4-15-1 Akasaka, Minato-ku, Tokyo
http://sekisuihouse-reit.co.jp/en/

Semi-Annual Report
7th Fiscal Period(from November 1, 2017 to April 30, 2018)

Creation of a highly stable “diversified REIT” having high-quality “residential properties
and office buildings” as its core assets
Sekisui House Reit, Inc. merged with Sekisui House Residential Investment
to the merger, and SHR will aim for further growth by setting a medium-

Corporation as of May 1, 2018. Asset size increased to 440.8 billion yen due
term asset size target of 600 billion yen.

Corporate Philosophy of SHR
SHR shares a corporate philosophy with our sponsor, Sekisui House,
and aims to “provide high-quality social capital” and“maximize unitholder value”

of a highly stable “diversified REIT” having “residential properties and
1 Creation
office buildings” planned and developed by Sekisui House as its core assets
Sekisui House Residential Investment Corporation, which specializes in residential properties, andSekisui House Reit, Inc., which focuses on fixed-rent type master lease agreements, merged andformed a highly stable portfolio.
Positioning residences and office buildings as the core assets of the portfolio, SHR will
also work to invest in hotels that are expected to achieve growth.
Setting prime properties (Note) with the pillars of “strategic location” and “high quality” asprimary investment targets, SHR will develop a high-quality portfolio.

Garden City
Shinagawa Gotenyama

Hommachi
Garden City

Hommachi Minami
Garden City

Sekisui House Reit, Inc.
Portfolio composed entirely of high-quality
properties developed by Sekisui House
Portfolio centered on relatively new officebuildings and a hotel

New Sekisui House Reit, Inc.
Diversified REIT centeredon prime properties

Mainly highly stable, fixed-rent type master leaseagreements

Hotel

Retail Property, etc.

3.9%

0.6%

Mergerof varied growth opportunities by utilizing the integrated
2 Increase
corporate strength of Sekisui House Group
External growth potential will be enhanced by increasing the asset size and expanding theusage type of investment target assets.
Solid sponsor support will be utilized to maximum effects from the perspectives of both
growth and stability.
At the same time with the merger, 6 residential properties assets were acquired from Sekisui Housefor 25.3 billion yen in total and 12 residential properties were sold to third parties for 16.4 billion
yen in total, achieving qualitative enhancement of the portfolio.

Sekisui House Residential Investment Corporation
High-quality properties developed by Sekisui
House Group are the core of the portfolio
Portfolio of relatively new and highly competitive
residences primarily located near stations and inGreater Tokyo
High and stable occupancy rate

Office building

41.6%

Asset Size

440.8
billion yen

Residence

53.8%

Ratio of prime properties (Note)

90.0%

3 Increase our market presence by increasing asset size
After the merger, asset size grew to 440.8 billion yen, increasing SHR’s presence in the J-REIT
marketAfter the merger was announced, Japan Credit Rating Agency, Ltd. (JCR) changed the credit
rating outlook for SHR from AA- (Stable) to AA- (Positive)

Prime Maison
Shirokanedai tower

Prime Maison
Gotenyama West

Prime Maison
Ginza East

(Note) “Prime properties” is the title given to high-quality residential properties and commercial properties standing in strategic locations (here andhereinafter). Ratio of prime properties indicates the ratio of properties that fall under prime properties within the owned assets calculated
based on acquisition price. Please refer to page 5 for “strategic location,” “high-quality” and “prime properties.” Hamamatsu Plaza (retailproperty, etc.) is not included in the target of assessment of prime properties.

1

Message to Our Unitholders
I would like to express our sincere gratitude for your continued and loyal patronage.
Since its listing on the Tokyo Stock Exchange Real Estate Investment Trust Section (the J-REIT market) on
December 3, 2014, Sekisui House Reit, Inc. (“SHR”) has steadily accumulated a track record and has
settled its accounts for the 7th fiscal period (namely, the fiscal period ended April 2018). I, on behalf of
SHR, would like to extend my heartfelt thanks to unitholders as this could not have been managedwithout your support.

Performance highlights
Distribution per unit
Distribution per unit (Actual)
7th Fiscal Period Ended April 2018

Business results and distribution

I hereby report on the management status and financial results for the 7th fiscal period of SHR.
In terms of operations, SHR has concluded master lease agreements for 5 properties out of 6 properties(200.7 billion yen) SHR owns as of the end of this fiscal period and a long-term lease agreement for 1
property, achieving an occupancy rate of 100.0%.
In terms of debt, SHR executed refinancing in November 2017, thereby diversifying the dates for
repayment of its debts and extending the terms of its debts, as well as promoting fixed interest rate debt.
As a result, the management performance for the 7th fiscal period resulted in operating revenue of 4,655
million yen, operating income of 2,994 million yen, ordinary income of 2,622 million yen, and net incomeof 2,621 million yen, and the distribution per unit declared for the 7th fiscal period was 2,705 yen.
Furthermore, SHR merged with Sekisui House Residential Investment Corporation on May 1, 2018,
making a new start as a highly stable diversified REIT having residential properties and office buildings as
its core assets.
With the merger, the outlook for the long-term issuer rating obtained from Japan Credit Rating Agency,
Ltd. (JCR) was changed from AA- (Stable) to AA- (Positive), and the asset size has expanded. These have
led to the expectation of increasing SHR’s presence in the J-REIT market.
In conducting investment primarily in prime properties; high-quality residential properties and commercial
properties standing in strategic locations, and in promoting a growth strategy that takes full advantage ofthe real estate development and management capabilities and the like of Sekisui House, Ltd., the sponsor,
SHR will aim to maximize unitholder value by securing stable earnings as well as steady growth of its
investment assets in the medium to long term.

Before the Merger

After the Merger
9th FP (Forecast)
8th FP (Forecast)(ending Oct. 2018) (Note 1) (ending Apr. 2019) (Note 1)

6th FP (Actual)(ended Oct. 2017)

7th FP (Actual)(ended Apr. 2018)

Operating revenue(million yen)

4,580

4,655

12,136

12,078Operating income(million yen)

2,987

2,994

5,570

6,346

Ordinary income(million yen)

2,626

2,622

4,878

5,604

Net income(million yen)

2,625

2,621

7,178

5,603

Distribution per unit(yen) (Note 2)

1,355(2,710)1,352(2,705)

1,531(3,062)

1,526(3,052)(Note 1) The respective figure for “8th FP (Forecast) (ending Oct. 2018)” and “9th FP (Forecast) (ending Apr. 2019)” are figures as of June 15, 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 beguarantees 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)” and earlier indicates figures are gained by dividing actual figures in brackets by
two, and distribution per unit for “8th FP (Forecast) (ending Oct. 2018)” or later indicates figures are gained by multiplying forecast figure by
two in brackets, respectively (fractions below 1 yen are rounded down. Here and hereinafter).

Operating revenue/Net income(million yen)

I ask for the continued support and encouragement ofunitholders.

2,705 yen

Operating revenue

Distribution per unit

Net income

14,000

(yen)
2,000

12,136

12,00012,0781,500

10,0001,355(2,710)1,352(2,705)

1,531(3,062)

1,526(3,052)

8,000

7,178
6,000

1,000

5,603
4,580

4,655

4,000

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

500

2,625
2,000

0

0

6th FP
7th FP
8th FP
9th FP(ended Oct. 2017) (ended Apr. 2018) (ending Oct. 2018) (ending Apr. 2019)
Actual2

2,621ActualForecast

Forecast

6th FP
7th FP
8th FP
9th FP(ended Oct. 2017) (ended Apr. 2018) (ending Oct. 2018) (ending Apr. 2019)
ActualActualForecast

Forecast

3

Overview of SHR after the merger
Overview of portfolio

Strategies of SHR after the Merger(as of June 15, 2018 (the announcement date of business results))

Portfolio Development Policy
Investment Ratio by Usage Type

Number ofowned properties
Aggregateacquisition price

113properties

Total appraisal
value (Note 1)

440.8billion yen

Occupancy rate

Usage Type Ratio (Note 2)
Hotel
3.9%
(1 property)

Retail Property, etc.
0.6% (1 property)

Area Ratio (Note 2)

15 or more years
4.0%(5 properties)

billionOsaka area
22.6%
(12 properties)
Office building
41.6%(6 properties)

5 years or more but less than 10 years
56.7% (36 properties)

100.0%
91.3%

Investment Ratio by as of June 15, 2018, after the Merger
Usage Type(the announcement date of(acquisition price basis)business results)

Residences
Student dormitories

Residence

Investment ratio target byusage type upon achieving an
asset size of 600 billion yen

30~55%

53.8%

Around 45%

30~55%

41.6%

Around 45%

0~30%

3.9%

Around 10%

0~10%

0.6%

Around 0-10%

Company housing
Office buildings
Data centers

HotelsCommercial
Properties

Service apartments
Hotel

Retail properties
Senior properties (Housing
for the elderly with services,Fee-based homes for the
Retail property, etc. aged, and Daycare centers)

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

Credit Rating

43.1%

Core Assets
Residential
Properties

Examples of Specific
Asset Types

Office building

8.6years
10 years or more but
less than 15 years
28.2%(59 properties)

Usage Type

Under 5 years
11.0%(13 properties)

Averageproperty age

94.4%

Financial Base

Asset
Category

Greater Tokyo
66.6%(78 properties)

Three Major
Metropolitan
Areas (Note 4)¥440.8Fixed interest rate
debt ratio

Building Age Ratio (Note 2)(Note 3)

Nagoya area
Others5.2%
5.6%(10 properties) (13 properties)

Asset Size

Long-term
debt ratio

97.5%(as of the end of May 2018)

Residence
53.8%(106 properties)

LTV(total asset basis) (Note 5)

476.0billion yen

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

With the following points recognized by JCR, the credit
rating outlook was changed on March 30, 2018

Asset Category

Priority Investment Area

Investment Ratio by Area(acquisition price basis)

as of June 15, 2018, after the Merger(the announcement date of business results)

Stable operation can be expected even after the merger
through utilization of the integrated corporate strength of the
Sekisui House Group

Residential Properties

Greater Tokyo

Not less than 70%

77.0%

Enhancement of the portfolio and diversification of properties
will be achieved through the expansion of asset size resulting
from the merger

Commercial Properties

Three Major Metropolitan Areas

Not less than 80%

98.7%

Rating agency Before the change

JCR

AA(Stable)

After the change

AA- (Positive)(Greater Tokyo, Osaka Area, Nagoya Area)

Investment strategy
Prime 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(Note 1) “Total appraisal value” is based on the appraisal value as of the end of April 2018 for owned assets of SHR from before the merger and theassets succeeded from Sekisui House Residential Investment Corporation (excluding 12 properties sold on May 1, 2018), and the appraisal
value as of April 1, 2018 for 6 properties acquired on May 1, 2018.
(Note 2) Usage type ratio of “Hommachi Garden City” is stated as if the respective building under sectional ownership of office building portion andhotel portion were separate buildings according to the usage type, and the entire property is calculated as one property for calculating thearea ratio and building age ratio.
(Note 3) “Building age” indicates figures as of May 1, 2018. Weighted average of building age calculated on the basis of the acquisition price isstated for average property age (here and hereinafter).
(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)” indicates ratio of interest-bearing liabilities to expected total assets after asset replacement implemented on May 1,
2018 (here and hereinafter).

4

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 “sustainablebases of operation” of tenantcompanies

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.

5Asset Replacement Implemented Simultaneously with the Merger

Pipeline with Sekisui House

Realized enhancement of portfolio quality through asset replacement

Enhance external growth opportunities by utilizing sponsor support

Acquired properties(6 properties)

Prime Maison Planned and Developed by Sekisui House (Note 1) (as of June 15, 2018 (the announcement date of business results))

Total acquisition price25.3 billion yen

Total appraisal price (Note 1)

27.2 billion yen
Before depreciation 4.8%
After depreciation 3.7%

Appraisal NOI yield
Percentage located in Greater Tokyo

100.0%

Average building age

4.5 years

Sekisui House Reit, Inc.

Acquired relatively
new high-quality
residences

Sekisui House

Sold at price
above appraisal
price

Third parties

Sold properties(12 properties)
Total sales price16.4 billion yen

Total appraisal price (Note 1)

15.8 billion yen

Properties Under Construction (Note 2)

2 properties / 85 units

7 properties / 1,038 units

Percentage located in Greater Tokyo (Note 2)

51.7%

Average building age (Note 2)

14.1 years

5 properties(All in 23 Wards of Tokyo)

Prime Maison Mita
Tsunamachi(Minato-ku, Tokyo)

Prime Maison Shirokanedai Tower

Prime Maison Otsuka

Planned Properties (Note 3)

Actual NOI yield of immediately Before depreciation 4.4%
preceding fiscal period (Note 2)
After depreciation 2.7%

Acquired properties
Property Name

Completed Properties(Provisional name)Prime Maison Egotanomori(Nakano-ku, Tokyo)

Prime Maison Asakusabashi

Office Buildings Developed by Sekisui House for which SHR has Preferential Negotiating Rights (Note 1)

Photo of Properties

Property Name

Location

Asset Type

Unacquired Floor Area Ratio (Note 4)

Garden City Shinagawa Gotenyama

Shinagawa-ku, Tokyo

Office building

19.0%

Hommachi Minami Garden City

Osaka-shi, Osaka

Office building

43.6%

Main Projects in Sekisui House’s Urban Redevelopment Business (Note 1), (Note 5)
Location

Shinagawa-ku, Tokyo

Toshima-ku, Tokyo

Taito-ku, Tokyo

7,950 million yen

3,700 million yen

1,680 million yen

8,570 million yen

3,970 million yen

1,800 million yen

Completion Date (Age)May 20, 2016 (2.0 years)

Jan. 11, 2017 (1.3 years)

Oct. 7, 2016 (1.6 years)

Property Name

Prime Maison Daikanyama

Prime Maison Gotenyama West

Esty Maison Toyosu Residence (Note 3)

Acquisition PriceAppraisal Value(Note 1)

1993

2006

2010

Umeda Sky
Building(Shinumeda City)

Akasaka
Garden City

Hommachi
Garden City
(Acquired Property)

2013

2011

Garden City
Shinagawa Gotenyama(Acquired Property) (Note 6)

Gotenyama SH
Building(Acquired Property)

2015

Hommachi Minami
Garden City
(Acquired Property) (Note 6)

Hirokoji Garden
Avenue(Acquired Property)

Main Future Projects

Photo of Properties(Provisional name)
Akasaka 5-chome PJ (Note 3)
Location
Acquisition PriceAppraisal Value(Note 1)

Completion Date (Age)6

Meguro-ku, Tokyo

Shinagawa-ku, Tokyo

Koto-ku, Tokyo

2,520 million yen

3,400 million yen

6,050 million yen

2,730 million yen

3,680 million yen

6,460 million yen

Jan. 12, 2017 (1.3 years)

Jan. 18, 2011 (7.3 years)

Feb. 28, 2008 (10.2 years)(Note 1) “Total appraisal price” of acquired properties indicates the figure as of April 1, 2018 and total appraisal price of sold properties indicates thefigure as of the end of April 2018.
(Note 2) “Actual NOI yield of immediately preceding fiscal period”, “Percentage located in Greater Tokyo” and “Average building age” of soldproperties are calculated using the acquisition price of Sekisui House Residential Investment Corporation.
(Note 3) The property name of the “Esty Maison Toyosu Residence” is “Toyosu Residence” as of June 15, 2018 (the announcement date of businessresults), but there is a plan to change the property brand name to Esty Maison, and therefore, the name after the change is stated (hereand hereafter).

