Assets
Not applicable.
Main assets other than the abovementioned real estate, etc. and asset-backed securities, etc. are essentiallybank deposits or bank deposits within assets in trust.

3.

Investigation into Value, etc. of Specified Assets(1) Real Estate, etc. (Appraisal)
Acquisition priceor
disposition price(million yen)Appraisalvalue(million yen)
(Note)

Appraisal firm

Date of value

Real estate trust
beneficiaryinterests

38,60040,000Japan Real
Estate InstituteMarch 31,2015－

38,60040,000－－Acquisitionordisposition

Name ofreal estate,etc.

Transaction
dateType of asset

Acquisition

Hommachi
Garden CityMay 19, 2015

－

Total
(Note)

The appraisal stated above is derived by applying the “Real Estate Appraisal Standards; Particulars; Chapter 3: Appraisal on
Value of Real Estate Subject to Securitization.”(2) Others
Concerning transactions requiring investigations into the value, etc. of specified assets pursuant to Article 201,
Paragraph 2 of the Investment Trusts Act, Ernst & Young ShinNihon LLC has conducted the investigations
pursuant to The Japanese Institute of Certified Public Accountants’ Industry Audit Practice Committee
Practical Guidelines No. 23 “Investigation into the Value, etc. of Specified Assets of Investment Trusts andInvestment Corporations” and SHR has been notified of the results of the investigations.
The transactions subject to investigations in the fiscal period under review were three interest rate swap
transactions. For the transactions, investigations into the name of the counterparty to the transaction, the typeof financial instrument or financial indicator involved, the transaction period, other matters concerning thecontent of the over-the-counter transaction of derivatives, etc. have been entrusted.

14

4. Status of Transactions with Interested Persons, etc. (Note 1)(1) Status of Transactions
Amount of purchase and sale, etc.

Category

Amount of purchase, etc.

Total amountAmount of sale, etc.
－ million yen

38,600 million yen

Breakdown of status of transactions with interested persons, etc.
Sekisui House, Ltd.

－ million yen [－%]

38,600 million yen [100.0%](2) Amount of Commission Fee, etc. (Note 2)

Category

Management fee(Note 3)

Total amount ofcommission fee, etc.
(A)(thousand yen)
18,619

Breakdown of transactions with interested persons, etc.
Payee

Sekisui House, Ltd.

Amount paid(B)(thousand yen)
18,619As apercentage of
total amount(B ÷ A)(%)
100.0(Note 1) “Interested persons, etc.” refers to interested persons, etc. of the asset management company with which SHR has executed an
asset management agreement as provided in Article 123 of the Order for Enforcement of the Act on Investment Trusts andInvestment Corporations and Article 26, Item 27 of the Rules on Investment Reports, etc. of Investment Trusts andInvestment Corporations of The Investment Trusts Association, Japan.
(Note 2) There are no payments for repair work, etc. for orders placed to interested persons, etc. during the fiscal period under review
besides the commission fee, etc. indicated above.
(Note 3) “Management fee” has been rounded down to the nearest thousand yen.

5.

Status, etc. of Transactions with the Asset Management Company Pertaining to Business Operations ofConcurrent Business Engaged in by the Asset Management Company
There are no applicable transactions because as of the end of the fiscal period under review, the AssetManagement Company does not concurrently engage in any type I financial instruments or type II financial
instruments business (as defined in the Financial Instruments and Exchange Act), building lots and buildings
transaction business, or specified joint real estate ventures.

15

Other information
1. Notice(1) General Meeting of Unitholders
No general meetings of unitholders were held during the fiscal period under review.
(2) Meeting of the Board of Directors of the Investment Corporation
In the fiscal period under review, of the matters, etc. provided in Items 2, 3, 5, 6 and 8 of Article 109, Paragraph
2 of the Investment Trusts Act, the following matters were approved at a meeting of the board of directors of
SHR, as well as other information deemed important.
Approval date

Matters approved

Overview
Administration of collection, storage,
disposal, deletion, etc. of individual
numbers, etc. of unitholders, etc. was

September 25, 2015

Execution of memorandum regarding
the administration of investment

entrusted to Mizuho Trust & Banking Co.,
Ltd., the transfer agent, in relation to theunits

Act on the Use of Numbers to Identify aSpecific Individual in the Administrative
Procedure (Act No. 27 of 2013), which cameinto force on October 5, 2015.

2.

OthersAmounts have been rounded down and ratios have been rounded to the nearest specified unit unless otherwise
indicated in this document.

16

Financial Section (Audited)

Contents
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
Supplementary Schedules
Independent Auditor’s Report

17

18
19
20
21
22
23
34
37

1. Financial Statements(1) Balance Sheet(Thousands of yen)

AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Prepaid expenses
Deferred tax assets
Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets
Other
Total intangible assets
Investments and other assets
Lease and guarantee deposits
Long-term prepaid expenses
Total investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Operating accounts payable
Accounts payable – otherAccrued expenses
Income taxes payable
Total current liabilities
Non-current liabilities
Long-term loans payable
Tenant leasehold and security deposits in trust
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus
Unappropriated retained earnings
Total surplus
Total unitholders’ equity
Total net assets (Note 4)
Total liabilities and net assets

1st Fiscal Period

2nd Fiscal Period(As of April 30, 2015)(As of October 31, 2015)

