27th Fiscal Period Financial Report (REIT) - heiwa-re.co.jp · PDF file27th Fiscal Period Financial Report (REIT) July 15, ... 26th FP ¥2,854 million ... HEIWA REAL ESTATE REIT, Inc

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27th Fiscal Period Financial Report (REIT)

July 15, 2015

REIT Issuer: HEIWA REAL ESTATE REIT, Inc. Stock Exchange Listing: TSE

Securities Code: 8966 URL: http://www.heiwa-re.co.jp/

Representative: (Title) Executive Director (Name) Masaaki Higashihara

Asset Management Company: HEIWA REAL ESTATE Asset Management CO., LTD.

Representative: (Title) President & Representative Director (Name) Takaya Ichikawa

Inquiries: (Title) General Manager, Planning & Finance Department (Name) Shinya Ito

TEL: +81-3-3669-8771

Scheduled date of submission of periodic securities report (yuka shoken hokokusho): August 26, 2015

Scheduled date of commencement of distribution payments: August 14, 2015

Supplementary materials: Attached

IR Conference: Yes (for institutional investors, securities analysts)

[Amounts are rounded down to the nearest million yen]

1. Status of Management and Assets for the 27th Fiscal Period

27th Fiscal Period (27th FP): Fiscal period ended May 2015 (from December 1, 2014 to May 31, 2015)

(1) Management

[% figures show the period-on-period increase (decrease)]

Operating revenue Operating income Ordinary income Net income

27th FP ¥5,415 million 7.2% ¥1,760 million (18.1%) ¥1,112 million (25.9%) ¥1,111 million (26.0%)

26th FP ¥5,052 million (0.1%) ¥2,148 million (0.9%) ¥1,502 million 3.9% ¥1,501 million 3.9%

Net income

per unit

Ratio of

net income to

unitholders’ equity

Ratio of

ordinary income to

total assets

Ratio of

ordinary income to

operating revenue

27th FP ¥1,169 1.3% 0.7% 20.5%

26th FP ¥1,703 1.8% 1.0% 29.7%

(Note) In the fiscal period ended May 2015, the REIT recorded a loss on the sale of real estate, etc. of ¥559 million under operating

expenses, but will pay distributions as shown in (2) below by applying ¥545 million from retained earnings brought forward.

(2) Distributions

Distribution per unit

(excluding distribution

in excess of earnings)

Total distributions

(excluding distribution

in excess of earnings)

Distribution in

excess of earnings

per unit

Total distributions

in excess of

earnings

Payout ratio

(Note 1)

Ratio of

distributions

to net assets

(Note 2)

27th FP ¥1,742 ¥1,656 million ¥0 ¥0 million 149.0% 2.0%

26th FP ¥1,703 ¥1,501 million ¥0 ¥0 million 100.0% 1.8%

(Note 1) Payout ratio shows figures that have been calculated using the following formula:

Total distributions (excluding total distributions in excess of earnings) ÷ Net income × 100

(Note 2) Ratio of distributions to net assets shows figures that have been calculated using the following formula:

Total distributions (excluding total distributions in excess of earnings) ÷ [(Net assets at beginning of period + Net assets at

end of period) ÷ 2] × 100

(Note 3) Sources of funds for paying total distributions for the 27th Fiscal Period include funds applied from retained earnings

brought forward (¥545 million) and therefore the amount of total distributions differs from the amount of net income.

(3) Financial Position

Total assets Net assets

Ratio of

unitholders’ equity to

total assets

Net assets

per unit

27th FP ¥165,397 million ¥87,508 million 52.9% ¥92,002

26th FP ¥157,382 million ¥82,033 million 52.1% ¥93,067

(4) Cash Flows

Net cash

provided by (used in)

operating activities

Net cash


investing activities

Net cash


financing activities

Cash and

cash equivalents

at end of period

27th FP ¥3,727 million (¥10,064 million) ¥6,607 million ¥7,336 million

26th FP ¥2,854 million (¥2,324 million) (¥1,472 million) ¥7,066 million

http://www.heiwa-re.co.jp/

HEIWA REAL ESTATE REIT, Inc. (8966) 27th Fiscal Period Financial Report

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2. Management Status Forecasts for the 28th Fiscal Period

28th Fiscal Period (28th FP): Fiscal period ending November 2015 (from June 1, 2015 to November 30, 2015)

[% figures show the period-on-period increase (decrease)]

Operating revenue Operating income Ordinary income Net income

Distribution per unit

(excluding

distribution in

excess of earnings)

Distribution in

excess of earnings

per unit

28th

FP

¥5,375

million (0.7%)

¥2,263

million 28.6%

¥1,636

million 47.1%

¥1,635

million 47.2% ¥1,719 ¥0

(Reference) Estimated net income per unit for the 28th Fiscal Period: ¥1,719

* Other

(1) Changes in Accounting Policies, Changes in Accounting Estimates, Restatements

(i) Changes in accounting policies accompanying amendments to accounting standards, etc.: No

(ii) Changes in accounting policies other than (i): No

(iii) Changes in accounting estimates: No

(iv) Restatements No

(2) Total Number of Investment Units Issued and Outstanding

(i) Total number of investment units issued and

outstanding at end of period (including own

investment units):

27th Fiscal

Period: 951,147 units

26th Fiscal

Period: 881,447 units

(ii) Number of own investment units at end of period: 27th Fiscal

Period: ‒ units

26th Fiscal

Period: ‒ units

* Statement on Status of Review Procedures

Financial statement review procedures based on the Financial Instruments and Exchange Act are still ongoing at the time of

disclosure of this financial report.

* Explanation on the Appropriate Use of the Management Status Forecasts, and Other Matters of Special Note

(Caution Concerning Forward-Looking Statements, Etc.)

The management status outlook and other forward-looking statements contained in this document are based on information currently

available to and certain assumptions deemed reasonable by the Investment Corporation. Accordingly, actual management status and

other results may vary materially due to various factors. This forecast is not a guarantee of actual distributions paid. See the Japanese

version of the “Management status forecast assumptions for 28th Fiscal Period (from June 1, 2015 to November 30, 2015)” on page 9

for notes on assumptions used in management status forecasts and on the use of management status forecasts.


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1. Related Corporations of the REIT

No disclosure necessary, since there have been no material changes from “Structure of the REIT” in the most

recent Annual Securities Report (submitted February 25, 2015).

2. Operating Policies and Operations

(1) Operating policies

No disclosure necessary, since there have been no material changes from “Investment policies,” “Targets of

investments” and “Distributions policy” in the most recent Annual Securities Report (submitted February 25,

2015).

(2) Operations

a. General situation during the 27th Fiscal Period

The REIT is striving based on its Basic Philosophy of “Steady Growth of Assets Under Management” and

“Stable Medium- to Long-Term Profits,” as well as “Active Use of the Heiwa Real Estate Group” (below,

collectively referring to Heiwa Real Estate Co., Ltd. [below, “Heiwa Real Estate”] and the subsidiaries of Heiwa

Real Estate; the same hereinafter) to manage its assets with the purpose of maximizing investor’s value.

Following is a summary of our asset management during the 27th Fiscal Period.

