(REIT) Financial Report for the Fiscal Period Ended August 2021
October 15, 2021
Listing: Tokyo Stock Exchange
URL: https://www.s-reit.co.jp/en/

REIT Securities Issuer:
TSE Code:
Representative:

SANKEI REAL ESTATE Inc.
2972
Yuichi Ota, Executive Director

Asset Management Company:
Representative:
Contact:

Sankei Building Asset Management Co., Ltd.
Yuichi Ota, President and Chief Executive Officer
Atsushi Mukai, Director and Chief Finance & IR Officer
TEL: +81-3-5542-1316

Scheduled date of submission of semiannual securities report:
Scheduled date of commencement of distribution payment:

November 26, 2021
November 22, 2021

Preparation of supplementary financial results briefing materials:
Holding of financial results briefing session:

Yes
Yes (for institutional investors and analysts)(Amounts are rounded down to the nearest million yen)
1. Status of Management and Assets for the Fiscal Period Ended August 2021 (from March 1, 2021, to August 31, 2021)(1) Results of Operations(% figures are the rate of period-on-period increase (decrease))
Operating revenue
Operating profit
Ordinary profit
Net profit
million yen%
million yen%
million yen%
million yen%
Fiscal period
2,176
1.3
1,141
2.0
1,014
(0.2)
1,014
(0.2)
Ended Aug. 2021
Ended Feb. 2021
2,147
7.1
1,118
12.3
1,017
12.5
1,016
12.5

yen

%

Ratio of ordinary profit
to total assets
%

2,841

2.7

1.3

46.6

2,849

2.7

1.3

47.4

Earnings per unit
Fiscal period
Ended Aug. 2021
Ended Feb. 2021

Return on equity

Ratio of ordinary profit
to operating revenue%(Note) Earnings per unit is calculated by dividing net profit by the daily weighted average number of investment units (fiscal period ended February 2021:
356,800 units; fiscal period ended August 2021: 356,800 units).

(2) Distribution
Distribution
Total
Distribution
per unit
distribution Distributions
Total
per unit(excluding(excluding
in excess of distribution in (including
distributions distribution in earnings per
excess of
distributions
in excess ofexcess ofunit
earnings
in excess ofearnings)
earnings)
earnings)

Total
distribution(including
distributions
in excess ofearnings)

Ratio of
Payout ratio distribution to
net assetsyenmillion yen
yenmillion yen
yenmillion yen%%
Fiscal period
2,842
1,014
20
7
2,862
1,021
100.0
2.7
Ended Aug. 2021
Ended Feb. 2021
2,849
1,016
100.0
2.7
(Note 1) The entire amount of the total distribution in excess of earnings is a refund of investment that falls under distribution reducing investment, etc.
under tax law.
(Note 2) The ratio of reduced surplus through the distribution in excess of earnings (refund of investment that falls under distribution reducing investment,
etc. under tax law) the fiscal period ended August 31, 2021 was 0.001.
(Note 3) The payout ratio and ratio of distribution to net assets are calculated based on figures that do not include distribution in excess of earnings.

(3) Financial Position

Fiscal period
Ended Aug. 2021
Ended Feb. 2021

Total assets
million yen

Net assets
million yen

79,84879,482Equity ratio%

Net assets per unit
yen

37,55547.0

105,255

37,55747.3

105,262(4) Cash Flows

million yen

million yen

million yen

Cash and cash
equivalents
Balance at end of
periodmillion yen

1,396

(60)

(1,022)

7,257

486

(4,100)

3,397

6,944

Cash flows fromoperating activities

Fiscal period
Ended Aug. 2021
Ended Feb. 2021

Cash flows frominvesting activities

Cash flows fromfinancing activities

2. Operating Forecasts for the Fiscal Period Ending February 2022 (from September 1, 2021, to February 28, 2022) andOperating Forecasts for the Fiscal Period Ending August 2022 (from March 1, 2022, to August 31, 2022)(% figures are the rate of period-on-period increase (decrease))
Operating revenue
million yen
Fiscal periodEnding Feb. 2022
Ending Aug. 2022

Operating profit% million yen

Ordinary profit% million yen%

Distribution per unit
(excluding
distribution inexcess of earnings)
yen

Net profit% million yen

Distributions inexcess of earnings
per unit
yen

2,775

27.6

1,526

33.7

1,382

36.2

1,381

36.3

2,958

-

2,808

1.2

1,419

(7.0)

1,263

(8.6)

1,262

(8.6)

2,703

-

(Reference) Forecast earnings per unit (Forecast net profit ÷ Forecast total number of investment units issued and outstanding at endof period)
Fiscal period ending February 2022: 2,957 yen Fiscal period ending August 2022: 2,703 yen(Note)

Distribution per unit (excluding distribution in excess of earnings) is calculated based on the forecast total number of investment units issued andoutstanding as of the date of this document of 467,099 units.

* Other(1) Changes in accounting policies, changes in accounting estimates, and retrospective restatements
i. Changes in accounting policies accompanying amendments to accounting standards, etc.: None
ii. Changes in accounting policies other than i:Noneiii. Changes in accounting estimates:
None
iv. Retrospective restatements:
None(2) Total number of investment units issued and outstandingi.
Total number of investment units issued andFiscal period
Fiscal period
outstanding (including treasury investment units)356,800 units
356,800 units
ended Aug. 2021
ended Feb. 2021
at end of period
ii. Number of treasury investment units at end of
Fiscal period
Fiscal period
0 units
0 units
periodended Aug. 2021
ended Feb. 2021
(Note) For the number of investment units serving as the basis for calculation of earnings per unit, please refer to “Notes on Per
Unit Information” on page 24.

* Financial reports are exempt from audits by certified public accountants or audit corporations.
* Matters of special note
The operating forecasts and other forward-looking statements contained in this document are based on information currently
available to and certain assumptions deemed reasonable by SANKEI REAL ESTATE. Accordingly, the actual results of operations, etc.
may differ materially due to various factors. In addition, the forecasts are not a guarantee of the amount of distribution. For theassumptions underlying the operating forecasts, matters of note in the use of the operating forecasts, etc., please refer to“Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending February 2022 (from September 1, 2021, to February
28, 2022) and Fiscal Period Ending August 2022 (from March 1, 2022, to August 31, 2022)” on pages 7 and 8.

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
Table of Contents
1. Management Status ...................................................................................................................................................................... 2(1) Management Status ............................................................................................................................................................... 2(2) Investment Risks .................................................................................................................................................................... 8
2. Financial Statements ..................................................................................................................................................................... 9(1) Balance Sheet ........................................................................................................................................................................ 9(2) Statement of Income ........................................................................................................................................................... 11(3) Statement of Unitholders’ Equity ........................................................................................................................................ 12(4) Statement of Cash Distribution ............................................................................................................................................ 13(5) Statement of Cash Flows...................................................................................................................................................... 14(6) Notes on the Going Concern Assumption ............................................................................................................................ 15(7) Notes on Matters Concerning Significant Accounting Policies ............................................................................................. 15(8) Notes to the Financial Statements ....................................................................................................................................... 16(9) Changes in Total Number of Investment Units Issued and Outstanding .............................................................................. 25
3. Reference Information ................................................................................................................................................................ 26(1) Information on Price of Assets Under Management, Etc. .................................................................................................... 26(2) Capital Expenditures ............................................................................................................................................................ 30-1-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021

1.

Management Status(1) Management Status(Overview of the Fiscal Period under Review)i.
Brief History of the Investment Corporation
SANKEI REAL ESTATE was incorporated under the Act on Investment Trusts and Investment Corporations (Act No. 198 of1951, as amended; hereinafter, the “Investment Trusts Act”) with Sankei Building Asset Management Co., Ltd. (hereinafter,
the “Asset Management Company”) as the organizer and investments in capital of 100 million yen (1,000 units) on
November 19, 2018, and completed the registration with the Kanto Local Finance Bureau pursuant to Article 187 of theInvestment Trusts Act on December 17, 2018 (Registration No. 140 with the Director-General of the Kanto Local Finance
Bureau). Later, SANKEI REAL ESTATE listed on the Real Estate Investment Trust Securities Market of Tokyo Stock Exchange,
Inc. on March 12, 2019 (TSE code: 2972).
As of the last day of the fiscal period under review (August 31, 2021), the total number of investment units issued andoutstanding was 356,800 units, and unitholders’ capital was 36,540 million yen.
ii.

Management Environment
In the fiscal period under review (fiscal period ended August 2021), amid difficult conditions due to the impact of COVID19, the Japanese economy showed movements of picking up due to advances made with vaccination. However, the spreadof infection caused by variant strains of the virus led to a rapid increase in the number of cases even during the state of
emergency and area-focused intensive measures for prevention of the spread of infection based on the Act on Special
Measures for Pandemic Influenza and New Infectious Diseases Preparedness and Responses (Act No. 31 of 2012, as
amended). This, among other factors, made it an environment in which economic developments continued to require
attention. Overseas, while the economy continued to pick up, it was a situation in which attention should be given to therisk of the COVID-19 spreading again.
Under such economic circumstances, in terms of the office building market, which SANKEI REAL ESTATE sets as the primary
investment target, there were movements to cancel lease agreements due to factors such as the consolidation of locations,and the vacancy rate continued to rise while rents declined slightly or remained the same in Tokyo and Osaka where SANKEIREAL ESTATE’s portfolio assets are located. As for the hotel market, in which SANKEI REAL ESTATE invests as sub-assets, thetotal number of guests and occupancy rate improved year on year in almost all months during the fiscal period underreview according to the Overnight Travel Statistics Survey by the Japan Tourism Agency, but the number of foreign tourists
continued to decrease significantly due to restrictions on entry into Japan taken as a preventitive measure against withthe spread of COVID-19. Furthermore, the situation did not improve significantly due to factors such as the Tokyo Olympic
and Paralympic Games being held without spectators during the state of emergency.

iii.

Management Performance
SANKEI REAL ESTATE did not acquire or sell any assets in the fiscal period under review. The portfolio of SANKEI REALESTATE as of the end of the fiscal period under review consisted of 12 properties with an asset size (total acquisition price)of 71,525 million yen, the same as that in the preceding fiscal period.
As a result, the occupancy rate (Note) of the 12 portfolio properties as of the last day of the fiscal period under review
remained high at 98.2%, and operating revenue from real estate leasing was 2,176 million yen, 1.3% higher than that at
the end of the previous fiscal period. The appraisal value as of the last day of the fiscal period under review was 79,326
million yen.
SANKEI REAL ESTATE has sought to improve satisfaction through reinforcement and enhancement of the relationship withexisting tenants, aiming at expansion of revenue and stable growth of earnings from assets under management as in theprevious fiscal period. For existing tenants approaching contract renewal, an effort was made to limit reductions in rent asmuch as possible and renew contracts with upward revision or no change in rent through careful efforts based on thecondition of the COVID-19 pandemic and trends of the rental market. In addition, repairs and capital expenditures were
narrowed down to those that contribute to maintenance and improvement of the competitiveness of the assets undermanagement. On the other hand, there are movements of consolidation of bases, mainly among companies based inseveral locations, and notices of contract cancellation and such associated with consolidation of bases have been received
from some tenants even at the assets under management of SANKEI REAL ESTATE in the previous fiscal year, but there islittle impact on management performance in the fiscal period under review.
The number of requests for rent decrease, deferment of rent payment, etc. due to the spread of COVID-19 from sometenants, mainly retail tenants occupying portions of office buildings that are assets under management was very low in
the fiscal period under review compared to the previous fiscal period, and the impact on management performance in thefiscal period under review is minimal because the assets under management are mainly office buildings. In addition,although the two hotel properties held by SANKEI REAL ESTATE saw impact associated with the spread of COVID-19, fixed
rent based on the current contract has been secured as usual for leasing business revenue in the fiscal period under review.
SANKEI REAL ESTATE, along with the Asset Management Company, intends to conduct management with consideration for
ESG, meaning the Environment, Social and Governance, for the purpose of sustainability of society and increasing the
medium- to long-term investor value.
The Asset Management Company established a new “Sustainability Policy” in the Asset Management Company’s
management guidelines in March 2021 for the purpose of strengthening sustainability initiatives, and has established avariety of rules for its implementation.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
In July 2021, SANKEI REAL ESTATE applied to participate in the GRESB Real Estate Assessment that is a global investment
benchmark established as a tool for use in selection of and dialogue with investment destinations by measuring ESG
considerations in individual companies and funds in the real estate sector, and acquired 3 Star and Green Star ratings in
October 2021.
(Note)“Occupancy rate” is the ratio of total leased area to total leasable area, rounded to one decimal place. Moreover, for total leasable area
and total leased area, each total is calculated based on the area corresponding to SANKEI REAL ESTATE’s ownership interest in eachportfolio property.

iv.

