IRライブラリー | 積水ハウス・レジデンシャル投資法人

(1)

From April 1, 2017 to September 30, 2017

24th

24

Semi-Annual Report

24th Fiscal Period

(2)

Sekisui House Residential Investment Corporation (the Investment Corporation) is a J-REIT

investing in residential properties, with Sekisui House, Ltd. serving as sponsor.

Collaboration as service provider of operation and administration as well

as a supply source of properties

Feedback of matters related to operation, administration and supply of properties

Features of the Investment Corporation

Collaborative Structure with Sekisui House Group

Sekisui House, Ltd.

Sekisui House,

a leading company

in the housing industry,

as the sponsor

Highly competitive residential portfolio

centering on Greater Tokyo / Major Urban Areas

Solid financial base

backed by

the credibility of Sekisui House

Acquisition of environmental certification through

environmentally-conscious management

2

3

4

1

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

Prime Maison YOKOHAMA NIHON-ODORI Prime Maison

GOTENYAMA EAST

Prime Maison GINZA EAST

Esty Maison OJIMA KOBE Women’s

Student Housing

Certiﬁcation rank

Certiﬁcation rank Certiﬁcation rank

(5 Stars)

(4 Stars)

(3 Stars)

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.

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.

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.

(Reference)

Acquisition Status of DBJ Green Building Certification

Prime Maison SHINAGAWA

Selected as

“Sector Leader”

(ranked first)

in the Asia Residential Sector for

the third consecutive year

Administration

Operation

Ownership

Development

Planning

Sekiwa Real Estate Group

Collaboration

with the Sekisui

House Group

Collaboration for planning and developing rental housing

Feedback of supply and demand information on rental housing

Sekisui House Residential

Investment Corporation

Entrustment of asset management

Sekisui House

Asset Management, Ltd.

(Asset Management Company)

Topics of the 24th Fiscal Period

Ended September 2017

2017 GRESB Assessment

*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. *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 2017

GRESB Real Estate Assessment in the world

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2,125 2,145 6,693

2,192 6,919

2,501 6,916

2,493 6,543

2,210

To Our Unitholders

6,543

2,741

2,214

2,210

47 2,125

6,965

2,986

2,467

2,465

-2,230

6,902

2,950

2,434

2,432

-2,200

6,916

3,001

2,494

2,493

-2,255

6,693

2,739

2,193

2,192

8 2,145

0 500 1,000 1,500 2,000 2,500

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000

2,234 2,255 Osamu Minami

Executive Director, Sekisui House Residential Investment Corporation

President, Sekisui House Asset Management, Ltd.

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 each

residence 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 high

levels of the period-end occupancy ratio (97.1%) and the period-average occupancy ratio (96.9%) for the

entire portfolio. Rent trends in new contracts and contract renewals also remained strong, indicating a

continuous upward trend in rents.

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 views

on 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 price

stood at 206.9 billion yen.

In terms of financing, we realized extension of loan periods and reduction of borrowing costs by repaying part

of 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, with

cash distribution per unit coming to 2,255 yen.

Furthermore, concerning the CSR and environmental activities in which we have actively engaged, we

participated 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.”

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 sole

sponsor in March. The Investment Corporation will continue to strive to realize continuous external growth

and 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.

We appreciate your continued support.

2 To Our Unitholders

3 Performance Highlights

8 _{Initiatives for Further Reinforcement of Financial Base}

Growth Track Based on Use of Comprehensive

Capabilities of the Sekisui House Group

4 CSR and Environmental Activity Case Studies

12 Major Properties Owned by the Investment Corporation

10 Portfolio Management

6 Topics of the 24th Fiscal Period Ended September 2017

1

30 Notes to Financial Statements

49 Independent Auditor’s Report

52 Unitholders Information

50 Overview of the Investment Corporation and Asset Management Company

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

Financial Section (Audited)

23 Management Discussion and Analysis

13 Performance Highlights

Cash distribution per unit

24 th Fiscal Period Ended September 2017

¥2,255

Cash distribution per unit

25 th Fiscal Period Ending March 2018

¥2,230

Cash distribution per unit

26 th Fiscal Period Ending September 2018

¥2,200

Cash Distribution per Unit

(forecast)

Forecast cash distributions

Actual cash distribution

Business Results and Cash Distributions

Settlement Date

Fiscal Period

)

Mar. 2016

21st FP

Sept. 2017

24th FP

Mar. 2018

25th FP (forecast)

Sept. 2018

26th FP (forecast)

Mar. 2017

23rd FP

6,919

3,060

2,502

2,501

31 2,234

(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 to change 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 in providing 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 the provision 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.

