Semi-Annual
Report4-15-1 Akasaka, Minato-ku, Tokyo
http://sekisuihouse-reit.co.jp/en/

8th
Fiscal Period(from May 1, 2018 to October 31, 2018)

Pictured on the cover

Hommachi Garden City
This property is located on the corner lot where Midosuji street, the established center of Osaka’s business zone,
intersects with Hommachi street. Completed in 2010, the property is a large-scale skyscraper complex consisting of an
office building, retail property and hotel. Its height is over 130m, which exceeds the regulatory value. This was permitted
because the special urban renaissance district applies. The property is directly connected to Hommachi Station on the
Osaka Metro Midosuji Line, and provides good access to Osaka’s major business areas, air terminals such as Itami Airportand Kansai International Airport, in addition to the other major cities of the Kansai region. The property houses The St.
Regis Osaka, a leading luxury brand hotel of Marriott International. The lobby, restaurants, bar and other facilities of thehotel are attractive spaces that were designed by taking advantage of the ceiling height (approximately 7,600mm).
Panoramic views are among its other characteristics. The high-grade appearance has a dignified look created by thecomplete stone cladding, making this building a landmark property befitting the Midosuji landscape.

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Message to Our Unitholders

Performance Highlights
Distribution per Unit

I would like to express our sincere gratitude for yourcontinued and loyal patronage.

1,554 yen

Distribution per unit (Actual)
8th Fiscal Period Ended October 2018

Sekisui House Reit, Inc. (“SHR”) has settled its accounts for the 8th fiscal period (fiscal period ended
October 2018), the first fiscal period since the absorption-type merger with Sekisui House Residential
Investment Corporation on May 1, 2018. I, on behalf of SHR, would like to extend my heartfelt
thanks to unitholders as this could not have been
managed without your support.

Business Results and Distribution
7th FP (Actual)(ended Apr. 2018)

8th FP (Actual)(ended Oct. 2018)

Operating revenue(million yen)

4,655

12,174

12,12012,050Operating income(million yen)

2,994

5,793

6,353

6,267

Fiscal period

9th FP (Forecast)
10th FP (Forecast)(ending Apr. 2019) (Note 1) (ending Oct. 2019) (Note 1)

Ordinary income(million yen)

2,622

5,109

5,624

5,538

Net income(million yen)

2,621

7,402

5,624

5,537

Distribution per unit(yen)(Note 2)

1,352

1,554

1,537

1,532

(3,074)(3,064)(3,108)(2,705)

I hereby report on the management status and financial results for the 8th fiscal period of SHR.
In terms of operations, concerning the 113 properties succeeded from Sekisui House Residential Investment Corporation, SHR implemented an asset
replacement whereby 12 residential properties
were sold to third parties and 6 residential properties were newly acquired from Sekisui House, Ltd.
on the same date. In October, SHR sold its sole retail property Hamamatsu Plaza. In this manner, SHR
worked to further enhance the quality of the portfolio.

(Note 1) The respective figure for “9th FP (Forecast) (ending Apr. 2019)” and “10th FP (Forecast) (ending Oct. 2019)” are figures as of December 14, 2018 (the announcement date of business results) calculated based upon certain assumptions. Actual operating revenue, operating income, ordinary income, net income and distribution per unit may differ materially due to various
factors. The above forecasts are not intended to be guarantees of business results or the actual amount of distribution.
(Note 2) SHR implemented a two-for-one split of investment units with May 1, 2018 as the effective date. In consideration of the impact of the split, distribution per unit for “7th FP (Actual) (ended
Apr. 2018)” indicates figures gained by dividing actual figures in brackets by two, and distribution per unit for “8th FP (Actual) (ended Oct. 2018)” or later indicates figures gained by multiplying actual or forecast figures by two in brackets (fractions below 1 yen are rounded down) (here and hereinafter).

Operating Revenue/Net Income(million yen)

14,000Operating revenue

12,00012,174

Distribution per Unit
Net income

12,120

(yen)

2,000

12,0501,500

10,000
8,000

7,402

6,000

As a result, the properties owned by SHR as of theend of the 8th fiscal period were 112 properties(residential properties: 106 properties; commercial
properties: 6 properties) with an aggregate acquisition price of 438,145 million yen (residential properties: 237,395 million yen; commercial properties:
200,750 million yen). The occupancy ratio at theend of the 8th fiscal period was 97.9% for residential properties and 100.0% for commercial properties, resulting in occupancy ratio for the entire
portfolio of 98.4%.

1,554(3,108)1,537(3,074)

1,532(3,064)

As a result of the above, the management performance for the 8th fiscal period resulted in operating
revenue of 12,174 million yen, operating income of
5,793 million yen, ordinary income of 5,109 million
yen and net income of 7,402 million yen, and the
distribution per unit declared for the 8th fiscal period was 1,554 yen.
Subsequently, SHR acquired Esty Maison Kokura inNovember 2018 by utilizing the proceeds from saleof Hamamatsu Plaza.
I ask for the continued support and encouragementof unitholders.

Junichi Inoue
Executive Director of Sekisui House Reit, Inc.
President & Representative Director of
Sekisui House Asset Management, Ltd.

1,352
(2,705)

Table of Contents

1,000
5,624

In terms of debt finances, SHR procured a total
amount of 8,000 million yen for use as part of thefunds for the acquisition of real estate trust beneficiary interests during the 8th fiscal period and related expenses, and executed refinancing of 2,500
million yen in long-term loans due for repayment.
SHR also concluded an interest rate swap agreementfor 4,750 million yen in floating interest rate loans
in an effort to hedge the risk of interest rate fluctuations by converting the interest rate payable into afixed rate. In addition, with the end of the commitment line agreement for 10 billion yen establishedby Sekisui House Residential Investment Corporation, SHR newly concluded a commitment line
agreement with the amount increased to 15 billion
yen.

5,537

4,655

4,000

500
2,621

2,000

Overview of SHR ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙2Statement of Cash Distributions∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

44

Financial Section (Audited) ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙39

Statement of Cash Flows ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙45

Notes to Financial Statements ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙46

Financial Statements
Balance Sheet ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙40

Supplementary Schedules ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙62

7th FP(ended Apr. 2018)

8th FP(ended Oct. 2018)

9th FP(ending Apr. 2019)

10th FP(ending Oct. 2019)

7th FP(ended Apr. 2018)

8th FP(ended Oct. 2018)

9th FP(ending Apr. 2019)

10th FP(ending Oct. 2019)

Statement of Income and Retained Earnings ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙42

Independent Auditor’s Report ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙73

ActualActualForecast

Forecast

ActualActualForecast

Forecast

Statement of Changes in Net Assets ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙43Unitholder Information ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙

74

0

0

1

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Overview of SHR

Outline of SHR

Strategies of SHR(as of December 14, 2018 (the announcement date of business results))

Overview of Portfolio

Portfolio Development Policy
Investment Ratio by Usage Type

Number of Owned Properties

Total Appraisal Value

113 properties

Area Ratio (Note 2)

Asset Size

439.1

Office building
41.8%(6 properties)

Osaka area
22.7%
(12 properties)
Residence
54.3%(107 properties)

Financial Status
LTV (total asset basis)

Building Age Ratio (Note 2) (Note 3)

Others5.2%(13 properties)

Three Major
Metropolitan
Areas (Note 4)

94.8%

Residential
Properties

15 or more years
4.4%(6 properties)

Residential properties

Commercial
Properties

Under 5 years
10.6%(13 properties)

9.2 years

43.3 %

Investment Ratio Target by Usage
Type upon Achieving an Asset
Size of 600 Billion Yen

Residences
Student dormitories
Company housing

30~55%

54.3%

Around 45%

Office buildings
Data centers

30~55%

41.8%

Around 45%

HotelsService apartments

0~30%

3.9%

Around 10%

Retail properties
Senior properties (Housing for the elderlywith services, Fee-based homes for theaged, and Daycare centers)

0~10%

0%

Around 0-10%

Hotel

Retail properties, etc.
5 years ormore butless than
10 years
55.4%(32 properties)

Investment Ratio by Area and Asset Category
Priority investment areas are set in light of the characteristics of each asset category. Regarding overseas real estate investment,
investment in residential properties and commercial properties will be allowed, but a cautious stance will be maintained for now.
Asset Category

Priority Investment Area

Investment Ratio by Area(acquisition price basis)

As of December 14, 2018(the announcement dateof business results)

Residential Properties

Greater Tokyo

Not less than 70%

76.6%

Commercial Properties

Three Major Metropolitan Areas(Greater Tokyo, Osaka Area, Nagoya Area)

Not less than 80%

100%

Credit Rating(Note 5)

As of December 14, 2018(the announcement dateof business results)

Office buildings

Average
10 years or more Property Age
but less than
15 years
29.5%(62 properties)
Greater Tokyo
66.9%(78 properties)

Investment Ratio by
Usage Type(acquisition price basis)

Examples of Specific
Asset Types

Usage TypeCore Assets

98.3 %

Nagoya area
5.3%
(10 properties)

billion yen

AssetCategory

Occupancy Ratio (as of the end of November 2018)439.1 billion yen
Hotel
3.9%
(1 property)

Build a portfolio with residential properties as bases and centers of human life and office buildings as business activity bases
being the core assets. Promote investment in hotels that are expected to continue growing.

480.1 billion yen

Aggregate Acquisition Price

Usage Type Ratio (Note 2)(Note 1)

With the following points recognized by JCR, the credit rating outlook
was changed on March 30, 2018 from “Stable” to “Positive.”● Stable operation can be expected even after the merger throughLong-Term Debt Ratio

100.0 %

utilization of the integrated corporate strength of the Sekisui House
Group

Investment Strategy● Enhancement of the portfolio and diversification of properties will

be achieved through the expansion of asset size resulting from themergerPrime Properties with “Strategic Location” and “High Quality” as Pillars
SHR will continue to invest primarily in prime properties with the aim of enhancing the quality of the portfolio.

Fixed Interest Rate Debt Ratio

93.7 %

Rating Agency

Before the Change

After the Change

JCR

AA- (Stable)AA- (Positive)(Note 1) “Total appraisal value” is based on the appraisal value as of the end of October 2018 for the investment assets that SHR owned from the 7th fiscal period and the investment assets that
SHR acquired in the 8th fiscal period, and the appraisal value as of November 1, 2018 for “Esty Maison Kokura” that SHR acquired on November 29, 2018.
(Note 2) “Hommachi Garden City” is calculated by treating the office building portion as one property and hotel portion as one property according to the usage type of the building under sectional
ownership for calculating “Usage Type Ratio,” and the entire building as one property for calculating “Area Ratio” and “Building Age Ratio.”(Note 3) Weighted average of building age calculated on the basis of the acquisition price is stated for average property age.
(Note 4) The “Three Major Metropolitan Areas” are “Greater Tokyo”, “Osaka Area” and “Nagoya Area” (here and hereinafter). The “Greater Tokyo” includes Tokyo, Kanagawa Prefecture, Chiba
Prefecture, and Saitama Prefecture; the “Osaka Area” includes Osaka Prefecture, Kyoto Prefecture, Hyogo Prefecture, and Nara Prefecture; and the “Nagoya Area” includes Aichi
Prefecture (here and hereinafter).
(Note 5) “LTV (total asset basis)” is the figure as of the end of October 2018.

Asset Category

Strategic Location

High Quality

Residential Properties

Locations suited for “bases forsustainable living” for residents

As residences, provide high-class fundamental functionality, such as
comfort and safety, and give due consideration to the environment as asocietal demand for making comprehensive determinations regarding
buildings suited to neighborhoods and the like.

Commercial Properties

Locations suited for “sustainable bases of operation” oftenant companies

In addition to the functionality sought by tenant companies, giveconsideration to the environment as a societal demand for establishingspecifications suitable for BCP sites to make comprehensive determinations
regarding buildings suited to neighborhoods and the like.

2

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Portfolio Map(as of December 14, 2018 (the announcement date of business results))

Major Owned Properties

Greater Tokyo
Osaka area (Note)
Nagoya area
OthersGreater Tokyo

GC Shinagawa Gotenyama

78 properties
13 properties
10 properties
13 properties

Fukuoka-shi

Residence/

Gotenyama SH Building

Sapporo-shi

Residence
Office building

Residence/

Hotel

76

Office building/

7 properties

Residence/

Yokkaichi-shi

Residence/

Residence/

1 property

2 properties

9 properties
Office building/ 1 property

1 property

Kitakyushu-shi

Osaka Area

Nagoya area

Kanazawa-shi

Residence/

1 property

Hommachi GC

Hommachi Minami GC

PM Ginza East

9 properties
Office building/ 3 properties
Hotel/ 1 property

PM Gotenyama East

Hirokoji GA

PM Shinagawa

PM Ebisu

PM Daikanyama

PM Yokohama Nihon-odori

PM Shirokane-takanawa

PM Ichigayayamabushicho

Residence

Hotel

PM Gotenyama WestPM Shirokanedai Tower

PM Otsuka

HK Yodoyabashi GA

PM Kitatanabe

PM Gokiso

PM Takami

PM Yadaminami

PM Minami 2-joGranmast Kanazawa Nishiizumi

Granmast Unomori

PM Yuhigaoka

Kobe Women’s Student Housing

Nagoya Area

Residence/

Office building

3 properties

properties

Osaka area

PM Musashinonomori

Residence/Greater Tokyo

PM Higashisakura

Other Areas

EM Toyosu Residence

PM Asakusabashi

MAST Hakata

PM: Prime Maison EM: Esty Maison GC: Garden City GA: Garden Avenue

PM Odorikoen

PM Central Park

(Note) “Hommachi Garden City” is calculated by treating the office building portion as one property and hotel portion as one property.

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Stable and Sound Financial Operations (as of October 31, 2018 (end of 8th fiscal period))

ESG Initiatives

Interest-Bearing Liabilities

Debt Finance

Acquisition of GRESB Assessment

Total interest-bearing
liabilities (billion yen)

197.9

Financial Institution

Balance(billion yen)

MUFG Bank, Ltd.

43.6

23.9%

Aozora Bank, Ltd.

1.7

0.9%

LTV (total asset basis)

43.3%

Sumitomo Mitsui Banking Corporation

35.0

19.2%

Shinkin Central Bank

1.6

0.9%

Mizuho Bank, Ltd.

33.0

18.1%

The Senshu Ikeda Bank, Ltd.

1.3

0.7%

GRESB Assessment

Sumitomo Mitsui Trust Bank, Limited

16.3

8.9%

The Shizuoka Bank, Ltd.

1.3

0.7%

GRESB Rating

100.0%

Mizuho Trust & Banking Co., Ltd.

12.2

6.7%

The 77 Bank, Ltd.

1.3

0.7%

GRESB Public Disclosure

Resona Bank, Limited

10.5

5.8%

The Hiroshima Bank, Ltd.

1.3

0.7%

Health and Wellbeing Module

Participation

0.77%

Development Bank of Japan Inc.

10.4

5.7%

The Yamaguchi Bank, Ltd.

1.3

0.7%

Resilience Module

Participation

The Norinchukin Bank

8.9

4.9%

Loan Total

182.4

100.0%The Bank of Fukuoka, Ltd.

2.4

1.3%

Total Investment
Corporation Bonds
Total InterestBearing Liabilities

15.5

-

197.9

-

Fixed interest rate debt ratio
Long-term debt ratio
Average financing
interest rate (Note)
Average number of years
spent financing (years)

93.7%

6.9

Percentage

Financial Institution

Balance(billion yen)

Percentage

Rated in the highest category, “Green Star,” for the second consecutive year in the 2018
Global Real Estate Sustainability Benchmark (GRESB) Real Estate Assessment
FY 2018

Acquisition of DBJ Green Building Certification
Newly acquired DBJ Green Building Certification for 16 residential properties
Acquired DBJ Green Building Certification for 48 properties of 113 owned properties, accounting for 58.6% of theportfolio (based on gross floor area)

Financial Institution

Credit Limit Agreement

Agreement Term

MUFG Bank, Ltd., Mizuho Bank, Ltd.,
Sumitomo Mitsui Banking Corporation

15.0 billion yen

November 1, 2018 to October 31, 2019

5 Stars

Total

2

Diversification of Repayment Dates
Loans with fixed interest rates

The asset management company became a GRESB member in June 2018.

What is GRESB?

Status of Commitment Line Agreement(billion yen)

B

GRESB is an annual benchmark for environmental, social and governance (“ESG”) considerations in the real estate sector, which wasestablished primarily by major European pension fund groups.

(Note) “Average financing interest rate” indicates a weighted average (annual) interest rate using the balance of interest-bearing liabilities. In respect of the interest rates of interest-bearing
liabilities for which an interest rate swap was conducted, interest rates taking into account the effect of the interest rate swap are used.

30.0Green Star

Loans with floating interest rates

Investment corporation bonds

4 Stars

3 Stars

Total

14

properties

Total

32

properties

Office building

Residence

Office building

Residence

Residence

Garden City
Shinagawa Gotenyama

Prime Maison
Shinagawa

Hommachi Minami
Garden City

Prime Maison
Ginza East

Prime Maison
Ichigayayamabushichoproperties

25.0
2.0

20.0
15.0
10.0
5.0
0

4.0
26.8

2.5
20.7

4.0

00

3.0

What is DBJ Green Building Certification?

16.9
4.3

8.3

3.0

7.1

4.4

12.4

11.1

11.1

12.4

11.8
3.0
1.9

6.1

7.6

2.0
3.1

00

The DBJ Green Building Certification System recognizes outstanding properties that respond to the demands of the times. The system
was established based on a proprietary scoring model developed by the Development Bank of Japan and serves to improve the environmental functionality of buildings while encouraging the prevalence of properties that demonstrate awareness of societal demands.

8.0

FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending FP ending
Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31,
2019
2019
2020
2020
2021
2021
2022
2022
2023
2023
2024
2024
2025
2025
2026
2026
2027
2027

Case Examples of ESG Initiatives
Efficient use of energy throughfacilities considerate of the environment

Green Bonds
SHR submitted an amended shelf registration statement for green bond issuance on
December 14, 2018●
Purpose of green bond issuance ● Further promotion of asset management considering ESG

Solar power generation panels

Strengthening capital procurement base through expanding theinvestors who have an interest in ESG investment

What are green bonds?

Initiatives for a low-carbon society and the efficient use of energy

Replacement of lights for common areas
with LED lighting in residential properties

Promotion of energy-saving of air conditioners
for exclusive areas in residential properties

Conducted at 4 properties during the 8th FP

Installed 169 units during the 8th FP

Implemented at a total of

Replaced a total of

Garden City Shinagawa Gotenyama

Prime Maison Gotenyama West43 properties

Low-e double-glazed windows

LED lighting● Electricity consumption● Electricity consumption● Greenhouse gas emissions● Greenhouse gas emissions

Expected total annual reduction ofaround 1,189,083 kwh

Green bonds are bonds issued by companies, funds, municipalities, etc. to procure funds for eligible green projects (environmentally-friendly
investment projects), and are generally issued under the Green Bond Principles declared by the International Capital Market Association(ICMA). The proceeds of green bonds should be allocated to green projects that provide clear environmental benefits.
HK Yodoyabashi Garden Avenue

Expected total annual reduction ofaround 602 t-CO2

932 A/C units

Expected total annual reduction ofaround 207,836 kwh

Expected total annual reduction ofaround 96.0 t-CO2

In Japan, the amount of issuance has been increasing since Development Bank of Japan Inc. issued Japan’s first green bond in 2014. Green

Hommachi Minami Garden City

bonds were also issued by a city bank in 2015 and the Tokyo Metropolitan Government in 2017.

(Note) The examples of initiatives above are ESG initiatives that have been actually undertaken by SHR or Sekisui House Residential Investment Corporation to date as of December 14, 2018. The
figures for expected reductions above are estimated by the asset management company based on materials provided by the replacement work operator and materials published by the
Agency for Natural Resources and Energy of the Ministry of Economy, Trade and Industry; there is no guarantee that the expected reductions will be realized.

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Profile of SHR

Overview of Asset Management Company

Overview

History

Name

Sekisui House Reit, Inc.

Representative

Junichi Inoue, Executive Director

Address

Sep. 8, 2014

Registration of incorporation under Article
166 of the Investment Trusts Act, andestablishment of SHR

Sep. 18, 2014

Registered by the Prime Minister of Japan
under Article 187 of the Investment Trusts
Act (registration number 95, filed with the
Director of the Kanto Local Finance Bureau)

Dec. 3, 2014

Listed on the Tokyo Stock Exchange Real
Estate Investment Trust Securities Market(Securities Code: 3309)

May 1, 2018

Merged with Sekisui House Residential Investment
Corporation through an absorption-type merger(For each investment unit of the dissolving
corporation, 1.65 post-split investment units ofthe surviving corporation (SHR) were allocated.)

4-15-1 Akasaka, Minato-ku, Tokyo

Asset
Management
Company

Sekisui House
Asset Management, Ltd.

Fiscal Period
Ends

April and October of each year

Structure Diagram

Investment Corporation

Corporate
nameSekisui House
Asset Management, Ltd.

Representative

Junichi Inoue, President &Representative Director

Head office

4-15-1 Akasaka, Minato-ku, Tokyo

Capital

400 million yen

Shareholder

Sekisui House, Ltd. (100%)❹ General Administrative Agent

General Meetingof Unitholders❷

Asset Management Company
Sekisui House
Asset Management, Ltd.

❶Board of Directors
Executive Director
Junichi Inoue
Supervisory Director Shigeru Nomura
Supervisory Director Tatsushi Omiya❸

Sekiwa Real Estate, Ltd.
Sekiwa Real Estate Kanto, Ltd.
Sekiwa Real Estate Tohoku, Ltd.
Sekiwa Real Estate Chubu, Ltd.
Sekiwa Real Estate Kansai, Ltd.
Sekiwa Real Estate Chugoku, Ltd.
Sekiwa Real Estate Kyushu, Ltd.

Registered as a financial
instruments business operator
Registration (Kinsho) No.2791
issued by the Director of Kanto
Local Finance Bureau

Statutory Auditor❺ Asset Custody Company
Mitsubishi UFJ Trust and Banking Corporation

Board of Directors❻ Transfer Agent

Investment Committee

Compliance Committee

Mizuho Trust & Banking Co., Ltd.

Compliance Officer

Independent Auditor
Pipeline Support Companies

Licenses andregistration,
etc.

Certified as an entrustmentbased agency
License No.82 issued by the
Minister of Land, Infrastructure,
Transportation and Tourism

General Meeting of
Shareholders

Mitsubishi UFJ Trust and Banking Corporation

Sekisui House, Ltd.

Licensed for building lots andbuildings transaction business
License No.(1) 96411 issued by
the Governor of Tokyo

Operational Organizational Structure(as of December 14, 2018 (the announcement date of business results))

Parent Company of the AssetManagement Company /Sponsor

100% ownership

Overview

Ernst & Young ShinNihon LLC❼ Administrator for Investment
Corporation Bonds

President

MUFG Bank, Ltd.