(Provisional name)MM21-44 PJ (Note 3)
Grand Front Osaka

The Ritz-Carlton, Kyoto

HK Yodoyabashi
Garden Avenue(Acquired Property)

Otemon Tower
JX Building(Note 1) As of June 15, 2018 (the announcement date of business results), there are no specific acquisition plans for the properties indicated as“Prime Maison Planned and Developed by Sekisui House”, “Office Buildings Developed by Sekisui House for which SHR has Preferential
Negotiating Rights” or “Main Projects in Sekisui House’s Urban Redevelopment Business”.
(Note 2) The images presented for “properties under construction” are images of the planned completed structures based on design drawings andthe actual buildings may differ.
(Note 3) Projects currently under consideration by Sekisui House; subject to change or cancellation without notice.
(Note 4) The “unacquired floor area ratio” indicates the ratio of the unacquired floor area for which SHR has preferential negotiating rights to acquire
the total exclusive-use floor area of the building.
(Note 5) The indicated properties include joint ventures with other companies and properties that have been sold.
(Note 6) SHR has acquired a portion and has preferential negotiating rights for the remain.

7

Portfolio Map(as of June 15, 2018 (the announcement date of business results))

Major owned properties
Greater Tokyo

Greater Tokyo
New

New

Residence/ 76 properties
Office building/ 2 properties

New Newly acquired properties

Others (Sapporo-shi)

Residence
Office building
Hotel

Sapporo-shi
Residence/ 3 properties

Residence

Garden City Shinagawa
Gotenyama

Gotenyama SH
Building

New

Prime Maison
Shirokanedai tower

Prime Maison
OtsukaNew

Office building
Hotel

New

Retail Property, etc.

New

Prime Maison
Odorikoen

Prime Maison
Minami 2-jo

Hommachi Minami
Garden City

Hommachi
Garden City

KOBE Women’sStudent Housing

Prime Maison
Yuhigaoka

Esty Maison
Kobe-sannomiya

Prime Maison
Kitatanabe

Osaka area
Nagoya area
Residence/ 9 properties
Office building/ 1 property

Prime Maison
Daikanyama

Prime Maison
Gotenyama West

Esty Maison
Toyosu Residence

Kanazawa-shi
Residence/ 1 property

Prime Maison
Asakusabashi
Fukuoka-shi

HK Yodoyabashi
Garden Avenue

Residence/ 7 properties

Hamamatsu-shi
Retail Property, etc./ 1 property

Yokkaichi-shi
Prime Maison
Gotenyama East
Prime Maison
Ginza East

Prime Maison
Musashinonomori

Residence/ 1 property

78 properties
Osaka area (Note)

Osaka area (Note)
Residence/ 9 properties
Office building/ 3 properties
Hotel/ 1 property

Prime Maison
Shinagawa

Greater Tokyo

13 properties
Nagoya area
10 properties
Others13 properties

Nagoya area

Prime Maison
Ebisu

Others (Fukuoka-shi)

Prime Maison
Yokohama
Nihon-odori

Prime Maison Teriha

Hirokoji Garden
AvenuePrime Maison
Higashisakura

Prime Maison
GokisoPrime Maison
Central Park

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

8

9

Stable and sound financial operations

ESG initiatives

Debt financeInterest-bearing liabilities (as of June 15, 2018 (the announcement date of business results))

Total interest-bearing
liabilities (billion yen)

197.9

Financial institution

LTV (total asset basis)

43.1%

Fixed interest rate
debt ratio

91.3%

Long-term rate
debt ratio

100.0%

Average financing
interest rate (Note 1)

0.77%

Average remaining term ofinterest-bearing liabilities (Note 2) (years)

4.1

Balance(billion yen)

Percentage

Balance(billion yen)

Percentage

MUFG Bank, Ltd.

43.6

23.9%

Sumitomo Mitsui Banking
Corporation

35.7

19.6%

Shinkin Central Bank

1.6

0.9%

The Senshu Ikeda Bank,
Ltd.

1.3

0.7%

Mizuho Bank, Ltd.

31.7

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

16.3

17.4%

The Shizuoka Bank, Ltd.

1.3

0.7%

8.9%

The 77 Bank, Ltd.

1.3

0.7%

12.2

6.7%

The Hiroshima Bank, Ltd.

1.3

0.7%

Resona Bank, Limited

10.5

5.8%

The Yamaguchi Bank, Ltd.

1.3

0.7%

Development Bank ofJapan Inc.

10.4

5.7%

Loan Total

182.4

100.0%

Total Investment
Corporation Bonds

15.5

—

Total Interest-Bearing
Liabilities

197.9

—

The Norinchukin Bank

8.9

4.9%

The Bank of Fukuoka, Ltd.

2.4

1.3%

Aozora Bank, Ltd.

2.2

1.2%

Financial institution

Received DBJ Green Building Certification for all of 6
properties acquired simultaneously with the merger
4 Stars

3 Stars

Refinancing activities in 7th FP and after
7th FP (November 2017)

8th FP (May 2018)

Long-term loan
(floating)Long-term loans Long-term loans(fixed) (Note 3)(fixed) (Note 3)

Loan amount14.0 billion yen

7.0 billion yen

7.0 billion yen

Financing term

3.0 years

4.6 years

Average financing
interest rate (Note 1)

1M TIBOR

0.35 %+0.25%

Prime Maison
Shirokanedai tower

Prime Maison
Gotenyama West

Prime Maison
Daikanyama

Prime Maison
OtsukaPrime Maison
Asakusabashi

Esty Maison Toyosu
Residence

Short-term loan
(floating)Long-term loans(fixed) (Note 3)

Loan amount

8.0 billion yen

8.0 billion yen

Record of acquisition of DBJ Green Building Certification (as of June 15, 2018 (the announcement date of business results))

5.5 years

Financing term

1.0 years

9.3 years

0.41 %

Average financing
interest rate (Note 1)

1M TIBOR

Acquired DBJ Green Building Certification for 38 properties of 113 owned properties, accounting for55.0% of the portfolio (based on acquisition price)

0.76%+0.18%

5 Stars

4 Stars

3 Stars

Status of Commitment Line
Financial Institution

Credit Limit Agreement

Agreement Term

Total

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

10.0 billion yen

November 1, 2017 to October 31, 2018

properties

Diversification of repayment dates

Loans with floating interest rates

Investment corporation bonds

30.0
25.0

26.8

2.5
4.0

3.0

3.0

20.7

4.7

16.9
5.0

8.3
0

2.5

1.8
7.1

4.4

12.4

11.1

11.1

12.4
7.0

3.0
1.9

6.1

7.6

2.0
3.1

The asset managementcompany became a
GRESB member inJune 2018.

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 FP ending
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, Apr. 30, Oct. 31,
2018
2019
2019
2020
2020
2021
2021
2022
2022
2023
2023
2024
2024
2025
2025
2026
2027
2026
2027

(Note 1) “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 theeffect of the interest rate swap are used.
(Note 2) “Average remaining term of interest-bearing liabilities” indicates the average remaining term from the respective date on which the averageremaining term of interest-bearing liabilities was calculated to maturity dates thereof, weighted by the balance of the respective interestbearing liabilities.
(Note 3) Including floating interest rate loans, the rates of which are fixed by interest rate swap transactions.

10

22

properties

The DBJ Green Building Certification System recognizes outstanding properties that respond to the demands of the times. The system was establishedbased 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.

GRESB assessment in FY2017• GRESB assessment: Green Star• GRESB rating: 3 Stars• ESG Public Disclosure: C (global average)• Participation in the Health & well-being Module

4.0
15.0
10.0

14

properties

Participation in the GRESB assessment

2.0

20.0

Total

(as of June 15, 2018 (the announcement date of business results))

Loans with fixed interest rates(billion yen)

2

Total

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

Reinforcement of governance catapulting on the merger
Newly established the Internal Control Promotion Department which controls and supervises risk management,internal audit, legal affairs, etc.
At the Investment Committee which plays an important role in the decision-making process, increased the number ofexternal committee members from one (a real estate appraiser) to two (a real estate appraiser and a lawyer).

11

Profile of SHR

Overview of Asset Management Company

Overview

History

Overview

Name

Sekisui House Reit, Inc.

Sep. 8,2014

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

Corporate
nameSekisui House
Asset Management, Ltd.

Representative

Junichi Inoue,
Executive Director

Sep. 18,
2014

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

Representative

Junichi Inoue, President &Representative Director

Address

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

Asset
Management
Company

Sekisui House AssetManagement, Ltd.

Fiscal Period
Ends

April and October of each year

Structure Diagram
Parent Company of the AssetManagement Company /Sponsor

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 absorptiontype merger(For each investment unit of the dissolving
corporation, 1.65 post-split investment units ofthe surviving corporation (SHR) were allocated.)(as of June 15, 2018 (the announcement date of business results))

100% ownership

Investment Corporation

General Meeting ofUnitholders

Asset Management Company

Board of Directors

Sekisui House
Asset Management, Ltd.

Executive Director Junichi Inoue
Supervisory Director Shigeru Nomura
Supervisory Director Tatsushi Omiya

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

Capital

400 million yen

Shareholder

Sekisui House, Ltd. (100%)

Licenses andregistration,
etc.

Certified as an entrustment-based
agencyLicense No.82 issued by the Ministerof Land, Infrastructure, Transportation
and Tourism
Registered as a financial instruments
business operator
Registration (Kinsho) No.2791 issued
by the Director of Kanto Local
Finance Bureau

Operational Organizational Structure
General Meeting of
Shareholders

Mitsubishi UFJ Trust andBanking Corporation

Statutory Auditor

Asset Custody Company
Board of Directors

Mitsubishi UFJ Trust andBanking Corporation
Investment Committee

Independent Auditor
Pipeline Support Companies
Ernst & Young ShinNihon LLC

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.
Asset Management Agreement Sponsor Support Agreement
General Administrative Agreement Asset Custody Agreement
Financial Agent Agreement

12

Head office

General Administrative Agent

Sekisui House, Ltd.

Licensed for building lots and buildings
transaction business
License No.(1) 96411 issued by theGovernor of Tokyo

Compliance Committee

Transfer Agent
Compliance Officer

Mizuho Trust & Banking Co., Ltd.

President

Administrator for Investment
Corporation Bonds
MUFG Bank, Ltd.

Business Strategy
Department

Internal Control
Promotion Department

Real Estate Division

Agreement on Preferential Negotiating Rights (etc.)
Administrative Agreement (Administration of Investment Units)

Real Estate
Investment
No. 1 Dept.

Real Estate
Investment
No. 2 Dept.

Real EstateManagement
No. 1 Dept.

Real EstateManagement
No. 2 Dept.

Real EstateManagement
No. 3 Dept.

Real Estate
Accounting
Department

Engineering
Management
Department

Finance
Department

Investor
Relations
Department

General
Accounting
Department

GeneralAffairs
Department13

Outline of asset management operation
1.

Developments in Asset Management in the Fiscal Period under Review(1) Brief History of the Investment Corporation
Sekisui House Reit, Inc. (“SHR”), that has as its sponsor Sekisui House, Ltd. (“Sekisui House”), one of theleading homebuilders in Japan with an established development and management track record also in theproperty development business, was established on September 8, 2014 and 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).
SHR’s policy is to conduct asset management that seeks to secure stable earnings over the medium to long termand steady growth of its investment assets, mainly by investing in commercial properties (Note 1), in particularcommercial properties which are situated in strategic locations or are of a high quality (referred to by SHR as
prime properties) positioned as its core investment targets.
Based on the policy described above, SHR acquired three properties (with an aggregate acquisition price (Note2) of 114,300 million yen) on December 3, 2014, the day it was listed, and thereafter began managing them.
After acquiring a property (with an acquisition price of 38,600 million yen) on May 19, 2015, SHR acquired three
additional properties (with an aggregate acquisition price of 26,650 million yen), one of which is an additional
portion of a property part of which is already owned by SHR on May 24, 2016. Thereafter, on May 24, 2017, SHR
acquired two additional properties (with an aggregate acquisition price of 21,200 million yen), both of which are
additional portions of properties part of which are already owned by SHR. As of April 30, 2018 (the end of the
fiscal period under review), SHR owns six properties (with an aggregate acquisition price of 200,750 million yen)
as its investment assets.
(Note 1) “Commercial properties” refer to real estate mainly used for business purposes other than for residence, such as officebuildings, retail properties and hotels. Residential properties include student dormitories, company housing and serviced
housing for the elderly. In line with the Investment Corporation Merger (as defined in “2. Status of Capital Increase, etc.”
later in this document. The same shall apply hereinafter.) described in “5. Significant Subsequent Events (4) Amendments to
Articles of Incorporation and Asset Management Guidelines” later in this document, SHR amended its asset management
guidelines to set prime properties, which refer to residential properties and commercial properties (both as defined in “4.
Future Management Policy (2) Future Management Policy and Challenges to Address” later in this document. The same shallapply hereinafter.), as the core investment target, etc. on May 1, 2018.
(Note 2) “Acquisition price” is the sale and purchase price stated in the sale and purchase agreement for each of the owned assets(excluding consumption tax and local consumption tax, as well as commission and various other expenses; rounded down to
the nearest million yen). The same shall apply hereinafter.

