Samty Residential Investment Corporation

Transcription

1 Samty Residential Investment Corporation April 2016 (Securities CODE:3459) Financial Results for the 1st Fiscal Period Ending January 2016

2 Table of Contents 1. Features of Samty Residential Investment Corporation P.3 2. Financial Overview P.7 3. Future Growth Strategy P Operating Results and Distribution Information P Appendix P.31 2

3 1. Features of Samty Residential Investment Corporation

4 Investment Strategy of Samty Residential Investment ( Samty Residential ) Samty Residential will invest in high quality residential assets suitable for regional living conditions, in cities throughout Japan with the sponsor support of the Samty Group. 1 Characteristics of Samty Residential Samty Residential aims to build a portfolio which pursues stability, growth potential and earnings potential by investing primarily in residential properties of major regional cities as well as support from the Samty Group. Investing primarily in residential properties of major regional cities Stability Diversified investing in carefully screened residential properties of Japan Growth Expanding portfolio size through continual new investments primarily in major regional cities Earnings Potential Realizing large earnings anticipated through investing in carefully screened residential properties of major regional cities Support from the Samty Group (Note) Listed on the First Section of the Tokyo Stock Exchange on October 26, 2015 Properties development by the Samty Group Stable supply of the S-RESIDENCE series - Grant of exclusive negotiating rights - Stable supply of newly developed properties Wide ranging support of the sponsor - Enhancing value through running a unified brand (Note) Samty Group refers to Samty Co., Ltd., and its consolidated subsidiary companies (Ordinance on Terminology, Forms and Preparation Methods of Consolidated Financial Statements (Ministry of Finance No. 28 of Including subsequent amendments.) Referred to as consolidated subsidiary company as stipulated by Article 2 (iii).) and special purpose companies which Samty Co., Ltd., invests in themselves, other than the consolidated subsidiary companies of Samty Co., Ltd., while excluding Samty Residential. 4

5 Portfolio Development Policy of Samty Residential Investment Corporation 2 Portfolio development Policy A. Investment policy by asset class Investing in accommodation facilities and other facilities, primarily in the residential asset class B. Investment policy by geographical area Investing primarily in major regional cities Investment areas Investment ratio (Note3) Residential properties (Note1) 80% or more Major regional cities (Sapporo, Sendai, Nagoya, Kyoto, Osaka, Kobe, Hiroshima and Fukuoka) 50% or more of all investments will be in properties that are conveniently located near bus terminals or railway stations linked with other major terminal stations. Operating facilities (Note2) 20% or less Focus on the Single and Compact type residences Regional cities Fukuoka Hiroshima Kyoto Kobe Osaka Nagoya Sapporo Sendai 50% or more Around 70% Single Type Compact Type Floor per unit of less than 30m 2 Floor per unit of between 30m 2 and 60m 2 (Note1) Residential properties represents the rental housing. (Note2) Operating facilities represents the hotels and health care properties. Greater Tokyo area Other regional cities (Regional cities excluding major regional cities) 20% or less of investments will be in residential properties that can anticipate rental and income stability because of their commutable location to core businesses, medical facilities or national universities located in the area. Tokyo, Kanagawa, Saitama, Chiba Around 30% of investments will be in residential properties primarily located in residential communities within a 10-minute walk of the nearest railway station (or bus stop) that is located along a line connected to a terminal station. 20% or less Around 30% (Note3) Investment ratio is calculated based on the acquisition price. The above is the target investment mix. Actual portfolio composition may vary 5

6 Portfolio Overview (as of January 31, 2016) Samty Residential has acquired 29 residential properties throughout 12 prefectures and has successfully composed a stable diversified portfolio concentrating in major regional cities. A-05 Portfolio map Greater Tokyo area 24.5% Other regional cities 9.0% A-06 A-04 Investment ratio by geographical area (based on acquisition price) Ratio of regional cities 75.5% A-13 A-01 Major regional cities 66.6% B-01 A-14 A-03 B-02 B-03 B-04 A-15 A-09 A-02 A-07 C-05 C-06 A-03 A-10 A-12 A-11 A-16 C-03 C-02 C-04 C-01 C-09 C-07 C-08 Properties acquired through sponsor involvement 74.9% Asset size 30.9 billion yen No. of properties 29 Occupancy rate 95.2% Average building age 7.6 year Average appraisal NOI yield 5.6% Average actual NOI yield (Note) 5.8% (Note: Average actual NOI yield is the figure of Period Ending January 2016 (As of January 31, 2016) Ratio by building age (based on acquisition price) 15 years to less than 20 years 3.0% 10 years to less than 15 years 8.4% Investment ratio by seller (based on acquisition price) Through bridge funds, 20.8% Owned by the sponsor, 38.7% Average building age 7.6 year Less than 5 years 22.7% 5 years to less than 10 years 65.9% Ratio of average area per residential unit (based on acquisition price) Properties developed Family Properties acquired by the sponsor type from sources 14.5% 8.4% unrelated to the sponsor Through 10.6% warehousing, Ratio of 15.5% residential properties 100% Compact type 32.9% Single type 58.6% 6

