Disclaimer
This document has been prepared solely for the purpose of providing U.K. and Dutch
investors with certain information under Article 23 of the European Alternative
Investment Fund Managers Directive (European Directive 2011/61/EU) (the “AIFMD”) as
implemented in their respective jurisdictions. Accordingly, you should not use thisdocument for any other purpose.
European Economic Area Investors
The AIFMD was adopted on June 8, 2011 and was required to be implemented by each
Member State of the EEA into its national legislation by July 22, 2013. The units of
Sekisui House Reit, Inc. (“SHR” or the “AIF”) may not be marketed (within the meaning
given to the term “marketing” under the AIFMD), and the Communication may not be
conducted, to prospective investors domiciled or with a registered office in any Member
State of the EEA unless: (i) the units of SHR may be marketed under any national private
placement regime (including under the AIFMD) or other exemption in that Member State;or (ii) the units of SHR can otherwise be lawfully marketed or sold in that Member Statein circumstances in which the AIFMD does not apply, provided that any such offer or saleis not made to a retail investor as described below. We have made a notification to each of
the Netherlands Authority for the Financial Markets and the United Kingdom Financial
Conduct Authority pursuant to Article 42 of the AIFMD in order to market the units of
SHR in the Netherlands and the United Kingdom, respectively.
Prohibition of Sales to EEA Retail Investors
In addition to the restrictions under the AIFMD, the units of SHR are not intended to beoffered, sold or otherwise made available to and should not be offered, sold or otherwise
made available to any retail investor in the European Economic Area (the “EEA”). For
these purposes, a retail investor means a person who is one (or more) of: (i) a retail client
as defined in point (11) of Article 4(1) of Directive 2014/65/EU, as amended (the “MiFIDII”), including any client, beneficiary, principal, or similar of any person acting as atrustee, agent, nominee, or similar; or (ii) a customer within the meaning of Directive (EU)2016/97, where that customer would not qualify as a professional client as defined in point(10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation(EU) 2017/1129, as amended (the “Prospectus Regulation”). Consequently, no key
information document has been prepared required by Regulation (EU) No 1286/2014 (the“PRIIPs Regulation”), for offering or selling the units of SHR or otherwise making themavailable to retail investors in the EEA. Therefore, offering or selling the units of SHR, or1otherwise making them available, to any retail investor in the EEA may be unlawful under
the PRIIPs Regulation.
United Kingdom
The units of SHR are being marketed in the United Kingdom pursuant to Article 59 of theUnited Kingdom Alternative Investment Fund Managers Regulations 2013. In accordancewith this provision, Sekisui House Asset Management, Ltd. (the “AIFM”) has notified the
Financial Conduct Authority (the “FCA”) of its intention to offer these units in the United
Kingdom. For the purposes of the United Kingdom Financial Services and Markets Act
2000 (“FSMA”) SHR is an unregulated collective investment scheme which has not beenauthorized by the FCA. Accordingly, any communications of an invitation or inducement
to invest in SHR may be made only to: (i) investment professionals falling within Article
19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005,
as amended, or the Order; (ii) high net worth companies, unincorporated associations orother entities falling within Articles 49(2)(a) to (d) of the Order; or (iii) other persons towhom it may lawfully be communicated (all such persons together being referred to as“Relevant Persons”). In the United Kingdom, this document and its contents are directed
only at Relevant Persons and must not be acted on or relied on by persons who are not
Relevant Persons. The transmission of this document and its contents in the United
Kingdom to any person other than a Relevant Person is unauthorized and may contravene
the FSMA and other United Kingdom securities laws and regulations.
Prohibition of Sales to UK Retail Investors
In addition to the restrictions under the AIFMD, as retained by the United Kingdom in its
domestic laws, the units of SHR are not intended to be offered, sold or otherwise madeavailable to and should not be offered, sold or otherwise made available to any retailinvestor in the United Kingdom. For these purposes of this provision, a “retail investor”
means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article
2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of theEuropean Union (Withdrawal) Act 2018 (the “EUWA”); or (ii) a customer within themeaning of the provisions of the FSMA and any rules or regulations made under the
FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as aprofessional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014
as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as
defined in Article 2 of Regulation (EU) 2017/1129, as it forms part of domestic law byvirtue of the EUWA; and the expression “offer” includes the communication in any formand by any means of sufficient information on the terms of the offer and the international

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units to be offered so as to enable an investor to decide to purchase or subscribe theinternational units.
Consequently, no key information document required by Regulation (EU) No 1286/2014,as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”), foroffering or selling the units of SHR, or otherwise making them available to retail investors
in the United Kingdom has been prepared. Therefore, offering or selling the units of SHR,or otherwise making them available to any retail investor in the United Kingdom may beunlawful under the UK PRIIPs Regulation.
Netherlands
The units of SHR are being marketed in the Netherlands under Section 1:13b of the Dutch
Financial Supervision Act (Wet op het financieel toezicht, or the “Wft”). In accordancewith this provision, the AIFM has notified the Dutch Authority for the Financial Markets(Autoriteit Financiële Markten, the “AFM”) of its intention to offer these units in the
Netherlands. The units of SHR will not, directly or indirectly, be offered, sold, transferredor delivered in the Netherlands, except to or by individuals or e ntities that are qualified
investors (gekwalificeerde beleggers) within the meaning of Article 1:1 of the Wft. As aconsequence neither the AIFM nor SHR is subject to the license requirement forinvestment institutions (beleggingsinstellingen) or their managers pursuant to the Wft.
Consequently, the AIFM and SHR are only subject to the supervision of the Dutch Central
Bank (De Nederlandsche Bank, “DNB”) or the AFM for the compliance with the ongoingregulatory requirements as referred to in the Dutch law implementation of Article 42 of
the AIFMD. According to Article 23, the prospectus is not subject to approval by the
AFM. No approved prospectus is required to be published in the Netherlands pursuant to
Article 3 of the Prospectus Regulation as amended and applicable in the Netherlands.

