Semi-Annual Report
24th Fiscal Period
24thFrom April 1, 2017 to September 30, 201724
3-1-31 Minami-Aoyama, Minato-ku, Tokyo

http://www.shi-reit.co.jp/eng/Sekisui House Residential Investment Corporation (the Investment Corporation) is a J-REIT
investing in residential properties, with Sekisui House, Ltd. serving as sponsor.
Topics of the 24th Fiscal Period
Ended September 2017

Features of the Investment Corporation

1
2
3
4

2017 GRESB Assessment

Sekisui House, a leading company

in the housing industry, as the sponsor

Highly competitive residential portfolio
centering on Greater Tokyo / Major Urban Areas

Selected as“Sector Leader”(ranked first)

Solid financial base backed byin the Asia Residential Sector forthe credibility of Sekisui Housethe third consecutive year

Acquisition of environmental certification throughenvironmentally-conscious management

The Investment Corporation participated in the 2017 GRESB Assessment conducted by Global Real Estate Sustainability
Benchmark (“GRESB”) and achieved “Green Star,” which proves receipt of high scores in the GRESB Real Estate Assessment,
and acquired “4 Stars” (five-level rating with the highest being “5 Stars”) in the GRESB Rating following the previous year.

Collaborative Structure with Sekisui House Group

Furthermore, the GRESB awards the title of “Sector Leader” to real estate companies, REITs and funds with outstanding
efforts on sustainability that have received the highest ranking in each sector in each region. The Investment Corporation
was selected as “Sector Leader” in the Asia residential sector (ranked first) for the third consecutive year.

Planning

Feedback of supply and demand
information on rental housing

Sekisui House Residential
Investment Corporation
Collaboration for planning anddeveloping rental housing

Entrustment of asset management*The GRESB Real Estate Assessment is an assessment on sustainability efforts of real estate companies, REITs and funds, not of individual real estates. A total of 850 entities participated in the 2017GRESB Real Estate Assessment in the world(Reference) Acquisition Status of DBJ Green Building Certification
The Investment Corporation has acquired DBJ Green Building Certification for a total of six properties in a period up
to the 24th fiscal period since acquiring the first such certification as a residential REIT in 2015 for two of the properties
in its portfolio.

Collaboration
with the Sekisui
House Group

Certification rank

Certification rank

Operation

Ownership

Development

Sekisui House, Ltd.

Administration*The GRESB is a benchmark system for evaluating sustainability performance in the real estate sector, established in 2009 primarily by major European pension funds, which played a major role in establishing
the Principles for Responsible Investment (PRI), for the purpose of enhancing shareholder value by applying environment, society and governance (ESG) considerations to real estate investments.

Feedback of matters related
to operation, administrationand supply of properties(4 Stars)

Sekisui House
Asset Management, Ltd.
Sekiwa Real Estate Group

Prime Maison
GOTENYAMA EAST

Prime Maison
GINZA EAST

Prime Maison
YOKOHAMA NIHON-ODORICertification rank

(Asset Management Company)

Collaboration as service provider ofoperation and administration as well
as a supply source of properties(5 Stars)

Prime Maison SHINAGAWA(3 Stars)

Esty Maison OJIMAKOBE Women’sStudent Housing* The DBJ Green Building Certification System recognizes outstanding properties that respond to the demands of the times. The system was established based on a
proprietary scoring model developed by the Development Bank of Japan, and serves to improve the environmental functionality of buildings while encouraging theprevalence of properties that demonstrate awareness of societal demands.

1

To Our Unitholders

Performance Highlights

I would like to express our sincere gratitude for your continued and loyal patronage.
I hereby report on the business results of Sekisui House Residential Investment Corporation (the “Investment
Corporation”) for the 24th fiscal period ended September 2017.
In the 24th fiscal period, while urban areas saw an increasing trend in population inflow backed by steady
improvement in employment situation, we conducted finely-tuned leasing capturing features of eachresidence against the backdrop of limited supply of quality rental apartments. As a result of such efforts,
occupancy remained favorable for a first half of the fiscal year, which is a low season, maintaining highlevels of the period-end occupancy ratio (97.1%) and the period-average occupancy ratio (96.9%) for theentire portfolio. Rent trends in new contracts and contract renewals also remained strong, indicating acontinuous upward trend in rents.

Cash Distribution per Unit
Actual cash distribution

24th Fiscal Period Ended September 2017 Cash distribution per unit ¥2,255
Forecast cash distributions

Osamu Minami
Executive Director, Sekisui House Residential Investment Corporation
President, Sekisui House Asset Management, Ltd.

In terms of financing, we realized extension of loan periods and reduction of borrowing costs by repaying partof 2,705 million yen that had matured using cash on hand and refinancing the remaining 2,528 million yen.
In addition, upon the ending of the commitment term in October 2017 with a maximum commitment line
amount of 10 billion yen executed in October 2016, we executed a new commitment line agreement under
the same conditions.
As a result of these endeavors, the Investment Corporation posted operating revenue of 6,916 million yen,operating income of 3,001 million yen and net income of 2,493 million yen for the 24th fiscal period, withcash distribution per unit coming to 2,255 yen.

Cash distribution per unit

¥2,230 (forecast)

26th Fiscal Period Ending September 2018 Cash distribution per unit

¥2,200 (forecast)

25th Fiscal Period Ending March 2018

As the real estate market saw a declining trend in cap rates and further intensifying acquisition competition
for residential properties that we target, we did not make any new property acquisition in the 24th fiscal
period upon careful assessment of property information based on our policy of maintaining appropriate viewson acquisition yield levels. Consequently, there was no change to the asset size in the 24th fiscal period with
the number of properties we owned at the end of the fiscal period at 113, of which total acquisition pricestood at 206.9 billion yen.

Business Results and Cash Distributions
Settlement Date

Mar. 2016

Sept. 2016

Mar. 2017

Sept. 2017

Mar. 2018

Sept. 2018

Fiscal Period

21st FP

22nd FP

23rd FP

24th FP

25th FP (forecast)

26th FP (forecast)

Operating revenue (million yen)

6,543

6,693

6,919

6,916

6,965

6,902

Operating income (million yen)

2,741

2,739

3,060

3,001

2,986

2,950

Furthermore, concerning the CSR and environmental activities in which we have actively engaged, weparticipated in the 2017 GRESB Assessment conducted by Global Real Estate Sustainability Benchmark(“GRESB”) as did in 2016, and were selected as “Sector Leader” in the Asia residential sector (ranked first)
for the third consecutive year as well as achieved "Green Star," which proves receipt of high scores in the
GRESB Real Estate Assessment and received “4 Stars” in the “GRESB Rating.”

Ordinary income (million yen)

2,214

2,193

2,502

2,494

2,467

2,434

Net income (million yen)

2,210

2,192

2,501

2,493

2,465

2,432

47

8

31

-

-

-

2,125

2,145

2,234

2,255

2,230

2,200

The 24th fiscal period was the first fiscal period we operated after changing its trade name to Sekisui House
Residential Investment Corporation in June this year in response to Sekisui House, Ltd. becoming the solesponsor in March. The Investment Corporation will continue to strive to realize continuous external growthand steady internal growth as well as to reinforce stable financial base that supports them, with an aim to
maximize the interest of its unitholders and maintain/improve the level of cash distributions by further
deepening collaborative relationship with Sekisui House Group.

(Note 1) The values of respective items in the “Mar. 2018 25th FP (forecast)” and “Sept. 2018 26th FP (forecast)” columns are the figures as of November 15, 2017 (the announcement date of business results)
calculated under certain assumptions. The actual operating revenue, operating income, ordinary income, net income, provision for reserve for reduction entry and cash distribution per unit are subject tochange due to such factors as additional acquisitions or dispositions of real estate and other investment assets in the future, changes in the real estate and other markets, and changes in the asset
management environment and other conditions surrounding the Investment Corporation. In addition, the Investment Corporation does not guarantee any actual results or cash distribution amount inproviding the forecast figures.
(Note 2) “Cash distribution per unit” for the “Mar. 2016 21st FP,” “Sept. 2016 22nd FP” and “Mar. 2017 23rd FP” columns are calculated based on the amount of unappropriated retained earnings less theprovision for reserve for reduction entry of 47 million yen, 8 million yen and 31 million yen, respectively, divided by the number of investment units issued as of the end of each fiscal period.
(Note 3) The Investment Corporation has internally reserved part of the gain on sale of properties as reserve for reduction entry by applying to the special taxation measures under the Act on Special Measures
Concerning Taxation. The cumulative amount of internal reserves as reduction entry as of the end of the 24th fiscal period ended September 30, 2017 is 214 million yen.

We appreciate your continued support.

Provision for reserve for reduction entry (million yen)
Cash distribution per unit (yen)Changes in Business Results
Operating Revenue / Net Income

Table of Contents

Operating revenue
Net income
6,919
6,916

(Million yen)

1 Topics of the 24th Fiscal Period Ended September 20172

2

To Our Unitholders

3

Performance Highlights

4

Growth Track Based on Use of Comprehensive
Capabilities of the Sekisui House Group

6

Portfolio Management

8

Initiatives for Further Reinforcement of Financial Base

13 Management Discussion and Analysis

7,000

23 Financial Section (Audited)

6,000

24 Financial Statements
I. Balance Sheet
II. Statement of Income and Retained Earnings
III. Statement of Changes in Net Assets
IV. Statement of Cash Distributions
V. Statement of Cash Flows

2,234

2,255

1,500

2,210

1,000

52 Unitholders Information

2,145

2,000

3,000

49 Independent Auditor’s Report

12 CSR and Environmental Activity Case Studies

2,500
2,125

4,000

30 Notes to Financial Statements
50 Overview of the Investment Corporation and Asset Management Company

(Yen)

5,000

2,000

10 Major Properties Owned by the Investment Corporation

6,693

6,543

Cash Distribution per Unit

0

2,192

2,501

2,493

1,000

500

21st FP(Mar. 31, 2016)

22nd FP

23rd FP

24th FP(Sept. 30, 2016)(Mar. 31, 2017)(Sept. 30, 2017)0

21st FP(Mar. 31, 2016)

22nd FP

23rd FP

24th FP(Sept. 30, 2016)(Mar. 31, 2017)(Sept. 30, 2017)3

Growth Track Based on Use of Comprehensive Capabilities of the Sekisui House GroupManagement under a joint-sponsor structure with Sekisui House as the main sponsor

Shift to sole sponsorship by Sekisui House

Total acquisition price(Million yen)

Property acquisition status since March 2010 when Sekisui House became the sponsor

Sekisui House Residential Investment Corporation

Properties acquired from the Sekiwa Real Estate companies
Properties acquired from third parties

Acquisition from Sekisui House
200,000
Total acquisition price135.2 billion yen
71 properties

56.0 billion yen / 28 properties

Acquisition fromthe Sekisui House GroupAcquisition from the Sekiwa Real Estate companies

51.9%

14.1 billion yen / 10 properties

Disposed properties

107 properties
188,771(Based on acquisition price)

June 2014: Changed the trade name to
Sekisui House SI Residential Investment Corporation

99 properties
171,099

95 properties
151,74465.1 billion yen / 33 properties
150,000

89 properties
141,472
77 properties
128,794

June 2010: Changed the trade name to
Sekisui House SI Investment Corporation

100,000

53 properties
99,92053 properties
99,92058 properties
106,234

57 properties
103,974(3,340)(3,340)60 properties
101,006(3,340)(8,140)(1,920)(1,920)70,00066 properties
110,214(22,275)(47,505)

113 properties
206,943

113 properties
206,943(56,005)(56,005)(14,140)(14,140)(24,030)(10,930)(9,180)(7,510)(12,220)(14,140)

Acquisition of 38
properties totaling
70.1 billion yen fromthe Sekisui HouseGroup(16,075)(3,750)(3,270)(16,075)(3,270)Oct. 1, 2012
Public offering
20,460 units

Apr. 22, 2013
Public offering
21,430 units

Apr. 21, 2014
Public offering
111,600 units

Oct. 22, 2014
Public offering
97,970 units

Oct. 26, 2016
Public offering
83,240 units

Oct. 26, 2012
Third-party allotment
1,540 units

May 23, 2013
Third-party allotment
1,105 units

May 22, 2014
Third-party allotment
5,615 units

Nov. 18, 2014
Third-party allotment
4,900 units

Nov. 14, 2016
Third-party allotment
4,160 units

Disposition of 1 property

Disposition of 1 property

Disposition of entirety of Hamamatsu Plaza Westand part of Hamamatsu Plaza East, etc.

(42,615)(38,345)(38,345)

Acquisition from third parties

108 properties
193,890110 properties
191,020111 properties
199,163

Disposition of part of Hamamatsu Plaza East

Disposition of 1 property
and part of 1 property-10,000

Disposition of 5 properties

Disposition of 1 property
and part of 1 property

Disposition of 1 property

End of 9th FP(Mar. 31, 2010)

End of 10th FP(Sept. 30, 2010)

End of 11th FP(Mar. 31, 2011)

End of 12th FP(Sept. 30, 2011)

End of 13th FP(Mar. 31, 2012)

End of 14th FP(Sept. 30, 2012)

End of 15th FP(Mar. 31, 2013)

End of 16th FP(Sept. 30, 2013)

End of 17th FP(Mar. 31, 2014)

End of 18th FP(Sept. 30, 2014)

End of 19th FP(Mar. 31, 2015)

End of 20th FP(Sept. 30, 2015)

End of 21st FP(Mar. 31, 2016)

End of 22nd FP(Sept. 30, 2016)

End of 23rd FP(Mar. 31, 2017)

End of 24th FP(Sept. 30, 2017)

LTV

48.9%

47.1%

48.3%

49.3%

51.5%

52.1%

53.4%

51.0%

53.4%

52.3%

51.1%

51.5%

52.3%

53.5%

50.3%

50.3%

Cash distribution
per unit¥2,010¥1,632¥1,958¥2,009¥2,023¥2,070¥2,091¥2,107¥2,212¥2,131¥2,185¥2,122¥2,125¥2,145¥2,234¥ 2,255

Aim to expand the asset size while maintaining /improving the cash distribution level

June 2017: Changed the trade name to
Properties acquired from Sekisui House(Note 1) “LTV” is calculated by dividing the total interest-bearing debt at the end of each fiscal period by total assets at the end of each fiscal period, rounded to the first decimal place. The same follows hereafter.
(Note 2) A five-for-one split of investment units was implemented on April 1, 2014. In consideration of the impact of the split, “Cash distribution per unit” for the 17th fiscal period ended March 2014 or earlier indicates figures obtained by dividing actual figures by 5.

Status of Property Management Service Entrustment to the Sekiwa Real Estate Group“Prime Maison” and Others Developed by Sekisui House through Property Planning Meetings with the Asset Management Company

Property management of 81 out of 112 residential properties in total is entrusted

All 14 properties are located in Greater Tokyo / Major Urban Areas (Tokyo 23 wards: 13, Yokohama-shi: 1)

5 properties 473 units in total

6 properties
3 properties
910 units in total

Track record of the Sekiwa Real Estate Group(as of July 31, 2017)

The Group manages leasing ofOccupancy ratio:

595 thousand units nationwide

96.8% (Entire leasing of Sha Maison)

Sekiwa Real Estate Tohoku
All properties
in Tokyo
23 wards
Prime Maison
ASAKUSABASHI

Prime Maison
OTSUKA

Prime Maison
DAIKANYAMA

Prime Maison
MITATSUNAMACHI(Tentative name) Prime Maison
EGOTANOMORI(Shinagawa-ku, Tokyo)(Taito-ku, Tokyo)(Toshima-ku, Tokyo)(Meguro-ku, Tokyo)(Minato-ku, Tokyo)(Nakano-ku, Tokyo)

220 units

64 units

144 units

27 units

18 units

526 units<Completed in January 2017><Completed in October 2017><Completed in May 2016> <Completed in Oct. 2016> <Completed in Jan. 2017>(Note) With regard to the properties above, the Investment Corporation has no specific plans to acquire any of them as of December 26, 2017 (the announcement date of this document).

4

Osaka-shi, etc.

Prime Maison
SHIROKANEDAI TOWER

Sekiwa Real Estate Kanto
Sekiwa Real Estate Kansai (2 properties)
Esty Maison UEMACHIDAI
Esty Maison KOBE-SANNOMIYATokyo, Sapporo-shi, etc.

Under construction

Sekiwa Real Estate (55 properties)

Nagoya-shi, etc.

Completed properties

Properties in theplanning stage

Sekiwa Real Estate Chubu (11 properties)

Fukuoka-shi

As of November 15, 2017 (the announcement date of business results)

As of November 15, 2017 (the announcement date of business results)

Sekiwa Real Estate Kyushu (4 properties)

Sekiwa Kanri Kansai (9 properties)(wholly-owned subsidiary of Sekiwa Real Estate Kansai)

Esty Maison NISHINAKAJIMA
Prime Maison YUHIGAOKA
KOBE Women’s Student Housing, etc.

Sekiwa Real
Estate Chugoku

Esty Maison GINZA
Prime Maison GINZA EAST
Prime Maison EBISU
Prime Maison SHIROKANE-TAKANAWA
Prime Maison ODORI KOEN, etc.

Prime Maison HIGASHISAKURA
Prime Maison GOKISO
Esty Maison TSURUMAI
Granmast KANAZAWA NISHIIZUMI, etc.

MAST HAKATA
Prime Maison MOMOCHIHAMA
Prime Maison CENTRAL PARK, etc.

(Note) “Sha Maison” is a brand for rental housing constructed by Sekisui House and managed by the Sekiwa Real Estate Group.

5Portfolio Management(Reference) Status of the Residential Portfolio
There is no change from the previous fiscal period (23rd fiscal period ended March 2017) since there was no acquisition of new properties or dispositionof owned properties in the 24th fiscal period ended September 2017.

Changes in Occupancy Ratio
In the 24th fiscal period, the Investment Corporation conducted strategic leasing activities with a focus on the optimum balance of occupancy and rentof each property and each unit in a favorable rental market environment, and achieved the occupancy ratio for the entire portfolio of 96.9% on averageand 97.1% at the end of the fiscal period, remaining at a high level.
100.0

100.0

96.9

96.7

96.7

96.5

Other real estate in trust (retail property)

100.0

100.0

Entire portfolio

100.0

100.0

100

97.8
97.7

97.0

96.9

96.9

97.1

96.8

96.8

96.8

97.0

95

Period-average occupancy ratio
Residence only

96.8%

Entire portfolio

96.9%

90
End of Mar.
2017

End of Apr.
2017

End of May
2017

23rd FPEnd of June2017

End of July2017

End of Aug.
2017

End of Sept.
2017

24th FP(Note 1) The occupancy ratio in the above graph indicates the ratio of total leased area to the total leasable area in each category for the properties of the corresponding category held by the Investment Corporation as of the end ofeach month from March 2017 to September 2017, rounded to the first decimal place.
(Note 2) “Period-average occupancy ratio” indicates the average of the occupancy ratios at the end of each month during the 24th fiscal period.

