July 31, 2017
To All Concerned Parties
REIT Securities Issuer
3-8-11 Kudan Minami, Chiyoda-ku, Tokyo
Sakura Sogo REIT Investment Corporation
Representative: Makoto Muranaka,
Executive Director:(Securities Code 3473)
Asset Management Company:
Sakura Real Estate Funds Management, Inc.
Representative
Makoto Muranaka,/ Inquires:
Representative Director andPresident
Tel:+81-3-6272-6608

Notice Concerning Revision to Operating and Distribution Forecasts for the Fiscal Periods
Ending August 2017 and February 2018
Sakura Sogo REIT (hereinafter the “Investment Corporation”) announces revision to its operating
forecasts and distribution forecasts for the second fiscal period (from March 1, 2017 to August 31, 2017,
hereinafter “FP2”) and for the third fiscal period (from September 1, 2017 to February 28, 2018,
hereinafter “FP3”) as follows.
1. Details of revision to operating forecasts and distribution forecasts(1)
FP2

Previous forecast (A)Revised forecast (B)Increase/decrease（B-A）
Increase/decrease
rate

Distributions
per Unit(Yen)

Distributions
in Excess ofEarnings
per Unit(Yen)

Operatingrevenue(mm yen)

Operatingincome(mm yen)

Ordinaryincome(mm yen)

Net income(mm yen)

2,428
2,419

1,071
1,068

934
934

933
933

2,803
2,803

00-9-30000-0.4%

-0.3%

0.0%

0.0%

0.0%

-(excluding
Distributions inExcess ofEarnings)(Reference) FP2: number of investment units forecast on issue: 333,001 units, forecast net income per unit: 2,803 yen

(2)

FP3

Previous forecast (A)Revised forecast (B)Increase/decrease（B-A）
Increase/decrease
rate

Distributions
per Unit(Yen)

Distributions
in Excess ofEarnings
per Unit(Yen)

Operatingrevenue(mm yen)

Operatingincome(mm yen)

Ordinaryincome(mm yen)

Net income(mm yen)

2,441
2,639

1,051
1,261

900
1,109899
1,108

2,700
3,330

00198

210

209

209

630

0

8.1%

20.0%

23.2%

23.2%

23.3%

-(excluding
Distributions in
Excess ofEarnings)(Reference) FP3: number of investment units forecast on issue: 333,001 units, forecast net income per unit: 3,330 yen

(Note 1) The operating forecasts and distribution forecasts for FP2 and FP3 are figures based on currently available
information calculated based on the assumptions described in the attachment “Assumptions for Operating
Forecasts for FP2 and FP3.” The actual operating revenue, operating income, ordinary income, net income
and distributions per unit excluding distributions in excess of earnings are subject to change due to factors
such as additional acquisition/disposition of real estate, fluctuations in rent income accompanying changesof tenants, changes in management environment including occurrence of unexpected repair, fluctuations ininterest rates, and issuance of new investment units in the future. In addition, the Investment Corporation
does not guarantee any actual cash distribution amount by announcing the forecast figures.
(Note 2) The forecasts remain subject to revision based on any material variance from assumptions attached.
(Note 3) Figures are rounded down. Percentages are rounded to the nearest decimal place.

2. Reason for the revision to operating forecasts and distribution forecasts
Due to the acquisition and disposition of real estate beneficiary interest in trust (hereinafter referred toas the “Acquisition” and “Disposition”) described in “Notice Concerning Acquisition and Disposition ofReal Estate Beneficiary Interest in Trust” announced today and current conditions of operating assets,
there were changes in the assumptions that underlie the forecast for FP3, which was announced on
April 13, 2017. Thus, the Investment Corporation revises its operating forecasts and distribution
forecasts accordingly. The Investment Corporation also revises the operating forecasts for FP2 basedon the assumptions outlined in the attachment.
The main factor for the revision in FP3 is the realized gain on sale real estate property of 317 million
yen before transaction costs. This equates to 224 million yen increase (245 million yen increase /ongain on sale of real estate property, 21 million yen increase in non-deductible consumption tax)..

This material is to be distributed to the Kabuto Club, the Ministry of Land, Infrastructure, Transport andTourism Press Club, and the Ministry of Land, Infrastructure, Transport and Tourism Press Club forconstruction trade publications of the Ministry of Land, Infrastructure, Transport and Tourism.
Sakura Sogo REIT website address: http://sakurasogoreit.com/en/

[Attachment]
Assumptions for Operating Forecasts for FP2 andFP3

Item
Calculation period

Investment Assets

Operating revenueAssumptions
FP2 (From March 1, 2017 to August 31, 2017) (184 days)
FP3 (From September 1, 2017 to February 28, 2018) (181 days)

With regard to the real estate trust beneficiary interests of the properties(18 properties in total) acquired on September 9, 2016 (hereinafter the“Currently Owned Assets”), it is assumed that there will be no change(acquisition of new properties, disposition of portfolio properties, etc.) in
FP2.
Disposition will exercised on September 11, 2017 and Acquisition on
September 29, 2017 respectively in FP3.
Rental revenues from the Currently Owned Assets are calculated basedon the rents described in the lease agreements that are effective as oftoday.
The forecast of operating revenues is made on the assumption that notenants will delay or default rental payments.
Gain on sale of real estate property from Disposition is expected to be 245
million yen for FP3.
The main items of operating expenses are as follows (rounded down tothe nearest specified unit; the same shall apply hereinafter):Expenses related toleasing business[Total]Management fees
Of which:
Maintenance andmanagement fee
Of which: Property
management fee
Repair expenses
Taxes and dues
Depreciation
Other than expenses
related to leasing
business [Total]
Asset managementfee
Non-deductible
consumption tax

