July 23, 2018
For Immediate Release
Real Estate Investment Trust Securities Issuer
Star Asia Investment Corporation
Representative: Atsushi Kato, Executive Director(Code: 3468)
Asset Management Company
Star Asia Investment Management Co., Ltd.
Representative: Atsushi Kato
President and CEO
Contact:

Toru Sugihara
Director and CFO
TEL: 03-5425-1340

Notice Concerning Revision to Forecasts for Operating Results and Distribution for the 5th Fiscal
Period Ending July 31, 2018 and 6th Fiscal Period Ending January 31, 2019
Star Asia Investment Corporation ("SAR") announces that it has decided to revise the operating results forecastsand distribution forecasts for the 5th fiscal period ending July 31, 2018 (February 1, 2018 to July 31, 2018) andfor the 6th fiscal period ending January 31, 2019 (August 1, 2018 to January 31, 2019), described under “2.
Management Status Forecast for Fiscal Period Ending July 31, 2018 (from February 1, 2018 to July 31, 2018) andFiscal Period Ending January 31, 2019 (from August 1, 2018 to January 31, 2019)” in “Financial Report for Fiscal
Period Ended January 31, 2018” announced on March 16, 2018 (“Previous Forecast”).

1. Revision to forecasts for operating results and distribution for the fiscal period ending July 31, 2018
OperatingOperating

OrdinaryNet

revenueincomeincomeIncome(million(million(million(millionyen)yen)yen)yen)

Cashdistribution
per unit (notincluding cash
distribution inexcess ofearnings) (yen)Cashdistribution
per unit(includingcash
distribution
in excess ofearnings)
(yen)

Cash
distribution
in excess ofearnings perunit (yen)Previous
Forecasts

2,751

1,504

1,231

1,230

2,750

0

2,750

2,801

1,534

1,264

1,263

2,770

0

2,770

49

29

32

32

20

020

1.8%

2.0%

2.7%

2.7%

0.7%

－0.7%(A)
Revised
Forecast(B)Change(C)=(B)-(A)Rate ofchange(D)=(C)/(A)

2. Revision to forecasts for operating results and distribution for the fiscal period ending January 31, 20191

Operating

OperatingOrdinaryNet

revenueincomeincomeIncome(million(million(million(millionyen)yen)yen)

yen)

Cash
distribution
per unit (notincluding cash
distribution inexcess ofearnings) (yen)Cashdistribution
per unit(includingcash
distribution
in excess ofearnings)
(yen)

Cash
distribution
in excess ofearnings perunit (yen)Previous
Forecasts

2,732

1,497

1,320

1,319

2,804

0

2,804

3,154

1,863

1,685

1,684

3,580

0

3,580

422

366

365

365

776

0776

15.5%

24.5%

27.7%

27.7%

27.7%

－27.7%(A)
Revisedforecast(B)
Change(C)=(B)-(A)Rate ofchange(D)=(C)/(A)(Notes)1.

2.
3.

The above forecasts are current forecasts based on “Assumptions Underlying Operating Results Forecasts
and Distribution Forecasts for Fiscal Periods Ending July 31, 2018 and Ending January 31, 2019” as attached
as Exhibit hereto and the actual operating revenue, operating income, ordinary income, net income, cash
distribution per unit (not including cash distribution in excess of earnings) and cash distribution in excess ofearnings per unit may fluctuate from the forecasts due to the deviation in assumptions caused by factors
such as future acquisitions and sales of real estate, changes in rent income as a result of changes in thetenants, changes in real estate market, changes in the investment management environment such as theunexpected need to perform repairs and fluctuations in interest rates and future issuance of investment
units and other changes in environment surrounding SAR, among other factors. In addition, SAR does notguarantee any actual cash distribution amount by announcing the forecast figures.
The forecasts may be subject to revision when a disparity beyond a certain degree is expected between theabove forecasts and actual figures.
Amounts are rounded down to the nearest specified unit and percentage figures are rounded to the firstdecimal place.

3．Reason for revisions and announcement
In the ficical period ending January 31, 2019, SAR revised the forecast as the estimated operating
revenue and distribution per unit for the fiscal period ending January 31, 2019 is likely to differ by 10% ormore operating revenue and by 5% or more distribution per unit, respectively from the amount in theprevious forecasts, mainly due to the estimated gain on sale of real estate (401 million yen) as a result of
determination of the asset acquisition and transfer (hereinafter referred to as the “Acquisition” and“Transfer,” respectively) described in “Notice Concerning Acquisition and Transfer (Asset Replacement) of
Real Estate Beneficiary Interests in Trust” announced today.
In addition, net income for the fiscal period ending July 31, 2018 is expected to increase by 32million
yen from the amount in the PreviousForecasts, due to the increase of rent operating revenue throughstrategic leasing activities such as the cancelation of the rent gap (difference between market rent andcontracted average rent) primarily in office portfolio, the increase of occupancy rate in residential assets,2