Overview of Fund Procurement
In the fiscal period under review, 4,800 million yen was borrowed from Mizuho Bank, Ltd., Sumitomo Mitsui Banking
Corporation, Development Bank of Japan Inc., Mizuho Trust & Banking Co., Ltd., Sumitomo Mitsui Trust Bank, Limited,
Shinsei Bank, Limited, and Resona Bank, Limited. through a loan syndicate with Mizuho Bank, Ltd. and Sumitomo Mitsui
Banking Corporation as the arrangers on March 12, 2021, to repay 4,800 million yen of long-term borrowings due forrepayment on March 12, 2021. The borrowing was made with a borrowing period of 4 years and fixed interest rate, thereby
promoting extension of the average time to maturity, improvement in the ratio of fixed-rate debt, and staggering of
maturities of interest-bearing liabilities.
As a result, as of the last day of the fiscal period under review, the balance of borrowings outstanding was 37,800 million
yen and the ratio of interest-bearing liabilities to total assets (hereinafter, “LTV ratio”) was 47.3%.

v.

Overview of Business Performance and Distribution
As a result of the management described above, business performance in the fiscal period under review was operating
revenue of 2,176 million yen, operating profit of 1,141 million yen, ordinary profit of 1,014 million yen, and net profit of
1,014 million yen.
Concerning distribution, in accordance with SANKEI REAL ESTATE’s distribution policy (Article 36 of the articles ofincorporation), SANKEI REAL ESTATE intends to have the maximum amount of distribution of earnings included indeductible expenses by application of special provisions for taxation on investment corporations (Article 67-15 of the Act
on Special Measures Concerning Taxation (Act No. 26 of 1957, as amended)). For the fiscal period under review, thedecision was made to distribute 1,014,025,600 yen, which is the entire amount of unappropriated retained earnings,
excluding fractions of distribution per unit of less than 1 yen. This resulted in distribution per unit of 2,842 yen (however,excluding distributions in excess of earnings). Furthermore, pursuant to the policy on the distribution of cash in excess ofearnings provided in Article 36, Paragraph 2 of SANKEI REAL ESTATE’s articles of incorporation, due to net profit decreasingin the fiscal period under review as a result of recording temporary borrowing related expenses associated with borrowing
for the acquisition of real estate trust beneficiary rights of 4 properties on September 2, 2021, 7,136,000 yen was
distributed as a refund of investment that falls under distribution reducing investment, etc. under tax law, and distribution
in excess of earnings per unit was 20 yen. As a result, the distribution per unit was 2,862 yen in the fiscal period underreview.

(Outlook for the Next Fiscal Period)i.
General Management Outlook
Although the impact of COVID-19 on social and economic activities in Japan and abroad is expected to be alleviated due
to factors such as progress in vaccinations ahead, there is no guarantee that it will lead to containment. As such, theenvironment will likely continue to be one in which downside risks to the Japanese and overseas economies, the impact
on fluctuations in the financial and capital markets, etc. warrant close attention.
In the office building market, vacancy rates have risen and rents have continued to decrease or remain the same. Socialand economic activities are expected to recover with rising vaccination rates, but it is necessary to monitor trends in officedemand such as changes in work styles and moves to reduce fixed expenses (rent payments, etc.). At SANKEI REAL ESTATE,
too, progress in consolidation of bases and reduction of office space due to the expansion of remote working such as
working from home and the intention to reduce fixed expenses (rent payments, etc.) could lead to lease contract
cancellations arising. We will further reinforce the relationship with tenants and continue consultations and responses as
required, while closely monitoring tenants’ business performance, etc.
In terms of the hotel market, while a recovery in the number of international visitors to Japan looking unlikely, domestic
travelers and business travelers are expected to increase with the recovery in social and economic activities, but the severe
situation is still expected to continue. A severe operating environment is foreseen for also the two hotel properties heldby SANKEI REAL ESTATE, but no impact on SANKEI REAL ESTATE is expected as GRANVISTA Hotels & Resorts Co., Ltd., which
is a tenant of the two properties and a wholly owned subsidiary of SANKEI REAL ESTATE’s sponsor, The Sankei Building Co.,
Ltd. (hereinafter, “Sankei Building” or “Sponsor”), continues to pay fixed rent based on the fixed-term building leaseagreement.
(A) External Growth Strategy
While carefully assessing the economic impact of the spread of COVID-19, the real estate investment market
conditions, and other factors, SANKEI REAL ESTATE will continue to maintain external growth through acquisition ofSankei Building’s portfolio properties as well as properties held by third parties by leveraging the sourcing capabilities
of Sankei Building through full utilization of sponsorship support.
In external growth, we will conduct diversified investment conscious of the balance of the portfolio matrix such asarea and yield, and strive to improve the profitability and stability of the portfolio.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
(B) Internal Growth Strategy
SANKEI REAL ESTATE aims for steady internal growth through reinforcement of the relationship with existing tenants
and improvement in tenant satisfaction. Specifically, we will raise rents when upon contract renewal based on thedeviation from market rent and continue to implement strategic leasing such as activities to extend the cancellation
notification period from tenants and disperse end dates of rental contracts from the viewpoint of termination risk forproperties where the end dates of multiple tenants are the same. Furthermore, we will continue to take proactive
measures to improve tenant satisfaction such as activities to improve the quality of hygiene and planned
implementation of maintenance and repairs under the COVID-19 pandemic.
SANKEI REAL ESTATE will utilize the Sankei Building Group’s comprehensive operation and management functions
ranging from real estate planning and development to lease-up, operation, and management through collaboration
within the Sankei Building Group with Sankei Building at the core.
In addition, SANKEI REAL ESTATE will execute the following measures, etc. to aim for greater revenue and stable
growth of earnings from assets under management.
(a) Strive to provide services for tenants’ comfortable use while strengthening and enhancing tenant relationships
in order to maintain and improve tenant satisfaction so as to maintain and improve the occupancy rate and rentof assets under management.
(b) Seek to maintain and improve the market competitiveness of assets under management through planning andimplementation of repairs and capital expenditures by taking into consideration the state and characteristics ofassets under management, real estate market conditions, tenant needs, and other factors and carefully
examining them.
(c) Strive to maintain and improve earnings by conducting agile leasing activities with a continual grasp of leasing
market trends.
(d) Adopt ongoing initiatives to reduce operating and management costs and consider the environment by
periodically verifying the validity of operations, management level, and costs of assets under management. In
doing so, the balance with the market competitiveness of assets under management and perspective of
maintaining and improving tenant satisfaction are taken into consideration.
(e) Conduct investment conscious of ESG, such as reduction of the environmental impact of assets undermanagement and cooperation with external stakeholders.
(C) Financial Strategy
SANKEI REAL ESTATE will conduct appropriate and sound financial management while considering agility of financing
activities, stability of cash flows, and other matters in order to secure stable earnings and steady growth of assets
under management over the medium to long term.
In addition, to secure financial soundness, the basic policy shall be to set the upper limit for the LTV ratio at 60% inprinciple (however, the LTV ratio may temporarily exceed the range of the upper limit for the LTV ratio for the purposeof new asset acquisition, etc.). As a rule, SANKEI REAL ESTATE will maintain an approximate range of 40% to 50%
during normal operations.
(a) Equity Financing
Issuance of new investment units shall be in an agile manner with due consideration to investment unit dilution,
while also comprehensively taking into account capital market trends, financial environment, timing ofacquisition of real estate, etc. to be newly acquired, ratio of interest-bearing liabilities to total assets and otherfactors.
(b) Debt Financing
Upon borrowing, etc., fund procurement shall be executed in an appropriate manner by taking into account thebalance between interest rate trends, market levels, financial agility, long-term business relationships, andsecurity, and by considering the borrowing period, fixed or floating interest rate, provision of collateral or not,fees, and other terms and conditions of procurement of interest-bearing liabilities.
ii.

Significant Subsequent Events
Issuance of new investment units
At the meetings of the board of directors held on August 16, 2021 and August 24, 2021, SANKEI REAL ESTATE passed thefollowing resolutions to issue new investment units, and payment was completed on September 1, 2021 for the issuanceof new investment units through public offering and on September 29, 2021 for the issuance of new investment units
through third-party allotment. As a result, as of September 29, 2021, unitholders’ capital was 49,442,685,000 yen andthe total number of investment units issued and outstanding was 467,099 units.
The proceeds from the issuance of new investment units through public offering were used for part of the funds foracquisition of real estate trust beneficiary rights of 4 properties stated “(Reference Information) (B) Acquisition of Assets”
below, which were acquired on September 2, 2021. Furthermore, the proceeds from the issuance of new investment
units through the third-party allotment are planned to be used as part of the funds for acquisition of specified assets orpart of the funds for repayment of borrowings in the future, until which the funds will be deposited with a financial
institution as funds on hand.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
(Issuance of new investment units through public offering)Number of new investment units issued:
105,047 units
Amount of issue price (offer price):
121,327 yen per unit
Total amount of issue price (total offer price):
12,745,037,369 yen
Amount to be paid in (issue amount):
116,971 yen per unit
Total amount of amount to be paid in (issue amount):
12,287,452,637 yen
Payment due date:
September 1, 2021
(Issuance of new investment units through third-party allotment)
Number of new investment units issued:
5,252 units
Amount to be paid in (issue amount):
116,971 yen per unit
Total amount of amount to be paid in (issue amount):
614,331,692 yen
Payment due date:
September 29, 2021
Allottee:
Daiwa Securities Co. Ltd.
(Reference Information)(A) Borrowing of Funds
SANKEI REAL ESTATE conducted the following borrowing of funds on September 2, 2021 to use as part of the funds foracquisition and incidental expenses upon acquisition of the real estate trust beneficiary rights of 4 properties as describedlater in this document under “(Reference Information) (B) Acquisition of Assets” along with the proceeds from the issuanceof new investment units through public offering stated in “Issuance of new investment units” above.
Category