(i) Brief background of the REIT

Investment units in the REIT have been listed on the Real Estate Investment Trust Section (J-REIT Section) of

the Tokyo Stock Exchange (below, TSE) since March 8, 2005 (Securities Code: 8966). Subsequently, the REIT

executed a capital increase through public offering and underwriting of investment units issued through private

placement on several occasions and an investment unit split and investment unit issuance through a merger with

Japan Single-residence REIT Inc. (below, JSR) on October 1, 2010 (below, this event is referred to as the merger)

by the 22nd Fiscal Period. During the Fiscal Period under review, the REIT executed a capital increase through

public offering in December 2014 and applied the proceeds as part of the funds to acquire three office spaces and

one residential building. As a result, total investment units outstanding were 951,147 and unitholders' capital was

76,372 million yen as of the end of the 27th Fiscal Period.

(ii) Operating environment

The Japanese economy during the 27th Fiscal Period at last showed signs of an upturn, as the stimulus measures

adopted by the Japanese government and the expansion of quantitative and qualitative monetary easing by the

Bank of Japan fostered continued improvement in corporate earnings and the employment and income

environment throughout the fiscal period, offsetting continued year-on-year falls in personal consumption for a

time due to a decline in reaction to the rush demand before the consumption tax hike. Under these circumstances,

the TSE REIT Index remained at a level exceeding 1,800 points throughout the fiscal period, rising to 1,866.06

points as of May 31, 2015, after ending the previous fiscal period at 1,826.72 points, due to the effect of

additional monetary easing by the Bank of Japan on October 31, 2014.

(a) Office building leasing market

The latest office building market data from Miki Shoji Co., Ltd. shows a decline in the average office building

vacancy rate in the five central wards of Tokyo (Chiyoda, Minato, Chuo, Shibuya and Shinjuku), to 5.17% at

the end of the 27th Fiscal Period (May 2015) from 5.55% as of the end of the 26th Fiscal Period (November

2014) as a result of steady reduction in vacancies at existing office buildings, offsetting a rise mainly due to the

impact of the completion of large office buildings. The office building leasing market is showing signs of a

steady improvement trend driven by an increase in demand for office space backed by improved corporate

economic sentiment. Average rents level also rose steadily from 16,950 yen per tsubo at the end of the previous

Fiscal Period to 17,320 yen per tsubo at the end of the Fiscal Period under review, and there is a noticeable

improvement trend in market rents.


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(b) Residential leasing market

According to the IPD/Recruit Residential Index, rents for rental apartments in the metropolitan areas in May

2015 rose 0.94% compared to the same month of the previous year, indicating that demand for rental housing is

decent due to continuous net positive migration into the metropolitan areas and an increasing number of

households with relatively few members, and since, in the meantime, new housing starts for rental housing

were almost unchanged from the year-ago level and supply remained limited, the supply-demand trend on the

residential leasing market remained firm. For assets under management by the REIT, occupancy rates remained

high throughout the Fiscal Period under review, and the number of properties with higher rent levels increased,

contributing to a steady rise in profitability. The outlook for the residential market remains stable, buoyed by

the further advancement of improvements in employment and consumption in the economic recovery process.

(c) Real estate

According to official land prices as of January 1, 2015 announced in March 2015, average land prices in

Japan’s three major metropolitan areas (Tokyo, Osaka and Nagoya) maintained last year’s upward trend in both

the residential and commercial areas. A breakdown shows that in the Tokyo and Nagoya areas, official land

prices in residential areas rose for a second consecutive year amid growth in housing demand fueled by

improvement in economic sentiment, while official land prices in commercial areas climbed for a second

straight year in all three areas. The rise in official land prices in residential areas can be largely attributed to

firm housing demand driven by low interest rates and mortgage tax breaks, whilst the increase in official land

prices in commercial areas is primarily attributable to increased demand for real estate for investment due to the

favorable funding environment created mainly by low interest rates and due to the downward trend in the

vacancy rate of office buildings in major city centers and signs of improvement in rents in certain regional

areas.

In contrast, official land prices in the regional areas continued to fall, both in the residential and commercial

areas. However, the size of the decline was smaller in both the residential and commercial areas.

(iii) Management performance

(a) External growth

The REIT acquired three office buildings (Of-33Daiwa Ueno Building (trust beneficial interest, acquisition

price 3,400 million yen), Of-34 Kojimachi HF Building (trust beneficial interest, acquisition price 1,350

million yen), Of-35 HF Kudanminami Building (trust beneficial interest, acquisition price 2,720 million yen)),

and one residential building (Re-75 HF Sendai Residence EAST (trust beneficial interest, acquisition price

1,630 million yen)) on December 4, 2014, for the purpose of improving its portfolio quality and increasing

profitability. On the other hand, the REIT sold one office property (Of-14 KCA Building (real estate,

acquisition price 1,730 million yen) on March 10, 2015. As a result, portfolio assets as of the period end were

95 properties (total acquisition price 155,039 million yen), including 30 office buildings (total acquisition price

of 68,006 million yen), 61 residential buildings (total acquisition price of 82,853 million yen) and four hotels

(total acquisition price 4,180 million yen).

(b) Internal growth

The REIT has consistently endeavored to increase profitability by improving and maintaining its occupancy

rates. During the 27th Fiscal Period, with the aim of maintaining the high occupancy rate achieved at the end of

the previous fiscal period, the REIT continued to be engaged in tenant leasing activities, working to shorten

vacancy duration as well as systematic efforts to increase its investment value based on tenant needs and the

characteristics of each individual property. Partly as a result of these initiatives of improving and maintaining

the competitiveness of its assets, the occupancy rate for all properties held by the REIT climber further to

96.84% as at the end of the 27th Fiscal Period. The REIT successfully maintained high and stable occupancy

throughout the period, resulting in a high average month-end occupancy rate of 97.27% for the fiscal period

under review, albeit lower than occupancy rate of 97.31% recorded at the end of the previous fiscal period.

Moreover, as part of the initiatives that the REIT has been working on continuously, it changed the names of

the following two managed assets in the period between the start of the fiscal period under review and the date

of this report, for the purpose of seeking to improve the caliber of its appeal to potential tenants and achieve

more efficient leasing.


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Properties renamed on January 5, 2015

Property no. Former property name New property name

Of-31 Nihonbashi Hamacho Central Building HF Nihonbashi Hamacho Building

Of-32 Sendai Green Place HF Sendai Honcho Building

(iv) Procurement of funds

The REIT executed a capital increase through public offering (investment units issued of 66,400 and total issue

price of 5,567,772,000 yen) on December 1, 2014, and private placement (investment units issued of 3,300 and

total issue price of 276,711,000 yen) on December 24, 2014 to procure funds mainly for acquiring properties. In

addition to the public offering, the REIT made new borrowings through Term Loan 25 Tranche A (loan amount

1,300 million yen), Term Loan 25 Tranche B (loan amount 1,300 million yen) and Term Loan 25 Tranche C

(loan amount 900 million yen) on December 4, 2014, to partially provide for the acquisition of properties. On

the same day, the REIT took out Term Loan 26 Tranche A (loan amount 700 million yen), Term Loan 26

Tranche B (loan amount 480 million yen) and Term Loan 26 Tranche C (loan amount 3,620 million yen) to repay

Term Loan 13 Tranche B (loan balance 480 million yen), Term Loan 18 (loan balance 1,520 million yen) and

Term Loan 22 Tranche A (loan balance 2,800 million yen), the principal of which was maturing on May 29,

2015. An overview of the loans is provided below. This has enabled the REIT to extend and spread its borrowing

periods and lower its borrowing cost. On the other hand, with the sale of one office building, the REIT made

partial early repayments of loans totaling 1,200 million yen on March 25, 2015 and April 3, 2015. On December

22, 2014 and December 24, 2014, the REIT executed interest rate swap agreements for the previously borrowed

two term loans (loan balance 4,931 million yen) to fix interest rates and to hedge against the risk of higher

interest rate expenses in the event that rates rise in the future. [Term Loan 25 Tranche A]

Lender Loan amount Principal

repayment date

Principal

repayment

method

Purpose Summary

Sumitomo Mitsui Banking

Corporation

Sumitomo Mitsui Trust Bank,

Limited

The Bank of Fukuoka, Ltd.