Business Strategy
Department

Internal Control
Promotion Department

Real Estate Division❶ Asset Management Agreement ❷ Sponsor Support Agreement ❸ Agreement on Preferential Negotiating Rights (etc.)❹ General Administrative Agreement ❺ Asset Custody Agreement❻ Administrative Agreement (Administration of Investment Units) ❼ Financial Agent Agreement

Real Estate
Investment
No. 1 Dept.

Real Estate
Investment
No. 2 Dept.

Real Estate
Real Estate
Real Estate
Real Estate Engineering
Management Management Management Accounting Management
No. 1 Dept.
No. 2 Dept.
No. 3 Dept. Department Department

Finance
Department

Investor
Relations
Department

General
Accounting
Department

GeneralAffairs
Department8

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Outline of asset management operation
1.

(2) Management Environment and Management Performancea. Management Environment
During the fiscal period under review, the Japanese economy showed a mild recovery with positive circulation ofincome contributing to expenditure, as was the case in the previous fiscal period, backed by such factors as anincrease in capital investment in accordance with improvements in corporate earnings and a moderate increase

Developments in Asset Management in the Fiscal Period under Review(1) Brief History of the Investment Corporation
Sekisui House Reit, Inc. (“SHR”) was established on September 8, 2014 as an investment corporation investing
primarily in commercial properties including office buildings, hotels and retail properties, sponsored by Sekisui
House, Ltd. (“Sekisui House”), one of the leading homebuilders in Japan with an established development andmanagement track record also in the property development business. SHR was listed on the Real Estate
Investment Trust Section of the Tokyo Stock Exchange, Inc. (“Tokyo Stock Exchange”) on December 3, 2014(securities code: 3309).
Sekisui House Residential Investment Corporation (“SHI,” and collectively with SHR, the “Two Investmentin private consumption associated with solid improvements in the employment and income environment.
Under such circumstances, the real estate leasing market continued to see a good supply and demand condition,
both for residences and office buildings, with leasing demand kept strong. As for the hotel market, the number offoreign tourists visiting Japan still remains on an upward trend despite a temporary negative impact fromnatural disasters that hit the country repeatedly during the period.
In the real estate transaction market, the appetite for property acquisition continues to be strong among
investors in Japan and abroad given the accommodative monetary policy while the high-quality properties that
SHR considers to be investible remain in short supply, keeping their expected cap rates at a low level.

Corporations”) was established on April 20, 2005 as JOINT REIT Investment Corporation investing primarily inresidences and retail properties, and listed on the Real Estate Investment Trust Section of the Tokyo Stock
Exchange on July 28, 2005. In March 2010, a collaboration system was established with Sekisui House serving
as the main sponsor and Spring Investment Co., Ltd. (“Spring Investment”) as joint sponsor for the investment

b. Management Performance
As of May 1, 2018, in accordance with the Investment Corporation Merger described in (1) Brief History of thecorporation, which was renamed to Sekisui House SI Investment Corporation in June 2010. Later, in June 2014,
its Articles of Incorporation were revised to set residences as the sole target of investment, and the corporatename was changed to Sekisui House SI Residential Investment Corporation. Subsequently, Spring Investment
transferred all of the shares it owned in the asset management company of SHI (Note 1) to Sekisui House in
March 2017, making Sekisui House the sole sponsor. In association with the shift to the single sponsor structure,

Investment Corporation above, SHR succeeded 113 properties (comprising 112 residences and a retail property)
owned by SHI. As of the same date, SHR also sold 12 of the residences to independent buyers (total sale price(Note): 16,400 million yen), while acquiring 6 residences (total acquisition price (Note): 25,300 million yen) fromSekisui House. Moreover, as of October 29, 2018, SHR sold Hamamatsu Plaza, a retail property, to anindependent buyer (sale price: 2,799 million yen).

SHI was renamed to Sekisui House Residential Investment Corporation in June 2017.
The Two Investment Corporations, each under the support of the Sekisui House Group (Note 2), had separately
conducted asset management in an effort to expand their assets and secure stable returns by utilizing theirrespective strengths with the aim of continuous enhancement of unitholder value. However, in the belief that

These transactions brought the number of properties SHR owned as of October 31, 2018 (“as of the end of the
fiscal period under review”) to 112 (comprising 106 residential properties and 6 commercial properties) with anaggregate acquisition price of 438,145 million yen (237,395 million yen for residential properties and 200,750
million yen for commercial properties).

expanding the scale of their assets and increasing their market presence and enhancing a variety ofopportunities for growth by utilizing the integrated corporate strength of the Sekisui House Group, thereby
securing strong returns and stability and growth of cash distributions through promoting a steady increase of
assets under management, should help maximize unitholder value, the Two Investment Corporations conducted
an absorption-type merger with SHR as the surviving corporation and SHI as the dissolving corporation (theMoreover, the occupancy ratio of SHR’s investment assets as of the fiscal period end stood at 97.9% forresidential properties, 100.0% for commercial properties and 98.4% for the entire portfolio, bolstered by strong
leasing demand against the backdrop of the solid economic growth described in a. Management Environment

above.

(Note) The “sale price” and “acquisition price” respectively indicate the transaction prices shown in the sales agreements for respective
properties (excluding consumption tax, local consumption tax and miscellaneous expenses including transaction fees), rounded“Investment Corporation Merger”), setting May 1, 2018 as the effective date.
SHR’s policy is to conduct asset management that seeks to secure stable earnings over the medium to long term

down to the nearest million yen. For properties SHR succeeded from SHI through the Investment Corporation Merger, however,the value based on the appraisal by real estate appraisers with April 30, 2018 as the appraisal date is used as the acquisitionand steady growth of its investment assets, with residential properties (Note 3) and commercial properties (Note4) as major investment targets.

price, because the acceptance price should be the appraisal value upon the acquisition by SHR as such properties are accounted
for by the purchase method with SHR set as the acquiring corporation and SHI as the acquired corporation. The same shall(Note 1) Sekisui House Asset Management, Ltd. (the “Asset Management Company”), to which SHR entrusts management of its assets,
was previously called Sekisui House Investment Advisors, Ltd. On May 1, 2018, it carried out an absorption-type merger with

apply hereinafter.

Sekisui House Asset Management, Ltd. (the “former SHAM”), the asset management company for SHI, with the AssetManagement Company being the surviving company and the former SHAM being the dissolving company, and changed its(3) Overview of Fund Procurement
a. Borrowings
SHR has adopted as its basic policy the conduct of stable and sound financial operations in order to securestable earnings over the medium to long term and enhance unitholder value. During the fiscal period underreview, SHR succeeded 95,032 million yen in loans and 10,500 million yen in investment corporation bonds
from SHI through the Investment Corporation Merger. Moreover, as of May 1, 2018, SHR borrowed short-termloans totaling 8,000 million yen to partly fund the acquisition of beneficiary interests in real estate and relatedcompany name to the current one.
(Note 2) “Sekisui House Group” refers to a group of companies comprised of Sekisui House and its consolidated subsidiaries and its
affiliates accounted for by the equity method. The same shall apply hereinafter.
(Note 3) “Residential properties” refer to real estate whose principal use is residential (including school dormitories, company housing,furnished residences with appliances which do not fall under service apartments (*1) (*2)). The same shall apply hereinafter.
(Note 4) “Commercial properties” refer to real estate whose principal use is for office buildings, hotels (including service apartments;
the same shall apply hereinafter.) and retail properties, etc. (including housing for elderly with service, fee-based homes for

expenses. SHR refinanced the said short-term loans with long-term loans in the same amount as of May 31,
2018. For the long-term loans with floating interest rates totaling 2,500 million yen due for repayment on
August 31, 2018, SHR refinanced them with long-term loans with floating interest rates in the same amount.
In addition, in order to address the risk of higher interest rates, SHR concluded an interest rate swap
agreement as of October 29, 2018 for the loans with floating interest rates totaling 4,750 million yen that it

the aged, and daycare centers (*2); the same shall apply hereinafter.) and other non-residential business purposes. The same
shall apply hereinafter.
(*1) “Service apartments” refer to furnished residences with appliances where a dedicated operator provides certain services
to users. The same shall apply hereinafter.
(*2) Some service apartments and housing for elderly with service, fee-based homes for the aged, and daycare centers may fallunder apartment houses as defined in the Building Standards Act (Act No. 201 of 1950, as amended). The same shallsucceeded from SHI, practically fixing the interest rates.

apply hereinafter.

As a result, the fixed interest rate debt ratio against interest-bearing liabilities rose from 93.0% as of the end of
the previous fiscal period to 93.7% as of the end of the fiscal period under review. The balance of interest-bearing
liabilities as of the end of the fiscal period under review stood at 197,932 million yen, with the ratio of totalinterest-bearing liabilities to total assets (“LTV (total assets basis)”) standing at 43.3%.
Moreover, as the commitment term of the commitment line agreement with a credit limit of 10,000 million yen

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that SHR succeeded from SHI was to end on October 31, 2018, SHR re-concluded the commitment line
agreement with a credit limit of 15,000 million yen with MUFG Bank, Ltd., Mizuho Bank, Ltd. and Sumitomo
Mitsui Banking Corporation on October 29, 2018, in consideration of the total interest-bearing liabilities that
had increased through the succession in association with the merger with SHI and the status of the repayment
dates, etc.

2.

Status of Capital Increase, etc.
The following table sets forth the increase (/decrease) in unitholders’ capital and the total number of investment
units issued and outstanding since the establishment of SHR through to the end of the fiscal period underreview.

b. Credit Rating
The following table sets forth the rating status as of the end of the fiscal period under review.

Date

Event

Total number ofinvestment units
issued and outstanding(units)Unitholders’ capital(million yen)
Increase(Decrease)

Increase(Decrease)

Note

Credit Rating Agency

Rating TypeJapan Credit Rating Agency, Ltd.
(JCR)

Long-term issuer rating: AA−
Rating outlook: Positive

Japan Credit Rating Agency, Ltd.
(JCR)

September 8, 2014

Private placement forincorporation

200

200

2,000

2,000

(Note 1)

Bond rating: AA−

December 2, 2014

Public offering

63,69063,890600,000

602,000(Note 2)

December 24, 2014

Third-party allotment

3,184

67,07430,000632,000(Note 3)

May 19, 2015

Public offering

19,67386,748154,200

786,200(Note 4)

June 12, 2015

Third-party allotment

995

87,7437,800

794,000(Note 5)

May 24, 2016

Public offering

11,70699,45095,200889,200(Note 6)

June 21, 2016

Third-party allotment

590

100,040

4,800

894,000(Note 7)

May 24, 2017

Public offering

9,661

109,70271,400965,400(Note 8)June 12, 2017

Third-party allotment

487

110,1893,600

969,000(Note 9)May 1, 2018

Split of investment units―

110,189

969,000

1,938,000(Note 10)

May 1, 2018

Allocation of investment
units through merger―

110,189

1,824,091

3,762,091(Note 11)(4) Overview of Business Performance and Distributions
Results in the fiscal period under review are operating revenue of 12,174 million yen, operating income of 5,793
million yen and ordinary income of 5,109 million yen, resulting in net income of 7,402 million yen. In addition,
concerning cash distributions, SHR decided to distribute 5,846 million yen, which is the amount of
unappropriated retained earnings after deducting part of the negative goodwill, as distribution of earnings
based on the application of special tax treatment for investment corporations (Article 67-15 of the Act on Special
Measures Concerning Taxation (Act No. 26 of 1957, as amended)).

Balance

Balance(Note 1) New investment units were issued at an offer price of 100,000 yen per unit upon the establishment of SHR on September 8, 2014.

(Note 2) New investment units were issued at an offer price of 110,000 yen (with the issue price being 106,150 yen) per unit through a public
offering to procure funds for the acquisition of new properties.

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)New investment units were issued at an issue price of 106,150 yen per unit by way of third-party allotment and proceeds thereof
were intended to use to make part repayment of loans. Out of proceeds from the issuance of new investment units, a portion was

allocated for partial repayment of loans and the remaining was allocated to fund part of the acquisition cost of a new property.
New investment units were issued at an offer price of 131,917 yen (with the issue price being 127,587 yen) per unit through apublic offering to procure funds for the acquisition of a new property.
New investment units were issued at an issue price of 127,587 yen per unit by way of third-party allotment and proceeds thereof

were intended to use to make part-repayment of loans or as part of future acquisition funds for specified assets.
New investment units were issued at an offer price of 127,140 yen (with the issue price being 122,967 yen) per unit through apublic offering to procure funds for the acquisition of new properties.
New investment units were issued at an issue price of 122,967 yen per unit by way of third-party allotment and proceeds thereof

were intended to use to make future part-repayment of loans or as part of future acquisition funds for specified assets.
New investment units were issued at an offer price of 139,912 yen (with the issue price being 135,320 yen) per unit through apublic offering to procure funds for the acquisition of new properties.
New investment units were issued at an issue price of 135,320 yen per unit by way of third-party allotment, with the proceeds
thereof intended to be used for the partial repayment of the short-term loans that had been taken up to finance the acquisition of
the new properties.

(Note 10) SHR implemented a two-for-one split of investment units with April 30, 2018 as the record date and May 1, 2018 as the effective
date.

(Note 11) Upon the Investment Corporation Merger, 1.65 SHR units following the investment unit split were allocated to every SHI unit on
May 1, 2018 and 1,824,091 investment units were newly issued.

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[Changes in Market Price of Investment Securities]
The following table sets forth the fiscal period high and low (closing price) on the Tokyo Stock Exchange Real
Estate Investment Trust Section on which SHR investment securities are listed.
7th fiscal period

8th fiscal

4th fiscal
period5th fiscal
period6th fiscal
periodFrom: May 1,
2016
To: Oct. 31,
2016

From: Nov. 1,
2016
To: Apr. 30,
2017

From: May 1,
2017
To: Oct. 31,
2017High (yen)157,900

153,900

146,400

149,100

70,50073,900Low (yen)

125,800

138,000

125,900

123,700

69,70068,200Fiscal period

Before theex-rights date

After the exrights date3.

periodPerformance of Distribution, etc.
Distribution per unit for the fiscal period under review (the 8th fiscal period) is 1,554 yen. The policy is to
distribute 5,846,289 thousand yen, which is the amount of unappropriated retained earnings after deducting
part of the negative goodwill, as distribution of earnings, in application of the special treatment of corporation
tax under which the amount equivalent to distribution of earnings is deductible from the taxable income ofinvestment corporations as deductible expenses (Article 67-15 of the Act on Special Measures Concerning
Taxation).

From: Nov. 1, From: Apr. 25, From: May 1,
2018
2018
2017
To: Oct. 31,
To: Apr. 30,
To: Apr. 24,
2018
2018
2018

Fiscal period
Total amount of unappropriatedretained earnings (thousand yen)Amount of accumulated earnings(thousand yen)
Total amount of cash distribution(thousand yen)

(Note) SHR implemented a two-for-one split of investment units with April 30, 2018 as the record date and May 1, 2018 as the effective date.

[Distribution per unit] (yen)Total amount of distribution of
earnings out of the total amount ofcash distribution(thousand yen)[Distribution of earnings per unit](yen)
Total amount of refund ofinvestment in capital out of thetotal amount of cash distribution(thousand yen)[Amount of refund of investment
in capital per unit] (yen)Total distribution amount fromreserve for temporary difference
adjustments out of total amount ofrefund of investment in capital(thousand yen)[Distribution amount from reserve
for temporary difference
adjustments per unit out of
amount of refund of investment
in capital per unit] (yen)Total distribution amount from
distribution reducing unitholders’capital for tax purpose out of total
amount of refund of investment incapital(thousand yen)[Distribution amount from
distribution reducing unitholders’capital for tax purpose out of
amount of refund of investment incapital per unit]
(yen)

14

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14

4th fiscal period 5th fiscal period 6th fiscal period 7th fiscal period 8th fiscal period
From: May 1,
From: Nov. 1,
From: May 1,
From: Nov. 1,
From: May 1,
2018
2017
2017
2016
2016
To: Oct. 31, 2016 To: Apr. 30, 2017 To: Oct. 31, 2017 To: Apr. 30, 2018 To: Oct. 31, 2018
2,321,003

2,381,018

2,626,016

2,621,502

7,403,117

179

296

26

357

1,556,827

2,320,824

2,380,722

2,625,990

2,621,145

5,846,289[2,596][2,663][2,710][2,705][1,554]2,320,824

2,380,722

2,625,990

2,621,145

5,846,289[2,596][2,663][2,710][2,705][1,554]

―

―

―

―

―

[―]

[―]

[―]

[―]

[―]

―

―

―

―

―

[―]

[―]

[―]

[―]

[―]

―

―

―

―

―

[―]

[―]

[―]

[―]

[―]

15

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4. Future Management Policy(1) Future Trends Outlook
Looking ahead, the Japanese economy is expected to continue recovering moderately, supported partly by theeffects of various economic policies, under circumstances where employment rates and income levels continue
rising, according to the Monthly Economic Report (October 2018) released by the Cabinet Office. On the other
hand, attention must be paid to the impact of the trade issue outcome on the world economy, economic
uncertainties overseas and the impact of fluctuations in global financial and capital markets. We also have to
be fully mindful of the economic impact of natural disasters that have occurred repeatedly.
Having such circumstances in mind, SHR believes that, in the real estate leasing market, demand will remain
solid both for residences and office buildings, although close attention is required to the supply and demandbalance in each of our investment areas. Meanwhile, the hotel market will likely continue to see a steadyservices consignment agreement (“PM Agreement”) with Sekisui House or a sponsor support agreement, seek (a)property management services for commercial properties, and (b) in relation to management of owned assets forinternal growth, (i) technologies and know-how that contribute to the improvement of tenant satisfaction orother factors, including energy efficiency and eco-friendliness, that contribute to the renovation/valueenhancement of properties, (ii) personnel support, including provision of know-how required for the operation of

SHR, and (iii) support in areas such as negotiation of master lease agreements. Furthermore, Sekiwa Real
Estate Group possesses PM skills, including tenant solicitation utilizing its nationwide network and know-how
on PM services proven by an abundant management track record. As such, SHR and the Asset Management
Company will capitalize on the PM skills possessed by Sekiwa Real Estate Group by concluding a PM
Agreement with Sekiwa Real Estate Group for residential properties.
(Note 1) The “Three major metropolitan areas” refer to “Greater Tokyo,” the “Osaka area” and the “Nagoya area,” where “Greater

Tokyo” refers to Tokyo, Kanagawa Prefecture, Chiba Prefecture and Saitama Prefecture, the “Osaka area” refers to Osaka
Prefecture, Kyoto Prefecture, Hyogo Prefecture and Nara Prefecture and the “Nagoya area” refers to Aichi Prefecture. The

increase in the number of foreign tourists visiting Japan and firm domestic demand.
As to the real estate market, the expected cap rate is likely to remain low for the time being.

same shall apply hereinafter.
(Note 2) “Sekiwa Real Estate companies (7 companies)” is a collective name for Sekiwa Real Estate, Ltd., Sekiwa Real Estate Kanto,(2) Future Management Policy and Challenges to AddressLtd., Sekiwa Real Estate Tohoku, Ltd., Sekiwa Real Estate Chubu, Ltd., Sekiwa Real Estate Kansai, Ltd., Sekiwa Real
Estate Chugoku, Ltd. and Sekiwa Real Estate Kyushu, Ltd., which are wholly-owned subsidiaries of Sekisui House and are

SHR will continue to focus on prime properties―high-quality residential properties and commercial properties
situated in strategic locations―as its core investment targets among other main investment targets. By
implementing growth strategies that take full advantage of the real estate development and operation
capabilities and other strengths of the Sekisui House Group, which has established an extensive track record ofdeveloping and operating residential properties and commercial properties, SHR will seek to secure stableearnings over the medium to long term and steady growth of its investment assets and thereby aim to maximize
unitholder value.
On the other hand, SHR will endeavor to expand its asset size by exploring investment opportunities throughthe initiatives of the Asset Management Company on its own.
Concerning main investment target areas in Japan for residential properties, SHR has set Greater Tokyo (Note1) as the core investment area with a focus on the Tokyo 23 wards, which are believed to have a number of prime
properties that offer locations accommodating residents’ needs as well as excellent basic functions as a residence
including comfort and safety and such and are expected to see strong leasing demand and supplies of prime
properties. In addition, SHR will invest in government designated cities and other major cities throughout
Japan outside of Greater Tokyo as well as their surrounding commutable areas, where networks of Sekisui
House and Sekiwa Real Estate companies (7 companies) (Note 2) can be fully utilized.
SHR has set the Three major metropolitan areas (Note 1) with Three large cities, namely the Tokyo 23 Wards,
Osaka City and Nagoya City, all of which SHR has knowledge in the course of developments by Sekisui House,as the core investment areas in Japan for commercial properties, with a focus on the Three large cities, in which
SHR can expect stable management against the backdrop of solidified demand resulting from being bases fortenant companies’ business activities. In addition, major cities throughout Japan other than the Three major
metropolitan areas are set as investment areas.
SHR has executed a sponsor support agreement with Sekisui House. This agreement provides for utilization ofcore companies of real estate unit of the Sekisui House Group operating nationwide. The same shall apply hereinafter.
(Note 3) “Sekiwa Real Estate Group” refers to a group of companies comprised of Sekiwa Real Estate companies (7 companies) as thecore, and of its subsidiaries and affiliates. The same shall apply hereinafter.

(3) Financial Strategy
SHR has adopted as its policy the conduct of stable and sound financial operations in order to secure stableearnings over the medium to long term and enhance unitholder value. Specifically, the policy is to form strong
and stable business relationships with leading domestic financial institutions, centering on megabanks,bolstered by the creditworthiness of the sponsor Sekisui House, and also to reduce refinancing risks and risks offluctuations in interest rates by exploring the extension of borrowing periods and working to diversify dates for
repayment, etc., while pursuing the optimum balance between fixed-rate and floating-rate debts.
In addition, with regard to LTV (total assets basis), SHR had the polity to set the figure at around 45% as its

upper limit for the time being but has changed the policy by raising the upper limit target from around 45% toaround 50%, with an intention to securely take property acquisition opportunities by ensuring flexibility in fundprocurement in consideration of the market conditions, while maintaining its policy to keep LTV at aconservative level. As of the end of the fiscal period under review, LTV (total assets basis) stood at 43.3%.
SHR will work to diversify its sources for direct and indirect financing, such as by issuing investment
corporation bonds, in comprehensive consideration of the market environment, SHR’s financial standing andother factors, while continuing its endeavors for stable and sound financial operations.

