SEKISUI HOUSE REIT, INC.

Fiscal Results Briefing
3rd Fiscal Period Ended April 30, 2016
August 5, 20160

Disclaimer
This document is provided for information purposes only and is not a solicitation for investment, nor a recommendation or invitation to make specifictransactions. We caution readers to undertake investment decisions of their own volition.
This document is not a disclosure document or report based upon the Financial Instruments and Exchange Act, the Act on Concerning Investment
Trusts and Investment Corporations, public listing regulations of the Tokyo Stock Exchange or other related laws or regulations in Japan.
This document includes charts, data and other information prepared by Sekisui House Investment Advisors, Ltd. (the “Asset Management
Company”) based on data, indices and other information disclosed by third parties, in addition to statements related to Sekisui House Reit, Inc. (the“Investment Corporation”). Statements on analysis, judgments and other opinions concerning those charts, data and other information of theInvestment Corporation or the Asset Management Company as of the date of this document are also included.
This document is prepared based on accounting policies in Japan, unless otherwise specified.
The contents of this document have not been audited and their accuracy and completeness are not guaranteed. Analysis, judgments and other
opinions of the Investment Corporation or the Asset Management Company only reflect the views of the Investment Corporation or the AssetManagement Company as of the date of the document. Therefore, other views and opinions may exist and the Investment Corporation or the AssetManagement Company may change its views in the future.
The figures under the same item of other disclosed materials may differ from figures presented in this document due to different rounding of fractions
and such.
This document includes forward looking statements with respect to the future performance, plans, managerial goals and strategies of the Investment
Corporation. These statements are based on assumptions of future events or trends of the business environment and there is no assurance thatthese assumptions are correct. The actual results may differ significantly due to various factors.
While the Investment Corporation takes reasonable care in the preparation of this document, it does not guarantee the accuracy and completenessof its content. Readers are also cautioned that the contents of this document may be changed or deleted without prior notice.
The Investment Corporation or the Asset Management Company accepts no responsibility for the accuracy of data, indices and other information
disclosed by third parties.
For the convenience of preparing graphs, the dates indicated herein may differ from actual business dates.
Making a copy of, or appropriation of, the content contained herein without prior permission is prohibited.
This English language document was prepared solely for the convenience of, and reference by, overseas investors. The Investment Corporation
gives no warranties as to its accuracy or completeness.
The material containing the information required under Article 23 (1) and (2) of the AIFMD is available at http://sekisuihouse-reit.co.jp/en/ir/library.html.
Inquiries
Asset Management Company: Sekisui House Investment Advisors, Ltd.
Financial Instruments Business Operator: Director-General of the Kanto Finance Bureau (Kinsho) No. 2791
TEL +81-3-6447-4870（main）

1

Contents

Appendix

About Sekisui House Reit, Inc.
・Executive Summary

3・Financial Results and Forecast

20

・Growth Strategies Utilizing Sekisui House’s Support

5・Balance Sheet

21

・Management Performance since IPO

7・Statement of Income and Retained Earnings

22

・Portfolio Summary (as of June 16, 2016)

8

・Entire Portfolio (as of April 30, 2016)23

・Outline of Portfolio

9・Overview of Appraisal

24

・Portfolio Map and Growth Potential of the Area

11

・Portfolio Development Policy

25

・Sekisui House, SHR’s Sponsor

12・Types of Lease Agreement

26

・External Growth

13・Structure of SHR

27・Internal Growth

14・Unitholders Composition

28

・Financial Results

15

・Governance System

29

・Interest-Bearing Liabilities (as of June 16, 2016)16

・Asset Management Company (as of June 16, 2016)30

・Strategy for Future Growth17・Change in Unit Price

31

・Our Growth Strategies

18

2

Executive Summary
Characteristics of Sekisui House Reit, Inc. (“SHR”)
Characteristic 1

 SHR’s sponsor is Sekisui House, Ltd. (“Sekisui House”), one of

the leading homebuilders in Japan.
 Expanding asset size by utilizing pipeline support from Sekisui
House and reducing risk of portfolio concentration by entering
into fixed-rent type master lease agreement with Sekisui House.
Characteristic 2

Current AUM(aggregate acquisition price)

JPY 179.5 bil

Current Portfolio(asset type) SHR is a diversified REIT focusing mainly on office buildings,

retail properties and hotels (“Commercial Properties”).

Office Buildings
100%
Current Portfolio(area)

 Investing in Commercial Properties located in major

metropolitan areas; Greater Tokyo (59.6%), Osaka area (36.8%)
and Nagoya area (3.5%) (acquisition price basis).

Tokyo, Osaka & Nagoya
100% Investing in Prime Properties featuring “strategic locations” and“high quality”.
 All 6 properties have been recently built and 3 properties have arating of 4 or 5 stars under the DBJ Green Building Certification
system.
Characteristic 3

Current Portfolio(features)

Prime Properties
100% Strong relationships with major domestic financial institutions.

(Note) Money amounts less than the indicated figures are rounded down and percentage figures are rounded to the nearest 1st decimal place otherwise indicated in this document. The same shall apply hereinafter.

3

Executive Summary
Profile of Sekisui House Reit, Inc.
Corporate Profile
Trade name
Asset management company
SponsorSekisui House Reit, Inc. (securities code: 3309)
Sekisui House Investment Advisors, Ltd.
Sekisui House, Ltd.
JPY 55.6 bil JPY 51.5 bil JPY 23.1 bil JPY 38.6 bil JPY 4.4 bil JPY 6.35 bil/NAGOYA/OSAKA/OSAKA/TOKYO/TOKYO/OSAKA

Owned Assets
Aggregate acquisition price
Number of properties

JPY 179.5 bil
6 properties (6 office buildings)

Distributions
Fiscal period ends
Actual for 1st fiscal period
Actual for 2nd fiscal period
Actual for 3rd fiscal period
Forecast for 4th fiscal period
Forecast for 5th fiscal period

April and October of each year
JPY 1,603 per unit
JPY 2,458 per unit
JPY 2,477 per unit
JPY 2,550 per unit
JPY 2,620 per unit

Financial information
Total interest-bearing liabilities
Unitholders’ capital
Number of investment units
issued and outstanding
Credit rating

2,477

2,458

2,550

2,620

1,603

1st FP DPU 2nd FP DPU 3rd FP DPU 4th FP DPU 5th FP DPU(actual)(actual)(actual)(forecast)(forecast)

History

JPY 77.3 bil
JPY 100.0 bil
894,000 units
AA- (stable) [JCR]

December
2014

May throughJune 2015

Listed on theReal Estate
Investment
Trust Section of
TSE（J-REIT market)

1st follow-on
public offering
Offering size:
JPY 20.6 bil

Sekisui House, Ltd. is also the main sponsor of Sekisui House SI Residential Investment Corporation.
(Note) The figures are as of July 31, 2016.