3Article 23 (1)(a)Objectives of the AIF

Sekisui House Reit, Inc. (“SHR” or the “AIF”) intends to maintain a competitive portfolio in
the medium to long term by investing primarily in rigorously selected high quality
residential and commercial properties located in strategic locations, including those
properties that meet its selection criteria for core investment targets based on strengthsof the economic area, convenience, livability/functionality, environmental consideration,
safety/business continuity planning and brand, which we refer to as “prime properties”.
We target residential properties located primarily in Greater Tokyo and commercial
properties located primarily in the three major metropolitan areas, which are supported
by strong tenant demand as well as other major cities taking into account investment area
diversity. SHR intends to make these investments upon careful consideration of location,size, quality, specifications, and suitability for use by tenants and operate them in amanner that increases unitholder value by securing stable income and achieving steady
growth of its portfolio over the medium to long term.
Please also see “Investment Strategy”.

Investment strategy

Increase unitholder value by focusing on acquisition of prime properties. SHR believes
residential tenants’ needs are growing for properties located in sites suited for bases forsustainable living, which provide residential tenants with comfort, sustainability andsecurity. On the other hand, we believe commercial tenants’ needs are growing forproperties located in places that allow sustainable operation of business by providing
commercial tenants with functional and operational capabilities to accommodate various
business needs. SHR will focus on acquiring these high-quality residential properties andcommercial properties located in strategic locations, or “prime properties”, that meet its
selection criteria as the core investment targets. SHR will seek to generate stable earnings
over the medium to long term by primarily investing in these prime properties based on
the following assessments:• Residential properties: Strengths of the economic area, convenience, livability,
environmental consideration, safety and brand.
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Office buildings and hotels: Strengths of the economic area, convenience,
functionality, environmental consideration, business continuity planning andbrand.

Continue to improve portfolio diversification through growth in assets under management
and pursue internal growth opportunity by taking advantage of favorable market
conditions. SHR will pursue internal growth opportunity by taking advantage of thefavorable market conditions unique to each asset type, in addition to continuing to
improve portfolio diversification through growth in assets under management. SHR willleverage the Sekisui House Group’s skills, knowhow and extensive network related to realestate management and operation to pursue those goals.
Please also see SHR’s “Investment Strategy” and “Growth Strategy”.

4Types of assets the AIF
may invest in

Real estate, trust beneficiary interests in real estate, real estate-backed securities andother specified assets. As provided for in the Order for Enforcement of the Act on
Investment Trusts and Investment Corporations, SHR may also acquire equity interests incorporations holding overseas real estate.
Please also see SHR’s “Articles of Incorporation”.

Techniques it may
employ and all
associated risks

SHR focuses on investing in prime properties, which are residential properties andcommercial properties situated in strategic locations and are of high quality.
The principal risks with respect to investment in SHR are as follows:
Property and Business Risks• Any adverse conditions in the Japanese economy could adversely affect us;• Our plan to pursue more pass-through type master lease schemes for our officebuildings may not yield the results we anticipate;• We may not be able to acquire, sell or replace properties in a manner that isaccretive to earnings;• Increases in prevailing market interest rates may increase our interest expenseand may result in a decline in the market price of our units;• Effects of monetary tightening policies by the United States and other majorcountries, including further potential monetary tightening by Japan in the future,
may result in increased market interest rates in Japan and reduced cash
distributions;• Adverse conditions in any of the sectors in which we make real estate investments
may adversely affect us;
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The geographic concentration of our portfolio in Greater Tokyo could have amaterial adverse effect on our business;
Our reliance on Sekisui House, Ltd. (“Sekisui House” or the “Sponsor”) and otherSekisui House Group companies could have a material adverse effect on ourbusiness;
There are potential conflicts of interest between us and certain Sekisui HouseGroup companies, including Sekisui House Asset Management, Ltd. (the “AIFM” or
the “Asset Manager”);
The past experience in the Japanese real estate market of Sekisui House or the
Asset Manager is not an indicator or guarantee of our future results ;Significant and increasing competition for tenants may adversely affect our ability
to retain our current tenants and attract new tenants, and to maintain occupancy
rates or maintain profitability of our properties;
It may be difficult for us to find replacement tenants or sell properties, particularly
if our properties cater to single tenants or are customized or designed for a
specific use such as hotels, and senior housing and healthcare-related properties(including serviced housing facilities for the elderly, paid nursing homes and adultday care centers);
Any inability to obtain financing for future acquisitions could adversely affect thegrowth of our portfolio;

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Liquidity and other limitations on our activities under debt financing
arrangements may adversely affect our business, financial condition and results ofoperations;
A high LTV ratio may increase our exposure to changes in interest rates and have amaterial adverse effect on our business, financial condition and results ofoperations;
A downgrading of our credit rating may affect our cost of financing and ability torefinance or newly issue investment corporation bonds;
We may suffer impairment losses relating to our properties;
Our cost of complying with regulations applicable to the properties we own or
intend to acquire could adversely affect the results of our operations;
Any property defect may adversely affect our business, financial condition andresults of operations;
We may incur unexpected expenses, expenditures or other losses for repair ormaintenance of our properties;
We may be strictly liable for any unforeseen loss, damage or injury suffered by athird party at our properties;
Properties located on reclaimed land are subject to unique risks, including land
contamination and liquefaction;
We may suffer large losses if any of our properties incurs damage from a natural
or man-made disaster or acts of violence or war;
We rely on expert appraisals and engineering, environmental and seismic reports,
which are subject to significant uncertainties;••

We rely on industry and market data that are subject to significant uncertainties ;Buildings that we own or intend to acquire may violate earthquake resistancestandards or other building codes, and any such buildings may collapse in evenminor earthquakes or may be required to be strengthened or demolished by us atsignificant expense;•