4,806,695
7,770,676
65,88324
2,451,353
121
15,094,753

2,117,144
10,093,565
79,73510
1,000,376
14,663
13,305,495

30,919,664(297,650)
30,622,013
643,178(7,215)635,962－－－
82,850,441
0114,108,418

45,889,590(848,625)
45,040,965
672,428(16,259)
656,169
996
(13)
982
106,673,263－
152,371,380

6,822
6,822

6,087
6,087

10,000262,823
272,823
114,388,065
129,482,818

10,000306,492
316,492
152,693,959
165,999,455

17,552
194,928
67,862
1,144
281,488

53,524
277,730
68,627586
400,469

55,000,000
6,113,449
61,113,449
61,394,937

68,100,000
7,803,586
75,903,586
76,304,055

67,074,500

87,743,594

1,013,381
1,013,381
68,087,881
68,087,881
129,482,818

1,951,805
1,951,805
89,695,399
89,695,399
165,999,455

The accompanying notes are an integral part of these financial statements.

18

(2) Statement of Income and Retained Earnings(Thousands of yen)

Operating revenue
Rent revenue – real estate (Note 5)
Other lease business revenue (Note 5)
Total operating revenue
Operating expenses
Expenses related to rent business (Note 5)
Asset management fee
Asset custody fee
Administrative service fees
Directors’ compensations
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Interest on refund
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing related expenses
Organization expenses
Investment unit issuance expenses
Other offering costs associated with issuance of investment units
Other
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings
The accompanying notes are an integral part of these financial statements.

19

1st Fiscal Period

2nd Fiscal Period(From September 8, 2014
to April 30, 2015)(From May 1, 2015
to October 31, 2015)

2,108,597
2,108,597

3,379,712
42
3,379,755

367,319
143,170
1,381
3,813
4,800
7,632
528,117
1,580,479

790,155
246,331
2,579
10,7743,600
35,771
1,089,212
2,290,542

502
－
502

1,127
1,087
2,215

183,616
134,748
58,684
119,963
64,3675,000
566,379
1,014,602
1,014,602
1,246
(24)
1,221
1,013,381－

265,059
50,646－
24,618－83
340,407
1,952,350
1,952,350
815
14
830
1,951,520
285
1,951,805－-

1,013,381

(3) Statement of Changes in Net Assets
1st Fiscal Period (From September 8, 2014 to April 30, 2015)(Thousands of yen)

Unitholders’ equity
Surplus

Unitholders’capitalBalance at beginning of period

Unappropriatedretained earnings
－)
－)

Total
surplus－)Total
unitholders’equityTotal
net assets－)－)

67,074,500)

67,074,500)

Changes of items during period
Issuance of new investment units

67,074,500)

Net income
Total changes of items during period
Balance at end of period (Note 6)

1,013,381)

1,013,381)

1,013,381)

1,013,381)

67,074,500)

1,013,381)

1,013,381) 68,087,881)

68,087,881)

67,074,500)

1,013,381)

1,013,381) 68,087,881)

68,087,881)

2nd Fiscal Period (From May 1, 2015 to October 31, 2015)(Thousands of yen)

Unitholders’ equity
Unitholders’capitalBalance at beginning of period

67,074,500)

Total
unitholders’equityTotal
net assets

1,013,381) 68,087,881)

68,087,881)

20,669,094)

20,669,094)

Surplus
Unappropriatedretained earnings
1,013,381)

Total
surplus

Changes of items during period
Issuance of new investment units

20,669,094)

Distribution from surplus(1,013,096)(1,013,096)(1,013,096)(1,013,096)

Net income

1,951,520)

1,951,520)

1,951,520)

1,951,520)

Total changes of items during period
Balance at end of period (Note 6)

20,669,094)

938,424)

938,424) 21,607,518)

21,607,518)

87,743,594)

1,951,805)

1,951,805) 89,695,399)

89,695,399)

The accompanying notes are an integral part of these financial statements.

20(4) Statement of Cash Distributions
Item

1st Fiscal Period(From September 8, 2014 toApril 30, 2015 )2nd Fiscal Period(From May 1, 2015 to
October 31, 2015 )Ⅰ. Unappropriated retained earnings

1,013,381,222 yen

1,951,805,557 yen

Ⅱ. Cash distributions

1,013,096,000 yen[1,603 yen]

1,951,652,000 yen[2,458 yen]

285,222 yen

153,557 yen[Cash distributions per unit]
Ⅲ. Retained earnings brought forward
Method of calculating amount of distribution

21

The basic policy is to distributein excess of an amountThe basic policy is to distributein excess of an amountequivalent to 90% of theamount of earnings available

equivalent to 90% of theamount of earnings available

for distribution of SHR
provided in Article 67-15,

for distribution of SHR
provided in Article 67-15,

Paragraph 1 of the Act on
Special Measures Concerning

Paragraph 1 of the Act on
Special Measures Concerning

Taxation as set forth in Article
46, Paragraph 1, Item 2 of theTaxation as set forth in Article
46, Paragraph 1, Item 2 of the

Articles of Incorporation of
SHR.

Articles of Incorporation of
SHR.

Based on such policy, SHR
decided to pay out aBased on such policy, SHR
decided to pay out a

distribution of earnings of
1,013,096,000 yen, which is the

distribution of earnings of
1,951,652,000 yen, which is thelargest integral multiple of thetotal number of investment

largest integral multiple of thetotal number of investment

units issued and outstanding(632,000 units) in an amountunits issued and outstanding(794,000 units) in an amountnot in excess of unappropriatedretained earnings for the

not in excess of unappropriatedretained earnings for theperiod.
SHR will not distribute cash inperiod.
SHR will not distribute cash inexcess of earnings as set forthin Article 46, Paragraph 2 ofexcess of earnings as set forthin Article 46, Paragraph 2 of

the Articles of Incorporation of
SHR.

the Articles of Incorporation ofSHR.