5.

the urban redevelopment business track record and know-how of Sekisui House, allowing SHR to seek fromSekisui House property acquisition support for external growth (pipeline support). Specifically, such support will(a) grant to SHR preferential negotiation rights with regard to the sale of domestic real estate, etc. owned ordeveloped by Sekisui House, (b) provide SHR with information on real estate, etc. owned or developed in Japanby third parties, (c) provide SHR with warehousing functions, and (d) provide SHR with support for the

Significant Subsequent Events
Not applicable.
(Reference Information)(1) Asset Acquisition
SHR acquired the following property on November 29, 2018.

redevelopment of owned properties.
Furthermore, SHR has concluded agreements concerning preferential negotiating rights (and others) with the
Sekiwa Real Estate companies (7 companies). Thus, particularly with residential properties, SHR will be able toreceive support in acquiring properties for external growth, such as granting of preferential negotiating rights
regarding sale of domestic real estate, etc. owned or developed by the Sekiwa Real Estate companies (7companies).
Sekisui House and Sekiwa Real Estate Group (Note 3) possess (a) property management (“PM”) skills based on
their relationship with tenants, (b) know-how as a real estate developer to maintain/improve real estate value
through large-scale repair, renovation/value enhancement, redevelopment, etc., and (c) know-how on developing
various types of master leasing businesses. SHR and the Asset Management Company can, by concluding a PM

Esty Maison Kokura (Note1)

Type of assets

Real estate trust beneficiary interest

Asset type

Residenceacquisition price

1,040 million yen

acquisition dateNovember 29, 2018

SellerLocation(indication of residential address)
Type of ownership

Undisclosed (Note 2)
4-2-5 Kyomachi, Kokurakita-ku,
Kitakyushu-shi, Fukuoka
Proprietorship(Note 1) The property name of the “Esty Maison Kokura” is “Cosmos Kokura Ekimae” as of December 14, 2018 (the announcement

date of business results), but its property name is scheduled to be changed with the brand name “Esty Maison” after
publicizing the change to the residents for a certain period of time, so the property name after such change has been stated.

(Note 2) The information is not disclosed as no consent to disclosure has been obtained from the seller.

16

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Outline of the Investment Corporation
1.

Status of Capital
Fiscal period

As of the end
As of the end
As of the end
As of the end
As of the endof 4th fiscal
of 5th fiscal
of 6th fiscal
of 7th fiscal
of 8th fiscal
periodperiodperiodperiodperiod(Oct. 31, 2016) (Apr. 30, 2017) (Oct. 31, 2017) (Apr. 30, 2018) (Oct. 31, 2018)

Total number of investment units
authorized (units)

10,000,000

10,000,000

10,000,000

10,000,000

20,000,000

Total number of investment units
issued and outstanding (units)

894,000

894,000

969,000

969,000

3,762,091

Unitholders’ capital (million yen)

100,040

100,040

110,189

110,189

110,189

Number of unitholders (persons)

13,74912,44914,49012,95820,2932.

3. Matters Concerning Directors, etc.
(1) Name of executive director, supervisory directors and independent auditor
The following table sets forth information on the executive director, supervisory directors and independent
auditor of SHR in the fiscal period under review.
Position
Executive
Director

Supervisory
Director

Matters Concerning Investment Units
Of the unitholders as of the end of the fiscal period under review, the following are the top ten unitholders interms of investment unitholding ratio.
Name

Number ofunits owned(units)Percentage of
owned units tototal units issued
and outstanding(%)

Independent
AuditorKey concurrently held position, etc.

Total amount of compensationfor each position during period(thousand yen)

President & Representative Director,
Sekisui House Asset Management, Ltd.

―

Name

Junichi Inoue

Shigeru Nomura

President, Shigeru Nomura Certified Public
Accountant OfficeOutside Director, Eiken Chemical Co., Ltd.
MemberofCorporate
Revitalization
Committee, The Resolution and Collection

1,800

Corporation (RCC)
Tatsushi Omiya

Outside Director, QB Net Holdings Co., Ltd.
Lawyer, LEX Law Office

1,800

Ernst & Young
ShinNihon LLC―

21,115(Note 2)

(Note 1) None of the Executive Director or Supervisory Directors owns SHR investment units in his own name or in the name ofanother person. In addition, Supervisory Directors may be officers of other corporations other than those stated above, but
none of such corporations, including those stated above, has vested interest in SHR.

Japan Trustee Services Bank, Ltd. (Trust Account)

968,015

25.73

The Master Trust Bank of Japan, Ltd. (Trust Account)

600,269

15.96

Sekisui House, Ltd.

194,750

5.18

The Nomura Trust and Banking Co., Ltd. (Investment Trust Account)

153,801

4.09

Trust & Custody Services Bank, Ltd. (Securities Investment Trust
Account)

112,152

2.98

Mitsubishi UFJ Trust and Banking Corporation

50,102

1.33

STATE STREET BANK WEST CLIENT ― TREATY 505234

45,932

1.22

The Hachijuni Bank, Ltd.

39,226

1.04

JP MORGAN CHASE BANK 385771

38,3791.02

Mizuho Securities Co., Ltd.

33,0070.88

Asset Management Company

Sekisui House Asset Management, Ltd.

2,235,633

59.43

Asset Custodian

Mitsubishi UFJ Trust and Banking Corporation

Administrative Agent (Transfer Agent)Mizuho Trust & Banking Co., Ltd.

Administrative Agent (Administrative Agent forOperation of Administrative Instruments)

Mitsubishi UFJ Trust and Banking Corporation

Administrative Agent (Administrative Agent for
Investment Corporation Bonds)

MUFG Bank, Ltd.

Total
(Note)(Note 2) The total amount of compensation for the Independent Auditor, as stated above, is an approximation and includes
compensation for auditing matters related to the Investment Corporation Merger and English financial statements.

(2) Policy for determining whether to dismiss or refuse the reappointment of independent auditor
Dismissal of the independent auditor is subject to consideration at a meeting of the board of directors of SHR inaccordance with the provisions of the Investment Trusts Act. Refusal of reappointment of the independent
auditor is also subject to consideration at a meeting of the board of directors of SHR by taking into account thequality of audits, amount of audit fee and various other circumstances in a comprehensive manner.

4.

Asset Management Company, Asset Custodian and Administrative AgentsThe following table sets forth information on the asset management company, asset custodian andadministrative agents of SHR as of the date of this document.
Entrustment category

Percentage of owned units to total units issued and outstanding is rounded to the nearest second decimal place.

18

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Condition of investment assets
1.

Hirokoji Garden Avenue
Total

Composition of Assets of the Investment Corporation
The following table sets forth the composition of assets of SHR as of the end of the fiscal period under review.
As of the end of 7th fiscal
As of the end of 8th fiscal
periodperiod(Apr. 30, 2018) (Note 1)(Oct. 31, 2018)
As a
Total
As a
Total
Type of
Asset
Geographical area, etc.
percentage
amountpercentage
amountasset
categoryof total
heldof total
heldassets(millionassets(million
(%)
(%)
yen)
yen)
(Note 3)(Note 2)
(Note 3)(Note 2)

Real estatein trust

Greater Tokyo――

182,615

39.9

Other areas――

54,544

11.9

197,376

95.1

196,670

43.0

―

―

―

―

Total of real estate in trust

197,376

95.1

433,830

94.8

Deposits and other assets

10,073

4.9

23,757

5.2

Total amount of assets

207,450100.0

457,588

100.0

Residential
properties
Commercial
properties

Three major
metropolitan areas
Other areas

4,442.75

4,442.75

100.0

1.8

Officebuilding

223,712139,142.38

138,600.39

99.6

44.3

―

(Note 1) “Book value at the end of period” refers to the depreciated book value of each property as of the end of the fiscal period underreview, rounded down to the nearest million yen. The same shall apply hereinafter.
(Note 2)“Leasable area” refers to the floor area presumably available for leasing based on the lease agreement or building drawing, etc.
for each property that is valid as of the end of the fiscal period under review, rounded down to the second decimal place. The

same shall apply hereinafter.
(Note 3) “Leased area” refers to the sum total of the leased area indicated in the respective lease agreements, which are valid as of theend of the fiscal period under review, with the end tenants for each of the properties. For Garden City Shinagawa Gotenyama,
Hommachi Garden City (office building portion) (as defined in (Note 7) below), Hommachi Minami Garden City andHommachi Garden City (hotel portion) (as defined in (Note 7) below), however, the “Leased area” column indicates the leasablearea of each property as fixed-rent type master lease agreements have been concluded with the master lease companies,

regardless of whether lease agreements have been concluded with the end tenants. The same shall apply hereinafter.
(Note 4) “Occupancy ratio” refers to the ratio of leased area to leasable area of each property as of the end of the fiscal period underreview, rounded to the nearest first decimal place. The figure indicated in the “Total” column indicates the ratio of the sum
total of leased area of each property to the sum total of leasable area of each property, rounded to the nearest first decimal

place.
(Note 5) Figures under the heading “As a percentage of total property-related operating revenue” indicate the ratio of property-related

operating revenue of each property for the fiscal period under review to total property-related operating revenue of each
property of SHR’s entire property for the fiscal period under review (including property-related operating revenue ofHamamatsu Plaza), rounded to the nearest first decimal place.
(Note 6) For Garden City Shinagawa Gotenyama, SHR owns real estate trust beneficiary interests for the sectional ownership rights toall of the exclusively-owned portions of the 2nd through 4th and 6th through 9th floors of the building and part of the
exclusively-owned portions of the 5th floor and for the accompanying right of site (ratio of right of site: 3,123,640/3,857,806 (or(Note 1) Figures indicated in “As of the end of 7th fiscal period (Apr. 30, 2018)” are the figures for SHR only before the Investment
Corporation Merger.

approximately 81.0%)).
(Note 7) Hommachi Garden City comprises the portions used as office and retail property (“Honmachi Garden City (Office building(Note 2) “Total amount held” is the carrying amount (or, for real estate in trust, the depreciated book value) as of the end of each fiscal
period, rounded down to the nearest million yen.

portion)”) and the portions used as a hotel (“Honmachi Garden City (Hotel portion).” In this document, the overview and otherinformation regarding the property may be described separately for the Office building portion and the Hotel portion.

(Note 3) Figures under the heading “As a percentage of total assets” have been rounded to the nearest first decimal place.
(Note 4) SHR does not own any overseas real estate, etc. as of the end of the fiscal period under review.

(Note 8) For Hommachi Minami Garden City, SHR owns real estate trust beneficiary interests for the sectional ownership rights to allof the exclusively-owned portions of the 13th through 24th floors of the building and for the accompanying right of site (ratio ofright of site: 1,669,946/2,965,753 (or approximately 56.3%).

2.

Major Portfolio Assets
The following table sets forth an overview of the major portfolio assets (top ten properties by book value at the end of
period) of SHR as of the end of the fiscal period under review.
As a percentage
Book value
LeasedOccupancyof totalat the end
Leasablearea
ratio
property-related
Name ofof period
area
Use
(m2)
(%)
operatingreal estate, etc.
(million(m2)(Note 4)revenue(Note 2)
(Note 3)yen)(%) (Note 5)(Note 1)
Garden City Shinagawa
Office58,667
31,236.34
31,236.34
100.0
10.8
Gotenyama (Note 6)
building
Gotenyama SH Building

50,44319,999.97

19,999.97

100.0

9.0

Officebuilding

Hommachi Garden City
(Office building portion) (Note 7)

37,512

17,006.94

17,006.94

100.0

7.4

Officebuilding

Hommachi Minami Garden City
(Note 8)22,268

16,699.46

16,699.46

100.0

4.8

Officebuilding

Hommachi Garden City
(Hotel portion) (Note 7)

17,14518,092.98

18,092.98

100.0

3.3

Hotel

Esty Maison Ojima

8,583

9,905.97

9,817.01

99.1

2.0 Residence

Esty Maison Kinshicho II

8,205

9,469.65

9,346.02

98.7

1.8 Residence

Prime Maison Shirokanedai
Tower

8,072

6,772.89

6,540.11

96.6

1.9 Residence

Esty Maison Ginza

6,527

5,515.43

5,418.81

98.2

1.4 Residence

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6,286

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3.

Details of Assets (Real Estate, etc.) in the Portfolio
The following table sets forth an overview of the properties held by SHR as of the end of the fiscal period underreview.
Use

Residence

Property
number(Note 1)Name ofreal estate, etc.

Location(Note 2)Type of ownershipBook value
at the end of
period(million yen)

Estimatedvalue at theend of period(million yen)
(Note 3)

R-001

Esty Maison Ginza

Chuo-ku, Tokyo

Real estate trust
beneficiary interests

6,527

6,700

R-002

Esty Maison Azabunagasaka

Minato-ku, Tokyo

Real estate trust
beneficiary interests

1,785

1,840

R-003

Esty Maison Ebisu II

Shibuya-ku, Tokyo

Real estate trust
beneficiary interests

2,036

2,090

R-004

Esty Maison Ebisu

Shibuya-ku, Tokyo

Real estate trust
beneficiary interests

870

896

R-005

Esty Maison Kanda

Chiyoda-ku, Tokyo

Real estate trust
beneficiary interests

1,601

1,650

R-006

Esty Maison Kitashinjuku

Shinjuku-ku, Tokyo

Real estate trust
beneficiary interests

1,580

1,630

R-007

Esty Maison
Asakusakomagata

Taito-ku, Tokyo

Real estate trust
beneficiary interests

2,175

2,240

R-008

Esty Maison Kawasaki

Kawasaki-shi,
Kanagawa

Real estate trust
beneficiary interests

2,376

2,530

R-009

Esty Maison Yokohama

Yokohama-shi,
Kanagawa

Real estate trust
beneficiary interests

2,097

2,110

R-010

Esty Maison Kameido

Koto-ku, Tokyo

Real estate trust
beneficiary interests

1,566

1,590

R-011

Esty Maison Meguro

Meguro-ku, Tokyo

Real estate trust
beneficiary interests

1,097

1,080

1,624

1,660

R-012

Esty Maison Sugamo

Toshima-ku, Tokyo

Real estate trust
beneficiary interests

R-013

Esty Maison Kyobashi

Osaka-shi, Osaka

Real estate trust
beneficiary interests

2,946

3,000

R-014

Esty Maison Hakuraku

Yokohama-shi,
Kanagawa

Real estate trust
beneficiary interests

925

932

R-015

Esty Maison Minamihorie

Osaka-shi, Osaka

Real estate trust
beneficiary interests

1,056

1,070

R-016

Shinagawa-ku,
Esty Maison Gotanda (Note 4)
Tokyo

Real estate trust
beneficiary interests

3,098

3,130

R-017

Esty Maison Oisendaizaka

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

2,705

2,720

R-018

Esty Maison Shinagawa
SeasideShinagawa-ku,
TokyoReal estate trust
beneficiary interests

2,042

2,080

R-019

Esty Maison Minamiazabu

Minato-ku, Tokyo

Real estate trust
beneficiary interests

1,247

1,270

R-020

Esty Maison Tsukamoto

Osaka-shi, Osaka

Real estate trust
beneficiary interests

1,071

1,080

R-021

Esty Maison Kawasaki II

Kawasaki-shi,
Kanagawa

Real estate trust
beneficiary interests

1,895

1,950

R-022

Esty Maison Azabujuban

Minato-ku, Tokyo

Real estate trust
beneficiary interests

2,686

2,750

R-023

Esty Maison Itabashihoncho

Itabashi-ku, Tokyo

Real estate trust
beneficiary interests

930

955

R-024

Esty Maison Oizumigakuen

Nerima-ku, Tokyo

Real estate trust
beneficiary interests

786

805

R-025

Esty Maison
Higashishinagawa

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

2,373

2,330

R-026

Esty Maison
Itabashikuyakushomae

Itabashi-ku, Tokyo

Real estate trust
beneficiary interests

2,526

2,590

R-027

Esty Maison Musashikoyama(Note 5)

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

1,045

1,060

R-028

Esty Maison Sendagi(Note 6)

Bunkyo-ku, Tokyo

Real estate trust
beneficiary interests

695

711

Use

Property
number(Note 1)

Residence22m_0365324553101.indd
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22Name ofreal estate, etc.

Estimatedvalue at theend of period(million yen)
(Note 3)

Location(Note 2)Type of ownershipBook value
at the end of
period(million yen)

Shinjuku-ku,
TokyoReal estate trust
beneficiary interests

2,085

2,140

R-029

Esty Maison
Yotsuyasakamachi(Note 7)

R-030

Esty Maison Hakatahigashi

Fukuoka-shi,
Fukuoka

Real estate trust
beneficiary interests

2,375

2,420

R-031

Esty Maison Kamigofuku

Fukuoka-shi,
Fukuoka

Real estate trust
beneficiary interests

814

816

R-032

Esty Maison Sangenjaya

Setagaya-ku,
TokyoReal estate trust
beneficiary interests

817

830

R-033

Prime Maison
Musashinonomori

Kodaira-shi,
Tokyo

Real estate trust
beneficiary interests

1,839

1,880

R-034

Prime Maison Higashisakura

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

1,488

1,530

R-035

Prime Maison Kayabakoen

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

794

819

R-036

Esty Maison Sangenjaya II

Setagaya-ku,
TokyoReal estate trust
beneficiary interests

781

804

R-037

Esty Maison Itabashi C6

Itabashi-ku,
TokyoReal estate trust
beneficiary interests

2,544

2,560

R-038

MAST Hakata (Note 8)

Fukuoka-shi,
Fukuoka

Real estate trust
beneficiary interests

2,327

2,400

R-039

Esty Maison Kinshicho

Sumida-ku,
TokyoReal estate trust
beneficiary interests

1,251

1,270

R-040

Esty Maison Musashikoganei

Koganei-shi,
Tokyo

Real estate trust
beneficiary interests

1,783

1,870

R-041

Prime Maison Gokiso

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

1,934

1,950

R-042

Prime Maison Yuhigaoka

Osaka-shi, Osaka

Real estate trust
beneficiary interests

903

929

R-043

Prime Maison Kitatanabe

Osaka-shi, Osaka

Real estate trust
beneficiary interests

596

614

R-044

Prime Maison Momochihama

Fukuoka-shi,
Fukuoka

Real estate trust
beneficiary interests

1,931

1,990

R-045

Esty Maison Akihabara

Taito-ku, Tokyo

Real estate trust
beneficiary interests

1,916

1,940

R-046

Esty Maison Sasazuka

Shibuya-ku,
TokyoReal estate trust
beneficiary interests

3,429

3,340

R-047

Prime Maison Ginza East

Chuo-ku, Tokyo

Real estate trust
beneficiary interests

6,219

6,360

R-048

Prime Maison Takami

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

1,042

1,050

809

820

R-049

Prime Maison Yadaminami

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

R-050

Prime Maison Teriha

Fukuoka-shi,
Fukuoka

Real estate trust
beneficiary interests

1,247

1,240

R-051

Esty Maison
Higashishirakabe

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

1,568

1,590

R-052

Esty Maison Sengoku

Bunkyo-ku,
TokyoReal estate trust
beneficiary interests

1,355

1,330

R-053

Esty Maison Daizawa

Setagaya-ku,
TokyoReal estate trust
beneficiary interests

2,262

2,240

R-054

Esty Maison Togoshi

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

1,762

1,770

R-055

Esty Maison Nishitemma

Osaka-shi, Osaka

Real estate trust
beneficiary interests

1,670

1,650

R-056

Esty Maison Shirokanedai

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

2,392

2,400

R-057

Esty Maison Higashishinjuku

Shinjuku-ku,
TokyoReal estate trust
beneficiary interests

1,669

1,720

R-058

Esty Maison Motoazabu

Minato-ku, Tokyo

Real estate trust
beneficiary interests

1,534

1,550

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Use

Property
number(Note 1)Name ofreal estate, etc.

Location(Note 2)

R-059

Esty Maison Toritsudaigaku

Meguro-ku, Tokyo

Real estate trust
beneficiary interests

Estimatedvalue at theend of period(million yen)
(Note 3)

857

851

R-060

Esty Maison Musashikoyama
II

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

1,024

1,030

R-061

Esty Maison Nakano

Nakano-ku, Tokyo

Real estate trust
beneficiary interests

1,861

1,810

R-062

Esty Maison Shinnakano

Nakano-ku, Tokyo

Real estate trust
beneficiary interests

1,014

995

R-063

Esty Maison Nakanofujimicho

Nakano-ku, Tokyo

Real estate trust
beneficiary interests

979

994

R-064

Esty Maison Tetsugakudo

Nakano-ku, Tokyo

Real estate trust
beneficiary interests

1,154

1,140

Esty Maison Koenji

Suginami-ku,
TokyoReal estate trust
beneficiary interests

1,154

Sumida-ku, Tokyo

Real estate trust
beneficiary interests

2,475

R-065
R-066

Residence

Type of ownershipBook value
at the end of
period(million yen)

Esty Maison Oshiage

Yokohama-shi,
Kanagawa

R-092
R-093

Esty Maison Uemachidai

2,440

R-097

R-068

Esty Maison Oji

Kita-ku, Tokyo

Real estate trust
beneficiary interests

1,638

1,620

R-069

Prime Maison Waseda

Shinjuku-ku,
TokyoReal estate trust
beneficiary interests

1,570

1,610

R-070

Prime Maison Hatchobori

Chuo-ku, Tokyo

Real estate trust
beneficiary interests

1,450

1,490

R-071

Prime Maison Jimbocho

Chiyoda-ku,
Tokyo

R-072

Prime Maison Gotenyama
East

Shinagawa-ku,
Tokyo

MAST LIFE Akihabara

Chiyoda-ku,
Tokyo

R-098

Residence

R-099

R-101
R-102

Prime Maison Otsuka

R-103

Prime Maison Asakusabashi

2,902

2,950

Real estate trust
beneficiary interests

552

551

R-105

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

2,444

2,480

R-106

Real estate trust
beneficiary interests

2,418

2,470

Subtotal
O-001

Esty Maison Yakuin

Fukuoka-shi,
Fukuoka

R-076

Esty Maison Kinshicho II

Sumida-ku, Tokyo

Real estate trust
beneficiary interests

8,205

8,420

R-077

Esty Maison Ojima

Koto-ku, Tokyo

Real estate trust
beneficiary interests

8,583

8,790

R-078

Prime Maison Fujimidai

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

2,061

2,060

R-079

Esty Maison Tsurumai

Nagoya-shi, Aichi

Real estate trust
beneficiary interests

4,705

4,490

R-080

Prime Maison Morishita

Koto-ku, Tokyo

Real estate trust
beneficiary interests

1,917

1,970

R-081

Prime Maison Shinagawa

Shinagawa-ku,
TokyoReal estate trust
beneficiary interests

1,950

1,970

R-082

Prime Maison Odorikoen

Sapporo-shi,
Hokkaido

R-083

Prime Maison Minami 2-jo

Sapporo-shi,
Hokkaido

R-084

Prime Maison
Kamokamogawa

Sapporo-shi,
Hokkaido

R-085

Prime Maison Central Park
(Note 9)Fukuoka-shi,
Fukuoka

R-086

MAST LIFE Yahiro

R-087

Prime Maison Ebisu

Real estate trust
beneficiary interests

3,154

3,200

Real estate trust
beneficiary interests

1,913

1,950

Real estate trust
beneficiary interests

1,237

1,280

Real estate trust
beneficiary interests

2,287

2,362

Sumida-ku, Tokyo

Real estate trust
beneficiary interests

1,897

1,910

Shibuya-ku,
TokyoReal estate trust
beneficiary interests

4,346

4,480

Real estate trust
beneficiary interests

1,068

1,060

Kanazawa-shi,Ishikawa

Kobe-shi, Hyogo
Minato-ku,
TokyoShinjuku-ku,
Tokyo
Sumida-ku,
Tokyo
Shinagawa-ku,
TokyoToshima-ku,
Tokyo

Prime Maison Shirokanedai
Tower

1,970

R-104

O-002
O-003
O-004
O-005
O-006
Subtotal
H-001

Shibuya-ku,
TokyoShibuya-ku,
Tokyo
Osaka-shi,
Osaka

Esty Maison Kobe-sannomiya

Esty Maison Morishita

1,948

Kobe-shi, Hyogo

Prime Maison Shirokanetakanawa
Prime Maison
Ichigayayamabushicho

R-100

Real estate trust
beneficiary interests
Real estate trust
beneficiary interests

R-075

Prime Maison Daikanyama

Taito-ku, Tokyo
Meguro-ku,
TokyoShinagawa-ku,
Tokyo

Prime Maison Gotenyama
West
Esty Maison Toyosu Residence
Koto-ku, Tokyo(Note 10) (Note 11)
Garden City Shinagawa
Gotenyama

Shinagawa-ku,
Tokyo
Shinagawa-ku,
Gotenyama SH Building
Tokyo
Hommachi Minami Garden
Osaka-shi,
City
Osaka
Hommachi Garden City (Office Osaka-shi,building portion)
Osaka
HK Yodoyabashi Garden
Osaka-shi,
Avenue (Note 12)
Osaka
Nagoya-shi,
Hirokoji Garden Avenue
Aichi
Hommachi Garden City (Hotel
Osaka-shi, Osaka
portion)Type of ownership
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests

Book value
at the end of
period(million yen)

Estimatedvalue at theend of period(million yen)
(Note 3)

820

830

2,742

2,814

1,378

1,410

4,837

4,880

5,795

5,880

2,423

2,480

2,997

3,070

1,094

1,050

964

971

4,884

5,010

4,204

4,250

651

658

8,072

8,950

3,775

4,090

1,711

1,860

2,560

2,850

3,459

3,850

6,218

6,510

237,160

242,437

58,667

71,40050,44360,10022,26829,90037,51244,700

4,346

5,750

6,286

7,160

-

179,524

219,010

Real estate trust
beneficiary interests

17,14517,700Subtotal--

17,14517,700

Total

-

-

433,830

479,14724

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24Hino-shi, Tokyo

R-096

3,240

Granmast Kanazawa
Nishiizumi

MAST LIFE Hino
Prime Maison Yokohama
Nihon-odori
Kobe Women’s Student
Housing

R-091

1,170

3,266

R-088

R-090

Esty Maison Kohoku
Tsunashima

Yokkaichi-shi,
MieYokohama-shi,
Kanagawa

Prime Maison Hatsudai

Real estate trust
beneficiary interests

Esty Maison Aoi

Granmast Unomori

R-095

Kita-ku, Tokyo

Location(Note 2)

R-089

Prime Maison Shibuya

Esty Maison Akabane

R-074

Name ofreal estate, etc.