The environmental assessments of our properties made prior to our ownershipmay not uncover all environmental liabilities, and Japanese laws subject property
owners to strict environmental liabilities;
A downgrading of our ESG-related evaluation or rating may result in a decline in
the market price of our units or investment corporation bonds;
We may be exposed to regulatory and financial risks related to climate change;
Security breaches and other disruptions could compromise our information andexpose us to liability, which could cause our business and reputation to suffer;
Illiquidity in the Japanese real estate market may limit our ability to grow or adjust
our portfolio;Entering into forward commitment contracts to purchase or sell properties orcontracts to purchase properties under development may expose us tocontractual penalties and market risks;
Decreases in tenant leasehold deposits and/or security deposits may increase ourfunding costs;
Master lease agreements expose us to the risk of becoming an unsecured creditorof our master lessees in the event of their insolvency;

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The rent guarantee system pursuant to which the guarantor companies guarantee
rent payments of the end-tenants expose us to the risk of decreased rental
revenues in the event of insolvency of the guarantor companies;
Our lack of control over operating costs may adversely affect our business ;We may lose rental revenues in the event of lease terminations, decreased leaserenewals, the default of a tenant as a result of financial difficulty or insolvency, or
careless or imprudent property management by a tenant;Epidemics and pandemics such as COVID-19 may adversely affect our rental
revenues and profitability of our properties;
Unitholders have limited control over changes in our investment policies;
Our success depends on the performances of service providers to which we are
required to entrust various key functions;
Our performance depends on the efforts of key personnel of the Asset Manager;
J-REITs and their asset managers are subject to tight supervision by the regulatory
authorities;
We may not be able to make distributions from reserve for distribution ascontemplated by our distribution policy;
Our financial statements are prepared in accordance with Japanese GAAP, which
differs in certain material respects from IFRS, U.S. GAAP and generally accepted
accounting principles and financial reporting standards in other jurisdictions ; andAny future borrowings or issuances of investment corporation bonds would besenior to our units upon liquidation, which could adversely affect the market priceof our units.

In addition, SHR is subject to the following risks:• Our failure to satisfy a complex series of requirements pursuant to Japanese tax
regulations would disqualify us from certain taxation benefits and significantly
reduce our cash distributions to our unitholders;• If the Japanese tax authorities disagree with our interpretations of the Japanese
tax laws and regulations for prior periods, we may be forced to pay additional
taxes for those periods;• We may not be able to benefit from reductions in certain real estate transfer taxes
enjoyed by qualified J-REITs;• We are subject to risks related to the tax and accounting treatment of negative
goodwill recognized in connection with asset dispositions or other transactions;• Changes in Japanese tax laws may significantly increase our tax burden;• Changes in tax laws or their interpretation may limit our ability to utilize ourreserve retained for distribution;• We may reduce our cash distributions due to limitations relating to reversal of
allowance for temporary difference adjustment;• Our ownership rights in some of our properties may be declared invalid or limited;• We may lose our rights in a property that we own or intend to acquire if thepurchase of the property is recharacterized as a secured financing;• Our leasehold or subleasehold rights may be terminated or may not be asserted
against a third party in some cases;

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Any applicable
investment restrictions

Properties in which third parties hold leasehold interests in the land and own thebuildings may subject us to various risks;Some of the properties that we currently own and may acquire in the future may
be held in the form of co-ownership (kyoyu) or quasi co-ownership (jun kyoyu)
and our rights relating to such properties may be affected by the intentions ofother owners;
We may hold interests in some properties through silent partnership (tokumei
kumiai) agreements, and our rights relating to such properties may be limited;
Any adverse changes in applicable laws and regulations, etc. in domestic andoverseas may affect our potential liabilities relating to our properties andoperations;
We own most of our properties through trust beneficiary interests and may suffer
losses as a trust beneficiary;
Some of our properties are in the form of compartmentalized ownership (kubun
shoyu) interests and our rights relating to such properties may be materially andadversely affected by the actions or intentions of other owners;
There are important differences regarding the rights of unitholders in a J -REIT
compared to those of shareholders in a corporation; andPotential risks related to fluctuations in foreign exchange rates in relation toinvestments in overseas real estate, etc., which may adversely affect earnings

SHR is subject to investment restrictions under Japanese laws and regulations (e.g., theAct on Investment Trusts and Investment Corporations (the “ITA”), the Financial
Instruments and Exchange Act (the “FIEA”)) as well as its Articles of Incorporation.
SHR must invest primarily in specified assets as defined in the ITA. Specified assets include,
but are not limited to, securities, real estate, leaseholds of real estate, surface rights(chijō-ken) (i.e., right to use land for the purpose of having a structure on it) or trust
beneficiary interests for securities or real estate, leaseholds of real estate or surface
rights. A listed J-REIT must invest substantially all of its assets in real estate, real estaterelated assets and liquid assets as provided by the listing requirements. Real estate in thiscontext includes, but is not limited to, real estate, leaseholds of real estate, surface rights,
and trust beneficiary interests for these assets, and real estate-related assets in thiscontext include, but not limited to, silent partnership (tokumei kumiai) equity interests forinvestment in real estate. Pursuant to the ITA, J-REITs may not independently develop
land for housing or to construct buildings, but may outsource such activities provided thatcertain conditions are met.
Investment restrictions SHR places in its Articles of Incorporation are as follows:(1) Restrictions relating to securities and monetary receivables
SHR only makes investments in securities and monetary receivables, excluding realestate related assets, for the purpose of improving stability and liquidity, and does
not undertake such investments for the purpose of actively seeking profit.
(2) Restrictions relating to derivatives
SHR invests in derivatives only for the purpose of hedging against risks includinginterest rate risk arising from its liabilities and currency risk relating to its investment
assets.

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(3) Restrictions relating to specified real estate assets
SHR conducts its asset management operations so that the ratio of specified realestate assets to total specified assets is 75% or greater.
(4) Restrictions relating to the real estate-related assets
SHR conducts its asset management operations so that the ratio of real estate-related
assets (as defined in Article 22-19 of the Ordinance for Enforcement of the Act on
Special Measures Concerning Taxation) to total assets is 70% or greater.
Circumstances inwhich the AIF may use
leverage

SHR shall procure funds through borrowings or the issuance of investment corporation
bonds for the purposes of utilizing such funds for the acquisition of assets, payments ofrepair expenses or distributions, operations of SHR, repayment of obligations or other.