Renovation Work of Entrance of Esty Maison EBISU II
In order to maintain/improve property competitiveness, we renovated the entrance of the property, which was completed about 14 years ago.
Details of work
Installation of decorative walls, decorative ceiling and lighting equipment such as
indirect lighting fixtures, etc. in the entrance hall and entrance approach

Construction cost(excluding consumption tax)

Construction Period¥16 million(entire amount wascapital expenditure)

August 2017 to September 2017

BeforeRepair of entrance approach
Creating space emphasizing continuity from the entrance hall
Adding a sense of depth by installing wood-like decorative
walls and ceiling6

End of 24th FP (Sep. 30, 2017)
Owned properties (totaling 112 properties)

After

Diversification status by area

100.0

End of 23rd FP (Mar. 31, 2017)
Owned properties (totaling 112 properties)

Greater Tokyo / Major Urban Areas
Greater Tokyo / Other Urban Areas
Major Cities Nationwide(Classified according to the area where each property is located (based on the acquisition price))

Diversification status by floor area Diversification status by walking distance to station Diversification status by property age

Residence(%)

End of 22nd FP (Sep. 30, 2016)
Owned properties (totaling 110 properties)

Less than 5 years
5 years to less than 10 years
10 years to less than 15 years
15 years or more
(Classified according to the property age with November 15, 2017 (the announcement date of business results) set as the base date (based on the acquisition price))

28.8%

27.7%

Greater Tokyo

71.2%

3.8%

10.2%

Greater Tokyo

67.4%

3.0%

9.1%

10.5 years

72.3%

9.1%

Average property age
48.6%

27.7%

Greater Tokyo

69.3%

Average property age
32.1%

46.7%

10.1 years

9.1%
32.8%
26.3%

69.3%

13.2%

Average property age
30.9%

46.7%

10.1 years

30.9%

More than 10 minutes

8.7%

Within10-minute walk

72.3%

9.1%

13.2%

Within 3 minutes
More than 3 minutes to within 5 minutes
More than 5 minutes to within 10 minutes(Classified according to the walking minutes from station for each property (based on the acquisition price))

27.4%

3.0%

8.7%

Within10-minute walk

35.1%
26.3%

Within10-minute walk

91.0%

91.3%

91.3%

30.7%

29.9%

29.9%

35.1%

Less than 30m2
30m2 to less than 50m2
50m2 to less than 100m2 100m2 or more
(Classified according to the area of each residential unit (based on the number of leasable residential units))

0.6%

0.6%

23.6%

22.9%

Average area
per unit
25.2%

0.6%

37.8 m2

22.9%

Average area
per unit

50.6%
24.8%

37.3 m

2

Average area
per unit

51.7%
24.8%

37.3 m2

51.7%(Note 1) “Average property age” is calculated by seeking the weighted average of the building age of each property (with November 15, 2017 (the announcement date of business results) set as the base date) with the investment ratio calculated based on theacquisition price, rounded down to the first decimal place.
(Note 2) “Average area per unit” is calculated based on the total leasable residential area owned properties and the total number of leasable residential units as of each point of the end of period, rounded down to the first decimal place.
(Note 3) The ratios of the above diversification statuses are rounded to the first decimal place. Accordingly, the ratios may not add up to 100%.

7

Initiatives for Further Reinforcement of Financial Base
Changes in Period-Average Borrowing Cost Rates and Average Remaining Period of Borrowings

Status of Financial Soundness
As an indicator demonstrating the stability of its financial base, the Investment Corporation has been granted the following credit ratings from two
Japanese rating agencies. Ratio of liabilities with fixed interest rates, ratio of long-term interest-bearing debt and LTV (ratio of interest-bearing debt tototal assets) as of the end of the 24th fiscal period are as follows.
Status of
Credit Ratings

Japan Credit Rating Agency, Ltd. (JCR)

As of November 15, 2017
(the announcement date ofbusiness results)[Long-term issuer rating]Ratio of liabilities with
fixed interest rates

93.1%

Rating and Investment Information, Inc. (R&I)

AA- (Stable)

Ratio of long-term
interest-bearing debt

End of the 24th FP (September 30, 2017)[Issuer rating]

A+ (Stable)

100.0%(Year)
6.0

(%)
1.50
Period-average borrowing cost rate (left axis)
Average remaining period of borrowings (right axis)

50.3%

LTV

End of the 24th FP (September 30, 2017)

The Investment Corporation is conducting fund procurement with an intention to reinforce its financial base while working to lengthen borrowing periods
under the low-interest rate environment. The period-average borrowing cost rate for the 24th fiscal period stood at 0.95%, and the average remaining
period of borrowings was 4.3 years as of the end of the fiscal period.

4.9 years

1.20 %

4.5 years

End of the 24th FP (September 30, 2017)

4.2 years(Note) “Ratio of liabilities with fixed interest rates” includes borrowings with the interest rates that have been practically fixed by concluding interest rate swap agreements, and “Ratio of long-term interest-bearing debt” includes
current portion of long-term loans payable within one year and investment corporation bonds maturing within one year. The ratios are rounded to the first decimal place.

1.00

1.09 %

4.6 years
4.3 years

1.04 %

Conclusion of Commitment Line Agreement

1.02 %

4.1 years
1.01 %

4.3 years

4.3 years
4.0

0.95 %

0.97%

0.95%

FP ended
Sept. 30, 2016
(22nd FP)FP endedMar. 31, 2017
(23rd FP)FP ended
Sept. 30, 2017(24th FP)

Upon the ending of the commitment term based on the commitment line agreement concluded with three Japanese megabanks on October 7, 2016 tosecure flexible and stable means for procuring funds, the Investment Corporation concluded a new commitment line agreement as follows. There is nochange to the main contents of the agreement.

Maximum commitmentline amount

Date of agreement
October 6, 2017

¥10,000 million

Term of commitment line
From November 1, 2017
to October 31, 2018

Use of funds• Property acquisitions

Lenders
Mizuho Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation• Refinancing (including redemption of
investment corporation bonds)• Renovation / repair work of real estate
owned by the Investment Corporation

The Investment Corporation is promoting to diversify repayment dates of its borrowings with an aim to further enhance the stability of its financial base.
Going forward, it will work to flatten the repayment amount for each fiscal period within the maximum commitment line amount of 10 billion yen as abenchmark.
(As of the end of the 24th fiscal period ended September 2017)

10,882

Maximum commitment line amount

10,000

2,500

8,000

4,000

4,000

2,705
2,528
177

Long-term loans payable

8,792

9,900

8,382

2,500
2,100

3,000

5,400

4,900

4,100
6,500

3,000

6,128
5,500
(2,528)

2,400

1,900

FP ended 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
Sept. 30, Mar. 31, Sept. 30, Mar. 31, Sept. 30, Mar. 31, Sept. 30, Mar. 31, Sept. 30, Mar. 31, Sept. 30, Mar. 31, Sept. 30, Mar. 31, Sept. 30, Mar. 31, Sept. 30, Mar. 31,
2017
2018
2018
2019
2019
2020
2020
2021
2021
2022
2022
2023
2023
2024
2024
2025
2025
2026
(24th FP) (25th FP) (26th FP) (27th FP) (28th FP) (29th FP) (30th FP) (31st FP) (32nd FP) (33rd FP) (34th FP) (35th FP) (36th FP) (37th FP) (38th FP) (39th FP) (40th FP) (41st FP)(Note) Amounts in the graph and table are rounded down to the nearest million yen. The same follows hereafter.

8

9,500
8,100

4,400
6,792

Investment corporation bonds

9,830

2,000 7,100

6,100

6,000

0

FP ended
Sept. 30, 2014
(18th FP)FP endedMar. 31, 2015
(19th FP)FP ended
Sept. 30, 2015
(20th FP)FP endedMar. 31, 2016
(21st FP)

2.0

(Note 1) “Period-average borrowing cost rate” is calculated by using the formula below and is rounded to the second decimal place:
Period-average borrowing cost rate = Period borrowing cost (annualized) / Balance of period-average interest-bearing debt
Borrowing cost = Interest expenses + borrowing related expenses + interest expenses on investment corporation bonds (excluding expenses for early repayment and commitment line agreement)(Note 2) “Average remaining period of borrowings” is the remaining period of interest-bearing debt to the repayment dates (redemption dates) at the end of each fiscal period weighted average by the balance of interest-bearing
debt, and is rounded down to the first decimal place.

The Investment Corporation has constructed the bank formation comprising 17 financial institutions centering on the three Japanese megabanks, basedon the credibility of Sekisui House. The borrowing status of the Investment Corporation is as follows.
(As of the end of the 24th fiscal period ended September 2017)
Outstanding
Balance

Share (%)

Mizuho Bank, Ltd.

16,001

17.6

Sumitomo Mitsui Banking Corporation

15,565

17.1

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

9,750

10.7

Mizuho Trust & Banking Co., Ltd.

8,030

8.8

Sumitomo Mitsui Trust Bank, Limited

6,850

7.5

Mitsubishi UFJ Trust and Banking Corporation

6,592

7.2

Development Bank of Japan Inc.

6,241

6.9

The Norinchukin Bank

4,752

5.2

Resona Bank, Limited.

Financial Institution(Million yen)
12,000

Repaid using
cash on hand

FP endedMar. 31, 2014
(17th FP)

Status of Bank Formation

Maturity Ladder

2,000

0.50

(million yen)

4,550

5.0

The Bank of Fukuoka, Ltd.

2,400

2.6

Aozora Bank, Ltd.

2,200
1,600

2.4

Shinkin Central BankThe Senshu Ikeda Bank, Ltd.

1,300

1.4

The Shizuoka Bank, Ltd.

1,300

1.4

The 77 Bank, Ltd.

1.4

The Hiroshima Bank, Ltd.

1,300
1,300

The Yamaguchi Bank, Ltd.
Total debt

1,300
91,032

1.4
100.0

1.4
1.4
1.4
1.4

1.4
1.8
2.4
2.6

17.6
5.0

Share byfinancial
institution

5.2
6.9

1.8

1.4

17.1

7.2
10.7

7.5
8.8

Unit: %

(Note) "Share" is rounded to the first decimal place.

9

Major Properties Owned by the Investment Corporation

Major Cities Nationwide (Sapporo-shi)

In order to mitigate the risks associated with a unipolar concentration of the portfolio, including risks related to the local economy and earthquakes, the Investment Corporation positions Greater Tokyo / Major Urban Areas as the focused investment area while conducting diversified
investment in Greater Tokyo / Other Urban Areas and Major Cities Nationwide.

Sapporo-shi

Prime Maison MINAMI 2-JO

3 properties

Greater Tokyo / Major Urban Areas
Greater Tokyo / Major Urban Areas
Total 71 properties

Greater Tokyo / Other Urban Areas
Total 5 properties
Prime Maison ODORI KOEN

Major Cities Nationwide
Total 36 properties

Prime Maison GINZA EAST

Prime Maison YOKOHAMA NIHON-ODORIPrime Maison EBISU

Prime Maison GOTENYAMA EAST

Prime Maison KAMOKAMOGAWA

Major Cities Nationwide (Nagoya-shi)

Prime Maison SHINAGAWA

Kyoto-shi

Prime Maison FUJIMIDAI

1 property
Kanazawa-shi
Osaka-shi

Prime Maison SHIROKANE-TAKANAWA Prime Maison ICHIGAYAYAMABUSHICHO Prime Maison HATSUDAI Prime Maison SHIBUYA Prime Maison MORISHTA Prime Maison JINBOCHO Prime Maison WASEDA Prime Maison HATCHOBORI MAST LIFE YAHIROMAST LIFE AKIHABARA

1 property

10 properties
Nagoya-shi

9 properties

Kobe-shi

2 properties
Esty Maison KINSHICHO II Esty Maison GINZA

Esty Maison GOTANDA Esty Maison SASAZUKA Esty Maison SHIBAURA Esty Maison AKABANE Esty Maison AZABUJUBAN

Prime Maison HIGASHISAKURA

Prime Maison TAKAMI Prime Maison YADAMINAMI

Major Cities Nationwide (Osaka-shi, Kyoto-shi and Kobe-shi)

1 property

Fukuoka-shi
Esty Maison OJIMA

Yokkaichi-shi

Prime Maison GOKISO

9 properties

Esty Maison KYOBASHI Esty Maison SHIJONISHINOTOIN

Esty Maison ITABASHIKUYAKUSHOMAE Esty Maison KOHOKU TSUNASHIMA

Esty Maison HIGASHISHINAGAWA

Greater Tokyo / Other Urban Areas

Major Cities Nationwide (Fukuoka-shi)

Prime Maison YUHIGAOKA

Esty Maison OISENDAIZAKA Esty Maison YOTSUYASAKAMACHI

Esty Maison KOBE-SANNOMIYA Kobe Women's Student Housing

Major Cities Nationwide (Other areas)

Esty Maison ITABASHI C6

Esty Maison SHINAGAWA SEASIDE Esty Maison KAWASAKI Esty Maison YOKOHAMA Esty Maison MORISHITA

10

Prime Maison KITATANABE

Prime Maison MUSASHINONOMORIMAST LIFE HINO

Prime Maison CENTRAL PARKMAST HAKATA

Prime Maison MOMOCHIHAMA Prime Maison TERIHA

Esty Maison HAKATAHIGASHI

Granmast KANAZAWA NISHIIZUMI Granmast UNOMORI

11

CSR and Environmental Activity Case Studies

Management Discussion and Analysis

Aiming to realize its basic principle of “providing high-quality residences through the J-REIT scheme” and “creating affluent and fulfilling lifestyles,” theInvestment Corporation conducts real estate investment management with due consideration given to the “environment, society and governance (ESG),” inaccordance with the “Sustainability Vision” advocated by Sekisui House. The Investment Corporation is conscious of its societal responsibilities, and has
established sustainability policy and objectives which it complies with and implements across the breadth of its operations. Major examples of its initiatives
are presented below.

1. Changes in Operating Results and Other Management Data
Fiscal Period
Accounting Period
Operating revenue

Energy conservation measures[Rent revenue - real estate]

LED light fixture replacement work in common areas

Replacement of air conditioners in exclusive areas
with energy-saving models

As of the end of September 2017

As of the end of September 2017

Implemented at

Implemented at
a total of

38 properties

a total of

Electricity consumption (cumulative):
Expected annual reduction of approx. 1,189,098kwh

677 A/C units

Comparison of air conditioning units with “
2 Stars” energy efficiency
and those with “
4 Stars” energy efficiency

Greenhouse gas (CO2) emissions (cumulative):
Expected annual reduction of
approx. 610 t-CO2* Estimation by the Asset Management Company based on
the proposal material prepared by the operator of
replacement work

Management that considers
the environment and society

Electricity consumption (cumulative):
Expected annual reduction of approx. 150,971kwh
Greenhouse gas (CO2) emissions (cumulative):
Expected annual reduction of approx. 71t-CO2* Estimation by the Asset Management Company based on the
publicly disclosed materials from Agency for Natural Resources
and Energy, Ministry of Economy, Trade and Industry

Realize a sustainable society

Installation ofwater saving equipment
on faucets in common use areas

Provide high-quality residences
through the J-REIT scheme

Installation of
emergency equipment, etc.

20th Fiscal Period(April 1, 2015 September 30, 2015)

21st Fiscal Period(October 1, 2015 March 31, 2016)

22nd Fiscal Period(April 1, 2016 September 30, 2016)

23rd Fiscal Period(October 1, 2016 March 31, 2017)24th Fiscal Period(April 1, 2017 September 30, 2017)

mm yen

6,411

6,543

6,693

6,919

6,916

Unit

Operating expenses[Expenses related to rent business]

mm yen[6,330][6,332][6,674][6,886][6,916]mm yen

3,667

3,801

3,953

3,858

3,914

mm yen[2,975][3,065][3,218][3,259][3,298]Operating income

mm yen

2,743

2,741

2,739

3,060

3,001

Ordinary income

mm yen

2,211

2,214

2,193

2,502

2,494

Net income(a)

mm yen

2,209

2,210

2,192

2,501

2,493

Total assets(b)

mm yen195,280

198,290203,257

210,166

210,009%[+0.6][+1.5][+2.5][+3.4][-0.1](c)

mm yen91,213

91,26391,292

101,318

101,341[Period-on-period variation]
Net assets[Period-on-period variation]
Unitholders' capital%[-0.0][+0.1][+0.0][+11.0][+0.0]

mm yen88,92588,92588,92598,633

98,633

Investment units issued

(d)

units

1,018,110

1,018,110

1,018,110

1,105,510

1,105,510

Net assets per unit(c)/(d)yen

89,59089,63989,66891,64891,669Total cash distributions(e)

mm yen

2,160

2,163

2,183

2,469

2,492

Cash distribution per unit(e)/(d)

yen

2,122

2,125

2,145

2,234

2,255

yen

[2,122][2,125][2,145][2,234][2,255][Earnings distribution per unit][Distribution in excess of earnings per unit]

yen

[-]

[-]

[-]

[-]

[-]

%

1.1 [2.3]

1.1 [2.2]

1.1 [2.2]

1.2 [2.4]

1.2 [2.4](Note 2)%

2.4 [4.8]

2.4 [4.8]

2.4 [4.8]

2.6 [5.2]

2.5 [4.9](c)/(b)

%

46.7

46.0

44.9

48.2

48.3

[-0.3][-0.7][-1.1][+3.3][+0.1](Note 3)

%

97.7

97.8

99.6

98.7

100.0

(Note 4)

properties

Ordinary income to total assets(Note 2)Return on unitholders' equity
Unitholders' equity ratio[Period-on-period variation]
Distribution payout ratio[Other reference information]

As of the end of September 2017

Installed at

168 locations (cumulative)
Water saving effect
Expected to save water by around 30% per flow control valve
by installing flow control valves that save water without
decreasing water pressure and other usability

As of the end of September 2017

Mainly implemented initiatives below

Total leasable area
(Note 4)

Depreciation
Capital expenditures

Installation of disaster-relief vending machines
Installation of automated external defibrillators (AED)
Installation of emergency cabinets in elevators

110

108

111

113

113

2

400,210.45

368,622.60

376,936.98

380,893.44

382,734.80

%

96.7

97.2

96.8

97.8

97.1

mm yen

1,431

1,468

1,582

1,606

1,602

m

Period-end occupancy ratio

Leasing NOI (net operating income)In addition to the above, replaced bathroom water faucets, showerheads, kitchen water faucets, etc. with those that are expected tosave water by around 20% - 30% compared to the conventionalmodels as necessary, in exclusive areas.

Resource depletion countermeasures

Number of investment properties(Note 2)mm yen

97

293

302

397

446

mm yen

4,786

4,735

5,038

5,234

5,220

(Note 1) Consumption tax is not included in operating revenue, etc.
(Note 2) The indicators are calculated by using the following methods. In addition, annualized figures in accordance with the number of management days are provided in the parenthesis in parallel.
Ordinary income to total assets

Ordinary income / Average total assets
Average total assets = (Period-beginning total assets + Period-end total assets) / 2

Return on unitholders' equity

Net income / Average net assets
Average net assets = (Period-beginning net assets + Period-end net assets) / 2

Leasing NOI

Leasing income for the fiscal period (Rent revenue-real estate – Expenses related to rent business) + Depreciation(Note 3) Distribution payout ratio is calculated by using the following method, and is rounded down to the nearest specified unit.
Cash distribution per unit (excluding distribution in excess of earnings per unit) / Net income per unit
For the 23rd fiscal period, however, the following method is employed as the Investment Corporation issued new investment units in the periods.
Total cash distributions / Net income(Note 4) Number of investment properties indicates the number of properties that are considered to be single units respectively in light of common sense. In addition, the period-end occupancy ratio indicates the ratio of the total leased area to the total leasablearea as of the account closing date.

Contributing to regions in which we own properties(Note) The above figures for expected annual reduction are estimates and do not guarantee actual reductions.