R-094

R-067

R-073

Use

Property
number(Note 1)25

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(Note 1) “Property number” is the number assigned by property after classifying the properties held by SHR by use, and the letters R, O, H
and C refer to residence, office building, hotel and commercial property, respectively. The same shall apply hereinafter.

The following table sets forth the status of leasing of real estate, etc. held by SHR.

(Note 2) “Location” is indicated based on the statement in the registry. If there are multiple statements of locations in the registry, either oneof them is indicated.

(Note 3) “Estimated value at the end of period” refers to the value stated in each real estate appraisal report (with the end of April as theappraisal date) for each fiscal period ended April, and the value stated in each real estate appraisal report (with the end of Octoberas the appraisal date) or the survey value stated in each real estate survey value report (with the end of October as the survey date)as a result of value surveys not pursuant to real estate appraisal standards, for each fiscal period ended October.

Use

Property
numberName ofreal estate, etc.

(Note 4) For Esty Maison Gotanda, SHR owns real estate trust beneficiary interests for the sectional ownership rights to part of the
exclusively-owned portions of the building and for the accompanying right of site (ratio of right of site: 387,036/426,933 (orapproximately 90.7%).
(Note 5) For Esty Maison Musashikoyama, SHR owns real estate trust beneficiary interests for the sectional ownership rights to part of the

exclusively-owned portions of the building and for the accompanying right of site (ratio of right of site: 117,678/127,609 (orapproximately 92.2%).

R-001(Note 6) For Esty Maison Sendagi, SHR owns real estate trust beneficiary interests for the sectional ownership rights to part of the
exclusively-owned portions of the building and for the accompanying right of site (ratio of right of site: 89,730/103,842 (or

R-002
R-003

approximately 86.4%).
(Note 7) For Esty Maison Yotsuyasakamachi, SHR owns real estate trust beneficiary interests for the sectional ownership rights to part ofR-004

the exclusively-owned portions of the building and for the accompanying right of site (ratio of right of site: 245,317/329,739 (orapproximately 74.4%).

R-005(Note 8) MAST Hakata is a property on a leased land owned by the Urban Renaissance Agency and for which a general fixed-term leasehold
right is established with a lease term of 50 years from December 1, 2002.

R-006(Note 9) Part of the land of Prime Maison Central Park (lot number: 23-32) is a leased land, while the building (store) on the leased land isowned by the lessee.

R-007(Note 10) The property name of Esty Maison Toyosu Residence was Toyosu Residence when SHR acquired it, but was renamed to the present
one as of October 1, 2018 after the acquisition. The shame shall apply hereinafter.

R-008(Note 11) Esty Maison Toyosu Residence is a property on a leased land owned by the Urban Renaissance Agency and for which a general
fixed-term leasehold right is established with a lease term of 65 years from March 17, 2006.

R-009(Note 12) For HK Yodoyabashi Garden Avenue, SHR owns real estate trust beneficiary interests for the sectional ownership rights to all of the
exclusively-owned portions of the 1st through 6th floors of the building and for the accompanying right of site (ratio of right of site:

R-010
R-011

405,901/1,000,000 (or approximately 40.6%).

R-012
R-013
R-014
Residence

R-015
R-016
R-017
R-018
R-019
R-020
R-021
R-022
R-023
R-024
R-025
R-026
R-027

26

m_0365324553101.indd
011_0365324553101.indd 26-27
26

Esty Maison Ginza
Esty Maison
Azabunagasaka
Esty Maison
Ebisu II
Esty Maison Ebisu
Esty Maison
Kanda
Esty Maison
Kitashinjuku
Esty Maison
Asakusakomagata
Esty Maison
Kawasaki
Esty Maison
Yokohama
Esty Maison
KameidoEsty Maison
MeguroEsty Maison
SugamoEsty Maison
Kyobashi
Esty Maison
Hakuraku
Esty Maison
Minamihorie
Esty Maison
GotandaEsty Maison
Oisendaizaka
Esty Maison
ShinagawaSeasideEsty Maison
Minamiazabu
Esty Maison
Tsukamoto
Esty Maison
Kawasaki II
Esty Maison
Azabujuban
Esty Maison
Itabashihoncho
Esty Maison
Oizumigakuen
Esty Maison
Higashishinagawa
Esty Maison
Itabashikuyakush
omae
Esty Maison
Musashikoyama

7th fiscal period (Note 1)
8th fiscal period
From: Nov. 1, 2017
From: May 1, 2018
To: Apr. 30, 2018
To: Oct. 31, 2018
PropertyPropertyAs a
Total
Total
relatedrelatedpercentage
Occupancy
number Occupancy
number ofoperatingoperatingof total
ratio
ratio
of
revenuerevenuetenants
property[at the end
tenants [at the end[during[during[at therelatedof fiscalof fiscal[at thefiscalfiscalend ofoperatingperiod]period]end ofperiod]period]fiscalrevenue(%)(%)
fiscal(million(million
period](%)(Note 3)(Note 3)
period]yen)
yen)(Note 2)
(Note 5)(Note 2)
(Note 4)(Note 4)As apercentage
of total
propertyrelated
operatingrevenue(%)(Note 5)

―

―

―

―

1

98.2

175

1.4

―

―

―

―

1

90.0

51

0.4

―

―

―

―

1

97.8

58

0.5

―

―

―

―

1

100.0

24

0.2

―

―

―

―

1

97.4

45

0.4

―

―

―

―

1

96.9

47

0.4

―

―

―

―

1

99.2

64

0.5

―

―

―

―

1

98.7

77

0.6

―

―

―

―

1

100.0

65

0.5

―

―

―

―

1

97.9

53

0.4

―

―

―

―

1

95.0

31

0.3

―

―

―

―

1

100.0

50

0.4

―

―

―

―

1

97.6

89

0.7

―

―

―

―

1

98.2

30

0.3

―

―

―

―

1

95.4

33

0.3

―

―

―

―

1

96.4

94

0.8

―

―

―

―

1

98.4

79

0.7

―

―

―

―

1

93.3

65

0.5

―

―

―

―

1

98.1

32

0.3

―

―

―

―

1

95.8

38

0.3

―

―

―

―

1

100.0

63

0.5

―

―

―

―

1

94.0

67

0.6

―

―

―

―

1

96.9

28

0.2

―

―

―

―

1

98.3

25

0.2

―

―

―

―

1

97.2

69

0.6

―

―

―

―

1

92.0

78

0.6

―

―

―

―

1

95.6

31

0.3

27

2019/01/28

16:56:41

011_0365324553101.indd

27

2019/01/28

17:11:20
16:56:41

Use

Property
number

R-028
R-029
R-030
R-031
R-032
R-033
R-034
R-035
R-036
R-037
R-038
R-039
R-040
R-041
Residence

R-042
R-043
R-044
R-045
R-046
R-047
R-048
R-049
R-050
R-051
R-052
R-053
R-054
R-055
R-056

Name ofreal estate, etc.

Esty Maison
Sendagi
Esty Maison
Yotsuyasakamachi
Esty Maison
Hakatahigashi
Esty Maison
Kamigofuku
Esty Maison
Sangenjaya
Prime Maison
Musashinonomori
Prime Maison
Higashisakura
Prime Maison
Kayabakoen
Esty Maison
Sangenjaya II
Esty Maison
Itabashi C6
MAST Hakata
Esty Maison
Kinshicho
Esty Maison
Musashikoganei
Prime Maison
GokisoPrime Maison
Yuhigaoka
Prime Maison
Kitatanabe
Prime Maison
Momochihama
Esty Maison
Akihabara
Esty Maison
SasazukaPrime Maison
Ginza East
Prime Maison
TakamiPrime Maison
Yadaminami
Prime Maison
TerihaEsty Maison
Higashishirakabe
Esty Maison
Sengoku
Esty Maison
Daizawa
Esty Maison
Togoshi
Esty Maison
Nishitemma
Esty Maison
Shirokanedai

7th fiscal period (Note 1)
8th fiscal period
From: Nov. 1, 2017
From: May 1, 2018
To: Apr. 30, 2018
To: Oct. 31, 2018
PropertyPropertyAs a
Total
related
Total
Occupancy related
Occupancy
percentag
numberoperatingnumberoperating
ratio
ratio
e of totalofrevenueof tenants
revenue[at the[at the end
propertytenants[during[at the[duringend ofof fiscal
related[at thefiscalend offiscalfiscalperiod]operatingend ofperiod]fiscalperiod]period](%)
revenuefiscal(million
period](million(%)(Note 3)(%)
period]yen)(Note 2)yen)
(Note 3)(Note 5)(Note 2)
(Note 4)(Note 4)As apercentage
of total
propertyrelated
operatingrevenue(%)(Note 5)Use

Property
Number

―

―

―

―

1

100.0

22

0.2

R-057

―

―

―

―

1

98.2

58

0.5

R-058

―

―

―

―

1

100.0

86

0.7

R-059

―

―

―

―

1

95.7

28

0.2

R-060

―

―

―

―

1

97.2

23

0.2

R-061

―

―

―

―

1

95.9

62

0.5

R-062

―

―

―

―

1

100.0

52

0.4

R-063

―

―

―

―

1

100.0

29

0.2

R-064

―

―

―

―

1

97.0

23

0.2

R-065

―

―

―

―

1

96.2

78

0.6

R-066

―

―

―

―

1

100.0

94

0.8

R-067

―

―

―

―

1

100.0

36

0.3

R-068

―

―

―

―

1

98.0

54

0.4

―

―

―

―

1

96.6

64

0.5

―

―

―

―

1

95.9

30

0.2

―

―

―

―

1

95.5

23

0.2

―

―

―

―

1

100.0

69

0.6

―

―

―

―

1

96.2

56

0.5

―

―

―

―

1

97.6

88

0.7

―

―

―

―

1

98.6

175

1.4

―

―

―

―

1

97.2

35

0.3

―

―

―

―

1

96.1

27

0.2

―

―

―

―

1

100.0

51

0.4

―

―

―

―

1

100.0

46

0.4

―

―

―

―

1

95.7

36

0.3

―

―

―

―

1

100.0

60

0.5

―

―

―

―

1

98.8

49

0.4

―

―

―

―

1

96.1

56

0.5

―

―

―

―

1

96.2

64

0.5

R-069
R-070
Residence

R-071
R-072
R-073
R-074
R-075
R-076
R-077
R-078
R-079
R-080
R-081
R-082
R-083
R-084
R-085
R-086

28

m_0365324553101.indd
011_0365324553101.indd 28-29
28Name ofreal estate, etc.

Esty Maison
Higashishinjuku
Esty Maison
Motoazabu
Esty Maison
Toritsudaigaku
Esty Maison
Musashikoyama II
Esty Maison
NakanoEsty Maison
Shinnakano
Esty Maison
Nakanofujimicho
Esty Maison
Tetsugakudo
Esty Maison
KoenjiEsty Maison
Oshiage
Esty Maison
AkabaneEsty Maison Oji
Prime Maison
WasedaPrime Maison
Hatchobori
Prime Maison
JimbochoPrime Maison
Gotenyama East
MAST LIFE
Akihabara
Esty Maison Aoi
Esty Maison
YakuinEsty Maison
Kinshicho II
Esty Maison
Ojima
Prime Maison
Fujimidai
Esty Maison
TsurumaiPrime Maison
Morishita
Prime Maison
ShinagawaPrime Maison
Odorikoen
Prime Maison
Minami 2-joPrime Maison
Kamokamogawa
Prime Maison
Central Park
MAST LIFE
Yahiro8th fiscal period
7th fiscal period (Note 1)
From: May 1, 2018
From: Nov. 1, 2017
To: Oct. 31, 2018
To: Apr. 30, 2018
PropertyPropertyAs a
Total
As a
Total
relatedrelatedpercentage
percentage number Occupancy
number Occupancy
operatingoperatingof total
ratio
ofof total
ratio
ofrevenuerevenue
propertyproperty- tenants [at the end
tenants [at the end[during[during
relatedof fiscal[at therelatedof fiscal[at thefiscalfiscaloperatingperiod]operating end of
period]end ofperiod]period]revenue(%)
fiscalrevenue(%)
fiscal(million(million(%)(Note 3)
period](%)
period] (Note 3)
yen)
yen)
(Note 5)(Note 5) (Note 2)(Note 2)
(Note 4)(Note 4)
―

―

―

―

1

100.0

46

0.4

―

―

―

―

1

85.2

36

0.3

―

―

―

―

1

100.0

22

0.2

―

―

―

―

1

97.8

29

0.2

―

―

―

―

1

98.4

52

0.4

―

―

―

―

1

98.0

28

0.2

―

―

―

―

1

97.7

30

0.2

―

―

―

―

1

95.4

33

0.3

―

―

―

―

1

100.0

33

0.3

―

―

―

―

1

97.7

72

0.6

―

―

―

―

1

97.6

96

0.8

―

―

―

―

1

98.9

48

0.4

―

―

―

―

1

93.0

41

0.3

―

―

―

―

1

96.2

37

0.3

―

―

―

―

1

100.0

51

0.4

―

―

―

―

1

100.0

84

0.7

―

―

―

―

1

100.0

15

0.1

―

―

―

―

1

92.3

71

0.6

―

―

―

―

1

96.1

75

0.6

―

―

―

―

1

98.7

219

1.8

―

―

―

―

1

99.1

242

2.0

―

―

―

―

1

92.2

67

0.6

―

―

―

―

1

100.0

155

1.3

―

―

―

―

1

98.8

57

0.5

―

―

―

―

1

100.0

57

0.5

―

―

―

―

1

96.5

115

0.9

―

―

―

―

1

99.3

70

0.6

―

―

―

―

1

98.1

47

0.4

―

―

―

―

1

98.7

88

0.7

―

―

―

―

1

100.0

56

0.5

29

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29

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17:11:20
16:56:42

7th fiscal period (Note 1)
From: Nov. 1, 2017
To: Apr. 30, 2018
PropertyAs a
Total
relatedpercentage
number Occupancy
operating
Property
Name ofof total
ratio
of
Use
revenuenumber real estate, etc. tenants [at the end
property[during
relatedof fiscal[at thefiscaloperatingperiod]end ofperiod]revenue(%)
fiscal(million(%)
period] (Note 3)yen)(Note 5)(Note 2)
(Note 4)
Prime Maison
R-087
―
―
―
―
Ebisu
Granmast
R-088 Kanazawa――――
Nishiizumi
Granmast
R-089
―
―
―
―
Unomori
Esty Maison
R-090 Kohoku――――
Tsunashima
MAST LIFE
R-091
―
―
―
―
Hino
Prime Maison
R-092 Yokohama――――
Nihon-Odori
Kobe Women’s
R-093 Student――――
Housing
Prime Maison
R-094
―
―
―
―
ShibuyaPrime Maison
R-095
―
―
―
―
Hatsudai
Esty Maison
R-096
―
―
―
―
Uemachidai
Esty Maison
R-097 Kobe――――
Residence
Sannomiya
Prime Maison
R-098 Shirokane――――
Takanawa
Prime Maison
R-099 Ichigayayamabu――――
shichoEsty Maison
R-100
―
―
―
―
Morishita
Prime Maison
R-101 Shirokanedai
―
―
―
―
Tower
Prime Maison
R-102
―
―
―
―
OtsukaPrime Maison
R-103
―
―
―
―
Asakusabashi
Prime Maison
R-104
―
―
―
―
Daikanyama
Prime Maison
R-105 Gotenyama
―
―
―
―
West
Esty Maison
R-106 Toyosu――――
Residence
Subtotal

―

―

―

―

8th fiscal period
From: May 1, 2018
To: Oct. 31, 2018
PropertyTotal
relatednumber Occupancy
operatingratio
ofrevenuetenants [at the end[duringof fiscal[at thefiscalperiod]end ofperiod](%)
fiscal(million(Note 3)
period]yen)(Note 2)
(Note 4)As apercentage
of total
propertyrelated
operatingrevenue(%)(Note 5)

1

98.2

113

0.9

1

100.0

41

0.3

1

100.0

26

0.2

1

100.0

82

0.7

1

99.0

48

0.4

1

93.6

136

1.1

1

100.0

222

1.8

1

96.6

64

0.5

1

98.2

75

0.6

1

100.0

32

0.3

1

98.2

30

0.3

1

97.5

120

1.0

1

95.4

109

0.9

1

100.0

18

0.2

1

96.6

232

1.9

1

94.9

105

0.9

1

100.0

51

0.4

1

91.8

68

0.6

1

95.9

109

0.9

1

98.4

463

3.8

12

97.9

7,399

60.8

8th fiscal period
7th fiscal period (Note 1)
From: May 1, 2018
From: Nov. 1, 2017
To: Oct. 31, 2018
To: Apr. 30, 2018
PropertyPropertyAs a
Total
As a
Total
relatedrelatedpercentage
percentage number Occupancy
number Occupancy
operatingoperating
Property
Name ofof total
ratio
ofof total
ratio
ofrevenuerevenuenumber real estate, etc. tenants [at the end
propertyproperty- tenants [at the end[during[during
relatedof fiscal[at therelatedof fiscal[at thefiscalfiscaloperatingperiod]operating end of
period]end ofperiod]period]revenue(%)
fiscalrevenue(%)
fiscal(million(million(%)(Note 3)
period](%)
period] (Note 3)
yen)
yen)
(Note 5)(Note 5) (Note 2)(Note 2)
(Note 4)(Note 4)
Garden City
O-001 Shinagawa
1
100.0
1,318
28.3
1
100.0
1,318
10.8
Gotenyama
Gotenyama SH
O-002
1
100.0
1,088
23.4
1
100.0
1,089
9.0
Building
HommachiO-003 Minami Garden
1
100.0
586
12.6
1
100.0
586
4.8
City
Hommachi
Garden City
1
100.0
903
19.4
1
100.0
903
7.4
O-004
(Office building
portion)HK
O-005 Yodoyabashi
1
100.0
149
3.2
1
100.0
152
1.3
Garden Avenue
Hirokoji Garden
O-006
1
100.0
205
4.4
1
100.0
213
1.8
AvenueUse

Officebuilding

Subtotal

2

100.0

4,253

91.4

2

100.0

4,264

35.0

1

100.0

402

8.6

1

100.0

402

3.3

1

100.0

402

8.6

1

100.0

402

3.3

―

―

―

―

―

―

100

0.8

Subtotal

―

―

―

―

―

―

100

0.8

Total

2

100.0

4,655

100.0

14

98.4

12,166

100.0

H-001

Hotel

Hommachi
Garden City
(Hotel portion)

Subtotal
C-001

Commercial
properties

Hamamatsu
Plaza(Note 6)(Note 1) Figures indicated in the “7th fiscal period From: Nov. 1, 2017 To: Apr. 30, 2018” column are only for the properties SHR owned
since before the Investment Corporation Merger.

(Note 2) “Total number of tenants” refers to the sum total of the number of tenants under, and indicated in, the respective leaseagreements for each property that are valid as of the end of each fiscal period (or, if a master lease agreement that is valid asof the end of each fiscal period has been concluded for the property, the number of lessees under the master lease agreement).
In the “Subtotal” and “Total” columns, however, a tenant that leases spaces in multiple properties is counted as one.

Furthermore, of the office buildings, the total number of end tenants for HK Yodoyabashi Garden Avenue and Hirokoji Garden
Avenue where pass-through type master lease agreements have been concluded is 7 and 8, respectively, both as of the end of
the 7th fiscal period (from Nov. 1, 2017 to Apr. 30, 2018) and as of the end of the 8th fiscal period (from May 1, 2018 to Oct. 31,2018).

(Note 3) “Occupancy ratio” refers to the ratio of leased area to leasable area of each property as of the end of each fiscal period, rounded
to the nearest first decimal place. The figures indicated in the “Subtotal” columns are the ratio of the subtotal of leased area of

each property classified by use to the subtotal of leasable area of each property classified by use, and the figure indicated in
the “Total” column is the ratio of the sum total of leased area of each property to the sum total of leasable area of each property,

as the occupancy ratio of the entire portfolio. The both figures have been rounded to the nearest first decimal place.
(Note 4) “Property-related operating revenue [during fiscal period]” indicates the property-related operating revenue of each property
for each fiscal period, rounded down to the nearest million yen.
(Note 5) Figures under the heading “As a percentage of total property-related operating revenue” indicate the ratio of property-related

operating revenue of each property for each fiscal period or the subtotal of property-related operating revenue of each property
classified by use for each fiscal period to total property-related operating revenue of each property for each fiscal period,

rounded to the nearest first decimal place.
(Note 6) SHR sold Hamamatsu Plaza on October 29, 2018. Accordingly, “Property-related operating revenue [during fiscal period]” and“As a percentage of total property-related operating revenue” for the property in the above table indicate the figures for theduration SHR owned it during the fiscal period under review.