The types and sourcesof leverage permitted
and associated risks

Loans and investment corporation bonds. Currently all of SHR’s outstanding long-termloans are unsecured and unguaranteed.
SHR may be subject to restrictive covenants in connection with any future indebtedness
that may restrict operations and limit its ability to make cash distributions to unitholders,to dispose of properties or to acquire additional properties. Furthermore, SHR may violate
restrictive covenants contained in the loan agreements SHR executes, such as themaintenance of debt service coverage or loan-to-value, or LTV, ratios, which may entitle
the lenders to require SHR to collateralize the properties or demand that the entire
outstanding balance be paid. Further, in the event of an increase in interest rates, to theextent that SHR has any debt with unhedged floating rates of interest or SHR incurs new
debt, interest payments may increase, which in turn could reduce the amount of cash
available for distributions to unitholders. Higher interest rates may also limit the capacity
for short- and long-term borrowings, which would in turn limit the ability to acquire
properties. Thus, higher interest rates could cause the market price of the units to decline.

Any restrictions onleverage

The maximum amount of each loan and investment corporation bond issuance is ¥1
trillion, and the aggregate amount of all such debt cannot exceed ¥1 trillion.

Any restrictions on
collateral and asset
reuse arrangements

No applicable arrangements.

Maximum level ofleverage which the
AIFM is entitled to
employ on behalf of
the AIFSHR has set an upper limit of 60% as a general rule for its LTV ratio, but intends tomaintain the upper limit to 50% for the time being, with a cruising level between 45% and
50% in order to operate within stable financial conditions. SHR may, however, temporarily
exceed the 60% threshold as a result of property acquisitions or other events.

Article 23(1) (b)Procedure by which
the AIF may change its
investment strategy /investment policy

Amendment of the Articles of Incorporation requires a quorum of a majority of the total
issued units and at least a two-thirds vote of the voting rights represented at the meeting.

9Article 23(1) (c)Description of themain legal implicationsof the contractual
relationship enteredinto for the purpose ofinvestment, including
jurisdiction, applicablelaw, and the existenceor not of any legal
instruments providing
for the recognition andenforcement of
judgments in the
territory where the AIF
is established

On May 1, 2018, SHR entered into a new sponsor support agreement, governed by
Japanese law, with the AIFM and the Sponsor, following the termination of the priorpipeline support agreement and sponsor support agreement as of the same date.
SHR is not involved in or threatened by any legal arbitration, administrative or otherproceedings, the results of which might, individually or in the aggregate, be material.
SHR is a corporate-type investment trust in the form of investment corporation (toshi
hojin) provided for under the ITA. Therefore, the relationship between SHR and its
unitholders is governed by SHR’s articles of incorporation (as opposed to individual
agreements), which can be amended from time to time upon resolution of a generalunitholders’ meeting. SHR’s articles of incorporation stipulate rules relating to generalunitholders meetings, including the convocation, setting of record date, exercise of voting
rights, resolutions and election of SHR’s directors.
The relationship between SHR and its unitholders is also governed by, and is subject to theprovisions of, Japanese law, including the ITA.
The courts in Japan would recognize as a valid judgment any final and conclusive civil
judgment for monetary claims (which, for this purpose, are limited to those of a purely
civil nature and do not include monetary claims of the nature of criminal or administrative
sanction, such as punitive damages, even though they take the form of civil claims) against
SHR obtained in a foreign court provided that (i) the jurisdiction of such foreign court isadmitted under the laws of Japan, (ii) SHR has received service of process for thecommencement of the relevant proceedings, otherwise than by a public notice or any
method comparable thereto, or has appeared without any reservation before such foreign
court, (iii) neither such judgment nor the relevant proceeding is repugnant to public policy
as applied in Japan, (iv) there exists reciprocity as to the recognition by such foreign courtof a final judgment obtained in a Japanese court and (v) there is no conflicting judgementon the subject matter by any Japanese court.

Article 23(1) (d)The identity of the
AIFM, AIF's depositary,
auditor and any otherservice providers and a
description of theirduties and theinvestors' rights
thereto• AIFM (Asset Manager): Sekisui House Asset Management, Ltd.
The AIFM manages and operates the operating assets.
• Auditor: Ernst & Young ShinNihon LLC
The Auditor audits financial statements and prepare audit reports.
• Custodian and General Administrator: Mitsubishi UFJ Trust and Banking Corporation
The Custodian provides administrative services related to custody of assets, money andrelated documents.
• Transfer Agent: Mizuho Trust & Banking Co., Ltd.
The transfer agent provides administrative services related to unitholders’ roster, andmanagement of institutions.
• General Administrator (Fiscal Agent): MUFG Bank, Ltd.
The General Administrator works as a fiscal agent for investment corporation bonds.

10Service providers owe contractual obligations under their respective agreements with the
AIF or AIFM, as the case may be. In addition, the FIEA provides that the Asset Manager
owes the AIF a fiduciary duty and must conduct its activities as the asset manager in goodfaith. The FIEA also prohibits the Asset Manager from engaging in certain specified
conduct, including entering into transactions outside the ordinary course of business orwith related parties of the Asset Manager that are contrary to or violate the AIF’s
interests. Pursuant to the ITA, the unitholders have the right to approve the execution or
termination of the asset management agreement at a general meeting of unitholders.
Article 23(1) (e)Description of how the
AIFM complies withthe requirements tocover professional
liability risks (ownfunds / professional
indemnity insurance)

Not applicable.

Article 23(1) (f)Description of any
delegatedmanagement function
such as portfolio
management or risk
management and of
any safekeeping
function delegated by
the depositary, theidentification of thedelegate and any
conflicts of interest
that may arise fromsuch delegations

Not applicable. There is no delegation of such functions beyond the AIFM, which is
responsible for portfolio and risk management, and the Custodian, which is responsible
for safekeeping activities.