Shortterm

ShorttermLongterm

Longterm

Borrowing
Maturity Repayment
amountInterest rate (Note)
Description
datemethod(million yen)
Base rate
Lump-sum Unsecured
Mizuho Bank, Ltd.
(JBA 1-monthAug. 31,400
repayment at and nonSumitomo Mitsui Banking Corporation
Japanese Yen TIBOR)
2022
maturity guaranteed+ 0.150%
Base rate
Lump-sum Unsecured
Mizuho Bank, Ltd.
(JBA 1-monthAug. 31,600
repayment at and nonSumitomo Mitsui Banking Corporation
Japanese Yen TIBOR)
2022
maturity guaranteed+ 0.150%
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Development Bank of Japan, Inc.
Mizuho Trust & Banking Co., Ltd.
Lump-sum Unsecured
Sumitomo Mitsui Trust Bank, Limited
Sept. 2,6,200
0.29655%
repayment at and nonShinsei Bank, Limited
2025
maturity guaranteed
Resona Bank, LimitedWest Japan City Bank, Ltd.
Kansai Mirai Bank, Limited
The Chiba Bank, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Development Bank of Japan, Inc.
Mizuho Trust & Banking Co., Ltd.
Sumitomo Mitsui Trust Bank, Limited
Lump-sum Unsecured
Sept. 2,
Shinsei Bank, Limited
6,200
0.35542%
repayment at and non2026
Resona Bank, Limited
maturity guaranteedAozora Bank, Ltd.
West Japan City Bank, Ltd.
Kansai Mirai Bank, Limited
The Chiba Bank, Ltd.
Lender:(Note) The base rate applicable to the calculation period for the interest payable on each interest payment date shall be decided two business days
prior to the immediately preceding interest payment date (the drawdown date in the case of the first interest calculation period). For the JBA
Japanese Yen TIBOR, please check the website of JBA TIBOR Administration (https://www.jbatibor.or.jp/english/rate/).

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
Furthermore, the 4,300 million yen of long-term borrowings due for repayment on October 1, 2021, was refinanced on
the same day as follows.
Category

Lender:Longterm

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Development Bank of Japan, Inc.
Mizuho Trust & Banking Co., Ltd.
Sumitomo Mitsui Trust Bank, Limited
Shinsei Bank, Limited
Resona Bank, LimitedAozora Bank, Ltd.

Borrowingamount(million yen)Interest rate

Maturity
date

Repayment
Description
method4,300

0.38044%

Apr. 1,2026

Lump-sum Unsecured
repayment at and nonmaturity guaranteed(B) Acquisition of Assets
SANKEI REAL ESTATE conducted the following acquisition of real estate trust beneficiary rights of 4 properties (totalacquisition price: 25,100 million yen) on September 2, 2021.
Asset
type

Property
Number

A-8

A-10
Officebuilding
A-11

A-12

Acquisition
Acquisition
price
Property nameLocation
Sellerasset(million yen)
(Note)
Real estate
Shinagawa Seaside TS Tower Shinagawa-ku,
trust
Godo Kaisha
10,900(additional acquisition)Tokyobeneficiary
SKB 2
right
Real estate
The Sankei
S-GATE AKASAKA
Minato-ku,
trust
1,400 Building Co.,
(additional acquisition)Tokyobeneficiary
Ltd.
right
Real estate
Miyamae-ku,
Godo Kaisha
trust
Miyazakidai Garden Office
Kawasaki-shi,
2,800 SKB
beneficiary
Kanagawa
Miyazakidai
rightReal estate
Sawara-ku,
trust
Godo Kaisha
Hitachi Kyushu Building
Fukuoka-shi,
10,000beneficiary
SKB Momochi
Fukuokaright

Total (4 properties)--

25,100-Acquisition
Date

Sept. 2,2021

Sept. 2,2021

Sept. 2,2021

Sept. 2,2021-

(Note) “Acquisition price” is the sale and purchase price of each trust beneficiary right stated in the trust beneficiary right transfer agreement foreach acquired asset, rounded down to the nearest million yen. The sale and purchase prices do not include consumption tax, local consumption
tax and the various expenses required for the acquisition.
The acquisition price for “Shinagawa Seaside TS Tower” presented is the figure equivalent to the 25% quasi co-ownership interest in sectional
ownership of the building, etc. additionally acquired by SANKEI REAL ESTATE, and the acquisition price for “S-GATE AKASAKA” is the figure
equivalent to the 20% quasi co-ownership interest additionally acquired by SANKEI REAL ESTATE. After these additional acquisitions, SANKEIREAL ESTATE holds 50% quasi co-ownership interest in sectional ownership of the buildings, etc. of Shinagawa Seaside TS Tower, and 80% quasi
co-ownership interest in S-GATE AKASAKA.

iii. Operating Forecasts
SANKEI REAL ESTATE’s operating forecasts for the fiscal period ending February 2022 (from September 1, 2021, to February
28, 2022) and fiscal period ending August 2022 (from March 1, 2022, to August 31, 2022) are as follows:
Operatingrevenue

OperatingprofitOrdinary
profitNet
profitDistribution per unit
(excluding distribution
in excess of earnings)

Distributions inexcess of
earnings per unit

million yen
million yen
million yen
million yen
yenyen
Fiscal period
2,775
1,526
1,382
1,381
2,958
ending Feb. 2022
Fiscal period
2,808
1,419
1,263
1,262
2,703
ending Aug. 2022
Furthermore, for the assumptions underlying the operating forecasts, please refer to “Assumptions Underlying the Operating
Forecasts for the Fiscal Period Ending February 2022 (from September 1, 2021, to February 28, 2022) and Fiscal Period Ending
August 2022 (from March 1, 2022, to August 31, 2022)” presented below.
(Note) The forecast figures above are the current forecasts calculated under certain assumptions. Accordingly, the actual operating revenue, operating
profit, ordinary profit, net profit, distribution per unit, and distribution in excess of earnings per unit may vary due to changes in thecircumstances. In addition, the forecasts are not a guarantee of the amount of distribution.

-6-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending February 2022 (from September 1, 2021, to February 28, 2022)
and Fiscal Period Ending August 2022 (from March 1, 2022, to August 31, 2022)
Item
Accounting period

Assets undermanagement

Operating revenue

Assumptions
・Fiscal period ending February 2022 (6th fiscal period) (from September 1, 2021, to February 28, 2022)(181 days)
・Fiscal period ending August 2022 (7th fiscal period) (from March 1, 2022, to August 31, 2022) (184 days)
・The assumption is that the real estate and real estate trust beneficiary rights (total of 14 properties)
held by SANKEI REAL ESTATE as of the date of this document (hereinafter, the “current portfolio assets”)
will continue to be held and there will be no acquisition of new properties through to the end of the
fiscal period ending August 2022.
・In actual practice, change may arise due to acquisition of new properties, disposition of portfolio
properties, etc.
・Leasing business revenue of the current portfolio assets is calculated by taking into account various
factors, such as lease agreements that have been concluded and are valid as of the date of thisdocument, tenant trends and market trends.
・The assumption is that there will be no delinquent or unpaid rent by tenants.
・Assuming that the effects of the spread of COVID-19 will continue through to the end of the fiscal period
ending August 2022, operating revenue is calculated by taking into account the utilization rate of rental
conference rooms and utilities reimbursement largely similar to the figures for the 4th and 5th fiscal
periods.
・Of operating expenses, the main components are as follows:(Unit: million yen)
Fiscal period
Fiscal period ending
ending Feb. 2022
Aug. 2022
Total expenses related to leasing business
980
1,074
Outsourcing expenses

223

216

Utilities expenses

143

151

Repair expenses
Property taxes

58
222

59
309

Depreciation

309

313

Other than expenses related to leasing business
269
314[Total]Asset management fee
210
258
Operating expenses
・Of expenses related to leasing business, which are the main operating expenses, the expenses otherthan depreciation are calculated on the basis of historical data and by taking into consideration thefactors causing fluctuation in each of the expenses.
・Depreciation is calculated using the straight-line method.
・In general, fixed asset tax, city planning tax, etc. are calculated on a pro rata basis and reimbursed at thetime of property acquisition with the previous owner upon transactions of real estate, etc. At SANKEIREAL ESTATE, the amount equivalent to the reimbursement is included in the cost of acquisition andthus not expensed in the business period in which the property acquisition date falls in the case of theproperties for which such reimbursement is made at the time of transaction. Furthermore, the fixed
asset tax, city planning tax, etc. on the asset acquired on September 2, 2021, will be expensed startingfrom the fiscal period ending August 2022.
・Repair expenses for buildings is the amount estimated based on medium- to long-term repair plans
formulated by the asset management company. However, repair expenses possibly increasing in amountor additionally arising from unforeseeable factors may result in repair expenses differing materially fromthe forecast amount.
・As interest expenses and other borrowing-related expenses, 137 million yen is assumed for the fiscal
period ending February 2022 and 149 million yen for the fiscal period ending August 2022.
Non-operating expenses
・As amortization of investment unit issuance expenses, 6 million yen is assumed for the fiscal period
ending February 2022 and 6 million yen for the fiscal period ending August 2022.

-7-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
Item

Assumptions

・The assumption is that total interest-bearing liabilities will be 50,600 million yen at the end of the fiscal
period ending February 2022 and 50,200 million yen at the end of the fiscal period ending August 2022.
・The assumption is that (i) A portion of the proceeds of new investment units issued on September 29,
2021 through third party allotment will be used as the source of funds to repay a portion (600 million
yen) of existing borrowings during the fiscal period ending February 2022, (ii) With refund of
consumption taxes corresponding to the fiscal period ending February 2022 scheduled to take place
Interest-bearing
during the fiscal period ending August 2022, the concerned refund, etc. will be used as the source ofliabilities
funds to repay a portion (400 million yen) of existing borrowings during the fiscal period ending August
2022, and (iii) There will be no change in the balance of borrowings other than the above through tothe end of the fiscal period ending August 2022.
・LTV ratio is expected to be 47.3% at the end of the fiscal period ending February 2022 and 47.1% at theend of the fiscal period ending August 2022. LTV ratio is calculated by the following formula and rounded
to one decimal place.
LTV ratio = Total interest-bearing liabilities ÷ Total assets × 100
・The assumption is the total number of investment units issued and outstanding as of the date of thisdocument of 467,099 units and that there will be no change in the number of investment units due to
Number of investment
issuance of new investment units, etc. through to the end of the fiscal period ending August 2022.
units issued and・Distribution per unit (excluding distribution in excess of earnings) is calculated based on the forecast
outstanding
total number of investment units issued and outstanding at the end of the fiscal period ending February
2022 and fiscal period ending August 2022 of 467,099 units.
・Distribution per unit (excluding distribution in excess of earnings) is calculated based on the assumptionthat distribution of earnings will be in accordance with the policy on distribution of cash provided inDistribution per unit
SANKEI REAL ESTATE’s articles of incorporation.
(excluding distribution
・Distribution per unit (excluding distribution in excess of earnings) may vary due to various factors, suchin excess of earnings)
as fluctuation in leasing business revenue accompanying change in assets under management, change
in tenants or other event, or incurrence of unexpected repairs.
Distributions in excessof earnings per unit
・No cash distribution in excess of earnings is planned to be made at this point in time.