1213

2. Asset Management Status for the 24th Fiscal Period(4) Initiatives on CSR and Realizing a Sustainable Society(1) Brief History of the Investment Corporation

The Investment Corporation established its environmental basic policy, sustainability policy and objectives in the 19th fiscal period ended March 2015, based

The Investment Corporation listed on the Real Estate Investment Trust Securities Market (the J-REIT market) of Tokyo Stock Exchange, Inc. on July 28, 2005.

on the Sustainability Vision upheld by Sekisui House, which was the first in the housing industry to be recognized as an Eco-First Company by the Minister ofthe Environment. Based on these policies, etc., the Investment Corporation has cooperated with Sekisui House to promote its initiatives for CSR and

Subsequently, since 2010, it has worked to establish a stable portfolio primarily comprising residential properties as an investment corporation sponsored by
Sekisui House, Ltd. (“Sekisui House”), a leading company in the housing industry.
At the 6th General Meeting of Unitholders held on June 11, 2014, the Investment Corporation’s Articles of Incorporation was partially revised to remove retail

Committee to see how the policies are followed and assess the effectiveness of implemented measures on a regular basis. In addition, in order to understandproperties, which had previously been identified as a supplementary investment target, from its investment horizons and to solely invest in real estate related
assets that are mainly used (Note 1) as residences. With the revision, which was aimed at shifting the Investment Corporation into a REIT specialized inwhere our environmental awareness initiatives are positioned, endeavors were made to obtain environmental recognition and certifications by external
assessment organizations, and a system has been established to enable the Investment Corporation to continuously take initiatives on CSR and for realizing

residential properties, its investment targets were limited to residential properties.

a sustainable society.

The Investment Corporation’s basic strategy is to build a portfolio that is centered on the high-quality rental residential properties planned and developed by
the Sekisui House Group (Note 2) with Sekisui House as the core company. Under this strategy, it works to expand the asset size with a focus on maximizing

In the 24th fiscal period, the Investment Corporation promoted such measures as introduction of LED lighting to its properties, which it had conducted fromtime to time, adoption of energy-efficient air-conditioning units and installation of water-saving equipment, as its initiatives on CSR and environmental

the interests of its investors as well as to reinforce its financial base. By doing so, the Investment Corporation aims to become a leading company among
REITs investing in residential properties.

activities. As for obtainment of environmental recognition and certifications by external agencies, the Investment Corporation achieved “Green Star” in the2017 GRESB Assessment of real estate companies, REITs and funds conducted by Global Real Estate Sustainability Benchmark (“GRESB”) (Note) following(Note 1) “Mainly used” means that a majority of the total exclusive area of the relevant real estate-related asset is allocated for a specific use.
(Note 2) The Sekisui House Group refers to the group encompassing Sekisui House and its 225 subsidiaries and 26 affiliated companies (as of the end of January 2017). The same follows hereafter.

(2) Operating Environment and Asset Management Results
During the 24th fiscal period, the Japanese economy remained on course for a modest recovery, with capital investment showing a mild upward trend amid
improvements in corporate earnings and consumer spending further strengthening backed by steady improvements in the employment and income
environment, among other factors.
As for the land price trend, in terms of the national average, the range of drop continued to shrink for residential land while turning upward from being
leveled-off last year for commercial land, according to the Prefectural Land Price Survey as of July 1, 2017. Presumably, this is a result of housing demand
being bolstered by policies to support housing acquisition and such amid improving employment situation, and also reflects such factors as growing demand
for stores and hotels due to an increase in the number of foreign tourists and other causes. By area, the commercial land price has shown a generally
stronger upward trend in the three major metropolitan areas (the Greater Tokyo, Osaka Area and Nagoya Area). As for residential land price, it continued torise at almost the same pace as the previous year, though rather slight, in the Greater Tokyo and Nagoya Area while remaining flat in Osaka Area. In regional
areas, both the residential land and commercial land prices in the four regional cities (Sapporo-shi, Sendai-shi, Hiroshima-shi and Fukuoka-shi) showed anincrease at a higher pace than in the three major metropolitan areas, and areas other than these cities also continued to demonstrate a lower rate of pricedecrease.
As for the rental housing market, particularly in the Greater Tokyo / Major Urban Areas, which is the Investment Corporation’s focused investment area, thesupply and demand environment has continued to remain favorable in the face of population inflow from other areas continuing and supply of rental
condominiums remaining low.
As for the real estate transaction market, active transactions continued as overseas investors boosted transaction volume. On the other hand, J-REIT market
saw a decrease in funds raised through public offering against the backdrop of the transaction price level remaining high for all real estate.
Under such circumstances, the Investment Corporation did not make any new acquisitions during the 24th fiscal period. However, it strived to collectinformation on properties that could be subject for acquisition and to strengthen financial base (improvement in profitability) of properties it owned. As aresult, the occupancy ratio of its residential portfolio marked the highest level (period average occupancy ratio: 96.8%, period-end occupancy ratio: 97.0%)
since its listing for a fiscal period ending September, which is a low season; and the figures for the entire portfolio also stood at a high level (period averageoccupancy ratio: 96.9%, period-end occupancy ratio: 97.1%). In addition, rents also showed a trend of increase as in the previous fiscal period.

(3) Changes in the Asset Size
Since no acquisition or disposition was made in the 24th fiscal period, the assets owned by the Investment Corporation remain unchanged since thebeginning of the fiscal period. Therefore, the Investment Corporation owned 113 properties (112 residential properties and 1 retail property) with a totalacquisition price of 206,943 million yen (203,122 million yen for residential properties and 3,820 million yen for the retail property) as of the end of the 24th
fiscal period.

14

environmental activities that meet the needs of the times, through such measures as enhancing energy conservation of its owned properties and acquiring
environmentally friendly properties. Furthermore, Sekisui House Asset Management, Ltd. (the “Asset Management Company”) has set up a Sustainability

the previous year, and also acquired “4 Stars” (five-level rating with the highest being “5 Stars”) in the GRESB Rating which shows a participant’s relative
status of overall GRESB score. Furthermore, GRESB awards the title of “Sector Leader” to real estate companies, REITs and funds with outstanding efforts onsustainability that have received the highest ranking in each sector in each region. The Investment Corporation was selected as “Sector Leader” in the Asia
residential sector (ranked first) for the third consecutive year. In addition, the “GRESB Public Disclosure (five-level rating from “A” to “E”)” was launched thisyear to measure environment, society and governance (ESG) disclosures for more than 450 listed real estate vehicles with coverage of the entire FTSE EPRA/NAREIT Developed Index components. The Investment Corporation has achieved “C,” which is the global average level.
The Investment Corporation is resolved to promote its basic principle of “providing high-quality residences through the J-REIT scheme” and “creating
affluent and fulfilling lifestyles” by continuously implementing its initiatives based on the above-mentioned policies.
(Note) The “GRESB” is a benchmark system for evaluating sustainability performance in the real estate sector, established in 2009 primarily by major European pension funds, which played a major role in establishing the Principles for Responsible Investment(PRI), for the purpose of enhancing shareholder value by applying environment, society and governance (ESG) considerations to real estate investments.

(5) Summary of Fund Procurement
During the 24th fiscal period, the Investment Corporation borrowed 2,528 million yen (loan period: 8 years) to repay part of a loan totaling 2,705 million yen(loan period: 5 years and 1 month) that matured in August 2017 and extended borrowing periods. The difference between the repaid amount and the loan
amount (177 million yen) was repaid using cash on hand.
As a result of the above, as of the end of the 24th fiscal period, the Investment Corporation’s balance of interest-bearing debt was 105,532 million yen(91,032 million yen in long-term loans payable (including 4,600 million yen in current portion of long-term loans payable) and 14,500 million yen in
investment corporation bonds (including 4,000 million yen in current portion of investment corporation bonds); and the ratio of the balance of borrowings,
investment corporation bonds and interest-bearing lease and guarantee deposits to total assets owned by the Investment Corporation (the “Loan-to-Value
Ratio (LTV)”) was 50.3%.
In addition, the Investment Corporation concluded a commitment line agreement with Mizuho Bank, Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd. and
Sumitomo Mitsui Banking Corporation (maximum commitment line amount: 10,000 million yen) in order to secure flexible and stable means for procuring
funds.
In addition, the Investment Corporation has been granted the following credit ratings as of December 26, 2017 (the announcement date of this document).
Credit Rating Agency

Issuer Rating

Japan Credit Rating Agency, Ltd. (JCR)

Long-term issuer rating
AA- (Stable)

Rating and Investment Information, Inc. (R&I)

Issuer rating
A+ (Stable)(6) Summary of Business Results and Distributions
As a result of these management efforts, the Investment Corporation posted operating revenue of 6,916 million yen, operating income of 3,001 million yen
after deducting such operating expenses as outsourcing expenses, utilities expenses and asset management fees, ordinary income of 2,494 million yen andnet income of 2,493 million yen in the 24th fiscal period. The Investment Corporation decided to distribute the entire amount of the unappropriated retained
earnings, excluding the fractional amount where distribution per unit would be less than 1 yen, with the aim of having the maximum amount of earning
distributions deducted as expenses based on application of the special provisions for taxation on investment corporations (Article 67-15 of the Act on Special
Measures Concerning Taxation). As a result, the cash distribution per unit came to 2,255 yen for the 24th fiscal period.

15

3. Future Management Policies and Vital Issues(1) Investment Environment

Hamamatsu Warehouse opened on September 1, 2017 on the site owned by Sekisui House. In line with this, the Investment Corporation is determined tocontinue working on stable operation through improvements of the facility, etc. to generate a synergy effect for existing tenants.

Looking ahead, the Japanese economy is expected to continue to moderately expand as a positive circulation of income and expenditure continues in both

(Note) “Sekiwa Real Estate Group” represents a group of companies comprising, as the core, the Sekiwa Real Estate companies (7 companies) and their subsidiaries and affiliates. Furthermore, the “Sekiwa Real Estate companies (7 companies)” refers to theseven companies of 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. and Sekiwa Real Estate Kyushu, Ltd., which
are wholly-owned subsidiaries of Sekisui House, and the core companies of the real estate division of the Sekisui House Group that are expanding nationwide presence in Japan. The same follows hereafter.

corporate and household economies and domestic demand takes an upward trend against the backdrop of a financial environment under monetary easing
policy so extreme as well as of government spending under the large-scale economic policy.

<Summary of the Investment Corporation’s Major Brands>
Brand Name

Prime Maison

Esty Maison

MAST Series

Brand of Sekisui House

Proprietary Brand of theInvestment Corporation

Brand of the Sekiwa Real
Estate GroupAs a rule, high-quality urban rental condominiums
the Investment Corporation acquired from outside
the Sekisui House GroupAs a rule, high-quality rental residential properties
planned and developed by the Sekiwa Real Estatecompanies (7 companies), which belong to the
Sekisui House Group, or those in which they own
in recognition of the value

However, attention must continue to be paid to the risk of the Japanese economy being pushed downward by such factors as the impact of the U.S.
economic policy operations on the international financial market, the development and impact of the Brexit negotiations and geopolitical risks.
Logo typeIn the domestic real estate transaction market, investment demand for real estate which is likely to bring stable rental income is expected to remain strong
backed by the favorable fund procurement environment thanks to the monetary easing policy, resulting in continuation of the harsh acquisition environment.
As for the rental housing market, a favorable environment is expected to continue as seen in the previous fiscal period.
Under such circumstances, the Investment Corporation will conduct acquisitions and management of assets by carefully discerning the economic andinterest rate trends, the supply and demand balance trends and the orientations of domestic and foreign investors.

Explanation on brand(2) Management Policy and Vital Issues
1) External Growth Strategy
With an aim to realize maximum value for its unitholders, the Investment Corporation endeavors to build a portfolio with a focus on acquiring investment
properties from the Sekisui House Group, for which Sekisui House, the sponsor, serves as the core company. The Investment Corporation will also endeavor
to acquire properties from outside sources by continuously collecting property information in a proprietary manner. In selecting the real estate-related assets
it invests in, the Investment Corporation will make comprehensive considerations of such macroeconomic factors as economic conditions and the real estatemarket trends, such geographical factors as the environment surrounding the areas where the real estate properties are located, urban planning status andits future outlook, and such individual factors as the size and shape of the land and buildings of the real estate properties and their conditions of connections
to roads. For the real estate-related assets that are believed to have superiority over a long term as a result of these considerations, the Investment
Corporation will forecast cash flows they will generate and, based on the forecast, will investigate and make judgments as to their values using the income
approach.
As for HAMAMATSU Plaza, the sole existing retail property (Note) it owns as of December 26, 2017 (the announcement date of this document), theInvestment Corporation will make efforts to achieve its stable management and, in cooperation with Sekisui House, work to enhance the appeal and asset
value of the entire facilities while investigating selling the property at an appropriate time.
(Note) “Existing retail property” refers to a real estate-related asset that the Investment Corporation owns continuously and that is mainly for use as a retail facility.

2) Internal Growth Strategy
The Investment Corporation will continuously implement various measures to enhance the profitability and asset value of its investment properties from a
medium to long-term perspective.
For the properties owned by the Investment Corporation, it will implement refurbishments and renovations at appropriate times to prevent aging andobsolescence of their exclusive and common areas, which hamper leasing. It will also promote a variety of repair works that are intended to maximize cost
performance, including thoroughly conducting quality control of the investment properties. The Investment Corporation aims to maintain and enhance asset
value through these measures.
For properties it acquires from the Sekisui House Group, the Investment Corporation will, in principle, consign property management services to the Sekiwa
Real Estate Group (Note) in charge of the relevant areas in which the said properties are located, in order to improve the occupancy ratio and enhance theoperational and administrative efficiency through the synergy effect with the Sekisui House Group. Moreover, the Investment Corporation has graduallyunified the property management companies involved in the existing residential properties to the Sekiwa Real Estate group. This is understood to haveenabled the Investment Corporation to realize tenant attraction and efficient administration by taking advantage of the Sekiwa Real Estate Group’s know-how
on property management services, backed by the track record of lease management for approximately 595 thousand units throughout Japan (as of July 31,2017), and its nationwide networks. Going forward, the Investment Corporation will keep this policy with an aim to enhance the profitability of its investment
properties. Furthermore, in an effort to establish the brand, the Investment Corporation is unifying the property name brands to “Esty Maison,” as a rule, forresidential properties it acquired from other than the Sekisui House Group. By doing so, and in combination with the “Prime Maison” brand for Sekisui
House’s rental residential properties and the “MAST” series brand for the Sekiwa Real Estate Group’s rental residential properties, the Investment Corporation
will implement its comprehensive brand strategy to demonstrate the superior quality of its properties. As for the retail property HAMAMATSU Plaza, Costco

16

High-quality urban rental condominiums plannedand developed by Sekisui House by utilizing its
know-how or in which it invests in recognition of
the value(3) Financial Strategy, Etc.
For Loan-to-Value Ratio (LTV), the Asset Management Guidelines of the Asset Management Company sets the ceiling at 60%. However, as the policy it has
followed to date, the Investment Corporation makes it a basic rule to maintain LTV at a conservative level, with the lower half of the 50% level as the target
ceiling for the time being. For future borrowings, the Investment Corporation will make it a basic policy to procure funds focused on long-term, fixed interest
rate debts with diversified repayment dates, while continuing its endeavors to reduce fund procurement costs by fully considering the optimum balance of
fixed and floating interest rate loans.

4. Significant Events Occurring after Settling the 24th Fiscal Period
Not applicable(Reference Information)
Establishment of commitment line
A commitment line agreement was concluded on October 6, 2017 as follows. This agreement establishes a new commitment line upon the ending of thecommitment term on October 31, 2017 under the commitment line agreement concluded on October 7, 2016.
Maximum commitment line amount

10,000 million yen

Start date of commitment line

November 1, 2017

Ending date of commitment line

October 31, 2018

Collateral

Unsecured and unguaranteed

Lenders

Mizuho Bank, Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Sumitomo Mitsui Banking Corporation

Use of funds

Funds for property acquisitions, refinancing (including redemption of investment corporation bonds) and renovation / repair work of real estate ownedby the Investment Corporation

17

5. Itemized Portfolio Assets
Property Name

The following table provides details of the assets (real estate and trust beneficiary interests in real estate as major entrusted property, etc.) owned by theInvestment Corporation as of September 30, 2017.
Property Name
Residence-1
Residence-3
Residence-4
Residence-5
Residence-6
Residence-8
Residence-10
Residence-11
Residence-12
Residence-14
Residence-15
Residence-16
Residence-17
Residence-19
Residence-20
Residence-21
Residence-22
Residence-23
Residence-24
Residence-25
Residence-26
Residence-27
Residence-28
Residence-29
Residence-30
Residence-31
Residence-33
Residence-34
Residence-35
Residence-36
Residence-37
Residence-39
Residence-40
Residence-41
Residence-42
Residence-43
Residence-44
Residence-45
Residence-46
Residence-47
Residence-48
Residence-50
Residence-51
Residence-52
Residence-53
Residence-54
Residence-55
Residence-56
Residence-57
Residence-58
Residence-59
Residence-60
Residence-61
Residence-62
Residence-63
Residence-64
Residence-65

18

Esty Maison GINZA
Esty Maison AZABUNAGASAKA
Esty Maison EBISU II
Esty Maison EBISU
Esty Maison KANDA
Esty Maison KITASHINJUKU
Esty Maison ASAKUSA KOMAGATA
Esty Maison MACHIDA
Esty Maison KAWASAKI
Esty Maison SHINKAWASAKI
Esty Maison YOKOHAMA
Esty Maison KAMEIDO
Esty Maison MEGURO
Esty Maison SUGAMO
Esty Maison KYOBASHI
Esty Maison MEGUROHONCHO
Esty Maison HAKURAKU
Esty Maison MINAMIHORIE
Esty Maison GOTANDA
Esty Maison OISENDAIZAKA
Esty Maison SHINAGAWA SEASIDE
Esty Maison MINAMIAZABU
Esty Maison JOTO
Esty Maison TSUKAMOTO
Esty Maison KAWASAKI II
Esty Maison AZABUJUBAN
Esty Maison ITABASHIHONCHO
Esty Maison OIZUMIGAKUEN
Esty Maison TENJINHIGASHI I
Esty Maison TENJINHIGASHI II
Esty Maison SHIJONISHINOTOIN
Esty Maison HIGASHISHINAGAWA
Esty Maison HACHIOJIMINAMINO
Esty Maison NISHINAKAJIMA
Esty Maison ITABASHIKUYAKUSHOMAE
Esty Maison MUSASHIKOYAMA
Esty Maison SENDAGI
Esty Maison YOTSUYASAKAMACHI
Esty Maison HAKATAHIGASHI
Esty Maison KAMIGOFUKU
Esty Maison SANGENJAYA
Prime Maison MUSASHINONOMORI
Prime Maison HIGASHISAKURA
Prime Maison KAYABAKOEN
Esty Maison SANGENJAYA II
Esty Maison ITABASHI C6MAST HAKATA
Esty Maison KINSHICHO
Esty Maison MUSASHIKOGANEIPrime Maison GOKISO
Prime Maison YUHIGAOKA
Prime Maison KITATANABE
Prime Maison MOMOCHIHAMA
Esty Maison AKIHABARA
Esty Maison SASAZUKA
Prime Maison GINZA EAST
Prime Maison TAKAMI

Location (residence indication)