4

May throughJune 2016
2nd follow-on
public offering
Offering size:
JPY 12.2 bilGrowth Strategies Utilizing Sekisui House’s Support
Strength and Track Record of Sekisui House’s Development Business■ Sekisui House’s Corporate Profile and Business Strategies
About Sekisui House

Priority strategies for each business modelSekisui House’s Corporate Profile (As of January 31, 2016)
Corporation Name : Sekisui House, Ltd.
Date of Establishment : August 1, 1960
Capital Stock : JPY 202,591.20 million
Cumulative Number of Houses Built : 2,284,659 houses

Built-to-Order Business・Strengthening sales of mid-range and high-end products by enhancing value-added proposals
・Strengthening sales of multifamily housing by enhancing three-and four-story houses
・Reinforcing sales of Green First Zero・Promoting sales for elderly housing with supportive services

Supplied Housing Business・Strengthening the large-scale renovation for detached houses, rental housing, and condominiums
・Strengthening the brokerage business for sales of detached houses and rental housing
・Promoting Sum Stock (The Provision of Quality Housing Stock Association) business・Strengthening the block leasing of elderly housing with supportive services

How Sekisui House became involved in the field of J-REIT
Since 2005, Sekisui House entered the J-REIT field by acquiring anequity stake in Japan Excellent Asset Management Co., Ltd., theasset manager for Japan Excellent Inc.（The capital ties havedissolved already.）.

Development Business・Creating quality communities to promote sales in the Houses for Sale Business・Bolstering exit strategies through Sekisui House Reit, Inc.
・Strengthening brand building in the Overseas BusinessIn 2010, Sekisui House acquired 75% of Joint Capital Partners Co.,
Ltd., the asset manager of Joint Reit Investment Corporation, now
known as Sekisui House SI Residential Investment Corporation.
■ Commitment of properties by Sekisui House Group to its
sponsored J-REITs (as of June 30, 2016)■ Sekisui House’s Consolidated Financial Statements FY2015(15/2-16/1)

Collaboration with our J-REIT platform within Sekisui House’s Development
Business has become significantly more important.
Asset Type

Number of Properties (Note)

Net Sales
1,858.8(JPY bil)

OthersTransaction Price

Total Assets

JPY 2,029.79 bil

401.5
Development Business

Office(2007-2016)

Residential(2010-2016)

Total(2007-2016)

8 properties
53 properties
61 properties

JPY 213.8 bil

Net Sales

JPY 95.1 bil

Operating Income

583.2

JPY 149.64 bil

Net Income

5

JPY 84.30 bil

Supplied Housing
Business
Built-to Order Business

794.3

JPY 308.9 bil(Note) 2 office properties have been acquired by Japan Excellent, Inc. and 53 residential properties have beenacquired by Sekisui House SI Residential Investment Corporation.

JPY 1,858.87 bil

Outline of Asset Management Operation
6

Garden City Shinagawa Gotenyama

Management Performance since IPO■Steady External Growth and Increase in Unitholder Value(JPY bil)IPO(3 properties)
JPY 114.3 bil

1st follow-on PO(1 property)
JPY 38.6 bil

2nd follow-on PO(3 properties)
JPY 26.6 bil

300
3,000

60.0
55.0

2,000
200

JPY 152.9 bil

JPY 152.9 bil

JPY 179.5 bil

50.0

JPY 114.3 bil

45.0

1,000
100

42.5％

40.0

41.0％

40.9％

0
Total acquisition
取得価格
price
LTV
LTV

End of 1st FP
2015年4月期

End of 2nd FP
2015年10月期(as of Apr. 30, 2015)(as of Oct. 31, 2015)（第1期末）（第2期末）

Unrealized Gain

JPY 5.9 bil

Total Market Value（Note）

Distribution
per unit

End of 3rd FP
2016年4月期

40.9％

35.0

nd follow-on PO
After 2本募集後
第2回公募増資後(as of Apr. 30, 2016)(as of June 16, 2016)

JPY 11.9 bil

JPY 17.8 bil

JPY 20.0 bil

JPY 89.6 bil

JPY 99.0 bil

JPY 100.2 bil

JPY 121.0 bil

1st FP (actual)
JPY 1,603

2nd FP (actual)
JPY 2,458

3rd FP (actual)
JPY 2,477

4th FP (forecast)
JPY 2,550（第3期末）

Increase of 11.7％ from initial forecast

Increase of 5.8％ from initial forecast

Growth of Distribution per unit by follow-on POs
Initial Forecast
JPY 2,201

Initial Forecast
JPY 2,410(Note) Total market value as of end of each FP and after 2nd follow-on PO is calculated based on unit price as of end of each FP and as of May 31, 2016 respectively.

7

5th FP (forecast)
JPY 2,620

Portfolio Summary（as of June 16, 2016）■Portfolio Highlight
Asset size

（aggregate acquisition price）

JPY 179.5 bil

Number of properties

6

Office buildings ratio

100.0 ％

Average building age（Note 3）

JPY 198.4 bil

Total appraisal value（Note 1）

99.9 ％

Occupancy rate（Note 2）

5.4 years

Locationratio

3 majormetropolitan areas(acquisition
price basis)

Greater Tokyo

100.0 ％
59.6 ％■Portfolio Description
No.

Property Name

Acquisition
Price (JPY)

Appraisal
Value (JPY)

