Ichigo Preserves and Improves Real Estate

June 14, 2016

Financial Report for the April 2016 Fiscal Period
Ichigo Office REIT Investment Corporation (Tokyo Stock Exchange, 8975)
Representative: Yoshihiro Takatsuka, Executive Director
www.ichigo-office.co.jp/english
Ichigo Real Estate Investment Advisors Co., Ltd. (Ichigo Office REIT Asset Management Company)
Representative: Wataru Orii, President & Representative Statutory Executive Officer
Inquiries: Masanori Kubota, Statutory Executive Officer (Finance, Accounting)Telephone: +81-3-3502-4891
Submission of Financial Report (Yuka Shoken Hokokusho): July 25, 2016 (expected)
Dividend Payment: July 22, 2016 (expected)
Supplemental Material to Financial and Business Results: Yes (Corporate Presentation)
Financial and Business Results Briefing: Yes (for institutional investors and analysts)
1. Financial Results for the April 2016 Fiscal Period (November 1, 2015 - April 30, 2016)(1) Earnings(million yen; period-on-period change)

April 2016

Operating
Revenue
6,682

October 2015

6,248

6.9%

Operating
Profit
3,208

24.5%

2,952

Change

8.7%

Recurring
Profit
2,542

30.2%

1,854

Change37.1%

Net
Income
2,482

84.4%

1,853

ChangeChange33.9%
163.1%

2.7%

Ratio of
Recurring Profit
to Total Assets
1.4%

Ratio of
Recurring Profit
to Operating Revenue
38.1%

2.3%

1.2%

29.7%

Net Income per Share(yen)

Ratio of Net Income
to Equity

April 2016

1,752

October 2015

1,310

(2) Dividends
Dividend per
Share

Total
Dividends

Dividend per
Share in Excessof Earnings

Total Dividends
in Excess of
Earnings

Payout
Ratio

April 2016

(yen)
1,740

(million yen)
2,464

(yen)
0

(million yen)
0

(%)
99.3

Ratio of
Dividends
to NetAssets(%)
2.6

October 2015

1,706

2,416

0

0

130.3

2.7

(Note 1) The October 2015 dividend included a 562 million yen dividend reserve reversal and thus differsfrom Net Income.
(Note 2) The April 2016 dividend reflects a 17 million yen provision to the dividend reserve fromunappropriated retained earnings.
(Note 3) The October 2015 payout ratio reflects a new share issuance and is calculated as: Payout Ratio =Total Dividends / Net Income x 100

(3) Assets and Equity

April 2016

Total Assets(million yen)
182,430

Net Assets(million yen)
93,321Equity Ratio
(%)
51.2

Net Assets per Share(yen)
65,890

October 2015

184,792

93,25550.5

65,843

Cash Flow fromOperating Activities

Cash Flow from
Investment Activities

Cash Flow from
Financing Activities

April 2016

(million yen)
7,327

(million yen)(539)

(million yen)
(5,247)

Cash and Cash
Equivalents at End of
the Period(million yen)
17,508October 2015

5,180

(47,277)

44,612

15,968(4) Cash Flow

2. Earnings Forecast for the October 2016 Fiscal Period (May 1, 2016 to October 31, 2016) and the April
2017 Fiscal Period (November 1, 2016 to April 30, 2017)(million yen; period-on-period change)

October 2016

Operating
Revenue
7,152

April 2017

7,188

7.0%

Operating
Income
3,410

0.5%

3,244

Change

6.3%

Recurring
Profit2,407(4.8%)

2,503

Change(5.3%)Net
Income
2,407

3.9%

2,503

ChangeChange(3.0%)
3.9%(yen)

Dividend per ShareDividend per Share in Excess of Earnings

October 2016

1,890

0

April 2017

1,900

0

(Note 1)
(Note 2)

The forecast Net Income per share for October 2016 is 1,570 yen and for April 2017 is 1,633 yen.
The October 2016 dividend reflects a dividend reserve reversal of 490 million yen, and the April
2017 dividend reflects a dividend reserve reversal of 406 million yen. Thus, both differ from therespective Net Income of the relevant period.