7 2. Financial Overview for the 1st Fiscal Period

8 Financial Overview Overview of the 1st Fiscal Period Ended January 2016 and Comparison to Beginning of Period Forecast (million yen) Real estate rental revenue Real estate rental expenses Real estate rental income Operating income Non-operating income and expense Ordinary income Management Status Forecast A. At IPO ( As of July 10, 2015 ) B. At Interim ( As of October 14, 2015 ) C. 1st Period Results Change from Change from Forecast at Forecast at IPO Interim 1,363 1,390 1, % +4.9% % +8.0% % +2.7% % 0.7% % 11.2% % +42.3% Major factors contributing to difference between forecast at IPO (as of July 10, 2015) and actual results (1st Fiscal Period ending January 2016) Increase in operating revenue: + 84 million - Increased rental revenues due to increase in occupancy and rent: + 42 million - Increase due to repayments from backing away from deposits: + 42 million Increase in operating expenses: - 60 million - Increase in repair and restoration expenses: - 25 million - Increase in leasing and other expenses: - 34 million Decrease in depreciation: + 2 million Corporate tax, etc Net income % +41.6% (yen) Forecast at Forecast at IPO Interim 1st Period Distributions (Note) ( As of July ( As of October Results 10, 2015 ) 平成 27 年 7 10 平成 27 年 , 2015 ) Distribution per unit 開 時点 開 時点 ,034 Distribution in excess of earnings per unit Total distribution per unit 1,444 1,512 1,810 (Note) Calculated with number of investment units issued and outstanding at 163,340 units Increase in sales management expenses: - 29 million - Increase in IR related expenses: - 24 million - Increase in compensation, etc.: - 4 million Decrease in non-operating expenses: + 63 million - Decrease in interest expenses: + 8 million - Decrease in founding, unit issuance costs, etc. : + 55 million Increase in corporate tax, etc.: - 1 million (+ indicates an increase, denotes a decrease) [Average occupancy rate during period] Forecast at IPO : 92.8% End of period : 93.8% [Capital expenditures] Forecast at IPO: 33 million End of period: 7 million 8

9 Financial Overview Financial Overview for the 1st Fiscal Period. Comparison between Initial Forecast and Actual Results. Comparison between IPO and 1st Fiscal Period Results. Total distributions 235 million ( 1,444 per unit) Operating revenue + 84 million Operating expenses - 60 million Sales management expenses - 29 million Non-operating expenses + 63 million Total distributions 295 million ( 1,810 per unit) Increased revenues with increase in occupancy and rents + 42 million (+ 257) Depreciation of deposits due to moving out + 42 million (+ 261) Increase in repair expenses - 13 million (- 82) Increase in restoration expenses - 12 million (- 74) Increase in leasing activity expenses - 34 million (- 210) Decrease in depreciatio n expenses + 2 million ( 14) Increase in IR related expenses - 24 million (- 152) Increase in compensati on, etc. - 4 million (- 25) Decrease in interest expenses + 8 million (+ 52) Decrease in founding, unit issuance costs, etc million ( 336) Corporate tax, etc. - 1 million (- 9) 1st Period 1Forecast st Period 13Results (as of July 10, 2015) (Note) Rounded down to the nearest million yen 9

10 Financial Overview Financial Overview of 1st Fiscal Period External Growth Internal Growth Samty Residential has expanded its asset size through property acquisition and portfolio diversification Acquired two sponsor developed properties ( 4,490 million(note)) and 22 ( 23,185 million) sponsor participated properties. In addition, acquired S-FORT Gakuenmae ( 462 million), which is a 5-minute direct train ride to Sapporo Station from its nearest station, Gakuenmae Station, is close to Hokkaigakuen University and has demand from both workers and students making it greatly competitive. (Note) The figures in parenthesis are based on acquisition price. At IPO (as of July 1, 2015) End of 1st Fiscal Period of fiscal 2016 (as of January 31, 2016) Number of properties 28 properties 29 properties Acquisition price 30,500 million 30,962 million Santy Residential has improved occupancy rates and raised rental revenue improving tenantsʼ satisfaction and asset value by effective renovations and reinforcing leasing activities. Introduced electric (IH) cookers and free internet services, and repaired modular baths, etc. Samty Residential afforded to acquire the superior property without conducting a public offering during the 1st period. Strengthened competitiveness for owned properties through execution of strategic value added work At IPO (as of June 30, 2015) End of interim period (as of August 31, 2015) End of 1st Period (as of January 31, 2016) Occupancy rate (Note) 92.8% 94.3% 95.2% (Note) Occupancy rates at the time of IPO and at the end of interim period are the figure of the acquired assets as well as assets to be acquired excluding S-FORT Shonan Hiratsuka, S-FORT Tsurumai marks, and before acquisition of S-FORT Gakuenmae. 1st Fiscal Period Regional Cities Greater Tokyo Area Total Rent increase ratio at time of tenant replacement 44% (132 properties) 33% (21 properties) 42% (153 properties) Financial Strategy While advancing investment in Major Regional Cities, Samty Residential has established a strong relationship with financial institutions in each region, constructing a solid financial standing through a balanced lender formation. As of January 29, 2016 made early repayment of 650 million in short-term loans payable. (Note) Calculated as; interest-bearing debt as of January 31, 2016 (17,162 million yen / Total assets as of January 31, 2016 (33,890 million yen). End of 1st Period Total interest-bearing liabilities 17,162 million LTV (based on total assets) (Note) 50.6% Average remaining years to maturity 3.4 years Long-term loan ratio Average borrowing interest rate End of 1st Period 93.2% 0.9% 10