Sept. 2016

22nd FP

Operating Revenue / Net Income

Cash Distribution per Unit

Changes in Business Results

Operating revenue Net income

(Million yen) _(Yen)

21st FP (Mar. 31, 2016)

23rd FP (Mar. 31, 2017)

24th FP (Sept. 30, 2017) 22nd FP

(Sept. 30, 2016)

21st FP (Mar. 31, 2016)

23rd FP (Mar. 31, 2017)

24th FP (Sept. 30, 2017) 22nd FP

(Sept. 30, 2016)

(4)

70,000

-10,000 100,000 150,000 200,000 Total acquisition price (Million yen) 113 properties 206,943 (56,005) (14,140) 53 properties 99,920 53 properties 99,920 57 properties 103,974 (3,340) 58 properties 106,234

(3,340) 60 properties_101,006 (3,340) (1,920) 66 properties 110,214 (8,140) (1,920) 77 properties 128,794 (16,075) (3,270) 89 properties 141,472 (16,075) (3,270) 95 properties 151,744 (22,275) (3,750) 99 properties 171,099 (24,030) (7,510) 107 properties 188,771 (38,345) (9,180) 110 properties 191,020 (38,345) (10,930) 108 properties 193,890 (42,615) (12,220) 111 properties 199,163 (47,505) (14,140)

Acquisition of 38

properties totaling

70.1 billion yen from

the Sekisui House

Group

Oct. 1, 2012 Public offering

20,460 units

Oct. 26, 2012 Third-party allotment

1,540 units

Apr. 22, 2013 Public offering 21,430 units

May 23, 2013 Third-party allotment

1,105 units

Apr. 21, 2014 Public offering 111,600 units

May 22, 2014 Third-party allotment

5,615 units

Oct. 22, 2014 Public offering 97,970 units

Nov. 18, 2014 Third-party allotment

4,900 units

Oct. 26, 2016 Public offering 83,240 units

Nov. 14, 2016 Third-party allotment

4,160 units

Disposition of entirety of Hamamatsu Plaza West

and part of Hamamatsu Plaza East, etc. Disposition of part of Hamamatsu Plaza East

Disposition of 1 property Disposition of 1 property and part of 1 property

Disposition of 5 properties

Disposition of 1 property Disposition of 1 property and part of 1 property

Disposition of 1 property

3 properties

(Tentative name) Prime Maison

EGOTANOMORI

(Nakano-ku, Tokyo)

526 units

6 properties

910 units in total

All properties

in Tokyo

23 wards

The Group manages leasing of

595 thousand

units nationwide

Occupancy ratio:

96.8 %

(Entire leasing of Sha Maison)

Track record of the Sekiwa Real Estate Group

(as of July 31, 2017)

¥1,632

¥1,958

¥2,009

¥2,023

¥2,070

¥2,091

¥2,107

¥2,212

52.3

%

¥2,131

51.1

%

MITATSUNAMACHI

(Minato-ku, Tokyo) 18 units <Completed in October 2017>

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

Management under a joint-sponsor structure with Sekisui House as the main sponsor

135.2

billion yen

71 properties

65.1

billion yen

/

33

properties Acquisition from third parties

56.0

billion yen /

28

properties

Acquisition from Sekisui House

51.9%

Acquisition from the Sekisui House Group

(Based on acquisition price)

Properties acquired from Sekisui House

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

Disposed properties

June 2010: Changed the trade name to

Sekisui House SI Investment Corporation

June 2014: Changed the trade name to

Sekisui House SI Residential Investment Corporation

June 2017: Changed the trade name to

Sekisui House Residential Investment Corporation

Shift to sole sponsorship by Sekisui House

Aim to e

xpand the asset size while maintaining /

impro

ving the cash distribution level

Cash distribution per unit

LTV

(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.