The Bank of Tokyo-Mitsubishi

UFJ, Ltd.

The 77 Bank, Ltd.

1,300 million

yen

May 31, 2018

(Note)

Lump sum

repayment on the

principal

repayment date

Property

acquisition

funding, etc.

Unsecured

Non-

guaranteed

[Term Loan 25 Tranche B]


repayment date

Principal

repayment

method

Purpose Summary


Corporation

Aozora Bank, Ltd.

Sumitomo Mitsui Trust Bank,

Limited

The Bank of Fukuoka, Ltd.


UFJ, Ltd.

The 77 Bank, Ltd.

1,300 million

yen

October 31, 2018

(Note)

Lump sum

repayment on the

principal

repayment date

Property

acquisition

funding, etc.

Unsecured

Non-

guaranteed

[Term Loan 25 Tranche C]


repayment date

Principal

repayment

method

Purpose Summary

Development Bank of Japan Inc. 900 million yen October 31, 2022

(Note)

Lump sum

repayment on the

principal

repayment date

Property

acquisition

funding, etc.

Unsecured

Non-

guaranteed


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[Term Loan 26 Tranche A]


repayment date

Principal

repayment

method

Purpose Summary


Corporation

Aozora Bank, Ltd.

700 million yen May 31, 2019

(Note)

Lump sum

repayment on the

principal

repayment date

Funds to repay

existing loans

Unsecured

Non-

guaranteed

[Term Loan 26 Tranche B]


repayment date

Principal

repayment

method

Purpose Summary

ORIX Bank Corporation 480 million yen October 31, 2021

(Note)

Lump sum

repayment on the

principal

repayment date

Funds to repay

existing loans

Unsecured

Non-

guaranteed

[Term Loan 26 Tranche C]


repayment date

Principal

repayment

method

Purpose Summary


Corporation

Resona Bank, Limited


UFJ, Ltd.

Shinsei Bank, Limited

Mizuho Bank, Ltd.

3,620 million

yen

May 31, 2023

(Note)

Lump sum

repayment on the

principal

repayment date

Funds to repay

existing loans

Unsecured

Non-

guaranteed

(Note) Or the previous business day if the date shown is not a business day.

As a result, the total loan amount at period end was 71,311 million yen (period end LTV: 43.12%).

The ratings of the REIT as of the date of this document are as follows:

Credit rating agency Issuer rating

Rating and Investment Information, Inc. (R & I) Rating: A-; Rating outlook: Stable

Japan Credit Rating Agency, Ltd. (JCR) Rating: A; Rating outlook: Stable

(v) Performance and distributions

The management described above led to 27th Fiscal Period results of 5,415 million yen in operating revenues,

1,760 million yen in operating income, and after deducting interest expenses on loans, 1,112 million yen in

ordinary income and 1,111 million yen in net income.

Concerning the distribution of monies (“distributions”) as prescribed in Article 137 of the Act on Investment

Trusts and Investment Corporations (Act No. 198 of 1951 and subsequent amendments; “the Investment Trusts

Act”), the REIT shall not make distributions in excess of unappropriated retained earnings for the current fiscal

period under review as stipulated in Article 32, paragraph 1 of its articles of incorporation (“bylaws”), and the

amount of distributions shall be more than 90% of the earnings available for distribution in accordance with

Article 67-15 of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957 and subsequent

amendments; “the Special Taxation Measures Act”). Based on the above policy, the REIT made a decision to

distribute 1,111,834,917 yen in net income for the fiscal period under review plus 545,063,157 yen from retained

earnings brought forward and to pay out 1,656,898,074 yen as distributions from earnings. The resulting

distributions per investment unit were 1,742 yen.

b. Outlook for next period

Management policy and future issues

The REIT has developed and managed a high quality portfolio, primarily consisting of office and residence

properties located in Tokyo 23 Wards, with the aim of maximizing investor value through our Basic Philosophy

of “Steady Growth of Assets under Management” and “Stable Medium- to Long-Term Profits” as well as through

“cooperation with and use of the Heiwa Real Estate Group.” In subsequent periods, we will continue to adhere to


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the above philosophy, aiming to further maximize investor value through the stable management of our portfolio

and pursuing a strategy of steady growth.

(a) External growth

The REIT has endeavored in particular to enhance the quality of its portfolio and bolster its financial footing. It

executed a capital increase through public offering during the Fiscal Period under review and applied the

proceeds to acquire quality properties, while selling a property after its profitability declined, thereby

advancing both the quality enhancement of its portfolio and improvement of its financial health. While the

REIT will continue to seek expansion in the scale of its assets in the future, it will also consider the

replacement of assets, strive to enhance its medium- to long-term portfolio quality and aim to maximize

investor value. Given the sound financing environment and the expectations for higher property prices on the

back of the expected economic recovery, competitors are maintaining a strong appetite for the acquisition of

properties. As a result, the property acquisition environment is likely to remain challenging. We will endeavor

to promptly obtain information on excellent properties by using our pipeline with Heiwa Real Estate and

building up our unique information routes as an asset management company. As a basic strategy, we aim to

increase opportunities for primarily acquiring properties owned and developed by Heiwa Real Estate, and

additionally for acquiring properties owned and developed by other developers to expand our portfolio,

contributing to stable profitability over the medium to long term.

(b) Internal growth

The REIT believes that by using the database and information network developed by the Heiwa Real Estate

Group and its property management company, it can quickly detect leasing market trends and conduct precise

property management, enabling it to maintain and increase occupancy rates and rent levels in assets under

management. To maintain and increase occupancy rates, it will deal with tenants by focusing on minimizing

departures and will undertake leasing management, including reducing the period of time for work for

restoration to the original state, to shorten the period between the time when properties are vacated and the

acquisition of new tenants. To make our properties more competitive, we continuously and actively make

value-building investments in repairs and improvements of assets under management to maintain and enhance

their medium- to long-term value, taking into account each property’s asset age, facility level and other aspects.

Through these measures, our goal is to maintain and further improve occupancy rates at high and stable levels.

(c) Financial strategy

The REIT is actively implementing measures in an effort to stabilize its financial foundations and achieve

sustainable growth. Concerning borrowings, the REIT will continue to strive to extend its borrowing periods

and diversify maturities by maintaining an appropriate loan-to-value ratio, while promoting measures to reduce

risks from higher interest rates in the future and cut financial costs. It will also endeavor to further strengthen

its bank formation by strengthening its relationships with financial institutions. By implementing these

measures and initiatives on a continuous basis, the REIT will strive to build sound financial systems that are

resilient to changes in the funding environment.