(2) Management Environment and Management Performancea. Management Environment
During the fiscal period under review, the Japanese economy continued to mildly expand with positive
circulation of income contributing to expenditure.
In the real estate transaction market, cap rates continue to remain low and high-quality properties remain inshort supply despite the appetite for property acquisition continuing to be strong among investors in Japan andabroad due to the low level vacancy rate and the accommodative monetary policy.
As for the office leasing market, the demand remains firm backed by solid economic growth.
With regard to the environment surrounding retail properties, according to the Outlook for Economic Activity
and Prices (April 2018) released by the Bank of Japan, private consumption has moderately increased albeit

b. Management Performance
The assets held by SHR as of the end of the fiscal period under review are six properties with an aggregateacquisition price of 200,750 million yen and total leasable area of 112,032.96m2. In addition, of the six properties,
master lease agreements with Sekisui House as lessee have been executed for five properties and a long-termlease agreement with one tenant as lessee has been executed for one property, resulting in occupancy rate as ofthe end of the fiscal period under review of 100.0%.
(3) Overview of Fund Procurement
a. Borrowings
SHR has adopted it as its basic policy to conduct stable and sound financial operations in order to secure stableearnings over the medium to long term and enhance unitholder value. During the fiscal period under review,
SHR refinanced loans with floating interest rates totaling 14,000 million yen due for repayment on November
30, 2017 with long-term loans in the same amount to diversify the repayment dates of its debts and extend theterm of its debts, and also changed the interest rates of its debts to fixed rates through interest rate swap
agreements, etc.
As a result, the fixed interest rate debt ratio against interest-bearing liabilities rose from 76.4% as of the end of
the previous fiscal period to 93.0% as of the end of the fiscal period under review; and the balance of interestbearing liabilities as of the end of the fiscal period under review stood at 84,400 million yen, unchanged from theprevious fiscal period, and the ratio of total interest-bearing liabilities to total assets (“LTV (total assets basis)”)is 40.7%.
b. Credit RatingWith regard to the credit rating SHR has acquired from Japan Credit Rating Agency, Ltd. (JCR), rating outlookof long-term issuer rating has been changed from “stable” to “positive” on March 30, 2018 in light of theInvestment Corporation Merger.
The following table sets forth the rating status as of the end of the fiscal period under review.
Credit Rating Agency

Rating TypeJapan Credit Rating Agency, Ltd.

Long-term issuer rating: AA−(JCR)Rating outlook: Positive

Japan Credit Rating Agency, Ltd.
(JCR)

Bond rating: AA−(4) Overview of Business Performance and Distributions
Results in the fiscal period under review are operating revenue of 4,655 million yen, operating income of 2,994
million yen and ordinary income of 2,622 million yen, resulting in net income of 2,621 million yen. In addition,
concerning distributions, the decision has been made to distribute the entire amount of unappropriated retained
earnings (excluding the portion in respect of which distribution per investment unit is less than 1 yen), with theintention of having the maximum amount of distribution of earnings included in deductible expenses 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)). As a result, the distribution per investment
unit is 2,705 yen.

with some ups and downs against the backdrop of solid improvements in employment and income, and thus
retail sales figures continue to be on an upward trend in general. Sales figures of department stores are picking
up in general and sales of supermarkets and convenience stores continue to show a moderate upward trajectory
albeit with some ups and downs.
Under such trends, demand for new store openings of drug stores, etc. has continued to be firm and rent hasremained mostly unchanged at a high level.
The hotel market remains favorable with the number of foreign tourists visiting Japan still on the rise. During
the period from January to March 2018, the number of foreign tourists to Japan totaled around 7.62 million,
representing a 16.5% year-on-year increase.

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2.

Status of Capital Increase, etc.
The following table sets forth the increase (/decrease) in unitholders’ capital and the total number of investment[Changes in Market Price of Investment Securities]

units issued and outstanding since the establishment of SHR through to the end of the fiscal period underreview.

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.

SHR conducted an absorption-type merger (“Investment Corporation Merger”), whereby SHR would be thesurviving corporation and Sekisui House Residential Investment Corporation (“SHI,” and collectively with SHR,
the “Two Investment Corporations”) would be the dissolving corporation, effective May 1, 2018. Accordingly, thetotal number of SHR’s investment units issued and outstanding became 3,762,091 on May 1, 2018. For details,
please refer to “5. Significant Subsequent Events (1) Merger between SHR and SHI and (2) Split of Investment
Units” later in this document.

Date

Event

Increase(Decrease)
September 8, 2014

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

Balance

Increase(Decrease)

Note

Balance

7th fiscal period
3rd fiscal
period4th fiscal
period5th fiscal
period6th fiscal
periodFrom: Nov. 1,
2015
To: Apr. 30,
2016

From: May 1,
2016
To: Oct. 31,
2016

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

From: May 1,
2017
To: Oct. 31,
2017High (yen)133,500

157,900

153,900

146,400

149,100

70,500Low (yen)

116,700

125,800

138,000

125,900

123,700

69,700Fiscal period

Before theex-rights date

On and after
the ex-rights
date

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

(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.

Private placement forincorporation

200

200

2,000

2,000

(Note 1)

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)(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 apublic offering to procure funds for the acquisition of new properties.
(Note 3) 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.
(Note 4) 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.
(Note 5) 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.
(Note 6) 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.
(Note 7) 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.
(Note 8) 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.
(Note 9) 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. Furthermore, upon the Investment Corporation Merger, 1.65 SHR units following the investment unit split were allocatedto every SHI unit on May 1, 2018 and 1,824,091 investment units were newly issued. As a result, the total number of investment
units issued and outstanding now stands at 3,762,091. There is no change to unitholders’ capital accompanying the above.

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3.

Performance of Distribution, etc.
Distribution per unit for the fiscal period under review (the 7th fiscal period) is 2,705 yen. The policy is to

4. Future Management Policy(1) Future Trends Outlook

distribute almost the entire amount of unappropriated retained earnings with the intention of applying thespecial treatment of corporation tax under which the amount equivalent to distribution of earnings is deductible

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

from the taxable income of investment corporations as deductible expenses (Article 67-15 of the Act on Special
Measures Concerning Taxation).
3rd fiscal period 4th fiscal period 5th fiscal period 6th fiscal period 7th fiscal period
From:
From:
From:
From:
From:
Nov. 1, 2015
May 1, 2016
Nov. 1, 2016
May 1, 2017
Nov. 1, 2017
Fiscal period
To:
To:
To:
To:
To:
Apr. 30, 2016
Oct. 31, 2016
Apr. 30, 2017
Oct. 31, 2017
Apr. 30, 2018
Total amount of unappropriated1,967,034
2,321,003
2,381,018
2,626,016
2,621,502
retained earnings (thousand yen)Amount of accumulated earnings
296
179
296
26
357
(thousand yen)
Total amount of cash distribution
1,966,738
2,320,824
2,380,722
2,625,990
2,621,145(thousand yen)rising, according to the Monthly Economic Report (May 2018) released by the Cabinet Office. On the other hand,
we have to be mindful of the impact of economic uncertainties overseas and fluctuations in global financial and[Distribution per unit] (yen)Total amount of distribution of
earnings out of the total amountof cash distribution(thousand yen)[Distribution of earnings perunit] (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 amountof refund of investment in capital(thousand yen)[Distribution
amountfromreserve 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 ofrefund of investment in capital(thousand yen)[Distribution
amountfrom
distribution
reducing
unitholders’ capital for tax
purpose out of amount of refundof investment in capital per unit](yen)[2,477][2,596][2,663][2,710][2,705]

1,966,738

2,320,824

2,380,722

2,625,990

2,621,145[2,477][2,596][2,663][2,710][2,705]

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capital markets.
As to the real estate market, the cap rate is likely to remain low for the time being.
In the office leasing market, although the impact of possible future mass supply in the Tokyo area requires close
attention, firm demand, backed by sustained strong corporate earnings, is expected to continue, including inregional cities.
The hotel market will likely continue to see sustained high occupancy rates levels, supported by the expected
increase in foreign tourists’ numbers and firm domestic demand.
(2) Future Management Policy and Challenges to Address
SHR will continue to focus on prime properties̿high-quality residential properties (Note 1) and commercial
properties (Note 2) situated in strategic locations̿as its core investment targets among other main investment
targets. By implementing growth strategies that take full advantage of the real estate development andoperation capabilities and other strengths of Sekisui House, which has established an extensive track record ofdeveloping and operating residential properties and commercial properties, SHR will, through the support of its
sponsor, seek to secure stable earnings over the medium to long term and steady growth of its investment assets
and thereby aim to maximize unitholder value.
Meanwhile at Sekisui House Asset Management, Ltd. (the “Asset Management Company”) efforts to advance
portfolio diversification by exploring investment opportunities which are seized through the Asset Management
Company's own approach.
Concerning main investment target areas, SHR has set Greater Tokyo as the core investment area in Japan forresidential properties, 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 etc. and are expected to see strong leasing demand and supplies of supriorproperties. 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 3) can be fully utilized.
SHR has set the Three major metropolitan areas (Note 4) 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

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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 as well.
SHR has executed a sponsor support agreement with Sekisui House. This agreement provides for utilization of

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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 theredevelopment of owned properties.

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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 5) 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

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services consignment agreement (“PM Agreement”) with Sekisui House and the sponsor support agreement,seek (a) PM services for commercial properties, and (b) in relation to management of owned assets for internal

5. Significant Subsequent Events(1) Merger between SHR and SHI

growth, (i) provision of 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/value

SHR conducted the Investment Corporation Merger on May 1, 2018.

enhancement 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 regarding commercial properties.

a. Purpose of the Investment Corporation Merger
SHR and SHI expect that the Investment Corporation Merger will bring (1) Creation of a highly stable

Furthermore, Sekiwa Real Estate Group possesses PM skills, including tenant solicitation utilizing its
nationwide network and know-how on PM services proven by an efficient management track record. SHR anddiversified REIT having high-quality residential properties and office buildings as its core assets, (2)Increase of varied growth opportunities by utilizing the integrated corporate strength of the Sekisui House

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.

Group and (3) Greater market presence due to an increase in the scale of assets, among other effects.
Sekisui House, the sponsor of the Two Investment Corporations, strives for the creation of residences andBy implementing growth strategies that take full advantage of the versatile support from Sekisui House and
Sekiwa Real Estate Group for external growth and internal growth as described above, SHR will seek to secureenvironments rich in humanity, aiming to be a “company which is a living environment creator” contributing
to building a society where everyone can live comfortably, and the Two Investment Corporations have always

stable earnings and steady growth of its investment assets and thereby aim to maximize unitholder value.

shared this corporate philosophy in carrying out their operations.
SHR, keeping in mind the philosophy of Sekisui House, will primarily target “residential properties”(Note 1) ”Residential properties” refer to real estate whose principal use is residential (including furnished residences with appliances,which do not fall under school dormitories, company housing, or service apartments (*1) (*2)). The same shall apply
hereinafter.
(Note 2) ”Commercial properties” refer to real estate whose principal use is for office buildings, hotels (including service apartments)
and retail properties, etc. (including housing for elderly with service, fee-based homes for the aged, and daycare centers (*2))
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
fall under apartment house as defined in Building Standards Act (Act No. 201 of 1950 as amended). The same shallapply hereinafter.
(Note 3) ”Sekiwa Real Estate companies (7 companies)” is a collective name for Sekiwa Real Estate, Ltd., Sekiwa Real Estate Kanto,Ltd.(“Sekiwa Real Estate Kanto”), Sekiwa Real Estate Tohoku, Ltd. (“Sekiwa Real Estate Tohoku”), Sekiwa Real Estate
Chubu, Ltd. (“Sekiwa Real Estate Chubu”), Sekiwa Real Estate Kansai, Ltd. (“Sekiwa Real Estate Kansai”), Sekiwa Real
Estate Chugoku, Ltd. (“Sekiwa Real Estate Chugoku”) and Sekiwa Real Estate Kyushu, Ltd. (“Sekiwa Real Estate Kyushu”),
which are wholly-owned subsidiaries of Sekisui House, and are core companies of real estate unit of the Sekisui House Group(*) operating nationwide. The same shall apply hereinafter.
(*) ”Sekisui House Group” refers to a group of companies comprised of Sekisui House and its consolidated subsidiaries andits affiliates accounted for by the equity method. The same shall apply hereinafter.
(Note 4) The “Three large cities” refer to the Tokyo 23 wards, Osaka City and Nagoya City. In addition, 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 same shall apply hereinafter.
(Note 5) ”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, LTV as of the effective date of Investment Corporation Merger was 43.1%, and around 45% is set as
upper limit of LTV (total assets basis) for the time being after Investment Corporation Merger. SHR has thepolicy to keep LTV at conservative level with attention being paid to the maintenance of funding capacity.
SHR will work to diversify its sources for direct and indirect financing, such as by issuing investment
corporation bonds and the like in consideration of the market environment, SHR’s financial standing, and otherfactors, as a whole, while striving to continue stable and sound financial operations.

including residence and other assets, and “commercial properties,” including office buildings and hotels
which fall under “High-Quality” Prime Properties situated in “Strategic Locations” and will pursue a growthstrategy leveraging to the fullest the real estate development and management capabilities of the Sekisui
House Group. In addition, it will strive to make it possible for its unitholders, tenants and all otherstakeholders to move forward together while aiming to “provide high-quality social capital” and“maximization of unitholders value” through asset management seeking medium- and long-term income
stability and a steady increase of investment assets.
b. Form of the Merger
Form of the Investment Corporation Merger was an absorption-type merger with SHR being the surviving
corporation, and SHI was dissolved in the Investment Corporation Merger.
c. Merger Ratio
Upon the Investment Corporation Merger, SHR allocated and delivered 1.65 SHR investment units for every
1 SHI investment unit to the unitholders stated or recorded in the final unitholders register on April 30,
2018, which was the day prior to the effective date of the Investment Corporation Merger, (the “Unitholders
Subject to Allocation”). Following the allocation, fractions of less than one investment unit arose in thenumber of investment units to be delivered to some of the Unitholders Subject to Allocation. Those fractional
units of less than one unit are sold through market transactions, and the proceeds from the sales aredelivered to the Unitholders Subject to Allocation as allocated fractional units in accordance with the fraction
pursuant to the provisions of the Act on Investment Trusts and Investment Corporations (Act No. 198 of1951, as amended) (the “Investment Trust Act”) in July 2018.
d. Merger Consideration
In addition to the abovementioned investment units, SHR pays the Unitholders Subject to Allocation or theregistered pledgees of investment units held equivalent to the cash distributions for the SHI’s final fiscal
period, a merger consideration in the form of cash distribution for that same period (amount obtained by
dividing the amount of SHI’s distributable income on April 30, 2018 by the number of issued SHI investment
units on the same day (dropping any fractions of a yen)) in July 2018.
e. Unitholders’ Capital, etc.
The amounts of SHR’s unitholders’ capital and capital surplus increased upon the Investment Corporation
Merger are as follows.
Unitholders’ capital
0 yen
Capital surplus

Amount obtained by subtracting the above unitholders’ capital from the amount ofchange in unitholders’ equity as defined in Article 22, paragraph 1 of theOrdinance on Accounting at Investment Corporations (Cabinet Office Ordinance
No. 47 of 2006, as amemded)

20

21

(2) Split of Investment Units

Acquisition Price

SHR conducted a split of investment units (the “Investment Unit Split”) on May 1, 2018.