All

14 properties are located in Greater Tokyo / Major Urban Areas

(Tokyo 23 wards: 13, Yokohama-shi: 1)

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

“Prime Maison” and Others Developed by Sekisui House through Property Planning Meetings with the Asset Management Company

5 properties

473 units in total

Prime Maison

SHIROKANEDAI TOWER

(Shinagawa-ku, Tokyo) 220 units <Completed in May 2016>

Prime Maison

ASAKUSABASHI

(Taito-ku, Tokyo) 64 units <Completed in Oct. 2016>

Prime Maison

OTSUKA

(Toshima-ku, Tokyo)

144 units <Completed in Jan. 2017>

Prime Maison

DAIKANYAMA

(Meguro-ku, Tokyo)

27 units <Completed in January 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).

Property management of

81 out of

112 residential properties in total is entrusted

Status of Property Management Service Entrustment to the Sekiwa Real Estate Group

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

Sekiwa Real Estate Kansai

(2 properties)

Sekiwa Kanri Kansai

(9 properties)

(wholly-owned subsidiary of Sekiwa Real Estate Kansai)

Esty Maison UEMACHIDAI Esty Maison KOBE-SANNOMIYA

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

Osaka-shi,

etc.

Sekiwa Real Estate Tohoku

Sekiwa Real Estate Kanto

Sekiwa Real

Estate Chugoku

Sekiwa Real Estate

(55 properties)

Esty Maison GINZA Prime Maison GINZA EAST Prime Maison EBISU

Prime Maison SHIROKANE-TAKANAWA Prime Maison ODORI KOEN, etc.

Tokyo,

Sapporo-shi,

etc.

Sekiwa Real Estate Chubu

(11 properties)

Prime Maison HIGASHISAKURA Prime Maison GOKISO Esty Maison TSURUMAI

Granmast KANAZAWA NISHIIZUMI, etc.

Nagoy

a-shi,

etc.

Sekiwa Real Estate Kyushu

(4 properties)

MAST HAKATA

Prime Maison MOMOCHIHAMA Prime Maison CENTRAL PARK, etc.

Fukuoka-shi

(Note) “Sha Maison” is a brand for rental housing constructed by Sekisui House and managed by the Sekiwa Real Estate Group. End of 9th FP

(Mar. 31, 2010)

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

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

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

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

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

(5)

67.4%

3.8%

28.8%

32.1%

9.1%

48.6%

30.7%

32.8%

27.4%

9.1%

50.6%

0.6%

23.6%

25.2%

Average area

per unit

37.8 _m

2

69.3%

3.0%

27.7%

30.9%

13.2%

46.7%

10.2%

9.1%

29.9%

35.1%

26.3%

8.7%

51.7%

0.6%

22.9%

24.8%

Average area

per unit

37.3 _m

2

69.3%

3.0%

27.7%

30.9%

13.2%

46.7%

9.1%

29.9%

35.1%

26.3%

8.7%

51.7%

0.6%

22.9%

24.8%

Average area

per unit

37.3 _m

2

Before

After

95

90

100.0

96.9

96.7

100.0

97.8

97.7

100.0

96.7

96.5

96.9

96.8

96.9

96.8

97.1

97.0

96.8 Portfolio Management

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 rent

of each property and each unit in a favorable rental market environment, and achieved the occupancy ratio for the entire portfolio of 96.9% on average

and 97.1% at the end of the fiscal period, remaining at a high level.

Residence Other real estate in trust (retail property) Entire portfolio

100 (%)

Residence only

96.8

Entire portfolio

%

96.9 %

Period-average occupancy ratio

End of Mar. 2017

End of Apr. 2017

End of May 2017

End of June 2017

End of July 2017

End of Aug. 2017

End of Sept. 2017

23rd FP 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 of each 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

_{(excluding consumption tax)}

Construction cost

Construction Period

Installation of decorative walls, decorative ceiling and lighting equipment such as

indirect lighting fixtures, etc. in the entrance hall and entrance approach

¥16 million

(entire amount was

capital expenditure)

August 2017 to September 2017

Repair of entrance approach

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

Owned properties (totaling 112 properties)

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

Owned properties (totaling 112 properties)

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

Owned properties (totaling 110 properties)

(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 disposition

of owned properties in the 24th fiscal period ended September 2017.