Article 23(1) (g)Description of the
AIF’s valuation
procedure and pricing
methodology,
including the methods
used in valuing hardto-value assets

SHR shall evaluate assets in accordance with its Article of Incorporation. The methods andstandards that SHR uses for the evaluation of assets shall be based on the Regulations
Concerning the Calculations of Investment Corporations, as well as the Regulations
Concerning Real Estate Investment Trusts and Real Estate Investment Corporations andother regulations stipulated by ITA, in addition to Japanese GAAP. J-REITs may only use
the valuation methods prescribed in the rules of the Investment Trusts Association, Japan,
which emphasize market price valuation.
SHR shall evaluate assets in accordance with Japanese Generally Accepted Accounting
Principles, or Japanese GAAP.
Please also see SHR’s “Articles of Incorporation”.

Article 23(1) (h)11Description of the
AIF’s liquidity risk
management,
including redemption
rights in normal andexceptional
circumstances andexisting redemption
arrangements withinvestors

SHR seeks to manage the capital resources and liquidity sources to provide adequate
funds for current and future financial obligations and other cash needs and acquisitions.
SHR manages liquidity risk by implementing a strategic cash management plan and byentering into committed lines of credit from its major lenders, varying repayment terms
and maturities of its loans and diversifying lenders and financing methods . As SHR is a
closed-end investment corporation, unitholders are not entitled to request theredemption of their investment.

Article 23(1) (i)Description of all fees,
charges and expenses
and a maximum
amount which is
directly / indirectly
borne by the investors

Director Compensation:
The Articles of Incorporation provide that SHR may pay each of its executive directors up
to 1,000,000 yen per month and each of its supervisory directors up to 500,000 yen permonth. The Board of Directors is responsible for determining the amount of compensationfor each executive and supervisory director, after taking into account general price andwage movements and other relevant factors.
Asset Manager:• Asset Management Fee: SHR pays the Asset Manager asset management fees asfollows:
1. Type 1 Management Fee
Type 1 Management Fees are calculated by multiplying (a) total assets (deducting,however, the amount of unamortized goodwill) as stated on SHR’s balance sheet (asapproved by the Board of Directors in accordance with Article 131, Paragraph 2 ofthe Investment Trust Act) as of the most recent fiscal period-end by (b) the sum ofan annual rate agreed upon by SHR and the Asset Manager (but in any event, nomore than 0.5% per annum) and “performance rate against TSE REIT Index”, anannualized rate calculated based on the relative performance of SHR’s unit priceagainst the TSE REIT Index over the course of the most recent fiscal period, such
resulting amount being prorated based on the number of operating days in thecalculation period and on a 365-day year basis, and rounded down to the nearest
yen. Notwithstanding the foregoing and the below, “performance rate against TSETREIT Index” is zero if the closing price per unit of SHR’s units as of the final business
day of the fiscal period immediately preceding the previous fiscal period exceeds theclosing price per unit of SHR’s units as of the final business day of the previous fiscal
period. Type 1 Management Fees shall be paid within three months of the end ofeach fiscal period.
“Performance rate against TSE REIT Index” is a percentage differential calculated bydeducting (a) from (b) where: (a) is a percentage calculated by (i) taking the sum of
the distributions per unit for the previous fiscal period and the difference between
the closing price per unit of SHR’s units as of the final business day of the previous
fiscal period and the closing price per unit of SHR’s units as of the final business dayof the fiscal period immediately preceding the previous fiscal period, (ii) divided by
the closing price per unit of SHR’s units as of the final business day of the fiscal period
immediately preceding the previous fiscal period; and (b) is a percentage calculatedby (i) the difference between the closing price of distributions-included index of TSE
REIT Index as of the final business day of the previous fiscal period disclosed by TSE
and the closing price of distributions-included index of TSE REIT Index as of the final
business day of the fiscal period immediately preceding the previous fiscal period

12disclosed by TSE, (ii) divided by the closing price of distributions-included index of
TSE REIT Index as of the final business day of the fiscal period immediately preceding
the previous fiscal period disclosed by TSE (in each case, if the closing price of such
distributions-included index is not made available by TSE, the latest available closing
price as calculated by SHR in accordance with the calculation method announced by
TSE for the closing price of such distributions-included index). The upper and lower
limits of the “performance rate against TSE REIT Index” is positive and negative
0.02%.
2. Type 2 Management Fee
Type 2 Management Fees are calculated for each fiscal period by multiplying (a) theDistributable Amount (hereinafter defined) (before deduction of Type 2
Management Fees) by (b) Operating Income (before deduction of Type 2
Management Fee) and (c) a rate agreed upon by SHR and Asset Manager (but in any
event, no more than 0.004% per annum), dividing such amount by (d) the number ofoutstanding investment units at the end of such fiscal period, and (e) rounding down
to the nearest yen.
“Distributable Amount” is the amount of income before income taxes (as stated on
SHR’s statement of income and retained earnings as approved by the Board of
Directors in accordance with Article 131, Paragraph 2 of the Investment Trust Act)(after adding back amortization of goodwill and deducting any gain on negative
goodwill) after adding Type 2 Management Fees for the fiscal period (including nondeductible consumption tax on Type 2 Management Fee) and, if applicable, loss
carryforwards from the previous fiscal period.
“Operating Income” is the amount of operating income as stated on SHR’s profit andloss sheet after adding back amortization of goodwill and Type 2 Management Fee
for the fiscal period (including non-deductible consumption tax on Type 2
Management Fee).
Type 2 Management Fees shall be paid within three months of the end of each fiscal
period.
3. Type 3 Management Fee (Acquisition Fees)
For each new property SHR acquires, the Asset Manager receives an acquisition fee
calculated by multiplying (a) the purchase price of property (excluding national andlocal consumption tax and expenses) by (b) a rate agreed upon by SHR and the AssetManager (but in any event, no more than 0.5%), and (c) rounding down to thenearest yen; provided, however, that no such fee shall be paid in the case oftransaction with a related party. Type 3 Management Fees shall be paid by the endof the month immediately following the end of the month in which the acquisition
occurs.
4. Type 4 Management Fee (Disposition Fees)
For each property SHR disposes of, the Asset Manager receives a disposition fee
calculated by multiplying (a) the disposition price (excluding national and local
consumption tax and expenses) by (b) a rate agreed upon by SHR and the AssetManager (but in any event, no more than 0.5%), and (c) rounding down to thenearest yen; provided, however, that no such fee shall be paid in the case oftransaction with a related-party. Type 4 Management Fees shall be paid by the endof the month immediately following the end of the month in which the disposition
occurs.
5. Type 5 Management Fee (Merger Fee)13