(5) Statement of Cash Flows(Thousands of yen)

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Investment unit issuance expenses
Interest income
Interest expenses
Decrease (increase) in consumption taxes receivable
Decrease (increase) in prepaid expenses
Decrease (increase) in long-term prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable – other
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
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
Payments for lease and guarantee deposits
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
Proceeds from issuance of investment units
Dividends paid
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period (Note 7)

1st Fiscal Period

2nd Fiscal Period(From September 8, 2014
to April 30, 2015)(From May 1, 2015
to October 31, 2015)

1,014,602
305,394
119,963(502)
183,616(2,451,353)(65,883)(262,823)
17,552
194,928(121)(944,625)
502(115,753)(102)(1,059,978)1,952,350
560,767
24,618(1,127)265,059
1,450,976(13,851)(43,668)
34,97480,64060
4,310,800
1,127(264,294)(1,373)
4,046,260(114,413,285)(7,350)6,115,249(1,800)(10,000)(108,317,186)(38,821,997)－
1,675,743(210)－(37,146,463)－－
55,000,000
66,954,536－
121,954,536
12,577,371－
12,577,371

16,600,000(16,600,000)
13,100,000
20,644,475(1,010,934)
32,733,541(366,661)
12,577,371
12,210,709

The accompanying notes are an integral part of these financial statements.

22(6) Notes to Financial Statements
1. Organization
Sekisui House Reit, Inc. (“SHR”) is a Japanese real estate investment corporation established in September 2014
under the Act on Investment Trusts and Investment Corporations of Japan (the “Investment Trust Act”).
On December 3, 2014, SHR commenced its investment operations when it was listed on the Real Estate Investment
Trust Securities Market of the Tokyo Stock Exchange, and it acquired three properties (total acquisition cost of¥114.3 billion) on the same day.
SHR is externally managed by a licensed asset management company, Sekisui House Investment Advisors, Ltd.
2. Basis of Presentation
SHR maintains its accounting records and prepares its financial statements in accordance with accounting
principles generally accepted in Japan (“Japanese GAAP”), including provisions set forth in the Financial
Instruments and Exchange Act, the Investment Trust Act, the Companies Act and the related regulations, which are
different in certain respects as to the application and disclosure requirements of International Financial ReportingStandards.
The accompanying financial statements are basically a translation of the financial statements of SHR, which wereprepared 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 to present them in a format which is morefamiliar to readers outside Japan. In addition, the notes to the financial statements include certain information
which might not be required under Japanese GAAP but is presented herein as additional information.
SHR’s fiscal period is a six-month period, which ends at the end of April and October of each year.
SHR 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 the accompanying
financial statements and the notes thereto. As a result, the amounts 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. Method of depreciation
and amortization of noncurrent assets

2. Accounting fordeferred assets

3. Standards forrevenue and expense
recognition

23(1)Property, plant and equipment (including assets in trust)
Depreciation is calculated using the straight-line method.
The useful lives of principal property, plant and equipment are as follows:
Buildings
15-62 years
Structures
37-40 years
Tools, furniture and fixtures
6 years(2)Intangible assets
Intangible assets are amortized utilizing the straight-line method.
(3)Long-term prepaid expenses
Long-term prepaid expenses are amortized utilizing the straight-line method.
(1)Organization expenses
The entire amount is expensed as incurred.
(2)Investment unit issuance expenses
The entire amount is expensed as incurred.
Accounting for property taxes.
In accounting for property tax, city planning tax, depreciable asset tax, etc. onreal estate, etc., of the tax amount assessed and determined, the amountcorresponding to the applicable calculation period is expensed as expenses
related to rent business.
Reimbursement of property tax, paid to the seller upon the acquisition of real estateor trust beneficiary interests of real estate as assets in trust, is not recognized as
expenses related to rent business in the corresponding fiscal period but included in
the acquisition cost of the property.
Property taxes capitalized as a part of the acquisition cost amounted to 30,766
thousand yen for the 1st fiscal period and 109,887 thousand yen for the 2nd fiscal
period.

4. Method of hedge
accounting

5.

6.

(1)Method of hedge accounting
Deferral hedge accounting is applied. However, the special accounting
treatment is applied to interest rate swaps that meet the criteria for the
special accounting treatment.
(2)Hedging instruments and hedged items
Hedging instruments: Interest rate swap transactions
Hedged items:
Interest on loans(3)Hedging policy
SHR conducts derivative transactions for the purpose of hedging the risks set
forth in its Articles of Incorporation based on its basic risk management policy.
(4)Method for assessing the effectiveness of hedging
Interest rate swaps meet the criteria for the special accounting treatment andan assessment of the effectiveness is thus omitted.
The funds (cash and cash equivalents) in the statement of cash flows consist of cash
Scope of funds in theon hand and cash in trust; deposits that can be withdrawn at any time and deposits
statement of cash flows
in trust; and short-term investments with a maturity of three months or less fromthe date of acquisition, which are readily convertible to cash and bear only an
insignificant risk of price fluctuation.
Other significant matters (1)Accounting for trust beneficiary interests of real estate, etc. as assets in trust
serving as basis forConcerning trust beneficiary interests of real estate, etc. as assets in trust, allpreparation of
accounts of assets and liabilities within assets in trust as well as all accounts
financial statementsof revenue and expenses from the assets in trust are recognized in the relevant
account items on the balance sheet and the statement of income and retained
earnings.
The following material items of the assets in trust recognized in the relevant
account items are separately listed on the balance sheet.
1) Cash and deposits in trust2) Buildings in trust; Structures in trust; Land in trust; Construction inprogress in trust3) Tenant leasehold and security deposits in trust(2)Accounting for consumption tax, etc.
Consumption tax and local consumption tax are excluded from the correspondingtransaction amounts.