30

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30

31

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4.

Capital expenditures for property

Details of Renewable Energy Power Generation Facility, etc.
Not applicable.

1.
5.

Details of Right to Operate Public Facility, etc.
Not applicable.

Name of real estate, etc.
(location)

6. Details of Investment Securities
Not applicable.

7.

Esty Maison Yakuin(Hirao, Chuo-ku, Fukuoka-shi,
Fukuoka)
Esty Maison Kawasaki(Ogawa-cho, Kawasaki-ku,
Kawasaki-shi, Kanagawa)
Esty Maison Higashishirakabe(Yoshino, Higashi-ku, Nagoya-shi,
Aichi）
Esty Maison Shinagawa Seaside(Higashishinagawa, Shinagawaku, Tokyo)
Esty Maison Kawasaki II(Ogawa-cho, Kawasaki-ku,
Kawasaki-shi, Kanagawa)

Table of Status of Contract Amount, etc. and Fair Value of Specified Transactions
The following table sets forth the status of contract amount, etc. and fair value of specified transactions at SHR
as of the end of the fiscal period under review.
Category

Type

Transaction other thanmarket transaction

Interest rate swap transaction(Under which floating interest
rates are receivable and fixedTransaction other thanmarket transaction

Interest rate swap transaction(Under which floating interest
rates are receivable and fixedContract amount, etc.
Fair value(thousand yen) (Note 1)(thousand yen)Amount(Note 2)due after 1 year
63,954,500

55,572,500

interest rates are payable)‐526,965

66,550,000

66,550,000(Note 3)

130,504,500

122,122,500‐526,965(Note)

2.

Large-scale repairs
Large-scale repairs
Large-scale repairs
Large-scale repairs
Large-scale repairs

From: February 2019
To: October 2019
From: August 2018
To: March 2019
From: February 2019
To: June 2019
From: April 2019
To: October 2019
From: June 2018
To: November 2018

217

-

-

155

-

-

118

-

-

108

-

-

98

39

-

”Scheduled amount” refers to the amount arrived at by multiplying (i) the full amount required for the work by (ii) the ratio of
SHR’s ownership in the real estate trust beneficiary interest, when SHR owns real estate trust beneficiary interests for the

Capital Expenditures During Period
An overview of capital expenditures conducted by SHR for its properties during the fiscal period under review is
as set forth in the following table. Total capital expenditures during the fiscal period under review was 572

Name of real estate, etc. (location)(Note 3) The fair value is omitted because the transaction meets the criteria for special accounting under the Accounting Standards for
Financial Instruments.

9.

Scheduled period

million yen and, together with 238 million yen of repair expenses charged to expenses in the fiscal period underreview, work amounting to 810 million yen was implemented.

(Note 1) The contract amount, etc. of interest rate swap transactions is based on notional principal amounts.
(Note 2) The fair value was calculated by the counterparty of the relevant transaction based on the actual market interest rate, etc.

8.

PurposeScheduled amount (million yen) (Note)
Payment for
Total
the fiscal
Amountamount period underalready paid
reviewsectional ownership rights to the property that is subject to the relevant work.

interest rates are payable)
Total

Schedule of Capital Expenditures
The main capital expenditure amounts accompanying renovation work, etc. currently planned for properties
held by SHR, is as follows. However, a portion of such amounts may ultimately be classified as expenses in thecourse of the accounting process.

Esty Maison Tsurumai(Chiyoda, Naka-ku, Nagoya-shi,
Aichi)
Esty Maison Sasazuka(Sasazuka, Shibuya-ku, Tokyo)
Esty Maison Uemachidai(Uehonmachi-nishi, Chuo-ku,
Osaka-shi, Osaka)
Esty Maison Meguro(Mita, Meguro-ku, Tokyo)
Prime Maison Odorikoen(Odori-nishi, Chuo-ku, Sapporo-shi,
Hokkaido)

Status of Other Assets
Trust beneficiary interests with real estate as the main assets in trust are stated in “3. Details of Assets (Real
Estate, etc.) in the Portfolio” above. As of the end of the fiscal period under review, there are no specified assets
other than real estate, etc., asset-backed securities, etc. and infrastructure assets, etc. in the portfolio.

Status of Holding of Assets by Country and Region
As of the end of the fiscal period under review, there are no portfolio real estate, etc. in any other country or
region besides Japan.

3.

PurposeLarge-scale repair
Large-scale repair
Large-scale repair
Large-scale repair
Repair of mechanical parking facilities

PeriodFrom: October 2017

Payment amount(million yen)

To: September 2018
From: December 2017
To: June 2018
From: June 2018
To: September 2018
From: June 2018
To: October 2018
From: August 2018
To: October 2018

Other capital expenditures
Total

239
98
58
41
14
119
572

Cash Reserves for Long-Term Repair Plans
SHR had no cash reserved for long-term repair plans as of the end of the fiscal period under review (Note).

(Note) “Reserve fund for repair,” which has been reserved by management associations at the properties owned by SHR in order tosecure expenses for repair works expected in the future, is not included in the cash reserves.

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Condition of expenses and debts

Condition of investment transactions

Details of Expenses Pertaining to Management, etc.

Item

7th fiscal period
From: Nov. 1, 2017
To: Apr. 30, 2018

Asset management fee (Note 1)

517,151

Asset custody fee

3,786

8,486

Administrative service fees

12,732

49,959Directors’ compensations

3,600

3,600

Other expenses (Note2)

47,5481,221,937

438,101

1,801,135

Status, etc. of Sale and Purchase of Real Estate, etc., Asset-Backed Securities, etc., Infrastructure Assets, etc.
and Infrastructure-Related Assets

Acquisition
Disposition
Disposition
Gain (Loss) on
Acquisition
Name of real estate, etc.
sale
price
price
Book value
Acquisition date
Disposition date(million yen)(million yen) (million yen) (million yen)
(Note 3)(Note 1)
(Note 1)
Prime Maison Shirokanedai Tower
May 1, 2018
7,950
―
―
―
―
Prime Maison Otsuka
May 1, 2018
3,700
―
―
―
―
Prime Maison Asakusabashi
May 1, 2018
1,680
―
―
―
―
Prime Maison Daikanyama
May 1, 2018
2,520
―
―
―
―
Prime Maison Gotenyama WestMay 1, 2018
3,400
―
―
―
―
Esty Maison Toyosu Residence
May 1, 2018
6,050
―
―
―
―
Esty Maison Machida――
May 1, 2018
Esty Maison Shinkawasaki――
May 1, 2018―
May 1, 2018
Esty Maison Megurohoncho――
May 1, 2018
Esty Maison Joto―
Esty Maison Tenjinhigashi I――
May 1, 2018
16,302―
May 1, 2018
Esty Maison Tenjinhigashi II―
16,400―（Note 2)
(Note 2)Esty Maison Shijonishinotoin――
May 1, 2018―
May 1, 2018
Esty Maison Hachiojiminamino――
May 1, 2018
Esty Maison Nishinakajima―
Esty Maison Kawaramachi――
May 1, 2018―
May 1, 2018
Esty Maison Shibaura―
Esty Maison Tsutsujigaoka――
May 1, 2018
― October 29, 2018
2,799
2,727
8
Hamamatsu Plaza (Note 4)
―
Total
―
25,300―19,19919,0298

8th fiscal period
From: May 1, 2018
To: Oct. 31, 2018
370,434

Total

1.

(Unit: thousand yen)

(Note 1) In addition to the amounts shown above, the asset management fees contain 925,022 thousand yen as merger fees, which areincluded in Other expenses, and 57,599 thousand yen as management fees for property disposition, recorded as otherdisposition-related expenses, for the 8th fiscal period.
(Note 2) Other expenses include 941,174 thousand yen as merger-related expenses, including the merger fee, for the 8th fiscal period.

(Note 1) “Acquisition price” and “Disposition price” indicate the transaction prices shown in the sales agreements for respective owned
properties (excluding consumption tax, local consumption tax and miscellaneous expenses including transaction fees), rounded
down to the nearest million yen. The same shall apply hereinafter.
(Note 2) Individual disposition prices are not disclosed as no consent to disclosure has been obtained from the purchasers. The same shallapply hereinafter. In accordance with this, individual book values are not disclosed, either. The same shall apply hereinafter.
(Note 3) “Gain (Loss) on sale” indicates the figure calculated by deducting book value and disposition fees from the disposition price.
(Note 4) Hamamatsu Plaza is a retail complex comprised of the Hamamatsu Plaza West area and Hamamatsu Plaza East area. As of thedisposition date, the Hamamatsu Plaza East area had the Costco Hamamatsu Warehouse Building, the Xebio Building, Akachan
Honpo Building, Hamapla & Frespo Building, a management building and a gas station for Costco members, while the Hamamatsu
Plaza West area had the mont-bell Building, ABC-mart Building, UNIQLO-GU Building and Hamamatsu Plaza Sports Building(Zexis). Of these, SHR succeeded only 49% quasi-co-ownership interest in the real estate trust beneficiary interest of the part ofHamamatsu Plaza East Area other than Costco Hamamatsu Warehouse Building and its site, Hamapla & Frespo Building andfacilities of the gas station for Costco members from SHI through the Investment Corporation Merger. The same shall apply
hereinafter.

2.

Status, etc. in respect of Sale and Purchase of Other Assets
Not applicable.
Main assets other than the abovementioned real estate, etc., asset-backed securities, etc., infrastructure assets,etc. and infrastructure-related assets are essentially bank deposits or bank deposits within assets in trust.

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3. Investigation into Value, etc. of Specified Assets(1) Real Estate, etc. (Appraisal)
Acquisitionordisposition

Acquisition

Disposition

Name of realestate, etc.

Acquisition
price orAppraisal
disposition
value
price
(million yen)(million(Note)
yen)

Transaction
dateType of asset

Prime Maison
Shirokanedai
Tower

May 1,
2018

Real estate trust
beneficiary interests

7,950

8,570

Prime Maison
OtsukaMay 1,
2018

Real estate trust
beneficiary interests

3,700

3,970

Prime Maison
Asakusabashi

May 1,
2018

Real estate trust
beneficiary interests

1,680

1,800

Prime Maison
Daikanyama

May 1,
2018

Real estate trust
beneficiary interests

2,520

2,730

Prime Maison
Gotenyama WestMay 1,
2018

Real estate trust
beneficiary interests

3,400

3,680

Esty Maison
Toyosu Residence

May 1,
2018

Real estate trust
beneficiary interests

Esty Maison
MachidaMay 1,
2018

Real estate trust
beneficiary interests

1,570

Esty Maison
Shinkawasaki

May 1,
2018

Real estate trust
beneficiary interests

1,250

Esty Maison
Megurohoncho

May 1,
2018

Real estate trust
beneficiary interests

1,130

Esty Maison Joto

May 1,
2018

Real estate trust
beneficiary interests

951

Esty Maison
Tenjinhigashi I

May 1,
2018

Real estate trust
beneficiary interests

Esty Maison
Tenjinhigashi II

May 1,
2018

Real estate trust
beneficiary interests

Esty Maison
Shijonishinotoin
Esty Maison
Hachiojiminamino
Esty Maison
Nishinakajima

May 1,
2018
May 1,
2018
May 1,
2018

Real estate trust
beneficiary interests
Real estate trust
beneficiary interests
Real estate trust
beneficiary interests

Esty Maison
Kawaramachi

May 1,
2018

Real estate trust
beneficiary interests

1,980

Esty Maison
Shibaura

May 1,
2018

Real estate trust
beneficiary interests

2,960

Esty Maison
Tsutsujigaoka
Hamamatsu Plaza

May 1,
2018

6,050

364

16,400

738

1,180
873
1,900

Real estate trust
beneficiary interests

October 29,
Real estate trust
2018
beneficiary interests

6,460

918
2,799

2,729

(2) Others
Concerning transactions requiring investigations into the value, etc. of specified assets pursuant to Article 201,
Paragraph 2 of the Investment Trusts Act, Akasaka Audit LLC has conducted the investigations pursuant toAppraiser

The Tanizawa
Sōgō Appraisal
Co., Ltd.
The Tanizawa
Sōgō Appraisal
Co., Ltd.
The Tanizawa
Sōgō Appraisal
Co., Ltd.
The Tanizawa
Sōgō Appraisal
Co., Ltd.
The Tanizawa
Sōgō Appraisal
Co., Ltd.
The Tanizawa
Sōgō Appraisal
Co., Ltd.
The Tanizawa
Sōgō Appraisal
Co., Ltd.
JLL Morii
Valuation &Advisory K.K.
DAIWA REALESTATEAPPRAISAL CO.,LTD.
Japan Real
Estate Institute
DAIWA REALESTATEAPPRAISAL CO.,LTD.
DAIWA REALESTATEAPPRAISAL CO.,LTD.
Japan Real
Estate Institute
Richi Appraisal
InstituteJapan Real
Estate Institute
The Tanizawa
Sōgō Appraisal
Co., Ltd.
Chuo Real EstateAppraisal
Co., Ltd.
The Tanizawa
Sōgō Appraisal
Co., Ltd.
Richi Appraisal
Institute

Practical Guidelines for Specialized Operations 4460 “Practical Guidelines for Agreed-Upon Procedures
Pertaining to Investigation into the Value, etc. of Specified Assets of Investment Trusts and Investment
Corporations” published by The Japanese Institute of Certified Public Accountants, and SHR has been notifiedof the results of the investigations.

Date ofappraisal

The transactions subject to investigations in the fiscal period under review were two interest rate swap
transactions. For the transactions, investigations into the name of the counterparty to the transaction, the typeof financial instrument or financial indicator involved, the transaction period, other matters concerning thecontent of the over-the-counter transaction of derivatives, etc. have been entrusted.

April 1,2018
April 1,2018

4. Status of Transactions with Interested Persons, etc. (Note 1)(1) Status of Transactions
Amount of purchase and sale, etc.
Category
Amount of purchase, etc.
Amount of sale, etc.

April 1,2018
April 1,
2018

Total amount

April 1,
2018

Sekisui House, Ltd.

April 1,
2018

19,199 million yen

25,300 million yen [100.0%]― million yen [―%]

(2) Amount of Commission Fee, etc.

April 30,
2018

Category

April 30,2018

Total amount Breakdown of transactions with interested persons, etc.
of commission
Amount paidfee, etc. (A)
Payee
(B)
(thousand yen)(thousand yen)

April 30,
2018
April 30,
2018Management fee(Note 2)

764,450

April 30,
2018

April 30,2018

As a percentage of
total amount (B/A)(%)

Sekiwa Real Estate, Ltd.

395,486

51.7

Sekiwa Real Estate
Chubu, Ltd.

56,980

7.5

Sekiwa Kanri Kansai Co.,Ltd.

40,525

5.3

Sekisui House, Ltd.

26,400

3.5

Sekiwa Real Estate
Kyushu, Ltd.

17,887

2.3

Sekiwa Real Estate
Kansai, Ltd.

6,195

0.8

(Note 1) “Interested persons, etc.” refers to interested persons, etc. of the Asset Management Company with which SHR has executed an
asset management agreement as provided in Article 123 of the Order for Enforcement of the Act on Investment Trusts andApril 30,
2018
April 30,
2018
April 30,
2018

Investment Corporations (Order for Enforcement No. 480 of 2000, as amended) and Article 26, Item 27 of the Rules on Investment
Reports, etc. of Investment Trusts and Investment Corporations of The Investment Trusts Association, Japan.
(Note 2) “Management fee” has been rounded down to the nearest thousand yen.
(Note 3) Other than the commission fee, etc. indicated above, the amounts paid to interested persons, etc. for repair works, etc. are as
follows. The figures have been rounded down to the nearest thousand yen.
Sekiwa Real Estate, Ltd.

April 30,
2018
April 30,
2018
April 30,2018

119,791 thousand yen

Sekiwa Real Estate Chubu, Ltd.

45,740 thousand yen

Sekisui House, Ltd.

42,120 thousand yen

Sekiwa Kensetu Nishi Tokyo Co., Ltd.

41,850 thousand yen

Sekiwa Kanri Kansai Co., Ltd.

18,668 thousand yen

Sekiwa Real Estate Kyushu, Ltd.

18,354 thousand yen

Sekiwa Real Estate Kansai, Ltd.

4,680 thousand yen

April 30,201836

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3625,300 million yen

Breakdown of status of transactions with interested persons, etc.

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5.

Status, etc. of Transactions with the Asset Management Company Pertaining to Business Operations ofConcurrent Business Engaged in by the Asset Management Company
There are no applicable transactions because as of the end of the fiscal period under review, the Asset

Financial
Financial Section
Section (Audited)(Audited)Management Company does not concurrently engage in any type I financial instruments or type II financial
instruments business (as defined in the Financial Instruments and Exchange Act (Act No. 25 of 1948, including
subsequent amendments)), building lots and buildings transaction business, or specified joint real estate
ventures.

Contents
Contents
Financial Statements
Balance Sheet

40

Statement of Income and Retained Earnings

42

Statement of Changes in Net Assets

43

Statement of Cash Distributions

44

Statement of Cash Flows45

Notes to Financial Statements

46

Supplementary Schedules

62

Independent Auditor’s Report73

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38

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1. Financial Statements(1) Balance Sheet

AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets
Leasehold rights in trust
Other
Total intangible assets
Investments and other assets
Lease and guarantee deposits
Long-term prepaid expenses
Deferred tax assets
Other
Total investments and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance costs
Investment unit issuance costs
Total deferred assets
Total assets(Thousands of yen)(Thousands of yen)

7th Fiscal Period
8th Fiscal Period(As of April 30, 2018) (As of October 31, 2018)

2,607,767
7,005,235
18,804
96,381
133－
9,728,322

9,230,651
12,859,502
145,522
154,213
5,114(499)
22,394,506

59,654,248(4,121,631)
55,532,616
684,357(61,803)622,554
921
(93)
827
3,053
(638)
2,414
141,218,283－
197,376,695

154,045,698(6,157,456)
147,888,242
1,483,975(91,713)
1,392,261
2,093,637(45,276)
2,048,361
59,994(3,391)56,602279,918,555
43,344431,347,368

－
2,412
2,412

2,526,599
8,346
2,534,946

20,181
246,91121－
267,114
197,646,222

800,700
279,284－
173,347
1,253,331
435,135,646

32,125
43,52375,648207,450,193

29,205
29,13958,344
457,588,497

Liabilities
Current liabilities
Operating accounts payable
Current portion of investment corporation bonds
Current portion of long-term loans payable
Accounts payable – otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Derivatives liabilities
Other
Total current liabilities
Non-current liabilities
Investment corporation bonds
Long-term loans payable
Tenant leasehold and security deposits in trust
Derivatives liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
SurplusCapital surplus
Unappropriated retained earnings
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets (Note 5)
Total liabilities and net assets

143,489－－
414,997
91,512
1,048
318,392－－0
969,440

640,450
2,500,000
12,382,000
623,167
195,311590
200,653
311,576
15,009201,664
17,070,424

5,000,000
79,400,000
9,269,955－－
93,669,955
94,639,396

13,000,000
170,050,500
10,964,384
511,956
327,370
194,854,211
211,924,636

110,189,294

110,189,294－
2,621,502
2,621,502
112,810,796

128,598,415
7,403,117
136,001,532
246,190,826－－
112,810,796
207,450,193(526,965)(526,965)
245,663,860
457,588,497

The accompanying notes are an integral part of these financial statements.

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40

7th Fiscal Period
8th Fiscal Period(As of April 30, 2018) (As of October 31, 2018)41

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(2) Statement of Income and Retained Earnings
7th Fiscal Period

Operating revenue
Rent revenue – real estate (Note 6)
Other lease business revenue (Note 6)
Gain on sales of real estate properties (Note 6)
Total operating revenue
Operating expenses
Expenses related to rent business (Note 6)
Asset management fee
Asset custody fee
Administrative service fees
Directors’ compensations
Merger expenses
Provision of allowance for doubtful accounts
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Reversal of distribution payable
Refunded consumption taxes
Interest on refund
Other
Total non-operating income
Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds
Borrowing related expenses
Amortization of investment unit issuance costs
Amortization of investment corporation bond issuance costs
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on negative goodwill
Total extraordinary income
Income before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings(3) Statement of Changes in Net Assets
7th Fiscal Period (From November 1, 2017 to April 30, 2018)(Thousands of yen)
8th Fiscal Period(From November 1, 2017

(From May 1, 2018 toto April 30, 2018)

October 31, 2018)

4,629,845
25,742－
4,655,588

11,913,550
252,879
8,114
12,174,544

1,223,022
370,434
3,786
12,7323,600－－
47,548
1,661,123
2,994,464

4,579,453
517,151
8,486
49,9593,600
941,174324
280,439
6,380,588
5,793,955

39
－
－
1,442
－
1,482

98
1,716
49,862－
143
51,820296,306
6,959
52,322
14,3842,919
537
373,430
2,622,516

599,481
51,21867,576
14,384
2,919
734
736,314
5,109,461－－
2,622,516
1,054
(14)
1,039
2,621,476
26
2,621,502

2,293,923
2,293,923
7,403,385
605
21
626
7,402,759
357
7,403,117(Thousands of yen)

Unitholders’ equity
Unitholders’capitalBalance at beginning of period

Surplus
Unappropriatedretained earnings

110,189,294

Total
unitholders’equityTotal
surplusTotal
net assets

2,626,016

2,626,016 112,815,310 112,815,310

Distribution from surplus(2,625,990)(2,625,990)(2,625,990)(2,625,990)

Net income

2,621,476

2,621,476

2,621,476

2,621,476(4,513)(4,513)(4,513)

Changes of items during period

Total changes of items during period
Balance at end of period (Note 7)－(4,513)

110,189,294

2,621,502

2,621,502 112,810,796 112,810,796

8th Fiscal Period (From May 1, 2018 to October 31, 2018)(Thousands of yen)

Unitholders’ equity
Unitholders’capitalBalance at beginning of period

Surplus
Unappropriatedretainedearnings

Capitalsurplus110,189,294－

2,621,502

Total
surplusTotal
unitholders’equity2,621,502 112,810,796

Changes of items during period
Increase due to merger

128,598,415

128,598,415 128,598,415

Distribution from surplus(2,621,145)(2,621,145)(2,621,145)

Net income

7,402,759

7,402,759

7,402,759

Net changes of items other thanunitholders’ equity
Total changes of items during period
Balance at end of period (Note 7)－

128,598,415

4,781,614

133,380,029 133,380,029

110,189,294

128,598,415

7,403,117

136,001,532 246,190,826(Thousands of yen)

Valuation and translation adjustments

Balance at beginning of period

Deferred gains orlosses on hedges

Total valuationand translation
adjustments

－

－

Total
net assets
112,810,796

Changes of items during period

The accompanying notes are an integral part of these financial statements.