Diversification status by area

Diversification status by property age

Diversification status by floor area

Diversification status by walking distance to station

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))

Greater Tokyo

71.2 %

Greater Tokyo

72.3 %

Greater Tokyo

72.3 %

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))

Average property age

10.5 _years

Average property age

10.1 years

Average property age

10.1 years

Within 3 minutes More than 3 minutes to within 5 minutes More than 5 minutes to within 10 minutes More than 10 minutes

(Classified according to the walking minutes from station for each property (based on the acquisition price))

Within

10-minute walk

91.0 %

Within

10-minute walk

91.3 %

Within

10-minute walk

91.3 %

_{or more}

(Classified according to the area of each residential unit (based on the number of leasable residential units))

(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 the acquisition 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%.

Creating space emphasizing continuity from the entrance hall

Adding a sense of depth by installing wood-like decorative

walls and ceiling

(6)

(Million yen) 0 4,000 6,000 10,000 2,000 8,000 12,000 M a x imum c o mm it m e n t l in e a m ou n t

Upon the ending of the commitment term based on the commitment line agreement concluded with three Japanese megabanks on October 7, 2016 to

secure flexible and stable means for procuring funds, the Investment Corporation concluded a new commitment line agreement as follows. There is no

change to the main contents of the agreement.

Conclusion of Commitment Line Agreement

Initiatives for Further Reinforcement of Financial Base

Ratio of liabilities with

ﬁxed interest rates

93.1 %

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

Ratio of long-term

interest-bearing debt

100.0 %

LTV

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 to

total assets) as of the end of the 24th fiscal period are as follows.

Status of Financial Soundness

50.3 %

Japan Credit Rating Agency, Ltd. (JCR)

[Long-term issuer rating]

AA-

(Stable)

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

A

+

(Stable)

[Issuer rating]

Status of

Credit Ratings

Changes in Period-Average Borrowing Cost Rates and Average Remaining Period of Borrowings

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.

FP ended Sept. 30, 2017 (24th FP) FP ending Mar. 31, 2018 (25th FP) FP ending Sept. 30, 2018 (26th FP) FP ending Mar. 31, 2019 (27th FP) FP ending Sept. 30, 2019 (28th FP) FP ending Mar. 31, 2020 (29th FP) FP ending Sept. 30, 2020 (30th FP) FP ending Mar. 31, 2026 (41st FP) FP ending Mar. 31, 2021 (31st FP) FP ending Sept. 30, 2021 (32nd FP) FP ending Mar. 31, 2022 (33rd FP) FP ending Sept. 30, 2022 (34th FP) FP ending Mar. 31, 2023 (35th FP) FP ending Sept. 30, 2023 (36th FP) FP ending Mar. 31, 2024 (37th FP) FP ending Sept. 30, 2024 (38th FP) FP ending Mar. 31, 2025 (39th FP) FP ending Sept. 30, 2025 (40th FP)

9,500

4,000

_8,382

2,500

2,000

6,792

_6,500

3,000

2,100

2,705

6,100

2,500

_2,400

10,882

8,792

7,100

9,900

4,400

9,830

5,400

8,100

4,100

3,000

6,128

5,500

4,900

Long-term loans payable Investment corporation bonds

The Investment Corporation has constructed the bank formation comprising 17 financial institutions centering on the three Japanese megabanks, based

on the credibility of Sekisui House. The borrowing status of the Investment Corporation is as follows.

Status of Bank Formation

17.6

17.1

10.7

8.8

7.5

7.2

6.9

5.2

5.0

1.4

1.8

2.4

2.6

Unit: %

Financial Institution

Outstanding

Balance

(million yen)

Share

(%) Mizuho Bank, Ltd.