24

4. Notes to Balance Sheet*1. Minimum net assets designated in Article 67-4 of the Investment Trust Act(Thousands of yen)

1st Fiscal Period

2nd Fiscal Period(As of April 30, 2015)(As of October 31, 2015)

50,00050,0005. Notes to Statement of Income and Retained Earnings*1. Breakdown of property-related operating revenue and expenses(Thousands of yen)

1st Fiscal Period

2nd Fiscal Period(From September 8, 2014
to April 30, 2015)(From May 1, 2015
to October 31, 2015)

A. Property-related operating revenue
Rent revenue – real estate
Rental income
Other

2,108,582
14

2,108,597

3,379,712
－

－

－

42

3,379,712

Other lease business revenue
Other
Total property-related operating revenue

2,108,597

42
3,379,755

B. Property-related operating expenses
Expenses related to rent business
Property management fees

10,85818,619Trust fees
Property and other taxes

1,077
41,801

1,526
191,422

Insurance expenses
Repair expenses

2,738
3,898

5,026
10,652

304,866
2,080

560,032
2,876

Depreciation
Other expenses related to rent business

367,319

790,155

Total property-related operating expenses

367,319

790,155

C. Property-related operating income [A − B]

1,741,277

2,589,599

6. Notes to Statement of Changes in Net Assets*1. Total number of authorized investment units and total number of investment units issued

Total number of authorized investment units
Total number of investment units issued

25

1st Fiscal Period

2nd Fiscal Period(From September 8, 2014
to April 30, 2015)(From May 1, 2015 to
October 31, 2015)

10,000,000 units

10,000,000 units

632,000 units

794,000 units

7. Notes to Statement of Cash Flows*1. Reconciliation of cash and cash equivalents at end of period to the corresponding balance sheet items(Thousands of yen)

1st Fiscal Period

2nd Fiscal Period(From September 8, 2014
to April 30, 2015)(From May 1, 2015
to October 31, 2015)

Cash and deposits

4,806,695

2,117,144

Cash and deposits in trust

7,770,676

10,093,565

Cash and cash equivalents

12,577,371

12,210,709

8. Lease Transactions
Operating lease transactions as lessor
Future minimum lease payments(Thousands of yen)

1st Fiscal Period

2nd Fiscal Period(As of April 30, 2015)(As of October 31, 2015)

Due within 1 year

5,126,750

6,934,353

Due after 1 year

42,889,168

46,739,869

48,015,919

53,674,222

Total

9. Financial Instruments
1. Status of financial instruments(1) Policy for financial instruments
Making it a policy to conduct stable and sound financial operations that would contribute to steady growthof its investment assets as well as efficient management and stability of management, SHR shall procure
funds through borrowings or the issuance of investment corporation bonds for the purposes of utilizing
such funds for the acquisition of assets, payments of repair expenses or distributions, operations of SHR,
repayment of obligations or other.
For derivative transactions, the policy is that derivative transactions shall be limited to those for the
purpose of hedging the risk of fluctuations in interest rates on liabilities and foreign currency risk in thecase of overseas real estate investments, and that no speculative transactions shall be conducted.
(2) Description of financial instruments and associated risks, and risk management structure
The funds procured through borrowings shall be used mainly for the acquisition of investment assets andfor repayment of loans.
The availability and terms and conditions of borrowings and the issuance of investment corporation bonds
may be affected by SHR’s financial creditworthiness, the interest rate situation and other factors, andthere is thus no guarantee that funds can be procured at SHR’s desired timing and terms and conditions.
Furthermore, loans with floating interest rates are susceptible to subsequent market trends.
SHR manages and limits the liquidity risk and the risk of fluctuations in interest rates associated withsuch fund procurement by diversifying fund procurement sources and means and by maintaining the ratio
of interest-bearing liabilities to total assets and the ratio of floating-rate loans to total loans at appropriate
levels. Furthermore, for certain loans with floating interest rates, derivative transactions (interest rate
swap transactions) are used as a hedging instrument for hedging the risk of fluctuations in interest rates
based on rules that set forth the basic policy for handling derivative transactions and risk management.