(d) Promotion of more timely disclosure

We practice information disclosure that is accurate, fair and timely, complying with the TSE’s Securities

Listing Regulations and other regulations, laws, etc. relating to timely disclosure. The REIT discloses

information on its decisions on the acquisition of new properties, etc. as a rule at the time of the decision by a

REIT organization such as the Board of Directors, while events such as damage to assets under management

resulting from incidental occurrences are disclosed at the time they are discovered. As a rule, REIT information

is disclosed through the TSE’s TDnet, press releases to the TSE press club (Kabuto Club), Ministry of Land,

Infrastructure, Transport and Tourism Press Club, etc., and through the REIT’s website.

c. Significant subsequent events

Not applicable


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d. Outlook for the 28th Fiscal Period

Operations are forecast to be as follows during the 28th Fiscal Period (from June 1, 2015 to November 30, 2015).

See “Management status forecast assumptions for 28th Fiscal Period (from June 1, 2015 to November 30, 2015)”

below for assumptions used in this forecast.

Operating revenues 5,375 million yen

Operating income 2,263 million yen

Ordinary income 1,636 million yen

Net income 1,635 million yen

Distributions per unit

(excluding distributions in excess of earnings) 1,719 yen

Distributions in excess of earnings per unit ‒ yen

(Note) The above forecast figures were calculated using a fixed set of assumptions and are valid as of the time of

this notice. Actual net income, distributions, etc., may vary due to changes in conditions. Forecast figures

are not a guarantee of the amount of distributions.


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Management status forecast assumptions for 28th Fiscal Period (from June 1, 2015 to November 30, 2015)

Item Assumptions

Management period 28th Fiscal Period: from June 1, 2015 to November 30, 2015 (183 days)

Assets under

management The assumption is 95 properties under management at the end of May 2015. The actual

number of properties owned may vary if properties are newly acquired, transferred, etc.

Total number of

investment units

issued and

outstanding

The assumption is 951,147 units as the total number of investment units issued and

outstanding at the end of the fiscal period ended May 2015.

Operating revenues

Operating revenues are calculated based on the assumption of the above assets under

management.

Operating revenues are calculated taking into account such factors as cancellation notices

currently received and the future market environment, using the history of acquired assets as

our standard.

Operating expenses

Operating expenses are calculated based on the assumption of the above assets under

management.

Assumptions concerning major operating expenses are as follows:

Public charges and taxes (fixed property tax, city planning tax, etc.): 391 million yen

Maintenance and repair fees: 165 million yen

Management commissions: 551 million yen

Depreciation: 904 million yen

Maintenance and repair fees are based on the amount deemed necessary during the period.

However, emergency maintenance and repair fees may arise as a result of unforeseeable

factors and actual fees may therefore vary significantly from the forecast.

Non-operating

expenses

Interest paid is expected to be 498 million yen. Additionally, 115 million yen as loan-related

expenses and 17 million yen as amortization of investment unit issuance expenses are

expected.

Interest-bearing

liabilities

Of the interest-bearing debt balance of 71,311 million yen at the end of the fiscal period

ended May 2015, loans of 3,000 million yen (repayment by October 30, 2015) and 2,820

million yen (repayment by October 31, 2015) maturing in the fiscal period ending November

2015 are recorded on the assumption that other loans of the same amount will be received.

There are no other loans that will be due for final repayment during the fiscal period ending

November 2015.

Distributions per unit

(excluding

distributions in

excess of earnings)

Distributions per unit (excluding distributions in excess of earnings) are calculated assuming

the distribution of monies policy prescribed by the REIT’s bylaws.

As for distributions for the 28th Fiscal Period, forecast net income of 1,635 million yen

(distributions of 1,719 yen per unit) is expected to be distributed, and no retained earnings

brought forward are assumed to be applied.

Distributions per unit (excluding distributions in excess of earnings) may change because of

various factors, including changes in leasing income attributable to changes of assets under

management or changes in tenants or to unexpected maintenance and repair work.

Distributions in

excess of earnings

per unit We do not expect any distributions in excess of earnings at this time.

Other

We assume no amendments to laws, the tax system, accounting standards, TSE rules, or The

Investment Trusts Association, Japan rules, etc., that would affect the above forecast figures.

We assume that no major unforeseen changes will occur in the general economic trends, real

estate market conditions, etc.

(3) Investment risk

No disclosure necessary, since there have been no material changes from “Investment risk” in the most recent

Annual Securities Report (submitted February 25, 2015).


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3. Financial Statements

(1) Balance Sheet

(Unit: 1,000 yen)

26th Fiscal Period

(As of November 30, 2014)

27th Fiscal Period

(As of May 31, 2015)

Assets

Current assets

Cash and deposits 6,472,394 6,073,141

Cash and deposits in trust 5,726,641 6,278,912

Operating accounts receivable 103,949 88,270

Prepaid expenses 250,304 229,357

Consumption taxes receivable, etc. – 144,396

Other 7,051 5,672

Allowance for doubtful accounts (387) (213)

Total current assets 12,559,953 12,819,537

Noncurrent assets

Property, plant and equipment

Buildings 12,153,844 11,896,779

Accumulated depreciation (2,975,396) (3,093,419)

Buildings, net 9,178,448 8,803,359

Structures 71,302 71,191

Accumulated depreciation (30,617) (32,524)

Structures, net 40,685 38,666

Machinery and equipment 235,299 240,651


Machinery and equipment, net 119,481 118,180

Tools, furniture and fixture 124,226 130,022


Tools, furniture and fixtures, net 63,286 62,204

Land 27,452,042 25,945,334

Buildings in trust 41,050,370 44,550,964

Accumulated depreciation (6,153,977) (6,787,492)

Buildings in trust, net 34,896,392 37,763,471

Structures in trust 288,274 295,217


Structures in trust, net 237,657 238,900

Machinery and equipment in trust 377,681 413,231


Machinery and equipment in trust, net 250,244 267,664

Tools, furniture and fixtures in trust 627,365 676,381


Tools, furniture and fixtures in trust, net 283,249 295,039

Land in trust 67,315,435 73,240,003

Total property, plant and equipment 139,836,924 146,772,826

Intangible assets

Leasehold right 715,719 715,719

Leasehold rights in trust 3,315,665 3,315,665

Other 2,485 1,301

Total intangible assets 4,033,871 4,032,686


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(Unit: 1,000 yen)

26th Fiscal Period


27th Fiscal Period

(As of May 31, 2015)