11 External Growth Initiatives for External Growth: Acquisition of New Properties (Acquired on October 1, 2015) A-16 S-FORT Gakuenmae Property name S-FORT Gakuenmae Location Access Number of rentable units Toyohira-ku, Sapporo Approx. a 3 minute walk from Gakuenmae Sta., Sapporo City Subway Toho Line 48 units Construction completed October, 2006 Acquisition price 462 million yen Appraisal value Appraised NOI yield 5.8% 476 million yen Seller Aegis GK (Direct deal without paying commission) S-FORT Gakuenmae [Property overview] This property, which has single and compact type units, is about a threeminute walk from Gakuenmae Station on the Sapporo City Subway. It takes about two minutes to reach Toyomizu Susukino Station from Gakuenmae Station using the subway and about six minutes to Sapporo station, providing excellent access to the downtown core of Sapporo. Hokkai-Gakuen University and Hokkai School of Commerce are close to this property, Hokkaido prefectural sports center and Tree planting botanical garden Toyohira Midori-no-center are within a 10-minites work. Hospital and stores selling daily essentials are nearby, providing a vibrant living environment. With such characteristics, convenience of transportation and living is good and the property is believed to have a high level of competitiveness in the leasing market of areas with similar demand and supply situations. Category Term loans Lender Balance (million yen) Fixed or floating interest rate Interest rate Drawdown date Repayment date Shortterm 2 Sumitomo Mitsui Banking Corporation The Bank of Fukuoka 462 Floating rate Base rate+0.4% 2015/10/1 2016/9/30 11

12 External Growth Changes in the Portfolio Portfolio highlight IPO (July 10, 2015) End of interim period (August 31, 2015) S-FORT Gakuenmae (Acquired on October 1, 2015) End of 1st period (January 31, 2016) No. of properties Total acquisition price Occupancy Rate (Note 1) Number of rentable units 28 properties 28 properties 1 property 29 properties 30,500 million yen 30,500 million yen 462 million yen 30,962 million yen 92.8% 94.3% (93.6%) 94.4% 95.2% 2,297 units 2,297 units 48 units 2,345 units (Note 1) The occupancy rate is the figure as of the end of August 2015 is excludes S-FORT Shonan Hiratsuka and S-FORT Tsurumai marks. The figure in the parenthesis is the occupancy rate with these two properties included. The occupancy rate at the time of IPO is the figure of the acquired assets and assets to be acquired as of the end of June 2015 and excludes the aforementioned two properties. The occupancy rate at the time of after new property acquisition is the figure as of the end of October2015. Acquired Properties A-07 S-FORT Tsutsujigaoka Koen A-08 S-RESIDENCE Namba Briller A-13 S-RESIDENCE Kobe Isogamidori A-15 S-FORT Katahira B-04 S-FORT Suzuka 12

13 96.0% 95.0% 94.0% 93.0% 92.0% Internal Growth Management Status (1) Changes in the Occupancy Rates by Area Occupancy rates are steadily rising. Improved 2.4 percentage point since IPO. 92.5% 92.7% 93.8% Began management with 28 properties on July 1, % 94.1% 94.5% 94.1% 93.9% 95.0% 92.7% 92.8% 94.3% 95.5% 94.4% 94.8% 92.1% Major regional cities (+2.9%) Other regional cities (+1.5%) Greater Tokyo area (+1.0%) Overall (+2.4%) The figures in parenthesis are the increase in occupancy rates from IPO as of June % 94.2% 92.8% 91.9% 94.6% 94.6% 94.4% 93.2% 94.5% 94.3% 94.1% 92.4% 95.6% 95.3% 95.2% 93.5% 91.0% Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan *Occupancy rates from June 2015 to August 2015 are figures at the end of each month excluding S-FORT Tsurumai marks, S-FORT Shonan Hiratsuka, which had just been constructed and S-FORT Gakuenmae, which was acquired on October 1, The figure for September 2015 includes S-FORT Tsurumai marks and S- FORT Shonan Hiratsuka, but excludes S-FORT Gakuenmae which had not been acquired. 13

14 Internal growth Management Status (2) Increase or Decrease of Rental Revenue at the Time of Tenant Replacement Increase or Decrease of Rental Revenue at the Time of Tenant Replacement Increased rental revenue for around half of tenant replacements The number of units rental revenue increased on the occasion of replacement: units 153 Decreased rents: 101units 28% Decrease of 5% or less: 75units 21% Decrease exceeding 5%: 26units Increase exceeding 5%: Tenant replacement: 362 units Unchanged: 108units 30% 7% Increased Increase of 5% or less: 110units 30% rents: 153units 42% The number of units rental revenue increased at the time of tenant replacement for the 1st Fiscal Period Regional Cities Greater Tokyo Area Total 132 units/299 units 21 units/ 63 units 153 units/ 362 units 14

15 Financial Strategy Financial Highlight 1 (At the end of fiscal period ending January 2016) Financial Status Average remaining borrowing period 3.4 year Average interest rate 0.9% Ratio of long-term borrowings 93.2% Total assets-based LTV (Note1) 50.6% (Note1) Calculated as; interest-bearing debt as of January 31, 2016 (17,162 million yen / Total assets as of January 31, 2016 (33,890 million yen). List of Borrowings Status of Borrowings 3% 2% 2% 3% Regional banks 52.7% 6% 6% 9% 23% 26% 9% 7% 6% (Billion yen) SMBC: 4.4 Aozora Bank: 1.5 Resona Bank: 1.2 Shinsei Bank: 1.0 The Bank of Fukuoka: 3.9 The Kagawa Bank: 1.5 The Tokyo Star Bank: 1.0 Shinwa Bank: 1.0 Shizuoka Bank: 0.5 Kumamoto Bank: 0.5 The Chiba Bank: 0.3 The Hiroshima Bank: 0.3 Category Term loans Lenders Balance (million yen) Fixed or floating interest rate Interest rate (Note2) Drawdown date Repayment date Long-term 1-A Loan syndicate with 5,000 Floating rate Base rate +0.6% 2015/7/1 2018/6/30 Long-term 1-B Sumitomo Mitsui 5,000 Floating rate Base rate +0.7% 2015/7/1 2019/6/30 Long-term 1-C Banking Corporation and The Bank of 4,000 Floating rate Base rate +0.8% 2015/7/1 2020/6/30 Fukuoka as arrangers Long-term 1-D 2,000 Floating rate Base rate +0.9% 2015/7/1 2021/6/30 Short-term 1-E Sumitomo Mitsui 700 Floating rate Base rate +0.4% 2015/7/1 2016/6/30 Banking Corporation 2 The Bank of Fukuoka 462 Floating rate Base rate +0.4% 2015/10/1 2016/9/30 Total borrowings 17,162 (Note2) The base rate to be applied is the one-month Japanese yen TIBOR announced by the Japanese Bankers Association. 15