Other

・The assumption is that the negative impact of the spread of COVID-19 will not further increase.
・The assumption is that there will be no amendment of laws and regulations, tax systems, accounting
standards, listing regulations provided by Tokyo Stock Exchange, Inc., rules provided by The Investment
Trusts Association, Japan, etc. that will impact the forecast figures above.
・The assumption is that there will be no unforeseen material change in general economic trends, realestate market conditions, etc.

(2) Investment Risks
Disclosure is omitted, because there is no significant change from “Investment Risks” in the securities registration statement(submitted on August 16, 2021).

-8-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021

2. Financial Statements(1) Balance Sheet(Unit: thousand yen)
4th fiscal period(as of Feb. 28, 2021)
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Land
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment 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
SoftwareTotal intangible assets
Investments and other assets
Long-term prepaid expenses
Deferred tax assets
Leasehold and guarantee deposits
Total investments and other assets
Total non-current assets
Deferred assets
Investment unit issuance expenses
Total deferred assets
Total assets-9-

5th fiscal period(as of Aug. 31, 2021)

4,147,117
2,797,010
54,096
46,597
9,321
41,015
7,095,157

4,457,965
2,799,257
36,07959,212
77
7,352,593

166,032(11,908)
154,123
353
(16)
336
2,457,766
14,296,308(769,403)
13,526,905
23,602(1,122)
22,479
2,875
(348)
2,526
27,889(3,719)24,17056,132,321
8,103
72,328,733

169,301(15,201)
154,100
544
(25)
518
2,457,766
14,340,970(992,106)
13,348,864
23,832(1,435)22,396
11,302(564)
10,73728,239(5,727)22,51256,132,575
281,344
72,430,815

5,773
5,773

4,833
4,833

43,23713
10,00053,251
72,387,757

43,72413
10,00053,73872,489,387

79,482,915

6,488
6,488
79,848,468

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021

(Unit: thousand yen)
4th fiscal period(as of Feb. 28, 2021)
Liabilities
Current liabilities
Operating accounts payable
Long-term borrowings due within 1 year
Accounts payable - otherAccrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Deposits received
Total current liabilities
Non-current liabilities
Long-term borrowings
Leasehold and guarantee deposits received
Leasehold and guarantee deposits received in trust
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus
Unappropriated retained earnings(undisposed loss)
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets

170,1129,100,000
219,582
26,175879
373,814
7,496
9,898,060

225,346
9,900,000
494,644
27,936875
89,208339,943
14,065
11,092,019

28,700,000
79,585
3,247,634
32,027,219
41,925,280

27,900,000
82,1393,219,176
31,201,315
42,293,334

36,540,901

36,540,901

1,016,734
1,016,734
37,557,635*1 37,557,635
79,482,915- 10 -

5th fiscal period(as of Aug. 31, 2021)

1,014,232
1,014,232
37,555,134*1 37,555,134
79,848,468

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
(2) Statement of Income(Unit: thousand yen)
4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021
Operating revenue
Leasing business revenue
Other leasing business revenue
Total operating revenue
Operating expenses
Expenses related to leasing business
Asset management fee
Asset custody fee
Administrative service fees
Remuneration for directors (and other officers)
Other operating expenses
Total operating expenses
Operating profit
Non-operating income
Interest income
Insurance claim income
Interest on refund
Other
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing related expenses
Other
Total non-operating expenses
Ordinary profit
Net profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Net profit
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)- 11 -

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

*1 2,015,771*1 2,032,902*1 132,163*1 143,210

2,147,934

2,176,113*1 790,014*1 793,758

186,562
1,568
7,065
3,600
40,5101,029,320
1,118,614

195,532
1,575
7,100
3,600
33,203
1,034,769
1,141,343

21
0
21

31
994
50
15
1,091

61,56537,6602,000
101,225
1,017,409
1,017,409882
0883
1,016,526
207
1,016,734

66,412
61,120127,533
1,014,902
1,014,902880
0880
1,014,021
210
1,014,232

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
(3) Statement of Unitholders’ Equity
4th fiscal period (from September 1, 2020, to February 28, 2021)(Unit: thousand yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning of period

Unappropriatedretained earnings(undisposed loss)

36,540,901

Total
surplusTotal
net assets

Total
unitholders’equity903,625

903,625

37,444,526

37,444,526

Dividend of surplus(903,417)(903,417)(903,417)(903,417)

Net profit

1,016,526

1,016,526

1,016,526

1,016,526-

113,108

113,108

113,108

113,108*1 36,540,901

1,016,734

1,016,734

37,557,635

37,557,635

Changes in items during period

Total changes in items during
periodBalance at end of period

5th fiscal period (from March 1, 2021, to August 31, 2021)(Unit: thousand yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning of period

Unappropriatedretained earnings(undisposed loss)

36,540,901

Total
surplusTotal
unitholders’equityTotal
net assets

1,016,734

1,016,734

37,557,635

37,557,635

Dividend of surplus(1,016,523)(1,016,523)(1,016,523)(1,016,523)

Net profit

1,014,021

1,014,021

1,014,021

1,014,021-(2,501)(2,501)(2,501)(2,501)*1 36,540,901

1,014,232

1,014,232

37,555,134

37,555,134

Changes in items during period

Total changes in items during
periodBalance at end of period- 12 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
(4) Statement of Cash Distribution(Unit: yen)
4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021
I. Unappropriated retained earnings

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

1,016,734,169

1,014,232,892

II. Additional distributions in excess of earnings
Deduction from unitholders' capital
III. Amount of distribution[Amount of distribution per unit]

7,136,000
1,021,161,600[2,849][2,862]

1,016,523,200

1,014,025,600[2,849][2,842]-

7,136,000

[-]

[20]

210,969

207,293

In accordance with the policy on
distribution of cash provided in Article
36, Paragraph 1 of SANKEI REALESTATE’s articles of incorporation, theamount of distribution shall be inexcess of the amount equivalent to
90% of the amount of SANKEI REALESTATE’s earnings available for
distribution provided in Article 67-15
of the Act on Special Measures
Concerning Taxation, but no more than
the amount of earnings. Based on suchpolicy, the decision was made to
distribute 1,016,523,200 yen, which is
the largest integral multiple of thetotal number of investment units
issued and outstanding (356,800 units)
in an amount not in excess ofunappropriated retained earnings, as
distribution of earnings.
The distribution of cash in excess ofearnings provided in Article 36,
Paragraph 2 of SANKEI REAL ESTATE’s
articles of incorporation will not be
made.

In accordance with the policy on
distribution of cash provided in Article
36, Paragraph 1 of SANKEI REALESTATE’s articles of incorporation, theamount of distribution shall be inexcess of the amount equivalent to
90% of the amount of SANKEI REALESTATE’s earnings available for
distribution provided in Article 67-15
of the Act on Special Measures
Concerning Taxation, but no more than
the amount of earnings. Based on suchpolicy, the decision was made to
distribute 1,014,025,600 yen, which is
the largest integral multiple of thetotal number of investment units
issued and outstanding (356,800 units)
in an amount not in excess ofunappropriated retained earnings, as
distribution of earnings.
Furthermore, pursuant to the policy on
the distribution of cash in excess ofearnings provided in Article 36,
Paragraph 2 of SANKEI REAL ESTATE’s
articles of incorporation, due to net
profit decreasing in the fiscal period
under review as a result of recording
temporary borrowing related expenses
associated with borrowing for theacquisition of real estate trust
beneficiary rights of 4 properties on
September 2, 2021, 7,136,000 yen was
distributed as a refund of investmentthat falls under distribution reducing
investment, etc. under tax law. As aresult, the amount of distribution was
1,021,161,600 yen in the fiscal period
under review.

of which, distribution of earnings[of which, distribution of earnings per
unit]of which, distribution in excess of earnings[of which, distributions in excess ofearnings per unit]
IV. Retained earnings carried forward
Method of calculation of amount of
distribution

1,016,523,200- 13 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
(5) Statement of Cash Flows(Unit: thousand yen)
4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021
Net cash provided by (used in) operating activities
Net profit before income taxes
Depreciation
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund
receivable
Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable - other
Increase (decrease) in consumption taxes refund
payableIncrease (decrease) in advances received
Increase (decrease) in deposits received
Decrease (increase) in long-term prepaid expenses
Decrease (increase) in other assets
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Proceeds from leasehold and guarantee deposits
received
Refund of leasehold and guarantee deposits received
Proceeds from leasehold and guarantee deposits
received in trust
Refund of leasehold and guarantee deposits received
in trust
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Proceeds from long-term borrowings
Repayments of long-term borrowings
Payments of investment unit issuance expenses
Distribution paid
Net cash provided by (used in) 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- 14 -

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

1,017,409
228,057(21)
61,565
34,103

1,014,902
229,481(31)
66,412
20,672(9,321)

9,321

5,300
(54,667)
4,076(12,615)
18,847
12,407(129,470)

89,20845,256(1,197,677)
17,555
526,775
548,943
21(61,662)(896)
486,405(33,871)
6,568
(487)
40,937
1,461,754
31(64,651)(884)
1,396,250(493)(4,286,634)(3,460)(28,670)

81

2,572

(12,724)(19)

232,800

3,970(33,127)(35,084)(4,100,099)(60,691)

4,300,000(902,512)
3,397,487(216,205)
7,160,333*1 6,944,127

4,800,000(4,800,000)(6,488)(1,015,975)(1,022,464)
313,095
6,944,127*1 7,257,223

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
(6) Notes on the Going Concern Assumption
Not applicable.
(7) Notes on Matters Concerning Significant Accounting Policies
1.

Method of depreciation of noncurrent assets

2.

Accounting for deferred assets

3.

Standards for revenue andexpense recognition

4.

Scope of funds in the statementof cash flows

5.

Other significant matters serving
as the basis for preparation of
the financial statements(1) Property, plant and equipment (including trust assets)
The straight-line method is adopted. Furthermore, the useful life of core property,
plant and equipment is as follows:
Buildings
3–65 years
Structures 6–59 years
Machinery and equipment
8-10 years
Tools, furniture and fixtures
4–8 years(2) Intangible assets
The straight-line method is adopted.
(3) Long-term prepaid expenses
The straight-line method is adopted.
Investment unit issuance expenses
They are amortized by the straight-line method over 3 years.
Accounting for fixed asset tax, etc.
For fixed asset tax, city planning tax, depreciable asset tax, etc. on real estate or trust
beneficiary rights that have real estate as trust assets held, the method adopted isthat, of the tax amount assessed and determined, the amount corresponding to theconcerned accounting period is expensed as expenses related to leasing business.
Furthermore, the amount equivalent to fixed asset tax, etc. in the initial fiscal year
borne by SANKEI REAL ESTATE upon acquisition of real estate or trust beneficiary rightsthat have real estate as trust assets is not recognized as expenses but included in thecost of acquisition of the concerned real estate, etc. The amount equivalent to fixed
asset tax included in the cost of acquisition of real estate, etc. was 3,425 thousand yen
in the previous fiscal period and zero in the fiscal period under review.
The funds (cash and cash equivalents) in the statement of cash flows comprise cashon hand and cash in trust, demand deposits and deposits in trust, and short-term
investments with a maturity of 3 months or less from the date of acquisition that arereadily convertible to cash and that are subject to an insignificant risk of changes invalue.
(1) Accounting for trust beneficiary rights that have real estate etc. as trust assets
Concerning trust beneficiary rights that have real estate held, etc. as trust assets, allaccounts of assets and liabilities within trust assets and all accounts of revenue andexpenses from the trust assets are recognized in the relevant account item of thebalance sheet and the statement of income.
Furthermore, the following material items of the trust assets recognized in therelevant account item are separately listed on the balance sheet.
i. Cash and deposits in trustii. Buildings in trust; Structures in trust; Machinery and equipment in trust; Tools,
furniture and fixtures in trust; Land in trust; Construction in progress in trustiii. Leasehold and guarantee deposits received in trust(2) Accounting for consumption tax, etc.
The accounting for consumption tax and local consumption tax is by the method of
exclusion of the taxes.