Sumitomo Mitsui Banking Corporation The Bank of Tokyo-Mitsubishi UFJ, Ltd. Mizuho Trust & Banking Co., Ltd. Sumitomo Mitsui Trust Bank, Limited Mitsubishi UFJ Trust and Banking Corporation Development Bank of Japan Inc.

The Norinchukin Bank Resona Bank, Limited.

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

The Senshu Ikeda Bank, Ltd.

The 77 Bank, Ltd. The Hiroshima Bank, Ltd. The Yamaguchi Bank, Ltd. The Shizuoka Bank, Ltd.

Total debt 16,001 15,565 9,750 8,030 6,850 6,592 6,241 4,752 4,550 2,200 1,600 1,300 1,300 91,032 100.0 17.6 17.1 10.7 8.8 7.5 7.2 6.9 5.2 5.0 2.6 1.8

Shinkin Central Bank

2,400 2.4 1.4 1.4 1.4 1,300 1.4 1,300 1,300 1.4

1.4

(Note) Amounts in the graph and table are rounded down to the nearest million yen. The same follows hereafter.

1.50 1.00 0.50 6.0 4.0 2.0 FP ended Mar. 31, 2015

(19th FP)

FP ended Sept. 30, 2015

(20th FP)

(%)

FP ended Mar. 31, 2014

(17th FP)

(18th FP)

years

Maturity Ladder

(As of the end of the 24th fiscal period ended September 2017)

As of November 15, 2017 (the announcement date of

business results)

(24th FP)

0.95

%

4.3 years

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

Share by

ﬁnancial

institution

1,900

0.97

% Repaid using cash on hand

2,528

(2,528)

177 ¥10,000 million

October 6, 2017

From November 1, 2017

to October 31, 2018

Mizuho Bank, Ltd.

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Sumitomo Mitsui Banking Corporation

Maximum commitment

line amount

Term of commitment line

Date of agreement

Use of funds

Lenders

(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.

(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.

• Property acquisitions

• 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 a

benchmark.

(7)

Major Properties Owned by the Investment Corporation

In order to mitigate the risks associated with a unipolar concentration of the portfolio, including risks related to the local economy and

earth-quakes, 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

3 properties

Kanazawa-shi

1 property

Nagoya-shi

9 properties

Osaka-shi

10 properties

1 property

Yokkaichi-shi

Kobe-shi

2 properties

1 property

Kyoto-shi

Fukuoka-shi

9 properties

Greater Tokyo / Major Urban Areas

Total

71 properties

Greater Tokyo / Other Urban Areas

Total

5 properties

Major Cities Nationwide

Total

36 properties

Prime Maison GINZA EAST

Prime Maison HATSUDAI Prime Maison MORISHTA Prime Maison ICHIGAYAYAMABUSHICHO Prime Maison SHIBUYA

Esty Maison AKABANE Esty Maison AZABUJUBAN Prime Maison GOTENYAMA EAST

Esty Maison OJIMA Esty Maison KINSHICHO IIEsty Maison GINZA Esty Maison GOTANDA

Prime Maison SHINAGAWA

Esty Maison KOHOKU TSUNASHIMA

Esty Maison MORISHITA

Greater Tokyo / Major Urban Areas

Prime Maison KITATANABE Prime Maison YUHIGAOKA

Esty Maison KYOBASHI

Major Cities Nationwide

(Osaka-shi, Kyoto-shi and Kobe-shi)

Prime Maison CENTRAL PARK

Prime Maison TAKAMI

Major Cities Nationwide

(Nagoya-shi)

Prime Maison MUSASHINONOMORI MAST LIFE HINO

Greater Tokyo / Other Urban Areas

Prime Maison EBISU

Prime Maison MOMOCHIHAMA Prime Maison TERIHA Esty Maison HAKATAHIGASHI

Major Cities Nationwide

(Fukuoka-shi)

Prime Maison HIGASHISAKURA

Major Cities Nationwide

(Other areas)