Property namea. Purpose of the Investment Unit Split
The Investment Corporation Merger was to be carried out through an absorption-type merger having SHR as
the surviving corporation, and the merger ratio, before considering the Investment Unit Split, would be SHR
1: SHI 0.825. However, based on this merger ratio, 0.825 units of SHR would be allotted to every unit of SHI,
which would mean that a number of SHI unitholders would receive less than one SHR unit. For this reason,in order to enable SHI unitholders to continue holding SHR units even after the Investment Corporation
Merger, for the purpose of issuing 1 SHR unit or more to all SHI unitholders, the SHR units were split 2-for1.

in the final unitholder register on the day were split 2-for-1.
c. Number of Investment Units Increased after the Investment Unit Split and the Investment Corporation
Merger, etc.
Total number of outstanding units prior to the Investment Unit Split:
Increased number of units through the Investment Unit Split:
Total number of issued and outstanding units after the Investment Unit Split:
Number of investment units allotted to SHI investment units
following the Investment Corporation Merger:

969,000
969,000units
units
969,000
969,000units
units
1,938,000
1,938,000units
units
1,824,091
1,824,091 units
units

Total number of issued and outstanding units after the Investment Corporation Merger: 3,762,091 units
Number of authorized investment units after the Investment Unit Split (Note):
20,000,000
20,000,000 units
units(Note)

Since the total number of issued and outstanding units would increase in line with the Investment Unit Split, SHR haschanged the number of authorized investment units from 10,000,000 units to 20,000,000 units contingent upon theInvestment Corporation Merger taking effect. For figures of per-unit information assuming that the investment unit
split was executed at the beginning of the fiscal period, please refer to “Financial Statements (6) Notes to Financial
Statements 19. Per Unit Information” later in this document.

Prime Maison Shirokanedai Tower

Shinagawa-ku,Tokyo

7,950

Prime Maison Otsuka

Toshima-ku,Tokyo

3,700

Prime Maison Asakusabashi

Taito-ku,Tokyo

1,680

Prime Maison Daikanyama

Meguro-ku,Tokyo

2,520

Prime Maison Gotenyama West

Shinagawa-ku,Tokyo

3,400

Koto-ku,Tokyo

6,050(Note 2)

Total Acquisition Price (Note 1)

Property nameEsty Maison Machida
Esty Maison Shinkawasaki

Location

Esty Maison Tenjinhigashi I
Esty Maison Tenjinhigashi II(4) Amendments to Articles of Incorporation and Asset Management Guidelines(Reference Information)(1) Acquisition of Assets
SHR acquired trust beneficiary interests in real estate for the following 6 residential properties on May 1,
2018.

Sale Price(million yen)

Sale Date

Purchaser

Kanagawa

name from “Sekisui House Investment Advisors, Ltd.” to “Sekisui House Asset Management, Ltd.,” effective asof May 1, 2018.

assets and investment targets. The changes to the asset management guidelines also took effect on May 1, 2018,
the effective date of the Investment Corporation Merger.

25,300

Saiwai-ku, Kawasaki-shi,Joto-ku, Osaka-shi, OsakaIn addition, the Asset Management Company resolved, at its Board of Directors held on March 28, 2018, to
make necessary changes to the asset management guidelines to respond to the expansion of SHR’s investment

Sekisui House,
Ltd.

Machida-shi, Tokyo

Esty Maison Joto

Merger, were approved. Part of amendments took effect on March 27, 2018 and the remaining part took effect on
May 1, 2018, the effective date of the Investment Corporation Merger.

May 1, 2018upon the Investment Corporation Merger on May 1, 2018.

Meguro-ku, Tokyobuildings, retail properties, and hotels, as well as to add necessary provisions regarding new geographical areas
for investment in residential properties, in conjunction with implementation of the Investment Corporation

Seller(2) Sale of Assets
SHR sold trust beneficiary interests in real estate for the following 12 residential properties it succeeded

The Asset Management Company carried out an absorption-type merger, with the Asset Management Company
being the surviving company and the former SHAM being the dissolving company, and changed its company

At the General Meeting of Unitholders held on March 27, 2018, amendments of the Articles of Incorporation to
add residential properties to SHR’s core investment targets along with its conventional targets of officeAcquisition
Date(Note 1) The “Acquisition Price” and “Total Acquisition Price” do not include acquisition expenses, fixed asset tax, city planning tax,
consumption tax, and local consumption tax.
(Note 2) The property name of the “Esty Maison Toyosu Residence” is “Toyosu Residence” as of the date of this document, 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.

Esty Maison Megurohoncho(3) Merger of Asset Management Company and Change of Company Name

(Note 1)(million yen)

Esty Maison Toyosu Residence
b. Method of the Investment Unit Split
With April 30, 2018 as the record date, SHR investment units owned by the unitholders set forth or recorded

LocationHakata-ku, Fukuoka-shi,
Fukuoka
Hakata-ku, Fukuoka-shi,
Fukuoka

Esty Maison Shijonishinotoin

Shimogyo-ku, Kyoto-shi, Kyoto

Esty Maison Hachiojiminamino

Hachioji-shi, Tokyo

Esty Maison Nishinakajima

Higashiyodogawa-ku, Osakashi, Osaka

Esty Maison Kawaramachi

Chuo-ku, Osaka-shi, Osaka

Esty Maison Shibaura

Minato-ku, Tokyo

Esty Maison Tsutsujigaoka

Chofu-shi, Tokyo

Total Sale Price (Note)

Undisclosed(Note)

May 1, 2018

Undisclosed(Note)

16,400(Note) Since neither the purchasers of the Sold Assets nor the investor who invests in the purchasers has given approval for disclosure, thesale price for individual properties and purchaser information will remain undisclosed. In addition, the “total sale price” does notinclude sale expenses, fixed asset tax, city planning tax, consumption tax, and local consumption tax.

(3) Borrowing of Funds
SHR conducted the following short-term loans on May 1, 2018 to partly fund of its acquisition of the trust
beneficiary interests in real estate stated in “(1) Acquisition of Assets” above, as well as related expenses. On

22

23

May 31, 2018, SHR conducted long-term loans in order to refinance the said short-terms loans through early
repayment.
a. Outline of new borrowings and early repayment
Category

LenderLoan syndicate with
MUFG Bank, Ltd.
Short term (Note 4) and Mizuho
Bank, Ltd. as arranger(Note 5)Loanamount(millionyen)Interest rate
(Note 1) (Note 2)

Category
Drawdown
date

Initialrepayment
date

Base rate (JBA 18,000

b. Outline of refinancing

month Japanese Yen May 1, 2018 Apr. 30, 2019

Early
repayment
date(Note 3)

May 31,
2018

LenderLoanamount(million yen)Interest rate
(Note 1)

6,100

Base rate(JBA 1-month
Japanese Yen
TIBOR) plus
0.460%(Note 5)

Drawdown
date

Borrowing
methodRepayment Repayment
date
method(Note 2)
(Note 3)

Security

Security

Loan syndicate with
MUFG Bank, Ltd. andMizuho Bank, Ltd. asarranger (Note 4)

Unsecured
Unguaranteed

TIBOR) plus 0.180%

May 31,
2018

Long term(Note 1)
(Note 2)
(Note 3)

Borrowing expenses, etc. payable to the lender are not included.
The base rate applicable to the calculation period for the interest payable on an interest payment date was 0.05364%.
Although repayment date was April 30, 2019, the entire loan amount was repaid prior to the repayment date due to refinancing
conducted on May 31, 2018.
(Note 4) The company name was changed from The Bank of Tokyo-Mitsubishi UFJ, Ltd. on April 1, 2018. The same shall apply hereinafter.
(Note 5) The loan syndicate comprises MUFG Bank, Ltd., Mizuho Bank, Ltd. and Sumitomo Mitsui Banking Corporation.

MUFG Bank, Ltd.

(Note 1)1,900

0.700%(Note 6)

Borrowingbased on theindividual loan
agreement
Lump-sum
August 31,
Unsecured
dated May 29,
repayment Unguaranteed
2027
2018, with theat maturity
lenders shown
to the left as
the loaner

Borrowing expenses, etc. payable to the lender are not included.

(Note 2) If the concerned date is not a business day, then the repayment date shall be the next business day, and if that next business day
falls in the next calendar month, then it shall be the business day immediately preceding the concerned date.
(Note 3) During the period from the Borrowing’s drawdown to the repayment date, SHR may make early repayment of loans, in whole orin part, if SHR gives prior written notice and other certain terms and conditions are met.
(Note 4) The loan syndicate comprises Mizuho Bank, Ltd. and Sumitomo Mitsui Banking Corporation.
(Note 5) The base rate applicable to the calculation period for the interest payable on an interest payment date shall be the one-month
Japanese Yen TIBOR (Tokyo Interbank Offered Rate) published by JBA TIBOR Administration two business days prior to theinterest payment date immediately preceding the respective interest payment date. The base rate is subject to review every
interest payment date. However, in cases where there is no rate corresponding to the interest calculation period, the base rateshall be the base rate corresponding to the concerned period calculated based on the method provided in the contract. The firstinterest payment date shall be the last day of June 2018, and subsequent interest payment dates shall be the last days of every
month and the principal repayment date. However, if the concerned date is not a business day, then it shall be the next businessday, and if that next business day falls into the next calendar month, then it shall be the business day immediately preceding theconcerned date. The interest rate is substantially fixed at 0.783% by conclusion of the interest rate swap agreement.
(Note 6) The first interest payment date shall be the last day of August 2018, and subsequent interest payment dates shall be the last daysof February and August of each year and the principal repayment date. However, if the concerned date is not a business day, thenit shall be the next business day, and if that next business day falls into the next calendar month, then it shall be the business
day immediately preceding the concerned date.

24

25

3.

Outline of the Investment Corporation
1.

Status of Capital
Fiscal period

Total number of investment units
authorized (units)

10,000,000

10,000,000

10,000,000

10,000,000

10,000,000

794,000

894,000

894,000

969,000

969,000

87,743100,040

100,040

110,189

110,189

issued and outstanding (units)
Unitholders’ capital (million yen)
Number of unitholders (persons)2.

16,545

13,74912,44914,49012,958

Position
Executive
Director

Key concurrently held position, etc.

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

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

㸫

Name

Junichi Inoue

Director, Shigeru Nomura Certified Public
Accountant Office
Supervisory

Shigeru Nomura

Independent
AuditorOutside Director, Eiken Chemical Co., Ltd.
Member of Corporate Revitalization

1,800

Committee, The Resolution and Collection
Corporation (RCC)

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.
Percentage of
owned units to
Number ofunits owned total units issued
Nameand outstanding(units)(%)

Tatsushi Omiya

Outside Director, QB Net Holdings Co., Ltd.
Partner, City Law Offices

1,800

Ernst & Young
ShinNihon LLC

㸫

9,000
(Note 2)

(Note 1) None of the executive director or supervisory directors owns SHR investment units in his own name or in the name of anotherperson. In addition, supervisory directors may be officers of other corporations other than those stated above, but none of suchcorporations, including those stated above, has vested interest in SHR.
(Note 2) The total amount of compensation for the Independent Auditor, as stated above, is an approximation and includes
compensation for auditing English financial statements.

Japan Trustee Services Bank, Ltd. (Trust Account)

262,107

27.05

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

157,431

16.25

Sekisui House, Ltd.

65,200

6.73

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

48,212

4.98

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

25,359

2.62

STATE STREET BANK AND TRUST COMPANY 505012

16,218

1.67

The Hachijuni Bank, Ltd.

12,818

1.32

STATE STREET BANK - WEST PENSION FUND CLIENTS - EXEMPT 505233

10,388

1.07

The Hokuriku Bank, Ltd.

10,098

1.04

Asset Management Company

Sekisui House Asset Management, Ltd.

STICHTING PENSIOENFONDS METAAL EN TECHNIEK

10,004

1.03

Asset Custodian

Mitsubishi UFJ Trust and Banking Corporation

617,835

63.76

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)

26

auditor of SHR as of the date of this document.

As of the end
As of the end
As of the end
As of the end
As of the endof 3rd fiscalof 4th fiscal
of 5th fiscal
of 6th fiscal
of 7th fiscal
periodperiodperiodperiodperiod(Apr. 30, 2016) (Oct. 31, 2016) (Apr. 30, 2017) (Oct. 31, 2017) (Apr. 30, 2018)

Total number of investment units

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

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

(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 Trust 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 factors 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

Name

27

Condition of investment assets
1.

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.

Type ofasset

Geographical area,etc.

As of the end of 6th fiscal period(Oct. 31, 2017)

As of the end of 7th fiscal period(Apr. 30, 2018)

Total amountheld(million yen)

Total amountheld(million yen)
(Note 1)

As a percentage
of total assets(%)(Note 2)

(Note 1)Three major

As a percentage
of total assets(%)(Note 2)

198,055

95.6

197,376

95.1

Other areas

㸫

㸫

㸫

㸫

Total of real estate in trust

198,055

95.6

197,376

95.1

Deposits and other assets

9,086

4.4

10,073

4.9

Total amount of assets

207,142100.0

207,450

100.0

Real estatein trust

metropolitan areas(Note 1) “Total amount held” is the carrying amount (or, for real estate in trust, the depreciated book value) as of the end of the fiscal
period under review, rounded down to the nearest million yen.
(Note 2) Figures under the heading “As a percentage of total assets” have been rounded to the nearest first decimal place.
(Note 3) SHR does not own any overseas real estate, etc. as of the end of the fiscal period under review.

2.