Form of Ownership

Total Leasable
Floor Area (m2)

Estimated Valueat End of Period(Note 1)(million yen)

3-11-19 Ginza, Chuo-ku, Tokyo
5-13-12 Roppongi, Minato-ku, Tokyo
4-13-1 Higashi, Shibuya-ku, Tokyo
1-13-4 Hiroo, Shibuya-ku, Tokyo
2-3-4 Kandata-cho, Chiyoda-ku, Tokyo
1-28-17 Kita-Shinjuku, Shinjuku-ku, Tokyo
1-10-9 Komagata, Taito-ku, Tokyo
2-1-17 Hara-machida, Machida-shi, Tokyo
14-24 Ogawa-cho, Kawasaki-ku, Kawasaki-shi, Kanagawa
1-4 Furuichiba, Saiwai-ku, Kawasaki-shi, Kanagawa
3-33-1 Tsuruya-cho, Kanagawa-ku, Yokohama-shi, Kanagawa
6-57-11 Kameido, Koto-ku, Tokyo
2-10-12 Mita, Meguro-ku, Tokyo
4-14-15 Sugamo, Toshima-ku, Tokyo
2-7-10 Higashinoda-cho, Miyakojima-ku, Osaka-shi, Osaka
4-8-21 Megurohoncho, Meguro-ku, Tokyo
1-18-19 Rokkakubashi, Kanagawa-ku, Yokohama-shi, Kanagawa
2-12-10 Minamihorie, Nishi-ku, Osaka-shi, Osaka
7-7-2 Nishi-Gotanda, Shinagawa-ku, Tokyo
5-9-10 Higashi-Oi, Shinagawa-ku, Tokyo
3-25-20 Higashi-Shinagawa, Shinagawa-ku, Tokyo, etc.
1-10-8 Minamiazabu, Minato-ku, Tokyo
2-11-8 Noe, Joto-ku, Osaka-shi, Osaka
2-13-5 Tsukamoto, Yodogawa-ku, Osaka-shi, Osaka
12-4 Ogawa-cho, Kawasaki-ku, Kawasaki-shi, Kanagawa
1-11-1 Azabujuban, Minato-ku, Tokyo
14-14 Yamato-cho, Itabashi-ku, Tokyo
2-12-15 Higashi-Oizumi, Nerima-ku, Tokyo
4-3 Susaki-machi, Hakata-ku, Fukuoka-shi, Fukuoka
6-12 Susaki-machi, Hakata-ku, Fukuoka-shi, Fukuoka
697 Myodenji-cho, Shijo-sagaru, Nishinotoin-dori, Shimogyo-ku, Kyoto-shi, Kyoto
1-10-1 Higashi-Shinagawa, Shinagawa-ku, Tokyo
3-2-8 Nishikatakura, Hachioji-shi, Tokyo
2-8-21 Higashinakajima, Higashiyodogawa-ku, Osaka-shi, Osaka
2-46-11 Itabashi, Itabashi-ku, Tokyo
3-1-7 Ebara, Shinagawa-ku, Tokyo
3-49-1 Sendagi, Bunkyo-ku, Tokyo
6-20 Yotsuyasakamachi, Shinjuku-ku, Tokyo
7-2-80 Yoshizuka, Hakata-ku, Fukuoka-shi, Fukuoka
13-3 Kamigofukumachi, Hakata-ku, Fukuoka-shi, Fukuoka
2-16-9 Sangenjaya, Setagaya-ku, Tokyo
5-15-3 Josuihoncho, Kodaira-shi, Tokyo
2-10-14 Higashisakura, Higashi-ku, Nagoya-shi, Aichi
2-7-13 Kayaba, Chikusa-ku, Nagoya-shi, Aichi
3-11-6 Shimouma, Setagaya-ku, Tokyo
32-16 Oyama-higashi-cho, Itabashi-ku, Tokyo
4-22-25 Hakata Ekimae, Hakata-ku, Fukuoka-shi, Fukuoka
1-1-8 Kinshi, Sumida-ku, Tokyo
2-6-5 Honcho, Koganei-shi, Tokyo
2-17-2 Ayuchitori, Showa-ku, Nagoya-shi, Aichi
5-4-13 Ueshio, Tennoji-ku, Osaka-shi, Osaka
4-9-17 Kitatanabe, Higashisumiyoshi-ku, Osaka-shi, Osaka
3-9-1 Momochihama, Sawara-ku Fukuoka-shi, Fukuoka
3-4-2 Ueno, Taito-ku, Tokyo
1-61-17 Sasazuka, Shibuya-ku, Tokyo
1-2-1 Tsukiji, Chuo-ku, Tokyo
2-6-7 Takami, Chikusa-ku, Nagoya-shi, Aichi

Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests

5,515.43
2,019.10
2,062.10
781.02
1,706.54
1,881.19
2,978.28
3,090.89
3,741.01
3,737.47
2,823.73
2,279.21
1,070.13
2,619.17
4,613.04
1,656.02
1,285.83
1,804.48
3,871.15
2,979.85
2,602.30
1,082.12
2,065.92
2,321.04
2,824.86
1,755.31
1,274.49
1,362.36
1,058.82
1,943.72
2,261.28
2,936.72
2,155.16
3,643.42
3,915.81
1,176.78
897.302,453.17
9,106.08
2,261.91
856.083,924.58
3,118.11
2,163.98
894.64
4,036.66
9,614.80
1,611.54
2,275.24
4,427.65
2,040.35
1,798.97
7,514.76
2,324.65
3,701.70
6,177.20
2,016.79

6,390
1,760
2,000
855
1,570
1,550
2,140
1,550
2,360
1,230
2,130
1,580
1,060
1,590
2,970
1,130
932
1,040
3,090
2,730
2,010
1,220
951
1,080
1,860
2,620
927
773
364
738
1,170
2,400
875
1,900
2,480
1,040
697
2,090
2,400
821
824
1,860
1,490
787
786
2,640
2,360
1,220
1,740
1,890
909
601
1,900
1,980
3,350
6,160
1,050

Book Value(million yen)
4,687
1,605
1,885
634
1,260
1,206
1,686
1,133
1,800
919
1,866
1,393
783
1,498
2,246
1,106
701
934
2,719
2,204
1,953
1,184
966
1,103
1,705
2,589
903
783
373
700
1,263
2,413
871
1,880
2,453
932
701
2,161
2,154
793
826
1,472
1,021
590
659
2,076
1,749
1,013
1,512
1,507
744
495
1,891
1,473
2,756
4,924
849

Residence-66
Residence-67
Residence-68
Residence-69
Residence-70
Residence-71
Residence-72
Residence-73
Residence-74
Residence-75
Residence-76
Residence-77
Residence-78
Residence-79
Residence-80
Residence-81
Residence-82
Residence-83
Residence-84
Residence-85
Residence-86
Residence-87
Residence-88
Residence-89
Residence-90
Residence-91
Residence-92
Residence-93
Residence-94
Residence-95
Residence-96
Residence-97
Residence-98
Residence-99
Residence-100
Residence-101
Residence-102
Residence-103
Residence-104
Residence-105
Residence-106
Residence-107
Residence-108
Residence-109
Residence-110
Residence-111
Residence-112
Residence-113
Residence-114
Residence-115
Residence-116
Residence-117
Residence-118
Residence-119
Residence-120
Retail-1

Prime Maison YADAMINAMI
Prime Maison TERIHA
Esty Maison HIGASHISHIRAKABE
Esty Maison SENGOKU
Esty Maison DAIZAWA
Esty Maison TOGOSHI
Esty Maison KAWARAMACHI
Esty Maison NISHITENMA
Esty Maison SHIROKANEDAI
Esty Maison HIGASHISHINJUKU
Esty Maison MOTOAZABU
Esty Maison TORITSUDAIGAKU
Esty Maison MUSASHIKOYAMA II
Esty Maison NAKANO
Esty Maison SHINNAKANO
Esty Maison NAKANOFUJIMICHO
Esty Maison TETSUGAKUDO
Esty Maison KOENJI
Esty Maison OSHIAGE
Esty Maison AKABANE
Esty Maison OJI
Prime Maison WASEDA
Prime Maison HATCHOBORI
Prime Maison JINBOCHO
Prime Maison GOTENYAMA EAST
MAST LIFE AKIHABARA
Esty Maison AOI
Esty Maison YAKUIN
Esty Maison KINSHICHO II
Esty Maison OJIMA
Prime Maison FUJIMIDAI
Esty Maison TSURUMAI
Prime Maison MORISHITA
Prime Maison SHINAGAWA
Prime Maison ODORI KOEN
Prime Maison MINAMI 2-JO
Prime Maison KAMOKAMOGAWA
Prime Maison CENTRAL PARKMAST LIFE YAHIRO
Prime Maison EBISU
Esty Maison SHIBAURA
Granmast KANAZAWA NISHIIZUMIGranmast UNOMORI
Esty Maison TSUTSUJIGAOKA
Esty Maison KOHOKU TSUNASHIMA
MAST LIFE HINO
Prime Maison YOKOHAMA NIHON-ODORIKOBE Women's Student Housing
Prime Maison SHIBUYA
Prime Maison HATSUDAI
Esty Maison UEMACHIDAI
Esty Maison KOBE-SANNOMIYA
Prime Maison SHIROKANE-TAKANAWA
Prime Maison ICHIGAYAYAMABUSHICHO
Esty Maison MORISHITA

Location (residence indication)

3-11-7 Yadaminami, Higashi-ku, Nagoya-shi, Aichi
1-3-7 Kashiiteriha, Higashi-ku, Fukuoka-shi, Fukuoka
3-9-36 Yoshino, Higashi-ku, Nagoya-shi, Aichi
4-6-17 Sengoku, Bunkyo-ku, Tokyo
2-39-13 Daizawa, Setagaya-ku, Tokyo
1-25-5 Togoshi, Shinagawa-ku, Tokyo
3-2-10 Kawaramachi, Chuo-ku, Osaka-shi, Osaka
5-15-3 Nishitenma, Kita-ku, Osaka-shi, Osaka
1-1-4 Kamiosaki, Shinagawa-ku, Tokyo
6-22-5 Shinjuku, Shinjuku-ku, Tokyo
3-6-6 Motoazabu, Minato-ku, Tokyo
2-7-17 Tairamachi, Meguro-ku, Tokyo
3-11-4 Koyama, Shinagawa-ku, Tokyo
5-48-2 Chuo, Nakano-ku, Tokyo
6-10-7 Honcho, Nakano-ku, Tokyo
5-13-1 Yayoicho, Nakano-ku, Tokyo
2-12-15 Matsugaoka, Nakano-ku, Tokyo
5-25-26 Koenjiminami, Suginami-ku, Tokyo
5-11-5 Narihira, Sumida-ku, Tokyo
2-39-5 Akabane, Kita-ku, Tokyo
2-25-8 Oji, Kita-ku, Tokyo
544-11 Waseda Tsurumaki-cho, Shinjuku-ku, Tokyo
4-11-9 Hatchobori, Chuo-ku, Tokyo
1-50-9 Kandajinbo-cho, Chiyoda-ku, Tokyo
6-6-33 Kitashinagawa, Shinagawa-ku, Tokyo
50-6 Kanda Sakumagashi, Chiyoda-ku, Tokyo
1-14-20 Aoi, Higashi-ku, Nagoya-shi, Aichi
1-13-8 Hirao, Chuo-ku, Fukuoka-shi, Fukuoka
3-5-19 Kotobashi, Sumida-ku, Tokyo
5-32-5 Ojima, Koto-ku, Tokyo
1-25 Fujimidai, Chikusa-ku, Nagoya-shi, Aichi
2-20-1 Chiyoda, Naka-ku, Nagoya-shi, Aichi
3-6-4 Morishita, Koto-ku, Tokyo
1-3-16 Kita-Shinagawa, Shinagawa-ku, Tokyo
6-5-2 Odori-Nishi, Chuo-ku, Sapporo-shi, Hokkaido
9-1-1 Minami 2jo Nishi, Chuo-ku, Sapporo-shi, Hokkaido
1-6-1 Minami 7jo Nishi, Chuo-ku, Sapporo-shi, Hokkaido
4-2-5 Kashii Teriha, Higashi-ku, Fukuoka-shi, Fukuoka
5-30-10 Yahiro, Sumida-ku, Tokyo
1-22-19 Ebisu, Shibuya-ku, Tokyo
2-8-3 Shibaura, Minato-ku, Tokyo
2-155-1 Nishiizumi, Kanazawa-shi, Ishikawa
1-6-7 Unomori, Yokkaichi-shi, Mie
1-14-19 Nishitsutsujigaoka, Chofu-shi, Tokyo, etc.
8-45-25 Shin-yoshida Higashi, Kohoku-ku, Yokohama-shi, Kanagawa, etc.
1-19-3 Shinmachi, Hino-shi, Tokyo
1-4 Honcho, Naka-ku, Yokohama-shi, Kanagawa, etc.
7-1-6 Koyocho Naka, Higashinada-ku, Kobe-shi, Hyogo
3-10-4 Shibuya, Shibuya-ku, Tokyo
1-45-2 Hatsudai, Shibuya-ku, Tokyo
1-1-16 Uehonmachi-nishi, Chuo-ku, Osaka-shi, Osaka
3-2-27 Onoe-dori, Chuo-ku, Kobe-shi, Hyogo
4-7-26 Mita, Minato-ku, Tokyo
2-5 Ichigaya Yamabushicho, Shinjuku-ku, Tokyo
1-13-11 Kikukawa, Sumida-ku, Tokyo
Residence subtotal
HAMAMATSU Plaza (Note 2)1020-1 Kaminishi-cho, Higashi-ku, Hamamatsu-shi, Shizuoka, etc.
Other real estate in trust (Retail property) subtotal
Total

Form of Ownership
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests
Trust beneficiary interests

Total Leasable
Floor Area (m2)

Estimated Valueat End of Period(Note 1)(million yen)Book Value(million yen)

2,168.59
6,728.20
4,014.07
1,498.13
2,352.90
1,943.17
3,486.48
2,877.90
2,675.11
1,889.50
1,199.86
1,035.78
1,073.59
2,023.72
1,107.57
1,299.60
1,531.89
1,527.52
3,180.90
4,302.84
2,289.44
1,650.66
1,382.32
1,819.90
2,512.91
803.36
4,809.68
5,213.51
9,469.65
9,905.97
5,704.63
13,812.40
2,180.78
2,107.88
7,360.37
6,019.09
4,102.08
10,268.74
3,409.16
3,010.66
3,795.82
4,634.50
2,280.00
1,849.70
6,867.48
2,827.55
5,461.13
15,341.68
1,972.59
2,879.20
2,225.52
2,007.00
3,923.76
4,099.04
748.92366,776.31
15,958.49
15,958.49
382,734.80

821
1,360
1,580
1,360
2,280
1,730
1,940
1,680
2,390
1,640
1,510
842
1,040
1,870
1,020
967
1,170
1,140
2,440
3,300
1,660
1,580
1,460
1,920
2,820
555
2,490
2,370
8,340
8,730
2,080
4,500
1,920
1,980
3,160
1,940
1,250
2,309
1,910
4,360
2,910
1,090
830
913
2,751
1,390
4,790
5,880
2,360
2,940
1,020
976
4,800
4,220
643
226,547
2,891
2,891
229,438

666
1,027
1,246
1,072
1,869
1,351
1,546
1,359
1,942
1,325
1,162
726
829
1,512
832
852
930
949
1,904
2,637
1,335
1,232
1,112
1,584
2,087
471
2,066
2,016
6,602
7,005
1,756
3,781
1,727
1,691
2,675
1,479
979
2,266
1,686
3,622
2,870
1,031
757
955
2,833
1,323
4,391
6,006
2,232
2,764
977
998
4,596
4,089
656
195,150
3,705
3,705
198,856(Note 1) The “Estimated Value at End of Period” indicates either the appraisal value or survey value by real estate appraisers with September 30, 2017 as the date of appraisal.
(Note 2) The real estate in trust is quasi-co-owned, and the figure represents the value obtained by multiplying the “leasable floor area” of the facility by 49%, which is the quasi-co-ownership interest of the Investment Corporation.

19

6. Changes in Rental Business Results

23rd Fiscal Period (Oct. 1, 2016 – Mar. 31, 2017)

The following table provides changes in rental business results for each property in which the Investment Corporation has invested.
Rent Revenue
throughout
Period(million yen)

Ratio to Total
Rent
Revenues(%)

Number of
Tenants at End
of Period(Note 1)

Occupancy
Ratio at End of
Period(Note 2) (%)

Rent Revenue
throughout
Period(million yen)

Ratio to Total
Rent
Revenues(%)

Residence-1 Esty Maison GINZA

1

98.0

176

2.6

1

97.4

173

2.5

Residence-3 Esty Maison AZABUNAGASAKA

1

91.5

47

0.7

1

91.5

48

0.7

Residence-4 Esty Maison EBISU II

1

97.5

55

0.8

1

97.9

56

0.8

Residence-5 Esty Maison EBISU

1

85.0

21

0.3

1

100.0

22

0.3

Residence-6 Esty Maison KANDA

1

95.6

44

0.6

1

96.3

45

0.7

Residence-8 Esty Maison KITASHINJUKU

1

92.9

47

0.7

1

100.0

48

0.7

Residence-10 Esty Maison ASAKUSA KOMAGATA

1

100.0

66

1.0

1

94.5

64

0.9

Residence-11 Esty Maison MACHIDA

1

98.4

51

0.7

1

91.8

51

0.7

Residence-12 Esty Maison KAWASAKI

1

96.6

74

1.1

1

95.3

74

1.1

Residence-14 Esty Maison SHINKAWASAKI

1

100.0

32

0.5

1

100.0

32

0.5

Residence-15 Esty Maison YOKOHAMA

1

100.0

65

1.0

1

100.0

65

1.0

Residence-16 Esty Maison KAMEIDO

1

98.9

54

0.8

1

97.0

54

0.8

Residence-17 Esty Maison MEGURO

1

100.0

31

0.5

1

95.0

31

0.5

Residence-18 Esty Maison YACHIYOMIDORIGAOKA

-

-

29

0.4

-

-

-

-

Residence-19 Esty Maison SUGAMO

1

97.3

49

0.7

1

100.0

50

0.7

Residence-20 Esty Maison KYOBASHI

1

99.4

91

1.3

1

96.9

89

1.3

Residence-21 Esty Maison MEGUROHONCHO

1

93.4

32

0.5

1

86.0

29

0.4

Residence-22 Esty Maison HAKURAKU

1

92.7

30

0.4

1

96.5

30

0.4

Residence-23 Esty Maison MINAMIHORIE

1

97.0

33

0.5

1

96.8

34

0.5

Residence-24 Esty Maison GOTANDA

1

96.6

95

1.4

1

94.3

92

1.3

Residence-25 Esty Maison OISENDAIZAKA

1

97.9

78

1.1

1

98.7

77

1.1

Residence-26 Esty Maison SHINAGAWA SEASIDE

1

98.3

65

0.9

1

93.4

63

0.9

Residence-27 Esty Maison MINAMIAZABU

1

100.0

36

0.5

1

98.1

35

0.5

Residence-28 Esty Maison JOTO

1

100.0

32

0.5

1

93.6

33

0.5

Residence-29 Esty Maison TSUKAMOTO

1

100.0

38

0.6

1

97.9

40

0.6

Residence-30 Esty Maison KAWASAKI II

1

100.0

61

0.9

1

96.9

61

0.9

Residence-31 Esty Maison AZABUJUBAN

1

98.8

68

1.0

1

91.8

66

1.0

Residence-33 Esty Maison ITABASHIHONCHO

1

98.4

29

0.4

1

95.4

28

0.4

Residence-34 Esty Maison OIZUMIGAKUEN

1

96.2

25

0.4

1

89.8

26

0.4

Residence-35 Esty Maison TENJINHIGASHI I

1

94.4

15

0.2

1

100.0

15

0.2

Residence-36 Esty Maison TENJINHIGASHI II

1

98.8

27

0.4

1

93.9

28

0.4

Residence-37 Esty Maison SHIJONISHINOTOIN

1

100.0

41

0.6

1

95.5

41

0.6

Residence-39 Esty Maison HIGASHISHINAGAWA

1

93.6

71

1.0

1

94.4

71

1.0

Residence-40 Esty Maison HACHIOJIMINAMINO

1

96.5

32

0.5

1

97.7

34

0.5

Residence-41 Esty Maison NISHINAKAJIMA

1

96.9

64

0.9

1

92.1

64

0.9

Residence-42 Esty Maison ITABASHIKUYAKUSHOMAE

1

99.2

77

1.1

1

96.0

76

1.1

Residence-43 Esty Maison MUSASHIKOYAMA

1

98.2

30

0.4

1

100.0

31

0.5

Residence-44 Esty Maison SENDAGI

1

93.1

22

0.3

1

100.0

22

0.3

Residence-45 Esty Maison YOTSUYASAKAMACHI

1

100.0

61

0.9

1

96.7

60

0.9

Residence-46 Esty Maison HAKATAHIGASHI

1

97.6

85

1.2

1

97.5

91

1.3

Residence-47 Esty Maison KAMIGOFUKU

1

98.5

29

0.4

1

98.5

28

0.4

Residence-48 Esty Maison SANGENJAYA

1

94.4

24

0.4

1

88.8

24

0.4

Residence-50 Prime Maison MUSASHINONOMORI

1

97.9

60

0.9

1

96.4

63

0.9

Residence-51 Prime Maison HIGASHISAKURA

1

98.6

51

0.8

1

88.9

50

0.7

Residence-52 Prime Maison KAYABAKOEN

1

100.0

30

0.4

1

93.0

27

0.4

Residence-53 Esty Maison SANGENJAYA II

1

100.0

24

0.4

1

88.8

23

0.3

Residence

Use Property No.