Granmast KANAZAWA NISHIIZUMI Granmast UNOMORI Prime Maison SHIROKANE-TAKANAWA

MAST HAKATA Prime Maison WASEDA Prime Maison HATCHOBORI

Prime Maison JINBOCHO Prime Maison YOKOHAMA NIHON-ODORI

MAST LIFE YAHIRO MAST LIFE AKIHABARA

Esty Maison SHIBAURA Esty Maison SASAZUKA

Esty Maison HIGASHISHINAGAWA

Esty Maison ITABASHI C6 Esty Maison ITABASHIKUYAKUSHOMAE

Esty Maison YOTSUYASAKAMACHI Esty Maison OISENDAIZAKA

Esty Maison YOKOHAMA Esty Maison KAWASAKI

Esty Maison SHINAGAWA SEASIDE

Kobe Women's Student Housing Esty Maison KOBE-SANNOMIYA

Esty Maison SHIJONISHINOTOIN Prime Maison ODORI KOEN

Prime Maison MINAMI 2-JO

Major Cities Nationwide

(Sapporo-shi)

Prime Maison KAMOKAMOGAWA

Prime Maison GOKISO Prime Maison YADAMINAMI

Prime Maison FUJIMIDAI

(8)

CSR and Environmental Activity Case Studies

Implemented at

a total of

677 A/C units

Electricity consumption (cumulative):

Expected annual reduction of approx.

150,971

kwh

Replacement of air conditioners in exclusive areas

with energy-saving models

Implemented at

a total of

38 properties

Installed at

168 locations (cumulative)

As of the end of September 2017

Mainly implemented initiatives below

As of the end of September 2017

Greenhouse gas (CO2) emissions (cumulative):

Expected annual reduction of

approx.

610

t-CO2

Greenhouse gas (CO2) emissions (cumulative):

71

t-CO2

Energy conservation measures

Resource depletion countermeasures

Contributing to regions in which we own properties

LED light ﬁxture replacement work in common areas

Management that considers

the environment and society

Realize a sustainable society

Provide high-quality residences

through the J-REIT scheme

(Note) The above figures for expected annual reduction are estimates and do not guarantee actual reductions.

Installation of

water saving equipment

on faucets in common use areas

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 Estimation by the Asset Management Company based on

the proposal material prepared by the operator of replacement work

* *

Water saving effect

Expected to save water by around

30

% per flow control valve

In addition to the above, replaced bathroom water faucets, shower-heads, kitchen water faucets, etc. with those that are expected to save water by around 20% - 30% compared to the conventional models as necessary, in exclusive areas.

by installing flow control valves that save water without decreasing water pressure and other usability

Installation of disaster-relief vending machines

Installation of automated external defibrillators (AED)

Installation of emergency cabinets in elevators

As of the end of September 2017

Aiming to realize its basic principle of “providing high-quality residences through the J-REIT scheme” and “creating affluent and fulfilling lifestyles,” the

Investment Corporation conducts real estate investment management with due consideration given to the “environment, society and governance (ESG),” in

accordance 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.

Electricity consumption (cumulative):

1,189,098

kwh

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

Installation of

emergency equipment, etc.

Management Discussion and Analysis

Fiscal Period

Unit 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) Accounting Period

Operating revenue mm yen 6,411 6,543 6,693 6,919 6,916 [Rent revenue - real estate] mm yen [6,330] [6,332] [6,674] [6,886] [6,916] Operating expenses mm yen 3,667 3,801 3,953 3,858 3,914 [Expenses related to rent business] 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 yen 195,280 198,290 203,257 210,166 210,009 [Period-on-period variation] % [+0.6] [+1.5] [+2.5] [+3.4] [-0.1] Net assets (c) mm yen 91,213 91,263 91,292 101,318 101,341 [Period-on-period variation] % [-0.0] [+0.1] [+0.0] [+11.0] [+0.0] Unitholders' capital mm yen 88,925 88,925 88,925 98,633 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 89,590 89,639 89,668 91,648 91,669

Total 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 [Earnings distribution per unit] yen [2,122] [2,125] [2,145] [2,234] [2,255] [Distribution in excess of earnings per unit] yen [-] [-] [-] [-] [-] Ordinary income to total assets (Note 2) % 1.1 [2.3] 1.1 [2.2] 1.1 [2.2] 1.2 [2.4] 1.2 [2.4] Return on unitholders' equity (Note 2) % 2.4 [4.8] 2.4 [4.8] 2.4 [4.8] 2.6 [5.2] 2.5 [4.9] Unitholders' equity ratio (c)/(b) % 46.7 46.0 44.9 48.2 48.3 [Period-on-period variation] [-0.3] [-0.7] [-1.1] [+3.3] [+0.1] Distribution payout ratio (Note 3) % 97.7 97.8 99.6 98.7 100.0