Major Portfolio Assets
The following table sets forth an overview of the portfolio assets of SHR as of the end of the fiscal period under review.
Book value
Leasable
LeasedOccupancy
As a percentage ofat the end of
Name of
Main
area
area
rate
total property-related
periodreal estate, etc.
use
(m2)
(m2)
(%)
operating revenue(million yen)
(Note 4)(%) (Note 5)(Note 2)
(Note 3)(Note 1)

Garden City

Office58,826

31,236.34

31,236.34

100.0

28.3

Gotenyama SH
Building

50,58319,999.97

19,999.97

100.0

23.4

Officebuilding

Hommachi Minami
Garden City

22,374

16,699.46

16,699.46

100.0

12.6

Officebuilding

17,006.94

17,006.94

100.0

19.4

Officebuilding

17,21318,092.98

18,092.98

100.0

8.6

Hotel

4,368

4,554.52

4,554.52

100.0

3.2

6,304

4,442.75

4,442.75

100.0

4.4

197,376

112,032.96

112,032.96

100.0

100.0

Shinagawa Gotenyama(Note 6)(Note 1) “Book value at 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. As such, the sum total of the “Book value at the end of period” of each
property may not match the figure indicated in the column for the total.
(Note 2) “Leasable area” refers to the floor area 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.
(Note 3) “Leased area” refers to the sum total of the leased area indicated in the respective lease agreements for each of the properties
that are valid as of the end of the fiscal period under review (or, if a pass-through type master lease agreement that is valid asof the end of each fiscal period has been concluded for the property, the lease agreements with the respective end tenants
concluded as of the end of the fiscal period under review).
(Note 4) “Occupancy rate” 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 is the occupancy rate of the entire
portfolio, which is the ratio of total leased area of each property to total 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 to total property-related operating revenue, rounded to the nearest first decimal place. As
such, the sum total of the figures in respect of each property may not match the figure indicated in the column for the total.
The same shall apply hereinafter.
(Note 6) SHR acquired sectional ownership rights to all of the exclusively-owned portions of the 4th, 7th and 8th floors and part of the
exclusively-owned portions of the 2nd, 3rd and 6th floors of Garden City Shinagawa Gotenyama, together with theaccompanying right of site (ratio of right of site: 2,103,349/3,857,806 (or approximately 54.5%)) (the “1st portion acquired”), on
December 3, 2014. Subsequently, SHR acquired sectional ownership rights to part of the exclusively-owned portions of the 2nd,
3rd, 5th and 6th floors of Garden City Shinagawa Gotenyama, together with the accompanying right of site (ratio of right ofsite: 820,252/3,857,806 (or approximately 21.3%)) (the “2nd portion acquired”), on May 24, 2016. Further SHR acquired
sectional ownership rights to part of the exclusively-owned portions of the 2nd floor and all of the exclusively-owned portionsof the 9th floor of Garden City Shinagawa Gotenyama, together with the accompanying right of site (ratio of right of site:
200,039/3,857,806 (or approximately 5.2%)) (the “3rd portion acquired”), on May 24, 2017.
(Note 7) SHR acquired sectional ownership rights to all of the exclusively-owned portions used as office and retail property in
Hommachi Garden City, together with the accompanying right of site, on May 19, 2015 ( “Hommachi Garden City (Officebuilding portion)” or “Office building portion”). The ratio of the exclusively-owned area is approximately 52.7% of the
exclusively-owned area of the entire building, and the ratio of right of site is 68,645/100,000 for the office portion and
1,104/100,000 for the retail portion, totaling 69,749/100,000 (or approximately 69.7%)). SHR subsequently acquired sectional
ownership rights to all of the exclusively-owned portions used as a hotel in Hommachi Garden City, together with theaccompanying right of site, on May 24, 2017 ( “Hommachi Garden City (Hotel portion)” or the “Hotel portion”). The ratio of the
exclusively-owned area is approximately 47.3% of the exclusively-owned area of the entire building and the ratio of right ofsite is 30,251/100,000 (or approximately 30.3%)). SHR owns sectional ownership rights and the accompanying rights of site, as
well as the annex to the entire Hommachi Garden City building. Hommachi Garden City includes co-ownership interest in thecommon portion pursuant to the relevant bylaws (parking, management offices, etc.), but there is no accompanying ratio ofright of site.

building

Office building portion
Hommachi
Garden City
(Note 7)

HK Yodoyabashi
Garden Avenue
Hirokoji
Garden Avenue
Total

28

37,705
Hotel portion

Officebuilding
Officebuilding
㸫

29

3.

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

Location

Garden City
Shinagawa Gotenyama

6-7-29 Kitashinagawa,Shinagawa-ku, Tokyo

Gotenyama
SH Building

6-5-17 Kitashinagawa,

Hommachi Minami
Garden City

3-6-1 Kitakyuhojimachi,

Hommachi
Garden City

3-6-4 Hommachi, Chuo-ku,

Shinagawa-ku, Tokyo

Chuo-ku, Osaka-shi, Osaka

Osaka-shi, OsakaHK Yodoyabashi
Garden Avenue

4-3-9 Fushimimachi,

Hirokoji
Garden Avenue

4-24-16, Meieki, Nakamura-

Total

Chuo-ku, Osaka-shi, Osakaku, Nagoya-shi, Aichi
㸫Type of ownership

Real estate trust
beneficiaryinterests
Real estate trust
beneficiaryinterests
Real estate trust
beneficiaryinterests
Real estate trust
beneficiaryinterests
Real estate trust
beneficiaryinterests
Real estate trust
beneficiaryinterests
㸫Book value
at the end of
period(million yen)
(Note 1)

Estimated value
at the end of
period(million yen)
(Note 2)58,82671,30050,58358,50022,374

29,100

Office building portion
37,70544,700Hotel portion
17,213

17,700

4,368

5,590

6,304

7,150

197,376

234,040(Note 1) “Book value at the end of period” refers to the book value after depreciation of each property as of the end of the fiscal period
under review, rounded down to the nearest million yen. As such, the sum total of the figures in respect of each property may
not match the figure indicated in the column for the total.
(Note 2) “Estimated value at the end of period” refers to the value stated in each real estate appraisal report (based on real estateappraisal reports prepared by Daiwa Real Estate Appraisal Co., Ltd., The Tanizawa Sōgō Appraisal Co., Ltd., Rich Appraisal
Institute Co., Ltd. and Japan Real Estate Institute with the end of the fiscal period under review as the date of valuation),rounded down to the nearest million yen.

30

The following table sets forth the status of leasing of real estate, etc. held by SHR.
6th fiscal period
7th fiscal period
From: May 1, 2017
From: Nov. 1, 2017
To: Oct. 31, 2017
To: Apr. 30, 2018
PropertyPropertyAs a
As a
relatedrelatedNumber Occupancy
Number Occupancy
percentage
percentage
operatingoperating
of
rate
of
rate
of totalof total
revenuerevenuetenants[at thetenants[at thepropertyproperty[during[during[at theend of[at theend ofName ofrelatedrelatedfiscalfiscalend offiscalend offiscalreal estate, etc.
operatingoperatingperiod]period]fiscalperiod]fiscalperiod]revenuerevenue(million(million
period](%)
period]
(%)
(%)
(%)
yen)
yen)
(Note 1)
(Note 2)
(Note 1)
(Note 2)
(Note 3)(Note 3)
Garden City
1
100.0
1,307
28.5
1
100.0
1,318
28.3
Shinagawa
Gotenyama
Gotenyama SH
1
100.0
1,088
23.8
1
100.0
1,088
23.4
Building
HommachiMinami
1
100.0
586
12.8
1
100.0
586
12.6
Garden City
Office building portion
1
100.0
903
19.7
1
100.0
903
19.4
Hommachi
Garden City
Hotel portion
1
100.0
352
7.7
1
100.0
402
8.6
HK
Yodoyabashi
Garden Avenue
Hirokoji
Garden Avenue
Total

1(7)

100.0

151

1(9)

100.0

189

2(16)

100.0

4,580

3.3

1(7)

100.0

149

3.2

4.1

1(8)

100.0

205

4.4

100.0

2(15)

100.0

4,655

100.0

(Note 1) “Number of tenants” refers to the sum total of the number of tenants under, and indicated in, the respective lease agreements
for each property that are valid as of the end of each fiscal period (or, if a master lease agreement that is valid as of the end ofeach fiscal period has been concluded for the property, the number of lessees under the master lease agreement). If a passthrough type master lease agreement that is valid as of the end of each fiscal period has been concluded for the property, thenumber of end tenants for the property is indicated in parenthesis.
In the “Total” column, a tenant that leases spaces in multiple properties is counted as one. The sum total of the number of end
tenants for properties where pass-through type master lease agreements that are valid as of the end of each fiscal period havebeen concluded is indicated in parenthesis.
(Note 2) “Occupancy rate” 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 total column indicates the occupancy rate of the entire portfolio, which indicates theratio of total leased area of each property to total leasable area of each property, rounded to the nearest first decimal place.
(Note 3) “Property-related operating revenue [during fiscal period]” refers to the sum total of property-related operating revenue in eachfiscal period in respect of each property, rounded down to the nearest million yen. As such, the sum of “Property-related operating
revenue [during fiscal period]” in respect of each property may not match the figure indicated in the column for the total.

31

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.

SHR, is as follows. However, a portion of such amounts may ultimately be classified as expenses in the course of
the accounting process.

Not applicable.

6.

Schedule of Capital Expenditures
The main capital expenditure amounts accompanying renovation work, etc. currently planned for assets held byName of real estate,
etc.

Details of Investment Securities
Not applicable.

Scheduled amount (million yen)
(Note)
PurposeScheduled period(location)

Payment for
Totalamountthe fiscal
period underreview

7.

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.
Contract amount, etc.
CategoryType(thousand yen) (Note 1)
Amountdue after 1 year

(Under which floating interest
rates are receivable and fixed

60,450,000

60,450,000

already
paid

Garden City
Shinagawa Gotenyama(Kitashinagawa,

Upgrading of integrated
watt meters

From: January 2019
To: March 2019

Upgrading of integrated

From: January 2019

8

㸫

㸫

5

㸫

㸫

4

㸫

㸫

4

㸫

㸫

Shinagawa-ku, Tokyo)
Fair value(thousand yen)

Hommachi Minami
Garden City

(Note 2)(Chuo-ku, Osaka-shi,
Osaka)

Interest rate swap transaction
Transaction other thanmarket transaction

Amount㸫interest rates are payable)(Note 1) The contract amount, etc. of interest rate swap transactions is based on notional principal amounts.
(Note 2) The fair value is omitted because the transaction meets the criteria for special accounting under the Accounting Standards for
Financial Instruments.

Hommachi Minami
Garden City
(Chuo-ku, Osaka-shi,
Osaka)

watt meters

Renovation of ventilation
facility at smoking rooms
for guests

To: January 2019

From: March 2019
To: March 2019

Garden City
Shinagawa Gotenyama(Kitashinagawa,

Replacement of battery
for guide light

From: August 2018
To: September 2018

Shinagawa-ku, Tokyo)
8.

Status of Other Assets
Trust beneficiary interests with real estate as the main assets in trust are stated in “3. Details of Assets (Real(Note)”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.

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.

9.

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.

32

33

2.

Capital Expenditures During Period
An overview of capital expenditures conducted by SHR for its assets during the fiscal period under review is as

Condition of expenses

set forth in the following table. Total capital expenditures during the fiscal period under review was 52 million
yen and, together with 22 million yen of repair expenses charged to expenses in the fiscal period under review,

Details of Expenses Pertaining to Management, etc.
(Unit: thousand yen)work amounting to 75 million yen was implemented.
Name of real estate, etc.
(location)
Hommachi Garden City
(Hotel portion) (Chuo-ku,
Osaka-shi, Osaka)PurposeUpgrading of integrated heatmetersPeriodPayment amount(million yen)

From: November 2017
To: December 2017

Item

8

Garden City Shinagawa
Gotenyama(Kitashinagawa,

Upgrading of integrated wattmetersFrom: January 2018
To: February 2018

Upgrading of integrated heatmetersFrom: November 2017
To: December 20177

Shinagawa-ku, Tokyo)

6

Osaka)
Garden City Shinagawa
Gotenyama(Kitashinagawa,Shinagawa-ku, Tokyo)
Garden City Shinagawa
Gotenyama(Kitashinagawa,Shinagawa-ku, Tokyo)

359,562

7th fiscal period
From: Nov. 1, 2017
To: Apr. 30, 2018
370,434

Asset custody fee

3,526

3,786

Administrative service fees

11,485

12,732

Directors’ compensations

3,600

3,600

Other expenses

Hommachi Garden City
(Office building portion)(Chuo-ku, Osaka-shi,

Asset management fee

6th fiscal period
From: May 1, 2017
To: Oct. 31, 2017

Total
(Note)

36,61447,548414,789

438,101

In respect to asset management fees, in addition to the amounts shown above, there are management fees for property acquisition(6th fiscal period: 31,800 thousand yen, 7th fiscal period: not applicable) included in the book value of real estate, etc.

Maintenance of emergency power
generators

From: March 2018
To: March 2018

Replacement of battery for guidelight

From: March 2018
To: March 20184

3

Hommachi Minami Garden
City(Chuo-ku, Osaka-shi,

Upgrading of integrated wattmetersFrom: January 2018
To: January 2018

3

Osaka)

3.

Other capital expenditures

18

Total

52

Cash Reserves for Long-Term Repair Plans
No cash was reserved for long-term repair plans as of the end of the fiscal period under review.

34

35

Condition of investment transactions
1.

subsequent amendments)), building lots and buildings transaction business, or specified joint real estate
ventures.

Status, etc. of Sale and Purchase of Real Estate, etc., Asset-Backed Securities, etc., Infrastructure Assets, etc.
and Infrastructure-Related Assets
Not applicable.

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.

3.

Investigation into Value, etc. of Specified Assets(1) Real Estate, etc. (Appraisal)
Not applicable.
(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 toPractical 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 notified of
the results of the investigations.
The transactions subject to investigations in the fiscal period under review were two interest rate swap
transactions. For the said transactions, investigations into the name of the counterparty to the transaction, thetype of financial instrument or financial indicator involved, the transaction period and other matters concerning
the content of the over-the-counter transaction of derivatives, etc. have been entrusted.

4.

Status of Transactions with Interested Persons, etc. (Note 1)(1) Status of Transactions
Not applicable.
(2) Amount of Commission Fee, etc. (Note 2)

Category

Management fee(Note 3)

Total amount ofcommission fee, etc.
(A)(thousand yen)
30,742

Breakdown of transactions with interested persons, etc.
Payee

Sekisui House, Ltd.

Amount paid(B)(thousand yen)
30,742As apercentage of
total amount
(B/A)
(%)
100.0

(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 andInvestment 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) There are no payments for repair work, etc. for orders placed to interested persons, etc. during the fiscal period under review
besides the commission fee, etc. indicated above.
(Note 3) “Management fee” has been rounded down to the nearest thousand yen.

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 AssetManagement 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

36

37

Other information
1.

gratis allotment of investment unit acquisition rights to current unitholders and exercise ofsuch rights).
(7) Since the amendments described in (1), (3), and (5) above are to come into effect subject to

Noticethe Investment Corporation Merger coming into effect, a provision to that effect shall be
added as an appendix to the Articles of Incorporation.

(1) General Meeting of Unitholders
During the fiscal period under review, SHR held its Third General Meeting of Unitholders on March 27, 2018.

(8) In addition to the above, language shall be revised and wording shall be corrected to clarify
the particulars of the provisions and article numbers shall be modified and other

The following are the matters approved at the General Meeting of Unitholders.
Matters
approved
Mergeragreement with
SHI

Overview

adjustments to the text shall be made.
Appointment of

An absorption-type merger, whereby SHR would be the surviving corporation and SHI would be
the dissolving corporation was approved.
Partial amendments to the Articles of Incorporation were resolved as described below.
(1) Since the total number of issued investment units will increase in conjunction with theInvestment Unit Split, the total number of authorized investment units shall be increased
accordingly in advance.
(2) With regard to the provision that a general meeting of unitholders shall be convened on acertain day and without delay thereafter, since the terms of office of directors will change
and in order to adjust to such change, the provision to the effect that a general meeting ofunitholders of SHR shall be convened on July 1, 2018 and without delay thereafter, andsubsequently shall be convened on July 1 and without delay thereafter every 2 years shallbe amended to the effect that a general meeting of unitholders of SHR shall be convened on
January 1, 2020 and without delay thereafter, and subsequently shall be convened on

1 (one)executive

Junichi Inoue was appointed as executive director.
His term of office will be 2 years from May 1, 2018.

director
Appointment of
2 (two)substitute

Osamu Minami and Nobuyoshi Sato were appointed as substitute executive directors.
Their term of office will be from May 1, 2018 to the end of the above executive director’s term ofexecutive
directors

office.