Operating expensesFP2
1,126million yen

FP31,089 million yen

340 million yen
210 million yen

341 million yen
205 million yen

82 million yen

80 million yen

53 million yen
202 million yen
253 million yen
224 million yen

33 million yen
198 million yen
255 million yen
288 million yen

129 million yen

172 million yen

11 million yen

32 million yen

Of expenses related to the leasing business of the Currently Owned
Assets, which are the main operating expenses, expenses other thandepreciation are calculated on a historical data basis based on
information provided by the previous owners of the Currently Owned
Assets and by reflecting variable factors.
Repair expenses for buildings are projected to be, based on the repair
plans drawn by the Asset Management Company, 53 million yen for FP2
and 33 million yen for FP3. However, due to reasons such as repair
expenses that may urgently arise for building damages, etc. caused byunforeseeable factors, the amount generally varying considerablyNon-operating
expenses

Debt financing

Investment unitsDistribution per Unit

depending on the fiscal year, and because it is not an amount that arises
periodically, each calculation period’s repair expenses may differ
materially from the forecast amount.
Depreciation calculated using the straight-line method, including
incidental expenses, are projected to be 253 million yen for FP2 and 255
million yen for FP3 respectively.
Upon acquisition of real estate or trust beneficiary interest having realestate as trust assets, the Investment Corporation includes the amountequivalent to fixed property taxes, city planning taxes, depreciable assets
taxes, etc. (hereinafter the “Fixed Property Taxes, etc.”) that are settledwith previous owners on a pro rata based on the number of days ofownership in the acquisition cost during the fiscal year of the acquisition.
As to the Fixed Property Taxes, etc. on the owned real estate or trust
beneficiary interest having real estate as trust assets, the Investment
Corporation adopts the method to record the amount corresponding to
the calculation period, out of finalized taxation amount, as expenses
related to leasing business.
Of the fees payable to the Asset Management Company, an agreement
has been reached for the NOI-linked fee Asset Management Fee (2)* thatthe fee rate shall be 0% until FP3 on the agreement that it shall be within
the upper limit provided in the Articles of Incorporation of the Investment
Corporation. Accordingly, the asset management fee for FP2 is lower
than the asset management fee to be calculated based on the fee rate
to be applied for FP3 and subsequent fiscal periods. The amount ofdifference between the asset management fee for FP2 that would bepayable if the asset management fee were to be at the fee rate that would
apply to FP3 and subsequent fiscal periods and based on the otherassumptions presented herein (estimate only) and the asset
management fee underlying the earnings forecast for each fiscal period
would be approximately 46 million yen for FP2.
* Asset Management Fee (2) = The amount arrived at when NOI (theamount arrived at when the total of expenses related to the leasing
business (excluding depreciation and loss on retirement of non-current
assets) is subtracted from the total of leasing business revenue on thestatement of income for the relevant fiscal period of the Investment
Corporation) is multiplied by the fee rate separately agreed upon
between the Investment Corporation and the Asset Management
Company of no more than 3%.
Interest expenses and other borrowing related expenses are projected
to be 136 million yen for FP2. Due to additional interest cost associatedwith refinance of short term borrowings and extension of loan maturity
profile, 151 million yen is projected for FP3.
The total of interest-bearing liabilities outstanding is assumed to be29,000 million yen at the end of FP2 and 29,000 million yen at the end ofFP3.
LTV at end of FP2 is projected to be about 46.0% and LTV at the end ofFP3 is projected to be about 45.7 %.
The following formula is used in the calculation of LTV.
LTV = Total interest-bearing liabilities ÷ Total assets
It is assumed that there will be no changes in the number of investment
units due to issuance of new investment units, etc. from the 333,001 units
of investment units issued and outstanding as of today through to the endof FP3.
Distribution per unit (excluding distribution in excess of earnings) is
calculated on the assumption that distribution will be made in accordanceDistributions inExcess of Earningsper Unit

Otherwith the cash distribution policy provided in the Articles of Incorporationof the Investment Corporation.
Distribution per unit (excluding distribution in excess of earnings) may
vary due to various factors, including fluctuations in leasing revenue
accompanying changes in assets under management, changes intenants and other events, and occurrence of unexpected repairs.
The Articles of Incorporation of the Investment Corporation enable it toprovide for distribution in excess of earnings, but considering the ratio ofcapital expenditures to depreciation and in an aim to conduct
conservative financial management, no distribution in excess of earnings
is scheduled to be implemented for the time being.
Forecasts are based on the assumption there will be no material changes
in laws, regulations, taxation systems, accounting standards, public listing
requirements or rules of the investment trust association that could impact
the forecasts presented herein.
Forecasts are based on the assumption there will be no unforeseenmaterial changes in general economic and real estate market conditions.