20

Property Name

Occupancy
Ratio at End of
Period(Note 2) (%)

Rent Revenue
throughout
Period(million yen)

Ratio to Total
Rent
Revenues(%)

Number of
Tenants at End
of Period(Note 1)

Occupancy
Ratio at End of
Period(Note 2) (%)

Rent Revenue
throughout
Period(million yen)

Ratio to Total
Rent
Revenues(%)

Residence-65 Prime Maison TAKAMI

1

89.9

33

0.5

1

92.9

33

0.5

Residence-66 Prime Maison YADAMINAMI

1

96.6

28

0.4

1

96.1

28

0.4

Residence-67 Prime Maison TERIHA

1

100.0

51

0.8

1

100.0

53

0.8

Residence-68 Esty Maison HIGASHISHIRAKABE

1

100.0

48

0.7

1

100.0

47

0.7

Residence-69 Esty Maison SENGOKU

1

91.7

37

0.6

1

98.4

37

0.5

Residence-70 Esty Maison DAIZAWA

1

97.6

59

0.9

1

98.9

59

0.9

Residence-71 Esty Maison TOGOSHI

1

99.0

48

0.7

1

97.8

49

0.7

Residence-72 Esty Maison KAWARAMACHI

1

94.7

59

0.9

1

95.0

59

0.9

Residence-73 Esty Maison NISHITENMA

1

94.8

51

0.7

1

97.1

51

0.7

Residence-74 Esty Maison SHIROKANEDAI

1

94.1

62

0.9

1

97.8

66

1.0

Residence-75 Esty Maison HIGASHISHINJUKU

1

98.2

47

0.7

1

97.8

47

0.7

Residence-76 Esty Maison MOTOAZABU

1

100.0

32

0.5

1

100.0

39

0.6

Residence-77 Esty Maison TORITSUDAIGAKU

1

95.3

24

0.4

1

100.0

21

0.3

Residence-78 Esty Maison MUSASHIKOYAMA II

1

100.0

28

0.4

1

97.8

30

0.4

Residence-79 Esty Maison NAKANO

1

97.9

50

0.7

1

100.0

51

0.7

Residence-80 Esty Maison SHINNAKANO

1

95.9

27

0.4

1

98.0

28

0.4

Residence-81 Esty Maison NAKANOFUJIMICHO

1

93.4

28

0.4

1

100.0

29

0.4

Residence-82 Esty Maison TETSUGAKUDO

1

97.6

33

0.5

1

96.9

33

0.5

Residence-83 Esty Maison KOENJI

1

95.1

32

0.5

1

100.0

32

0.5

Residence-84 Esty Maison OSHIAGE

1

98.8

70

1.0

1

100.0

71

1.0

Residence-85 Esty Maison AKABANE

1

97.0

85

1.2

1

98.2

93

1.4

Residence-86 Esty Maison OJI

1

98.9

48

0.7

1

100.0

47

0.7

Residence-87 Prime Maison WASEDA

1

93.0

43

0.6

1

96.1

43

0.6

Residence-88 Prime Maison HATCHOBORI

1

90.0

37

0.5

1

96.9

37

0.5

Residence-89 Prime Maison JINBOCHO

1

93.6

54

0.8

1

93.6

52

0.8

Residence-90 Prime Maison GOTENYAMA EAST

1

95.7

79

1.2

1

89.0

78

1.1

Residence-91 MAST LIFE AKIHABARA

1

100.0

15

0.2

1

100.0

15

0.2

Residence-92 Esty Maison AOI

1

96.3

75

1.1

1

88.7

75

1.1

Residence-93 Esty Maison YAKUIN

1

96.4

74

1.1

1

97.1

74

1.1

Residence-94 Esty Maison KINSHICHO II

1

95.8

219

3.2

1

97.6

215

3.1

Residence-95 Esty Maison OJIMA

1

98.9

235

3.4

1

98.0

239

3.5

Residence-96 Prime Maison FUJIMIDAI

1

91.0

70

1.0

1

91.2

69

1.0

Residence-97 Esty Maison TSURUMAI

1

100.0

155

2.3

1

100.0

155

2.2

Residence-98 Prime Maison MORISHITA

1

100.0

55

0.8

1

94.3

56

0.8

Residence-99 Prime Maison SHINAGAWA

1

100.0

55

0.8

1

98.3

56

0.8

Residence-100 Prime Maison ODORI KOEN

1

92.3

116

1.7

1

96.0

116

1.7

Residence-101 Prime Maison MINAMI 2-JO

1

99.1

68

1.0

1

96.5

69

1.0

Residence-102 Prime Maison KAMOKAMOGAWA

1

98.0

47

0.7

1

92.5

45

0.7

Residence-103 Prime Maison CENTRAL PARK

1

100.0

87

1.3

1

98.6

87

1.3

Residence-104 MAST LIFE YAHIRO

1

100.0

56

0.8

1

100.0

56

0.8

Residence-105 Prime Maison EBISU

1

100.0

112

1.6

1

94.8

108

1.6

Residence-106 Esty Maison SHIBAURA

1

95.8

79

1.2

1

98.6

78

1.1

Residence-107 Granmast KANAZAWA NISHIIZUMI

1

100.0

41

0.6

1

100.0

41

0.6

Residence-108 Granmast UNOMORI

1

100.0

26

0.4

1

100.0

26

0.4

Residence-109 Esty Maison TSUTSUJIGAOKA

1

92.2

29

0.4

1

89.7

27

0.4

Residence-110 Esty Maison KOHOKU TSUNASHIMA

1

100.0

80

1.2

1

100.0

78

1.1

Residence-111 MAST LIFE HINO

1

98.1

47

0.7

1

100.0

48

0.7

Residence-112 Prime Maison YOKOHAMA NIHON-ODORI

1

98.1

143

2.1

1

92.8

135

2.0

Residence-113 KOBE Women's Student Housing

1

100.0

222

3.2

1

100.0

222

3.2

Residence-114 Prime Maison SHIBUYA

1

96.6

63

0.9

1

100.0

62

0.9

Residence-115 Prime Maison HATSUDAI

1

94.7

80

1.2

1

96.6

80

1.2

Residence-116 Esty Maison UEMACHIDAI

1

97.5

31

0.5

1

100.0

32

0.5

Residence-117 Esty Maison KOBE-SANNOMIYA

1

98.3

29

0.4

1

94.8

29

0.4

Residence-118 Prime Maison SHIROKANE-TAKANAWA

1

98.1

103

1.5

1

96.9

126

1.8

Residence-119 Prime Maison ICHIGAYAYAMABUSHICHO

1

93.9

85

1.2

1

99.4

106

1.5

Residence-120 Esty Maison MORISHITA

1

95.1

3

0.1

1

100.0

18

0.3

112

97.7

6,799

98.7

112

97.0

6,824

98.7

Property Name

24th Fiscal Period (Apr. 1, 2017 – Sept. 30, 2017)

Occupancy
Ratio at End of
Period(Note 2) (%)

Residence-54 Esty Maison ITABASHI C6

1

97.9

79

1.2

1

97.0

78

1.1

Residence-55 MAST HAKATA

1

100.0

92

1.3

1

100.0

93

1.3

Residence-56 Esty Maison KINSHICHO

1

100.0

35

0.5

1

91.6

35

0.5

Residence-57 Esty Maison MUSASHIKOGANEI

1

95.1

53

0.8

1

98.0

52

0.8

Residence-58 Prime Maison GOKISO

1

98.4

64

0.9

1

92.7

59

0.9

Residence-59 Prime Maison YUHIGAOKA

1

100.0

30

0.4

1

100.0

30

0.4

Residence-60 Prime Maison KITATANABE

1

100.0

21

0.3

1

96.6

23

0.3

Residence-61 Prime Maison MOMOCHIHAMA

1

100.0

69

1.0

1

100.0

68

1.0

Residence-62 Esty Maison AKIHABARA

1

96.2

56

0.8

1

97.5

56

0.8

Residence-63 Esty Maison SASAZUKA

1

96.6

92

1.3

1

97.5

88

1.3

Residence-64 Prime Maison GINZA EAST

1

97.2

167

2.4

1

95.9

165

2.4

Residence

23rd Fiscal Period (Oct. 1, 2016 – Mar. 31, 2017)

Number of
Tenants at End
of Period(Note 1)

Use Property No.

Number of
Tenants at End
of Period(Note 1)

24th Fiscal Period (Apr. 1, 2017 – Sept. 30, 2017)

Residence subtotal

21

Financial Section (Audited)

23rd Fiscal Period (Oct. 1, 2016 – Mar. 31, 2017)
Number of
Tenants at End
of Period(Note 1)

Occupancy
Ratio at End of
Period(Note 2) (%)

Rent Revenue
throughout
Period(million yen)

Ratio to Total
Rent
Revenues(%)

Number of
Tenants at End
of Period(Note 1)

Occupancy
Ratio at End of
Period(Note 2) (%)

Rent Revenue
throughout
Period(million yen)

Ratio to Total
Rent
Revenues(%)

HAMAMATSU Plaza

4

100.0

87

1.3

5

100.0

91

1.3

Other real estate in trust (Retail property) subtotal

4

100.0

87

1.3

5

100.0

91

1.3

116

97.8

6,886

100.0

117

97.1

6,916

100.0

Use Property No.

Other Real Estate in Trust (Retail property)

24th Fiscal Period (Apr. 1, 2017 – Sept. 30, 2017)

Retail-1

Property Name

Total

(Note 1) The “Number of Tenants” indicates the number of lessees (including master-lease companies) that are in direct lease agreement with the trustees for each asset already acquired as of the end of fiscal period. Furthermore, the “Master-lease Company”
represents the lessee that has concluded a lease agreement for the entire building with the Investment Corporation or the trustee for the purpose of subleasing the property to third parties.
(Note 2) Of the properties that are subleased by the lessees to sublessees, for those from which the Investment Corporation receives rents that may vary depending on the leasing status to the sublessees, the indicated occupancy ratio is based on the occupancy
status of the sublessees (the ratio of the leased floor area to the leasable floor area at the end of the relevant calculation period).

7. Capital Expenditures in the 24th Fiscal Period
The following are the overview of works that fall under the category of the capital expenditures that the Investment Corporation conducted in real estate intrust in the 24th fiscal period. In addition, the capital expenditure for the fiscal period under review totaled 446 million yen. Combining this with the 211
million yen in repair expenses, which were classified as expenses for the fiscal period, the Investment Corporation conducted construction of 657 million yen.
Property Name
(Location)

PurposeExpenditures(million yen)

PeriodEsty Maison HAKATAHIGASHI(Fukuoka-shi, Fukuoka)

Large-scale renovation

From: December 2016
To: September 2017

167

Esty Maison SUGAMO(Toshima-ku, Tokyo)

Large-scale renovation

From: June 2017
To: September 2017

59

Esty Maison TSUTSUJIGAOKA(Chofu-shi, Tokyo)

Large-scale renovation

From: May 2017
To: September 201751

Prime Maison MOMOCHIHAMA and other 11 properties(Fukuoka-shi, Fukuoka and other )LED light fixture replacement work in common areas

From: April 2017
To: September 201722

Prime Maison FUJIMIDAI(Nagoya-shi, Aichi)

Large-scale renovation

From: June 2017
To: August 201719

OthersContents
Financial Statements
Balance Sheet
Statement of Income and Retained Earnings
Statement of Changes in Net Assets
Statement of Cash Distributions
Statement of Cash Flows
Notes to Financial Statements
Independent Auditor’s Report

24
26
27
28
29
30
49

124
Total

446

8. Transactions with Interested Parties, Etc.
(1) Transaction Status
Not applicable.

(2) Amount of Fees, Etc.
Category

Property Management Fees

Brokerage Fees

22

Total Fees, Etc. (A)(thousand yen)494,658

143,812

Breakdown of Transactions with Interested Parties, Etc.
Paid Party

Ratio to Total Amount(B/A) (%)

Paid Amount (B)(thousand yen)

Sekiwa Real Estate Ltd.

257,505

52.1

Sekiwa Real Estate Chubu, Ltd.

52,751

10.7

Sekiwa Real Estate Kansai, Ltd.

5,251

1.1

Sekiwa Real Estate Kyushu, Ltd.

16,863

3.4

Sekiwa Kanri Kansai Co., Ltd.

49,0399.9

Sekiwa Real Estate Ltd.

87,45360.8

Sekiwa Real Estate Chubu, Ltd.

6,577

4.6

Sekiwa Real Estate Kansai, Ltd.

1,281

0.9

Sekiwa Real Estate Kyushu, Ltd.

931

0.6

Sekiwa Kanri Kansai Co., Ltd.

4,225

2.9

(Note) “Interested Parties, Etc.” refers to the interested parties of the Asset Management Company and is designated in Article 123 of the Enforcement Order of the Act on Investment Trusts and Investment Corporations and Article 26-1-27 of the regulation on
management reports in investment trusts and investment corporations of the Investment Trusts Association, Japan.

23

Financial Statements(1) Balance Sheet(Thousand yen)(Thousand yen)
23rd Fiscal Period(As of March 31, 2017)24th Fiscal Period(As of September 30, 2017)

AssetsCurrent assets

23rd Fiscal Period(As of March 31, 2017)
Liabilities
Current liabilities

Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Deferred tax assets
Other
Allowance for doubtful accounts

3,793,152
5,096,818
146,649
150,392
32
87(2,628)5,259,432
4,658,956
115,509167,21076623(2,499)Total current assets

9,184,504

10,199,308

Non-current assets

Operating accounts payable
Current portion of investment corporation bonds
Current portion of long-term loans payable
Accounts payable – otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Other

314,916
4,000,000
4,805,000
569,457
54,222
1,261
11,147
230,640
10,332249,227
4,000,000
4,600,000
657,587
52,886
1,917
19,927
245,694
4,423

Total current liabilities

9,996,979

9,831,663

Investment corporation bonds
Long-term loans payable
Tenant leasehold and security deposits in trust

10,500,000
86,404,500
1,946,227

10,500,000
86,432,500
1,903,196

Total non-current liabilities

98,850,727

98,835,696

108,847,707

108,667,360

98,633,97898,633,978

183,091

214,718

Property, plant and equipment
Buildings in trust

106,007,452

106,390,873

Accumulated depreciation(16,309,706)(17,796,436)

Buildings in trust, net

89,697,745

88,594,437

Structures in trust
Accumulated depreciation

983,036(243,251)

987,265(269,583)

Structures in trust, net

739,785

717,682

Total liabilities

2,022,031(618,529)

2,029,841(685,360)

Net assets
Unitholders’ equity

1,403,501

1,344,481

298,133(100,337)

349,478(120,455)

197,795

229,023

Land in trust
Construction in progress in trust

107,827,854-

107,828,487
35,856

Total property, plant and equipment

199,866,683

198,749,967

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

143,964
110

141,946
98

Total intangible assets

144,075

142,044242,672
473,891
152,239

242,662
438,169
158,778

Total investments and other assets

868,802

839,609200,879,561

199,731,621

Investment corporation bond issuance costs
Investment unit issuance costs

52,234
49,81344,68833,512

Total deferred assets

102,048

78,201

210,166,114

210,009,131

Total non-current assets

Non-current liabilities

Unitholders’ capital
Surplus
Voluntary retained earnings
Reserve for reduction entry
Total voluntary retained earnings
Unappropriated retained earnings
Total surplus
Total unitholders’ equity

Intangible assets
Leasehold rights in trust
Other
Investments and other assets
Lease and guarantee deposits
Long-term prepaid expenses
Other

24th Fiscal Period(As of September 30, 2017)

Total net assets
Total liabilities and net assets

183,091

214,718

2,501,336

2,493,073

2,684,427

2,707,792

101,318,406

101,341,771

101,318,406

101,341,771

210,166,114

210,009,131

See accompanying “Notes to Financial Statements.”

Deferred assets

Total assets

24

25

(2) Statement of Income and Retained Earnings(3) Statement of Changes in Net Assets(Thousand yen)
24th Fiscal Period(April 1, 2017 –September 30, 2017)

23rd Fiscal Period(October 1, 2016 –March 31, 2017)

23rd fiscal period (from October 1, 2016 to March 31, 2017)(Thousand yen)
Unitholders’ equity
SurplusOperating revenue
Rent revenue - real estate
Gain on sales of real estate properties

6,886,897
32,176

6,916,462-

Total operating revenue

6,919,074

6,916,462

Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Directors’ compensations
Provision of allowance for doubtful accounts
Other operating expenses

3,259,096
360,581
16,13536,151
3,600
1,583
181,193

3,298,248
364,317
16,52937,232
3,600
1,672
193,109

Total operating expenses

3,858,342

3,914,711

3,060,731

3,001,751

Unitholders’capitalOperating expenses

Operating income
Non-operating income

Balance as of
October 1, 2016
Changes of items during
the fiscal period
Issuance of new
investment units
Provision for reserve
for reduction entry
Distribution fromsurplus88,925,149

Voluntary retained
earnings

Unappropriatedretained
Reserve
Total
earnings
forvoluntary
reduction retainedentry
earnings
174,521

174,521

2,192,416

8,570

8,570

(2,183,845)(2,183,845)(2,183,845)

2,501,336

2,501,336

2,501,336

2,501,336

317,490

10,026,319

10,026,319

680

30,51524th fiscal period (from April 1, 2017 to September 30, 2017)

Interest expenses

394,811

379,879

Interest expenses on investment corporation
bonds

Unitholders’ equity

56,06056,689SurplusAmortization of investment corporation bondissuance costs

7,505

7,546

Borrowing related expenses
Amortization of investment unit issuance costs
Other

79,09921,211
117

76,787
16,301
108

Total non-operating expenses

558,806

537,313

Ordinary income

2,502,606

2,494,953

Income before income taxes

2,502,606

2,494,953

1,268
2

1,923
(44)
1,879
2,493,073

Retained earnings brought forward--

Unappropriated retained earnings

2,501,336

2,493,073

See accompanying “Notes to Financial Statements.”