[Notes on Accounting Standards, Etc. Yet to be Applied]・ “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (ASBJ) Statement No. 29 issued
on March 31, 2020)
・ “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30 issued on March
26, 2021)
・ “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued on
March 31, 2020)
1. Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) in the
United States have jointly developed comprehensive accounting standards for revenue recognition and issued“Revenue from Contracts with Customers” (IFRS 15 by IASB and Topic 606 by FASB) in May 2014. Given the situation
where IFRS 15 would be applied from fiscal years beginning on or after January 1, 2018, and Topic 606 would beapplied from fiscal years beginning after December 15, 2017, the ASBJ developed a comprehensive accounting
standard for revenue recognition and issued such together with an implementation guidance.
The basic policy for the ASBJ when it developed the accounting standard for revenue recognition was to determine
the accounting standard, incorporating the basic principles of IFRS 15 as a starting point, from the perspective ofcomparability between financial statements, which is one of the benefits of consistency with IFRS 15. If there is an
item to which consideration should be given, such as practices that have been conducted thus far in Japan, alternative
treatments shall be added to the extent to which comparability is not impaired.
15

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
2. Scheduled application date
Application will be from the beginning of the fiscal period ending February 2022.
3. Impact of applying the accounting standards, etc.
The impact on the financial statements of the applying of the “Accounting Standard for Revenue Recognition” andthe like is currently under review.
・ “Accounting Standard for Fair Value Measurement” (Accounting Standards Board of Japan (ASBJ) Statement No. 30
issued on July 4, 2019)
・ “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10 issued on July 4, 2019)
・ “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31 issued onJune 17, 2021)
・ “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued
on March 31, 2020)
1. Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) in the
United States set up detailed guidance on fair value measurement (IFRS 13 “Fair Value Measurement” by IASB and
Topic 820 “Fair Value Measurement” by FASB). To improve the comparability with the provisions of these international
accounting standards, the ASBJ discussed the guidance and disclosure regarding mainly the fair value of financial
instruments, and announced an accounting standard for fair value measurement and an implementation guidanceon the accounting standard for fair value measurement.
The basic policy for the ASBJ when it developed the accounting standard for fair value measurement was toincorporate basically all of the provisions of IFRS 13, from the perspective of improving the comparability between
financial statements among domestic and international companies by using a unified method of measurement. To
the extent that the comparability between financial statements is not significantly impaired, other treatments ofindividual items shall be determined considering practices that have been conducted thus far in Japan, etc.
2. Scheduled application date
Application will be from the beginning of the fiscal period ending February 2022.
3. Impact of applying the accounting standards, etc.
The impact on the financial statements of the applying of the “Accounting Standard for Fair Value Measurement” andthe like is currently under review.
(8) Notes to the Financial Statements[Notes to the Balance Sheet]*1. Minimum net assets as provided in Article 67, Paragraph 4 of the Act on Investment Trusts and Investment Corporations(Unit: thousand yen)
4th fiscal period
5th fiscal period(as of Feb. 28, 2021)(as of Aug. 31, 2021)
50,00050,000- 16 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
[Notes to the Statement of Income]*1. Breakdown of operating income (loss) from real estate leasing
4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021

(Unit: thousand yen)
5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

A. Operating revenue from real estateleasing
Leasing business revenue
Rental revenue
Common area maintenance revenue

1,868,319
147,452

1,890,879
142,022

Total leasing business revenue

2,015,771

2,032,902

Other leasing business revenue
Utilities reimbursement
Parking revenue
Other rental revenue

93,36630,6558,141

89,327
31,102
22,780Total other leasing business revenue
Total operating revenue from real estateleasing
B. Operating expenses from real estateleasing
Expenses related to leasing businessOutsourcing expenses

132,163
2,147,934

143,210
2,176,113

183,374

169,652

Utilities expenses
Property taxes
Land rent
Repair expenses
Insurance premium
Trust fee
Depreciation
Other expenses related to leasing
business
Total expenses related to leasing
business
Total operating expenses from realestate leasing
C. Operating income (loss) from real estateleasing [A−B]

110,924
214,815
1,818
35,844
4,664
2,371
227,117
9,081

116,632
223,015
1,818
39,331
4,354
2,752
228,541
7,658

790,014793,758

790,014793,758

1,357,920

1,382,355[Notes to the Statement of Unitholders’ Equity]*1. Total number of investment units authorized and total number of investment units issued and outstanding
4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021
Total number of investment units
authorized
Total number of investment units issued
and outstanding- 17 -(Unit: units)
5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

10,000,000

10,000,000

356,800

356,800SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
[Notes to the Statement of Cash Flows]*1. Reconciliation of cash and cash equivalents at end of period to the amount of balance sheet items
4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021

(Unit: thousand yen)
5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

Cash and deposits
Cash and deposits in trust

4,147,117
2,797,010

4,457,965
2,799,257

Cash and cash equivalents

6,944,127

7,257,223[Notes on Lease Transactions]Operating lease transactions (as lessor)
Future minimum lease payments
4th fiscal period(as of Feb. 28, 2021)(Unit: thousand yen)
5th fiscal period(as of Aug. 31, 2021)

Due within 1 year

2,692,306

2,519,482

Due after 1 year
Total

15,407,566
18,099,872

14,482,652
17,002,135[Notes on Financial Instruments]
1. Matters concerning status of financial instruments(1) Policy for handling financial instruments
SANKEI REAL ESTATE shall procure funds in a well-balanced manner through borrowing from financial institutions,issuance of investment corporation bonds, issuance of new investment units, etc. to contribute to steady growth ofassets under management as well as efficient operation and stability of management.
Upon borrowing from financial institutions, issuance of investment corporation bonds, etc., the fund procurement shallbe in a manner that gives due consideration to the balance between agility in fund procurement and financial stability,
characteristics of to-be-acquired real estate, etc. Specifically, the procurement means, ratio of long-term debt, ratio of
fixed-rate debt, staggering of maturities, provision of collateral or not, etc. shall be considered. If borrowing, lenders
shall be limited to the qualified institutional investors provided in the Financial Instruments and Exchange Act (however,limited to the institutional investors provided in Article 67-15 of the Act on Special Measures Concerning Taxation).
Issuance of new investment units shall be for the purpose of expansion of asset size and enhancement of profitability,
and implementation decided by taking into account the LTV ratio, dilution of existing unitholders’ rights andaccompanying decline in transaction price of investment units, etc. and in light of the financial environment.
Derivative transactions may be conducted for the purpose of hedging the risk of fluctuation in interest rates and otherrisks on SANKEI REAL ESTATE arising from the concerned liabilities. No derivative transactions were conducted in thefiscal period under review.
(2) Description of financial instruments and associated risks, and risk management system
Borrowings are mainly for the purpose of procuring funds for acquisition of assets and funds for repayment of
obligations. Borrowings are exposed to the risk of inability to refinance upon becoming due for repayment, risk of risein the interest rate payable, etc., but the risks are mitigated by considering fund procurement that is well balanced
through issuance of investment units, etc. while also diversifying fund procurement sources and staggering maturities.
In addition, the risk of rise in interest rates on SANKEI REAL ESTATE’s operations is managed by closely watching interest
rate trends and keeping the LTV ratio under control in an appropriate manner.
(3) Supplementary explanation to matters concerning fair value, etc. of financial instruments
The fair value of financial instruments is values based on market price, but may otherwise include values based onreasonable calculation when no market price is available. Certain assumptions, etc. are adopted in the calculation of theconcerned values. Accordingly, the concerned values may vary when different assumptions, etc. are adopted.

- 18 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
2. Matters concerning fair value, etc. of financial instruments
The following are the carrying amount and fair value as of February 28, 2021, and the amount of difference between these.
Financial instruments for which estimation of fair value is recognized to be extremely difficult are not included in thefollowing table (Note 2).
(Unit: thousand yen)
Carrying amount(1) Cash and deposits(2) Cash and deposits in trust
Total assets(1) Long-term borrowings due
within 1 year
(2) Long-term borrowings
Total liabilities

Fair value

Amount of difference

4,147,117
2,797,010

4,147,117
2,797,010-

6,944,127

6,944,127-

9,100,000
28,700,000

9,100,000
28,744,574

44,57437,800,000

37,844,574

44,574

The following are the carrying amount and fair value as of August 31, 2021, and the amount of difference between these.
Financial instruments for which estimation of fair value is recognized to be extremely difficult are not included in thefollowing table (Note 2).
(Unit: thousand yen)
Carrying amount(1) Cash and deposits(2) Cash and deposits in trust
Total assets(1) Long-term borrowings due
within 1 year
(2) Long-term borrowings
Total liabilities

Fair value

Amount of difference

4,457,965
2,799,257

4,457,965
2,799,257-

7,257,223

7,257,223-

9,900,000
27,900,000

9,908,903
27,976,223

8,903
76,22337,800,000

37,885,127

85,127(Note 1) Method of calculation of the fair value of financial instruments
Assets(1) Cash and deposits; (2) Cash and deposits in trust
Because these are settled in a short period of time, the fair value is approximately the same as the book value and thus stated at that book value.
Liabilities(1) Long-term borrowings due within 1 year; (2) Long-term borrowings
Of long-term borrowings, because those with floating interest rates reflect market interest rates in a short period of time, the fair value is thought
to resemble the book value and thus stated at that book value. However, in the case of long-term borrowings with fixed interest rates, the fairvalue is calculated based on the present value of their future cash flows discounted over the time to maturity and at the rate adjusted for credit
risks.
(Note 2) Financial instruments for which estimation of fair value is recognized to be extremely difficult(Unit: thousand yen)
5th fiscal period(as of Aug. 31, 2021)

4th fiscal period(as of Feb. 28, 2021)
Leasehold and guarantee deposits received
Leasehold and guarantee deposits received in trust

79,585

82,1393,247,634

3,219,176* “Leasehold and guarantee deposits received” and “Leasehold and guarantee deposits received in trust” are not subject to disclosure of fair value,
because there being no market price and, even if the lease contract period has been set, there being the possibility of contract cancellation before
expiration, contract extension or contract renewal make calculating the actual deposit period impossible and reasonable projection of future cash
flows is thus recognized to be extremely difficult.
(Note 3) Amount of redemption of monetary claims scheduled to be due after the end of the fiscal period (February 28, 2021)
Due within
1 yearDue after
1 to 2 years

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years(Unit: thousand yen)
Due after
5 years

Cash and deposits

4,147,117

-

-

-

-

-

Cash and deposits in trust

2,797,010

-

-

-

-

-

6,944,127

-

-

-

-

-

Total

- 19 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
Amount of redemption of monetary claims scheduled to be due after the end of the fiscal period (August 31, 2021)
Due within
1 yearDue after
1 to 2 years

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years(Unit: thousand yen)
Due after
5 years

Cash and deposits

4,457,965

-

-

-

-

-

Cash and deposits in trust

2,799,257

-

-

-

-

-

7,257,223

-

-

-

-

-

Total

(Note 4) Amount of repayment of borrowings scheduled to be due after the end of the fiscal period (February 28, 2021)
Due within
1 yearLong-term borrowings due within
1 yearDue after
1 to 2 years

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years(Unit: thousand yen)
Due after
5 years

9,100,000

-

-

-

-

-

Long-term borrowings-

11,500,000

9,600,000

7,600,000

-

-

Total

9,100,000

11,500,000

9,600,000

7,600,000--

Amount of repayment of borrowings scheduled to be due after the end of the fiscal period (August 31, 2021)
Due within
1 yearLong-term borrowings due within
1 yearDue after
1 to 2 years

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years(Unit: thousand yen)
Due after
5 years

9,900,000

-

-

-

-

-

Long-term borrowings-

9,600,000

9,200,000

9,100,000

-

-

Total

9,900,000

9,600,000

9,200,000

9,100,000--[Notes on Securities]
4th fiscal period (as of February 28, 2021)
Not applicable.
5th fiscal period (as of August 31, 2021)
Not applicable.
[Notes on Derivative Transactions]
4th fiscal period (as of February 28, 2021)
Not applicable.
5th fiscal period (as of August 31, 2021)
Not applicable.
[Notes on Retirement Benefits]
4th fiscal period (as of February 28, 2021)
Not applicable.
5th fiscal period (as of August 31, 2021)
Not applicable.