[Other reference information]

Number of investment properties (Note 4) properties 110 108 111 113 113 Total leasable area m2 _{400,210.45 368,622.60 376,936.98 380,893.44 382,734.80}

Period-end occupancy ratio (Note 4) % 96.7 97.2 96.8 97.8 97.1 Depreciation mm yen 1,431 1,468 1,582 1,606 1,602 Capital expenditures mm yen 97 293 302 397 446 Leasing NOI (net operating income) (Note 2) 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 leasable area as of the account closing date.

1. Changes in Operating Results and Other Management Data

(9)

2. Asset Management Status for the 24th Fiscal Period

(1) Brief History of the Investment Corporation

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.

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

properties, 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 in

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

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

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.

(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 to

rise 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 an

increase 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 price

decrease.

As for the rental housing market, particularly in the Greater Tokyo / Major Urban Areas, which is the Investment Corporation’s focused investment area, the

supply 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 collect

information on properties that could be subject for acquisition and to strengthen financial base (improvement in profitability) of properties it owned. As a

result, 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 average

occupancy 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 the

beginning of the fiscal period. Therefore, the Investment Corporation owned 113 properties (112 residential properties and 1 retail property) with a total

acquisition 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.

(4) Initiatives on CSR and Realizing a Sustainable Society

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

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 of

the Environment. Based on these policies, etc., the Investment Corporation has cooperated with Sekisui House to promote its initiatives for CSR and

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

Committee to see how the policies are followed and assess the effectiveness of implemented measures on a regular basis. In addition, in order to understand

where 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

a sustainable society.

In the 24th fiscal period, the Investment Corporation promoted such measures as introduction of LED lighting to its properties, which it had conducted from

time to time, adoption of energy-efficient air-conditioning units and installation of water-saving equipment, as its initiatives on CSR and environmental

activities. As for obtainment of environmental recognition and certifications by external agencies, the Investment Corporation achieved “Green Star” in the

2017 GRESB Assessment of real estate companies, REITs and funds conducted by Global Real Estate Sustainability Benchmark (“GRESB”) (Note) following

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 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. In addition, the “GRESB Public Disclosure (five-level rating from “A” to “E”)” was launched this

year 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 and

net 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.

(10)

3. Future Management Policies and Vital Issues

(1) Investment Environment

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

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.

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.

In 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 and

interest rate trends, the supply and demand balance trends and the orientations of domestic and foreign investors.

(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 estate

market trends, such geographical factors as the environment surrounding the areas where the real estate properties are located, urban planning status and

its 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), the

Investment 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 and

obsolescence 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 the

operational and administrative efficiency through the synergy effect with the Sekisui House Group. Moreover, the Investment Corporation has gradually

unified the property management companies involved in the existing residential properties to the Sekiwa Real Estate group. This is understood to have

enabled 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, for

residential 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

Hamamatsu Warehouse opened on September 1, 2017 on the site owned by Sekisui House. In line with this, the Investment Corporation is determined to

continue working on stable operation through improvements of the facility, etc. to generate a synergy effect for existing tenants.

(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 the seven 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.

<Summary of the Investment Corporation’s Major Brands>

Brand Name Prime Maison Esty Maison MAST Series

Logo type

Explanation on brand

Brand of Sekisui House

High-quality urban rental condominiums planned and developed by Sekisui House by utilizing its know-how or in which it invests in recognition of the value

Proprietary Brand of the Investment Corporation

As a rule, high-quality urban rental condominiums the Investment Corporation acquired from outside the Sekisui House Group

Brand of the Sekiwa Real Estate Group

As a rule, high-quality rental residential properties planned and developed by the Sekiwa Real Estate companies (7 companies), which belong to the Sekisui House Group, or those in which they own 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 the

commitment 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 owned

by the Investment Corporation