Investment
Ratio

Total Leasable
Area

Ｊ-1

Garden City Shinagawa Gotenyama

39.7 bil

44.3 bil

22.1％

21,033.47㎡

Ｊ-1(portion of additional acquisition) NEW

15.9 bil

16.9 bil

8.9％

8,202.48㎡

55.6 bil

61.2 bil

31.0％

29,235.95㎡

Total

Occupancy
Rate

Building
Age

Address

100.0%

5.3 years

Shinagawa-ku,
Tokyo

Ｊ-2

Gotenyama SH Building

51.5 bil

56.3 bil

28.7％

19,999.97㎡

100.0%

5.4 years

Shinagawa-ku,
Tokyo

Ｊ-3

Hommachi Minami Garden City

23.1 bil

26.9 bil

12.9％

16,699.46㎡

100.0%

5.3 years

Osaka-shi,
Osaka

Ｊ-4

Hommachi Garden City

38.6 bil

42.2 bil

21.5％

17,006.94㎡

100.0%

6.1 years

Osaka-shi,
Osaka

Ｊ-5

HK Yodoyabashi Garden Avenue NEW

4.4 bil

5.1 bil

2.5％

4,554.52㎡

98.6%

0.9 years

Osaka-shi,
Osaka

Ｊ-6

Hirokoji Garden Avenue NEW

6.35 bil

6.78 bil

3.5％

4,442.75㎡

100.0%

5.3 years

Nagoya-shi,
Aichi(Note 1) The total appraisal values stated in the appraisal reports as of the end of the 3rd fiscal period is indicated for the assets owned as of the end of the 3rd fiscal period. The total appraisal values at the time of acquisition is indicated for assets
acquired in the 4th fiscal period.
(Note 2) Occupancy rate stated above is as of May 31, 2016.
(Note 3) Average building age is calculated using the weighted average of building age according to the respective acquisition price.
(Note 4) As for Garden City Shinagawa Gotenyama, Hommachi Minami Garden City and HK Yodoyabashi Garden Avenue, SHR owns the sectional ownership right as well as accompanying right of site (in the site ownership ratio of approximately 75.8%,
56.3% and 40.6%, respectively). As for Hommachi Garden City, SHR owns the sectional ownership right to all exclusively-owned portions used as office and retail property of the building (in the exclusive area ratio of approximately 52.7%),
as well as the accompanying right of site (in the site ownership ratio of approximately 69.7%).

8

Outline of Portfolio
Property No.

J-1

J-2

J-3

Property name

Garden City Shinagawa Gotenyama

Gotenyama SH Building

Hommachi Minami Garden City

Photo of Properties

Map of Properties

25F

9F

7F

8F

24F

6F
5F

6F

Description of rights

～

7F

13F

4F

5F

3F

4F

2F

2F

1F

1F

B1F

12F

～

3F

Portion acquired at the time of the IPO

B2FPortion acquired at the time of the 2nd follow-on PO

Portion held by Sekisui House

Environmental
Consideration

DBJ Green Building Certification: 5 Stars-

DBJ Green Building Certification: 4 Stars

Total Floor Area
(entire building)

62,975.42㎡

19,812.85㎡

46,010.88㎡

Total Leasable Area(acquired portions)

29,235.95㎡

19,999.97㎡

16,699.46㎡

Occupancy Rate

100.0％

100.0％

100.0％

Completion

Feb. 2011

Feb. 2011

Feb. 20119Outline of Portfolio
Property No.

J-4

J-5

J-6

Property name

Hommachi Garden CityHK Yodoyabashi Garden Avenue

Hirokoji Garden Avenue

Photo of Properties
Map of Properties

～

27F

14F
13F
12F
11F
10F

Common Area

Office～Description of rights

Hotel

3F
2F
1F
B1F
B2F

Common Area

Retail

13Ｆ
12Ｆ
11Ｆ
10Ｆ
9F
8F
7F
6F
5F
4F
3F
2F
1F

Portion held by Third Party

12Ｆ
11Ｆ
10Ｆ
9F
8F
7F
6F
5F
4F
3F
2F
1F

Portion acquired at the time of the 1st follow-on PO

Portion acquired at the time of the 2nd follow-on PO

Environmental
Consideration

DBJ Green Building Certification: 4 Stars

CASBEE OSAKA: Rank A

CASBEE NAGOYA: Rank A

Total Floor Area
(entire building)

49,163.16㎡

16,953.28㎡

7,017.98㎡

Total Leasable Area(acquired portions)

17,006.94㎡

4,554.52㎡

4,442.75㎡

Occupancy Rate

100.0％

98.6％

100.0％

Completion

May 2010

July 2015

Mar. 201110

Portion held by Sekisui House

Portfolio Map and Growth Potential of the Area
Shinagawa Gotenyama Area
■Shinagawa station, the accessible station from the two buildings below, is one of the largest stations in Tokyo and has a high growth rate in terms of the passenger numbers.
■Shinagawa Station offers easy access to the Shinkansen Line and to Tokyo International Airport.
Hommachi - Yodoyabashi Area
■These three buildings are located in an area known as the Hommachi - Yodoyabashi area, the representative business area of Osaka.
■This area is convenient for accessing public transportation and also offers easy access to the Shinkansen Line and to Osaka International Airport.
Nagoya Meieki Area
■ Nagoya Station, the biggest terminal station in Chubu Area, is located in Nagoya Meieki Area, which comprises a business and commercial district.
■ A large-scale redevelopment project around Nagoya is underway with an eye to the launch of the Linear Chuo Shinkansen in 2027.
Osaka International Airport (ITAMI)
Osaka Sta.

Narita International Airport

Umeda Sta.

Tokyo Terminal Sta.

Shibuya Sta.

Yodoyabashi Sta.
J-5

Midosuji Ave.
Hommachi Sta.

Tokyo

J-4

J-3

Shinagawa Sta.
J-2
J-1

Osaka
NagoyaNamba Sta.

Shinkansen Line

Tokyo International Airport(HANEDA)

Kansai International Airport
J-5

J-4

J-3

J-6

J-2

J-1

Nagoya Sta.

Shinkansen LineHK Yodoyabashi
Garden Avenue

Hommachi
Garden City

Hommachi Minami
Garden City
Chubu Centrair International Airport

J-6

11

Hirokoji
Garden Avenue

Gotenyama
SH Building

Garden City
Shinagawa Gotenyama

Sekisui House, SHR’s Sponsor
Sekisui House’s ability to develop urban areas and its track record■Projects of Sekisui House
Asset acquired (Note 1)

Asset acquired (Note 1)

Asset acquired (Note 1)

Asset acquired

Governor of Osaka Award at
the Osaka Sustainable
Architecture Awards

CASBEE OSAKA OF THE
YEAR 2011

The Minister of Land, Infrastructure and Transport Prize, at theCompetition for Specialized Greening Technology for Rooftops,
Wall Facings and New Green Spaces

Hommachi Garden City
（Osaka）
Completion in May 2010

Hommachi Minami Garden City
（Osaka）
Completion in Feb. 2011

Garden City Shinagawa Gotenyama

Gotenyama SH Building

Gotenyama project (Tokyo) Completion in Feb. 2011

Governor of Osaka Award at the
14th Osaka Machinami Awards
in1994

Umeda Sky Building（Osaka）
Completion in Mar. 1993

(Note2)

CASBEE OSAKA OF THE
YEAR 2013

HICAP Reggie Shiu
Development of the Year

Grand Front Osaka（Osaka）
Completion in Apr. 2013

The Ritz-Carlton, Kyoto（Kyoto）
Completion in Oct. 2013

Best Tall Building Worldwide

Central Park Project in Australia

Akasaka Garden City (Tokyo)
Completion in Jan. 2006

(Note 1) Although SHR has acquired parts of the above buildings, it still has preferential negotiation rights by acquiring the remaining parts of these buildings. SHR does not have any plan to acquire the remaining parts of these buildings
as of the date hereof.
(Note 2) The above projects within and outside Japan include joint projects with other companies and properties that have been sold. SHR does not have any plan to acquire these projects as of the date hereof.