- 20 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
[Notes on Tax-Effect Accounting]
1. Breakdown of main causes for occurrence of deferred tax assets and deferred tax liabilities
4th fiscal period(as of Feb. 28, 2021)(Unit: thousand yen)
5th fiscal period(as of Aug. 31, 2021)

Deferred tax assets
Non-deductible accrued enterprise tax

13

13

Total
Deferred tax assets, net

13
13

13
13

2. Breakdown of major components that caused any significant differences between the statutory tax rate and the effective
income tax rate after application of tax-effect accounting(Unit: %)4th fiscal period
5th fiscal period(as of Feb. 28, 2021)(as of Aug. 31, 2021)
Statutory tax rate

31.46

31.46

(31.43)(31.43)

Other

0.06

0.06

Effective income tax rate after applicationof tax-effect accounting

0.09

0.09

[Adjustments]
Deductible distribution payable[Notes on Share of Profit (Loss) of Entities Accounted for Using Equity Method]
4th fiscal period (from September 1, 2020, to February 28, 2021)
Not applicable.
5th fiscal period (from March 1, 2021, to August 31, 2021)
Not applicable.
[Notes on Related-Party Transactions]
1. Parent company, major corporate unitholder, etc.
4th fiscal period (from September 1, 2020, to February 28, 2021)
Not applicable.
5th fiscal period (from March 1, 2021, to August 31, 2021)
Not applicable.
2. Affiliated company, etc.
4th fiscal period (from September 1, 2020, to February 28, 2021)
Not applicable.
5th fiscal period (from March 1, 2021, to August 31, 2021)
Not applicable.
3. Fellow subsidiary, etc.
4th fiscal period (from September 1, 2020, to February 28, 2021)
Not applicable.
5th fiscal period (from March 1, 2021, to August 31, 2021)
Not applicable.

- 21 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
4. Director, major individual unitholder, etc.
4th fiscal period (from September 1, 2020, to February 28, 2021)
Description of
Share capital
Percentage ofrelationship
Balanceorvoting rights,
Transactio
Description ofat end ofConcurrent
investments
etc. held by
Description of n amount AccountAttribute
Locationbusiness
periodholding of
in capital(in) SANKEItransaction (thousand
item
Businessor occupation(thousanpositions,(thousand
REAL ESTATE
yen)
relationshipd yen)
etc. byyen)(%)
directors
Executive
Director of
SANKEI REAL
Payment of
Executive Director of
ESTATE, andasset
SANKEI REAL ESTATE, andPresident andmanagement
Accounts
President and Chief
228,562
Director Yuichi Ota
Chief Executive
fee to asset
payable - 205,218
Executive Officer of(Note 4)
Officer ofmanagement
other
Sankei Building Asset
Sankei Building
company
Management Co., Ltd.
Asset
(Note 3)
Management
Co., Ltd.
(Note 1) Of the related-party transactions subject to disclosure, the related-party transactions including significant transactions are disclosed.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period includes consumption tax,
etc. Amounts are rounded down to the nearest thousand yen.
(Note 3) Payment of asset management fee is for transactions conducted by Yuichi Ota as representative of Sankei Building Asset Management Co., Ltd.,and transaction amount is based on the terms and conditions provided in SANKEI REAL ESTATE’s articles of incorporation.
(Note 4) Asset management fee includes the portion of the fee for property acquisition included in the book value of individual real estate, etc. (42,000
thousand yen).
(Note 5) Transaction terms and conditions are decided based on the actual market conditions.
Name ofcompany,
etc. orname ofperson

5th fiscal period (from March 1, 2021, to August 31, 2021)
Description of
Share
Percentage ofrelationship
Balance
capital or
voting rights,
Transactio
Description ofat end ofConcurrent
investments
etc. held by
Description of n amount AccountAttribute
Locationbusiness
periodholding of
in capital(in) SANKEItransaction (thousand
item
Businessor occupation(thousanpositions,(thousand
REAL ESTATE
yen)
relationshipd yen)
etc. byyen)(%)
directors
Executive
Director of
SANKEI REAL
Payment of
Executive Director of
ESTATE, andasset
SANKEI REAL ESTATE, andPresident andmanagement
Accounts
President and Chief
Director
Yuichi Ota
Chief Executive
fee to asset
195,532 payable - 215,085
Executive Officer of
Officer ofmanagement
other
Sankei Building Asset
Sankei Building
company
Management Co., Ltd.
Asset
(Note 3)
Management
Co., Ltd.
(Note 1) Of the related-party transactions subject to disclosure, the related-party transactions including significant transactions are disclosed.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period includes consumption tax,
etc. Amounts are rounded down to the nearest thousand yen.
(Note 3) Payment of asset management fee is for transactions conducted by Yuichi Ota as representative of Sankei Building Asset Management Co., Ltd.,and transaction amount is based on the terms and conditions provided in SANKEI REAL ESTATE’s articles of incorporation.
(Note 4) Transaction terms and conditions are decided based on the actual market conditions.
Name ofcompany,
etc. orname ofperson[Notes on Asset Retirement Obligations]
4th fiscal period (from September 1, 2020, to February 28, 2021)
Not applicable.
5th fiscal period (from March 1, 2021, to August 31, 2021)
Not applicable.

- 22 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
[Notes on Investment and Rental Properties]
SANKEI REAL ESTATE owns office buildings, etc. for the purpose of earning revenue from leasing. The carrying amount,amount of change during period and fair value of these investment and rental properties are as follows:(Unit: thousand yen)
4th fiscal period
5th fiscal period
From: Sept. 1, 2020
From: Mar. 1, 2021
To: Feb. 28, 2021
To: Aug. 31, 2021
Carrying amount
Balance at beginning of period
68,249,447
72,320,630
Amount of change during period
Balance at end of period
Fair value at end of period

4,071,182(171,159)

72,320,630
79,181,000

72,149,470
79,326,000(Note 1) Carrying amount is the amount of the cost of acquisition, less accumulated depreciation.
(Note 2) Of the amount of change during period, the amount of increase in the previous fiscal period is mainly attributable to new property acquisitionof 1 property (4,255,758 thousand yen), etc., while the amount of decrease is mainly attributable to depreciation (227,117 thousand yen).
The amount of increase in the fiscal period under review is mainly attributable to capital expenditures (57,084 thousand yen), etc., while theamount of decrease is mainly attributable to depreciation (228,541 thousand yen).
(Note 3) Fair value at end of period is the appraisal value by an external real estate appraiser.

Furthermore, the income (loss) concerning investment and rental properties is presented in “Notes to the Statement of
Income.”[Notes on Segment Information, Etc.]
1. Segment information
The information is omitted because SANKEI REAL ESTATE has a single segment—the real estate leasing business.
2. Related information
4th fiscal period (from September 1, 2020, to February 28, 2021)(1) Information by product and service
The information is omitted, because operating revenue to external customers for a single group of products and services
exceeds 90% of operating revenue on the statement of income.
(2) Information by geographic area
i. Operating revenue
The information is omitted, because operating revenue to external customers in Japan exceeds 90% of operating
revenue on the statement of income.
ii. Property, plant and equipment
The information is omitted, because the amount of property, plant and equipment located in Japan exceeds 90%of the amount of property, plant and equipment on the balance sheet.
(3) Information by major customer
Name of customer
GRANVISTA Hotels & Resorts Co., Ltd.

Operating revenue
325,755(Unit: thousand yen)
Related segment
Real estate leasing businessSony Corporation

Not disclosed (Note)

Real estate leasing business(Note)

Not disclosed, due to unavoidable circumstances in that consent for disclosure has not been obtained from the lessee.

5th fiscal period (from March 1, 2021, to August 31, 2021)(1) Information by product and service
The information is omitted, because operating revenue to external customers for a single group of products and services
exceeds 90% of operating revenue on the statement of income.
(2) Information by geographic area
i. Operating revenue
The information is omitted, because operating revenue to external customers in Japan exceeds 90% of operating
revenue on the statement of income.
ii. Property, plant and equipment
The information is omitted, because the amount of property, plant and equipment located in Japan exceeds 90%of the amount of property, plant and equipment on the balance sheet.
(3) Information by major customer
Name of customer
GRANVISTA Hotels & Resorts Co., Ltd.

Operating revenue
325,755(Unit: thousand yen)
Related segment
Real estate leasing businessSony Group Corporation

Not disclosed (Note)

Real estate leasing business(Note)

Not disclosed, due to unavoidable circumstances in that consent for disclosure has not been obtained from the lessee.

- 23 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
[Notes on Per Unit Information]
4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

Net assets per unit

105,262 yen

105,255 yen

Earnings per unit

2,849 yen

2,841 yen

(Note 1) Earnings per unit is calculated by dividing net profit by the period’s daily weighted average number of investment units (fiscal period ended
February 2021: 356,800 units; fiscal period ended August 2021: 356,800 units). In addition, diluted earnings per unit is not stated, because
there are no diluted investment units(Note 2) The basis for calculation of earnings per unit is as follows:
4th fiscal period
5th fiscal period
From: Sept. 1, 2020
From: Mar. 1, 2021
To: Feb. 28, 2021
To: Aug. 31, 2021
Net profit (thousand yen)Amount not available to common unitholders (thousand yen)
Net profit attributable to common investment units(thousand yen)
Average number of investment units during period (units)

1,016,526

1,014,021－－

1,016,526

1,014,021

356,800

356,800[Notes on Significant Subsequent Events]
At the meetings of the board of directors held on August 16, 2021 and August 24, 2021, the following resolutions to issue
new investment units were passed, and payment was completed on September 1, 2021 for the issuance of new investment
units through public offering and on September 29, 2021 for the issuance of new investment units through third-party
allotment. As a result, as of September 29, 2021, unitholders’ capital was 49,442,685,000 yen and the total number ofinvestment units issued and outstanding was 467,099 units.
(Issuance of new investment units through public offering)Number of new investment units issued:
105,047 units
Amount of issue price (offer price):
121,327 yen per unit
Total amount of issue price (total offer price):
12,745,037,369 yen
Amount to be paid in (issue amount):
116,971 yen per unit
Total amount of amount to be paid in (issue amount): 12,287,452,637 yen
Payment due date:
September 1, 2021
Intended use:
It was used as part of the funds for acquisition of real estate trust
beneficiary rights of 4 properties on September 2, 2021.
(Issuance of new investment units through third-party allotment)
Number of new investment units issued:
5,252 units
Amount to be paid in (issue amount):
116,971 yen per unit
Total amount of amount to be paid in (issue amount): 614,331,692 yen
Payment due date:
September 29, 2021
Allottee:
Daiwa Securities Co. Ltd.
Intended use:
It is planned to be used as part of the funds for acquisition of
specified assets or part of the funds for repayment of borrowings
in the future, until which the funds will be deposited with afinancial institution as funds on hand.