Investment and other assets

Investment securities 143,061 1,000,083

Guarantee deposits 10,016 10,016

Long-term prepaid expenses 434,040 399,492

Derivatives 134,898 102,397

Other 195,396 207,556

Total investments and other assets 917,413 1,719,546

Total noncurrent assets 144,788,209 152,525,060

Deferred assets

Investment unit issuance 34,619 52,780

Total deferred assets 34,619 52,780

Total assets 157,382,782 165,397,378

Liabilities

Current liabilities

Operating accounts payable 615,028 479,937

Current portion of long-term loans payable 10,620,000 11,620,000

Accrued expenses 658,496 694,768

Accrued consumption tax, etc. 97,748 –

Advances received 779,315 856,028

Other 8,284 8,567

Total current liabilities 12,778,872 13,659,302

Noncurrent liabilities

Long-term loans payable 58,391,700 59,691,700

Tenant leasehold and security deposits 922,620 904,062

Tenant leasehold and security deposits in trust 3,132,314 3,501,369

Derivative liabilities 123,460 132,598

Total noncurrent liabilities 62,570,095 64,229,729

Total liabilities 75,348,968 77,889,032

Net Assets

Unitholders’ equity

Unitholders’ capital / 70,527,819 76,372,303

Surplus

Investment surplus 7,406,652 7,406,652

Unappropriated retained earnings (undisposed loss) 4,564,300 4,175,031

Total surplus 11,970,952 11,581,683

Total unitholders’ equity 82,498,771 87,953,987

Valuation and translation adjustments

Deferred hedge gain or loss (464,957) (445,640)

Total valuation and translation adjustments (464,957) (445,640)

Total net assets 82,033,814 87,508,346

Total liabilities and net assets 157,382,782 165,397,378


12

(2) Profit and Loss Statement

(Unit: 1,000 yen)

26th Fiscal Period

(June 1, 2014 –

November 30, 2014)

27th Fiscal Period

(December 1, 2014 –

May 31, 2015)

Operating Revenues

Rent revenue-real estate 4,650,423 4,975,976

Other lease business revenue 395,900 438,527

Dividend distribution from silent partnership 6,395 1,031

Total operating revenue 5,052,718 5,415,535

Operating expenses

Expenses related to rent business 2,269,925 2,421,026

Loss on sales of real estate properties – 559,833

Asset management fee 455,872 486,101

Asset custody fee 19,346 19,347

Administrative service fees 39,575 41,953

Directors’ compensation 8,006 8,006

Audit fee 9,664 9,660

Other operating expenses 101,572 108,968

Total operating expenses 2,903,964 3,654,898

Operating income 2,148,754 1,760,636

Non-operating income

Interest income 818 1,145

Reversal of dividends payable 817 623

Other 2,243 1,762

Total non-operating income 3,880 3,530

Non-operating expenses

Interest expenses 501,843 497,969

Borrowing related expenses 134,377 130,536

Amortization of investment unit issuance expenses 11,834 17,834

Other 2,316 5,387

Total non-operating expenses 650,372 651,727

Ordinary income 1,502,261 1,112,439

Income before income taxes 1,502,261 1,112,439

Income taxes-current 605 605

Total income taxes 605 605

Net income 1,501,656 1,111,834

Retained earnings brought forward 3,062,643 3,063,196

Unappropriated retained earnings (undisposed loss) 4,564,300 4,175,031


13

(3) Statements of Changes in Net Assets (Unitholders’ Equity)

26th Fiscal Period (June 1, 2014 – November 30, 2014) (Unit: 1,000 yen)


Unitholders’

capital /

Total Capital

Surplus

Total unitholders’

equity Investment surplus

Unappropriated

retained earnings

(undisposed loss)

Total surplus

Balance at the beginning of the

period 70,527,819 7,406,652 4,534,660 11,941,312 82,469,131

Changes of items during the period

Dividends from surplus (1,472,016) (1,472,016) (1,472,016)

Net income 1,501,656 1,501,656 1,501,656

Net changes of items other than


Total changes of items during the

period – – 29,640 29,640 29,640

Balance at the end of the current

period 70,527,819 7,406,652 4,564,300 11,970,952 82,498,771


Total net assets

Deferred hedge

gain or loss

Total valuation

and translation

adjustments


period (353,226) (353,226) 82,115,904


Dividends from surplus (1,472,016)

Net income 1,501,656


unitholders’ equity (111,730) (111,730) (111,730)


period (111,730) (111,730) (82,090)


period (464,957) (464,957) 82,033,814


14

27th Fiscal Period (December 1, 2014 – May 31, 2015) (Unit: 1,000 yen)


Unitholders’

capital /

Total Capital

Surplus

Total unitholders’

equity Investment surplus

Unappropriated

retained earnings

(undisposed loss)

Total surplus


period 70,527,819 7,406,652 4,564,300 11,970,952 82,498,771


Issuance of new investment

units 5,844,484 5,844,484

Dividends from surplus (1,501,104) (1,501,104) (1,501,104)

Net income 1,111,834 1,111,834 1,111,834




period 5,844,484 – (389,269) (389,269) 5,455,215


period 76,372,303 7,406,652 4,175,031 11,581,683 87,953,987


Total net assets

Deferred hedge

gain or loss

Total valuation

and translation

adjustments


period (464,957) (464,957) 82,033,814


Issuance of new investment

units 5,844,484

Dividends from surplus (1,501,104)

Net income 1,111,834


unitholders’ equity 19,317 19,317 19,317


period 19,317 19,317 5,474,532


period (445,640) (445,640) 87,508,346


15

(4) Statements of Cash Dividend Distributions

(Unit: yen)

26th Fiscal Period

(June 1, 2014 –

November 30, 2014)

27th Fiscal Period


May 31, 2015)

I. Unappropriated retained earnings 4,564,300,558 4,175,031,234

II. Distributions 1,501,104,241 1,656,898,074

Distributions per unit (excluding

distributions in excess of earnings) (1,703) (1,742)

III. Retained earnings brought forward 3,063,196,317 2,518,133,160

How distributions were calculated

Following the policy prescribed in Article

32-1 of the REIT’s bylaws, distributions are

defined as anything in excess of 90% of the

“amount of distributable income” stipulated

in Article 67-15 of the Act on Special

Measures Concerning Taxation, up to the

amount of the REIT’s unappropriated

retained earnings. Based on this policy, we

paid out distributions from earnings of

1,501,104,241 yen, which is the maximum

value of the integral multiple of the number

of units issued and outstanding (881,447

units) in an amount that is not in excess of

net income. The REIT does not distribute

monies in excess of income as prescribed in

Article 32-2 of its bylaws.

Following the policy prescribed in Article

32-1 of the REIT’s bylaws, distributions are

defined as anything in excess of 90% of the

“amount of distributable income” stipulated

in Article 67-15 of the Act on Special

Measures Concerning Taxation, up to the

amount of the REIT’s unappropriated

retained earnings. Based on this policy, we

applied 545,063,157 yen in retained earnings

from the previous fiscal period to

1,111,834,917 yen in net income from the

fiscal period under review, distributing

1,656,898,074 yen as profit distributions.

The REIT does not distribute monies in

excess of income as prescribed in Article

32-2 of its bylaws.