In a consolidation-type merger or absorption-type merger (collectively, a “merger”)
between SHR and another investment corporation, if such merger takes effect after
the AIFM investigates and assesses the assets and other properties held by suchinvestment corporation and conducts any other business associated with themerger, Type 5 Management Fee shall be calculated by multiplying (i) the thenassessed value of the Real Estate-Related Assets held by such investment
corporation when such merger takes effect by (ii) a rate separately agreed between
SHR and AIFM (up to 0.8%). Type 5 Management Fees shall be paid within twomonths after the merger takes effect.
“Real Estate-Related Assets” is the assets listed in Article 32, Paragraph 2, Items (a)to (e) of the Articles of Incorporation amended on January 24, 2024.
6. Adjustment Provisions
Certain adjustment regarding Type 1 and Type 2 Management Fees will be madefollowing any unit split, rights offering and other transaction pursuant to the
Articles of Incorporation amended on January 24, 2024.
Custodian:• Custodian Fees:
SHR pays custodian fees to the Custodian for each calculation period, which is thethree-month period that ends on the last day of January, April, July or October of
each year. Such custodian fees are paid by the end of the month immediately
following the end of the relevant calculation period. The amount of custodian fees isdetermined by an agreement between SHR and the Custodian, and is capped at theamount calculated using the schedule below (plus national and local consumption
taxes) for each calculation period, based on SHR’s total assets on the balance sheet asof the immediately preceding fiscal period.
Total assets (billion yen)
Portions not exceeding 10
Over 10 and not more than 50
Over 50 and not more than 100
Over 100 and not more than 200
Over 200 and not more than 300
Over 300 and not more than 500
Over 500 and not more than 700
Over 700 and not more than 900
Over 900

Calculation method (annualized)
4,200,000 yen
4,200,000 yen +(Total assets – 10 billion
yen) × 0.030 %
16,200,000 yen +(Total assets – 50 billion
yen) × 0.024 %28,200,000 yen +(Total assets – 100 billion
yen) × 0.021 %
49,200,000 yen +(Total assets – 200 billion
yen) × 0.018 %
67,200,000 yen +(Total assets – 300 billion
yen) × 0.015 %
97,200,000 yen +(Total assets – 500 billion
yen) × 0.012 %
121,200,000 yen +(Total assets – 700
billion yen) × 0.009 %139,200,000 yen +(Total assets – 900
billion yen) × 0.006 %If the above fee arrangement becomes inadequate due to changes in economic conditions
or other circumstances, SHR may revise the custodian fees based on mutual consultation
with the Custodian.

14

Notwithstanding the foregoing, if unitholders’ capital on the balance sheet as of the endof the fiscal period immediately preceding the first day of the relevant calculation period
is under 500,000,000 yen, the custodian fee is determined based on an agreement
between SHR and the Custodian, with the maximum amount being capped at 4,200,000
yen multiplied by the number of days in the calculation period and divided by 365 (plusnational and local consumption tax), and rounded down to the nearest yen.
If unitholders’ capital first surpasses 500,000,000 yen during a calculation period, thecustodian fee is determined based on an agreement between SHR and the Custodian, withthe maximum amount being capped at the sum of (a) and (b) below (plus national andlocal consumption tax), and rounded to the nearest yen.
(a): 4,200,000 yen multiplied by the number of days from the first day of the calculation
period up until, but not including, the date on which SHR’s unitholders’ capital firstexceeded 500,000,000 yen and divided by 365, and rounded down to the nearest yen.
(b): the amount calculated according to the payment schedule above based on theamount of unitholders’ capital as of the date on which unitholders’ capital firstexceeded 500,000,000 yen multiplied by the number of days up until, and including,the last day of the calculation period and divided by 365 (where, for purposes of thissection (b), “total assets” in the schedule shall be deemed to be replaced with“unitholders’ capital”.)
Transfer Agent:• SHR pays the Transfer Agent various transfer agency fees based on the mutual
consultation of the parties, up to the amounts described in the tables below.
However, with respect to payment for one-time transfer agency services inconnection with the issuance of new investment units, such amounts are determinedon a case-by-case basis between SHR and the Transfer Agent.
• Standard Fee:
SHR pays the Transfer Agent a standard fee for services such as the preparation,
maintenance, and storage of the unitholder register; and preparation of materials
concerning end-of-period unitholder statistical data (number of unitholders, total
units held, distribution by geographical area). Monthly standard fees equal one sixthof the total amount of fees calculated in the manner below; however, the minimum
monthly fee shall be 200,000 yen.
Number of unitholders
first 5,000 investors
over 5,000 to 10,000
over 10,000 to 30,000
over 30,000 to 50,000
over 50,000 to 100,000
over 100,000

Fees per unitholder
420 yen360 yen
300 yen
300 yen
260 yen
225 yen• Fees for Management and Payment of Distributions
SHR pays the Transfer Agent fees for (i) administrative services such as the
preparation of the distributions register, distributions receipts, designated bankaccount deposit slips, deposit notices; book-keeping, which includes keeping recordof distribution amounts paid, determining outstanding distribution amounts, keeping
payment records; paying stamp taxes; as well as (ii) payment of distributions andmanagement of the distributions register after the bank handling period. The fees
paid are determined by calculating the total number of unitholders receiving

15

distributions falling under each of the sections as shown below; however, theminimum fee per arrangement is 350,000 yen.
Number of unitholders
first 5,000 unitholders
over 5,000 and up to 10,000
over 10,000 and up to 30,000
over 30,000 and up to 50,000
over 50,000 and up to 100,000
over 100,000

Fees per unitholder
120 yen
110 yen
100 yen
80 yen60 yen50 yen• Other fees:
SHR pays the unitholders’ register other fees for various other services, including inconnection with unitholders meetings.