16 6,000 Financial Strategy Financial Highlight 2 (At the end of fiscal period ending January 2016) Diversification of Maturity ladder (million yen) Average remaining period of borrowings:3.4 year 5,000 4,000 3,000 2,000 Partially repaid by the amount of 650 million yen as an early repayment on January 29, , nd period 3rd period 4th period 5th period 6th period 7th period 8th period 9th period 10th period 11th period 12th period (Jul.2016) (Jan.2017) (Jul.2017) (Jan.2018) (Jul.2018) (Jan.2019) (Jul.2019) (Jan.2020) (Jul.2020) (Jan.2021) (Jul.2021) 16

17 Appraisal Value Status (Change in Appraisal Value and Cap Rates)1 Summary of Appraisal Value No. of properties At IPO (as of July 10, 2015) End of interim period (as of October 14, 2015) End of period (as of January 31, 2016) Appraisal Appraisal Appraisal Cap Rate value Cap Rate value value Cap Rate (Note1) (million yen) (%) (million yen) (%) (million yen) (%) Properties acquired prior to and at IPO Major regional cities 15 20, , , Other regional cities 4 2, , , Greater Tokyo area 9 7, , , Subtotal 28 30, , , Properties acquired after IPO S-FORT Gakuenmae (Major regional cities) (Note2) Total 29 30, , , (Note 1) Cap Rate is calculated with the weighted average using the cap rate as per the direct capitalization method of the appraisal reports. (Note 2) Acquired on October 1, Appraisal value at time of acquisition on August 21,

18 Appraisal Value Status (Change in Appraisal Value and Cap Rates)2 Changes in the Appraisal Value and Cap Rates after IPO Comparison of appraisal value at IPO and end of interim period Change in appraisal value No. of properties Compared to IPO Compared to end of interim period Upward Unchanged 0 7 Downward 0 0 Change in Cap Rates Change in Cap Rate No. of properties Compared to IPO Compared to end of interim period Improved 0 0 Unchanged 0 13 Degraded (Upward of appraisal value) (million yen) 40,000 30,000 20,000 10,000 Major regional cities Greater Tokyo area 30,936 31,959 32,434 7,624 2,861 Other regional cities 7,719 7,824 2,885 2,935 20,451 21,355 21,675 At IPO Interim period (Note3) End of period (Note3) Interim period includes S-FORT Gakuenmae acquired on October 1, % 6.0% 5.5% 5.0% 4.5% Major regional cities Greater Tokyo area At IPO 6.1% 5.5% 5.0% 5.9% 5.8% 5.4% 5.3% 4.9% Interim (Note3) period Other regional cities End of period 4.8% 18

19 3. Future Growth Strategy

20 Growth Strategies External growth strategy Internal growth strategy Financial strategy (1) Expand the asset size and enhance the quality of the portfolio through continuous acquisitions of the S-RESIDENCE properties developed by the sponsor (2) Acquire properties through sponsor support (3) Acquire properties by taking advantage of the proprietary channels of the asset management company (4) Implement the differentiated portfolio development policy (1) Enhance the asset value and rate of return through reviewing existing facilities and other measures (2) Reduce operating costs (3) Stabilize earnings by utilizing sublease agreements (1) Lengthen borrowing periods and reduce cost of debt (2) Expand the bank formation (3) Acquire credit ratings in the future Management Target(Based on acquisition price) Target of managed assets: achieving the asset size of 100 billion yen within three years billion yen (Asset size: billion yen) IPO 1st period (Jan.2016) Management Target (3 years later) 20