and rent increase by recontracts with existing tenants in logistic assets. Considering the increase of net
income and level of the cash distribution, SAR revised the expected amount of reversal of internal
reserves to 40 million yen, decreased by 23 million yen from 63 million yen of the previous assumption in
calculating distribution amount. As a result, the estimated amount of distribution per unit is expected toincrease, thus SAR determined to revise and announce the revised operating results forecasts anddistribution forecasts based on the revised assumptions. The rent gap means the difference between theassumed market average rent of the surrounding area and contracted average rent. The assumed market
average rent of the surrounding area is based on assessment of rent (median of the range) provided by
CBRE. CBRE defined this figure as the moderate monthly rent per tsubo, comprehensively considering
leasing transactions of Asset to be Transeferred and surrounding competing assets in the neighboringarea and the market condition, under the assumption that tenants seeking is carrying out in each timingof rent assessment and new contract is concluded by a floor unit. Contracted average rent is calculatedby the whole rent of all tenants of asset to be transferred at the timing of assessing the rent divided byoperated area and includes common service fee, but free rent and rent holiday as of the day are notconsidered and don’t include tax.

<Reference>
Other press releases published as of today
・Notice Concerning Acquisition and Transfer (Asset Replacement) of Real Estate Beneficiary Interests in Trust・Supplementary Materials concerning the Acquisition and Transfer (Asset Replacement) of Real Estate
Beneficiary Interests in Trust* This material is distributed to the press club of the Tokyo Stock Exchange (Kabuto Club), the press club of theMinistry of Land, Infrastructure, Transport and Tourism, and the press club for construction trade publicationsof the Ministry of Land, Infrastructure, Transport and Tourism.
* Star Asia Investment Corporation website address: http://starasiareit.com/en/3

[Exhibit]
Assumptions Underlying Operating Results Forecasts and Distribution Forecasts
for Fiscal Periods Ending July 31, 2018 and Ending January 31, 2019
Item

Assumptions

Calculation period 

5th Fiscal period ending July 31, 2018: February 1, 2018 – July 31, 2018 (181 days)
6th Fiscal period ending January 31, 2019: August 1, 2018 – January 31, 2019 (184days)

For the real estate beneficiary interest in trust of the 29 properties (referred to as the“Existing Properties (real estate, etc.)” hereinafter in these assumptions) and 2
Mezzanine Loan Debt (referred to as the “Existing Properties (mezzanine)” hereinafterin these assumptions) held by SAR as of today (hereinafter collectively referred to as
the “Existing Properties”), it is assumed there will be no change (new property
acquisitions, sales of the Existing Properties, etc.) other than “Acquisition” and“Transfer” as described below to the investment assets through the end of the fiscal
period ending January 31, 2019.
< Acquisition>
Property Name: Hotel WBF Fukuoka Tenjin Minami
Anticipated Acquisition Date:(Note) The anticipated acquisition date shall be the day to be separately agreed
upon by the seller and the purchaser on or before the end of December
2018. In these assumptions, SAR assumes that the acquisition date shall be
December 28, 2018.
< Transfer>
Property Name: Hakata-eki Higashi 113 Building
Anticipated Transfer Date:
1st (49% quasi-co-ownership interest)December 3, 2018
2nd (51% quasi-co-ownership interest) February 1, 2019
In practice, this may vary due to changes in investment assets.

Investment assetsOperatingrevenue

Operatingexpenses

Rent revenues from the Existing Properties (real estate, etc.) are calculated based on
the rent stated in the lease agreements that are effective as of today. Rent revenue
from the property planned for "Acquisition" is calculated based on the informationfrom the seller and rent stated in the lease agreements that will be effective as of theanticipated acquisition date, etc, taking factors such as market movement intoconsideration, respectively. It is also assumed that there will be no arrears or
non-payment of rent by tenants.
Interest revenue or dividend revenues from the Existing Properties (mezzanine) arecalculated based on outlines or trust agreements which define contents of theExisting Properties (mezzanine) that are effective as of today. It is also assumed thatno interest payments or dividend payments will be declined.
Gain on sales of real estate property from the 1st “Transfer” is expected to be 401
million yen for the fiscal period ending January 31, 2019. In practice, this may vary
due to the success or failure of transaction, transfer price and transfer date, among
other factors.
Among expenses related to rent business of the Existing Properties (real estate, etc.),
which are the principal operating expenses, expenses excluding depreciation arecalculated on the basis of historical data, reflecting variable factors of expenses.