12External Growth Promoting external growth by focusing on “strategic locations” and “high quality” through utilizing Sponsor Pipeline.
<Acquisition Policy>• By setting a target to achieve JPY 200 bil in asset size, promoting continuous external growth focusing on acquisition from sponsor.
• Continuing the policy of making selective investments and actively considering property acquisition from third parties other than the sponsor.

<Properties acquired from Sponsor in 4th FP>• SHR acquired recently built and high quality properties for less than appraisal values under adverse acquisition environment.
Garden City
Shinagawa Gotenyama

HK Yodoyabashi
Garden Avenue

Hirokoji
Garden Avenue

Acquisition Price (JPY bil)

15.9

4.4

6.35

Appraisal Value (JPY bil)

16.9

5.1

6.78

Estimated NOI yield (Note 1)

3.9％

4.5％

4.8％

Garden City
Shinagawa Gotenyama

Hommachi Minami
Garden City

Hommachi
Garden City

Asset Type

Office building

Office building

Hotel

Period of Preferential
Negotiation Rights

From Oct. 16, 2014

From Oct. 16, 2014

From Apr. 24, 2015

Ratio of unacquired
floor area (Note 2)

24.2%

43.6%

47.3%

<Preferential Negotiation Rights (Japan)><Acquisition Capacity>• Maintaining LTV (total asset basis) at a conservative level and securing acquisition capacity.
(Acquisition capacity until LTV reaches 50% is about JPY 35 bil (Note 3).)(Note 1) Estimated NOI yield is exclusive of extraordinary factors in the year of acquisition and calculated by dividing the estimated NOI (which is assumed by the Asset Management Company based on the leasing terms and conditions, etc.),
by the acquisition price of the property.
(Note 2) “Ratio of unacquired floor area” refers to a percentage of the unacquired floor area in respect of which SHR holds preferential negotiation rights for acquisition to the exclusively-owned area of the entire building.
Unacquired floor area refers to the exclusively-owned areas in Garden City Shinagawa Gotenyama, Hommachi Minami Garden City and Hommachi Garden City for which SHR holds preferential negotiation rights for acquisition.
(Note 3) This indicates the maximum amount procured when SHR procures funds for asset acquisition with new interest-bearing liabilities until LTV (total assets basis) reaches 50%. However, please note that this does not guarantee the actual
procurement of the funds.

13Internal Growth■ Seeking stable earnings and internal growth opportunities• Policy to select a lease scheme from among pass-through type, fixed-rent type master lease or direct lease with tenants, etc., comprehensively taking
into account the status of owned assets, stability of rent revenue, efficiency of operation management and such other factors.
• Maintaining high occupancy rates through operation management utilizing
the know-how held by Sekisui House.
Seeking internal growth opportunities
Lease Types

Fixed-Rent Type Master Lease（68.5％）(Ratio of lease types)(Note 1)

Pass-Through Type Master Lease（9.8％）

Direct Lease（21.8％）

Garden City
Shinagawa Gotenyama

Hommachi Minami
Garden City

Hommachi
Garden CityHK Yodoyabashi
Garden Avenue

Hirokoji
Garden Avenue

Gotenyama
SH Building

Occupancy Rate

100.0％

100.0％

100.0％

98.6％

100.0％

100.0％

LesseeSekisui House

Sekisui House

Sekisui House

Sekisui House

Sekisui House

Non-disclosure (Note 2)

The Japan Research Institute,
Limited/
3M Japan Limited

Sompo Japan
Nipponkoa InsuranceInc./
The Dai-ichi Life
Insurance Company,
LimitedNon-disclosure (Note 2)/
Mizuho Securities Co.,Ltd.

Konoike Transport Co.,Ltd./
HANWA CO.,LTD.

Sekiwa Real Estate
Chubu, Ltd.

Non-disclosure (Note 2)

From
Dec. 2014
toDec. 2019

From
May 2015
toMay 2020

From
May 2016
to
May 2019

From
May 2016
to
May 2019

From
Mar. 2011
toFeb. 2031

Property Name

Photo of Properties

Main End-Tenant① acquired
portionContract Period（Master Lease or
Direct Lease)

From
Dec. 2014
toDec. 2019② portion
additionallyacquiredFrom
May 2016
toDec. 2019(Note 1) “Ratio of lease types” refers to the ratio of the leased floor area for each lease type under the relevant lease agreements for the properties (the master lease agreement if a master lease agreement has been concluded for the property) that is valid
as of June 16, 2016, to the total of leased floor areas indicated in such lease agreements.
(Note 2) The tenant name cannot be disclosed as consent for disclosure has not been acquired from the tenant.

14

Financial Results■Financial Standing
End of 3rd PF(actual)After 2nd
follow-on PO(as of April 30, 2016)(as of June 16, 2016)

Total interest-bearing liabilities

JPY 68.1 bil

JPY 77.3 bil

Fixed interest rate borrowing
ratio

79.4%

70.0%

Long-term liability ratio

100.0%LTV (total asset basis)

40.9％

40.9％

JPY 31.0 bil

JPY 35.0 bil

Average interest rate (Note 1)

0.80%

0.73%

4.8 years

Name of Lenders

88.1%

Acquisition capacity until
LTV reaches 50%(Approximate amount)

Average remaining term ofinterest-bearing liabilities (Note 2)■Distribution of Lenders (excluding short-term loans)（as of June 16, 2016）
Percentage (%)

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

23.9

Sumitomo Mitsui Banking Corporation

21.4

Mizuho Bank, Ltd.

12.8

Sumitomo Mitsui Trust Bank, Limited

12.0

Resona Bank, Limited

7.6

Mitsubishi UFJ Trust and Banking Corporation

6.3

Development Bank of Japan Inc.

5.4

The Norinchukin Bank

5.4

Mizuho Trust & Banking Co., Ltd.

5.3

■Diversification of Repayment Date（as of June 16, 2016）（JPY bil）

Floating
変動金利

200
20

4.3 years

Fixed
固定金利

150
15

■Credit Rating Information（as of June 16, 2016）
Credit Rating Company
JCR

100
10

17.0
14.0

Long-term Issuer Rating

50
5

9.2

AA-（Stable）
2017(Note 2)

10.0
7.0
3.0

00
(Note 1)

14.0

3.1

2 02018
1 8 年 2 02019
1 9 年 2 02020
2 0 年 2 02021
2 1 年 2 2022
0 2 2 年 2 2023
0 2 3 年 2 2024
024年

“Average interest rate” indicates a weighted average annual interest rate using the balance of interest-bearing liabilities as of the end of the 3rd fiscal period and May 31, 2016. In respect of the average interest rates of interest-bearing liabilities forwhich an interest rate swap was conducted in order to hedge the risk of interest rate fluctuations, weighted average interest rates taking into account the effect of the interest rate swap are used. The figure is rounded to the nearest 2nd decimal place.
Average remaining term of interest-bearing liabilities is calculated using the weighted average of remaining years of liabilities until maturity as of the end of the 3rd fiscal period and May 31, 2016 according to the respective balance of liabilities.