21 External growth Pipeline (Properties of which exclusive negotiating rights were granted and properties under negotiation for acquisition) Properties being developed by the sponsor, of with exclusive negotiating rights were granted Name (tentative) Location Number of units Area 1 S-RESIDENCE Shin Osaka Ekimae Higashi Yodogawa-ku, Major regional cities 167 Osaka *Completed in September S-RESIDENCE Esaka Suita-shi, Osaka 138 Other regional cities *Completed in September S-RESIDENCE Yodoyabashi Chuo-ku, Osaka 84 Major regional cities *Completed in January S-RESIDENCE Kobe Motomachi Chuo-ku, Kobe 81 Major regional cities *To be completed in February S-RESIDENCE MidoribashiSF Chuo-ku, Osaka 148 Major regional cities 6 S-RESIDENCE Fukaebashi East Higashinari-ku, Osaka 144 Major regional cities 7 S-RESIDENCE Shin Osaka West Yodogawa-ku, Osaka 224 Major regional cities 8 S-RESIDENCE Miyakojima Miyakojima-ku, Osaka 120 Major regional cities 9 S-RESIDENCE Esaka Tarumicho Suita-shi, Osaka 75 Other regional cities 10 S-RESIDENCE Nagoya Chiyoda Naka-ku, Nagoya 109 Major regional cities 11 S-RESIDENCE Minami Horie Nishi-ku, Osaka 154 Major regional cities 12 S-RESIDENCE Yokosuka Chuo Yokosuka-shi, Greater Tokyo area 24 Kanagawa *To be completed in February S-RESIDENCE Higashi Ikebukuro Toshima-ku, Tokyo 40 Greater Tokyo area *To be completed in February S-RESIDENCE Ryogoku Sumida-ku, Tokyo 36 Greater Tokyo area *To be completed in February S-RESIDENCE Sakura Josui Suginami-ku, Tokyo 43 Greater Tokyo area 16 S-RESIDENCE Yokohama Kanagawaku,Yokohama 36 Greater Tokyo area 17 S-RESIDENCE Kawasaki Kawasaki-ku, Kawasaki 43 Greater Tokyo area 18 S-RESIDENCE Shinjuku 5-Chome Shinjuku-ku, Tokyo 65 Greater Tokyo area Prefectures where the 29 owned properties are located Properties owned by third party which sponsor has concluded sales contract Prefectures where investments will be made for the first time Area Major regional cities Other regional cities Location Number Number of of units (total) buildings Nagoya-shi 3 88 Tochigi 1 52 Properties owned by the sponsor, being considered for acquisition Location Number of units Area 1 Nagata-ku, Kobe 168 Major regional cities 2 Aoba-ku, Sendai 91 Major regional cities 3 Wakabayashi-ku, Sendai 59 Major regional cities 4 Nakagyo-ku, Kyoto 47 Major regional cities 5 Higashiyama-ku, Kyoto 18 Major regional cities 6 Oita-shi, Oita 92 Other regional cities 7 Saga-shi, Saga 127 Other regional cities 8 Saga-shi, Saga 46 Other regional cities 9 Kumamoto-shi, Kumamoto 91 Other regional cities 10 Tyuou-ku, Sagamihara 53 Greater Tokyo area (Note) Acquisition of any properties described on this page has not been decided as of the date of this document. 21

22 Internal Growth Leasing Activities / Examples at Acquired Assets (1) Renovation Examples Aiming for asset value improvement through continued planning and execution of renovations C-02 S-FORT Nihonbashi Hakozaki 3 unit prefabricated bath before After Since long-term vacancies stood out at acquisition, the bathroom was renovated into two separate rooms with high functionality. By providing a more comfortable living space, occupancy rates improved and rental revenue increased. At property acquisition (as of July 31, 2015) Occupancy Rate After renovations (as of January 31, 2016) 84.6% 92.3% Rent unit price (including common expenses) Renovated units Average rent increase after renovation 4 units 8,000 B-01 S-FORT Shizuoka Hondori Electric cooker repairs The occupancy rate was low at acquisition, but by replacing the deteriorated electric cookers with the latest IH stoves and by advertising such to tenants, the occupancy rate improved significantly. At property acquisition (as of April 30, 2015) before After A-14 S-FORT Kyoto Nishioji Occupancy Rate After renovations (as of January 31, 2016) 85.7% 92.9% Introduced free internet service The free internet service is one of the popular features of rental residences and is expected to lead to improved occupancy rates in the future. After its introduction, 3 new contracts were signed. Before introduction Down time After introduction 137 days 51 days 22

23 Internal Growth Leasing Activities / Examples at Acquired Assets (2) Leasing Considering the Property Characteristics The 2 properties (S-RESIDENCE Namba Briller, S-RESIDENCE Kobe Isogamidori) among the S-RESIDENCE series developed by sponsors utilize the design and security-conscious product marketability in promotional materials and maintain high occupancy rates by taking in many female and corporate demands. A-13 S-RESIDENCE Kobe Isogamidori Rent revision status (July 2015 through January 2016) Unchanged 1 unit Rent increase or decrease ratio at time of tenant replacement for July 2015 through January % Upward revision 29 units At S-RESIDENCE Kobe Isogamidori, leasing activities aiming for an increase in rent unit prices were executed and rents were revised upwards for most units at the time of tenant replacement % Occupancy rate change (July 2015 through January 2016) 99.0% 98.0% 97.0% 96.0% 95.0% 99.4% 98.3% 98.4% 97.9% 98.9% 99.4% 99.1% Occupancy rate (%) Jul.2015 Aug. Sep. Oct. Nov. Dec. Jan.2016 A-08 S-RESIDENCE Namba Briller Rent revision status (July 2015 through January 2016) Unchanged rent ratio at time of tenant replacement for July 2015 through January % Unchanged 21 units While S-RESIDENCE Namba Briller has many competing properties in the surrounding area, it has not had to decrease rents at the time of tenant replacements and has maintained a high occupancy rate of around 98%. Occupancy rate change (July 2015 through January 2016) 100.0% 99.0% 98.0% 97.0% 96.0% 95.0% 96.8% 98.1% 100.0% 98.1% 98.0% 97.4% 100.0% Occupancy rate (%) Jul.2015 Aug. Sep. Oct. Nov. Dec. Jan