26

(3) Supplementary explanation of matters concerning fair value of financial instruments
The fair value of financial instruments, aside from values based on market price, includes values based onreasonable calculations when there is no market price. As the calculations involve variable factors, there
may be cases where the corresponding values will vary when different assumptions are adopted. In
addition, the contract amount of derivative transactions in “2. Matters concerning fair value of financial
instruments” do not represent the market risk involved in the derivative transactions.
2. Matters concerning fair value of financial instruments
The following is the carrying amount and fair value of financial instruments as of April 30, 2015, and thedifference between them.
The following table does not include those for which fair value is recognized to be extremely difficult todetermine (please refer to (Note 2)).
1st Fiscal Period (As of April 30, 2015)(Thousands of yen)Book value
recorded on thebalance sheet

Fair value

Difference(1) Cash and deposits

4,806,695

4,806,695－(2) Cash and deposits in trust

7,770,676

7,770,676－

12,577,371

12,577,371－

55,000,000

55,096,527

96,52755,000,000

55,096,527

96,527－－－

Total assets(3) Long-term loans payable
Total liabilities(4) Derivative transactions
2nd Fiscal Period (As of October 31, 2015)(Thousands of yen)Book value
recorded on thebalance sheet

Fair value

Difference(1) Cash and deposits

2,117,144

2,117,144－(2) Cash and deposits in trust

10,093,565

10,093,565－

12,210,709

12,210,709－

68,100,000

68,961,485

861,485

68,100,000

68,961,485

861,485－－－

Total assets(3) Long-term loans payable
Total liabilities(4) Derivative transactions(Note 1) Method of calculating the fair value of financial instruments(1) Cash and deposits and (2) Cash and deposits in trust
As these are settled within a short period of time, the fair value is approximately the same as the book value and is thusstated at that book value.
(3) Long-term loans payableAs long-term loans payable with floating interest rates reflect interest rate changes within a short period of time, the fairvalue is approximately the same as the book value and is thus stated at that book value (provided, however, that for long-termloans payable with floating interest rates that qualify for the special accounting treatment of interest rate swaps (please refer
to “11. Derivative Transactions”), the fair value is based on the method of calculation in which the sum total amount ofprincipal and interest accounted for with the interest rate swap is discounted by the rate assumed in the event of a similar
new drawdown). In addition, for those with fixed interest rates, the fair value is based on the method of calculation in which
the sum total amount of principal and interest is discounted by the rate assumed in the event of a similar new drawdown
corresponding to the remaining period.
(4) Derivative transactions
Please refer to “11. Derivative Transactions”.

27

(Note 2) Financial instruments for which fair value is recognized to be extremely difficult to determine
Tenant leasehold and security deposits in trust are not subject to valuation of fair value because a reasonable estimation of
cash flows is recognized to be extremely difficult because there is no market price and the difficulty of calculating the actual
deposit period from when lessees move in to when they move out.

(Thousands of yen)Item

1st Fiscal Period

2nd Fiscal Period(As of April 30, 2015)(As of October 31, 2015)

6,113,449

7,803,586

Tenant leasehold and security deposits in trust(Note 3) Redemption schedule of monetary claims after the closing date

1st Fiscal Period (As of April 30, 2015)(Thousands of yen)
Due after
4 to 5 years
5 years

Due in1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

Cash and deposits

4,806,695

－

－

－

－

－

Cash and deposits in trust

7,770,676

－

－

－

－

－

Total

12,577,371

－

－

－

－

－

2nd Fiscal Period (As of October 31, 2015)(Thousands of yen)
Due after
4 to 5 years
5 years

Due in1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

Cash and deposits

2,117,144

－

－

－

－

－

Cash and deposits in trust

10,093,565

－

－

－

－

－

Total

12,210,709

－

－

－

－

－

(Note 4) Repayment schedule of loans after the closing date

1st Fiscal Period (As of April 30, 2015)
Due in1 year or less

1 to 2 years

2 to 3 years

3 to 4 years－－

14,000,000－

Long-term loans payable(Thousands of yen)
Due after
4 to 5 years
5 years

14,000,000

27,000,000

2nd Fiscal Period (As of October 31, 2015)
Due in1 year or less

1 to 2 years

2 to 3 years

3 to 4 years－－

14,000,000－

Long-term loans payable(Thousands of yen)
Due after
4 to 5 years
5 years

14,000,000

40,100,000

10. Securities
1st Fiscal Period (As of April 30, 2015)
Not applicable.
2nd Fiscal Period (As of October 31, 2015)
Not applicable.
11. Derivative Transactions
1. Derivatives to which hedge accounting is not applied
1st Fiscal Period (As of April 30, 2015)
Not applicable.
2nd Fiscal Period (As of October 31, 2015)
Not applicable.
282. Derivatives to which hedge accounting is applied
The following is the contract amount or the amount equivalent to the principal provided in the contract asof the closing date for each method of hedge accounting.
1st Fiscal Period (As of April 30, 2015)(Thousands of yen)

Method ofhedge
accounting
Specialaccounting
treatment forinterest rate
swaps

Type ofderivative transactions

Main
hedgeditem

Interest rate swap
transaction
Receivable floating ;Payable fixedLong-term
loans
payableContract amount

41,000,000

Of which,over
1 yearFair value

Calculation
method offair value

41,000,000*－* As derivative transactions qualifying for the special accounting treatment for interest rate swaps are accounted for with the hedged
long-term loans payable, the fair value is included in the fair value of the underlying long-term loans payable (please refer to “ 9.
Financial Instruments; 2. Matters concerning fair value of financial instruments (Note 1)”).

2nd Fiscal Period (As of October 31, 2015)(Thousands of yen)

Method ofhedge
accounting
Specialaccounting
treatment forinterest rate
swaps

Type ofderivative transactions

Main
hedgeditem

Interest rate swap
transaction
Receivable floating ;Payable fixedLong-term
loans
payableContract amount

50,350,000

Of which,over
1 yearFair value

Calculation
method offair value

50,350,000*－* As derivative transactions qualifying for the special accounting treatment for interest rate swaps are accounted for with the hedged
long-term loans payable, the fair value is included in the fair value of the underlying long-term loans payable (please refer to “ 9.
Financial Instruments; 2. Matters concerning fair value of financial instruments (Note 1)”).