Increase due to merger

128,598,415

Distribution from surplus(2,621,145)

Net income

7,402,759

Net changes of items other thanunitholders’ equity
Total changes of items during period
Balance at end of period (Note 7)(526,965)(526,965)(526,965)(526,965)(526,965)

132,853,063(526,965)(526,965)

245,663,860

The accompanying notes are an integral part of these financial statements.

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(4) Statement of Cash Distributions
Item(5) Statement of Cash Flows
7th Fiscal Period

8th Fiscal Period(From November 1, 2017 to(From May 1, 2018 toApril 30, 2018 )October 31, 2018 )Ⅰ. Unappropriated retained earnings
Ⅱ. Cash distributions[Cash distributions per unit]
Ⅲ. Voluntary reserve
Provision of reserve for temporary difference
adjustments
Ⅳ. Retained earnings carried forward
Method of calculating amount of distribution

7th Fiscal Period

2,621,502,992yen
2,621,145,000yen[2,705yen]

7,403,117,143yen
5,846,289,414yen[1,554yen]－yen

1,556,827,729yen

357,992yen－yen

The basic policy is to distributein excess of an amountequivalent to 90% of the

The basic policy is to distributein excess of an amountequivalent to 90% of theSpecial Measures Concerning
Taxation as set forth in Article
46, Paragraph 1, Item 2 of the
Articles of Incorporation of
SHR.

Special Measures Concerning
Taxation as set forth in Article
46, Paragraph 1, Item 2 of the
Articles of Incorporation ofSHR.

amount of earnings available
for distribution of SHR
provided in Article 67-15,
Paragraph 1 of the Act on

Based on such policy, SHR
decided to pay out a
distribution of earnings of
2,621,145,000 yen, which is thelargest integral multiple of thetotal number of investment
units issued and outstanding(969,000 units) in an amountnot in excess of unappropriatedretained earnings for theperiod.

SHR will not distribute cash inexcess of earnings as set forthin Article 46, Paragraph 2 of
the Articles of Incorporation ofCash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Gain on negative goodwill
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes receivable
Decrease (increase) in prepaid expenses
Decrease (increase) in long-term prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable – other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in advances received
Decrease due to sale of property, plant and equipment in trust
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Purchase of property, plant and equipment in trust
Purchase of intangible assets in trust
Purchase of intangible assets
Payments for lease and guarantee deposits
Proceeds from tenant leasehold and security deposits in trust
Repayments of tenant leasehold and security deposits in trust
Decrease (increase) in other investments
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting from merger
Cash and cash equivalents at end of period (Note 9)

amount of earnings available
for distribution of SHR
provided in Article 67-15,
Paragraph 1 of the Act on

Based on such policy, SHR
decided to distribute
5,846,289,414 yen, which is theamount of unappropriatedretained earnings after
deducting part of the gain on
negative goodwill, as
distribution of earnings.
SHR will not distribute cash inexcess of earnings as set forthin Article 46, Paragraph 2 of

the Articles of Incorporation of
SHR.

SHR.

(Thousands of yen)

8th Fiscal Period(From November 1, 2017

(From May 1, 2018 to

2,622,516
732,273
2,919
14,384－(39)
303,266526
372,744(20,182)(19,746)(43,839)
11,768318,392－－(133)
4,294,850
39(293,992)(749)
4,000,148

7,403,385
2,143,819
2,919
14,384(2,293,923)(98)
650,700(6,629)－(40,845)(29,126)
147,997(404,864)(127,643)
72,781
19,029,353
25,875
26,588,085
98(763,802)(3,188)25,821,192(38,016)－－－
12,250(11,025)－(36,791)(24,039,880)(2,290,065)(7,067)(537,857)
483,748(666,337)(6,605)(27,064,065)－－
14,000,000(14,000,000)(2,625,348)(2,625,348)
1,338,008
8,274,994－
9,613,003

8,000,000(8,000,000)
10,500,000(2,500,000)(5,673,896)
2,326,103
1,083,230
9,613,003
11,393,919
22,090,154

to April 30, 2018)

October 31, 2018)

The accompanying notes are an integral part of these financial statements.

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3. Standards for recording
allowance

Allowance for doubtful accounts
To prepare for possible losses arising from default on receivables, theestimated uncollectable amount is recorded by examining collectability on acase-by-case basis for doubtful and other specific receivables.
Accounting for property taxes
4. Standards for
In accounting for property tax, city planning tax, depreciable asset tax, etc. onrevenue and expense
real estate, etc., of the tax amount assessed and determined, the amountrecognition
corresponding to the applicable calculation period is expensed as expenses
related to rent business.
Reimbursement of property tax, paid to the seller upon the acquisition of realestate or trust beneficiary interests of real estate as assets in trust, is notrecognized as expenses related to rent business in the corresponding fiscal
period but included in the acquisition cost of the property.
Property taxes capitalized as a part of the acquisition cost amounted to 65,915
thousand yen for the 8th fiscal period, and there were no property taxes
capitalized for the 7th fiscal period.
5. Method of hedge(1)Method of hedge accounting
accounting
Deferral hedge accounting is applied. However, the special accounting
treatment is applied to interest rate swaps that meet the criteria for the
special accounting treatment.
(2)Hedging instruments and hedged items
Hedging instruments: Interest rate swap transactions
Hedged items:
Interest on loans(3)Hedging policy
SHR conducts derivative transactions for the purpose of hedging the risks set
forth in its Articles of Incorporation based on its basic risk management policy.
(4)Method for assessing the effectiveness of hedging
Interest rate swaps meet the criteria for the special accounting treatment andan assessment of the effectiveness is thus omitted.
The funds (cash and cash equivalents) in the statement of cash flows consist of cash
6. Scope of funds in theon hand and cash in trust; deposits that can be withdrawn at any time and deposits
statement of cash flows
in trust; and short-term investments with a maturity of three months or less fromthe date of acquisition, which are readily convertible to cash and bear only an
insignificant risk of price fluctuation.
7. Other significant matters (1)Accounting for trust beneficiary interests of real estate, etc. as assets in trust
Concerning trust beneficiary interests of real estate, etc. as assets in trust, allserving as basis foraccounts of assets and liabilities within assets in trust as well as all accounts
preparation ofof revenue and expenses from the assets in trust are recognized in the relevant
financial statements
account items on the balance sheet and the statement of income and retained
earnings.
The following material items of the assets in trust recognized in the relevant
account items are separately listed on the balance sheet.
ͳሻ Cash and deposits in trustʹሻ Buildings in trust; Structures in trust; Machinery and equipment in trust;Tools, furniture and fixtures in trust; Land in trust; Construction inprogress in trust; Leasehold rights in trust͵ሻ Tenant leasehold and security deposits in trust(2)Accounting for consumption tax, etc.
Consumption tax and local consumption tax are excluded from thecorresponding transaction amounts.

(6) Notes to Financial Statements
1. Organization
Sekisui House Reit, Inc. (“SHR”) is a Japanese real estate investment corporation established in September 2014
under the Act on Investment Trusts and Investment Corporations of Japan (the “Investment Trust Act”).
On December 3, 2014, SHR commenced its investment operations when it was listed on the Real Estate Investment
Trust Securities Market of the Tokyo Stock Exchange, and it acquired three properties (total acquisition cost of¥114.3 billion) on the same day.
SHR implemented a 2-for-1 split of its investment units with May 1, 2018 as the effective date.
SHR conducted an absorption-type merger with Sekisui House Residential Investment Corporation (“SHI”) as thedissolved corporation, setting May 1, 2018 as the effective date.
SHR is externally managed by a licensed asset management company, Sekisui House Asset Management, Ltd. (the“Asset Management Company”).
Sekisui House Asset Management, Ltd., previously called Sekisui House Investment Advisors, Ltd., carried out anabsorption-type merger with Sekisui House Asset Management, Ltd. (the “former SHAM”), which was the asset
management company for SHI, on May 1, 2018, with the Asset Management Company being the surviving company
and the former SHAM being the dissolved company, and changed its company name to the current one.
2. Basis of Presentation
SHR maintains its accounting records and prepares its financial statements in accordance with accounting
principles generally accepted in Japan (“Japanese GAAP”), including provisions set forth in the Financial
Instruments and Exchange Act, the Investment Trust Act, the Companies Act and the related regulations, which are
different in certain respects as to the application and disclosure requirements of International Financial ReportingStandards.
The accompanying financial statements are basically a translation of the financial statements of SHR, which wereprepared in accordance with Japanese GAAP and were presented in its Securities Report filed with the Kanto Local
Finance Bureau. In preparing the accompanying financial statements, certain reclassifications and modifications
have been made to the financial statements issued domestically in order to present them in a format which is morefamiliar to readers outside Japan. In addition, the notes to the financial statements include certain information
which might not be required under Japanese GAAP but is presented herein as additional information.
SHR’s fiscal period is a six-month period, which ends at the end of April and October of each year.
SHR does not prepare consolidated financial statements as it has no subsidiaries.
Unless otherwise specified, amounts have been rounded down to the nearest thousand yen in the accompanying
financial statements and the notes thereto. As a result, the amounts shown in the financial statements and notes
thereto do not necessarily agree with the sum of the individual account balances.
3. Summary of Significant Accounting Policies(1)Property, plant and equipment (including assets in trust)
1. Method of depreciation
Depreciation is calculated using the straight-line method.
and amortization of nonThe useful lives of principal property, plant and equipment are as follows:
current assets
Buildings
3-69 years
Structures
7-40 years
Machinery and equipment
10-61 years
Tools, furniture and fixtures
2-15 years(2)Intangible assets
Intangible assets are amortized utilizing the straight-line method.
Leasehold rights in trust are amortized on a straight-line basis over theremaining life of each fixed-term land lease contract.
(3)Long-term prepaid expenses
Long-term prepaid expenses are amortized utilizing the straight-line method.
2. Accounting for(1) Investment corporation bond issuance costs
deferred assets
Investment corporation bond issuance costs are amortized utilizing thestraight-line method over the redemption periods.
(2) Investment unit issuance costs
Investment unit issuance costs are amortized utilizing the straight-line
method (over 3 years).

46

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4. Notes to Changes in Presentation(Changes in accordance with the application of Partial Amendments to Accounting Standard for Tax EffectAccounting)

6. Notes to Statement of Income and Retained Earnings*1. Breakdown of property-related operating revenue and expenses(Thousands of yen)

7th Fiscal Period

From the beginning of the 8th fiscal period, SHR applied the Partial Amendments to Accounting Standard forTax Effect Accounting (Accounting Standards Board of Japan Statement No. 28 issued on February 16, 2018)
and changed the presentation method for deferred tax assets and deferred tax liabilities. Accordingly, deferred(From November 1, 2017
to April 30, 2018)

A. Property-related operating revenue
Rent revenue – real estate
Rental income
Other

tax assets are now classified as Investments and other assets and deferred tax liabilities are classified as Noncurrent liabilities.

As a result, the Deferred tax assets amounting to 21 thousand yen which were presented under Current assets
for the 7th fiscal period have been reclassified as Deferred tax assets under Investments and other assets.

Other lease business revenue
Utilities revenue
Other

4,617,985
11,8604,629,845

11,601,257
312,293

19,927
5,815

25,74250,897201,981

Total property-related operating revenue

5. Notes to Balance Sheet

B. Property-related operating expenses
Expenses related to rent businessSubcontract expenses
Property management fees
Trust fees
Utilities expenses
Property and other taxes
Insurance expenses
Repair expenses
Depreciation
Other expenses related to rent business*1. Minimum net assets designated in Article 67-4 of the Investment Trust Act(Thousands of yen)
8th Fiscal Period

7th Fiscal Period(As of April 30, 2018)(As of October 31, 2018)

50,00050,0002. Commitment line agreement
SHR has entered into a commitment line agreement with three financial institutions in order to secure flexible
and stable financing.

(Thousands of yen)

7th Fiscal Period

8th Fiscal Period(As of April 30, 2018)(As of October 31, 2018)

Total amount of commitment line－

15,000,000

Balance executed as loans－－

Unused line of credit－

15,000,000

8th Fiscal Period(From May 1, 2018 to
October 31, 2018)

4,655,588

24,56130,742
2,765
19,172
378,425
5,950
22,728731,538
7,137

1,223,022

11,913,550

252,879
12,166,429

381,521383,058
40,485
109,791
806,781
14,209238,406
2,142,602
462,595

4,579,453

Total property-related operating expenses

1,223,022

4,579,453

C. Property-related operating income [A − B]

3,432,565

7,586,976*2. Breakdown of gain on sales of real estate properties
7th Fiscal Period (From November 1, 2017 to April 30, 2018)
Not applicable.
8th Fiscal Period (From May 1, 2018 to October 31, 2018)(Thousands of yen)

Esty Maison Machida
Esty Maison Shinkawasaki
Esty Maison Megurohoncho
Esty Maison Joto
Esty Maison Tenjinhigashi I
Esty Maison Tenjinhigashi II
Esty Maison Shijonishinotoin
Esty Maison Hachiojiminamino
Esty Maison Nishinakajima
Esty Maison Kawaramachi
Esty Maison Shibaura
Esty Maison Tsutsujigaoka
Proceeds from sale of realestate properties

16,400,000

Cost of real estate properties

16,302,324

Other sales expenses
Gain on sales of real estate
properties

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(Note) Individual gain on sales of real estate properties (disposition prices) are not disclosed as consent for disclosure cannot be
obtained from the purchasers. In accordance with this, individual costs of sales of real estate properties (book values) are
not disclosed either.

9. Notes to Statement of Cash Flows*1. Reconciliation of cash and cash equivalents at end of period to the corresponding balance sheet items(Thousands of yen)Hamamatsu Plaza
Proceeds from sale of realestate property

2,799,860

Cost of real estate property

2,727,028

Other sales expenses

64,716

Gain on sales of real estate
property

8,114

7th Fiscal Period(From November 1, 2017
to April 30, 2018)

7. Notes to Statement of Changes in Net Assets*1. Total number of authorized investment units and total number of investment units issued
8th Fiscal Period
7th Fiscal Period(From November 1, 2017
to April 30, 2018)

Total number of authorized investment units
Total number of investment units issued

20,000,000units

969,000 units

3,762,091units

Cash and deposits

2,607,767

9,230,651

Cash and deposits in trust

7,005,235

12,859,502

Cash and cash equivalents

9,613,003

22,090,154*2. Details of non-cash transaction
The assets and liabilities succeeded from SHI as a result of the merger in the 8th fiscal period are summarized
as follows.
Capital surplus increased by 128,598,415 thousand yen as a result of merger.

(From May 1, 2018 to
October 31, 2018)

10,000,000 units

8th Fiscal Period(From May 1, 2018 to
October 31, 2018)(Thousands of yen)
7th Fiscal Period(From November 1, 2017
to April 30, 2018)

8. Notes to Statement of Cash Distributions
Of the gain on negative goodwill recorded for the 8th fiscal period, SHR recognized 1,556,827,729 yen as reserve

for temporary difference adjustments. SHR plans to drawdown at least 1% of the reserve (corresponding to theamount of the reserve expensed equally over 50 years) and appropriate the amount for cash distributions,starting from the fiscal period following the fiscal period in which the reserve was made.

8th Fiscal Period(From May 1, 2018 to
October 31, 2018)

Current assets－

11,596,391

Non-current assets－

231,681,572

Total assets－

243,277,963

Current liabilities－

21,936,953

Non-current liabilities－

90,448,670

Total liabilities－

112,385,624

10. Lease Transactions
Operating lease transactions as lessee
Future minimum lease payments(Thousands of yen)
(As of April 30, 2018)

7th Fiscal Period

8th Fiscal Period(As of October 31, 2018)

Due within 1 year－

411,348

Due after 1 year－

20,675,865－

21,087,213

Total
Operating lease transactions as lessor
Future minimum lease income(Thousands of yen)
7th Fiscal Period(As of April 30, 2018)

8th Fiscal Period(As of October 31, 2018)

Due within 1 year

9,047,000

10,582,684

Due after 1 year

31,211,701

31,930,912

40,258,702

42,513,596

Total

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8th Fiscal Period (As of October 31, 2018)

11. Financial Instruments
1. Status of financial instruments(1) Policy for financial instruments
Making it a policy to conduct stable and sound financial operations that would contribute to steady growthof its investment assets as well as efficient management and stability of management, 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 of repair expenses or distributions, operations of SHR,
repayment of obligations or other.
For derivative transactions, the policy is that derivative transactions shall be limited to those for the

purpose of hedging the risk of fluctuations in interest rates on liabilities and foreign currency risk in thecase of overseas real estate investments, and that no speculative transactions shall be conducted.
(2) Description of financial instruments and associated risks, and risk management structure
The funds procured through borrowings shall be used mainly for the acquisition of investment assets andfor repayment of loans.

Difference

9,230,651

9,230,651－(2) Cash and deposits in trust

12,859,502

12,859,502－

Total assets

22,090,154

22,090,154－(3) Current portion of investment corporation bonds

2,500,000

2,501,004

1,004(4) Current portion of long-term loans payable

12,382,000

12,402,940

20,940(5) Investment corporation bonds

13,000,000

13,169,226

169,226

Total liabilities

170,050,500

172,355,674

2,305,174

197,932,500

200,428,846

2,496,346[526,965][526,965]－[526,965][526,965]－(7) Derivative transactions(*)
Total derivative transactions(*)(*)Amounts arising from derivative transactions are shown on a net basis with any amounts inside square parentheses [ ]SHR manages and limits the liquidity risk and the risk of fluctuations in interest rates associated withsuch fund procurement by diversifying fund procurement sources and means and by maintaining the ratio

indicating a net liability position.

of interest-bearing liabilities to total assets and the ratio of floating-rate loans to total loans at appropriate
levels. Furthermore, for certain loans with floating interest rates, derivative transactions (interest rate
swap transactions) are used as a hedging instrument for hedging the risk of fluctuations in interest rates(Note 1) Method of calculating the fair value of financial instruments(1) Cash and deposits and (2) Cash and deposits in trust
As these are settled within a short period of time, the fair value is approximately the same as the book value and is thusstated at that book value.
(3) Current portion of investment corporation bonds (5)Investment corporation bonds

based on rules that set forth the basic policy for handling derivative transactions and risk management.
(3) Supplementary explanation of matters concerning fair value of financial instruments
The fair value of financial instruments, aside from values based on market price, includes values based on

The fair value of investment corporation bonds is based on the quoted market price.
Of the investment corporation bonds issued by SHR, the fair value of those with a market price is based on the quoted market

reasonable calculations when there is no market price. As the calculations involve variable factors, there
may be cases where the corresponding values will vary when different assumptions are adopted. In

price. For those where it is difficult to obtain the fair value based on the quoted market price, the fair value is based on themethod of calculating by discounting the combined total of principal and interest by a reasonably estimated interest rateapplicable when conducting similar fund procurement for the remaining period of the bonds.
(4) Current portion of long-term loans payable (6) Long-term loans payable

addition, the contract amounts of derivative transactions in “2. Matters concerning fair value of financial
instruments” do not represent the market risk involved in the derivative transactions.

As the long-term loans payable with floating interest rates reflect interest rate changes within a short period of time, the fairvalue is approximately the same as the book value and is thus stated at that book value (provided, however, that for long-term

2. Matters concerning fair value of financial instruments
The following is the carrying amount and fair value of financial instruments as of April 30, 2018 andOctober 31, 2018, and the difference between them.
The following table does not include those for which fair value is recognized to be extremely difficult todetermine (please refer to (Note 2)).

loans payable with floating interest rates that qualify for the special accounting treatment of interest rate swaps (please refer
to “11. Derivative Transactions”), the fair value is based on the method of calculation in which the sum total amount ofprincipal and interest accounted for with the interest rate swap is discounted by the rate assumed in the event of a similar
new drawdown). In addition, for those with fixed interest rates, the fair value is based on the method of calculation in which

the sum total amount of principal and interest is discounted by the rate assumed in the event of a similar new drawdown
corresponding to the remaining period.

(7) Derivative transactions
Please refer to “11. Derivative Transactions”.

7th Fiscal Period (As of April 30, 2018)
Book value
recorded on thebalance sheet

Fair value

Difference

cash flows is recognized to be extremely difficult because there is no market price and the difficulty of calculating the actual
deposit period from when lessees move in to when they move out.

2,607,767

2,607,767－(2) Cash and deposits in trust

7,005,235

7,005,235－

9,613,003

9,613,003－

Total assets(3) Investment corporation bonds

5,000,000

4,985,800(14,200)(4) Long-term loans payable

79,400,000

80,689,728

1,289,728

84,400,000

85,675,528

1,275,528－－－

Total liabilities(Note 2) Financial instruments for which fair value is recognized to be extremely difficult to determine
Tenant leasehold and security deposits in trust are not subject to valuation of fair value because a reasonable estimation of(Thousands of yen)

(1) Cash and deposits(Thousands of yen)

Item
Tenant leasehold and security deposits in trust

7th Fiscal Period

8th Fiscal Period(As of April 30, 2018)(As of October 31, 2018)

9,269,955

10,964,384(Note 3) Redemption schedule of monetary claims after the closing date52

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Fair value(1) Cash and deposits(6) Long-term loans payable

The availability and terms and conditions of borrowings and the issuance of investment corporation bonds
may be affected by SHR’s financial creditworthiness, the interest rate situation and other factors, andthere is thus no guarantee that funds can be procured at SHR’s desired timing and terms and conditions.
Furthermore, loans with floating interest rates are susceptible to subsequent market trends.

(5) Derivative transactions(Thousands of yen)Book value
recorded on thebalance sheet53

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7th Fiscal Period (As of April 30, 2018)
Due in1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

Cash and deposits

2,607,767

－

－

－

－

－

Cash and deposits in trust

7,005,235

－

－

－

－

－

Total

9,613,003

－

－

－

－

－

8th Fiscal Period (As of October 31, 2018)13. Derivative Transactions
1. Derivatives to which hedge accounting is not applied
7th Fiscal Period (As of April 30, 2018)
Not applicable.
8th Fiscal Period (As of October 31, 2018)(Thousands of yen)
Due after
4 to 5 years
5 years

Not applicable.

2. Derivatives to which hedge accounting is applied
The following is the contract amount or the amount equivalent to the principal provided in the contract asof the closing date for each method of hedge accounting.

(Thousands of yen)
Due after
4 to 5 years
5 years

Due in1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

Cash and deposits

9,230,651

－

－

－

－

－

Cash and deposits in trust

12,859,502

－

－

－

－

－

Total

22,090,154

－

－

－

－

－

7th Fiscal Period (As of April 30, 2018)(Note 4) Repayment schedule of investment corporation bonds and loans after the closing date

7th Fiscal Period (As of April 30, 2018)

Investment corporation
bonds

Type ofderivative transactions

Main
hedgeditem

Specialaccounting
treatment forinterest rate
swaps

Interest rate swap
transaction
Floating interest ratereceivable and fixedinterest rate payable

Long-term
loans
payable60,450,000

Of which,over
1 yearFair value

Calculation
method offair value

60,450,000*－

1 to 2 years

2 to 3 years

3 to 4 years

－

－

－

－

3,000,000

2,000,000

long-term loans payable, the fair value is included in the fair value of the underlying long-term loans payable (please refer to “ 11.
Financial Instruments; 2. Matters concerning fair value of financial instruments (Note 1)”).