24 Internal Growth Leasing Activities / Examples at Acquired Assets (3) Successful Examples of Flexible and Strategic Leasing A-09 S-FORT Tsurumai marks Achieved 100% occupancy rate through strategic leasing activities focusing on corporate demands, by cooperating with PM companies at the time of acquisition, aiming for improved occupancy rates anticipating personnel changes in the fall. Corporate contracts account for more than half (23 of 42 units contracted), the business types are diverse, making stable occupancy rates possible % 95.0% 90.0% 97.6% 97.6% 97.6% 100% 100% 85.0% 80.0% 85.7% 83.3% Occupancy rate (%) Jul.2015 Aug. Sep. Oct. Nov. Dec. Jan.2016 A-04 S-FORT Chikushi Dori Before Samty Residential acquired the property the occupancy rate was in the lower 80% range and at the date of acquisition by Samty Residential (as of May ) it was 85.6%. However, at the time of the acquisition the PM company was changed and relations with the leasing agent were strengthened and with strategic leasing activities such as analysis of the cause of vacant units and value add work (color contrast), the occupancy rate improved to 97.8% as of January 31, % 95.0% 97.8% 90.0% 85.0% 80.0% 92.3% 91.1% 90.1% 87.8% 87.8% 85.6% 86.7% 93.3% Occupancy rate (%) H27 年 5 6 Jul.2015 Aug. Sep. Oct. Nov. Dec. Jan

25 Financial strategy Summary of Financial Strategy Basic Policy Equity finance Debt finance LTV The issuance of new investment units will be authorized based on the financial environment and with consideration given to dilution of unitholder value, following a comprehensive review of the profitability of the managed asset, timing of the acquisition, LTV level, and repayment plan for interest-bearing debt, among other factors. Debt financing through execution of borrowings and issuance of investment corporation bonds (including short-term investment corporation bonds) will be carried out with consideration given to the balance between financing flexibility and financial stability. LTV levels will be determined with close consideration given to financial capacity. While the ceiling will be set at 60%, LTV levels will generally be kept between 45% and 55%. Future Action Plans Develop new banking relation ship including regional banks Diversify the source of financing across Japan as is in case of geographical diversification of assets Extend remaining borrowing period with consideration given to costs Diversify repayment dates Acquire credit ratings in the future 25

26 4. Operating Results and Distribution Information

27 Management Forecast of the 2nd Fiscal Period (million yen) Real estate rental revenue Miscellaneous rental expenses Taxes and dues Depreciation Real estate rental expenses Real estate rental income Asset managemant fees Other expenses Operating income Non-operating income and expense Ordinary income Corporate tax, etc. Net income 2nd fiscal period 1, Assumptions Calculation period : From February 1, 2016 to July 31, 2016 Managed assets 29 properties (Number of acquired properties as of the date of this document) Period-average month-end occupancy rate 94.6% Interest-bearing liabilities 17,162 million yen (yen) Distribution per unit 2,017 No. of investment units issued and outstanding 163,340 units Distribution in excess of earnings per unit Total distribution per unit 2, Capital expenditures (planned amount) 28 million yen 27

28 Distribution Policy Due to of the nature of the portfolio, the ratio of depreciation to property acquisition price tends to be large, Samty Residential aims to increase fund efficiency through optimal fund allocation and improvement of unitholder value over the medium to long term. In regards to the 2nd Fiscal Period, Samty Residential determined that it is appropriate to conduct distributions in excess of earnings in consideration of the market environment and financial conditions. Amount of distribution amount are determined based on the target payout ratio aiming for 70%. Cash Management Strategy Based on the characteristics of the portfolio, Samty Residential will optimally distribute free cash flow after allocating funds to reserves for capital expenditures to maintain the building functions, etc., working capital and such, in accordance with the situations of the time. Cash will be allocated based on a comprehensive review of the external economic environment, real estate market conditions, and financial condition of Samty Residential Capital expenditures to maintain the building functions, etc. Securement of working capital on hand, etc. Optimally allocate the free cash to each measure listed below after the fund allocation mentioned above Return to unitholders including distribution in excess of earnings Reinforcement of the financial base by reducing interest-bearing liabilities, etc. Investment that should help enhance the portfolioʼs profitability 28

29 Distribution Policy Distributions in Excess of Earnings Samty Residential determines the distribution amount of each period based on the payout ratio, as distribution of operation outcome. However, when deciding distribution in excess of earnings, the following requirements are to be fulfilled, taking into account Samty Residentialʼs financial conditions, amount of future capital expenditures, etc., in order to avoid undermining the unitholder value. Conceptual diagram of distribution in excess of earnings (1) Determine of distribution With a view to enhancing unitholder value over the medium to long term, distributions in excess of earnings are authorized when Samty Residentialʼs portfolio meets the following conditions. Total appraisal value CAPEX for the following fiscal period Total adjusted book value (Note) Expensed related to rent business, sales, general and administrative expenses, nonoperating expenses, etc. Note: Excluding amount equivalent to incidental expenses upon acquisition (2) Determination of amount Amount of distributions are determined for each fiscal period based on future capital expenditures, capital demand, etc. Rental revenue Depreciation Distribution in excess of earnings Payout ratio = Total distribution amount (including distribution in excess of earnings)/(net income + Depreciation) Distribute payout ratio aiming for 70% Net income before income taxes Distribution (profits) However, distribution in excess of earnings will be up to 35% of depreciation 29

30 Cash distribution forecast: Outlook of Funds From Operations and Cash Flow Outlook of Cash Flow 2nd fiscal period (million yen) 700 Payout ratio 70.8% Depreciation 268 Distributions in excess of earnings Net income 329 Distributions (profits) FFO CAPEX AFFO Total 分配 cash distribution 総額 Cash 活 可能 available for な現 use *FFO=Net income + Depreciation Gain or loss on sale of real estate AFFO= FFO-CAPEX 30