- 24 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
(9) Changes in Total Number of Investment Units Issued and Outstanding
Changes in unitholders’ capital and the total number of investment units issued and outstanding from the incorporation of
SANKEI REAL ESTATE to the last day of the fiscal period under review (August 31, 2021) are as follows:
Total number of investment
Unitholders’ capitalunits issued and outstanding Remarks(thousand yen)(units)Date
Description
Increase
Increase
Balance
Balance(Decrease)(Decrease)
Incorporation
Nov. 19, 2018
through private
100,000
100,000
1,000
1,000 (Note 1)
placement
Capital increase
Mar. 11, 2019
through public
21,928,467
22,028,467
227,238
228,238 (Note 2)
offering
Capital increase
Apr. 10, 2019
through third-party
1,096,433
23,124,900
11,362
239,600 (Note 3)
allotment
Capital increase
Sept. 2, 2019
through public
12,777,138
35,902,038
111,619
351,219 (Note 4)
offering
Capital increase
Sept. 26, 2019
through third-party
638,862
36,540,901
5,581
356,800 (Note 5)
allotment(Note 1) Investment units were issued at a paid-in amount of 100,000 yen per unit upon the incorporation of SANKEI REAL ESTATE.
(Note 2) New investment units were issued through public offering at an issue price of 100,000 yen (paid-in amount of 96,500 yen) per unit for the
purpose of procuring funds for acquisition of new properties.
(Note 3) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in
amount of 96,500 yen per unit.
(Note 4) New investment units were issued through public offering at an issue price of 118,734 yen (paid-in amount of 114,471 yen) per unit for the
purpose of procuring funds for acquisition of new properties.
(Note 5) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in
amount of 114,471 yen per unit.

- 25 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
3.

Reference Information(1) Information on Price of Assets Under Management, Etc.
i. Investment Status
4th fiscal period(as of Feb. 28, 2021)
Asset group

Asset type

Geographic area
(Note 1)

5th fiscal period(as of Aug. 31, 2021)

Total amount
As a
Total amount
As a
held
percentage ofheldpercentage of(million yen) total assets (million yen) total assets(Note 2)(%) (Note 3)(Note 2)(%) (Note 3)

Greater Tokyo, Osaka City andNagoya City
Cities designated by
Office buildings
government ordinance(excluding above), core cities
and major regional cities
Real estate
Greater Tokyo, Osaka City andNagoya City
Cities designated by
Sub assets
government ordinance(excluding above), core cities
and major regional cities
Greater Tokyo, Osaka City andNagoya City
Cities designated by
Office buildings
government ordinance(excluding above), core cities
and major regional cities
Greater Tokyo, Osaka City andNagoya City
Real estate inCities designated by
Sub assets
trustgovernment ordinance(excluding above), core cities
and major regional cities
Greater Tokyo, Osaka City andNagoya City
Cities designated byHotelsgovernment ordinance(excluding above), core cities
and major regional cities
Subtotal
Deposits and other assets
Total assets

2,612

3.3

2,612

3.3

-

-

-

-

-

-

-

-

-

-

-

-

56,72871.4

56,609

70.9

-

-

-

-

9,004

11.3

8,978

11.2

3,974

5.0

3,949

4.9

9,004

11.3

8,978

11.2

3,974

5.0

3,949

4.9

72,320
7,162

91.0
9.0

72,149
7,698

90.4
9.6

79,482100.0

79,848100.0(Note 1) “Greater Tokyo” refers to Tokyo, Kanagawa Prefecture, Saitama Prefecture and Chiba Prefecture.
“Core cities” refers to cities with population of 200,000 or more (excluding Greater Tokyo, Osaka City and Nagoya City, and other cities
designated by government ordinance).
“Major regional cities” refers to cities that are municipalities with population of less than 200,000 and the Asset Management Company has
deemed certain demand can be found for specific asset types.
(Note 2) “Total amount held” is based on the carrying amount (in the case of real estate and real estate in trust, the depreciated book value),rounded down to the nearest million yen. Furthermore, the total amount held for real estate in trust with hotel as the asset type includes
the book value of movables incidental to hotels.
(Note 3) “As a percentage of total assets” is rounded to one decimal place.

4th fiscal period(as of Feb. 28, 2021)

5th fiscal period(as of Aug. 31, 2021)

Total liabilities

As a percentage of total
assets(%) (Note 2)
41,925
52.7

Total net assets
Total assets

37,557
79,482

Amount(million yen) (Note 1)

47.3
100.0

As a percentage of total
assets(%) (Note 2)
42,293
53.0

Amount(million yen) (Note 1)

37,55579,84847.0
100.0(Note 1) Total liabilities, total net assets and total assets amounts are each based on the carrying amount, rounded down to the nearest million yen.
(Note 2) “As a percentage of total assets” is rounded to one decimal place.

- 26 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
ii.

Investment Assets
The following are the assets held by SANKEI REAL ESTATE (real estate or trust beneficiary rights that have real estate astrust assets; hereinafter, may be collectively referred to as the “portfolio assets”) as of August 31, 2021.

(A) Portfolio List
The property name, location, acquisition price, investment ratio, book value, appraisal value and acquisition date of theportfolio assets of SANKEI REAL ESTATE are as follows:
Acquisition priceAppraisal(Note 1)
Book value
Acquisition
Asset Property
value
Property nameLocation(million yen)
Date
Investment
type
Number(million yen)
Price
(Note 2)
(Note 4)
ratio
(Note 3)(million yen)(%)
Tokyo Sankei
Chiyoda-ku,
A-1
Building
2,509
3.5
2,612
2,690
Mar. 12, 2019Tokyo
(Note 5)Kita-ku,i. 8,600
BREEZÉ TOWER
i. Mar. 12, 2019
A-2
Osaka-shi,ii. 4,500
18.3
13,076
17,280(Note 5)ii. Sept. 3, 2019
Osaka
Total 13,100
S-GATENIHONBASHIChuo-ku,
A-3
6,698
9.4
6,707
7,470
Mar. 12, 2019
HONCHOTokyo(Note 5)
Chiyoda-ku,
A-4
S-GATE AKIHABARA
2,055
2.9
2,051
2,530
Mar. 12, 2019
Tokyo
OfficeHibiya Sankei
Chiyoda-ku,
buildings
A-5
5,829
8.1
6,057
6,410
Mar. 12, 2019
Building
Tokyo
Hatchobori Sankei
Chuo-ku,
A-6
4,959
6.9
5,011
5,500
Mar. 12, 2019
BuildingTokyo
Koto-ku,A-7
Toyo Park Building
3,782
5.3
3,892
3,610
Mar. 12, 2019
Tokyo
Shinagawa Seaside Shinagawa-ku,
A-8
10,04014.0
10,107
11,000
Sept. 3, 2019
TS Tower (Note 5)Tokyo
Ota-ku,A-9
Omori Park Building
5,400
7.5
5,463
5,490
Sept. 3, 2019Tokyo
S-GATE AKASAKA
Minato-ku,
A-10
4,200
5.9
4,242
4,266
Oct. 1, 2020
(Note 5)Tokyo
Subtotal-

58,57481.9

59,221

66,246-

B-1

Hotel Intergate
Tokyo Kyobashi

Chuo-ku,
Tokyo

8,961

12.5

8,978

9,010

Mar. 12, 2019

B-2

Hotel Intergate
Hiroshima

Naka-ku,
Hiroshima-shi,
Hiroshima

3,990

5.6

3,949

4,070

Sept. 3, 2019

Subtotal-

12,951

18.1

12,927

13,080

-

Total

-

71,525100.0

72,14979,326-Sub
assets(Note 1) “Acquisition price” is the sale and purchase price of real estate and each trust beneficiary right stated in each sale and purchase agreement for the
portfolio assets, rounded down to the nearest million yen. The sale and purchase prices do not include consumption tax, local consumption tax and thevarious expenses required for the acquisition. “Investment ratio” is the proportion of the acquisition price of each portfolio asset to the sum total
amount of acquisition prices, rounded to one decimal place.
(Note 2) “Book value” is the depreciated book value for each portfolio asset as of August 31, 2021, rounded down to the nearest million yen.
(Note 3) “Appraisal value” is the appraisal value with an appraisal date of August 31, 2021, stated in each real estate appraisal report. The appraisal of eachportfolio asset is entrusted to Japan Real Estate Institute, The Tanizawa Sōgō Appraisal Co., Ltd. and Daiwa Real Estate Appraisal Co., Ltd.
(Note 4) “Acquisition date” is the acquisition date stated in each sale and purchase agreement for the portfolio assets.
(Note 5) The acquisition price, book value and appraisal value are the figures equivalent to the co-ownership interest (2% for “Tokyo Sankei Building” and 51%
for “S-GATE NIHONBASHI-HONCHO”) and the quasi co-ownership interest (45% for “BREEZÉ TOWER,” 25% for “Shinagawa Seaside TS Tower,” and 60%
for “S-GATE AKASAKA”) held by SANKEI REAL ESTATE.