－

14,000,000

11,050,000

18,860,000

10,000,000

25,490,000

8th Fiscal Period (As of October 31, 2018)

8th Fiscal Period (As of October 31, 2018)

Long-term loans payable

Method ofhedge
accounting

Due in1 year or lessLong-term loans payable

Investment corporation
bonds(Thousands of yen)
Due after
4 to 5 years
5 years(Thousands of yen)Contract amountDue in1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

2,500,000

2,000,000－

3,000,000

12,382,000

27,892,500

29,710,000

39,230,000* As derivative transactions qualifying for the special accounting treatment for interest rate swaps are accounted for with the hedged

Method ofhedge
accounting(Thousands of yen)
Due after
4 to 5 years
5 years－
22,200,000

Type ofderivative transactions

Interest rate swap
transaction
Floating interest ratereceivable and fixedinterest rate payable
Interest rate swap
Specialtransaction
accounting
treatment for Floating interest rateinterest rate receivable and fixedswapsinterest rate payable

8,000,000

Principal
method51,018,000

12. Securities
7th Fiscal Period (From November 1, 2017 to April 30, 2018)
Not applicable.
8th Fiscal Period (From May 1, 2018 to October 31, 2018)
Not applicable.

*1*2(Thousands of yen)Contract amountMain
hedgeditem

Of which,over
1 yearFair value

Calculation
method offair value

Long-term
loans
payable63,954,500

55,572,500(526,965)*1

Long-term
loans
payable66,550,000

66,550,000*2－Fair value is quoted by counterparties based on the prevailing market interest rates.
As derivative transactions qualifying for the special accounting treatment for interest rate swaps are accounted for with thehedged long-term loans payable, the fair value is included in the fair value of the underlying long-term loans payable (pleaserefer to “ 11. Financial Instruments; 2. Matters concerning fair value of financial instruments (Note 1)”).

14. Retirement Benefits
7th Fiscal Period (From November 1, 2017 to April 30, 2018)
Not applicable.
8th Fiscal Period (From May 1, 2018 to October 31, 2018)
Not applicable.

15. Business Combination
7th Fiscal Period (From November 1, 2017 to April 30, 2018)
Not applicable.

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5. Item and Amount of Major Acquisition-Related Expenses
Item Amount8th Fiscal Period (From May 1, 2018 to October 31, 2018)
Business Combination through Acquisition
1. Overview of Business Combination（1）Name and Business Description of Acquiree

Merger-related fees 925,022 thousand yen
6. Amount and Reason for Gain on Negative Goodwill

Name of acquiree：Sekisui House Residential Investment Corporation (“SHI”)(1) Amount of Gain on Negative Goodwill
2,293,923 thousand yen(2) Reason
Negative goodwill represents the difference between the acquisition cost of SHI in the amount of
128,598,415 thousand yen and the fair value of SHI’s net assets acquired in the amount of 130,892,339
thousand yen as of the business combination date.

Business description： Real estate investment trust（2）Main Reasons for Business Combination
SHR reached the conclusion that expanding the scale of assets and increasing market presence throughthe Investment Corporation Merger as well as enhancing a variety of opportunities for growth by utilizing

the integrated corporate strength of the Sekisui House Group would be the best strategy for maximizing
unitholder value by securing strong returns and stability and growth of cash distributions through thesteady increase of assets under management. Accordingly, SHR concluded a merger agreement as ofJanuary 24, 2018.
（3）Date of Business Combination

7. Breakdown of Assets Acquired and Liabilities Assumed on the Date of Business Combination
Current assets
11,596,391 thousand yen
Non-current assets
231,681,572 thousand yen
Total assets
243,277,963 thousand yen
Current liabilities
21,936,953 thousand yen
Non-current liabilities
90,448,670 thousand yen
Total liabilities
112,385,624 thousand yen

May 1, 2018（4）Legal Form of Business Combination
An absorption-type merger: SHR as the surviving corporation and SHI as the dissolved corporation.
（5）Name of the Investment Corporation after Business Combination

8. Estimated Impact on the Statement of income and Retained Earnings for the 8th fiscal period.
There is no impact as the business combination date was the same date as the beginning of the fiscal
period.

Sekisui House Reit, Inc.
（6）Main Reasons for Determining Acquiring Company
SHR was determined to be the acquiring corporation after comprehensively considering the relative
voting rights of the unitholders in the combined entity, the composition of the board of directors and otherfactors, based on the accounting standard for business combination

2. Operating period of Acquiree Included in the Statement of Income and Retained Earnings
From May 1, 2018 to October 31, 2018
3. Acquisition Cost of Acquiree and the Breakdown

Acquisition cost
Fair value of the Investment Corporation's investment units allotted on the date of business combination
128,598,415 thousand yen
Acquisition cost
128,598,415 thousand yen

4. Exchange Ratio, Method of Determining the Exchange Ratio and Number of Investment Units Allotted
for the Acquisition（1）Exchange Ratio of Investment Units
1.65 units of the Investment Corporation were allotted for 1 unit of SHI through the Merger.

The Investment Corporation implemented a 2-for-1 investment unit split with May 1, 2018 as the record
date before the Merger.
（2）Method of Determining the Exchange Ratio
In calculating the merger ratio used for the Investment Corporation Merger, for the sake of securing
fairness, SHR selected Nomura Securities Co., Ltd. and SHI selected Mizuho Securities Co., Ltd. as thefinancial advisors (“FAs”), respectively, and requested them to calculate the merger ratio. Comprehensive
considerations were made regarding such factors as the financial results and the status of assets andliabilities of SHR and SHI, prospects of business operations in the future, advantages of the Investment
Corporation Merger and the results of financial analyses conducted by the FA, and discussions andnegotiations were repeatedly conducted in a prudent manner. As a result, it was determined that theabove merger ratio is reasonable.
（3）Number of Investment Units Allotted
1,824,091units

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16. Income Taxes
1. Breakdown of deferred tax assets and deferred tax liabilities by major cause

2. Subsidiaries and affiliates.
7th Fiscal Period (From November 1, 2017 to April 30, 2018)
Not applicable.

(Thousands of yen)

7th Fiscal Period

8th Fiscal Period(As of April 30, 2018)(As of October 31, 2018)

Valuation difference on assets acquired due to merger－

2,422,055

Amortization of leasehold rights in trust

－

6,835

Accrued business taxes not deductible fromtaxable income

21－

Deferred gains or losses on hedges－

166,456

Deferred tax assets (subtotal)

21

2,595,347

Valuation allowance for total deductible temporary
difference－(2,595,347)

Total deferred tax assets

21－

8th Fiscal Period (From May 1, 2018 to October 31, 2018)
Not applicable.

Deferred tax assets

21

Net deferred tax assets

3. Sister companies.
7th Fiscal Period (From November 1, 2017 to April 30, 2018)
Not applicable.

8th Fiscal Period (From May 1, 2018 to October 31, 2018)
Not applicable.

4. Directors and major individual unitholders.
7th Fiscal Period (From November 1, 2017 to April 30, 2018)

－

Type

2. Breakdown of major items that caused significant differences between the statutory tax rate and theeffective income tax rate after application of tax-effect accounting(%)
7th Fiscal Period(As of April 30, 2018)

Directoror close
relative(31.72)(24.87)

Gain on negative goodwill－(9.76)

Changes in valuation allowance

－

3.13

Other
Effective income tax rate
after application of tax-effect accounting

Inoue

0.02

0.00

0.04

0.01

of SHR and
Representative

Director of Sekisui
House Investment

Description of

voting rights
held by (in) SHR

transaction(Thousandsof yen)Account
item

Balanceat end of period(Thousands ofyen)

Payment of asset－

Advisors, Ltd.

management fee to
Sekisui House
Investment
Advisors, Ltd.

370,434

Accounts
payable– other

400,069(Note 1)the fee amount is based on terms and conditions set forth in the Articles of Incorporation of SHR.
(Note 2) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

8th Fiscal Period (From May 1, 2018 to October 31, 2018)
Type

Name

Description ofbusiness or
occupation

Percentage ofor close
relative

JunichiInoueof SHR and
Representative

Director of Sekisui
House Assettransaction

Transaction
amount(Thousandsof yen)Account
item

Balanceat end of period(Thousands ofyen)

Payment of asset－

Management, Ltd.

Not applicable.

Description of

voting rights
held by (in) SHR

Executive Director
Director

17. Profit or Loss of Affiliates Accounted for Under the Equity Method
7th Fiscal Period (From November 1, 2017 to April 30, 2018)

management fee to
Sekisui House
Asset
Management, Ltd.

1,499,773(Note 2)

Accounts
payable– other

567,595(Note 1)

(Note 1) A transaction conducted by Junichi Inoue as a representative of a third party (Sekisui House Asset Management, Ltd.) andthe fee amount is based on terms and conditions set forth in the Articles of Incorporation of SHR.
(Note 2) The amount includes 57,599 thousand yen of asset management fees pertaining to real estate sales included in the book value

8th Fiscal Period (From May 1, 2018 to October 31, 2018)
Not applicable.

of property, plant and equipment.
(Note 3) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

18. Transactions with Related Parties
1. Parent company and major corporate unitholders.
7th Fiscal Period (From November 1, 2017 to April 30, 2018)19. Asset Retirement Obligations
7th Fiscal Period (From November 1, 2017 to April 30, 2018)

8th Fiscal Period (From May 1, 2018 to October 31, 2018)

8th Fiscal Period (From May 1, 2018 to October 31, 2018)

Not applicable.

Not applicable.

Not applicable.

Not applicable.

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Transaction
amount(Note 1) A transaction conducted by Junichi Inoue as a representative of a third party (Sekisui House Investment Advisors, Ltd.) and[Adjustments]
Deductible cash distribution

Junichi(As of October 31, 2018)31.51

business or
occupation

Percentage of

Executive Director

8th Fiscal Period

31.74

Statutory tax rate

Name

Description of59

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8th Fiscal Period (From May 1, 2018 to October 31, 2018)(1) Information about products and services
Information about products and services is omitted because net sales to external customers for a single
products and services category are in excess of 90% of operating revenue on the statement of income andretained earnings.
(2) Information about geographic areas
ͳሻ Operating revenue

20. Investment and Rental Properties
SHR owns rental office buildings, etc. in Tokyo and other areas for the purpose of earning revenue from leasing.
The following is the carrying amount, amount of increase (decrease) during the period and fair value of theseinvestment and rental properties.

(Thousands of yen)

7th Fiscal Period(From November 1, 2017 toApril 30, 2018)

8th Fiscal Period(From May 1, 2018 toInformation about net sales is omitted because net sales to external customers in Japan are in excessof 90% of operating revenue on the statement of income and retained earnings.
ʹሻ Property, plant and equipment

October 31, 2018)

Carrying amount
Balance at beginning of period

198,055,813

197,376,695(679,117)

236,453,927

197,376,695

433,830,623

234,040,000

479,147,000

Amount of increase (decrease) during period
Balance at end of period
Fair value at end of period

Information about property, plant and equipment is omitted because the property, plant andequipment located in Japan is in excess of 90% of property, plant and equipment on the balance sheet.
(3) Information about major customers(Thousands of yen)

Name of customer(Note 1) Carrying amount is the book value less accumulated depreciation.
(Note 2) Net increase during the 8th fiscal period is mainly attributable to the acceptance of properties (231,126,624 thousand yen)

Operating revenue

Sekisui House, Ltd.

from SHI through the Investment Corporation Manager and the acquisition of 6 new properties (25,927,177 thousand yen).
Net decrease during the 8th fiscal period is mainly attributable to the disposition of 13 properties (19,029,353 thousand yen)

22. Per Unit Information

SHR owned and depreciation (2,142,602 thousand yen).
(Note 3) Fair value at the end of the period is the appraisal value by outside real estate appraisers.

The property-related operating income in the 7th and 8th fiscal periods for investment and rental properties ispresented in “5. Notes to Statement of Income and Retained Earnings”.
21. Segment Information
1. Segment information

58,209yen

65,299yen

Net income per unit

1,352yen

1,967yen

7th Fiscal Period
2017

to April 30, 2018)

7,402,759

Amount not attributable to common unitholders (Thousands of yen)－

Net income attributable to common investment units (Thousands ofyen)

2,621,476

7,402,759

Average number of investment units during period (Units) (Note)

1,938,000

3,762,091(Note)

Real estate leasing business(Note)SHR implemented a 2-for-1 split of its investment units with May 1, 2018 as the effective date. Average number ofinvestment units during period are calculated on the basis that the investment unit split was implemented at the beginningof the 7th fiscal period.

23. Significant Subsequent Events
Not applicable.

Name of related segment

1,088,998

The customer is a general business company in Japan, but the name is not disclosed because consent has not beenobtained from the customer. The customer is not a group company of Sekisui House, Ltd.

60

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60(From May 1, 2018

to October 31, 2018)－(Thousands of yen)

Not disclosed (Note)

8th Fiscal Period

2,621,476

Net income (Thousands of yen)

Information about property, plant and equipment is omitted because the property, plant andequipment located in Japan is in excess of 90% of property, plant and equipment on the balance sheet.
(3) Information about major customers

Real estate leasing business(From May 1, 2018

to October 31, 2018)

Net assets per unit

(From November 1,

Information about net sales is omitted because net sales to external customers in Japan are in excessof 90% of operating revenue on the statement of income and retained earnings.
ʹሻ Property, plant and equipment

3,211,225

8th Fiscal Period

period.
(Note 3) The following is the basis for calculating net income per unit.

(1) Information about products and services
Information about products and services is omitted because net sales to external customers for a single
products and services category are in excess of 90% of operating revenue on the statement of income andretained earnings.
(2) Information about geographic areas
ͳሻ Operating revenue

Sekisui House, Ltd.

7th Fiscal Period(From November 1,
2017
to April 30, 2018)(Note 2) SHR implemented a 2-for-1 split of its investment units with May 1, 2018 as the effective date. Net assets per unit and net
income per unit are calculated on the basis that the investment unit split was implemented at the beginning of the 7th fiscal

2. Related information
7th Fiscal Period (From November 1, 2017 to April 30, 2018)

Operating revenue

Real estate leasing business(Note 1) Net income per unit is calculated by dividing net income by the daily weighted average number of investment units.
In addition, diluted net income per unit is not stated because there are no dilutive investment units.

Segment information is omitted because SHR operates a single segment, which is the real estate leasing
business.

Name of customer

3,212,851

Name of related segment61

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3. Schedule of property, plant and equipment and intangible assets(7) Supplementary Schedules
8th Fiscal Period (From May 1, 2018 to October 31, 2018)
1. Schedule of securities(1) Shares

Type of assets

Not applicable.

(2) Securities other than shares
Not applicable.

Transaction other thanmarket transaction
Transaction other thanmarket transaction

TypeInterest rate swap transaction
Floating interest rate receivableand fixed interest rate payable
Interest rate swap transaction
Floating interest rate receivableand fixed interest rate payable
Total

Of which,over 1 year

(526,965)

66,550,000

66,550,000(Note 3)

130,504,500

122,122,500

4,992,020

684,357

851,388921

2,039,065

147,888,242

51,771

1,483,975

91,71330,175

1,392,261

2,209,540

116,823

2,093,637

45,27645,182

2,048,361

3,053

56,941－

59,994

3,391

2,753

56,602

141,218,283

152,572,516

13,872,244

279,918,555－－

279,918,555－

43,344－

43,344－－

43,344

201,560,863

255,117,202

19,032,859

437,645,207

6,297,838

2,117,176

431,347,368－

2,552,025－

2,552,025

25,42525,4252,526,599

Other

7,350

7,150

－

14,500

6,154

1,216

8,346

Subtotal

7,350

2,559,176－

2,566,526

31,58026,6422,534,946

201,568,213

257,676,379

19,032,859

440,211,733

6,329,418

2,143,819

433,882,315

andequipment in
Property,

55,572,500

99,383,471

Net balanceat end ofperiod

Notes(Note 1)
(Note 2)
(Note 1)

Machinery

Fair value(Note 2)

63,954,500

59,654,248

Accumulated depreciation

6,157,456

in trust

Contract amount (Note 1)

Balanceat end ofperiod154,045,698

Structures

Category

Amount ofdecreaseduringperiodFor theperiodin trust(Thousands of yen)Amount ofincreaseduringperiodoraccumulated
amortization

Buildings

2. Contract amount and fair value of derivative transactions

Balanceat beginningof period(Thousands of yen)plant andtrust
Tools,

furniture andequipment fixtures intrust
Land in trust(526,965)(Note 1)
(Note 2)

Construction(Note 1) The contract amount of interest rate swap transactions is based on the notional principal amount.
(Note 2) Fair value is quoted by counterparties based on the prevailing market interest rates.

in progress intrust(Note 3) The fair value is omitted because the transaction meets the criteria for the special accounting treatment under the

Subtotal

Accounting Standards for Financial Instruments.

Intangible Leasehold
assetsrights in(Note 1)

trust

Total
(Note 1)

The increase during the fiscal period under review is mainly attributable to the transfer of 113 properties owned by SHI through(Note 2)The decrease during the fiscal period under review is attributable to the disposition of 13 properties SHR owned.

the merger with SHI and the acquisition of 6 new properties.

4. Schedule of other specified assets

Real estate trust beneficiary interests are included above in “3. Schedule of property, plant and equipment
and intangible assets”.

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5. Schedule of investment corporation bonds
Name

Issue date

SHI
Second Series
February 28,
Unsecured Investment
2013
Corporation Bond
(Note 1)SHI
Third Series
February 28,
Unsecured Investment
2014
Corporation Bond
(Note 1)SHI
4th Series Unsecured
February 28,
Investment
2014
Corporation Bond
(Note 1)SHI
5th Series Unsecured
August 29,
Investment
2014
Corporation Bond
(Note 1)SHR
First Series
September 8,
Unsecured Investment
2016
Corporation Bond
SHR
Second Series
July 13,
Unsecured Investment
2017
Corporation Bond
Total

－

Balance at
beginning of
period(Thousands ofyen )Amount ofdecrease during
period(Thousands ofyen )Balanceat end of period(Thousands of
yen )

－

－

2,000,000

Coupon
rate
(%)

1.000

Redemption Use of
dateproceeds

6. Schedule of loans payable

Security

February 28,(Note 3) Unsecured
2020

Shortterm
loans

－

－

2,500,000

0.374

payableFebruary 28,
2019(Note 4) Unsecured(Note 2)

Mizuho Bank, Ltd.

－

－

－

－

3,000,000

3,000,000

1.069

0.871

Development Bank ofFebruary 28,(Note 4) Unsecured
2024

August30,2024

Japan Inc.

－

2,000,000

0.340

5,000,000－－

3,000,000

15,500,000

0.240

－

July 13,
2022
－

－

term

in Current liabilities on the balance sheet.
(Note 3) The funds are used to repay borrowings and acquire trust beneficiary interests in real estate, etc.

loans
payable(Note 4) The proceeds are used as funds for repayment of loans payable.
(Note 5) This investment corporation bonds are equipped with pari passu clause among specified investment corporation bonds.

Due in1 year or less
2,500,000(Thousands of yen)

1 to 2 years
2,000,000

2 to 3 years

3 to 4 years－

3,000,000-

4,200,000- 0.23364-

1,900,000

1,900,000-(Note1)-

1,470,500-

1,470,500(Note1)-

1,470,500-

1,470,500(Note1)-

941,000-

941,000

Repaymentof loans

1.15475

payableFeb. 28,2019(Note1)-750,000-

750,000 0.89900

2,250,000-

2,250,000

MUFG Bank, Ltd.

(Note1)-

3,842,500-

3,842,500

Mizuho Bank, Ltd.

(Note1)-400,000-

400,000(Note1)-500,000-

500,000

relatedexpenses(Note3)-

Security

assets and2019

750,000(Note1)

Use ofproceeds

Purchase ofApr. 30,750,000

Purchase of
assets andrelatedexpenses

1.02225

Feb. 28,
2020

Resona Bank, Limited(Note1)-500,000-

500,000

Lump-

Un-

Mizuho Bank, Ltd.

(Note1)-200,000

200,000-sum

secured(Note1)-

1,100,000

1,100,000-(Note1)-500,000

500,000- 0.46909(Note1)-200,000

200,000-(Note1)-500,000

500,000-

Banking Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust & Banking
Co., Ltd.
MUFG Bank, Ltd.

(Note1)-800,000-

800,000

Mizuho Bank, Ltd.

(Note1)-500,000-

500,000(Note1)-2,500,000-

2,500,000

Mizuho Trust & Banking
Co., Ltd.

(Note1)-200,000-(Note1)-500,000-

500,000(Note1)-1,000,000-

1,000,000

MUFG Bank, Ltd.

(Note1)-800,000-

800,000

Mizuho Bank, Ltd.

(Note1)-300,000-

300,000

Banking Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation

64(Note1)-300,000--

400,000-

400,000(Note1)-

405,000-

405,000(Note1)-

1,145,000-

1,145,000

guaran-Aug. 31, maturity
2018

teed
Repayment

Aug. 31,
2020

Purchase of

300,000 1.17350(Note1)Un-

atpayable200,000

Aozora Bank, Ltd.

payment

of loans

1.17200

Resona Bank, Limited

Sumitomo Mitsuim_0365324553101.indd
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64method-Bank, Limited

－

date

-

Sumitomo Mitsui Trust

4 to 5 years

1,900,000(Note 1)

ent

750,000

Aozora Bank, Ltd.

(Note 6) The following is the maturity schedule of investment corporation bonds within five years of the balance sheet date.

1,900,000

periodnt due750,000

Sumitomo MitsuiLong-period(%)

Repayme Repaym-

Co., Ltd.

－

periodrate-

Mizuho Trust & Banking(Note 4) Unsecuredof period

Balanceat end of(Note1)

Mizuho Trust & Banking

3,000,000

during(Note1)Banking Corporation

September 8,(Note 4) Unsecured2026

decreaseduringMizuho Bank, Ltd.

Co., Ltd.

2,000,000

increase(Thousands of yen)

MUFG Bank, Ltd.
Sumitomo Mitsui(Note 4) Unsecured

atbeginninginterest

4,200,000

Banking Corporation

Banking Corporation

Amount of-

Sumitomo Mitsui

Sumitomo Mitsui

Amount of-

MUFG Bank, Ltd.

Mizuho Bank, Ltd.

(Note 1) These investment corporation bonds were succeeded from SHI as of May 1, 2018.
(Note 2) As of the end of the fiscal period under review, these bonds are recorded as Current portion of investment corporation bonds

Investment Corporation Bonds

Lendercategory

BalanceFeb. 28,2022

assets andrelatedexpenses

0.79614

Feb. 28,
2020

Repaymentof loans
payable65

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Lendercategory

BalanceAmount ofAmount ofatincreasedecrease

beginning

duringduringperiodperiodof period

Balanceat end ofperiodinterest
rate(%)(Note 1)

Repayme Repaym
nt dueent

datemethodUse ofproceeds

Lendercategory

Security

BalanceAmount ofAmount ofatincreasedecrease

beginning

duringduringof period

periodBalanceat end ofperiodperiodMUFG Bank, Ltd.