2

3. Other(1) Changes in Accounting Policies, Changes in Accounting Estimates, and Retrospective
Restatement(i) Changes Accompanying Amendments to Accounting Standards:(ii) Changes Not Listed in (i):(iii) Changes in Accounting Estimates:(iv) Retrospective Restatement:

None
None
None
None

(2) Number of Shares Issued and Outstanding(i) The number of shares issued and outstanding (including treasury shares) was 1,416,323
shares at the end of October 2015 and 1,416,323 shares at the end of April 2016.
(ii) There were no treasury shares at the end of October 2015 or at the end of April 2016.
Completion Status of Auditing ProceduresThis document is not subject to the auditing requirements set forth in the Financial Instruments and Exchange
Law of Japan. The auditing procedures in accordance with those requirements have thus not been completed asof the date of the publication of this document.
Appropriate Use of Performance Forecasts and Other Matters of Special Note
The forecasts presented above are current figures based on certain preconditions. Accordingly, the actual
operating revenue, operating income, recurring profit, net income, dividend per share, and dividend per share inexcess of earnings may vary due to changes in circumstances. Moreover, these forecasts should not be construed
as a guarantee of such performance or results.
For details on preconditions, please refer to the “Preconditions for the October 2016 Earnings Forecasts” and the“Preconditions for the April 2017 Earnings Forecasts” on pages 4 and 5.
This English version is a translation of the original Japanese notice and is provided solely for informational
purposes. Should there be any discrepancies between this translation and the Japanese original, the latter shallprevail.

3

Preconditions for the October 2016 Earnings Forecasts
Preconditions
PeriodOctober 2016 Fiscal Period: May 1, 2016 – October 31, 2016 (184 days)

Portfolio Assets• 86 assets. The forecast assumes there will be no additional acquisitions or sales throughOctober 2016.
• The number of portfolio assets may change due to acquisitions or sales.

Number of Shares• 1,532,287 shares issued and outstanding as of June 14, 2016

Operating Revenue• Portfolio-wide occupancy forecast for October 31, 2016: 96.5%• Rental revenue is calculated conservatively based on lease contracts that are in effect as oftoday while taking into consideration such factors as historical rents, the competitiveness of
Ichigo Office REIT assets, and market conditions.

Operating Expenses• Property and city planning taxes: 513 million yen. Pro-rated property and city planningtaxes related to acquisitions are included in acquisition cost and excluded from operating
expenses.
• Building maintenance and repair expenses: 99 million yen. However, expenses may differ
significantly from these estimated amounts for reasons including the variability ofmaintenance and repair expenses, costs due to unexpected building damage, etc.
• Service provider expenses including property management fees, etc.: 657 million yen.
• Depreciation: 921 million yen. Depreciation is calculated using the straight-line method,and includes the depreciation of future additional capital expenditures.
• For rental expenses, Ichigo Office REIT’s principal operating expenses (other thandepreciation, see above) are calculated based on historical data while taking into
consideration variable expenses.
• Actual operating expenses may differ significantly from these assumptions due tounforeseeable factors.

Non-Operating
Expenses• Interest expenses: 553 million yen• Borrowing-related expenses: 396 million yen• Expenses related to the new share issuance: 54 million yen

Borrowings• Total borrowings: 97,911 million yen as of October 31, 2016

Dividend per Share• Dividends: 2,896 million yen, which is the total amount of unappropriated retained earningsof 2,407 million yen plus a dividend reserve reversal of 490 million yen.
• Dividend per share is based on the assumption that dividends will comply with the dividend
distribution policy stipulated in Ichigo Office REIT’s Articles of Incorporation.
• 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, fluctuationsin interest rates, and the issuance of additional shares.

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

Other• The performance forecast is based on the assumption that revisions impacting the forecast
figures will not be made to laws and ordinances, the tax system, accounting standards,
listing rules, rules of the Investment Trust Association, Japan, and that there will be no
unexpected material change in general economic trends, real estate market conditions, etc.

4

Preconditions for the April 2017 Earnings Forecasts
Preconditions
PeriodApril 2017 Fiscal Period: November 1, 2016 – April 30, 2017 (181 days)

Portfolio Assets• 86 assets. The forecast assumes there will be no additional acquisitions or sales throughApril 2017.
• The number of portfolio assets may change due to acquisitions or sales.

Number of Shares• 1,532,287 shares issued and outstanding as of June 14, 2016

Operating Revenue• Portfolio-wide occupancy for April 30, 2017: 95.9%• Rental revenue is calculated conservatively based on lease contracts that are in effect as oftoday while taking into consideration such factors as historical rents, the competitiveness of
Ichigo Office REIT properties, and market conditions.

Operating Expenses• Property and city planning taxes: 537 million yen. Pro-rated property and city planningtaxes related to acquisitions are included in acquisition cost and excluded from operating
expenses.
• Building maintenance and repair expenses: 118 million yen. However, expenses may differ
significantly from these estimated amounts for reasons including the variability ofmaintenance and repair expenses, costs due to unexpected building damage, etc.
• Service provider expenses including property management fees, etc.: 640 million yen• Depreciation: 923 million yen. Depreciation is calculated using the straight-line method,and includes the depreciation of future additional capital expenditures.
• Performance fees to asset management company: 153 million yen• For rental expenses, Ichigo Office REIT’s principal operating expenses (other thandepreciation, see above) are calculated based on historical data while taking into
consideration variable expenses.
• Actual operating expenses may differ significantly from these assumptions due tounforeseeable factors.