15

Interest-Bearing Liabilities（as of June 16, 2016) LoanTerm
Short

LenderThe Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited
Mitsubishi UFJ Trust and Banking Corporation
Development Bank of Japan Inc.
The Norinchukin Bank
Mizuho Trust & Banking Co., Ltd.

Long

Balance (JPY mil)

9,200

14,000Interest Rate

Base Rate(JBA 1-month JPY TIBOR)+0.22％
Base Rate(JBA 1-month JPY TIBOR)+0.25％

Drawdown Date

Repayment Date

May 24, 2016

May 23, 2017

Nov. 30, 2017

14,0000.65830% (Note)

17,0000.94060% (Note)

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Mitsubishi UFJ Trust and Banking Corporation
Development Bank of Japan Inc.

10,0001.47450％ (Note)

Nov. 30, 2024

Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited
Mitsubishi UFJ Trust and Banking Corporation
The Norinchukin Bank
Mizuho Trust & Banking Co., Ltd.

5,350

0.62760％ (Note)

Nov. 30, 2020

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

1,650

0.89470％ (Note)

Nov. 30, 2022

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

2,350

1.01850％ (Note)

Nov. 30, 2023

1,650
700
750
650
77,3000.61760%
0.88470%
1.00850%
0.88500%-

Nov. 30, 2020
Nov. 30, 2022
Nov. 30, 2023
Nov. 30, 2022-

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Development Bank of Japan Inc.

Total

Remarks

Nov. 30, 2019
Dec. 3, 2014

Nov. 30, 2021

UnsecuredandUnguaranteed

July 31, 2015-

(Note) In order to hedge the risk of interest rate fluctuations, an interest rate swap transaction, which substantially secured interest rates, was conducted. Accordingly, the interest rates are calculated taking the effect of this interest rate swap into consideration.

■Investment Corporation Bond
As of June 16, 2016, SHR does not issue investment corporation bonds.

16Strategy for Future Growth
Sekisui House REIT’s goals are to continue to focus on “Prime Properties”, andexpand and diversify its portfolio at a sustainable pace,by capitalizing on the strong support of Sekisui House.

Sekisui House REIT’s Operational Philosophy
・Provide high-quality social capital and maximize unitholder value
・Invest in commercial properties focused on strategic locations and high quality
・Portfolio development policy centering on office buildings
・Growth strategies that take full advantage of the versatile support of Sekisui House

Sekisui House’s Support for Sekisui House REIT
・External growth through Pipeline Support Agreement
・Fixed-rent type Master Lease with Sekisui House

17

Our Growth Strategies■Growth of Our Asset Size and Target(JPY bil)
3,000
300

JPY179.5bil

2,000
200

Utilize sponsor pipeline
by Sekisui House

JPY200bil+

JPY152.9bil

Utilize acquisition capacity

JPY114.3bil

↓

1,000
100

Promote continuous
external growth

0
上場時
After
IPO

After 1st第1回
follow-on PO After 2nd第2回
follow -on PO

公募増資後

公募増資後

The current
target■Management Strategies

Investment
Strategies

 Investment focusing on Prime Properties
 Continuous expansion of asset size Diversifying portfolio(number of properties / tenants)
 Utilizing sponsor pipeline by Sekisui House

Provide highquality social
capitalFinancial
Strategies

 Managing LTV (total asset basis) at a conservative
level between 40% and 50%
 Promoting extension of borrowing periods,
diversification of repayment dates andfixation of interest rates
 Diversifying funding sources

Realizeappropriate
financing18

Maximize ourunitholder value
while maintaining stable
DPU growthⅢ. Appendix

Appendix

HK Yodoyabashi Garden Avenue

19Financial Results and Forecast■Comparison of forecast and actual results
Actual Results of 1st FP Actual Results of 2nd FP Actual Results of 3rd FP

Forecast of 4th FP

Forecast of 5th FP（as of Apr. 30, 2015)（as of Oct. 31, 2015)（as of Apr. 30, 2016)

Days of Operation

149 days

184 days

182 days

184 days

181 days

Operating Revenue

2,108 JPY
mil

3,379 JPY
mil

3,467 JPY
mil

4,052 JPY
mil

4,151 JPY
mil

Operating Income

1,580 JPY
mil

2,290 JPY
mil

2,278 JPY
mil

2,633 JPY
mil

2,683 JPY
mil

Ordinary Income

1,014 JPY
mil

1,952 JPY
mil

1,967 JPY
mil

2,281 JPY
mil

2,343 JPYmil

Net income

1,013 JPY
mil

1,951 JPY
mil

1,966 JPY
mil

2,280 JPY
mil

2,342 JPY
mil

Distribution per unit
(DPU)

1,603 JPY

2,458 JPY

2,477 JPY

2,550 JPY

2,620 JPY

■Results of NOI（as of Oct. 31, 2016)（as of Apr. 30, 2017)■Forecast of NOI yield
Actual Results of 3rd FP（as of Apr. 30, 2016)

Forecast of 4th FP

Forecast of 5th FP（as of Oct. 31, 2016)（as of Apr. 30, 2017)

Actual Results

Yield (Note)

NOI

3,166 JPY
mil

4.1 %

NOI yield

4.2 %

4.1 %

NOI
(after depreciation)

2,606 JPY
mil

3.4 %

NOI yield(after depreciation)

3.4 %

3.4 %

(Note) Yield is calculated by dividing annualized NOI and NOI (after depreciation) by total acquisition price of the current portfolio.