Appointment of
2 (two)supervisory

Shigeru Nomura and Tatsushi Omiya were appointed as supervisory directors.
Their term of office will be 2 years from May 1, 2018.

directors

January 1 and without delay thereafter every 2 years, and the necessary provisions relating
to the record date for general meetings of unitholders shall be changed.
(3) In conjunction with implementation of the Investment Corporation Merger, residential
properties shall be added to SHR’s core investment targets along with its conventionaltargets of office buildings, retail properties, and hotels, and necessary provisions regarding
new geographical areas for investment in residential properties shall be added.
(4) Some investments by SHI, which is the counterparty to the Investment Corporation Merger,
include assets that are not investment targets of SHR; accordingly, in conjunction with thePartialamendments toInvestment Corporation Merger, additions shall be made to SHR’s target assets forinvestment.

the Articles ofIncorporation(5) While the roles and responsibilities of the accounting auditor are mounting, audit work isalso likely to increase in conjunction with the expanded scope of investment assets resulting
from the Investment Corporation Merger. In light of such, the maximum accounting auditor
remuneration amount shall be raised from 20 million yen to 25 million yen to reflect anappropriate level.
(6) In conjunction with the Investment Corporation Merger, the Asset Management Company
conducted investigation and valuation of SHI’s assets, negotiated with related persons, andperformed other services for the purpose of implementation of the Investment Corporation
Merger; accordingly, provisions relating to the Management Fee V (Merger Fee) shall be
added to enable payment of appropriate consideration for the Asset Management
Company’s services.
Further, it is expected that goodwill will arise in conjunction with the Investment
Corporation Merger, and therefore, necessary provisions shall be added to clarify thehandling of goodwill amortization and the like when calculating Management Fee I(Ongoing Operational and Management Fee I) and Management Fee II (Ongoing
Operational and Management Fee II).
Moreover, with regard to Management Fee II (Ongoing Operational and Management Fee
II), necessary provisions shall be added regarding calculation of Management Fee II(Ongoing Operational and Management Fee II) to ensure that the impact on Management
Fee II (Ongoing Operational and Management Fee II) would be neutral when SHR splits its
investment units or implements a rights offering (issuance of new investment units through38

39

(2) Meeting of the Board of Directors of the Investment Corporation
In the fiscal period under review, regarding the matters, etc. provided in Items 2, 3, 5, 6 and 8 of Article 109,

Financial Section (Audited)

Paragraph 2 of the Investment Trusts Act, the followings describe matters approved at a meeting of the board of
directors of SHR, as well as other matters deemed important.
Approval date
January 24, 2018

Matters approved

An absorption-type merger, whereby SHR would be the surviving
corporation and SHI would be the dissolving corporation wasagreement

concluded.

Conclusion ofamendment
February 27, 2018agreement
regarding asset
managementagreement

2.

40

Overview

Conclusion ofmergerAn amendment agreement regarding amendments to asset
management fees whose condition precedent is approval of partial
amendments to the Articles of Incorporation at SHR’s Third General
Meeting of Unitholders on March 27, 2018; and an amendment
agreement regarding amendments to investment policy, etc. whose
condition precedent is the Investment Corporation Merger taking
effect, were concluded.

Handling of fractions of monetary amounts and percentage figures

Contents

Amounts have been rounded down and ratios have been rounded to the nearest specified unit unless otherwise
indicated in this document.

Financial Statements
Balance Sheet

42

Statement of Income and Retained Earnings

44
4

Statement of Changes in Net Assets

45
5Statement of Cash Distributions

46
6

Statement of Cash Flows47
7

Notes to Financial Statements

48
8

Supplementary Schedules

60

Independent Auditor’s Report

66
6

41

1. Financial Statements(1) Balance Sheet(Thousands of yen)(Thousands of yen)

6th Fiscal Period
7th Fiscal Period(As of October 31, 2017) (As of April 30, 2018)

6th Fiscal Period
7th Fiscal Period(As of October 31, 2017) (As of April 30, 2018)
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Deferred tax assets
Consumption taxes receivable
Other
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
Total property, plant and equipment
Intangible assets
Other
Total intangible assets
Investments and other assets
Lease and guarantee deposits
Long-term prepaid expenses
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

42

1,756,618
6,518,376
19,33076,1987
372,744㸫
8,743,275

2,607,767
7,005,235
18,804
96,38121
㸫
133
9,728,343

59,604,170(3,399,530)
56,204,639
683,807(52,592)
631,215
921
(58)
862
1,259
(447)
811
141,218,283
198,055,813

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

3,147
3,147

2,412
2,412

20,181
227,164
247,345
198,306,306

20,181
246,911
267,092
197,646,200

35,04557,907
92,952
207,142,534

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

Liabilities
Current liabilities
Operating accounts payable
Current portion of long-term loans payable
Accounts payable – otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Other
Total current liabilities
Non--current liabilities
Investment corporation bonds
Long-term loans payable
Tenant leasehold and security deposits in trust
Total non--current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus
Unappropriated retained earnings
Total surplus
Total unitholders’ equity
Total net assets (Note 4)
Total liabilities and net assets

172,924
14,000,000
402,587
82,238743
㸫㸫
14,658,493

143,489㸫
414,997
91,512
1,048
318,3920
969,440

5,000,000
65,400,000
9,268,730
79,668,730
94,327,223

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

110,189,294

110,189,294

2,626,016
2,626,016
112,815,310
112,815,310
207,142,534

2,621,502
2,621,502
112,810,796
112,810,796
207,450,193

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

43

(2) Statement of Income and Retained Earnings(Thousands of yen)

Operating revenue
Rent revenue – real estate (Note 5)
Other lease business revenue (Note 5)
Total operating revenue
Operating expenses
Expenses related to rent business (Note 5)
Asset management fee
Asset custody fee
Administrative service fees
Directors’ compensations
Other operating expenses
Total operating expenses
Operating income
Non--operating income
Interest income
Interest on refund
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
Income before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings

6th Fiscal Period

7th Fiscal Period(From May 1, 2017 to(From November 1, 2017

October 31, 2017)

to April 30, 2018)

4,550,426
30,0814,580,508

4,629,845
25,742
4,655,588

1,178,033
359,5623,526
11,4853,600
36,614
1,592,823
2,987,685

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

46
㸫
46

39
1,442
1,482

293,464
5,568
43,16014,3842,258
2,416
361,252
2,626,479
2,626,479750
9759
2,625,719
296
2,626,016

296,306
6,959
52,322
14,3842,919
537
373,430
2,622,516
2,622,516
1,054
(14)
1,039
2,621,476
26
2,621,502(3) Statement of Changes in Net Assets
6th Fiscal Period (From May 1, 2017 to October 31, 2017)







(Thousands of yen)

Unitholders’ equity
Unitholders’capitalBalance at beginning of periodSurplus
Unappropriatedretained earnings

100,040,294

Total
surplusTotal
unitholders’equityTotal
net assets

2,381,018

2,381,018 102,421,312 102,421,312(2,380,722)(2,380,722)

Changes of items during period
Issuance of new investment units

10,149,000

Distribution from surplus
Net income
Total changes of items during period
Balance at end of period (Note 6)

10,149,000

10,149,000(2,380,722)(2,380,722)

2,625,719

2,625,719

2,625,719

2,625,719

10,149,000

244,997

244,997

10,393,997

10,393,997

110,189,294

2,626,016

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

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

(Thousands of yen)

Unitholders’ equity
Unitholders’capitalBalance at beginning of period

110,189,294

Surplus
Unappropriatedretained earnings

Total
surplusTotal
unitholders’equityTotal
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

㸫

(4,513)(4,513)(4,513)(4,513)

110,189,294

2,621,502

Changes of items during period

Total changes of items during period
Balance at end of period (Note 6)

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

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

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

4445

(4) Statement of Cash Distributions
Item(5) Statement of Cash Flows
6th Fiscal Period

7th Fiscal Period(From May 1, 2017 to(From November 1, 2017 to

October 31, 2017 )April 30, 2018 )Ϩ. Unappropriated retained earnings

2,626,016,489yen

2,621,502,992yen

ϩ. Cash distributions

2,625,990,000yen[2,710yen]

2,621,145,000yen[2,705yen][Cash distributions per unit]
Ϫ. Retained earnings carried forward
Method of calculating amount of distribution

26,489yen(Thousands of yen)

357,992yen

The basic policy is to distributein excess of an amountThe basic policy is to distributein excess of an amountequivalent to 90% of theamount of earnings available

equivalent to 90% of theamount of earnings available

for distribution of SHR
provided in Article 67-15,

for distribution of SHR
provided in Article 67-15,

Paragraph 1 of the Act on
Special Measures Concerning

Paragraph 1 of the Act on
Special Measures Concerning

Taxation as set forth in Article
46, Paragraph 1, Item 2 of theTaxation as set forth in Article
46, Paragraph 1, Item 2 of the

Articles of Incorporation of
SHR.

Articles of Incorporation of
SHR.

Based on such policy, SHR
decided to pay out aBased on such policy, SHR
decided to pay out a

distribution of earnings of
2,625,990,000 yen, which is the

distribution of earnings of
2,621,145,000 yen, which is thelargest integral multiple of thetotal number of investment

largest integral multiple of thetotal number of investment

units issued and outstanding(969,000 units) in an amountunits issued and outstanding(969,000 units) in an amountnot in excess of unappropriatedretained earnings for the

not in excess of unappropriatedretained earnings for theperiod.
SHR will not distribute cash inperiod.
SHR will not distribute cash inexcess of earnings as set forthin Article 46, Paragraph 2 ofexcess of earnings as set forthin Article 46, Paragraph 2 of

the Articles of Incorporation of
SHR.

the Articles of Incorporation of
SHR.

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
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
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
Proceeds from tenant leasehold and security deposits in trust
Repayments of tenant leasehold and security deposits in trust
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
Proceeds from issuance of investment corporation bondProceeds from issuance of investment units
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
Cash and cash equivalents at end of period (Note 7)

6th Fiscal Period

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

2,626,479
730,830
2,258
14,384(46)
299,032(2,621)(372,744)
8,324
12,69858,92628,855(284,571)
11,3503,133,158
46(295,964)(945)
2,836,294

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(21,377,917)
235,020
㸫
(21,142,896)( 38,016)
12,250( 11,025)( 36,791)

7,600,000(7,600,000)
4,100,000
㸫
2,980,150
10,104,734(2,381,007)
14,803,877(3,502,724)
11,777,719
8,274,994

㸫㸫
14,000,000( 14,000,000)
㸫㸫( 2,625,348)( 2,625,348)
1,338,008
8,274,994
9,613,003

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

46

47

(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 is externally managed by a licensed asset management company, Sekisui House Investment Advisors, Ltd.
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. Method of depreciation
and amortization of noncurrent assets

2. Accounting fordeferred assets

3. Standards forrevenue and expense
recognition

48(1)Property, plant and equipment (including assets in trust)
Depreciation is calculated using the straight-line method.
The useful lives of principal property, plant and equipment are as follows:
Buildings      6-65 years
Structures     
10-40 years
Machinery and equipment  10-18 years
Tools, furniture and fixtures
2-15 years(2)Intangible assets
Intangible assets are amortized utilizing the straight-line method.
(3)Long-term prepaid expenses
Long-term prepaid expenses are amortized utilizing the straight-line method.
(1) Investment corporation bond issuance costs
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).
Accounting for property taxes
In accounting for property tax, city planning tax, depreciable asset tax, etc. onreal estate, etc., of the tax amount assessed and determined, the amountcorresponding 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 78,845
thousand yen for the 6th fiscal period, and there were no property taxes
capitalized for the 7th fiscal period.

4. Method of hedge
accounting

5.

6.

(1)Method of hedge 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
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.
Other significant matters (1)Accounting for trust beneficiary interests of real estate, etc. as assets in trust
serving as basis forConcerning trust beneficiary interests of real estate, etc. as assets in trust, allpreparation of
accounts of assets and liabilities within assets in trust as well as all accounts
financial statementsof revenue and expenses from the assets in trust are recognized in the relevant
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͵ሻ Tenant leasehold and security deposits in trust(2)Accounting for consumption tax, etc.
Consumption tax and local consumption tax are excluded from the correspondingtransaction amounts.

49

4. Notes to Balance Sheet

7. Notes to Statement of Cash Flows*1. Reconciliation of cash and cash equivalents at end of period to the corresponding balance sheet items*1. Minimum net assets designated in Article 67-4 of the Investment Trust Act(Thousands of yen)(Thousands of yen)

6th Fiscal Period

6th Fiscal Period(From May 1, 2017 to

7th Fiscal Period(As of October 31, 2017)(As of April 30, 2018)

50,0005. Notes to Statement of Income and Retained Earnings*1. Breakdown of property-related operating revenue and expenses(Thousands of yen)

6th Fiscal Period

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

October 31, 2017)

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

24,706
5,375

Total property-related operating revenue

4,550,426

4,617,985
11,86030,081

19,927
5,815

4,580,508

25,742
4,655,588

Subcontract expenses
Property management fees

24,546
26,177

24,56130,742Trust fees
Utilities expenses

2,704
20,595

2,765
19,172

Property and other taxes
Insurance expenses

334,107
6,291

378,425
5,950

Repair expenses
Depreciation

28,342730,095

22,728731,538

Cash and deposits in trust

6,518,376

7,005,235

Cash and cash equivalents

8,274,994

9,613,003

6th Fiscal Period(As of October 31, 2017)

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

Due within 1 year

9,159,073

9,047,000

Due after 1 year

35,656,637

31,211,701

44,815,711

40,258,702

8. Lease Transactions
Operating lease transactions as lessor
Future minimum lease income

5,171

1,178,033

7,137

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,
1,223,022

1,178,033

1,223,022

3,402,475

3,432,565

6. Notes to Statement of Changes in Net Assets*1. Total number of authorized investment units and total number of investment units issued
6th Fiscal Period

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

October 31, 2017)

Total

1. Status of financial instruments(1) Policy for financial instruments

Total property-related operating expenses

Total number of investment units issued

2,607,767

9. Financial Instruments

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

Total number of authorized investment units

1,756,618

4,629,845

B. Property-related operating expenses
Expenses related to rent business

Other expenses related to rent business

Cash and deposits(Thousands of yen)

4,538,496
11,930

Other lease business revenue
Utilities revenue
Other

October 31, 2017)

50,000

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

10,000,000 units

10,000,000 units

969,000 units

969,000 units

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.
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.
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
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
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 onreasonable 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
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.