4

Item

Assumptions







NOI(Net OperatingIncome)

Non-operating
expensesDebt financing
Fixed property taxes, city planning taxes and other public charges are expected to be
175 million yen in fiscal period ending July 31, 2018 and to be 175 million yen in fiscal
period ending January 31, 2019. For the property planned for "Acquisition", fixed
property taxes, city planning taxes and other public charges in fiscal 2018 (7 million
yen (Annual amount and not equal to settled amount)) will be settled on a pro rata
basis based on the number of days of ownership with the seller at the time ofacquisition of the property. However, in the case of SAR, the settled amount will beincluded in the acquisition cost and thus will not be recorded as expenses in the fiscal
period ending January 31, 2019. Fixed property taxes, city planning taxes and otherpublic charges for the property planned for "Acquisition" will be recorded as expenses
from the fiscal period ending July 31, 2019.
For the expenditures for repair and maintenance of buildings, 90 million yen isexpected for the fiscal period ending July 31, 2018 and 68 million yen is expected forthe fiscal period ending January 31, 2019 based on repair and maintenance plans
drawn up by Star Asia Investment Management Co., Ltd. However, the expenditures
for repair and maintenance for the fiscal periods could differ significantly from theestimated amounts, as expenditures may arise urgently due to damage to buildings
and such caused by unexpected factors, and because the variance in amounts
generally tends to be significant from year to year and repair and maintenanceexpenses do not arise regularly.
Depreciation is calculated using the straight line method including ancillary costs andis expected to be 355 million yen for the fiscal period ending July 31, 2018 and 365
million yen for the fiscal period ending January 31, 2019.
The whole Net Operating Income is expected to be 2,142 million yen for the fiscal
period ending July 31, 2018 and 2,124 million yen for the fiscal period ending January
31, 2019.
NOI is calculated by using the following calculation method.
NOI = rent revenue – rent expenses (excluding depreciation )Temporary expenses in issuance of new investment units in February 2018 areexpected to be 7 million yen for the fiscal period ending July 31, 2018.
Interest expense and other financial expenses are expected to be 262 million yen for
the fiscal period ending July 31, 2018 and to be 177 million yen for the fiscal period
ending January 31, 2019.
As of today, SAR has a balance of loans outstanding of 43,230 million yen, of which
190 million yen is expected to be repaid by consumption tax refund and other funds
before repayment date in the fiscal period ending January 31, 2019.
It is assumed that there will be no new borrowing and prepayment other than theabove until the end of the fiscal period ending January 31, 2019.

Investment units 

The total number of investment units issued is assumed to be 470,624 (number ofissued units as of the date of this document).
It is assumed that there will be no changes in the number of investment units issued
due to additional issuance of new investment units, etc. until the end of the fiscal
period ending January 31, 2019.

Cash distribution per unit

Cash distribution per unit (not including cash distribution in excess of earnings) iscalculated on the assumption described in the cash distribution policy stipulated in5

Item

Assumptions(not includingcash distribution in excess ofearnings)

Cash distribution
in excess ofearnings per unit 
Other

SAR’s Articles of Incorporation.
It is assumed that derivative transactions (interest rate swaps) will continue to beconducted. However, deferred losses on hedges, which is an item of deduction fromnet assets (those provided in Article 2, item 30 (b) of the Ordinance on Accountings ofInvestment Corporations), is not expected to arise by the end of the fiscal period
ending January 31, 2019, and it is assumed that cash distribution per unit (notincluding cash distribution in excess of earnings) will not be affected by changes in
items of deduction from net assets in the calculation.
It is possible that the cash distribution per unit (not including cash distribution inexcess of earnings) could change due to various factors, including changes ininvestment assets, changes in rent revenue accompanying changes in tenants, etc.,
and unexpected repair and maintenance, etc. In addition, cash distribution per unit
(not including cash distribution in excess of earnings) may be affected by changes in
items of deduction from net assets.
SAR revised the expected amount of reversal of internal reserves for fiscal period
ending July 31, 2018 to 40 million yen, revised from 63 million yen of the previous
assumption.
It is assumed that there will be no incurrence of deferred losses on hedges, which isan item of deduction from net assets, as described above. Of cash distribution inexcess of earnings, that attributable to allowance for temporary difference
adjustment is not scheduled at this point.
In addition, of cash distribution in excess of earnings, that falling under the categoryof cash distribution accompanying decrease in capital, etc. under tax law is notscheduled at this point.
Forecasts are based on the assumption that revisions that may affect the above
forecast will not be made to laws and regulations, tax systems, accounting standards,
listing rules and rules of The Investment Trusts Association.
Forecasts are based on the assumption that there will be no major unforeseenchanges to general economic trends and real estate market conditions, etc.

6