16

(5) Cash Flow Statement

(Unit: 1,000 yen)

26th Fiscal Period

(June 1, 2014 –

November 30, 2014)

27th Fiscal Period


May 31, 2015)

Cash Flows from Operating Activities

Income before income taxes 1,502,261 1,112,439

Depreciation 838,593 898,194

Increase (decrease) in allowance for doubtful accounts (78) (174)

Investment unit issuance amortization 11,834 17,834

Interest income (818) (1,145)

Interest expenses 501,843 497,969

Decrease (increase) of operating accounts receivable (2,289) 14,928

Decrease (increase) of consumption taxes receivable 210,729 (144,396)

Increase (decrease) in accrued consumption taxes 97,748 (97,748)

Decrease (increase) of long-term prepaid expenses 64,683 34,547

Increase (decrease) in operating accounts payable 80,589 (25,498)

Increase (decrease) in accrued expenses 14,096 33,551

Increase (decrease) in advances received (28,630) 76,713

Increase (decrease) in deposits received (2,020) 245

Decrease from sales of property, plant and equipment – 1,724,674

Other 9,828 16,725

Subtotal 3,298,371 4,158,859

Interest income received 818 1,086

Interest expenses paid (443,783) (432,646)

Income taxes paid (1,251) (45)

Cash Flows from Operating Activities 2,854,154 3,727,254

Cash Flows from Investment Activities

Payments into time deposits (2,000,000) (500,000)

Purchase of property, plant and equipment (85,013) (76,921)

Purchase of property, plant and equipment in trust (213,245) (9,621,303)

Proceeds from receipt of tenant leasehold and security deposits 139,879 73,013

Repayments of tenant leasehold and security deposits (165,968) (79,514)

Proceeds from tenant leasehold and security deposits in trust 89,319 490,394

Repayments of tenant leasehold and security deposits in trust (71,535) (107,311)

Proceeds from payment of trust deposits corresponding to tenant

leasehold and security deposits in trust 71,535 107,311

Deposits of trust deposits corresponding to tenant leasehold and

security deposits in trust (89,319) (490,394)

Purchase of investment securities – 140,000

Cash Flows from Investment Activities (2,324,348) (10,064,725)

Cash Flows from Financing Activities

Proceeds from long-term loans payable 5,731,000 8,300,000

Repayment of investment corporation bonds (5,731,000) (6,000,000)

Proceeds from issuance of investment units – 5,844,484

Payments for investment unit issuance expenses – (35,995)

Distributions paid (1,472,315) (1,501,000)

Cash Flows from Financing Activities (1,472,315) 6,607,488

Increase (decrease) in cash and cash equivalents (942,508) 270,017

Cash and cash equivalents at beginning of period 8,009,229 7,066,721

Cash and cash equivalents at end of period 7,066,721 7,336,738


17

4. Reference Information

(1) Investment status

Asset

type Use Area

26th Fiscal Period


27th Fiscal Period

(As of May 31, 2015)

Value of holding

(Million yen)

(Note 1)

Ratio to total

assets

(%)

Value of holding

(Million yen)

(Note 1)

Ratio to total

assets

(%)

Real estate

(Note 2)

Office

Tokyo 23 Wards 16,556 10.5 14,796 8.9

Metropolitan Area

(Note 3) 5,073 3.2 5,035 3.0

Residence

Tokyo 23 Wards 11,823 7.5 11,758 7.1

Metropolitan Area

(Note 3) 4,116 2.6 4,093 2.5

Subtotal 37,569 23.9 35,683 21.6

Real estate

in trust

(Note 2)

Office

Tokyo 23 Wards 26,084 16.6 33,580 20.3

Other (Note 4) 14,288 9.1 14,213 8.6

Residence

Tokyo 23 Wards 48,412 30.8 48,229 29.2

Metropolitan Area

(Note 3) 1,204 0.8 1,197 0.7

Other (Note 4) 12,400 7.9 14,019 8.5

Hotel

Metropolitan Area

(Note 3) 983 0.6 976 0.6

Other (Note 4) 2,924 1.9 2,903 1.8

Subtotal 106,298 67.5 115,120 69.6

Real estate, etc., subtotal 143,868 91.4 150,804 91.1

Equity interest in silent partnership (Note 5) 143 0.1 – –

Deposits and other assets 13,371 8.5 14,593 8.8

Total assets 157,382 100.0 165,397 100.0

(Note 1) “Value of holding” is based on the balance sheet amount (carrying amount after depreciation in the case of real estate in trust,

etc.) as of the end of the period.

(Note 2) Values for “Real estate” and “Real estate in trust” do not include value of assets under construction.

(Note 3) “Metropolitan Area” refers to Tokyo (other than Tokyo 23 Wards) and Kanagawa, Saitama and Chiba prefectures.

(Note 4) “Other” refers to investment areas other than Tokyo 23 Wards and Metropolitan Area.

(Note 5) All “equity interest in silent partnership” is equity interest in a silent partnership that is related to the silent partnership under

the management of Herb, a limited liability company.

26th Fiscal Period


27th Fiscal Period

(As of May 31, 2015)

Balance sheet amount

(Million yen)

Ratio to total assets

(%)

Balance sheet amount

(Million yen)


(%)

Liabilities 75,348 47.9 77,889 47.1

Net assets 82,033 52.1 87,508 52.9


18

(2) Investment assets

(i) Main issues of investment securities

The summary of investment securities held by the REIT as of May 31, 2015 is as follows:

Asset type Issues Book value

(Thousand yen)

Appraised value

(Thousand yen)

(Note 1)


(%)

MMF JP Morgan Yen Cash

Liquidity Fund 1,000,083 1,000,083 0.6

(Note 1) The book value is stated as the appraised value.


19

(3) Investment real estate properties

(i) Overview of portfolio assets

Property

no. Property name Address

Form of asset

(Note 1)

Appraisal

value

(Million yen)

Balance sheet

amount

(Million yen)

(Note 2)

Acquisition

price

(Million yen)

(Note 3)

Percentage of

investments

(%)

(Note 4)