Non-Operating
Expenses• Interest expenses: 552 million yen• Borrowing-related expenses: 189 million yen

Borrowings• Total borrowings: 97,764 million yen as of April 30, 2017

Dividend per Share• Dividends: 2,911 million yen, which is the total amount of unappropriated retained earningsof 2,504 million yen plus a dividend reserve reversal of 406 million yen.
• Dividend per share is based on the assumption that dividends will comply with the dividend
distribution policy stipulated in Ichigo Office REIT’s Articles of Incorporation.
• 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, fluctuationsin interest rates, and the issuance of additional shares.

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

Other• The performance forecast is based on the assumption that revisions impacting the forecast
figures will not be made to laws and ordinances, the tax system, accounting standards,
listing rules, rules of the Investment Trust Association, Japan, and that there will be no
unexpected material change in general economic trends, real estate market conditions, etc.

5Financial Statements(1) Balance Sheet(Thousand yen)
October 2015(as of October 31, 2015)
AssetsCurrent assets
Cash and cash equivalents
Cash and cash equivalents in trust
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Other
Total current assets

April 2016(as of April 30, 2016)

6,545,720

7,961,946

9,455,413
46,996

9,588,157
43,306

325,501
515,293311,670―

748

11,231

16,889,673

17,916,313

8,492,334

8,013,966

Fixed assets
Property, plant, and equipment
Buildings
Accumulated depreciation(976,199)(1,044,830)

7,516,134

6,969,136

32,54532,545

Accumulated depreciation(17,183)(19,337)

Structures, net

15,362

13,208

Buildings, net
Structures

Machinery and equipment

265,918

240,839

Accumulated depreciation(81,671)(81,147)

Machinery and equipment, net

184,247

159,691

Accumulated depreciation

58,111(27,855)

57,170(30,306)

Fixtures, net

Fixtures30,255

26,863Land
Construction in progress

18,825,582
124

18,763,321―

Buildings in trust
Accumulated depreciation

37,003,566(2,885,137)

36,180,504(3,371,382)

Buildings in trust, net

34,118,429

32,809,122

Structures in trust
Accumulated depreciation

57,868(10,259)

57,918(13,577)

Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Fixtures in trust

47,60844,341

351,538

301,936(109,675)(116,546)

241,863

185,389

191,917

193,962

Accumulated depreciation(76,520)(83,497)

Fixtures in trust, net

115,397

110,465

99,388,460

98,144,951

4,286

3,366

160,487,752

157,229,858

Leasehold rights in trust

4,494,579

4,494,579

Total intangible assets

4,494,579

4,494,579

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

6

(Thousand yen)
October 2015(as of October 31, 2015)

April 2016(as of April 30, 2016)

Investments and other assets
Investments in securities
Tenant leasehold and security deposits
Long-term prepaid expenses
Other
Total investments and other assets
Total fixed assets
Total assets
Liabilities
Current liabilities
Operating accounts payable
Current portion of long-term loans payable
Accounts payable – otherAccrued expenses
Income taxes payable, etc.
Accrued consumption taxes, etc.
Advances received
Allowance for disaster-related loss
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Asset retirement obligations
Total noncurrent liabilities
Total liabilities
Net assets
Shareholders’ equity
Shareholders’ capital
SurplusCapital surplus
Dividend reserve
Unappropriated retained earnings /loss
Total surplus
Total shareholders’ equity
Total net assets
Total liabilities and net assets

7

2,022,112

2,030,331

10,005

10,005

868,429
19,801

722,514
26,5762,920,348

2,789,427

167,902,679

164,513,865

184,792,353

182,430,179

463,454
283,049
531,893
5,243
605
30,985
1,040,173―
11,6072,367,010

548,735
255,549
609,494
7,366
605
423,553
1,047,558
60,00036,031
2,988,893

81,110,726
1,744,540
6,311,861
2,725
89,169,854
91,536,865

78,303,391
1,686,912
6,126,635
2,742
86,119,682
89,108,576

58,781,415

58,781,415

20,566,420
12,053,620
1,854,031
34,474,073
93,255,488
93,255,488
184,792,353

20,566,420
11,491,269
2,482,497
34,540,187
93,321,603
93,321,603
182,430,179

(2) Income Statement(Thousand yen)
October 2015
(May 1, 2015 to
October 31, 2015)
Operating revenue
Rental revenue
Other rental revenue

April 2016
(November 1, 2015 toApril 30, 2016)