50

51

(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
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. Matters concerning fair value of financial instruments
The following is the carrying amount and fair value of financial instruments as of October 31, 2017 andApril 30, 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)).

(Thousands of yen)Item

6th Fiscal Period (As of October 31, 2017)(Thousands of yen)Book value
recorded on thebalance sheet(1) Cash and deposits

Total assets(3) Current portion of long-term loans payable(4) Investment corporation bonds(5) Long-term loans payable
Total liabilities(6) Derivative transactions

6,518,376

6,518,376

㸫

8,274,994

8,274,994

㸫14,000,000

14,000,000

㸫

5,000,000

4,980,500(19,500)

65,400,000

66,990,706

1,590,706

84,400,000

85,971,206

1,571,206㸫㸫㸫(Thousands of yen)

Fair value

Difference

2,607,767

2,607,767

㸫

7,005,235

7,005,235

㸫

9,613,003

9,613,003

㸫(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

㸫㸫㸫(2) Cash and deposits in trust
Total assets

Total liabilities(5) Derivative transactions(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) Investment corporation bonds
The fair value of investment corporation bonds are based on the quoted market price.
(4) Long-term loans payable
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-termloans 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.
(5) Derivative transactions
Please refer to “11. Derivative Transactions”.

52(As of April 30, 2018)

9,268,730

9,269,955

6th Fiscal Period (As of October 31, 2017)(Thousands of yen)
Due after
5 years

Due in1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Cash and deposits

1,756,618

㸫

㸫

㸫

㸫

㸫

Cash and deposits in trust

6,518,376

㸫

㸫

㸫

㸫

㸫

Total

8,274,994

㸫

㸫

㸫

㸫

㸫

Due in1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Cash and deposits

2,607,767

㸫

㸫

㸫

㸫

㸫

Cash and deposits in trust

7,005,235

㸫

㸫

㸫

㸫

㸫

Total

9,613,003

㸫

㸫

㸫

㸫

㸫

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

7th Fiscal Period (As of April 30, 2018)(1) Cash and deposits(As of October 31, 2017)

Tenant leasehold and security deposits in trust(Note 3) Redemption schedule of monetary claims after the closing date㸫Book value
recorded on thebalance sheet

7th Fiscal Period

Difference

1,756,618

1,756,618(2) Cash and deposits in trust

Fair value

6th Fiscal Period(Thousands of yen)
Due after
5 years(Note 4) Repayment schedule of investment corporation bonds and loans after the closing date

6th Fiscal Period (As of October 31, 2017)(Thousands of yen)
Due after
5 years

Due in1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

14,000,000

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

3,000,000

2,000,000

㸫㸫

14,000,000

12,910,000

17,000,000

21,490,000

Due in1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Investment corporation
bonds

㸫

㸫

㸫

㸫

3,000,000

2,000,000

Long-term loans payable㸫

14,000,000

11,050,000

18,860,000

10,000,000

25,490,000

Current portion of longterm loans payable
Investment corporationbonds
Long-term loans payable㸫

7th Fiscal Period (As of April 30, 2018)(Thousands of yen)
Due after
5 years

10. Securities
6th Fiscal Period (From May 1, 2017 to October 31, 2017)
Not applicable.
7th Fiscal Period (From November 1, 2017 to April 30, 2018)
Not applicable.

5311. Derivative Transactions
1. Derivatives to which hedge accounting is not applied
6th Fiscal Period (As of October 31, 2017)
Not applicable.

13. Income Taxes
1. Breakdown of deferred tax assets and deferred tax liabilities by major cause(Thousands of yen)

7th Fiscal Period (As of April 30, 2018)
Not applicable.

6th Fiscal Period

7th Fiscal Period(As of October 31, 2017)(As of April 30, 2018)721

 Total deferred tax assets

7

21

Net deferred tax assets

7

21

Deferred tax assets
 Accrued business taxes not deductible fromtaxable income

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.

2. Breakdown of major items that caused significant differences between the statutory tax rate and the

6th Fiscal Period (As of October 31, 2017)(Thousands of yen)

Method ofhedge
accounting
Specialaccounting
treatment forinterest rate
swaps

Type ofderivative transactions
Interest rate swap
transaction
Floating interest ratereceivable and fixedinterest rate payable

Contract amountMain
hedgeditem
Long-term
loans
payableOf which,over
1 year

50,350,000

50,350,000

Fair value

effective income tax rate after application of tax-effect accounting(%)

Calculation
method offair value

6th Fiscal Period

7th Fiscal Period(As of October 31, 2017)(As of April 30, 2018)

31.74

31.74

Statutory tax rate*㸫[Adjustments](31.73)(31.72) Other

0.02

0.02

* As derivative transactions qualifying for the special accounting treatment for interest rate swaps are accounted for with the hedged
long-term loans payable, the fair value is included in the fair value of the underlying long-term loans payable (please refer to “ 9.
Financial Instruments; 2. Matters concerning fair value of financial instruments (Note 1)”).

Effective income tax rate
after application of tax-effect accounting

0.03

0.04

7th Fiscal Period (As of April 30, 2018)14. Profit or Loss of Affiliates Accounted for Under the Equity Method
6th Fiscal Period (From May 1, 2017 to October 31, 2017)
Not applicable.

(Thousands of yen)

Method ofhedge
accounting

Type ofderivative transactions

Main
hedgeditem

Specialaccounting
treatment forinterest rate
swaps

Interest rate swap
transaction
Floating interest ratereceivable and fixedinterest rate payable

Long-term
loans
payableContract amount

60,450,000

Of which,over
1 yearFair value

Calculation
method offair value

60,450,000*㸫* As derivative transactions qualifying for the special accounting treatment for interest rate swaps are accounted for with the hedged
long-term loans payable, the fair value is included in the fair value of the underlying long-term loans payable (please refer to “ 9.
Financial Instruments; 2. Matters concerning fair value of financial instruments (Note 1)”).

12. Retirement Benefits
6th Fiscal Period (From May 1, 2017 to October 31, 2017)
Not applicable.
7th Fiscal Period (From November 1, 2017 to April 30, 2018)
Not applicable.

 Deductible cash distribution

7th Fiscal Period (From November 1, 2017 to April 30, 2018)
Not applicable.
15. Transactions with Related Parties
1. Parent company and major corporate unitholders.
6th Fiscal Period (From May 1, 2017 to October 31, 2017)
Not applicable.
7th Fiscal Period (From November 1, 2017 to April 30, 2018)
Not applicable.
2. Subsidiaries and affiliates.
6th Fiscal Period (From May 1, 2017 to October 31, 2017)
Not applicable.
7th Fiscal Period (From November 1, 2017 to April 30, 2018)
Not applicable.
3. Sister companies.
6th Fiscal Period (From May 1, 2017 to October 31, 2017)
Not applicable.
7th Fiscal Period (From November 1, 2017 to April 30, 2018)
Not applicable.

54

55

17. Investment and Rental Properties
SHR owns rental office buildings, etc. in Tokyo and other areas for the purpose of earning revenue from leasing.

4. Directors and major individual unitholders.
6th Fiscal Period (From May 1, 2017 to October 31, 2017)
Type

Directoror close
relative

Name

Description ofbusiness or
occupation

JunichiInoue

Executive Directorof SHR and
Representative
Director of Sekisui
House Investment
Advisors, Ltd.

Percentage ofvoting rights
held by (in) SHR

Description oftransaction

㸫

Payment of asset
management fee
to Sekisui House
Investment
Advisors, Ltd.
(Note 1)

Transaction
amount(Thousands ofyen)

391,362(Note 2)

Account
item

Accounts
payable– other

Balanceat end of period(Thousands ofyen)

Directoror close
relative

Description ofbusiness or
occupation

JunichiInoue

Executive Directorof SHR and
Representative
Director of Sekisui
House Investment
Advisors, Ltd.

Percentage ofvoting rights
held by (in) SHR

Description oftransaction

㸫

Payment of asset
management fee
to Sekisui House
Investment
Advisors, Ltd.
(Note 1)

Transaction
amount(Thousands ofyen)

370,434

Account
item

Accounts
payable– other

Balanceat end of period(Thousands ofyen)

400,069(Note 1) A transaction conducted by Junichi Inoue as a representative of a third party (Sekisui House Investment Advisors, Ltd.) andthe 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.

16. Asset Retirement Obligations
6th Fiscal Period (From May 1, 2017 to October 31, 2017)
Not applicable.
7th Fiscal Period (From November 1, 2017 to April 30, 2018)
Not applicable.

6th Fiscal Period

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

October 31, 2017)

Carrying amount7th Fiscal Period (From November 1, 2017 to April 30, 2018)
Name(Thousands of yen)

388,327(Note 1) A transaction conducted by Junichi Inoue as a representative of a third party (Sekisui House Investment Advisors, Ltd.) andthe fee amount is based on terms and conditions set forth in the Articles of Incorporation of SHR.
(Note 2) The amount includes 31,800 thousand yen of asset management fees pertaining to real estate acquisitions included in thebook value 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.

Type

The following is the carrying amount, amount of increase (decrease) during the period and fair value of theseinvestment and rental properties.

177,418,011

Balance at beginning of period

198,055,813

Amount of increase (decrease) during period

20,637,802(679,117)

Balance at end of period

198,055,813

197,376,695

233,080,000

234,040,000

Fair value at end of period(Note 1) Carrying amount is the book value less accumulated depreciation.
(Note 2) Net increase during the 6th fiscal period is mainly attributable to the acquisition of new properties (21,355,798 thousandyen), offset by depreciation (730,095 thousand yen).
Net decrease during the 7th fiscal period is mainly attributable to depreciation (731,538 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 6th and 7th fiscal periods for investment and rental properties ispresented in “5. Notes to Statement of Income and Retained Earnings”.
18. Segment Information
1. Segment information
Segment information is omitted because SHR operates a single segment, which is the real estate leasing
business.
2. Related information
6th Fiscal Period (From May 1, 2017 to October 31, 2017)(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
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
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

Operating revenue

Name of related segment

Sekisui House, Ltd.

3,151,016

Real estate leasing businessNot disclosed (Note)

1,088,998

Real estate leasing business(Note)

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.

7th Fiscal Period (From November 1, 2017 to April 30, 2018)56

57

(1) Information about products and services
Information about products and services is omitted because net sales to external customers for a single

1.

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
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
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

20. Significant Subsequent Events
Merger with Sekisui House Residential Investment Corporation
SHR implemented an absorption-type merger on May 1, 2018 with SHR as the surviving corporation and SHI as
the dissolving corporation.

(1) Purpose of the Investment Corporation Merger
SHR implemented the Investment Corporation Merger having reached the conclusion that expanding the scaleof assets and increasing market presence through the Investment Corporation Merger as well as enhancing
opportunities for growth by utilizing the integrated corporate strength of the Sekisui House Group, thereby
securing strong returns and stability and growth of distributions through the steady increase of assets undermanagement, would be the best strategy for maximizing unitholder value.
(2) Merger Ratio
Upon the Investment Corporation Merger, SHR allocated and delivered to SHI unitholders 1.65 units of SHR
investment units for every 1 investment unit of SHI.

(Thousands of yen)

Name of customer

Operating revenue

Name of related segment

Sekisui House, Ltd.

3,211,225

Real estate leasing businessNot disclosed (Note)

1,088,998

Real estate leasing business(Note)

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.

19. Per Unit Information
6th Fiscal Period

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

Net assets per unit

58,212yen

58,209yen

Net income per unit

1,368yen

1,352yen(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.
(Note 2) SHR implemented a 2-for-1 split of 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 6th fiscal
period.
(Note 3) The following is the basis for calculating net income per unit.

Net income (Thousands of yen)

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

2,625,719

2,621,476

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

Net income attributable to common investment units (Thousands ofyen)

2,625,719

2,621,476

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

1,918,506

1,938,000(Note)

58

6th Fiscal Period

SHR implemented a 2-for-1 split of investment units with May 1, 2018 as the effective date. Average number of investment
units during period are calculated on the basis that the investment unit split was implemented at the beginning of the 6th
fiscal period.

(3) Merger Consideration
In lieu of the cash distribution for SHI’s final fiscal period ended April 30, 2018 (from October 1, 2017 to April 30,2018), SHR intends to pay the unitholders stated or recorded in the final unitholder register of SHI on April 30,
2018, the day before the effective date of the Investment Corporation Merger, a merger consideration in the formof cash distribution based on SHI’s distributable income for SHI’s final fiscal period on July 20, 2018.
(4) Unitholders’ Capital, Etc.
The increase in unitholders’ capital and capital surplus of SHR upon the Investment Corporation Merger are as
follows:
Unitholders’ capital:
0 yen
Capital surplus:
This amount corresponds to the change in unitholders’ equity, etc. as specified in Article
22, Paragraph 1 of the Regulations on Accounting of Investment Corporations (Cabinet
Office Ordinance No. 47 of 2006, as amended), less the amount of unitholders’ capitalstated above2.

Split of Investment Units
SHR implemented a 2-for-1 split of its investment units with April 30, 2018 as the record date and May 1, 2018as the effective date.

(1) Purpose of the Investment Unit Split
The purpose is to be able to issue at least 1 unit of SHR investment units to all SHI unitholders upon theInvestment Corporation Merger.
(2) Method of the Investment Unit Split
Investment units owned by the unitholders stated or recorded in the final unitholder register on April 30, 2018,
the day before the effective date of the Investment Unit Split, were split at a ratio of 2-for-1.
(3) Increase in Number of Investment Units, Etc. Due to the Investment Unit Split and the Investment Corporation
MergerTotal number of SHR units outstanding prior to the Investment Unit Split:
969,000 units
Increase in number of units due to the Investment Unit Split:
969,000 units
Total number of SHR units outstanding following the Investment Unit Split:
1,938,000 units
Number of units allocated to SHI units upon the Investment Corporation Merger: 1,824,091 units
Total number of SHR units outstanding following the Investment Corporation Merger:3,762,091 units
Total number of units authorized following the Investment Unit Split (Note):
20,000,000 units(Note) Given the increase in total number of investment units issued and outstanding upon the Investment
Unit Split, SHR changed the total number of investment units authorized from 10,000,000 units to
20,000,000 units, subject to the Investment Corporation Merger coming into effect. Please refer to “Per
Unit Information” for the figures for per unit information when calculated on the basis that theInvestment Unit Split was implemented at the beginning of the 6th fiscal period.