31 5. Appendix

32 Characteristics of Regional Residence Investments Household growth rate (2000 = 100) (%) 100 Kyoto City Source: Prepared by Sumitomo Mitsui Trust Research Institute based on Basic Resident Registers, Ministry of Internal Affairs and Communications Net Migration (people ) 80,000 70,000 Tokyo 23 Wards Fukuoka City Sapporo City Tokyo 23 Wards Sendai City Major Regional Cities Nagoya City Osaka City Kobe City Hiroshima City Major Regional Cities Growth rate from 2000 to % +22.5% +19.8% +18.2% +17.8% +16.7% +16.1% +15.6% +14.9% +12.5% Number of New Housing Starts (Year 2000=100) (%) 東京 Tokyo 区 Wards 主要地 都市合計 Major Regional Cities 平成 平成 平成 平成 平成 2008 平成 平成 平成 Source: Prepared by Samty Asset Management based on Housing Starts Statistics (yearly), (house for rent/reinforced concrete structure, steel framed reinforced concrete structure/residential complex) Ministry of Land, Infrastructure, Transportation and Tourism, Information Policy Division, Construction Research and Statistics Office Status of Investment into Residences by Listed J-REITs Others: % (number of buildings) 60,000 50,000 40,000 30,000 20,000 10, Source: Prepared by Sumitomo Mitsui Trust Research Institute based on Basic Resident Registers, Ministry of Internal Affairs and Communications Aichi Prefecture: 89 6% Osaka: 95 7% Tokyo: % Source: Prepared by Samty Asset Management based on ARES J-REIT Property Database (Note) Total of each listed J-REITʼs owned residences (1,455 buildings) at end of the most recent fiscal period as of February 23, Further, for Nomura Real Estate Master Fund. Inc., which merged on October 1, 2015, the owned residences at the end of the most recent fiscal period for the pre-merger Nomura Real Estate Residential Fund, Inc. 32

33 Overview of the Samty Group History Dec Sep Mar Jul Feb Dec Samty Development Co., Ltd. (currently Samty Co., Ltd.) established at Nakajima 1-chome, Higashi-Yodogawa Ward, Osaka City Launched the real estate securitization business and conducted real estate securitization that was the first such operation approved by the Kinki Local Finance Bureau Launched the S-Residence series of rental condominiums for real estate funds and REITs Shares listed on the Osaka Securities Exchange's Hercules market (currently the Tokyo Stock Exchange's JASDAQ Standard). Established Tokyo Branch Office Established Samty Kanri Co., Ltd. that is engaged in real estate management business Jun Nov May 2015 Oct Mar Established Fukuoka Branch Office Acquired shares in Samty Asset Management Co., Ltd. to make it a wholly-owned subsidiary Established Sapporo Branch Office Moved up to the First Section of the Tokyo Stock Exchange. Established Nagoya Branch Office (million yen) Property Leasing The Samty Group owns condominiums, office buildings, retail properties, hotels and parking lots either for the entire buildings or in sectional ownership, and leases them to individuals and corporate tenants. The Group continuously acquires income-generating real estate properties in major regional cities throughout Japan, centering on the Kansai area where the Groupʼs headquarters exist. The in-house design and leasing divisions have qualified architects of the first class, who study and implement lease-up plans and measures to enhance asset value. The Group also conducts subleasing and consigned operations of building management, etc. As such, the group has accumulated a wide range of know-how and experiences. Office buildings 10,653 15% Composition of Lease Assets of the Samty Group Retail facilities / hotels, etc. 39% Book value : as of November 30, 2015 Condominiums 33,578 46% Shikoku, 699m2, (0%) KinKi, 271,305m2, (69%) Distribution of Lease Assets of the Samty Group Leased area : as of November 30, 2015 Kyusyu, Hokkaido, 12,156m2, (3%) 52,780m2, (14%) Tohoku, 4,017m2, (1%) Kanto, 32,189m2, (8%) Chubu, 17,938m2, (5%) Changes in the Operating Results of the Samty Group (Consolidated Basis) (million yen) 45,000 40,000 35,000 30,000 25,000 20,000 Net sales : Total (left axis) Net sales : Property Leasing (left axis) Operating income (right axis) Net sales : Other Businesses (left axis) Net salse : Real Estate Business (left axis) (million yen) 9,000 7,500 6,000 4,500 (million yen) 14,000 12,000 Real Estate Business Solution Business The Samty Group sells real estate properties it develops on its own and existing income-generating real estate properties, etc. that it acquires from third parties to external investors and other buyers. A representative product of the real estate properties it develops is the S-RESIDENCE series rental condominiums, prefixed with its own brand, for which the Group operates consistently from acquiring land for the project to planning and developing the product and constructing it. For the income-generating real estate properties it has developed or acquired, the Samty Group not only invites tenants but also works to enhance the grades of the properties through facility renovations by utilizing its know-how, in an endeavor to secure earnings during the period it owns them and maximize their sale value. Since 2004, the Group has sold 28 buildings (totaling 45.5 billion yen on a sale price basis), of which 6 buildings (totaling 13.8 billion yen on a sale price basis) are owned by listed J-REITs as of the date of this document. Development Results and Development Plan of the S-RESIDENCE Series 15,000 10,000 5,000 3,000 1,500 10,000 8,000 6,000 4,000 0 Nov Nov Nov Nov Nov Nov Nov Nov Source: Securities Reports (from the fiscal year ended November 2008 to the fiscal year ended November 2015) of Samty Co., Ltd. (Note) The Net sales figure as of November 2008 shows the total of all the sales due to the change in segmentation method. 0 2, (results) 2005 (results) 2006 (results) 2007 (results) 2008 (results) 2009 (results) 2010 (results) 2011 (results) 2012 (results) 2013 (results) 2014 (results) 2015 (planned) 2016 (planned) 2017 (planned) Source: Presentation on Operating Results for Fiscal Year Ending November 2015 by Samty Co., Ltd. (Note 1) Development results represent a compilation of the sale amounts of rental condominiums developed for listed J-REITs and investment funds. (Note 2) Development plans represent a compilation of the assumed sale amounts of properties for which the Samty Group has concluded agreements regarding acquisition of the land for the projects. The figures are as of the end of November 2015, and may be changed in accordance with an increase or a decrease in the number of future agreements on acquiring land and changes in the assumed sale amounts. 33