12. Retirement Benefits〔1st Fiscal Period (As of April 30, 2015) 〕
Not applicable.
〔2nd Fiscal Period (As of October 31, 2015) 〕
Not applicable.
13. Income Taxes
1. Breakdown of deferred tax assets and deferred tax liabilities by major cause(Thousands of yen)

1st Fiscal Period

2nd Fiscal Period(As of April 30, 2015)(As of October 31, 2015)

24

10

24

10

24

10

Deferred tax assets
Accrued business taxes not deductible fromtaxable income
Total deferred tax assets
Net deferred tax assets29

2. Breakdown of major items that caused significant differences between the statutory tax rate and theeffective income tax rate after application of tax-effect accounting(%)
1st Fiscal Period

2nd Fiscal Period(As of April 30, 2015)(As of October 31, 2015)

34.16

32.31

(34.11)(32.30)

0.07

0.03

0.12

0.04

Statutory tax rate
[Adjustments]
Deductible cash distribution
Other
Effective income tax rate
after application of tax-effect accounting
14. Profit or Loss of Affiliates Accounted for Under the Equity Method〔1st Fiscal Period (From September 8, 2014 to April 30, 2015) 〕
Not applicable.
〔2nd Fiscal Period (From May 1, 2015 to October 31, 2015) 〕
Not applicable.
15. Transactions with Related Parties
1. Parent company and major corporate unitholders.
〔1st Fiscal Period (From September 8, 2014 to April 30, 2015) 〕
Not applicable.
〔2nd Fiscal Period (From May 1, 2015 to October 31, 2015) 〕
Not applicable.
2. Subsidiaries and affiliates.
〔1st Fiscal Period (From September 8, 2014 to April 30, 2015) 〕
Not applicable.
〔2nd Fiscal Period (From May 1, 2015 to October 31, 2015) 〕
Not applicable.
3. Sister companies.
〔1st Fiscal Period (From September 8, 2014 to April 30, 2015) 〕
Not applicable.
〔2nd Fiscal Period (From May 1, 2015 to October 31, 2015) 〕
Not applicable.
4. Directors and major individual unitholders.
〔1st Fiscal Period (From September 8, 2014 to April 30, 2015) 〕
TypeDirectoror close
relative

Name

Description ofbusiness or
occupation

JunichiInoue

Executive Directorof SHR and
Representative
Director of Sekisui
House Investment
Advisors, Ltd.

Percentage ofvoting rights
held by (in) SHR

Description oftransaction－

Payment of asset
management fee
to Sekisui House
Investment
Advisors, Ltd.
(Note 1)

Transaction
amount(Thousands ofyen)

143,170

Account
item

Accounts
payable– other

Balanceat end of period(Thousands ofyen)

154,624(Note 1) A transaction conducted by Junichi Inoue as a representative of a third party (Sekisui House Investment Advisors, Ltd.) andthe fee amount is based on terms and conditions set forth in the Articles of Incorporation of SHR.
(Note 2) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

30

〔2nd Fiscal Period (From May 1, 2015 to October 31, 2015) 〕
TypeDirectoror close
relative

Name

Description ofbusiness or
occupation

JunichiInoue

Executive Directorof SHR and
Representative
Director of Sekisui
House Investment
Advisors, Ltd.

Percentage ofvoting rights
held by (in) SHR

Description oftransaction－

Payment of asset
management fee
to Sekisui House
Investment
Advisors, Ltd.
(Note 1)

Transaction
amount(Thousands ofyen)

304,231(Note 2)

Account
item

Accounts
payable– other

Balanceat end of period(Thousands ofyen)

266,038(Note 1) A transaction conducted by Junichi Inoue as a representative of a third party (Sekisui House Investment Advisors, Ltd.) andthe fee amount is based on terms and conditions set forth in the Articles of Incorporation of SHR.
(Note 2) The amount includes 57,900 thousand yen of asset management fees pertaining to real estate acquisition included in the bookvalue of property, plant and equipment.
(Note 3) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

16. Asset Retirement Obligations〔1st Fiscal Period (As of April 30, 2015) 〕
Not applicable.
〔2nd Fiscal Period (As of October 31, 2015) 〕
Not applicable.
17. Investment and Rental Properties
SHR owns rental office buildings, etc. in Tokyo and other areas for the purpose of earning revenue from leasing.
The following is the carrying amount, amount of increase (decrease) during the period and fair value of theseinvestment and rental properties.
(Thousands of yen)

1st Fiscal Period

2nd Fiscal Period(From September 8, 2014
to April 30, 2015)

to October 31, 2015)(From May 1, 2015

Carrying amount
Balance at beginning of period－

114,108,418

Amount of increase (decrease) during period

114,108,418

38,262,962

Balance at end of period

114,108,418

152,371,380

120,100,000

164,300,000

Fair value at end of period(Note 1) Carrying amount is the book value less accumulated depreciation.
(Note 2)Net increase during the 1st fiscal period is mainly attributable to the acquisition of new properties (114,413,284 thousand yen),offset by depreciation (304,866 thousand yen). Net increase during the 2nd fiscal period is mainly attributable to theacquisition of new properties (38,819,898 thousand yen), offset by depreciation (560,032 thousand yen).
(Note 3) Fair value at the end of the period is the appraisal value by outside real estate appraisers.