20Balance Sheet（unit：JPY thousand ）ndrd

2 Fiscal Period
October 31, 2015nd

3 Fiscal Period
April 30, 2016

3rd Fiscal Period
April 30, 2016

2 Fiscal Period
October 31, 2015

AssetsLiabilities
Current liabilities

Current assets
Cash and deposits

2,117,144

4,059,682

Operating accounts payable

53,52475,140Cash and deposits in trust

10,093,565

10,037,966

Accounts payable - other277,730

319,477

79,73582,843

Accrued expenses

68,627

69,909

10

17

586

775

1,000,376--

223,779

400,469

689,082

68,100,000

68,100,000

7,803,586

7,803,586

75,903,586

75,903,586

76,304,055

76,592,668

87,743,594

87,743,594

1,951,805

1,967,034

Prepaid expenses
Deferred tax assets
Consumption taxes receivable
Other
Total current assets

14,663

6,333

13,305,495

14,186,844

Income taxes payable
Accrued consumption taxes
Total current liabilities
Non-current liabilities

Non-current assets

Long-term loans payable
Tenant leasehold and security
deposits in trust
Total non-current liabilities

Property, plant and equipment
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust

45,889,590

45,895,496(848,625)(1,399,667)

45,040,965

44,495,829

672,428

672,428

Accumulated depreciation(16,259)(25,303)

Structures in trust , net

656,169

647,125

Tools, furniture and fixtures in trust

996

996

Accumulated depreciation

(13)

(97)

Tools, furniture and fixturesin trust, net

982

898

106,673,263

106,673,263-

16,023

152,371,380

151,833,140

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

Total liabilities

Net assets
Unitholders’ equity
Unitholders’ capital
SurplusIntangible assets

Unappropriated retained earnings

Other

6,087

5,352

Total intangible assets

6,087

5,352

Total surplus
Total unitholders’ equity

Investments and other assets

Total net assets

Lease and guarantee deposits

10,00010,000Long-term prepaid expenses

306,492

267,961

Total investments and other assets
Total non-current assets
Total assets

316,492

277,961

152,693,959

152,116,453

165,999,455

166,303,297

Total liabilities and net assets

21

1,951,805

1,967,034

89,695,399

89,710,628

89,695,399

89,710,628

165,999,455

166,303,297

Statement of Income and Retained Earnings（unit：JPY thousand ）ndrd

2 Fiscal Period
From May 1, 2015
to October 31, 2015

3 Fiscal Period
From November 1, 2015
to April 30, 2016

Operating revenue
Rent revenue - real estate

3,379,712

3,467,176

42

379

3,379,755

3,467,556

Expenses related to rent business

790,155

860,922

Asset management fee

246,331272,995

Asset custody fee

2,579

3,154

Administrative service fees

10,774

11,783

Other lease business revenue
Total operating revenue
Operating expenses

Directors’ compensations

3,600

3,600

Other operating expenses

35,771

36,517

Total operating expenses

1,089,212

1,188,973

2,290,542

2,278,582

Interest income

1,127

1,267

Interest on refund

1,087

197

Total non-operating income

2,215

1,465

Interest expenses

265,059

275,257

Borrowing related expenses

50,64636,447

Investment unit issuance expenses

24,618-83499

340,407312,204

Ordinary income

1,952,350

1,967,842

Income before income taxes

Operating income
Non-operating income

Non-operating expenses

Other
Total non-operating expenses

1,952,350

1,967,842

Income taxes - current

815

969

Income taxes - deferred

14

(7)

Total income taxes

830

961

1,951,520

1,966,880

Retained earnings brought forward

285

153

Unappropriated retained earnings

1,951,805

1,967,034

Net Income

22Entire Portfolio（as of April 30, 2016）
Property No.
Property name
Address
Acquisition price (JPY mil)Leasable area (m2)Occupancy rate（％）
Tenant

J-1

J-2

J-3

J-4

Garden City
Shinagawa Gotenyama
Shinagawa-ku,
Tokyo
39,700Gotenyama
SH Building
Shinagawa-ku,
Tokyo
51,500

Hommachi Minami
Garden City
Osaka-shi,
Osaka
23,100

Hommachi
Garden City
Osaka-shi,
Osaka
38,60021,033.47

19,999.97

16,699.46

17,006.94

100.0

100.0

100.0

100.0

Sekisui House

non-disclosure (Note 1)

Sekisui House

Sekisui House

182

182

182

182

Days of operation
Notes to Statement of Income
April 30, 2016（end of 3rd FP）① Property-related operating revenue（Unit：JPY thousand）
887,965

1,088,998

586,791

903,801

887,585

1,088,998

586,791

903,801

379

-

-

-

② Property-related operating expenses

211,633

195,938

185,048

268,301

Property management fees

6,000

1,200

6,000

6,000

400

400

500

250

Property and other taxes

77,312

51,411

62,51058,807

Insurance expenses

1,418

952

974

1,803

Repair expenses

11,340

-

3,485

6,417

Depreciation

114,933

139,639

111,369

194,227

228

2,335

209

796

③ Property-related operating income （= ① - ②）

676,331

893,059

401,742

635,499

NOI（= ③ + Depreciation）

791,264

1,032,699

513,111

829,727

4.0%

4.0%

4.4%

4.3%

Rent revenue
Other lease business revenue

Trust fees

Other expenses related to rent business

NOI yield (Note 2)(Note 1) The tenant name cannot be disclosed as consent for disclosure has not been acquired from the tenant.
(Note 2) NOI yield is calculated by dividing annualized NOI by total acquisition price.

23

Overview of Appraisal■Appraisal Value List
Property
No.

Property Name

Capitalization

Appraisal
Value①(JPY mil)Book Valueor
Acquisition
price②(JPY mil)Unrealized
Gain/Loss①-②(JPY mil)Direct Return Method
Capitalization(JPY mil)

Cap
Rate
（％）

DCF Method
Capitalization(JPY mil)Discount
Rate（％）

Terminal
Cap Rate（％）

Appraisal
NOI(JPY mil)Appraisal
Institution

J-1

Garden City
Shinagawa Gotenyama

44,30039,432+4,86745,3003.6

43,900

3.3

3.8

1,618

DAIWA REAL ESTATEAPPRAISAL CO.,LTD.

J-2

Gotenyama SH Building

56,30051,141+5,15857,3003.7

55,800

3.7

3.9

2,063

The Tanizawa Sōgō
Appraisal Co., Ltd.

J-3

Hommachi Minami
Garden City

26,90022,806+4,09327,8004.1

26,500

3.8

4.3

1,141

Rich Appraisal InstituteCo., Ltd.

J-4

Hommachi Garden City

42,20038,436+3,76342,7003.8

41,600

3.5

4.0

1,607

Japan Real Estate
Institute

Sub-total as of end of 3rd FP

169,700

151,817+17,882

173,100-

167,800

-

-

6,431

-

Garden City
Shinagawa Gotenyama

16,90015,900+1,00017,2003.7

16,700

3.4

3.9

631

DAIWA REAL ESTATEAPPRAISAL CO.,LTD.

J-1(portion of additional acquisition)

J-5

HK Yodoyabashi
Garden Avenue

5,100

4,400

+700

5,320

4.3

5,010

4.3

4.4

229

The Tanizawa Sōgō
Appraisal Co., Ltd.