- 27 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
(B)

Overview of Buildings and Leasing
The property name, construction completion, total rental revenue, security and guarantee deposits, total leasable area,
total leased area and occupancy rate of the portfolio assets of SANKEI REAL ESTATE are as follows:
Security andTotal rental
Total leasable
Total leased Occupancy
Construction
guarantee
Asset Property
revenue
area
area
rate
Property namecompletion
deposits
type Number(million yen)
(m2)
(m2)
(%)
(Note 1)(million yen)
(Note 2)
(Note 4)(Note 5)(Note 6)(Note 3)
Tokyo Sankei
A-1
Building
Sept. 28, 2000
95
81
881.69826.25
93.7(Note 7)BREEZÉ TOWER
A-2
July 1, 2008
1,046
937
12,146.02
12,122.05
99.8(Note 7)
S-GATENIHONBASHIA-3
Oct. 31, 2018307
307
3,171.83
3,171.83
100.0
HONCHO(Note 7)
A-4
S-GATE AKIHABARA Sept. 29, 2017130
130
1,681.55
1,681.55
100.0
Hibiya Sankei
OfficeA-5
Jun. 25, 1992
382
324
3,439.61
3,439.61
100.0
Buildingbuildings
Hatchobori Sankei
A-6
Sept. 1, 1965
318
261
5,594.90
5,594.90
100.0
Building
A-7
Toyo Park Building Jun. 18, 1991
179
143
4,224.52
3,497.61
82.8
Shinagawa Seaside
Not disclosed Not disclosed Not disclosed Not disclosed
A-8
TS Tower
July 25, 2003
100.0
(Note 8)(Note 8)(Note 8)(Note 8)(Note 7)
Omori Park
A-9
May 31, 1993
281
261
7,469.72
7,131.88
95.5
Building
S-GATE AKASAKA
Not disclosed Not disclosed
A-10
July 31, 2015
1,984.86
1,984.86
100.0(Note 7)(Note 8)(Note 8)Not disclosed Not disclosed
Subtotal (average)
3,423
2,957
97.6
(Note 8)(Note 8)
Hotel Intergate
B-1
Jan. 18, 2018
413
206
6,006.53
6,006.53
100.0
Tokyo Kyobashi
SubassetsHotel Intergate
B-2
Oct. 31, 2018
237
118
9,160.15
9,160.15
100.0
Hiroshima
Subtotal (average)
651
325
15,166.68
15,166.68
100.0
Not disclosed Not disclosed
Total (average)
4,075
3,283
98.2
(Note 8)(Note 8)(Note 1) “Construction completion” is the date of new construction completion stated in the registry of the main building for each portfolio asset. If there are
multiple main buildings, the date of the oldest building stated in the registry is indicated. As for “Shinagawa Seaside TS Tower,” the date of new
construction completion stated in the registry of the building with the building number 100-1-9 is indicated.
(Note 2) “Total rental revenue” is the amount calculated by annualizing the monthly rent (Only the rent for the rental accommodation, excluding usage fees forwarehouses, signboards, parking lots, etc., but including common service charges, etc. Free rent and rent holiday (*1) will not be taken into
consideration. As for rents that include floating rents in agreements with the tenants, the rents are calculated without taking floating rents into
consideration. Consumption tax, etc. are not included. The same shall apply hereinafter.) for the building stated in the lease agreement for each portfolio
asset effective as of August 31, 2021, rounded down to the nearest million yen. The amount calculated by annualizing the monthly rent stated in thelease agreement concluded with the end tenant with respect to the portion in the pass-through-type master lease agreement (*2) is indicated when apass-through-type master lease agreement has been concluded for the portfolio assets.
(*1) “Free rent” refers to measures temporarily reducing rent or other amount for mainly tenants newly moving in that temporarily reduce costs
associated with moving so as to encourage them to move in. “Rent holiday” refers to an agreement on measures temporarily reducing rent orother amount on a regular or irregular basis for a certain period of time during a tenant’s period of occupancy. The same shall apply hereinafter.
Unless otherwise stated, calculations are made without taking free rent or rent holiday into consideration when calculating monthly rent, etc.
in this document.
(*2) “Pass-through-type master lease agreement” refers to master lease agreements that have no rent guarantee.
(Note 3) “Security and guarantee deposits” is the total amount of security and guarantee deposits (including the amount expected to be received based on eachlease agreement, but excluding security and guarantee deposits for warehouses, signboards, parking lots, etc.) based on the lease agreement for eachportfolio asset as of August 31, 2021, rounded down to the nearest million yen. The amount of security deposits stated in the lease agreement concluded
with the end tenant with respect to the portion in the pass-through-type master lease agreement is indicated when a pass-through-type master leaseagreement has been concluded for the portfolio assets.
(Note 4) “Total leasable area” is the area (excluding area of warehouse, signboard, parking lot, etc.) expected to be leasable based on the lease agreement,
drawing, etc. of the buildings for each portfolio asset as of August 31, 2021, rounded down to two decimal places.
(Note 5) “Total leased area” is the total leased area (excluding area of warehouse, signboard, parking lot, etc.) stated in the lease agreement (excluding leased
agreements under which the lease period is yet to commence) for each portfolio asset as of August 31, 2021, rounded down to two decimal places.
With respect to the portion which comes under the pass-through-type master lease agreement, the total area for which the lease agreement has
actually been concluded with the end tenant and for which the lease period has commenced is indicated, rounded down to two decimal places.
(Note 6) “Occupancy rate” is the ratio of total leased area to total leasable area for each portfolio asset as of August 31, 2021, rounded to one decimal place. In
addition, each subtotal and portfolio total figure is the ratio of the sum total of total leased area to the sum total of total leasable area for each portfolio
asset, rounded to one decimal place.
(Note 7) The total rental revenue, security and guarantee deposits, total leasable area and total leased area are the figures equivalent to the co-ownershipinterest (2% for “Tokyo Sankei Building” and 51% for “S-GATE NIHONBASHI-HONCHO”) and the quasi co-ownership interest (45% for “BREEZÉ TOWER,”
25% for “Shinagawa Seaside TS Tower,” and 60% for “S-GATE AKASAKA”) held by SANKEI REAL ESTATE.
(Note 8) Not disclosed, due to unavoidable circumstances in that such contains information for which consent for disclosure has not been obtained from thetenant, relevant party, etc. or information from which confidential information can be derived.

- 28 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
(C) Overview of Real Estate Appraisal Reports
The following is an overview of each real estate appraisal report prepared by Japan Real Estate Institute, The Tanizawa
Sōgō Appraisal Co., Ltd. and Daiwa Real Estate Appraisal Co., Ltd. upon being entrusted by SANKEI REAL ESTATE and theAsset Management Company with the appraisal of the portfolio assets of SANKEI REAL ESTATE. The concerned real estateappraisal reports are the appraisal company’s judgment and opinion at a certain point in time, and are not a guarantee ofthe validity or accuracy of the content thereof, possibility of transaction at the concerned appraisal value, etc. Furthermore,
there is no special vested interest between Japan Real Estate Institute, The Tanizawa Sōgō Appraisal Co., Ltd. or Daiwa Real
Estate Appraisal Co., Ltd. and SANKEI REAL ESTATE or the Asset Management Company.
Overview of appraisal report

Asset
type

Property
Property name
Number

A-1

A-2

A-3

Tokyo Sankei
Building(Note 2)BREEZÉ
TOWER(Note 2)S-GATENIHONBASHI-HONCHO(Note 2)

Japan Real
EstateInstituteJapan Real
EstateInstitute

2,690

2,730

2.5

2,640

2.2

2.6

2,750

17,28017,415

3.8

17,1453.4

4.0

15,705

7,470

7,590

3.3

7,340

3.0

3.5

6,650

2,530

2,570

3.5

2,490

3.3

3.7

2,460

6,410

6,550

3.0

6,260

2.8

3.2

6,970

5,500

5,710

4.1

5,410

4.2

4.3

5,660

3,610

3,650

4.0

3,560

3.7

4.1

2,990

11,00011,425

3.6

10,8253.7

3.8

10,425

5,490

5,590

3.8

5,380

3.6

4.0

5,530

4,266

4,362

3.2

4,164

3.0

3.4

3,942

66,246

67,592-

65,214--63,082

9,010

9,160

3.8

8,950

3.6

4.0

8,710

4,070

4,110

4.6

4,030

4.4

4.8

4,320

Subtotal

13,08013,270-12,980--13,030Total

79,32680,862-

78,194--

76,112A-4

S-GATEAKIHABARA

A-5

Hibiya Sankei
Building

A-6

Hatchobori
Sankei
Building

A-7

Toyo Park
Building

A-8

ShinagawaSeaside TS
Tower(Note 2)

A-9

Omori Park
Building

A-10

S-GATEAKASAKA(Note 2)

Officebuildings

Appraiser

Japan Real
EstateInstituteJapan Real
EstateInstituteJapan Real
EstateInstitute
The Tanizawa
Sōgō
Appraisal Co.,
Ltd.
Japan Real
EstateInstitute
The Tanizawa
Sōgō
Appraisal Co.,
Ltd.
Japan Real
EstateInstituteJapan Real
EstateInstitute

Subtotal
B-1
Sub
assetsB-2

Direct capitalization
DCF method
methodIndicated
Appraisalvalue by
Indicated
Indicated
value
cost
value by(million yen) value by
Discount Terminal
approachincome Cap rate income(Note 1)rate
cap rate(million
approach(%)
approach
(%)
(%)
yen)
(million(million
yen)
yen)

Hotel
IntergateTokyo
Kyobashi
HotelIntergate
Hiroshima

Daiwa Real
EstateAppraisal Co.,
Ltd.
Japan Real
EstateInstitute(Note 1) “Appraisal value” is the appraisal value with an appraisal date of August 31, 2021, stated in each real estate appraisal report.
(Note 2) The appraisal value, indicated value by income approach based on direct capitalization method, indicated value by income approach basedon DCF method and indicated value by cost approach are the figures equivalent to the co-ownership interest (2% for “Tokyo Sankei
Building” and 51% for “S-GATE NIHONBASHI-HONCHO”) and the quasi co-ownership interest (45% for “BREEZÉ TOWER,” 25% for“Shinagawa Seaside TS Tower,” and 60% for “S-GATE AKASAKA”) held by SANKEI REAL ESTATE.

- 29 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2021
(2) Capital Expendituresi.
Schedule of Capital Expenditures
Of capital expenditures associated with renovation work, etc. currently planned for assets held by SANKEI REAL ESTATE as
of August 31, 2021, the following are the major estimated amounts (10 million yen or more). The estimated construction
costs below may include the portion separately charged to expenses in accounting.

Name of real estate, etc.
(Location)

Expected construction cost
(million yen)Amount of
Total
Total
payment
amountamountduringalready
periodpaid

PurposeScheduled period

Hibiya Sankei Building(Chiyoda-ku, Tokyo)

Renewal of power distribution
panel equipment

From: Nov. 1, 2021
To: Nov. 30, 2021

12

-

-

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Renewal of telephone andswitching equipment
Renewal of switching
peripheral equipment

From: Feb. 1, 2022
To: Feb. 28, 2022

11

-

-

ii.

Capital Expenditures during the Fiscal Period
Major construction works falling under the category of capital expenditures of 10 million yen or more conducted in thefiscal period under review for assets held by SANKEI REAL ESTATE as of August 31, 2021 are as follows: For the fiscal period
under review, capital expenditures amounted to 57 million yen and repair expenses separately charged to expenses
amounted to 39 million yen for a combined total of 96 million yen of construction works implemented.

Name of real estate, etc.
(Location)
Toyo Park Building(Koto-ku, Tokyo)

iii.

Purpose

PeriodInstallation of raised flooring

From: July 1, 2021
To: Aug. 25, 2021

Amount of payment(million yen)
12

Other

44

Total

57

Cash Reserves for Long-Term Repair Plans
Based on long-term repair plans formulated on a property-by-property basis, SANKEI REAL ESTATE makes the following
provision of reserve for repairs from cash flows during the fiscal period for the purpose of allocating to medium- to longterm future large-scale repairs and other funds.

Fiscal period
Balance of reserveat beginning of
period(thousand yen)
Provision of reserve
during period(thousand yen)
Reversal of reserve
during period(thousand yen)
Reserve carriedforward(thousand yen)

1st fiscal period
2nd fiscal period
From: Nov. 19, 2018 From: Sept. 1, 2019
To: Aug. 31, 2019
To: Feb. 29, 2020

3rd fiscal period
From: Mar. 1, 2020
To: Aug. 31, 2020

4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021-

95,103

130,466

217,842

175,880

95,103

105,897

128,187

59,29359,293-70,53440,812

101,255

25,496

95,103

130,466

217,842

175,880

209,678- 30 -