The property-related operating income in the 1st and 2nd fiscal periods for investment and rental properties ispresented in “5. Notes to Statement of Income and Retained Earnings”.

31

18. Segment Information
1. Segment information
Segment information is omitted because SHR operates a single segment, which is the real estate leasing
business.
2. Related information〔1st Fiscal Period (From September 8, 2014 to April 30, 2015) 〕(1) Information about products and services
Information about products and services is omitted because net sales to external customers for a single
products and services category are in excess of 90% of operating revenue on the statement of income andretained earnings.
(2) Information about geographic areas
1) Operating revenue
Information about net sales is omitted because net sales to external customers in Japan are in excessof 90% of operating revenue on the statement of income and retained earnings.
2) Property, plant and equipment
Information about property, plant and equipment is omitted because the property, plant andequipment located in Japan is in excess of 90% of property, plant and equipment on the balance sheet.
(3) Information about major customers(Thousands of yen)

Name of customer

Operating revenue

Name of related segment

Sekisui House, Ltd.

1,212,793

Real estate leasing businessNot disclosed (Note)

895,788

Real estate leasing business(Note)

The customer is a general business company in Japan, but the name is not disclosed because consent has not beenobtained from the customer. The customer is not a group company of Sekisui House, Ltd.

〔2nd Fiscal Period (From May 1, 2015 to October 31, 2015) 〕(1) Information about products and services
Information about products and services is omitted because net sales to external customers for a single
products and services category are in excess of 90% of operating revenue on the statement of income andretained earnings.
(2) Information about geographic areas
1) Operating revenue
Information about net sales is omitted because net sales to external customers in Japan are in excessof 90% of operating revenue on the statement of income and retained earnings.
2) Property, plant and equipment
Information about property, plant and equipment is omitted because the property, plant andequipment located in Japan is in excess of 90% of property, plant and equipment on the balance sheet.
(3) Information about major customers(Thousands of yen)

Name of customer

Operating revenue

Name of related segment

Sekisui House, Ltd.

2,290,713

Real estate leasing businessNot disclosed (Note)

1,088,998

Real estate leasing business(Note)

The customer is a general business company in Japan, but the name is not disclosed because consent has not beenobtained from the customer. The customer is not a group company of Sekisui House, Ltd.

32

19. Per Unit Information
1st Fiscal Period

2nd Fiscal Period(From September 8,2014 to April 30, 2015)(From May 1, 2015
to October 31, 2015)

Net assets per unit

107,733 yen

112,966 yen

Net income per unit

2,525 yen

2,511 yen

(Note 1) Net income per unit is calculated by dividing net income by the daily weighted average number of investment units.
In addition, diluted net income per unit is not stated because there are no dilutive investment units.
(Note 2) The following is the basis for calculating net income per unit.

Net income (Thousands yen)Amount not attributable to common unitholders (Thousands yen)
Net income attributable to common investment units (Thousands yen)
Average number of investment units during period (Units)

20. Significant Subsequent Events
Not applicable.

33

1st Fiscal Period

2nd Fiscal Period(From September 8,2014 to April 30, 2015)(From May 1, 2015
to October 31, 2015)

1,013,381

1,951,520－－

1,013,381

1,951,520

401,319

777,134

(7) Supplementary Schedules〔2nd Fiscal Period (From May 1, 2015 to October 31, 2015) 〕
1. Schedule of securities(1) Shares
Not applicable.
(2) Securities other than shares
Not applicable.
2. Contract amount and fair value of derivative transactions(Thousands of yen)Contract amount (Note 1)
Category

Type

Transaction other thanmarket transaction

Fair value(Note 2)

Of which,over 1 year

Interest rate swap transaction
Floating interest rate receivableand fixed interest rate payable

50,350,000

50,350,000

－

Total

50,350,000

50,350,000－(Note 1) The contract amount of interest rate swap transactions is based on the notional principal.
(Note 2) The fair value is omitted because the transaction meets the criteria for the special accounting treatment under the
Accounting Standards for Financial Instruments.

3. Schedule of property, plant and equipment and intangible assets(Thousands of yen)
Accumulated depreciation

Balanceat beginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodBalanceat end ofperiod30,919,664

14,969,926－

45,889,590

848,625

643,178

29,250－672,428－996－

82,850,441

23,822,8210Subtotal
Intangible Other
assetsSubtotalType of assets

Buildings
in trust
Structuresin trust

Net balanceat end ofperiodNotes

550,974

45,040,965(Note)

16,2599,043

656,169(Note)

996

13

13

982

(Note)－

106,673,263－－

106,673,263(Note)

－

0

－

－

－

－

－

114,413,285

38,822,994

0

153,236,279

864,898

560,032

152,371,380

－

7,350

－

－

7,350

1,262

735

6,087

－

7,350

－

－

7,350

1,262

735

6,087

－

114,420,635

38,822,994

0

153,243,629

866,161

560,767

152,377,467－

oraccumulated
amortization

For theperiodTools,
Property,plant andequipment

furniture andfixtures intrust
Land in trust
Constructionin progressin trust

Total(Note)The increase during the period is attributable to the acquisition of Hommachi Garden City.

