Advance
Residence
Investment Corporation

Questions & Answers at the Presentation Meeting
For the Results of the Fiscal Period Ended July 2020
Date & Time:
Presenter:

16:30 - 16:45, September 18, 2020
Takeshi Takano,President and Representative Director,
AD Investment Management Co., Ltd.

Occupancy Rate Related Questions
Q1.
Do you think the decline in occupancy rate is structural or temporary? Are you planning to spend extra
leasing cost to raise occupancy?
A1.
The decline in the occupancy rate is believed to be mainly due to a decline in corporate leaseapplications, as the state of emergency restricted the movement of people and temporarily suspended
personnel transfers.
After the state of emergency was lifted, number of lease applications have returned to the same level as
the previous year, so unless we see another widespread outbreak, we believe the occupancy will returnto around 96.3%.
The leasing cost was increased 1.5 times as much as usual for a while, but now returned to normal.
Going forward, our leasing strategy will be to suppress the increase in rent, rather than spending moreon leasing costs, therefore, we expect to see that the rent increase for the current FP will decline.
Dividends Related Questions
Q2.
You have told us that achieving DPU of 5,600 yen will be delayed by one year because you expect theoccupancy rate to decline and the rent increase will be suppressed. Will you accelerate the acquisition ofsponsored properties to help raise the DPU?
A2.
Since the market cap rate continues to be compressed and be lower than our portfolio’s average yield, I
do not think the current environment is the time to accelerate acquisitions. The business model ofsponsors is to sell about 5 billion yen a year on average. We have just lowered the LTV to 48% last year
through equity financing and I would rather like to keep the LTV low by utilizing cash from depreciationand moderate use of debt to acquire those assets. We will continue to be disciplined in our acquisitions
going forward and utilize asset replacement opportunities to maintain NOI with the acquisition and raise
the DPU by distributing the gain on sale.
Q3.
If the EPU falls below the earnings forecast of 5,180 yen, will the negative goodwill be additionally drawn
down to maintain the distribution as forecasted?
A3.
Basically, I think drawing down additional negative goodwill or increasing leverage in order to protect
distributions should be our last measures. On the other hand, if the EPU goes down substantially, we willconsider additionally drawing down the negative goodwill, but I think it is still premature to make any
decision at the moment.

Disclaimer‣ This document is for informational purposes only and it is not intended as investment advice, or an offer or solicitation for thepurchase or sale of any financial product. If one should invest in financial products it should be by one's own judgment andresponsibility.
‣ To purchase investment units or investment corporation bonds of ADR, please contact your own securities company.
‣ The information provided in this document does not necessarily conform to the Financial Instruments and Exchange Act, the law
concerning investment trusts and investment corporations, the related laws such as the Building Land and Building Transaction
Business Law, and the Tokyo Stock Exchange Listing Regulations.
‣ The content of this document contains forward‐looking statements, but such statements do not guarantee future performances.
‣ We making every effort to be accurate, but we do not guarantee the accuracy nor guarantee the certainty of the content. In addition,please understand beforehand that the contents.