59ͷǤ Schedule of investment corporation bonds(7) Supplementary Schedules
7th Fiscal Period (From November 1, 2017 to April 30, 2018) ͳǤ Schedule of securities

Name(1) Shares
Not applicable.

2. Contract amount and fair value of derivative transactions

Total(Thousands of yen)Contract amount (Note 1)
Type

Transaction other thanmarket transaction(Thousands ofyen )Amount ofdecrease during
period(Thousands ofyen )Balanceat end of period(Thousands ofyen )Couponrate(%)

Redemption Use of
dateproceeds

2,000,000

㸫

2,000,000

0.340

September 8,(Note 1) Unsecured
2026

3,000,000

㸫

3,000,000

0.240

July 13,2022

5,000,000

㸫

5,000,000

㸫㸫First Series
September 8,
Unsecured Investment
2016
Corporation Bond
Second Series
July 13,
Unsecured Investment
2017
Corporation Bond

(2) Securities other than shares
Not applicable.

Category

Balance at
beginning of
periodIssue date

(Note 1) Unsecured㸫㸫(Note 1) The proceeds are used as funds for repayment of loans payable.
(Note 2) This investment corporation bonds are equipped with pari passu clause among specified investment corporation bonds.
(Note 3) The following is the maturity schedule of investment corporation bonds within five years of the balance sheet date.

Fair value(Note 2)

Of which,over 1 year㸫

Security(Thousands of yen)Interest rate swap transaction
Floating interest rate receivableand fixed interest rate payable

60,450,000

60,450,000

㸫

Total

60,450,000

60,450,000㸫

Due in1 year or less
Investment Corporation Bonds(Note 1) The contract amount of interest rate swap transactions is based on the notional principal.



1 to 2 years㸫

2 to 3 years㸫

3 to 4 years㸫

4 to 5 years㸫

3,000,000

(Note 2) The fair value is omitted because the transaction meets the criteria for the special accounting treatment under the
Accounting Standards for Financial Instruments.

͵Ǥ Schedule of property, plant and equipment and intangible assets(Thousands of yen)
Accumulated depreciation

Balanceat beginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodBalanceat end ofperiod

59,604,170

50,077

㸫

59,654,248

4,121,631

683,807550㸫

684,357

921

㸫

㸫

1,259

1,794

Land in trust

141,218,283

Subtotal
Intangible Other
assetsSubtotalType of assets

Buildings
in trust
Structuresin trust

Net balanceat end ofperiodNotes

722,100

55,532,616

㸫61,803

9,210

622,554

㸫

921

93

34

827

㸫

㸫

3,053

638

191

2,414

㸫

㸫

㸫

141,218,283

㸫㸫

141,218,283

㸫

201,508,442

52,421

㸫

201,560,863

4,184,167

731,538

197,376,695

㸫

7,350

㸫

㸫

7,350

4,937

735

2,412

㸫

7,350

㸫

㸫

7,350

4,937

735

2,412

㸫

201,515,792

52,421

㸫

201,568,213

4,189,105

732,273

197,379,108

㸫oraccumulated
amortization

For theperiodMachinery
andProperty,equipment inplant andtrust

equipment Tools,
furniture andfixtures in
trust

Total

ͶǤ Schedule of other specified assets
Real estate trust beneficiary interests are included above in “͵Ǥ Schedule of property, plant and equipment
and intangible assets”.

60

61

Lender

Balanceat beginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodMUFG Bank, Ltd.

1,500,000

㸫

1,500,000

1,300,000

㸫

1,300,000

㸫Mizuho Bank, Ltd.

2,100,000

㸫

2,100,000

㸫Long-term loans payable

1,200,000

㸫

1,200,000

2,100,000

㸫

2,100,000

㸫

1,300,000

㸫

1,300,000

㸫

1,900,000

㸫

1,900,000

㸫Development Bank ofJapan Inc.

1,100,000

㸫

1,100,000

㸫The Norinchukin Bank

1,500,000

㸫

1,500,000

㸫

MUFG Bank, Ltd.

3,300,000

㸫㸫

3,300,000

MUFG Bank, Ltd.(Note 2)

1,000,000

㸫㸫

1,000,000

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

1,800,000

㸫㸫

1,800,000

3,000,000

㸫㸫

3,000,000

1,800,000

㸫㸫

1,800,000 0.65830

600,000㸫㸫

600,000

900,000㸫㸫

900,000

Development Bank ofJapan Inc.

800,000㸫㸫

800,000

The Norinchukin Bank

800,000㸫㸫

800,000

MUFG Bank, Ltd.
MUFG Bank, Ltd.(Note 2)
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust & Banking
Co., Ltd.

4,200,000

㸫㸫

4,200,000

900,000㸫㸫

900,000

2,400,000

㸫㸫

2,400,000

3,700,000

㸫㸫

2,000,000

㸫㸫

900,000㸫㸫

2,000,000 0.94060
900,000

1,400,000

㸫㸫

1,400,000

Development Bank ofJapan Inc.

800,000㸫㸫

800,000

700,000㸫㸫Nov. 30,2017

700,000

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodMUFG Bank, Ltd.

4,200,000

㸫㸫

4,200,000

MUFG Bank, Ltd. (Note 2)

400,000㸫㸫

400,000

Mizuho Bank, Ltd.

700,000㸫㸫

700,000

MUFG Bank, Ltd.
MUFG Bank, Ltd. (Note 2)
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust & Banking
Co., Ltd.

Nov. 30,2019

3,700,000

Resona Bank, Limited

The Norinchukin Bank

0.29364

LenderBalanceatbeginningof period

Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
Development Bank ofJapan Inc.

㸫

Resona Bank, Limited

Mizuho Bank, Ltd.

Averageinterest
Repaymen Repayment Use ofrate
Securityt due datemethodproceeds(%)(Note 1)㸫

Mitsubishi UFJ Trust andBanking Corporation

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

62

Balanceat end ofperiodNov. 30,
2021

Purchase Unof assets secured
Lump-sumandUnpayment
related guaranat maturity
expenses teedLong-term loans payable

Category(Thousands of yen)

Category͸Ǥ Schedule of loans payable

Balanceat end ofperiodAverageinterest
Repayment Repayment Use ofrate
Security
due date
methodproceeds(%)(Note 1)1.474503,700,000

㸫㸫

3,700,000

700,000㸫㸫

700,000

300,000㸫㸫

300,000

1,650,000

㸫㸫

200,000㸫㸫

1,650,000 0.61760
200,000

950,000㸫㸫

950,000

1,650,000

㸫㸫

1,650,000

850,000㸫㸫

850,000

0.62760

500,000㸫㸫

500,000

Resona Bank, Limited

550,000㸫㸫

550,000

The Norinchukin Bank

650,000㸫㸫

650,000

MUFG Bank, Ltd.

700,000㸫㸫

700,000 0.88470

Development Bank ofJapan Inc.

650,000㸫㸫

650,000 0.88500

Mizuho Bank, Ltd.

350,000㸫㸫

350,000

650,000㸫㸫

650,000

350,000㸫㸫

350,000

Resona Bank, Limited

300,000㸫㸫

300,000

MUFG Bank, Ltd.

750,000㸫㸫

750,000 1.00850

MUFG Bank, Ltd. (Note 2)

500,000㸫㸫

500,000

Mizuho Bank, Ltd.

400,000㸫㸫

400,000

700,000㸫㸫

700,000

350,000㸫㸫

350,000

300,000㸫㸫

300,000

Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited

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

Purchaseof assets
andrelatedexpensesNov. 30,
2024

Nov. 30,
2020

Nov. 30,
2022

Unsecured
Unguaranteed

Lump-sumpayment
at maturity

0.89470

100,000㸫㸫

100,000

1,560,000

㸫㸫

1,560,000

830,000㸫㸫

830,000

370,000㸫㸫

370,000

Resona Bank, Limited

550,000㸫㸫

550,000

Development Bank ofJapan Inc.

370,000㸫㸫

370,000

The Norinchukin Bank

370,000㸫㸫

370,000

Repayment ofloans
payable1.01850

0.27475

Nov. 30,
2023

Nov. 30,
2020

63

Category

Averageinterest
Repaymen Repayment Use of Securitrate
t due datemethod proceedsy(%)(Note 1)

Balanceatbeginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiod

1,810,000

㸫㸫

MUFG Bank, Ltd. (Note 2)

440,000㸫㸫

440,000

Mizuho Bank, Ltd.

900,000㸫㸫

900,000

870,000㸫㸫

870,000

480,000㸫㸫

480,000

Resona Bank, Limited

300,000㸫㸫

300,000

The Norinchukin Bank

210,000㸫㸫

210,000

MUFG Bank, Ltd.

990,000㸫㸫

990,000 0.37000

MUFG Bank, Ltd. (Note 2)

260,000㸫㸫

260,000

Mizuho Bank, Ltd.

550,000㸫㸫

550,000

Lender

MUFG Bank, Ltd.

Balanceat end ofperiod

1,810,000 0.60500

0.67000
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited

Long-term loans payable

Mizuho Trust & Banking
Co., Ltd.
Development Bank ofJapan Inc.

0.24975

0.45254
220,000㸫㸫

220,000

㸫

14,000,000

2 to 3 years
11,050,000

3 to 4 years
18,860,000

4 to 5 years
10,000,000

Aug. 31,2021

Nov. 30,
2023

㸫

㸫

220,000㸫

750,000㸫

750,000 0.32000

Mizuho Bank, Ltd.

㸫

1,050,000

㸫

1,050,000

㸫

600,000㸫

600,000㸫

1,050,000

㸫

1,050,000

㸫

650,000㸫

650,000

Resona Bank, Limited㸫

950,000㸫

950,000

The Norinchukin Bank

㸫

750,000㸫

750,000

MUFG Bank, Ltd. (Note 2)

㸫

650,000㸫

650,000

Development Bank ofJapan Inc.

㸫

550,000㸫

550,000

MUFG Bank, Ltd.

㸫

750,000㸫Mizuho Bank, Ltd.

㸫

1,050,000

㸫

1,050,000

㸫

600,000㸫

600,000㸫

1,050,000

㸫

1,050,000

㸫

650,000㸫

650,000

Resona Bank, Limited㸫

950,000㸫

950,000

The Norinchukin Bank

㸫

750,000㸫

750,000

MUFG Bank, Ltd. (Note 2)

㸫

650,000㸫

650,000

Development Bank ofJapan Inc.

㸫

550,000㸫

550,000

Subtotal

79,400,000

14,000,000

14,000,000

79,400,000

㸫

㸫

㸫

㸫

㸫

Total

79,400,000

14,000,000

14,000,000

79,400,000

㸫

㸫

㸫

㸫

㸫

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

1 to 2 years

Sep. 8,2026

220,000

Lump-sumpayment
at maturity
0.34800(Thousands of yen)Due in1 year or lessLong-term loans payable

MUFG Bank, Ltd.

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

(Note 3) The following is the maturity schedule of long-term loans within five years of the balance sheet date.

UnRepayme
securednt ofUnloansguaranpayable
teedJul. 13,2022

0.35341

750,000 0.34000

0.41800

May. 31,2023

0.42622(Note 1) 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 2) MUFG Bank, Ltd. succeeded Mitsubishi UFJ Trust and Banking Corporation’s position as lender upon the transfer of
Mitsubishi UFJ Trust and Banking Corporation’s corporate-loan-related businesses to MUFG Bank, Ltd., effective April 16,
2018.

64

65

Unitholder Information
Introducing the Website of SHR
SHR renovated its website in May 2018. Press releases, financial results, portfolio and other various information are
publicized on the website. SHR will continuously strive to provide information to our unitholders in a timely manner.

http://sekisuihouse-reit.co.jp/en/
Sekisui House Reit

SearchSHR’s investment unit
price (real time) andvolume (20-minutes delay)
are shown.

Information on
Cash Distributions
Information on actual
cash distributions andforecast cash distributions
are provided.

IR e-mail Delivery(Japanese version only)
Delivers the latest
information to registerede-mail addresses.

What’s New
Press releases and information
on updates are provided.

Latest Financial Reports
Access the latest
information on financial
results

Video on Financial Report Presentation
Meetings (Japanese version only)Video of presentation meeting for the 7th fiscal
period held on June 15, 2018 is available.

66

67

Unitholder Information
Change in Investment Unit Price and Trading Volume(JPY)

SHR’s investment unit price (left axis)

TSE REIT Index

Unitholder Memo

Trading Volume (right axis)(Unit)

Account Closing Date

End 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

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 ofunitholders may be held from time to time when it is necessary.

Date to Determine Exercising of
Voting Rights by Unitholders

Date stipulated in Article 12 of the Articles of Incorporation

50,000Listed Stock ExchangeTokyo Stock Exchange (Securities Code: 3309)

40,000Newspaper Posting Public Notice

Nikkei100,000

80,00090,00075,00080,00070,00070,00060,00065,00060,00030,00020,00055,000Transfer Agent

Mizuho Trust & Banking Co., Ltd.

Contact

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

10,000050,000Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May
2014 2015
2016
2017
2018

Concerning procedures to change registered address, etc.
Please contact your securities company to change registered address, name, etc.

(Source) Tokyo Stock Exchange, Inc.
(Note 1) Closing price and trading 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. Furthermore, TSE REIT Index refers to the weighted average-type index of market capitalization of all REIT counters listed on theTokyo Stock Exchange (TSE).
(Note 4) Figures for the period from December 3, 2014 to May 31, 2018 are indicated.

Unitholder Composition (as of the end of the fiscal period ended April 2018 (7th fiscal period))
Financial institutions (including financial instruments business operators)
Other domestic firms
Foreign firms, etc.
Individuals and others

88,182 units (9.10%)

Number of investment
units owned by owner
type
Total: 969,000 units

Number of unitholders
by owner type
Total: 12,958

IR Calendar
Closing month of
FP ending April

Announcement offinancial results for
FP ending April

Apr.

Jun.

May

167 (1.29%)
241 (1.86%)

You can receive your “cash distribution” by bringing your “distributions receipt” to a nearby Japan Post Bank orpost 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, withrespect to future cash distribution, if you wish to receive them through transfer to a bank account you specify orother measures, please contact your securities company, etc. Please receive your “cash distribution” on an early dateas we will be unable to pay them if they are not received within 3 years from the commencement date of paymentsof cash distribution.

90,646 units (9.35%)

128,128 units (13.22%)
662,044 units (68.32%)

Concerning receiving cash distribution

Closing month of
FP ending October

Announcement offinancial results for
FP ending October

Oct.

Dec.

Aug.

Jul.

Sep.

Nov.

Feb.

Jan.

Mar.

12,389 (95.61%)

161 (1.24%)

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

Commencement of the payment of cash distributions for FP ending October
Dispatch of Semi-Annual Report for FP ending October (Japanese version)(Note) Total of ratios may not add up to 100.0% as ratios are indicated as rounded to the second decimal place.

68

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