9,708,829(2,183,845)

Total non-operating income

1,270

9,708,829-

Total changes of items
during the fiscal period
Balance as ofMarch 31, 2017

2,501,336

91,292,087

-

44
255
30,000215

Net income

91,292,087

-

46
616
18

Total income taxes

2,366,937(8,570)Interest income
Reversal of distributions payable
Settlement received
Other

Income taxes - current
Income taxes - deferred

Total Net
Assets9,708,829

Net Income

Non-operating expenses

Total
surplusTotal
unitholders’equity9,708,829

8,570

8,570

308,919

98,633,978

183,091

183,091

2,501,336

2,684,427 101,318,406 101,318,406(Thousand yen)

Unitholders’capitalBalance as ofApril 1, 2017
Changes of items during
the fiscal period
Provision for reserve
for reduction entry
Distribution fromsurplus98,633,978

Voluntary retained
earnings

Unappropriatedretained
Reserve
Total
earnings
forvoluntary
reduction retainedentry
earnings

Total
surplus

Total Net
Assets183,091

183,091

2,501,336

31,626

31,626(31,626)---(2,469,709)(2,469,709)(2,469,709)(2,469,709)

2,493,073

2,493,073

2,493,073

2,493,073

23,36423,36423,364Net Income
Total changes of items
during the fiscal period
Balance as of
September 30, 2017

Total
unitholders’equity-31,626

31,626(8,262)

98,633,978214,718

214,718

2,493,073

2,684,427 101,318,406 101,318,406

2,707,792 101,341,771 101,341,771

See accompanying “Notes to Financial Statements.”

26

27

(4) Statement of Cash Distributions
Item(5) Statement of Cash Flows

23rd Fiscal Period(October 1, 2016 – March 31, 2017)

I. Unappropriated retained earnings

2,501,336,041 yen

2,493,073,959 yen

II. Cash distributions

2,469,709,340 yen

2,492,925,050 yen(2,234 yen)

(2,255 yen)

(Cash distributions per unit)
III. Voluntary retained earnings
Provision for reserve for reduction
entry
IV. Retained earnings carried forward
Method for calculating cash
distributions

31,626,701 yen(Thousand yen)

24th Fiscal Period(April 1, 2017 – September 30, 2017)

0 yen

0 yen

148,909 yen

As provided in Article 34-1-2 of its
Articlesof
Incorporation,
theInvestment Corporation makes it abasic policy to make cash distributions
in excess of the amount equivalent to
90% of the distributable income
amount as stipulated in Article 67-15 of
the Act on Special Measures
Concerning Taxation. Following thispolicy, and in consideration of the factthat individual unitholders must
calculate the capital gains or losses forcash distributions in excess ofearnings
whentheInvestment
Corporation distributes cash in excessof earnings as stipulated in Article
34-1-4 of its Articles of Incorporation,
the Investment Corporation distributed
2,469,709,340 yen, as distribution of
earnings, which is the entire amount of
the unappropriated retained earnings
after deducting the provision forreserve for reduction entry, as
stipulated in Article 66-2 of the Act on
SpecialMeasures
Concerning
Taxation.

As provided in Article 34-1-2 of its
Articlesof
Incorporation,
theInvestment Corporation makes it abasic policy to make cash distributions
in excess of the amount equivalent to
90% of the distributable income
amount as stipulated in Article 67-15 of
the Act on Special Measures
Concerning Taxation. Following thispolicy, and in consideration of the factthat individual unitholders must
calculate the capital gains or losses forcash distributions in excess ofearnings
whentheInvestment
Corporation distributes cash in excessof earnings as stipulated in Article
34-1-4 of its Articles of Incorporation,
the Investment Corporation distributed
2,492,925,050 yen, which is the entire
amount of the unappropriated retained
earnings excluding the fractionalamount where distribution per unit
would be less than 1 yen, as
distribution of earnings.

23rd Fiscal Period(October 1, 2016 –March 31, 2017)24th Fiscal Period(April 1, 2017 –September 30, 2017)

Cash flows from operating activities

2,502,606
1,606,450

2,494,953
1,602,040

7,505

7,546

21,211(1,190)(46)
450,872(33,687)
23,708
1,264
24,544(141,153)
11,147(6,156)

16,301(128)(44)
436,568
31,140(16,368)(62,881)
4,769
8,779
15,053

1,168,045-

Other, net(28,452)(2,799)35,271(6,701)

Subtotal

5,603,871

4,566,300

Interest income received
Income taxes paid

46(452,590)(1,302)44(437,904)(1,268)Net cash used in operating activities

5,150,025

4,127,172(9,751,609)(125)(402,755)-

Proceeds from tenant leasehold and security deposits
in trust

155,193

119,201

Repayments of tenant leasehold and security deposits
in trust(143,522)(162,232)

Decrease (increase) in investments and other assets,
net(7,412)(6,528)(9,747,475)(452,315)(3,000,000)
9,500,000(9,500,000)
9,661,495(2,183,802)

2,528,000(2,705,000)(2,469,439)

Income before income taxes
Depreciation
Amortization of investment corporation bond issuancecosts
Amortization of investment unit issuance costs
Increase (decrease) in allowance for doubtful accounts
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in prepaid expenses
Decrease (increase) in consumption taxes receivable
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable - other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in advances received
Decrease due to sale of property, plant and equipmentin trust
Decrease (increase) in long-term prepaid expenses

Interest expenses paid

Cash flows from investing activities
Purchase of property, plant and equipment in trust
Purchase of intangible assets

Net cash used in investing activities
Cash flows from financing activities
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of new investment units
Dividends paid

4,477,693(2,646,439)

Net increase (decrease) in cash and cash equivalents(119,757)

1,028,417

Cash and cash equivalents at the beginning of period

9,009,728

8,889,971

Cash and cash equivalents at the end of period

8,889,971

9,918,388

Net cash used in financing activities

See accompanying “Notes to Financial Statements.”

28

29

Notes to Financial Statements

3. Summary of Significant Accounting Policies

1. Organization

1. Depreciation method for
non-current assets

Sekisui House Residential Investment Corporation (the “Investment Corporation”) is a real estate investment
trust (REIT) specialized in residential properties, established in April 2005 under the Act on Investment Trusts
and Investment Corporations (Act No. 198 of 1951; as amended) (the “Investment Trusts Act”) and listed on
the Real Estate Investment Trust Section (J-REIT market) of the Tokyo Stock Exchange in July 2005 (security
code: 8973).
Since listing, the Investment Corporation has made it a basic policy to conduct management with the aim of
securing stable earnings and steady growth of investment properties from a medium- to long-term perspective,
and worked to build a portfolio that is centered on the high-quality rental residential properties planned anddeveloped by the Sekisui House Group (Note) with Sekisui House, Ltd., the sponsor, as the core company. As
a result of these endeavors, its asset size has grown to 206.9 billion yen (based on the acquisition price) with
113 properties at the end of the 24th fiscal period (September 30, 2017).
The Investment Corporation will utilize the comprehensive strengths of the Sekisui House Group on housing,backed by the ample track records and know-how accumulated by the Group through widely implementing
housing-related businesses, to the utmost for its external growth and internal growth. By doing so, theInvestment Corporation will aim to maximize its business value as well as the interests of its unitholders.
The Investment Corporation has executed an asset management agreement with Sekisui House AssetManagement, Ltd., a 100%-owned subsidiary of Sekisui House, Ltd., to consign operations related to
management of its assets.
(Note) The Sekisui House Group refers to the corporate group encompassing Sekisui House and its 225 subsidiaries and26 affiliated companies (at the end of January 2017). The same follows hereafter.

2. Basis of Presentation
The Investment Corporation maintains its accounting records and prepares its financial statements inaccordance with accounting principles generally accepted in Japan (“Japanese GAAP”), including provisions
set forth in the Financial Instruments and Exchange Act, the Investment Trusts Act, the Companies Act and therelated regulations, which are different in certain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards.
The accompanying financial statements are a translation of the financial statements of the Investment
Corporation, which were prepared 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 topresent them in a format more familiar to readers outside Japan. In addition, the notes to financial statements
include certain information which might not be required under Japanese GAAP but is presented herein as
additional information.
The Investment Corporation’s fiscal period is a six-month period, which ends at the end of March and
September of each year. The Investment Corporation 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 theaccompanying financial statements and the notes thereto. As a result, the total shown in the financial
statements and notes thereto do not necessarily agree with the sum of the individual account balances.

30(1) Property, plant and equipment
Depreciation is calculated using the straight-line method.
The estimated useful lives of major property, plant and equipment are as
follows:
Buildings in trust3 – 66 years
Structures in trust3 – 50 years
Machinery and equipment in trust
7 – 48 years
Tools, furniture and fixtures in trust2 – 15 years(2) Intangible assets
Intangible assets are amortized utilizing the straight-line method.
Leasehold rights in trust are amortized on a straight-line basis over theremaining life of each contract.
2. Accounting for deferred(1) Investment corporation bond issuance costs
assetsInvestment 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).
3. Standards for recording
Allowance for doubtful accounts
allowance
For allowance for doubtful accounts against possible losses arising fromdefault on receivables, uncollectable amount is estimated and recorded
by investigating collectability on a case-by-case examination for doubtful
and other specific receivables.
4. Standards for recording
Accounting treatment of property taxes, etc.
Property taxes, city planning taxes and depreciable asset taxes
revenues and expenses(“property taxes, etc.”) assessed for the real estate owned by theInvestment Corporation are charged as expenses at an amountattributable to each fiscal period as expenses related to rent business.
Property taxes etc. that the Investment Corporation pays to the seller inconnection with acquisition of real estate (including trust beneficiaryinterests in real estate as entrusted property) as they are deemed to be
attributable to the Investment Corporation are included in theacquisition cost of the acquired real estate, instead of expenses.
Property taxes, etc. capitalized as a part of the acquisition cost
amounted to 3,952 thousand yen for the 23rd fiscal period and 632
thousand yen for the 24th fiscal period, respectively.
5. Method of hedge accounting (1) Method of hedge accounting
Special accounting is applied for interest rate swap transactions.
(2) Hedging instruments and hedged items
Hedging instrument: interest rate swap transactions
Hedged items: interest expenses on loans payable(3) Hedging policy
Based on its basic policy for risk management, the Investment
Corporation utilizes derivative transactions in order to hedge risks
designated in its Articles of Incorporation.
(4) Method for assessing the effectiveness of hedging
Assessment of the effectiveness of hedging is omitted as requirements
are satisfied for special accounting for interest rate swap transactions.
6. Scope of funds (cash and
The funds (cash and cash equivalents) in the statement of cash flows consist
cash equivalents) in theof cash on hand and cash in trust; deposits that can be withdrawn at any timestatement of cash flows
and deposits in trust; and short-term investments with a maturity of 3 months
or less from the date of acquisition, which are readily convertible to cash andbear only an insignificant risk of value fluctuation.

31

4. Notes to Balance Sheet
7. Other significant items
fundamental to preparing
the financial statements(1) Accounting methods for trust beneficiary interests in real estate, etc. as
entrusted property
Regarding trust beneficiary interests in real estate, etc. as entrusted
property, all asset and liability accounts of the entrusted properties aswell as all revenue and expense accounts generated by the entrusted
properties are recorded in relevant accounts on the balance sheet andstatement of income and retained earnings.
Furthermore, the following accounts are considered material and thusstated separately in the balance sheet related to entrusted properties
from the relevant accounts.
1) Cash and deposits in trust2) Buildings in trust, structures in trust, machinery and equipment intrust, tools, furniture and fixtures in trust, land in trust andconstruction in progress in trust3) Leasehold rights in trust4) Tenant leasehold and security deposits in trust(2) Accounting for consumption taxes
National and local consumption taxes are excluded from the transaction
amounts. Non-deductible consumption taxes for acquisition of assets areincluded in the acquisition cost of each asset.

Minimum total net assets designated in Article 67-4 of the Investment Trusts Act(Thousand yen)
24th Fiscal Period(As of September 30, 2017)

23rd Fiscal Period(As of March 31, 2017)
50,00050,000Commitment line contract
The Investment Corporation concluded a commitment line contract with three banks for borrowings.

(Thousand yen)

23rd Fiscal Period(As of March 31, 2017)
Maximum commitment line amount

10,000,000

10,000,000--

10,000,000

10,000,000

Used commitment line balance
Difference

24th Fiscal Period(As of September 30, 2017)

5. Notes to Statement of Income and Retained Earnings
Breakdown of real estate rental revenues and expenses
23rd Fiscal Period(October 1, 2016 –March 31, 2017)(Thousand yen)
24th Fiscal Period(April 1, 2017 –September 30, 2017)

A. Real estate rental revenues
Rent revenue - real estate
Rents
Other revenue

6,668,229

6,710,863

218,667

205,599

Total real estate rental revenue

6,886,897

6,916,462

B. Real estate rental expenses
Expenses related to rent businessOutsourcing expenses

656,606

641,120

Utilities expenses

84,38888,192

Insurance expenses

8,013

7,988

Repair expenses

201,751

211,070

Property and other taxes

377,346

427,505

Trust fees

43,19642,881

Other

281,374

277,462

1,606,420

1,602,027

Depreciation
Total real estate rental expenses
C. Real estate rental revenues andexpenses (A – B)

32

3,259,096

3,298,248

3,627,800

3,618,213

33

Breakdown of gain on sales of real estate properties
23rd Fiscal Period (from October 1, 2016 to March 31, 2017)

9. Financial Instruments
1. Matters Concerning Status of Financial Instruments(Thousand yen)

(1) Policy on Handling Financial Instruments
The Investment Corporation raises necessary funds (through additional issuance of investment units,
borrowings and issuance of investment corporation bonds) in light of its financial plans and surplus fundmanagement plans. With regard to surplus fund management, the Investment Corporation focuses onsafety and liquidity, and manages them as interest-bearing ordinary bank deposits or short-term time
deposits in order to avoid market risks as much as possible. As for derivative transactions, the Investment
Corporation may use them to hedge against interest rate fluctuation risks, and will not conduct any
speculative transactions.

Esty Maison YACHIYOMIDORIGAOKA
Revenue from sales of real estate
Cost of real estate sold
Other sales expenses

1,250,000
1,168,146
49,6761,217,823
32,176

Gain on sales of real estate properties

24th Fiscal Period (from April 1, 2017 to September 30, 2017)
Not applicable.

6. Notes to Statement of Changes in Net Assets
23rd Fiscal Period(October 1, 2016 –March 31, 2017)

Total number of authorized investment
units and total number of investment units
issued24th Fiscal Period(April 1, 2017 –September 30, 2017)

Total number of authorized investment units

10,000,000 units

10,000,000 units

Total number of investment units issued

1,105,510 units

1,105,510 units

7. Notes to Statement of Cash Flows
Reconciliation of the Cash and cash equivalents at the end of period in the statement of cash flows with thecorresponding accounts on the balance sheet(Thousand yen)
24th Fiscal Period(April 1, 2017 –September 30, 2017)

23rd Fiscal Period(October 1, 2016 –March 31, 2017)
Cash and deposits

3,793,152

5,259,432

Cash and deposits in trust

5,096,818

4,658,956

Cash and cash equivalents

8,889,971

9,918,388

8. Lease Transactions
Operating lease transactions as lessee
Future lease payable equivalents

Due within one year

24,648(Thousand yen)
24th Fiscal Period(As of September 30, 2017)
24,648Due after one year

854,464

842,140

Total

879,112866,788

Due within one year

23rd Fiscal Period(As of March 31, 2017)
1,600,910(Thousand yen)
24th Fiscal Period(As of September 30, 2017)
1,668,267

Due after one year

5,422,695

5,141,374

Total

7,023,605

6,809,641

23rd Fiscal Period(As of March 31, 2017)

Operating lease transactions as lessor
Future lease receivable equivalents

34(2) Description of Financial Instruments and Associated Risks, and Risk Management Structure
Operating accounts receivable are exposed to credit risks of customers. In order to mitigate such risks, theInvestment Corporation works to select tenants by taking into account the tenants’ credibility and has
established a management system for controlling the status of rent payment.
Lease and guarantee deposits from rental properties are exposed to credit risks of the companies to dobusiness with. In order to mitigate such risks, the Investment Corporation works to periodically grasp thefinancial conditions, etc. of such companies.
The possibility, conditions and subsequent burden of interest payments for borrowings and issuance ofinvestment corporation bonds are impacted by the interest rate situations and other factors. Thus, there is
no guarantee that the Investment Corporation can successfully make borrowings or issue investment
corporation bonds at a time when and under the conditions that it prefers. In addition, if borrowings are
made at floating interest rates, interest payments may increase due to later fluctuations in the interest
rates. Depending on the lending attitude of financial institutions, new borrowings may not be possible or
the Investment Corporation may have to borrow funds under disadvantageous conditions in terms ofinterest rates, collateral provision and financial covenants, etc.
Concerning the market risks (interest rate fluctuation risk, etc.) related to the above-mentioned borrowings
and investment corporation bonds, the Investment Corporation works to mitigate them in accordance with
the Derivative Transactions Handling and Risk Management Regulations, an internal rule designated by
the Asset Management Company.
Moreover, for the management of liquidity risk related to fund raising (risk of failing to execute repaymenton the repayment dates), the department in charge at the Asset Management Company prepares andupdates cash flow plans in a timely manner based on reports from its respective departments. The liquidity
risk is also managed by such measures as maintaining liquidity on hand at a certain level.
(3) Supplementary Explanation on Matters Concerning Fair Value, etc. of Financial Instruments
The fair value of financial instruments, aside from values based on market price, include values based onreasonable calculations when there is no market price. Certain variable factors are adopted in calculating
those values, and there may be cases where the values will vary when different assumptions are adopted.
As for the contract value and other conditions of derivative transactions indicated in “2. Matters Concerning
Fair Value, etc. of Financial Instruments,” the value itself is not an indicator showing the market risks
related to such transactions.