General Administrator:• General Administration Fee:
SHR pays to the General Administrator a general administration fee for eachcalculation period, which is the three-month period that ends on the last day ofJanuary, April, July or October of each year. Such general administration fees are paidby the end of the month immediately following the end of the relevant calculation
period. The general administration fee is determined by an agreement between SHR
and the Custodian, and is capped at the amount calculated using the schedule below(plus national and local consumption taxes) for each calculation period, based on
SHR’s total assets on the balance sheet as of the immediately preceding fiscal period.
Total assets (billion yen)
Portions not exceeding 10
Over 10 and not more than 50
Over 50 and not more than 100
Over 100 and not more than 200
Over 200 and not more than 300
Over 300 and not more than 500
Over 500 and not more than 700
Over 700 and not more than 900
Over 900

Calculation method (Annualized)
11,000,000 yen
11,000,000 yen + (Total assets – 10 billion
yen) × 0.080 %
43,000,000 yen + (Total assets – 50 billion
yen) × 0.060 %
73,000,000 yen + (Total assets – 100 billion
yen) × 0.055 %128,000,000 yen + (Total assets – 200
billion yen) × 0.040 %
168,000,000 yen + (Total assets – 300
billion yen) × 0.035 %
238,000,000 yen + (Total assets – 500
billion yen) × 0.030 %
298,000,000 yen+ (Total assets – 700
billion yen) × 0.025%
348,000,000 yen+ (Total assets – 900
billion yen) × 0.020%

If the above fee arrangement becomes inadequate due to changes in economic conditions
or other circumstances, SHR may revise the general administration fee based on mutual
consultation with the General Administrator.
Notwithstanding the foregoing, if unitholders’ capital on the balance sheet as of the endof the fiscal period immediately preceding the first day of the relevant calculation period16

is under 500,000,000 yen, the general administration fee is determined based on anagreement between SHR and the General Administrator, with the maximum amount being
capped at 11,000,000 yen multiplied by the number of days in the calculation period anddivided by 365 (plus national and local consumption tax), and rounded down to thenearest yen.
If unitholders’ capital first surpasses 500,000,000 yen during a calculation period, thegeneral administration fee is determined based on an agreement between SHR and theGeneral Administrator, with the maximum amount being capped at the sum of (a) and (b)below (plus national and local consumption tax), and rounded to the nearest yen.
(a): 11,000,000 yen multiplied by the number of days from the first day of the calculation
period up until, but not including, the date on which SHR’s unitholders’ capital firstexceeded 500,000,000 yen and divided by 365, and rounded down to the nearest yen.
(b): the amount calculated according to the payment schedule above based on theamount of unitholders’ capital as of the date on which unitholders’ capital firstexceeded 500,000,000 yen multiplied by the number of days up until, and including,the last day of the calculation period and divided by 365 (where, for purposes of thissection (b), “total assets” in the schedule shall be deemed to be replaced with“unitholders’ capital”.)
Auditor:• Auditor Fee:
The compensation amount to the Independent Auditor for each fiscal period subject
to audit shall be determined by the Board of Directors, capped at a maximum amountof 20,000,000 yen per fiscal period, and such auditor fees shall be paid by the end ofeach February and August covering the respective six months periods preceding suchmonth-ends.
• The AIF may also incur other miscellaneous fees in connection with property
management and investment corporation bonds and the operation, acquisition or
disposition of properties.
Article 23(1) (j)Description of the
AIFM's procedure toensure fair treatment
of investors anddetails of any
preferential treatment
received by investors,
including detailing thetype of investors andtheir legal or economic
links with the AIF or
AIFM

Under Article 77 paragraph 4 of the Act on Investment Trusts and Investment
Corporations of Japan, which applies the requirements of Article 109 paragraph 1 of theCompanies Act to investment corporations, investment corporations are required to treat
unitholders equally depending on the number and content of units held. In addition, uponliquidation, the allotment of residual assets to unitholders is required to be made equallydepending on the number units held under Article 77 paragraph 2 item 2 and Article 158of the ITA.

Article 23(1) (k)17The latest annual
report referred to in
Article 22(1)Additional information may be found in our most recent semi-annual report prepared inaccordance with Article 22 of the AIFMD, which is available at the Asset Manager’s officelocated at 4-15-1 Akasaka, Minato-ku, Tokyo.

Article 23(1) (l)The procedure andconditions for theissue and sale of theunits

SHR is authorized under the Articles of Incorporation to issue up to 20,000,000 units. Itsunits have been listed on the Tokyo Stock Exchange since December 3, 2014. Secondary
market sales and transfers of units will be conducted in accordance with the rules of theTokyo Stock Exchange. Unit prices on the Tokyo Stock Exchange are determined on a realtime basis by the equilibrium between bids and offers. The Tokyo Stock Exchange setsdaily price limits, which limit the maximum range of fluctuation within a single trading day.
Daily price limits are set according to the previous day’s closing price or special quote.

Article 23(1) (m)Latest net asset valueof the AIF or latest
market price of theunit or share of the AIF

SHR’s unit’s latest market price is publicly available at the Tokyo Stock Exchange or fromfinancial information vendors (including Reuters, which can be viewed athttps://www.reuters.com/markets/companies/3309.T).

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Article 23(1) (n)Details of the historicalperformance of theAIF, where available

The units of SHR were listed on the Tokyo Stock Exchange on December 3, 2014.
The performance of the units for the most recent five fiscal periods is as follows.
Fiscal period

Total Assets(millions of yen)

Net Assets(millions of yen)

Net Assets per unit
(base value) (yen)15th fiscal period (fromNovember 1, 2021 toApril 30, 2022)
16th fiscal period (fromMay 1, 2022 to October
31, 2022)
17th fiscal period (fromNovember 1, 2022 toApril 30, 2023)
18th fiscal period (fromMay 1, 2023 to October
31, 2023)
19th fiscal period (fromNovember 1, 2023 toApril 30, 2024)

579,931

298,782

67,428570,999

294,484

67,211

569,205

293,61767,013

569,478

293,226

66,924565,030

289,526

66,079Please also see SHR’s “Financial Report for the Fiscal Period Ended April 30, 2024”.
Article 23(1) (o)Identity of the prime
broker, any material
arrangements of the
AIF with its prime
brokers, how conflictsof interest aremanaged with theprime broker and theprovision in thecontract with thedepositary on thepossibility of transfer
and reuse of AIF
assets, andinformation about any
transfer of liability tothe prime broker that
may exist

Not applicable.

