Questions and Answers
at the Fiscal Period January 2018 Earnings Presentation
Advance Residence Investment Corporation
Date: From 15:30 to 16:30, Tuesday, Mach 13, 2018
Presenter: Kenji Kousaka, President and Representative Director, AD Investment
Management Co., Ltd.
▶The questions grouped according to the type of topic.
▶Advance Residence Investment Corporation is abbreviated as “ADR”.
Internal Growth Related Questions
Q1. Rents were falling in the Kansai and Nagoya areas, what is the cause? Is there no
possibility that the influence will spread to Tokyo?
A1. It is in a state of oversupply a little. Since Local developers with the generalcontractor function actively acquire land and develop, supply of one‐room
condominiums is increasing In the Kansai area. And Cancellation continued in big
unit and the struggle for leasing in Nagoya
In Tokyo, the supply pressure is still low, and it is difficult to imagine the influence.
Q2. Although there was explanation that the cap rate of the appraisal evaluation isbottoming out, is the cap rate stopped decreasing even in the actual deal?
A2. In actual transactions, the cap rate is more aggressive. The cap rate is around 4%
and plus or minus 0.2% is the current viewpoint In the case of a typical residential
property.
Altough continuous appraisal evaluation, the cap rate tends to level off as it ispulled to the previous level.
Q3. Do you see market rents likely to rise in the future?
A3. In general, the balance of supply and demand has been tightened, ADR rent
levels continue to rise as the market rent rises. We expect the market rents to risefurther in the future, so we can expect a rise in rent.

Q4. Do you see a change in demand trends to rental housing in each region?
A4. The difference in the demand trend among the areas is small. The occupancy rate
has remained at the high 96% level in every area.

External Growth Related Questions
Q5. ITOCHU Property Development, Ltd.(IPD) announced that IPD strengthen
development of rental housing, but will the external growth pace of ADR
accelerate in the future? Although other housing REITs disclosed that it would
acquire properties from IPD, are there any major impacts on ADR by increasing
external sales?
A5. When IPD purchases land for development, the journal entries for ADR and thosefor third parties are completed. Those that are not in the direction ADR acquires
will be sold to a third party. IPD has a policy to strengthen rental housingdevelopment for the purpose of diversifying business, and ADR will be a futureacquisition opportunity.
Questions on Other Topics
Q6. The goal of the DPU in the next 1‐2 years is set at 5,400 yen, but it will be reachedwhile exchanging properties?
A6. First of all, would like to concentrate on solidifying a 5,300 yen footing based onmy ability. We want to consider selling (replacement) of these properties
according to the timing of acquiring properties from sponsors with threeproperties with unrealized losses in the current portfolio.
Q7. It is reported that sponsor ITOCHU Corporation is considering establishing alogistics facility REIT, but is there any impact on ADR in the medium to long term?
Also, is there a possibility of future merger?
A7. Logistics facility REIT is in the spotlight and it is true that sponsors' exposure tologistics facility assets is getting bigger. However, since it has been developing
business with two pillars of housing and logistics facilities, each of which is a policy
to operate independently, it will be affected by inclination to a logistics facility,
such as falling exposure to housing. We are not considering regarding mergers at
the current situation.

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