35

2. Matters Concerning Fair Value, etc. of Financial Instruments
The following are the book values recorded on the balance sheet, fair values and the difference between
these amounts. The following tables do not include those for which determining the fair value is recognized to
be extremely difficult.
23rd Fiscal Period (As of March 31, 2017)
Book Value Recordedon the Balance Sheet(Thousand yen)
Fair Value

Difference(1) Cash and deposits

3,793,152

3,793,152-(2) Cash and deposits in trust

5,096,818

5,096,818-

146,649

146,649-(2,628)(2,628)-144,020

144,020-

9,033,991

9,033,991-(4) Operating accounts payable

314,916

314,916-(5) Current portion of investment
corporation bonds

4,000,000

4,013,033

13,033(6) Current portion of long-term loans
payable4,805,000

4,819,804

14,804(7) Investment corporation bonds

10,500,000

10,611,537

111,537(8) Long-term loans payable

86,404,500

87,034,282

629,782

Total of liabilities

106,024,416

106,793,575

769,158---(3) Operating accounts receivable
Allowance for doubtful accounts

Total of assets(9) Derivative transactions(Note 1) Calculation method for fair value of financial instruments and matters concerning derivative transactions(1) Cash and deposits, (2) Cash and deposits in trust and (3) Operating accounts receivable
As these are settled within a short period of time, the fair value is approximately the same as the book value
and is thus stated at that book value.
In calculating the fair value of operating accounts receivable, it is difficult to determine the credit risk
individually. Accordingly, allowance for doubtful accounts is deemed as credit risk.
(4) Operating accounts payable
As these are settled within a short period of time, the fair value is approximately the same as the book value
and is thus stated at that book value.
(5) Current portion of investment corporation bonds and (7) Investment corporation bonds
As the investment corporation bonds of the Investment Corporation are traded over the counter throughnegotiations, it is difficult to indicate the fair value as the market price. The present value is based on themethod of calculating by discounting the combined total of principal and interest by a reasonably estimatedrate assumed as being applicable to a similar bond issuance.
(6) Current portion of long-term loans payable and (8) Long-term loans payable
The fair value of those with floating interest rates is based on the book value, as it reflects the market interest
rate within a short period of time and thus is considered to be nearly equal to the book value. (However, thefair value of certain long-term loans payable with floating interest rates that qualifies for the special
accounting of interest rate swaps [see Note “11. Derivative Transactions ”] is based on the method of
calculating by discounting the sum of its principal and interest payments net of any cash flows from theinterest-rate swap by a reasonably estimated rate assumed as being applicable to a new similar borrowing to
be made by the Investment Corporation.) The present value of those with fixed interest rates is based on themethod of discounting the combined total of principal and interest by a reasonably estimated rate assumed as
being applicable to a new similar borrowing to be made by the Investment Corporation.
(9) Derivative transactions
See Note “11. Derivative Transactions.”(Note 2) Scheduled redemption amount of monetary claims
23rd Fiscal Period (As of March 31, 2017)(Thousand yen)
Due after 1
Due after 2
Due after 3
Due after 4
Due in 1 YearDue after
Year through Years through Years through Years throughor Less
5 Years
2 Years
3 Years
4 Years
5 Years

24th Fiscal Period (As of September 30, 2017)
Book Value Recordedon the Balance Sheet

Fair Value(1) Cash and deposits

Difference(1) Cash and deposits

5,259,432

5,259,432-(2) Cash and deposits in trust

4,658,956

4,658,956-(2) Cash and deposits intrust(3) Operating accounts
receivable

115,509

115,509-

Total of assets(2,499)(2,499)-113,009

113,009-

10,031,398

10,031,398-

249,227

249,227-(3) Operating accounts receivable
Allowance for doubtful accounts

Total of assets(4) Operating accounts payable(5) Current portion of investment
corporation bonds

4,000,000

4,001,341

1,341(6) Current portion of long-term loans
payable4,600,000

4,602,023

2,023(7) Investment corporation bonds

10,500,000

10,605,967

105,967(8) Long-term loans payable

86,432,500

86,936,457

503,957

Total of liabilities

105,781,727

106,395,018

613,291---(9) Derivative transactions

36(Thousand yen)

3,793,152

-

-

-

-

-

5,096,818

-

-

-

-

-

146,649

-

-

-

-

-

9,036,620

-

-

-

-

-

24th Fiscal Period (As of September 30, 2017)(Thousand yen)
Due after 1
Due after 2
Due after 3
Due after 4
Due in 1 YearDue after
Year through Years through Years through Years throughor Less
5 Years
2 Years
3 Years
4 Years
5 Years(1) Cash and deposits(2) Cash and deposits intrust(3) Operating accounts
receivable
Total of assets

5,259,432

-

-

-

-

-

4,658,956

-

-

-

-

-

115,509

-

-

-

-

-

10,033,898

-

-

-

-

-

37

(Note 3) Scheduled redemption and repayment amount of investment corporation bonds and borrowings
23rd Fiscal Period (As of March 31, 2017)
Due in 1 Yearor Less(1) Investment
corporation bonds(2) Long-term loans
payableTotal of liabilities

Due after 1
Due after 2
Due after 3
Due after 4Year through Years through Years through Years through2 Years
3 Years
4 Years
5 Years(Thousand yen)
Due after
5 Years

4,000,000

2,500,000

2,000,000--

6,000,000

4,805,000

10,882,000

6,792,500

17,000,000

14,230,000

37,500,000

8,805,000

13,382,000

8,792,500

17,000,000

14,230,000

43,500,000

24th Fiscal Period (As of September 30, 2017)
Due in 1 Yearor Less(1) Investment
corporation bonds(2) Long-term loans
payableTotal of liabilities

Due after 1
Due after 2
Due after 3
Due after 4Year through Years through Years through Years through2 Years
3 Years
4 Years
5 Years(Thousand yen)
Due after
5 Years

4,000,000

2,500,000

2,000,000--

6,000,000

4,600,000

8,382,000

13,892,500

14,300,000

15,230,000

34,628,000

8,600,000

10,882,000

15,892,500

14,300,000

15,230,000

40,628,000

Category(Thousand yen)
24th Fiscal Period(As of September 30, 2017)(1) Lease and guarantee deposits

242,672

242,662(2) Tenant leasehold and security
deposits in trust

1,946,227

1,903,196

(1)

(2)

Method of Hedge
Accounting

Lease and guarantee deposits
Lease and guarantee deposits are not subject to disclosure of fair value because discerning of fair value is recognized to be
extremely difficult as reasonable estimation of cash flows is impossible since there is no market price and also since it isdifficult to calculate the deposit period in effect.
Tenant leasehold and security deposits in trust
Tenant leasehold and security deposits in trust, which are deposited by the tenants of rental properties, are not subject todisclosure of fair value because reasonable estimation of cash flows is recognized to be extremely difficult since there is nomarket price and also since it is difficult to calculate the deposit period in effect.

Type of Derivative
Main Hedged Item
Transactions

Of Which,over 1 Year

(Thousand yen)Calculation
Fair
Method for
Value
the Fair
Value

24th Fiscal Period (As of September 30, 2017)
The following is the contract amount or amount equivalent to the principal provided in the contract, etc. asof balance sheet date for each method of hedge accounting.
Type of Derivative
Main Hedged Item
Transactions

Contract Amount (Note 1)
Of Which,over 1 Year

(Thousand yen)Calculation
Fair
Method for
Value
the Fair
Value

Interest rate swap
Special accounting
transaction
Long-term loans
for interest rate
61,304,500
59,204,500 (Note 2)
Receivable floating;payableswaps
Payable fixed(Note 1) The contract amount of interest rate swaps is indicated based on the notional principal amount.
(Note 2) Transactions for which special accounting for interest rate swaps is applied are combined with long-term loans
payable, the hedged item. Accordingly, their fair value is included in the fair value of the relevant long-term loans
payable (See Note “9. Financial Instruments” 2. Matters Concerning Fair Value, etc. of Financial Instruments(Note 1) (8) Long-term loans payable).

12. Retirement Benefits
23rd Fiscal Period (As of March 31, 2017)
Not applicable as the Investment Corporation does not have any retirement benefit plan.

10. Securities

24th Fiscal Period (As of September 30, 2017)
Not applicable as the Investment Corporation does not have any retirement benefit plan.

23rd Fiscal Period (As of March 31, 2017)
Not applicable

13. Income Taxes

24th Fiscal Period (As of September 30, 2017)
Not applicable

11. Derivative Transactions
1. Derivatives to which hedge accounting is not applied
23rd Fiscal Period (As of March 31, 2017)
Not applicable
24th Fiscal Period (As of September 30, 2017)
Not applicable

1. Deferred tax assets and deferred tax liabilities consisted of the following:(Thousand yen)
24th Fiscal Period(As of September 30, 2017)

23rd Fiscal Period(As of March 31, 2017)
Deferred tax assets:
Amortization of leasehold rights in trust
Amount of allowance for doubtful accounts notdeductible from taxable income
Amount of accrued business taxes not deductible
from taxable income
Subtotal deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax assets, net

38

Contract Amount (Note 1)

Interest rate swap
Special accounting
transaction
Long-term loans
for interest rate
64,009,500
59,204,500 (Note 2)
Receivable floating;payableswaps
Payable fixed(Note 1) The contract amount of interest rate swaps is indicated based on the notional principal amount.
(Note 2) Transactions for which special accounting for interest rate swaps is applied are combined with long-term loans
payable, the hedged item. Accordingly, their fair value is included in the fair value of the relevant long-term loans
payable (See Note “9. Financial Instruments” 2. Matters Concerning Fair Value, etc. of Financial Instruments(Note 1) (8) Long-term loans payable).

Method of Hedge
Accounting(Note 4) Financial instruments for which discerning of fair value is recognized to be extremely difficult
23rd Fiscal Period(As of March 31, 2017)

2. Derivatives to which hedge accounting is applied
23rd Fiscal Period (As of March 31, 2017)
The following is the contract amount or amount equivalent to the principal provided in the contract, etc. asof balance sheet date for each method of hedge accounting.

6,619

7,259

834

793

32

76

7,485

8,129

(7,453)(8,053)

32

76

32

76

39

2. Reconciliation of the statutory tax rate to the Effective Income Tax Rate

4. Directors and Major Individual Unitholders

23rd Fiscal Period(As of March 31, 2017)
Statutory tax rate
(Adjustment)
Deductible cash distributions
Provision for reserve for reduction entry
Other

24th Fiscal Period(As of September 30, 2017)31.74%

31.74%(31.32%)(0.40%)
0.03%(31.71%)
-%
0.05%

0.05%

0.08%

Classification Name

Share of
Voting Rights
Business[or Ownership
Description orof Such in the
Occupation
Investment
Corporation]

Description ofTransaction

Balance atTransaction
the End ofAmountCategory
Period(thousand(thousand
yen)
yen)

24th Fiscal Period (from April 1, 2017 to September 30, 2017)
Not applicable

Payment of asset
Accounts
management fees to409,597
SekisuiHouse
Asset
Executive Director
payable 394,845(Note 2)
Management, Ltd.
of the Investment
other
Director and(Note 1)
Corporation and
Osamu
President ofPayment of institution
its close
Minami Sekisui House
operation andrelatives
AccountsAssetadministration fees
1,400
payable 1,512
Management, Ltd.
to Sekisui House
other
Asset Management,
Ltd. (Note 3)(Note 1) The transaction was conducted by Osamu Minami as representative of a third party (Sekisui House AssetManagement, Ltd.), and the fees are based on the terms and conditions designated in the Articles ofIncorporation of the Investment Corporation.
(Note 2) The figure includes 39,016 thousand yen as asset management fees related to property acquisitions, which havebeen capitalized in the book value of individual real properties, and 10,000 thousand yen of asset management
fees related to property disposition, which have been recorded in other sales expenses.
(Note 3) The transaction was conducted by Osamu Minami as representative of a third party (Sekisui House AssetManagement, Ltd.), and the fees are based on the institution operation and administration agreement.
(Note 4) Of the amounts in the above table, consumption taxes are not included in the transaction amount but areincluded in the balance at the end of period.

16. Transactions with Related Parties

24th Fiscal Period (from April 1, 2017 to September 30, 2017)

Effective income tax rate

14. Equity Method Income and Retained Earnings
23rd Fiscal Period (from October 1, 2016 to March 31, 2017)
Not applicable as the Investment Corporation does not have any affiliated companies.
24th Fiscal Period (from April 1, 2017 to September 30, 2017)
Not applicable as the Investment Corporation does not have any affiliated companies.

15. Assets Retirement Obligations
23rd Fiscal Period (from October 1, 2016 to March 31, 2017)
Not applicable

1. Parent Company and Major Corporation Unitholders
23rd Fiscal Period (from October 1, 2016 to March 31, 2017)
Not applicable
24th Fiscal Period (from April 1, 2017 to September 30, 2017)
Not applicable
2. Subsidiaries and Affiliates
23rd Fiscal Period (from October 1, 2016 to March 31, 2017)
Not applicable
24th Fiscal Period (from April 1, 2017 to September 30, 2017)
Not applicable
3. Sister Companies
23rd Fiscal Period (from October 1, 2016 to March 31, 2017)
Not applicable
24th Fiscal Period (from April 1, 2017 to September 30, 2017)
Not applicable

40

23rd Fiscal Period (from October 1, 2016 to March 31, 2017)Classification Name

Share of
Voting Rights
Business[or Ownership
Description orof Such in the
Occupation
Investment
Corporation]

Description ofTransaction

Balance atTransaction
the End ofAmountCategory
Period(thousand(thousand
yen)
yen)

Payment of asset
Accounts
management fees to364,317
Sekisui House Asset
Executive Director
payable 393,463(Note 2)
Management, Ltd.
of the Investment
other
Director and(Note 1)
Corporation and
Osamu
President ofPayment of institution
its close
Minami Sekisui House
operation andrelatives
AccountsAssetadministration fees
6,100
payable 1,512
Management, Ltd.
to Sekisui House
other
Asset Management,
Ltd. (Note 3)(Note 1) The transaction was conducted by Osamu Minami as representative of a third party (Sekisui House AssetManagement, Ltd.), and the fees are based on the terms and conditions designated in the Articles ofIncorporation of the Investment Corporation.
(Note 2) Since no property acquisition or disposition was made during the 24th fiscal period, there is no asset
management fees related to property acquisitions, which have been capitalized in the book value of individual
real properties; or asset management fees related to property disposition, which have been recorded in othersales expenses.
(Note 3) The transaction was conducted by Osamu Minami as representative of a third party (Sekisui House AssetManagement, Ltd.), and the fees are based on the institution operation and administration agreement.
(Note 4) Of the amounts in the above table, consumption taxes are not included in the transaction amount but areincluded in the balance at the end of period.

41

17. Segment Information[Segment Information]
Descriptions are omitted as the Investment Corporation has a single business segment of real estateleasing business.
[Related Information]
23rd Fiscal Period (from October 1, 2016 to March 31, 2017)(1) Information by product and service
Descriptions are omitted as the Investment Corporation’s operating revenue under single product/service
classification for outside customers exceeds 90% of operating revenue recorded in the statement ofincome and retained earnings.
(2) Information by region(a) Operating revenue
Descriptions are omitted as the Investment Corporation’s operating revenue for outside customers inJapan exceeds 90% of operating revenue recorded in the statement of income and retained earnings.
(b) Property, plant and equipment
Descriptions are omitted as the amount of the Investment Corporation’s property, plant andequipment located in Japan exceeds 90% of property, plant and equipment recorded in the balance
sheet.
(3) Information by major customer
Descriptions are omitted as the Investment Corporation’s operating revenue for any individual outside
customer is less than 10% of operating revenue recorded in the statement of income and retained
earnings.
24th Fiscal Period (from April 1, 2017 to September 30, 2017)(1) Information by product and service
Descriptions are omitted as the Investment Corporation’s operating revenue under single product/service
classification for outside customers exceeds 90% of operating revenue recorded in the statement ofincome and retained earnings.
(2) Information by region(a) Operating revenue
Descriptions are omitted as the Investment Corporation’s operating revenue for outside customers inJapan exceeds 90% of operating revenue recorded in the statement of income and retained earnings.
(b) Property, plant and equipment
Descriptions are omitted as the amount of the Investment Corporation’s property, plant andequipment located in Japan exceeds 90% of property, plant and equipment recorded in the balance
sheet.
(3) Information by major customer
Descriptions are omitted as the Investment Corporation’s operating revenue for any individual outside
customer is less than 10% of operating revenue recorded in the statement of income and retained
earnings.

18. Per Unit Information
23rd Fiscal Period
24th Fiscal Period(October 1, 2016 –(April 1, 2017 –Item
March 31, 2017)
September 30, 2017)
Net assets per unit
91,648 yen
91,669 yen
Net income per unit
2,288 yen
2,255 yen
(Note 1) Diluted net income per unit has not been presented since no warrants or convertible bonds are outstanding.
(Note 2) Net income per unit has been calculated based on the following data:
PeriodPeriodItem
Net Income (thousand yen)Amount not attributable to ordinary
unitholders (thousand yen)
Net income attributable to ordinary
investment units (thousand yen)
Average number of units during the
fiscal period (units)

42

23rd Fiscal Period(October 1, 2016 –March 31, 2017)
2,501,336

24th Fiscal Period(April 1, 2017 –September 30, 2017)
2,493,073--

2,501,336

2,493,073

1,093,070

1,105,510

19. Rental Properties
The Investment Corporation owns assets as trust beneficiary interests in real estate as entrusted property,
which comprises rental residential properties and rental retail properties. Real estate rental revenues andexpenses for the relevant rental properties amounted to 3,627,800 thousand yen for the 23rd fiscal period and3,618,213 thousand yen for the 24th fiscal period, respectively. The following table provides the book value
recorded on the balance sheet, amount of change during the period and fair value of these rental properties.

(Thousand yen)
24th Fiscal Period(April 1, 2017 –September 30, 2017)

23rd Fiscal Period(October 1, 2016 –March 31, 2017)

Book value recorded on the balance sheet
Balance at the beginning of period
192,994,081
200,010,647
Amount of net change during period
7,016,565(1,154,590)
Balance at the end of period
200,010,647
198,856,057
Fair value at the end of period
226,015,800
229,438,000(Note 1) Book value recorded on the balance sheet indicates the book value less accumulated depreciation.
(Note 2) Net change during the 23rd fiscal period is comprised of increases primarily attributable to new acquisitions of 3
properties (9,393,337 thousand yen) and decrease primarily attributable to disposition of Esty Maison
YACHIYOMIDORIGAOKA (1,168,146 thousand yen) and depreciation (1,606,420 thousand yen). Net change
during the 24th fiscal period is primarily comprised of decrease attributable to depreciation (1,602,027 thousandyen).
(Note 3) Pursuant to the Articles of Incorporation, the fair value at the end of period indicates the appraisal value or
surveyed value provided by outside real estate appraisers with the respective appraisal dates of March 31, 2017
and September 30, 2017.

20. Significant Subsequent Events
Not applicable

21. Detailed Schedules
1. Schedule of Securities
Not applicable
Real estate trust beneficiary interests are included in the Summary of Detailed Schedule of Real Properties.
2. Schedule of Contract Amount, Etc. and Fair Value of Derivative Transactions and Forward Exchange
Transactions(Thousand yen)

Category

Type

Transaction other thanmarket transaction

Interest rate swap
transaction
Receivable floating;payable fixed

Total

Contract Amount (Note 1)
Of Which,over 1 Year61,304,500

59,204,500

61,304,500

59,204,500

Fair Value(Note 2)-

(Note 1) The contract amount of interest rate swaps is indicated based on the notional principal amount.
(Note 2) Description of fair value is omitted as the transactions satisfy the requirements for special accounting under theaccounting standards for financial instruments.