J-6

Hirokoji Garden Avenue

6,780

6,350

+430

6,910

4.5

6,720

4.3

4.7

311

DAIWA REAL ESTATEAPPRAISAL CO.,LTD.

Sub-total of acquisition in 4th FP (Note)

28,78026,650+2,13029,430-28,430

-

-

1,172

-

Total

198,480

178,467+20,012202,530-

196,230

-

-

7,603

-

(Note) For properties acquired in 4th FP, the figures are calculated based on appraisal reports as of March 31, 2016.

■Appraisal Value (as of end of 3rd Fiscal Period, compared to as of end of 2nd Fiscal Period)
Appraisal Value (JPY mil)Property
No.

Property Namend

End of 2①

FPrd

End of 3 FP②

Direct Cap Rate (％)
Comparison②-①

nd

End of 2①

End of 3rd FP②

FP

Comparison
②-①

J-1

Garden City Shinagawa Gotenyama

42,20044,300+2,100

3.8

3.6

△0.2

J-2

Gotenyama SH Building

54,80056,300+1,500

3.8

3.7

△0.1

J-3

Hommachi Minami Garden City

26,20026,900

+700

4.2

4.1

△0.1

J-4

Hommachi Garden City

41,10042,200+1,100

3.9

3.8

△0.1

Total

164,300

169,700+5,400

-

-

-

24

Portfolio Development Policy■Portfolio Development Policy by Asset Type and by Country(Japan/Overseas)
Asset Type

Japan
80％
or moreOffice buildings
Retail properties andhotels, etc.

Less than
20％

Overseas80％
or moreLess than
20％■Portfolio Development Policy by Area (Japan)

Area

Ratio

3 majormetropolitan areas

80％ or more

Other areas

Less than 20％(Note) “3 major metropolitan areas” refers to Greater Tokyo, Osaka area and Nagoya area.

■Investment in overseas real estate
SHR may invest in real estate located overseas. The overseas areas where SHR intends to invest in real estate are those where Sekisui House
has expertise in its actual development projects. Currently, such areas are mainly Singapore, Australia and the U.S.

■Major overseas projects
SHR and the asset management company have entered into respective basic agreements on the sale of properties overseas with Sekisui House inrelation to the following two projects, which gives SHR and the said company preferential negotiation rights exercisable after Dec. 2016.

Punggol Waterway Point Project in Punggol, Singapore

Central Park Project in Sydney, Australia

25

Types of Lease Agreement■Image of Lease Scheme

End-Tenant(Sub-lessee)

Tenant(Lessee)LessorFixed-Rent Type
Master Lease

Pass-Through Type
Master Lease

Direct Lease

End-Tenant

End-Tenant

End-Tenant

Rent

Rent

Sekisui House

Sekisui House

Fixed-Rent

Rent

SHR

SHR

Rent

SHR

■Characteristics of SHR’s Internal Growth• Approximately 70% of the portfolio (ratio of lease types) adopts fixed-rent type master lease with Sekisui House.
Rent revenue is being fixed in order to reduce the impact of tenant vacation, etc. on earnings.
• HK Yodoyabashi Garden Avenue and Hirokoji Garden Avenue adopt pass-through type master lease with Sekisui House.
Since SHR can receive rent of the same amount as the rent under the lease agreement concluded between Sekisui Houseand end-tenants, SHR can benefit from rent revenue upside when the occupancy rate rises or the rent is revised upward.
• Gotenyama SH Building adopts direct lease in which the property is directly leased to the end-tenant. A 20-year leaseagreement has been concluded with the tenant, and thus the rent revenue is stable over the long-term.
26

Structure of SHR■ Structure Diagram

Asset Custodian

SEKISUI HOUSE REIT, INC.

2

4

Mitsubishi UFJ Trust and Banking Corporation

Administrative Agent for Operation of
Administrative Instruments
Mitsubishi UFJ Trust and Banking Corporation

General Meeting of Unitholders
Holding approximately 7.3% of investment units
Transfer Agent(as of July 31,2016)

Board of Directors

3

Executive Director: Junichi Inoue
Supervisory Director: Shigeru Nomura
Supervisory Director: Tatsushi Omiya

Mizuho Trust & Banking Co.,Ltd.

5

Parent Company of
the Asset Management Company / Sponsor
SEKISUI HOUSE, LTD.

Independent Auditor

Real Estate

Ernst & Young ShinNihon LLC
Investment
Rent

1

Asset Management Company
SEKISUI HOUSE INVESTMENT ADVISORS, LTD.

Sponsor Pipeline Support

1

Asset Management Agreement
4

100% ownership

2

Asset Custody Agreement

General Administrative Agreement

53Administrative Agreement (Administration of Investment Units)

Pipeline Support Agreement / Sponsor Support Agreement, etc.

27

Unitholders Composition■Major Unitholders（Top 10）（as of April 30, 2016）
Name

Unit

■Number of Unitholders by Unitholder Type
Percentage

Japan Trustee Services Bank, Ltd. (Trust Account)

225,76428.43%

Sekisui House, Ltd.

63,300

7.97%

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

63,216

7.96%

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

30,976The Nomura Trust and Banking Co., Ltd.
(Investment Trust Account)

20,866

2.63%

BNY FOR GCM CLIENT ACCOUNTS(E) ISG

11,321

1.43%

The Hyakujushi Bank, Ltd.

9,200

1.16%

The Hokuriku Bank, Ltd.

8,736

1.10%

NOMURA BANK (LUXEMBOURG) S. A.

8,568

1.08%

The Hokkoku Bank, Ltd.

6,572

0.83%

448,51956.49%

Other domestic

Foreign

Individuals

その他国内法人
companies

Companies
外国人

個人・その他/Others

167 (1.01%)

330 (1.99%)

105 (0.63%)/Individuals

2016年

Total

3.90%

(Note) Percentages, rounded to the nearest 2nd decimal place, are based on the total number of investment units issued and outstanding
as of April 30, 2016 (794,000 units).

■Main Report on Possession of Large Volume（Including Change Report）（as of July 31, 2016）
Name

Financial Institutions

金融機関（証券会社含む）(Including Security Firms)

Unit

4月30日
As of
Apr. 30, 2016現在
16,545people15,943 (96.36%)

16,545人

0%

20%

40%

Foreign

Other domestic
その他国内法人(Including Security Firms)

Submission
Date

80%

100%

■ Number of Investment Units Issued andOutstanding by Unitholder Type
Financial Institutions
金融機関（証券会社含む）

Share

60%

(Note) Percentages are rounded to the nearest 2nd decimal place.

外国人
Companies

companies/individuals

Individuals
個人・その他/Others

2016年

Sumitomo Mitsui Trust Bank, Ltd.
Sumitomo Mitsui Trust Asset Management Co., Ltd.
Nikko Asset Management Co., Ltd.