(Note1)-500,000-

500,000

MUFG Bank, Ltd.

5,100,000--

5,100,000

Mizuho Bank, Ltd.

(Note1)-400,000-

400,000

Mizuho Bank, Ltd.

2,400,000--

2,400,000

3,700,000--

3,700,000

2,000,000--

2,000,000

Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust & Banking
Co., Ltd.
Resona Bank, Limited
The Senshu Ikeda Bank,Ltd.
The Yamaguchi Bank,(Note1)-500,000-

500,000(Note1)-500,000-

500,000(Note1)-500,000-

500,000(Note1)-500,000-

500,000(Note1)-500,000-

Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui Trust

0.95225

Bank, Limited

Feb. 26,

Co., Ltd.
Resona Bank, Limited

500,000

Development Bank of

Repayment

Japan Inc.

of loans

The Norinchukin Bank

900,000--

900,000

1,400,000--

1,400,000

800,000--

800,000

700,000--

700,000(Note1)-500,000-

500,000

MUFG Bank, Ltd.

4,600,000--

4,600,000

MUFG Bank, Ltd.

(Note1)-500,000-

500,000

Mizuho Bank, Ltd.

700,000--

700,000

Mizuho Bank, Ltd.

(Note1)-400,000-

400,000

Sumitomo Mitsui

3,700,000--

3,700,000(Note1)-500,000-

500,000

Ltd.

Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust & Banking(Note1)-1,500,000-

1,500,000(Note1)-

980,000-

980,000

Resona Bank, Limited(Note1)-800,000-

800,000

Long-

Mizuho Bank, Ltd.

(Note1)-300,000-

300,000

term

Sumitomo Mitsui

loansBanking Corporation(Note1)-300,000-

300,000

Co., Ltd.

payable The Bank of Fukuoka,(Note1)-500,000-

500,000

Shinkin Central Bank

(Note1)-500,000-

500,000

The Shizuoka Bank, Ltd.

(Note1)-500,000-

500,000

Mizuho Bank, Ltd.

(Note1)-2,450,000-

2,450,000

Ltd.

Sumitomo Mitsui(Note1)-

1,950,000-

1,950,000

MUFG Bank, Ltd.

(Note1)-900,000-

900,000

Mizuho Bank, Ltd.

(Note1)-2,500,000-

2,500,000

Banking Corporation

Sumitomo Mitsui

Banking Corporation

1.11000

Feb. 28,Un-

sum

securedpayment Purchase of
0.97300

0.96475

atassets andguaran-2021

maturity

relatedteed(Note1)-600,000-

600,000(Note1)-300,000-

300,000

The Norinchukin Bank

(Note1)-500,000-

500,000

Shinkin Central Bank

(Note1)-500,000-

500,000(Note1)-500,000-

500,000 0.62800

The Shizuoka Bank, Ltd.

(Note1)-500,000-

500,000

The 77 Bank, Ltd.

(Note1)-500,000-

500,000(Note1)-500,000-

500,000

payable Banking Corporation

The Senshu Ikeda Bank,
Ltd.

Aug. 31,

Aug. 31,300,000

Sumitomo Mitsui

Un-Feb. 26,

2021

-

loans

expenses

0.83600-

term

The Hiroshima Bank,

RepaymentLtd.

of loans

MUFG Bank, Ltd.

(Note1)-300,000-

300,000

payableMizuho Bank, Ltd.

(Note1)-500,000-

500,000(Note1)-500,000-

500,000

2022

Sumitomo Mitsui2,000,000-

2,000,000

MUFG Bank, Ltd.

4,300,000--

4,300,000

Resona Bank, Limited(Note1)-750,000-

750,000

Mizuho Bank, Ltd.

1,800,000--

1,800,000

The Norinchukin Bank

(Note1)-800,000-

800,000

3,000,000--

3,000,000(Note1)-500,000-

500,000

1,800,000--

1,800,000(Note1)-1,000,000-

600,000--

600,000

900,000--

900,000

800,000--

800,000

800,000--

800,000

Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust & Banking
Co., Ltd.
Resona Bank, Limited
Development Bank ofJapan Inc.
The Norinchukin Bank

Banking Corporation

The Bank of Fukuoka,
Ltd.

0.65830

Purchase ofDevelopment Bank ofNov. 30,

assets andJapan Inc.

2019

relatedmethodSecurity

Nov. 30,2021

Nov. 30,
2024

Lump-

Un-

sum

securedpaymentUn-

atguaran-maturity

teed

Feb. 26,
2021

Repaymentof loans
payable0.73975

1,000,000 0.85250

Feb. 28,2022

Feb. 28,2023

expenses

66

m_0365324553101.indd
011_0365324553101.indd 66-67
66

date

Use ofproceeds

related

300,000

Mizuho Bank, Ltd.

ent

expenses

700,000

Japan Inc.

nt dueassets and

-

Long-

Repayme Repaym

Purchase of-Development Bank of

Lump-(Note 1)700,000

Bank, Limited

2022

(%)

1.47450

Sumitomo Mitsui Trust-

Banking Corporation(Note1)payablerate

0.94060Mizuho Trust & Banking

2021

interest

67

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67

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17:11:28
16:56:48

Lendercategory

BalanceAmount ofAmount ofatincreasedecrease

beginning

duringduringperiodperiodof period(Note 1)nt dueent

datemethodUse ofproceeds

Lendercategory

Security

BalanceAmount ofAmount ofatincreasedecrease

beginning

duringduringperiodperiodof period

1,300,000-

1,300,000

Mizuho Bank, Ltd.

Mizuho Bank, Ltd.

(Note1)-1,000,000-

1,000,000

Development Bank of(Note1)-600,000-

600,000

Japan Inc.
Mizuho Bank, Ltd.
Sumitomo Mitsui

Balanceat end ofperiod(Note1)-

100,000-

100,000(Note1)-

2,100,000-

2,100,000(Note1)-450,000-

450,000(Note1)-450,000-

450,000(Note1)-1,000,000-

1,000,000

interest
rate(%)(Note 1)0.67400

Repayme Repaym
nt dueent

datemethodUse ofproceeds

2023

Aug. 31,-300,000-

300,000(Note1)-800,000-

800,000

Resona Bank, Limited(Note1)-500,000-

500,000

MUFG Bank, Ltd.

(Note1)-700,000-

700,000

The Norinchukin Bank

(Note1)-500,000-

500,000

Mizuho Bank, Ltd.

(Note1)-

1,100,000-

1,100,000(Note1)-700,000-

700,000(Note1)-

1,100,000-

1,100,000(Note1)-450,000-

450,000(Note1)-500,000-

500,000

Resona Bank, Limited(Note1)-300,000-

300,000

The Norinchukin Bank

(Note1)-300,000-

300,000

related

Aozora Bank, Ltd.

(Note1)-200,000-

200,000

expenses(Note1)-

100,000-

100,000(Note1)-450,000-

450,000(Note1)-600,000-

600,000

Mizuho Trust & Banking
Co., Ltd.

The Bank of Fukuoka,
Ltd.
Aozora Bank, Ltd.

(Note1)-200,000-

200,000

Shinkin Central Bank

(Note1)-200,000-

200,000(Note1)-200,000-

200,000

The Senshu Ikeda Bank,Ltd.
The Shizuoka Bank, Ltd.

(Note1)-200,000-

200,000

The 77 Bank, Ltd.

(Note1)-200,000-

200,000(Note1)-200,000-

200,000

The Hiroshima Bank,Ltd.
The Yamaguchi Bank,

Mizuho Trust & Banking
Co., Ltd.

0.86650

Sumitomo MitsuiFeb. 28,

Banking Corporation

2023

Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust & Banking
Co., Ltd.

The Yamaguchi Bank,Ltd.
MUFG Bank, Ltd.

-

200,000-

MUFG Bank, Ltd.

1,650,000--

MUFG Bank, Ltd.

200,000--

200,000

Lump-

Mizuho Bank, Ltd.

950,000--

950,000

sum

Repayment

1,650,000--

1,650,000

payment

of loans

Un-atpayableguaran-Ltd.

Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui Trust(Note1)Banking Corporation

200,000

Development Bank of

1,650,000 0.61760

Nov. 30,2020

maturity

Long-

Japan Inc.

Un-

term

The Bank of Fukuoka,

secured

loans

Ltd.

payable Shinkin Central Bank

teed

100,000(Note1)-

100,000-

100,000

The Shizuoka Bank, Ltd.

(Note1)-

100,000-

100,000

The 77 Bank, Ltd.

(Note1)-

100,000-

100,000(Note1)-

100,000-

100,000(Note1)-200,000-

200,000(Note1)-200,000-

200,000(Note1)-400,000-

400,000(Note1)-500,000-

500,000

Resona Bank, Limited(Note1)-300,000-

300,000

Ltd.

500,000--

500,000

Resona Bank, Limited

550,000--

550,000

The Hiroshima Bank,

The Norinchukin Bank

650,000--

650,000Ltd.

MUFG Bank, Ltd.

700,000--

700,000 0.88470

Mizuho Bank, Ltd.

Japan Inc.
Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui Trust

650,000--

650,000 0.88500

350,000--

350,000

650,000--

650,000

Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui Trust

Nov. 30,

Bank, Limited

2022

Mizuho Trust & Banking

0.89470

Co., Ltd.

0.48242
Purchase of
assets andFeb. 29,2024

0.50500

0.49500

350,000--

350,000

Resona Bank, Limited

300,000--

300,000

The Norinchukin Bank

(Note1)-300,000-

300,000

MUFG Bank, Ltd.

750,000--

750,000 1.00850

MUFG Bank, Ltd.

(Note1)-600,000-

600,000 0.57000

MUFG Bank, Ltd.

500,000--

500,000

MUFG Bank, Ltd.

(Note1)-1,000,000-

1,000,000

Mizuho Bank, Ltd.

400,000--

400,000

Mizuho Bank, Ltd.

(Note1)-800,000-

800,000(Note1)-800,000-

800,000 0.59750(Note1)-400,000-

400,000

Bank, Limited

Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust & Banking
Co., Ltd.
Resona Bank, Limited

700,000--

700,000

350,000--

350,000

300,000--

300,000

100,000--

100,000

Sumitomo Mitsui1.01850

Nov. 30,

Banking Corporation

2023

Development Bank ofJapan Inc.

68

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011_0365324553101.indd 68-69
68

2023

200,000-

850,000 0.62760

Development Bank of-

100,000-

Co., Ltd.

200,000--

Mizuho Trust & Banking-(Note1)The Senshu Ikeda Bank,

850,000

Bank, Limited(Note1)0.68030

Security

Aug. 31,(Note1)

Bank, Limited

payable(%)

Repayme Repaym-

Sumitomo Mitsui Trust

loans

periodrate(Note1)Banking Corporation

term

at end ofinterest

MUFG Bank, Ltd.
Sumitomo Mitsui

Long-

Balance

Lump-

Un-

sum

securedpaymentUn-

atguaran-maturityteedAug. 30,
2024
Repaymentof loans
payableAug. 29,2025

69

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69

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17:11:28
16:56:48

Lendercategory

Sumitomo Mitsui

BalanceAmount ofAmount ofatincreasedecrease

beginning

duringduringof period

periodperiod

1,560,000

Banking Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust & Banking
Co., Ltd.
Resona Bank, Limited
Development Bank of-

Balanceat end ofperiod-830,000

370,000--

370,000 0.28242

550,000--

550,000

370,000--

370,000

MUFG Bank, Ltd.

1,810,000--

MUFG Bank, Ltd.

440,000--

440,000

Mizuho Bank, Ltd.

900,000--

900,000-

1,600,000-

Banking Corporation

nt dueent

datemethodUse ofproceeds

Lendercategory

Security

1,600,000 0.31000--

600,000

1,050,000--

1,050,000

650,000--

650,000
950,000---

750,000

MUFG Bank, Ltd.

650,000--

650,000

550,000--

550,000

750,000 0.34000

MUFG Bank, Ltd.

750,000

-

-

2020

Mizuho Bank, Ltd.

1,050,000--

1,050,000

600,000--

600,000

1,050,000--

1,050,000

650,000--

650,000-

600,000 0.61000

Sumitomo Mitsui-

200,000

Banking Corporation(Note1)-300,000-

300,000

Co., Ltd.

600,000

Resona Bank, Limited(Note1)-400,000-

400,000

Long-

Shinkin Central Bank

(Note1)-300,000-

300,000

term

MUFG Bank, Ltd.

(Note1)-1,500,000-(Note1)-800,000-

800,000

payable Mizuho Bank, Ltd.

(Note1)-700,000-

700,000(Note1)-

1,200,000-

1,200,000

Japan Inc.
The Bank of Fukuoka,
Ltd.
Aozora Bank, Ltd.
The Yamaguchi Bank,
Ltd.

(Note1)-500,000-

500,000(Note1)-300,000-

300,000(Note1)-500,000-

500,000

Sumitomo Mitsui

870,000

Banking Corporation
Sumitomo Mitsui Trust

-

-

sum

Repayment

securedof loans

Un-atpayableguaran-Resona Bank, Limited

950,000--

950,000Long-

The Norinchukin Bank

750,000--

750,000

term

MUFG Bank, Ltd.

650,000--

650,000

loans

Development Bank of

550,000--

550,000

payable Japan Inc.

teed

Feb. 27,
0.778802026

MUFG Bank, Ltd.

(Note1)-1,300,000-

1,300,000

Mizuho Bank, Ltd.

(Note1)-1,400,000-

1,400,000

Sumitomo Mitsui

870,000
480,000 0.25742

Resona Bank, Limited

300,000--

300,000

The Norinchukin Bank

210,000--

210,000

MUFG Bank, Ltd.

990,000--

990,000 0.37000

MUFG Bank, Ltd.

260,000--

260,000

Mizuho Bank, Ltd.

550,000--

550,000

220,000--

220,000 0.45254

Aug. 31,

Nov. 30,-

500,000-

500,000 0.56500

MUFG Bank, Ltd.

(Note1)-500,000-

500,000

Mizuho Bank, Ltd.

(Note1)-

100,000-

100,000

The 77 Bank, Ltd.

(Note1)-500,000-

500,000 0.63500(Note1)-500,000-

500,000

MUFG Bank, Ltd.

-

1,900,000-

1,900,000 0.70000

Mizuho Bank, Ltd.

-

4,200,000-

4,200,000

Sumitomo Mitsui

2023

Banking Corporation
Sumitomo Mitsui Trust

Development Bank ofJapan Inc.

220,000--

220,000

Mizuho Bank, Ltd.

(Note1)-

176,000-

176,000

The Norinchukin Bank

(Note1)-

2,352,000-

2,352,000

Bank, Limited

0.61380

Mizuho Trust & Banking

Aug. 29,

Co., Ltd.

2025

Total

70

m_0365324553101.indd
011_0365324553101.indd 70-71
700.23742(Note1)

Mizuho Bank, Ltd.

Repaymentof loans
payable

Lump-

Un-

sum

securedpaymentUn-

atguaran-maturity

MUFG Bank, Ltd.

Banking Corporation

SecurityJul. 13,0.42622-

Sumitomo Mitsui

method2023

1,300,000

Ltd.

2021

date

Use ofproceeds

0.41800 May. 31,-

The Hiroshima Bank,

ent

0.35341(Note1)Banking Corporation-

Co., Ltd.

Un-

payment
maturity-

Mizuho Trust & Banking

Mizuho Trust & Banking

Lump-

480,000

Bank, Limited

Bank, LimitedCo., Ltd.

1,500,000 0.72500

MUFG Bank, Ltd.
Development Bank of

Sumitomo Mitsui Trust

nt due2022-

600,000-

0.34800

750,000

200,000

600,000(Note 1)

950,000--(%)

Repayme Repaym

750,000 0.32000

Aug. 31,

2025

rate

Resona Bank, Limited

Japan Inc.

Feb. 28,

interest

The Norinchukin Bank-

(Note1)

period600,000(Note1)0.67000

period

1,050,000(Note1)

Mizuho Trust & Bankingof period

period-Mizuho Bank, Ltd.
Bank, Limited

during-Development Bank of2026

duringat end of

1,050,000

Co., Ltd.

0.67000

beginning

BalanceMizuho Bank, Ltd.

Bank, Limited

Sep. 8,decrease-

Mizuho Trust & Banking

1,810,000 0.60500

Amount ofincrease-

Sumitomo Mitsui Trust

2020

Amount of

at

750,000

Banking Corporation

Nov. 30,

Balance

MUFG Bank, Ltd.

MUFG Bank, Ltd.
Sumitomo Mitsui Trust

loans

Repayme Repaym

Sumitomo Mitsui-

370,000(Note1)(Note 1)--

Sumitomo Mitsui(%)

830,000-

The Norinchukin Bankrate

1,560,000

370,000

Japan Inc.

interest

1,300,000

Redemption

Feb. 28,of existing

2019

investment(Note3)

corporation

teed

bonds

-

1,900,000-

1,900,000-

1,480,000-

1,480,000-

320,000-

320,000-

500,000-

500,000-

200,000-

200,000

Feb. 27,

0.78300

2026

Aug. 31,

Repayment2027

of loans
payable0.23504

Aug. 31,2021

79,400,000 113,532,500 10,500,000 182,432,500

71

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16:56:48

(Note 1) These loans were succeeded through the merger with SHI as of May 1, 2018.

(Note 2) Average interest rate is the weighted average interest rate during the period. Interest rates are rounded to six decimal
places. The interest rates for loans hedged by interest rate swap transactions used to hedge the risk of interest rate
fluctuations are the interest rates reflecting the effect of the interest rate swaps.
(Note 3) As of the end of the fiscal period under review, these loans are recorded as Current portion of long-term loans payable in
Current liabilities on the balance sheet.
(Note 4) The following is the maturity schedule of long-term loans within five years of the balance sheet date.

Due in1 year or lessLong-term loans payable

12,382,000(Thousands of yen)
1 to 2 years
27,892,500

2 to 3 years
29,710,000

3 to 4 years
39,230,000

4 to 5 years
22,200,000

72m_0365324553101.indd
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72

73

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011_0365324553101.indd

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16:56:51

Unitholder Information

Unitholder Information

Unitholder Memo

Change in Investment Unit Price and Trading Volume (December 3, 2014 to November 30, 2018)
SHR’s investment unit price (left axis)

TSE REIT Index (left axis)

Unitholder Memo

Volume (right axis)(JPY)(Unit)
100,000

80,00090,00075,00080,00060,00050,00065,00040,00060,00030,00020,00055,000End of April and October of each year

Record Date for Determining
Distribution Payment

End of April and October of each year
(Cash distribution will be paid out within 3 months from the record date)
General meeting of unitholders shall be convened on January 1, 2020 and onwards without delay,and subsequently be convened on January 1 every 2 years and onwards without delay.
In addition, the general meetings of unitholders may be held from time to time when it is necessary.

General Meeting ofUnitholders

70,00070,000Account Closing Date

Date to Determine Exercising of
Voting Rights by Unitholders

Date stipulated in Article 12 of the Articles of Incorporation

Listed Stock ExchangeTokyo Stock Exchange, Inc. (Securities Code: 3309)

Newspaper Posting Public
NoticeNikkei Inc.

Transfer Agent

Mizuho Trust & Banking Co., Ltd.

Contact

Stock Transfer Agency Department,
Mizuho Trust & Banking Co., Ltd.
1-2-1 Yaesu, Chuo-ku, Tokyo, 103-0028
Phone: 0120-288-324 (Toll Free only in Japan)

10,00050,000

Dec.
2014

Mar.
2015

Jun.

Sep.

Dec.

Mar.
2016

Jun.

Sep.

Dec.

Mar.
2017

Jun.

Sep.

Dec.

Mar.
2018

Jun.

Sep.

Dec.

0

(Note 1) Closing price and volume of the investment unit of SHR in a regular trading session at Tokyo Stock Exchange, Inc. are indicated.
(Note 2) As a two-for-one split of investment units was implemented on May 1, 2018, investment units have been traded at halved (the ex-rights) unit price on and after April 25, 2018. In consideration of the impact of the split, the above graph is based on actual figures of “Investment Unit Price” for April 25, 2018 and earlier being divided by two and actual figures of “Trading
Volume” being multiplied by Two.
(Note 3) Change in TSE REIT Index is indicated after converting the closing price of TSE REIT Index on the listing date of SHR (December 3, 2014) to JPY 66,000, the amount gained after adjusting
the two-for-one split to the closing price of the investment unit of SHR in a regular trading session on such date. Furthermore, TSE REIT Index refers to the weighted average-type index ofmarket capitalization of all REIT counters listed on the Tokyo Stock Exchange (TSE).
(Note 4) Figures for the period from December 3, 2014 to November 30, 2018 are indicated.

Concerning Procedures to Change Registered Address, etc.
Please contact your securities company to change registered address, name, etc.

Unitholder Composition(as of October 31, 2018 (end of 8th fiscal period))

Financial institutions (including financial instruments business operators)
Other domestic firms
Foreign firms, etc.
Individuals and others

330,586 units (8.8%)

Concerning Receiving Cash Distribution

517,580 units (13.8%)

2,633,706 units (70.0%)

280,219 units (7.4%)

You can receive your “cash distribution” by bringing your “distributions receipt” to a nearby Japan Post Bank or post office.
In cases where the reception period has elapsed, please specify how you wish to receive dividends on the back of the “distributions receipt,” and then mail it to the place of contact mentioned above, or receive cash distribution directly at the service
counter of the head office/branch of Mizuho Trust & Banking Co., Ltd. In addition, with respect to future cash distribution, if
you wish to receive them through transfer to a bank account you specify or other measures, please contact your securities
company, etc.

● Number of investment

units owned by owner type

Total: 3,762,091 units● Number ofunitholders by type
Total: 20,293

Please receive your “cash distribution” on an early date as we will be unable to pay them if they are not received within 3
years from the commencement date of payments of cash distribution.

19,533 (96.3%)

194 (1.0%)357 (1.8%)
209 (1.0%)

Website of Sekisui House Reit, Inc.

(Note) Total of ratios may not add up to 100.0% as ratios are indicated as rounded to the first decimal place.

IR Calendar
Closing month of
FP ending April

Announcement of financial
results for FP ending April

Apr.

Jun.
May

Closing month of
FP ending October

Announcement of financial
results for FP ending October

Oct.

Dec.

Aug.
Jul.

Sep.

Commencement of the payment of cash distributions for FP ending April
Dispatch of Semi-Annual Report for FP ending April (Japanese version)

Nov.

Guide to Website

http://sekisuihouse-reit.co.jp/en/
Feb.

Jan.

SHR strives for timely and accurate information disclosure via
the website. IR information is also made available via e-maildelivery to provide access to the latest information.
The latest cash distribution, financial, investment property
and other information useful to investors are made available
for viewing on the website.

Mar.

Commencement of the payment of cash distributions for FP ending October
Dispatch of Semi-Annual Report for FP ending October (Japanese version)74

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7475

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10:00:47012_0365324553101.indd75

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2019/01/26

17:11:29
10:00:48