19Article 23(1) (p)Description of how
and when periodic
disclosures will bemade in relation toleverage, liquidity andrisk profile of theassets, pursuant to
Articles 23(4) and23(5)The AIFM will disclose the matters described in Articles 23(4) and 23(5) periodicallythrough its Internet website and semi-annual report.

Article 23(2)The AIFM shall informthe investors before
they invest in the AIF
of any arrangement
made by thedepositary tocontractuallydischarge itself ofliability in accordancewith Article 21(13)Not applicable.

The AIFM shall also
inform investors of any
changes with respect
to depositary liability
without delay

Not applicable.

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Article 23(4)(a)Percentage of the AIF's assets which
are subject to special arrangements
arising from their illiquid nature. The
percentage shall be calculated as the
net value of those assets subject tospecial arrangements divided by the
net asset value of the AIF concerned
Overview of any special
arrangements, including whether
they relate to side pockets, gates orother arrangements
Valuation methodology applied toassets which are subject to sucharrangements
How management and performancefees apply to such assets
Article 23(4)(b)Any new arrangements for managing
the liquidity of the AIF
For each AIF that the AIFM manages
that is not an unleveraged closed-end
AIF, notify to investors whenever they
make changes to its liquidity
management systems (which enable
an AIFM to monitor the liquidity riskof the AIF and to ensure the liquidity
profile of the investments of the AIF
complies with its underlying
obligations) that are material inaccordance with Article 106(1) of theRegulation (EU) No 231/2013 (i.e.,there is a substantial likelihood that areasonable investor, becoming awareof such information, would reconsider
its investment in the AIF, including
because such information could
impact an investor’s ability to
exercise its rights in relation to its
investment, or otherwise prejudice
the interests of one or more investors
in the AIF).

There are no assets that are subject to special arrangements arising fromtheir illiquid nature.

There are no such special arrangements.

There are no such special arrangements.

There are no such special arrangements.

Any new arrangements or change in applicable arrangements will be
disclosed at an appropriate time.
Any new arrangements or change in applicable arrangements will be
disclosed at an appropriate time.

21

Immediately notify investors where
they activate gates, side pockets orsimilar special arrangements or
where they decide to suspend
redemptions
Overview of changes to liquidity
arrangements, even if not special
arrangements
Terms of redemption andcircumstances where management
discretion applies, where relevant
Also any voting or other restrictions
exercisable, the length of any lock-up
or any provision concerning ‘first inline’ or ‘pro-rating’ on gates andsuspensions shall be included
Article 23(4)(c)
The current risk profile of the AIF andthe risk management systems
employed by the AIFM to manage
those risks

Any new arrangements or change in applicable arrangements will be
disclosed at an appropriate time.

Any new arrangements or change in applicable arrangements will be
disclosed at an appropriate time.
As SHR is a closed-end investment corporation, unitholders are not entitled
to request the redemption of their investment.
There are no voting or other restrictions on the rights attaching to units.

Deposits are exposed to risks of failure of the financial institution holding
the deposit and other credit risks, but such risks are controlled throughdiversification of financial institutions holding the deposits.
The fund proceeds from borrowings and issuance of investment
corporation bonds are used for the purpose of investing in properties,
conducting repairs or other work, paying cash distributions, repaying
obligations and other activities. These borrowings and investment bonds
are exposed to liquidity risks. SHR strives to reduce the liquidity risks bydiversifying financing methods and lenders, dispersing repayment dates
and establishing commitment lines.
Borrowings and investment corporation bonds are also exposed to a risk ofrising interest rates. SHR manages interest rate risks by diversifying debt toinclude more long term borrowings and investment corporation bonds withvarying maturity dates.
Derivative transactions are also utilized to hedge the interest rate risks
arising from any borrowing or other debts. Further, in the course of aninvestment in overseas real estate, derivative transactions may be utilized
for the purpose of hedging foreign-currency risks if, among other things,
any rent or other income gain is required to be received or paid in local
currency.
Tenant leasehold and security deposits are deposits from tenants and are
exposed to liquidity risks arising from tenants moving out of properties. SHR
manages the risk by retaining cash and deposits sufficient to return
necessary amounts to tenants.

22

Measures to assess the sensitivity of
the AIF’s portfolio to the most
relevant risks to which the AIF is or
could be exposed
If risk limits set by the AIFM havebeen or are likely to be exceeded andwhere these risk limits have been
exceeded a description of thecircumstances and the remedial
measures taken
Article 23(5)(a)Any changes to the maximum amountof leverage which the AIFM may
employ on behalf of the AIF,
calculated in accordance with thegross and commitment methods. This
shall include the original and revised
maximum level of leverage calculated
in accordance with Articles 7 and 8 of
the Level 2 implementing EU
Legislation, whereby the level ofleverage shall be calculated as therelevant exposure divided by the net
asset value of the AIF
Any right of the reuse of collateral or
any guarantee granted under theleveraging agreement, including thenature of the rights granted for thereuse of collateral and the nature of
the guarantees granted
Details of any change in service
providers relating to the above.
Article 23(5)(b)Information on the total amount ofleverage employed by the AIF
calculated in accordance with thegross and commitment methods

No such measures have been implemented.

No such situation has occurred.

Any new arrangements or change in applicable arrangements will be
disclosed at an appropriate time.

To be disclosed in the semi-annual report or on AIF’s homepage, if any suchright or guarantee exists.

Any new arrangements or change in applicable arrangements will be
disclosed at an appropriate time.
The aggregate amount of interest-bearing debt is 257,242,000,000 yen as ofApril 30, 2024.
Please also see SHR’s “Status of Interest-Bearing Liabilities”.

23