Advance Residence Investment Corporation
Questions & Answers at the Presentation Meeting
For the Results of the Fiscal Period Ended July 2014
Date & Time:
Presenter:

15:30 ‐ 16:10, September 10, 2014
Kenji Kousaka, President, AD Investment Management Co., Ltd

Q&As are listed in chronological order
Q1.

What is your main scenario in acquiring one of the bridge funds listed on page 13 of thepresentation material, G. K. RISING3 which the expiration date for the right of first refusal isNovember 30, 2014? Would you fund the acquisition through debt by using the acquisition
capacity or through asset replacement?
A1.

Q2.

You have mentioned at the last presentation meeting six month ago, that you would like to hear
the opinions of investors on the usage of the dividend reserve in deciding what to do when theEPS consistently tops 4500yen. What are your thoughts on the usage of the dividend reserve atthe moment?
A2.

Q3.

In the last one and half years, I have received comments on the subject from many investors.
The impression I got was that the majority of the investors’ opinion was for using the reservefor future unforeseen events and limit or stop using it to supplement the dividend. But, wewould like to decide on the matter and announce our final decision in due course.

Do you expect the rents to rise due to the upgrade works or will it rise naturally due to inflation?
A3.

Q4.

If the disposition of assets can be executed by the time of expiration, I would like to consider
the option of acquiring the properties using the proceeds from the disposition, if not, theacquisition as you have mentioned, will be financed with the use of debt, utilizing theacquisition capacity of approximately 25 billion yen.

Due to strong demand and tightening supply, we are getting better leasing terms even on
units which have not received any upgrades. We think during the fiscal period which ends on
July 2015 will be the time to raise rents in earnest due to the fact that the period includes thepeak leasing months of March and April.

On page 13 of the presentation material, you have listed examples of sponsor developed
properties. What do you expect the cap rates to be when you acquire them?
A4.

Due to the fact that the sponsors’ main business is in real estate development, the price inwhich we will be able to acquire their property will not diverge greatly from the market cap
rate at the time of acquisition.

Q5.

The average NOI yield of the pipeline bridge fund properties are above your current portfolio’s
yield. Will the current portfolio’s yield continue to be your acquisition hurdle rate?
A5.

Since our AUM has grown to over 420 billion yen which is more than 1.5 times larger than thesecond largest residential J‐REIT fund, we are in no hurry to expand further in this heatedreal estate market. We intend to wait till the market cools to the point where we are able toacquire assets at a reasonable price.
In any case, we have over ten staffs working in the acquisition department at the asset
management company. By fully utilizing the staffs’ knowhow and ability I hope to continue
growing through our independent sourcing network.

Q6.

Even though I expect that your sponsors will continue to develop properties, do you expect thespeed of your external growth to slow down after you acquire the existing properties in thebridge funds?
A6.

There are 19 properties worth about 20 billion yen in the bridge funds and we have listed 23
properties of about 35 billion yen which the sponsors are developing, totaling above 50
billion yen. Since we have been acquiring around 20 to 25 billion yen per annum since themerger, there are about two years’ worth of asset in the pipeline. Even though we cannot
guarantee that we will able to acquire all of the sponsor developed properties, I do not thinkthat there will be a need to slowdown.

Disclaimer
This material contains forward-looking statements on future operatingresults, plans, business objectives and strategies of the company.
Forward-looking statements provide current expectations of future events
based on number of assumptions and include statements that do not directly
relate to any historical or current facts.
Forward‐looking statements are not guarantees of future performance andthe company’s actual results may differ significantly from the results
discussed in the forward-looking statements.
This material is based on Japanese GAAP unless otherwise stated.
This material was not created for the purpose of soliciting investment inthe company. Investments should be based on your own judgment andresponsibility.