43

3. Summary of Detailed Schedule of Real Properties(Million yen)

6. Schedule of Loans Payable
Category

Accumulated Depreciation Net Balance
Balance Increase Decrease Balance
as ofduringduring
as of
as of
or
Depreciation
Type of Assets
Remarks
April 1,thethe
September Accumulated during the September
2017
PeriodPeriod30, 2017
30, 2017
Amortization
PeriodBuildings in trust 106,007
383
106,390
17,796
1,486
88,594Structures in trust
983
4
987
269
26
717
Machinery and
2,022
7
2,029
685
66
1,344
equipment in trust
Property,
Tools, furnitureplant andand fixtures in
298
51
349
120
20
229
equipment trust
Land in trust
107,827
0
107,828
107,828
Construction in
35
35
35
progress in trust
Total
217,138483
217,621
18,871
1,600
198,749
Leasehold rights
164
164
22
2
141
in trust
Intangible
Other
6
6
6
0
0
assets
Total
171
171
29
2
142

Lender

4. Schedule of Other Specified Assets
Not applicable
Real estate trust beneficiary interests are included in the Summary of Detailed Schedule of Real Properties.

5. Schedule of Investment Corporation Bonds
NameFirst Series
Unsecured
Investment
Corporation Bonds
Second Series
Unsecured
Investment
Corporation Bonds
Third Series
Unsecured
Investment
Corporation Bonds
Fourth Series
Unsecured
Investment
Corporation Bonds
Fifth Series
Unsecured
Investment
Corporation Bonds
Total

Issue Date

Balance as ofApril 1, 2017
(million yen)February 28,
2013

4,000

February 28,
2013

2,000

February 28,
2014

2,500

February 28,
2014
August 29,
2014

Decrease Balance as of
Couponduring the
September
Rate
Period30, 2017(%)(million yen) (million yen)
-

-

-

3,000

-

4,000

2,000

2,500

3,000

3,000

-

3,000

14,500-14,500

0.630

1.000

0.374

1.069

0.871

Redemption
Date
February 28,
2018(Note 1)

Purpose CollateralLong-term
loans
payable(Note 2)February 28,
2020
February 28,
2019
February 28,
2024

Unsecured(Note 3)

August 30,
2024(Note 1) These investment corporation bonds are recorded in the current liabilities on the balance sheet as current portionof investment corporation bonds at the end of the 24th fiscal period.
(Note 2) The proceeds are used as funds for repayment of existing borrowings and acquisition of real estate trust
beneficiary interests, etc.
(Note 3) The proceeds are used as funds for repayment of existing borrowings, etc.
(Note 4) These investment corporation bonds are equipped with pari passu clause among specified investment
corporation bonds.
(Note 5) Amounts of investment corporation bonds to be redeemed annually within five years after the date of the balance
sheet are as follows.
(Million yen)Due in 1 YearDue after 1 YearDue after 2 Years
Due after 3 Years
Due after 4 Yearsor Less
through 2 Years
through 3 Years
through 4 Years
through 5 Years
4,000

44

2,500

2,000

-

-

Development Bank ofJapan Inc.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
The Norinchukin Bank
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Mizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Mizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation
Resona Bank, Limited
The 77 Bank, Ltd.
The Hiroshima Bank, Ltd.
Mizuho Bank, Ltd.
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation
Aozora Bank, Ltd.
Mizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Trust
Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation
Resona Bank, LimitedAozora Bank, Ltd.
Mizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Mizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mitsubishi UFJ Trust andBanking Corporation
Resona Bank, Limited

Balance Increase Decrease Balance
as ofduringduringas of
Average
April 1,thethe
September
Repayment Repayment
Interest Rate
Purpose2017
PeriodPeriod30, 2017
Date
Method(Note 1)(million (million (million(million
yen)
yen)
yen)
yen)
941

-

-

941

1,470

-

-

1,470

1,470

-

-

1,470

2,352
176

-

2,352
176

-

176

-

176

-

750

-

-

750

2,250

-

-

2,250

750

-

-

750

750

-

-

750

400

-

-

400

500

-

-

500

1,700

-

-

1,700

2,142

-

-

2,142

500
500
500
100

-

-

500
500
500
100

500

-

-

500

500

-

-

500

1,000
500

-

-

1,000
500

200

-

-

200

2,500

-

-

2,500

600

-

-

600

200

-

-

200

500
500
200

-

-

500
500
200

200

-

-

200

1,100

-

-

1,100

500

-

-

500

300

-

-

300

300

-

-

300

400

-

-

400

800

-

-

800

400

-

-

400

980

-

-

980

500

-

-

500

1,500

-

-

1,500

500

-

-

500

800

-

-

800

1.15475%

Remarks

February 28,
2019(Note 3)0.95750%

August 31,
2017

0.89900%

February 28,
20191.02225%

February 28,
2020

0.75600%

February 28,
2018(Note 2)

(Note 4)Lump-sumupon
maturity(Note 3)

1.17200%

August 31,
2020

0.45727%

August 31,
2018(Note 2)

1.17350%

February 28,
2022(Note 4)1.11000%

February 28,
2022(Note 3)

Unsecured/
Unguaranteed

45

Category
LenderThe Senshu Ikeda Bank, Ltd.

Mizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mitsubishi UFJ Trust andBanking Corporation
The Yamaguchi Bank, Ltd.
Resona Bank, Limited
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
The Shizuoka Bank, Ltd.
Shinkin Central Bank
The Bank of Fukuoka, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Aozora Bank, Ltd.
The Senshu Ikeda Bank, Ltd.

The Shizuoka Bank, Ltd.
The 77 Bank, Ltd.
Shinkin Central Bank
Long-term
The Norinchukin Bankloans payable
The Hiroshima Bank, Ltd.
The Bank of Fukuoka, Ltd.
Mizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation
The Yamaguchi Bank, Ltd.
Resona Bank, Limited
Development Bank ofJapan Inc.
The Norinchukin Bank
The Bank of Fukuoka, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Resona Bank, Limited
The Senshu Ikeda Bank, Ltd.

The Shizuoka Bank, Ltd.
The 77 Bank, Ltd.
Shinkin Central Bank
The Norinchukin Bank
The Hiroshima Bank, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation

46

Balance Increase Decrease Balance
as ofduringduringas of
Average
April 1,thethe
September
Repayment Repayment
Interest Rate
Purpose2017
PeriodPeriod30, 2017
Date
Method(Note 1)(million (million (million(million
yen)
yen)
yen)
yen)
500
500
400
400
500

-

-

500

500

-

-

500

500

-

-

500

500

-

-

500

500
500
405

-

-

500
500
405

1,145

-

-

1,145

500
500
500
300

-

-

500
500
500
300

300

-

-

300

2,500

-

-

2,500

2,000

-

-

2,000

900

-

-

900

2,450

-

-

2,450

1,950

-

-

1,950

200
200
200
200
200
500
200
700
1,000

-

-

200
200
200
200
200
500
200
700
1,000

800

-

-

800

600

-

-

600

300

-

-

300

800

-

-

800

500

-

-

500

200
500

-

-

200
500

1,000

-

-

1,000

800
500
500

-

-

800
500
500

500

-

-

500

300

-

-

300

750
500
500
500
500
500
500
600

-

-

750
500
500
500
500
500
500
600

300

-

-

300

0.95225%

0.79614%0.97300%

February 26,
2021(Note 3)February 26,
2021

0.96475%

0.83600%

August 31,
2021(Note 4)Lump-sumupon
maturity

Unsecured/
Unguaranteed

February 28,
2023(Note 3)0.85250%0.73975%

0.62800%

Remarks

February 28,
2020

August 31,
2022

0.86650%

Category

February 28,
2023

February 28,
2022

February 26,
2021

LenderMizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Development Bank ofJapan Inc.
Mizuho Bank, Ltd.
Aozora Bank, Ltd.
The Norinchukin Bank
Mizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
The Yamaguchi Bank, Ltd.
Resona Bank, Limited
The Senshu Ikeda Bank,Ltd.
The Shizuoka Bank, Ltd.
The 77 Bank, Ltd.
Shinkin Central Bank
Development Bank ofJapan Inc.
The Hiroshima Bank, Ltd.
The Bank of Fukuoka, Ltd.
Mitsubishi UFJ Trust andBanking Corporation
Development Bank ofJapan Inc.
Mizuho Bank, Ltd.
Long-termloans payable Sumitomo Mitsui Banking
Corporation
Mitsubishi UFJ Trust andBanking Corporation
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
The Norinchukin Bank
Mizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
Resona Bank, LimitedAozora Bank, Ltd.
Development Bank ofJapan Inc.
The Bank of Fukuoka, Ltd.
Mizuho Bank, Ltd.
Mitsubishi UFJ Trust andBanking Corporation
The Yamaguchi Bank, Ltd.
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Shinkin Central Bank
Mizuho Bank, Ltd.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Resona Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking
Corporation

Balance Increase Decrease Balance
as ofduringduringas of
Average
April 1,thethe
September
Repayment Repayment
Interest Rate
Purpose2017
PeriodPeriod30, 2017
Date
Method(Note 1)(million (million (million(million
yen)
yen)
yen)
yen)
450
450
0.68030%

August 31,
2023

0.67400%

August 31,2023

0.45503%

February 29,
2024

1,000

-

-

1,000

450

-

-

450

2,100

-

-

2,100

100
200
300
1,100

-

-

100
200
300
1,100

500

-

-

500

1,100

-

-

1,100

450

-

-

450

700

-

-

700

100
300

-

-

100
300

100

-

-

100

100
100
100

-

-

100
100
100

600

-

-

600

100
200

-

-

100
200

450

-

-

450

400

-

-

400

800

-

-

800

800

-

-

800

1,000

-

-

1,000

600

-

-

600

300
200

-

-

300
200

500

-

-

500

200

-

-

200

400

-

-

400

300
300

-

-

300
300

1,200

-

-

1,200

500
700

-

-

500
700

800

-

-

800

500

-

-

500

1,500

-

-

1,500

300
200

-

-

300
200

600

-

-

600

300

-

-

300

400

-

-

400

600

-

-

600

0.61000%

1,600

-

-

1,600

0.31000%

Remarks(Note 4)0.50500%

February 29,
2024

0.59750%

August 29,2025

0.57000%

August 29,2025

0.49500%

August 30,
2024

Lump-sumupon
maturity

Unsecured/
Unguaranteed(Note 3)0.77880%

February 27,
2026

0.72500%

February 27,
2026

0.67000%

February 28,
2025

February 28,
2025
August 31,
2020

47

Category
Lender
The Norinchukin Bank
Long-termloans payable Mizuho Bank, Ltd.
Total

Balance Increase Decrease Balance
as ofduringduringas of
Average
April 1,thethe
September
Repayment Repayment
Interest Rate
PurposeRemarks
2017
PeriodPeriod30, 2017
Date
Method(Note 1)(million (million (million(million
yen)
yen)
yen)
yen)
Lump-sum
－
－
2,352
2,352
Unsecured/
August 29,
upon
0.61380%(Note 3)2025
Unguaranteed
－
176
－
176
maturity
91,2092,528
2,705
91,032

Independent Auditor’s Report(Note 1) The “average interest rate” is a weighted-average figure during the fiscal period and is rounded to the fifth
decimal place. Furthermore, the average interest rate of borrowings for which the Investment Corporation
conducted interest rate swap transactions for the purpose of hedging the interest rate fluctuation risk is the rate
obtained by taking into account the effect of interest rate swaps.
(Note 2) These loans are recorded in the current liabilities on the balance sheet as current portion of long-term loans
payable at the end of the 24th fiscal period.
(Note 3) These loans are used as funds for repayment of existing borrowings.
(Note 4) These loans are used as funds for the acquisition of real estate trust beneficiary interests, etc.
(Note 5) Amounts of long-term loans payable to be repaid annually within five years after the date of the balance sheet
are as follows.
(Million yen)Due in 1 Yearor Less

4,600

48

Due after 1 Yearthrough 2 Years

8,382

Due after 2 Years
through 3 Years

13,892

Due after 3 Years
through 4 Years

14,300Due after 4 Years
through 5 Years

15,23049

Overview of the Investment Corporation
Trade Name

Overview of the Asset Management Company
Trade Name

Sekisui House Residential Investment Corporation

Address

Address

3-1-31 Minami-Aoyama, Minato-ku, Tokyo

Representative

Sekisui House Asset Management, Ltd.
3-1-31 Minami-Aoyama, Minato-ku, Tokyo
Tel: +81-3-5770-8973 (main number)

Paid-in Capital

200 million yen

Shareholders

Sekisui House, Ltd.

Osamu Minami, Executive Director

Asset Management Company

Sekisui House Asset Management, Ltd.

Osamu Minami, President
Nobuyoshi Sato, Executive Vice President

Fiscal Term

Directors

End of March and end of September

Koji Sakamoto, Senior Managing Director
Masami Matsumoto, Director (part-time) (Senior Manager, Accounting & Finance Department, Sekisui House, Ltd.)
Naoki Kawamura, Auditor (part-time) (Senior Manager, Legal Department, Sekisui House, Ltd.)History

April 20, 2005

Registration and Establishment under Article 166 of the Act on Investment Trusts and Investment
Corporations (the “Investment Trusts Act”)

May 19, 2005

Implementation of registration by the Prime Minister under Article 187 of the Investment Trusts Act(Registration No.33 issued by the Director of Kanto Local Finance Bureau)

July 28, 2005

July 28, 2004
January 27, 2005

EstablishedCertified as entrustment-based agency services for transactions under the Building Lots and Buildings
Transaction Business Act(License No.31 issued by the Minister of Land, Infrastructure, Transport and Tourism)

History

April 18, 2005

Certified as asset management operator of investment corporations under the Investment Trusts Act(License No. 41 issued by the Prime Minister)

September 30, 2007 Registered as a financial instruments business operator under the Financial Instruments and Exchange Act

Listed on the Tokyo Stock Exchange(Registration No.337 issued by the Director of Kanto Local Finance Bureau (Kinsho))Organizational Structure

Structure to Manage the Investment Corporation

Based on its Articles of Incorporation, the Investment Corporation manages the funds paid in by the unitholders by investing primarily in real estate and related assets.

The asset management of the Investment Corporation is entrusted to Sekisui House Asset Management, Ltd., the asset management company.

The following diagram indicates the operational roles and assignments of the companies involved in the management and administration of the Investment Corporation.

The following diagram shows the organizational chart of the asset management company and its organizations in charge of compliance.

Specific Related Corporation /Pipeline Support Companies

Investment Corporation

Sekisui House, Ltd.

General Administrative
Affairs Entrustment Agreement

Sekiwa Real Estate, Ltd.
Agreement concerning
preferential negotiation rights, etc.

Sekisui House
Residential Investment Corporation

General Meeting of
Shareholders

Administrator (Accounting) /Custodian

Statutory Auditor

Asset Custody Agreement
Mizuho Trust & Banking Co., Ltd.

Board of Directors

Organization to discuss anddecide on basic andimportant compliance matters

Compliance Committee
Asset Management Company / Administrator(Institutional management)

Sekisui House Asset Management, Ltd.

Asset Management
Agreement

General Meeting of Unitholders

Institutional Management
Agreement

Investment Committee
Transfer Agency Services Agreement(Investment Unit Administration
Services Agreement)

Board of Directors
Agreement concerning preferential negotiation rights, etc.

Osamu Minami, Executive Director

Agreement concerning preferential negotiation rights

Kaoru Takamatsu, Supervisory Director

Compliance Officer

Organization in charge of complianceTransfer Agent

Mizuho Trust & Banking Co., Ltd.

Compliance Officer

Mikio Koyano, Supervisory Director

President
Financial Agency Agreement

Pipeline Support Companies

Compliance Committee

The Compliance Committee consists of theCompliance Officer, President and external
experts in compliance.

Investment Corporation
Bond Administrator

Risk Management and Compliance Office

Independent Auditor
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Sekiwa Real Estate Kanto, Ltd.

Sekiwa Real Estate Kansai, Ltd.

Sekiwa Real Estate Tohoku, Ltd.

Sekiwa Real Estate Chugoku, Ltd.

Sekiwa Real Estate Chubu, Ltd.

Sekiwa Real Estate Kyushu, Ltd.

Risk Management and Compliance Office

Ernst & Young ShinNihon LLC

Real Estate Investment
Department

50

The Compliance Officer is responsible for managing the overall compliance of the Asset Management Company. The Compliance Officer shall beselected based on having sufficient examining andsupervising capabilities to ensure compliance withlaws and regulations by the Asset Management
Company

Asset Management
Department

Engineering Management
Department

IR & Financial Affairs
Department

Management
Department

The Risk Management and Compliance Officemonitors operations with regard to risk management and compliance with laws, regulations andvarious rules, etc.

51

Unitholders Information

MEMO

Changes in Investment Unit Price and Transaction Volume in the Last Two Years (September 30, 2015 – September 30, 2017)(Investment unit price: yen)Transaction volume (Transaction volume: units)

Investment unit price

200,000

50,000Market capitalization: 121,827 million yen (as of September 29, 2017)High (closing price) in the 24th fiscal period: 123,200 yen (April 6, 2017)

170,000

40,000Low (closing price) in the 24th fiscal period: 109,200 yen (July 18, 2017)
Period-end investment unit price in the 24th fiscal period: 110,200 yen (September 29, 2017)

140,000

30,000110,000

20,00080,00010,00050,000
Sept. 30, 2015
(20th FP)0
Dec. 31Mar. 31, 2016
(21st FP)

Jun. 30

Sept. 30, 2016
(22nd FP)

Dec. 31Mar. 31, 2017
(23rd FP)

Jun. 30

Sept. 30, 2017(24th FP)

Unitholders Composition
Number of Unitholders

152 (1.43%)

End of 24th FP (Sept. 30, 2017)
10,559 unitholders

Other domestic firms

Foreign firms, etc.

Individuals and others

10,087 (95.17%)
202 (1.91%)
153 (1.43%)

End of 23rd FP (Mar. 31, 2017)
10,702 unitholders

Financial institutions (including securities companies)
158 (1.49%)

165 (1.54%)
10,178 (95.10%)

206 (1.92%)

Number of Investment Units
End of 24th FP (Sept. 30, 2017)

158,124 units (14.30%) 107,685 units (9.74%)

764,645 units (69.17%)

1,105,510 units

75,056 units (6.79%)

End of 23rd FP (Mar. 31, 2017)

168,300 units (15.22%) 107,589 units (9.73%)

752,248 units (68.05%)

1,105,510 units

77,373 units (7.00%)

Major Unitholders
The following table shows the 10 largest unitholders according to the ratio of their owned investment units to the total number of investment units issued asof September 30, 2017.
Name / Company Name

Number of Investment
Units Owned (units)

Ratio of Investment Units Owned toTotal Investment Units Issued(%) (Note)

Japan Trustee Services Bank, Ltd. (Trust Account)

289,331

26.17

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

123,568

11.17

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

42,104

3.80

Sekisui House, Ltd.

39,000

3.52

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

27,624

2.49

Mitsubishi UFJ Trust and Banking Corporation

20,103

1.81

THE HACHIJUNI BANK, LTD.

19,964

1.80

DEUTSCHE BANK AG LONDON-GPF CLIENT OMNI-FULL TAX 613

19,785

1.78

STATE STREET BANK-WEST PENSION FUND CLIENTS EXEMPT 505233

19,035

1.72

THE FUJI FIRE AND MARINE INSURANCE COMPANY, LIMITED

17,130

1.54

Total

617,64455.86(Note) The "Ratio of Investment Units Owned to Total Investment Units Issued" are rounded down to the nearest second decimal place.

52

53