111,158

12.43%

April 25
2016

Mizuho Asset Management Co., Ltd.
Shinko Asset Management Co., Ltd.

80,248

8.98%

July 25
2016

DIAM Co., Ltd.

56,615

6.33%

July 5
2016

Nomura Securities Co., Ltd.
Nomura Asset Management Co., Ltd.

32,538

3.64%

May 11
2016(Note) Percentages, rounded to the nearest 2nd decimal place, are based on the total number of investment units issued and outstanding
as of July 31, 2016 (894,000 units).

28

As of
4月30日
Apr. 30, 2016
794,000
現在
units

495,754 units(62.44%)

91,213 69,732
units
units
(11.49%) (8.78%)

137,301
units(17.29%)794,000口

0%

20%

40%

60%

(Note) Percentages are rounded to the nearest 2nd decimal place.

80%

100%

Governance System
Adopts a Scheme that Emphasizes Unitholders’ Interests

Strong Alignment of Interests between Sekisui House
and Our Unitholders■Decision-Making Process

Sekisui House has confirmed that it intends to continue holding
SHR’s investment units on a long-term basis■Agreement on Consideration of Co-Ownership or
Sectional Ownership with Sekisui House
Deliberation
and approval

Board of Directorsof Sekisui House Reit

Disapproved

Deliberation
and resolution

Deliberation
and resolution

Compliance Committee

Board of Directors

Rejected

Rejected

Deliberation
and resolution

Investigation
and approval

Compliance Officer

Proposal

Proposing Department

Investment Committee

Rejected

Remanded■Same-Boat Investment from Sekisui House

Sekisui House has confirmed that it will consider faithfully
co-ownership (including beneficiary interests) or sectional
ownership with us upon our request■Measures to Prevent Transactions Involving Conflictof Interest

Attendance and assent byexternal members are required

Calculation Method

Type 1(Asset-based fee)

Total assets at prior FY-end × (up to) 0.5% (Note 1)

Type 2(DPU-based fee)

DPU (Note 2)× Operating Income (Note 3) × (up to) 0.004% (Note 1)

Type 3(Acquisition Fees)

Purchase price × (up to) 0.5% (Note 1)(up to 0.25%(Note 1) in case of a transaction with a related party)

Type 4(Disposition Fees)

Sale price × (up to) 0.5%
(zero in case of a transaction with a related party)

Acquisition price shall be equal to or less than the appraisal value.

Property Transfer

Transfer price shall be equal to or higher than the appraisal value.

Brokerage fee shall be within the scope of reward stipulated in the Building
Lots and Buildings Transaction Business Act, and shall be determined after
Payment of Brokerage Feetaking into account the levels of contract terms and conditions, difficulty inconducting brokerage and other factors.
a. Consignment shall be made under conditions that are deemed to beappropriate after comprehensively taking into account the market levelsof the outsourcing fees, the content of provided services, total work
volume and other factors.
b. Upon acquiring real estate and other assets, and if their management
and other services have been outsourced to interested parties and will
Outsourcing of Management
continue to be outsourced to the same parties, approval or disapproval of
and Other Services of Realthe acquisition as well as the acquisition price shall be determined by
Estate and Other Assets
paying full attention to the adequacy of the outsourcing terms andconditions.
c. With regard to the interested party’s status of implementing management
and other services, the party’s adequacy as consignee shall be verified
once a year as a rule via assessments and such conducted by an outside
independent appraiser that is not an interested party.
The agreements shall be executed under the terms and conditions that are
Execution of Lease
deemed to be adequate after investigating such factors as the market rent
Agreements for Real Estatelevel and price situation in neighboring markets and, as needed, referring to
and Other Assets
the opinions of third parties that are not interested parties.

■Performance-Based Asset Management FeesManagement Fee

Property Acquisition(Note 1) As of June 16, 2016,
Rate for Type 1 management fee is 0.15%,
Rate for Type 2 management fee is 0. 0023%,
Rate for Type 3 management fee is 0.3％ (or 0.15% in case of a transaction with a related party)(Note 2) DPU= distributable profit before deduction of Type 2 management fee / total number of investment units issued
and outstanding(Note 3) Operating Income before deduction of type 2 management fee

Placement of Orders forConstruction Work, Etc.
with Contract AmountSurpassing 30 million yen

29

Orders may be placed to interested parties only when such factors as theestimated price and the content of services to be provided are notdisadvantageous to SHR after comparing such factors with those of third
parties other than the interested parties.

Asset Management Company（as of June 16, 2016）■Overview of Asset Management Company■Directors and Corporate Auditors

Sekisui House Investment Advisors, Ltd.

Trade Name

（Financial Instruments Business Operator: Director-Generalof the Kanto Finance Bureau (Kinsho) No. 2791）

President &Representative Director

Atsuhiro Kida

Director
Foundation

Junichi Inoue（General Manager of Management Division）

February 17, 2014

Shoichi Maruyama
Paid-in capital

JPY 400 mil

Shareholder

Sekisui House, Ltd.（100％）

Directors andemployees

19

Director（General Manager of Real Estate Investment
Management Division）

Director

Ichiro Maeoka（Compliance Officer）
Hideyuki Kamijyo

Director（Part time）
Auditor（Part time）■Organization Chart（Executive Officer, Chief Manager of Accounting &Finance Department of Sekisui House）

Keizo Yoshimoto（Senior Manager of Secretariat of Sekisui House ）General Meeting of
Shareholders
AuditorBoard of Directors
Investment
Committee

Compliance
Committee
President &Representative Director

Real Estate Investment andManagement Division

Real Estate Investment
Department

Compliance
OfficerManagement
Division

Real Estate Management
Department

IR and Finance
Department

30

General Affairs andAccounting Department

Change in Unit Price■Change in Unit Price（December 3, 2014 - July 31, 2016）

Volume（Right axis）（JPY）
160,000

TSE REIT Index

Price of SHR（Left axis）（Units）
50,000186,236 units
as of Dec. 3 ,2014

155,000

45,000150,000
40,000145,000
35,000140,000
30,000135,000
130,000

25,000125,000

20,000120,000
15,000115,000
10,000110,000
5,000

105,000
100,0000
Dec-14Jan-15

Feb-15Mar-15

Apr-15May-15Jun-15

Jul-15Aug-15

Sep-15Oct-15(Note) TSE REIT Index performance is indexed to SHR unit price (132,000 yen) as of December 3, 2014, which is our listing date.
TSE REIT Index refers to the weighted average-type index of market capitalization of all REIT counters.

31

Nov-15

Dec-15Jan-16

Feb-16

Mar-16

Apr-16May-16Jun-16

Jul-16Memo32

33