5,596,972
633,787

5,675,615
584,151

17,808―50,136
372,545

Total operating revenue

6,248,567

6,682,449

Operating expenses
Rental expense
Loss on sales of real estate

2,545,378

2,527,506

654
631,997

54,083764,925

10,16938,43313,08740,152Other operating expenses

5,040
64,181

5,040
69,343

Total operating expenses

3,295,855

3,474,139

2,952,711

3,208,309

1,615
639

1,525
615

―

783

2,255

2,924

490,964

478,136

567,196
40,416

190,131―

Dividend income from investment in TK equity
Gain on sales of real estate

Asset management fee
Asset custody fee
Administrative service fees
Director’s compensation

Operating profit
Non-operating income
Interest income
Reversal of distribution payable
Interest on refund
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing related expenses
Share issuance expenses
Other
Total non-operating expenses
Recurring profit
Extraordinary loss
Provision of allowance for disaster-related loss
Total extraordinary losses
Income (losses) before income taxes
Income taxes – current
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings/loss

8

2,212

―

1,100,789

668,267

1,854,178

2,542,966―

60,000―60,0001,854,178

2,482,966

605

605

605

605

1,853,573

2,482,361

458

135

1,854,031

2,482,497

(3)Statement of Shareholders’ Equity
October 2015 (May 1, 2015 to October 31, 2015)(Thousand yen)
Shareholders' equity
Surplus
Shareholders’capitalBalance at start of theperiod34,130,503

Unappropriatedretainedearnings/loss

CapitalsurplusDividend
reserve

20,566,420

13,160,756

705,230

Total
shareholders’equityTotal
surplus34,432,407

Total
net asset

68,562,911

68,562,911

24,650,912

24,650,912

Changes during the period
Issuance of new shares

24,650,912

Reversal of dividend
reserve

1,107,136―――

Dividends from surplus(1,811,907)(1,811,907)(1,811,907)(1,811,907)

Net income

1,853,573

1,853,573

1,853,573

1,853,573(1,107,136)

Total changes during theperiod24,650,912―(1,107,136)

1,148,801

41,665

24,692,577

24,692,577

Balance at end of the period

58,781,415

20,566,420

12,053,620

1,854,031

34,474,073

93,255,488

93,255,488

April 2016 (November 1, 2015 to April 30, 2016)(Thousand yen)
Shareholders’ equity
Surplus
Shareholders’capitalUnappropriatedretainedearnings/loss

Total
net asset

CapitalsurplusDividend
reserve

20,566,420

12,053,620

1,854,031

34,474,073

93,255,488

93,255,488(562,350)

562,350―――Dividends from surplus(2,416,247)(2,416,247)(2,416,247)(2,416,247)

Net income

2,482,361

2,482,361

2,482,361

2,482,361

Balance at start of theperiod58,781,415

Total
surplus

Total
shareholders’equityChanges during the period
Reversal of dividend
reserve

Total changes during theperiodBalance at end of the period――(562,350)

628,465

66,114

66,114

66,11458,781,415

20,566,420

11,491,269

2,482,497

34,540,187

93,321,603

93,321,603

9

(4) Cash Flow Statement(Thousand yen)
April 2016
(November 1, 2015 toApril 30, 2016)

October 2015
(May 1, 2015 to
October 31, 2015)
Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Share issuance expenses
Increase (decrease) in allowance fordisaster-related loss
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes receivable
Decrease (increase) in prepaid expenses
Decrease (increase) in long-term advance charges
Increase (decrease) in accrued consumption taxes
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable
Increase (decrease) in advances received
Decrease due to sale of property, plant, andequipment
Decrease due to sale of property, plant, andequipment in trust
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash generated by (used in) operating activities
Cash flows from investment activities
Purchase of property, plant, and equipment
Purchase of property, plant, and equipment in trust
Increase in tenant leasehold and security deposits
Decrease in tenant leasehold and security deposits
Increase in tenant leasehold and security deposits intrust
Decrease in tenant leasehold and security deposits in
trust
Purchase of investment securities

1,854,178
831,363
40,4162,482,966
836,704――

60,000(1,615)490,964(10,181)(515,293)(66,056)(264,659)(42,480)
167,812
165,391
239,019(1,525)478,1363,689
515,293
13,830145,914392,568(133,907)
77,6007,385―

554,258

2,809,010

2,358,614(22,679)
5,675,189
1,615(495,343)(605)
5,180,856

10,9597,802,491
1,525(476,013)(605)
7,327,398(39,194)(46,879,754)
19,791(4,839)(31,160)(250,681)
74,151(131,850)

1,935,346

245,027(303,617)(445,085)(2,005,400)―

Net cash generated by (used in) investment activities(47,277,668)(539,597)

Cash flows from financing activities
Increase in long-term loans payable
Decrease in long-term loans payable
Proceeds from issuance of shares
Dividends paid
Net cash generated by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period

29,644,000(7,830,537)
24,610,495(1,811,741)
44,612,217
2,515,405
13,453,047
15,968,453―(2,834,834)―(2,412,653)(5,247,488)
1,540,312
15,968,453
17,508,765

10