4. Schedule of other specified assets
Real estate trust beneficiary interests are included above in “3. Schedule of property, plant and equipment
and intangible assets”.
5. Schedule of investment corporation bonds
Not applicable.
34

6. Schedule of loans payable

Short-termloans payable

Category(Thousands of yen)
Balanceat beginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodThe Bank of TokyoMitsubishi UFJ, Ltd.

－

13,280,000

13,280,000

Sumitomo Mitsui Banking
Corporation－

3,320,000

3,320,000

Subtoal－16,600,000

16,600,000－

1,500,000－－

1,500,000

1,100,000－－

1,100,000

The Norinchukin Bank

1,500,000－－

1,500,000

Mizuho Bank, Ltd.

2,100,000－－

2,100,000

1,300,000－－

1,300,000 0.38000

1,200,000－－

1,200,000

2,100,000－－

2,100,000

1,300,000－－

1,300,000

1,900,000－－

1,900,000

3,300,000－－

3,300,000

800,000－－

800,000

800,000－－

800,000

1,800,000－－

1,800,000

600,000－－

3,000,000－－

3,000,000

1,800,000－－

1,800,000

1,000,000－－

1,000,000

900,000－－

900,000

4,200,000－－

4,200,000

800,000－－

800,000

700,000－－

700,000

2,400,000－－

2,400,000

900,000－－

3,700,000－－

3,700,000

2,000,000－－

2,000,000

900,000－－

900,000

1,400,000－－

1,400,000

4,200,000－－

4,200,000

LenderThe Bank of TokyoMitsubishi UFJ, Ltd.
Development Bank ofJapan Inc.

Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mitsubishi UFJ Trust andBanking Corporation
Resona Bank, Limited
The Bank of TokyoMitsubishi UFJ, Ltd.
Development Bank ofJapan Inc.

Long-term loans payable

The Norinchukin Bank
Mizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mitsubishi UFJ Trust andBanking Corporation
Resona Bank, Limited
The Bank of TokyoMitsubishi UFJ, Ltd.
Development Bank ofJapan Inc.
The Norinchukin Bank
Mizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mitsubishi UFJ Trust andBanking Corporation
Resona Bank, Limited
The Bank of TokyoMitsubishi UFJ, Ltd.
Development Bank ofJapan Inc.

35

Average
Balanceinterest
Repayment Repayment
at end ofrate
Purpose Security
due date
methodperiod(%)(Note 1)
Purchase Un－
May 18, Lump-sum of assets secured
0.35500
2016
payment
andUn(Note 2) at maturity related guaran－
expenses teed－

600,000 0.65830

900,000 0.94060

1.47450
300,000－－

300,000

－

－

－

－

Nov. 30,
2017

Nov. 30,
2019

Nov. 30,2021

Nov. 30,
2024

Purchase UnLump-sum of assets secured
payment
andUnat maturity related guaranexpenses teedCategoryAmount ofincreaseduringperiodAmount ofdecreaseduringperiod700,000－－

700,000

3,700,000－－

3,700,000

700,000－－

700,000

400,000－－

400,000－

1,650,000－

The Norinchukin Bank－

650,000－

650,000

Mizuho Bank, Ltd.

－

950,000－

950,000－

500,000－

500,000－

1,650,000－－

850,000－

850,000－

200,000－

200,000－

550,000－

550,000

LenderMizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mitsubishi UFJ Trust andBanking Corporation
The Bank of TokyoMitsubishi UFJ, Ltd.

Long-term loans payable

Averageinterest
Repayment Repayment
rate
Purpose Security
due date
method(%)(Note 1)

Balanceatbeginningof period

Balanceat end ofperiod

1.47450

Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mitsubishi UFJ Trust andBanking Corporation
Resona Bank, Limited
The Bank of TokyoMitsubishi UFJ, Ltd.
Development Bank ofJapan Inc.

Purchaseof assets
andrelatedexpensesNov. 30,2024

1,650,000 0.61760

1,650,000 0.62760

Nov. 30,
2020

Unsecured
Unguaranteed

Lump-sumpayment
at maturity－

700,000－

700,000 0.88470－

650,000－

650,000 0.88500－

350,000－

350,000－

650,000－

650,000－

350,000－

350,000

Resona Bank, Limited－

300,000－

300,000

The Bank of TokyoMitsubishi UFJ, Ltd.

－

750,000－

750,000 1.00850

Mizuho Bank, Ltd.

－

400,000－

400,000－

300,000－

300,000－

700,000－

700,000－

350,000－

350,000－

500,000－

500,000－

100,000－

100,000

Subtotal

55,000,000

13,100,000－

68,100,000

－

－

－

－

－

Total

55,000,000

29,700,000

16,600,000

68,100,000

－

－

－

－

－

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

Repayment ofloans
payableNov. 30,2022
0.89470

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

1.01850

Resona Bank, Limited

Nov. 30,2023(Note 1) Average interest rate is the weighted average interest rate during the period. Interest rates are rounded to five decimal
places. The interest rates for loans hedged by interest rate swap transactions used to hedge the risk of interest rate
fluctuations are the interest rates reflecting the effect of the interest rate swaps.
(Note 2) Partial early repayments were made on June 17, 2015 and July 22, 2015 and an early repayment of the remaining existing
loan was made on July 31, 2015.
(Note 3) The following is the maturity schedule of long-term loans within five years of the balance sheet date.

(Thousands of yen)Due in1 year or lessLong-term loans payable

1 to 2 years-

2 to 3 years-

14,000,000

3 to 4 years

4 to 5 years-

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