Advance Residence Investment Corporation
Questions & Answers at the Presentation Meeting
For the Results of the 10th Fiscal Period Ended July 2015
Time & Date: 15:30 – 16:30, September 9, 2015 (Wednesday)
Presenter:
Kenji Kousaka, President, AD Investment Management Co., Ltd.
Q&As are listed in chronological order.
Q1. On slide nine, it shows that rent rose +0.12%, whereas in slide ten, rent rose 1.34% for 1,460
tenant replacement units. Why is there a large discrepancy between the two figures?
A1.

On slide 11 portfolio rent index rose 0.2% points. This is for only pass-through rent units.
Pass-through units are about 75% of the whole portfolio. If you include the remaining
25% which are rent guaranteed units, it will add up to the rent rise for the whole
There is a discrepancy because, rent rise of tenant replacement units of +1.34% asshown on in slide 10, only includes units where tenants were replaced during thefiscal period totaling 1,460 units. On the other hand, rent rise for the whole
portfolio includes every units that was occupied at the beginning and the end of
the fiscal period which includes units which did not see any replacements orrenewals and which adds up to 18,303 units.
portfolio of +0.12% shown on slide nine.

Q2. You expect 43 billion yen in restoration and renovation cost in the coming ten years. How
will it impact dividends?
A2. The cost of the works shown in the slide is what we expect in the coming ten years.
When we actually decide whether to do the works it will be decided based on each
property’s and on each unit’s prospective return on investment of the works.
Q3. Looking at the chart showing the completion schedule for Itochu group’s development onslide 14, I see that there are no projects completing on fiscal year 2017. Does that mean that
Itochu’s acquisitions of land for development is not going well?
A3. Although they are not shown in the materials, there are several project lands that thegroup has acquired and which the constructions are scheduled to be completed in2017. I would expect that they will continue to acquire land to maintain their businessmodel of making annual outside sales of properties of 10 billion yen which includes
sales to ADR.
Q4. How sure are you in acquiring Itochu’s properties? At what cap rate do you wish to acquire
those properties?
A4. The real estate market in Japan is rather heated at the moment. Therefore if Itochu
was to sell its properties to third parties it is more likely that they will be able to get
more on gains on sales than to sell to ADR. But Itochu also considers profits fromsubsidiary which it can consolidate. That means that there are certain advantages inselling properties to ADR.
Q5. Why is the rise in net income weaker than the rise in rent?
A5. It is because the management fee which ADR pays to the asset management company

is linked to NOI and net income and dampens the rate of rise in net income comparedto the rise in rent.
Q6. Are not there pitfalls in following an investment strategy of focusing on properties locatedin central Tokyo and single-type units in the long-run?
A6. Currently, we think the revenue from properties in central Tokyo and single-type units
are the most stable and less cyclical. But in the future, due to expected shift indemographics there will be less younger generations who are the main targets for ourcentrally located single-type units. We keep a dialogue on the matter with oursponsors and timely adjust our investment strategy.

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This material is provided for informational purposes only. The information in this material
does not constitute an offer for products or services, or a solicitation of an offer.
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