Of-01 HF GOTANDA BUILDING Shinagawa-ku,

Tokyo

Trust beneficial

interest 1,308 1,351 1,290 0.83

Of-05 Suitengu Heiwa Bldg Chuo-ku, Tokyo Trust beneficial

interest 1,303 1,459 1,550 1.00

Of-06 HF MONZEN-NAKACHO BUILDING Koto-ku, Tokyo Trust beneficial

interest 2,350 2,388 2,500 1.61

Of-07 HF HAMAMATSUCHO BUILDING Minato-ku,

Tokyo

Trust beneficial

interest 1,520 1,542 1,530 0.99

Of-08 Kokusai Tameike Bldg Minato-ku,

Tokyo

Trust beneficial

interest 2,510 2,782 2,700 1.74

Of-09 Grace Building Sengakujimae Minato-ku,

Tokyo Trust beneficial

interest 1,520 1,171 1,220 0.79

Of-10 HF SHIN-YOKOHAMA BUILDING Yokohama-shi,

Kanagawa Real estate 1,080 1,399 1,550 1.00

Of-11 Nihonbashi Daiichi Bldg Chuo-ku, Tokyo Trust beneficial

interest 1,810 2,245 2,150 1.39

Of-12 Hatchobori SF Bldg Chuo-ku, Tokyo Real estate 2,420 3,121 3,092 1.99

Of-13 Shibuya AX Hills Shibuya-ku,

Tokyo Real estate 1,420 1,825 1,860 1.20

Of-15 HF NAKAMEGURO BUILDING Meguro-ku,


Of-16 Anwa Tsukasacho Bldg Chiyoda-ku,


Of-17 Hatchobori MF Bldg Chuo-ku, Tokyo Real estate 956 1,122 1,110 0.72

Of-18 M2 Harajuku Shibuya-ku,

Tokyo

Trust beneficial

interest 4,385 3,487 3,418 2.20

Of-20 Funabashi Face Bldg Funabashi-shi,

Chiba Real estate 2,960 3,636 3,900 2.52

Of-21 Adesso Nishiazabu Minato-ku,

Tokyo

Trust beneficial

interest 457 622 640 0.41

Of-22 HF TORANOMON BUILDING Minato-ku,


Of-23 HF IKEBUKURO BUILDING Toshima-ku,


Of-24 HF YUSHIMA BUILDING Bunkyo-ku,


Of-25 Kayabacho Heiwa Bldg Chuo-ku, Tokyo Trust beneficial

interest 5,950 4,806 4,798 3.09

Of-26 HIROKOJI AQUA PLACE Nagoya-shi,

Aichi

Trust beneficial

interest 4,279 2,826 2,930 1.89

Of-27 Kobe Kyukyoryuchi Heiwa Building Kobe-shi, Hyogo Trust beneficial

interest 2,680 2,270 2,310 1.49

Of-28 Mita Heiwa Building (leasehold land) Minato-ku,

Tokyo

Trust beneficial

interest 2,627 2,269 2,230 1.44

Of-29 Sakae Minami Heiwa Building Nagoya-shi,

Aichi

Trust beneficial

interest 1,880 1,546 1,580 1.02

Of-30 HF SAKURADORI Building Nagoya-shi,

Aichi

Trust beneficial

interest 5,460 4,833 4,900 3.16

Of-31 HF Nihonbashi Hamacho Building Chuo-ku, Tokyo Trust beneficial

interest 2,190 1,921 1,900 1.23

Of-32 HF Sendai Honcho Building Sendai-shi,

Miyagi

Trust beneficial

interest 3,090 2,737 2,700 1.74

Of-33 Daiwa Ueno Building Taito-ku, Tokyo Trust beneficial

interest 3,790 3,429 3,400 2.19

Of-34 Kojimachi HF Building Chiyoda-ku,

Tokyo

Trust beneficial

interest 1,590 1,357 1,350 0.87

Of-35 HF Kudanminami Building Chiyoda-ku,

Tokyo

Trust beneficial

interest 2,930 2,743 2,720 1.75

Office subtotal 69,549 67,625 68,006 43.86


20

Property


Form of asset

(Note 1)

Appraisal

value

(Million yen)

Balance sheet

amount

(Million yen)

(Note 2)

Acquisition

price

(Million yen)

(Note 3)

Percentage of

investments

(%)

(Note 4)

Re-03 HF ICHIKAWA RESIDENCE Ichikawa-shi,

Chiba

Trust beneficial

interest 499 393 430 0.28

Re-05 HF MEGURO RESIDENCE Meguro-ku,

Tokyo

Trust beneficial

interest 618 646 660 0.43

Re-09 HF KASAI RESIDENCE Edogawa-ku,

Tokyo

Trust beneficial

interest 684 592 650 0.42

Re-11 HF WAKABAYASHI-KOEN

RESIDENCE

Setagaya-ku,

Tokyo

Trust beneficial

interest 3,850 3,226 3,610 2.33

Re-12 HF HIMONYA RESIDENCE Meguro-ku,

Tokyo

Trust beneficial

interest 1,541 1,451 1,560 1.01

Re-14 HF MINAMIAZABU RESIDENCE Minato-ku,

Tokyo

Trust beneficial

interest 1,259 1,313 1,370 0.88

Re-15 HF AZABUJUBAN RESIDENCE Minato-ku,

Tokyo

Trust beneficial

interest 1,120 1,175 1,260 0.81

Re-16 HF GAKUGEIDAIGAKU RESIDENCE Meguro-ku,

Tokyo

Trust beneficial

interest 900 933 1,000 0.64

Re-17 HF HIGASHIKANDA RESIDENCE Chiyoda-ku,

Tokyo

Trust beneficial

interest 1,220 957 1,100 0.71

Re-18 HF HIGASHINIHONBASHI

RESIDENCE Chuo-ku, Tokyo

Trust beneficial

interest 1,410 1,060 1,210 0.78

Re-19 HF NERIMA RESIDENCE Nerima-ku,

Tokyo

Trust beneficial

interest 738 602 690 0.45

Re-20 HF SHIROKANETAKANAWA

RESIDENCE

Minato-ku,


Re-21 HF MEIDAIMAE RESIDENCE Setagaya-ku,

Tokyo Real estate 926 1,009 1,070 0.69

Re-22 HF NIHONBASHI RESIDENCE Chuo-ku, Tokyo Trust beneficial

interest 997 1,083 1,130 0.73

Re-23 HF KAMISHAKUJII RESIDENCE Nerima-ku,

Tokyo Real estate 933 900 950 0.61

Re-24 HF KINSHICHO RESIDENCE Sumida-ku,


Re-25 HF GINZA RESIDENCE EAST Chuo-ku, Tokyo Trust beneficial

interest 4,470 5,664 5,940 3.83

Re-26 HF SHIN-YOKOHAMA RESIDENCE Yokohama-shi,

Kanagawa Real estate 2,600 3,129 3,350 2.16

Re-29 HF HAKUSAN RESIDENCE Bunkyo-ku,


Re-30 HF MAGOME RESIDENCE Ota-ku, Tokyo Real estate 1,250 1,568 1,630 1.05

Re-31 HF GAKUGEIDAIGAKU RESIDENCE

II

Meguro-ku,

Tokyo

Trust beneficial

interest 1,130 1,596 1,650 1.06

Re-33 HF KAMEIDO RESIDENCE Koto-ku, Tokyo Real estate 1,030 1,036 1,050 0.68

Re-34 HF TANASHI RESIDENCE Nishitokyo-shi,

Tokyo Real estate 758 964 911 0.59

Re-35 HF SHIBA-KOEN RESIDENCE Minato-ku,

Tokyo

Trust beneficial

interest 809 805 836 0.54

Re-36 HF MITA RESIDENCE Minato-ku,

Tokyo

Trust beneficial

interest 1,160 1,037 1,080 0.70

Re-37 HF TAKANAWA RESIDENCE Minato-ku,

Tokyo

Trust beneficial

interest 793 718 749 0.48

Re-38 La Residence de Shirokanedai Minato-ku,

Tokyo

Trust beneficial

interest 847 705 730 0.47

Re-39 HF GINZA RESIDENCE EAST II Chuo-ku, Tokyo Trust beneficial

interest 1,550 1,440 1,460 0.94

Re-40 HF HACCHOBORI RESIDENCE II Chuo-ku, Tokyo Trust beneficial

interest 2,000 1,848 1,890 1.22

Re-41 HF HACCHOBORI RESIDENCE III Chuo-ku, Tokyo Trust beneficial

interest 906 738 793 0.51

Re-42 HF GINZA RESIDENCE Chuo-ku, Tokyo Trust beneficial

interest 1,060 872 944 0.61

Re-43 HF KOMAZAWA-KOEN RESIDENCE

TOWER

Setagaya-ku,

Tokyo

Trust beneficial

interest 6,880 6,552 6,520 4.21

Re-44 HF UMEDA RESIDENCE TOWER Osaka-shi, Osaka Trust beneficial

interest 2,020 1,760 1,920 1.24


21

Property


Form of asset

(Note 1)

Appraisal

value

(Million yen)

Balance sheet

amount

(Million yen)

(Note 2)

Acquisition

price

(Million yen)

(Note 3)

Percentage of

investments

(%)

(Note 4)

Re-45 HF NAKANOSHIMA RESIDENCE Osaka-shi, Osaka Trust beneficial

interest 478 452 453 0.29

Re-46 HF AWAZA RESIDENCE Osaka-shi, Osaka Trust beneficial

interest 655 551 577 0.37

Re-47 HF MARUNOUCHI RESIDENCE Nagoya-shi,

Aichi

Trust beneficial

interest 679 569 624 0.40

Re-48 HF HIRAO RESIDENCE Fukuoka-shi,

Fukuoka

Trust beneficial

interest 1,850 1,657 1,780 1.15

Re-49 HF KAWARAMACHI NIJO

RESIDENCE Kyoto-shi, Kyoto

Trust beneficial

interest 530 509 534 0.34

Re-52 HF TENJIN-HIGASHI RESIDENCE Fukuoka-shi,

Fukuoka

Trust beneficial

interest 565 447 502 0.32

Re-53 HF SHIJO KAWARAMACHI


Trust beneficial

interest 2,100 1,717 1,820 1.17

Re-54 La Residence de Sendagi Bunkyo-ku,

Tokyo

Trust beneficial

interest 901 790 820 0.53

Re-55 HF SENDAGI RESIDENCE Bunkyo-ku,

Tokyo

Trust beneficial

interest 963 835 870 0.56

Re-56 HF KOMAZAWA-KOEN RESIDENCE Setagaya-ku,

Tokyo

Trust beneficial

interest 653 587 615 0.40

Re-57 HF MUSASHI KOYAMA RESIDENCE Shinagawa-ku,

Tokyo

Trust beneficial

interest 1,000 810 842 0.54

Re-58 HF KOKUBUNJI RESIDENCE Kokubunji-shi,

Tokyo

Trust beneficial

interest 907 804 839 0.54

Re-59 HF HISAYAODORI RESIDENCE Nagoya-shi,

Aichi

Trust beneficial

interest 1,180 1,030 1,080 0.70

Re-60 HF KARASUMA KURAMAGUCHI


Trust beneficial

interest 633 542 572 0.37

Re-61 HF NISHI-SHINJUKU RESIDENCE

WEST

Shinjuku-ku,

Tokyo

Trust beneficial

interest 2,270 1,994 1,990 1.28

Re-62 HF NISHI-SHINJUKU RESIDENCE

EAST

Shinjuku-ku,

Tokyo

Trust beneficial

interest 1,300 1,171 1,170 0.75

Re-63 HF HIGASHI SHINJUKU RESIDENCE Shinjuku-ku,

Tokyo

Trust beneficial

interest 1,500 1,301 1,360 0.88

Re-64 HF HIGASHI-SHINSAIBASHI

RESIDENCE Osaka-shi, Osaka

Trust beneficial

interest 608 544 566 0.37

Re-65 HF KITA-YOBANCHO RESIDENCE Sendai-shi,

Miyagi

Trust beneficial

interest 982 757 809 0.52

Re-66 HF ATAGOBASHI RESIDENCE Sendai-shi,

Miyagi

Trust beneficial

interest 819 626 684 0.44

Re-67 HF KYUDAIBYOINMAE RESIDENCE Fukuoka-shi,

Fukuoka

Trust beneficial

interest 464 396 426 0.27

Re-68 HF ASAKUSABASHI RESIDENCE Taito-ku, Tokyo Trust beneficial

interest 859 739 771 0.50

Re-69 HF ICHIBANCHO RESIDENCE Sendai-shi,

Miyagi

Trust beneficial

interest 986 781 834 0.54

Re-70 HF HIGASHI-NAKANO RESIDENCE Nakano-ku,

Tokyo

Trust beneficial

interest 1,010 905 942 0.61

Re-72 HF WASEDA RESIDENCE Shinjuku-ku,

Tokyo

Trust beneficial

interest 2,280 2,019 2,090 1.35

Re-73 HF WASEDA RESIDENCE II Shinjuku-ku,

Tokyo

Trust beneficial

interest 932 844 872 0.56

Re-74 HF WAKAMATSUKAWADA

RESIDENCE

Shinjuku-ku,

Tokyo

Trust beneficial

interest 1,240 1,202 1,158 0.75

Re-75 HF Sendai Residence EAST Sendai-shi,

Miyagi

Trust beneficial

interest 1,660 1,676 1,630 1.05

Residence subtotal 82,802 79,298 82,853 53.44


22

Property


Form of asset

(Note 1)

Appraisal

value

(Million yen)

Balance sheet

amount

(Million yen)

(Note 2)

Acquisition

price

(Million yen)

(Note 3)

Percentage of

investments

(%)

(Note 4)

Ho-01 Super Hotel Osaka Tennoji Osaka-shi, Osaka Trust beneficial

interest 1,170 1,009 1,080 0.70

Ho-02 Super Hotel Kyoto Karasumagojyo Kyoto-shi, Kyoto Trust beneficial

interest 989 841 900 0.58

Ho-03 Super Hotel Saitama Omiya Saitama-shi,

Saitama

Trust beneficial

interest 1,130 976 1,050 0.68

Ho-04 Super Hotel Sendai Hirose-dori Sendai-shi,

Miyagi

Trust beneficial

interest 1,270 1,052 1,150 0.74

Hotel subtotal 4,559 3,879 4,180 2.70

Total 156,910 150,804 155,039 100.00

(Note 1) The “Form of asset” column shows the REIT’s form of ownership of the asset. The form is shown as “Trust beneficial interest” if the REIT is listed as

a beneficiary in the registry and as “Real estate” if the REIT is listed as the owner.

(Note 2) The “Balance sheet amount” column shows the acquisition price (including acquisition-related costs and subsequent capital expenditures) minus

cumulated depreciation as of May 31, 2015.

(Note 3) The “Acquisition price” column shows the sales value listed in the real estate sales agreement or trust beneficial interest sales agreement (not including

amount corresponding to consumption taxes or costs necessary to make acquisition; same applies below). However, for properties acquired as a result

of the merger (40 properties, from Re-35 HF SHIBA-KOEN RESIDENCE through Re-73 HF WASEDA RESIDENCE II, and from Ho-01 Super Hotel

Osaka Tennoji through Ho-04 Super Hotel Sendai Hirose-dori), the column shows the appraisal value as of October 1, 2010, the day the merger took

effect.

(Note 4) The “Percentage of investments” column shows the percentage of each property’s acquisition price to total acquisition price of all acquired assets,

rounded to the nearest one-hundredth of one percent.

DISCLAIMER:

Heiwa Real Estate REIT, Inc. makes no assurance or warranty with respect to the completeness or accuracy of this

English translation. In the event of any discrepancy between the Japanese original and this English translation, the

Japanese original shall prevail. For complete and accurate information, please refer to the Japanese original.

Documents

27th Fiscal Period Financial Report (REIT) - heiwa-re.co.jp · PDF file27th Fiscal Period Financial Report (REIT) July 15, ... 26th FP ¥2,854 million ... HEIWA REAL ESTATE REIT, Inc