34 Condominium Brand S-RESIDENCE in Samty Residentialʼs Portfolio S-RESIDENCE Brand Washstand with modern taste Double lock with dimple key for high security S-RESIDENCE is a high quality, rental condominium brand developed by Samty Group since S-RESIDENCE is a brand characterized by the opulent utilization of fieldstones, entrances with open spaces, luxury hotel-like indirect lighting and corridors, high quality plumbing which display a luxuriousness, etc., possess high quality designs which appeal mainly to students, workers, etc., and particularly the high relative ratio of female tenants. S-RESIDENCE Kobe Isogamidori Hotel-like indoor hallway protecting privacy Convenient large Closets around the entrance hall Bathroom heater/dryer/ ventilation system Hands-free assuring comfort when intercom taking a bath in winter with a monitor or drying clothes on rainy days Safe flat flooring by eliminating difference in level on the floor to prevent Well-poised entrance hall trips that serves as a gateway Flat-designed floors from ordinary to private space Self-locking system that secures daily peace of mind and safety Security cameras that are effective for preventing vandalism and crimes are installed in the building and elevators Convenient home-delivery box for receiving parcels around-the-clock Image illustration Toilet with variety of functions such as self-cleaning and heater Cushioned flooring with excellent sound-absorption 34

35 Portfolio List 1 Major Regional Cities List of acquired properties (Number of acquired properties as of January 31, 2016) Property No. Property name Location type Appraisal Value Acquisition Price at End of Period (millions of yen) (millions of yen) appraisal NOI yield Number of rentable units Occupancy Rate Major regional cities A-01 S-FORT Shin Osaka ravir A-02 S-FORT Sanno A-03 S-FORT Fujigaoka A-04 S-FORT Chikushi Dori A-05 S-FORT Fukuoka Kencho Mae A-06 S-FORT Takamiya A-07 A-08 A-09 A-10 A-11 A-12 A-13 A-14 S-FORT Tsutsujigaoka Koen S-RESIDENCE Namba Briller S-FORT Tsurumai marks S-FORT Rokuban-cho S-FORT Nakajima Koen S-FORT Hokudai Mae S-RESIDENCE Kobe Isogamidori S-FORT Kyoto Nishioji A-15 S-FORT Katahira A-16 S-FORT Gakuenmae Yodogawa-ku, Osaka Nakagawa-ku, Nagoya Meitou-ku, Nagoya Hakata-ku, Fukuoka Hakata-ku, Fukuoka Minami-ku, Fukuoka Miyagino-ku, Sendai Naniwa-ku, Osaka Single / Compact % % Single / Compact 2,890 3, % % Single % % Compact 1,170 1, % % Single 979 1, % % Single / Commercial % % Single / Compact / Family 1,340 1, % % Single 2,020 2, % % Naka-ku, Naoya Family 1,020 1, % % Atsuta-ku, Nagoya Single / Commercial % % Chuo-ku, Sapporo Compact / Family 1,590 1, % % Kita-ku, Sapporo Compact / Commercial % % Chuo-ku, Kobe Single / Compact 2,470 2, % % Shimogyo-ku, Kyoto Aoba-ku, Sendai Toyohira-ku, Sapporo Single / Commercial % % Single / Compact 2,330 2, % % Single / Compact % % 35

36 Portfolio List 2 Other Regional Cities / Greater Tokyo Area List of acquired properties (Number of acquired properties as of January 31, 2016) Property No. Property name Other regional cities B-01 S-FORT Shizuoka Hondori B-02 S-FORT Suminodo B-03 S-FORT Yokkaichi otomachi Location Aoi-ku, Shizuoka Daitou-shi, Osaka Yokkaichi-shi, Mie type Appraisal Value Number of Acquisition Price appraisal NOI Occupancy at End of Period rentable (millions of yen) yield Rate (millions of yen) units Compact % % Single / Compact 1,420 1, % % Compact % % B-04 S-FORT Suzuka Suzuka-shi, Mie Compact % % Greater Tokyo area C-01 S-FORT Maita Koen C-02 S-FORT Nihonbashi Hakozaki C-03 S-FORT Itabashi Shimura Minami-ku, Yokohama Single / Compact 987 1, % % Chuo-ku, Tokyo Single / Compact % % Itabashi-ku, Tokyo Compact % % C-04 S-FORT Shiomi Koto-ku, Tokyo Single % % C-05 S-FORT Noborito Tama-ku, Kawasaki Single % % C-06 S-FORT Hiratsuka-shi, Shonan Hiratsuka Kanagawa Single % % C-07 S-FORT Funabashi-shi, Nishifunabashi Chiba Single / Compact % % C-08 S-FORT Maihama Urayasu-shi, Chiba Single 1,130 1, % % C-09 S-FORT Ichikawa Ichikawa-shi, Chiba Single / Commercial % % Total 29 properties 30,962 32, % 2, % 36

37 Income and Expenditure by Property (1) Fiscal Period Ending January 2016 (As of January 31, 2016) Area category Property No. Property name Acquisition date Major regional cities A-01 A-02 A-03 A-04 A-05 A-06 A-07 A-08 S-FORT S-FORT S-FORT Shin S-FORT S-FORT S-FORT S-RESIDENCE S-FORT Sanno Fukuoka Tsutsujigaoka Osaka ravir Fujigaoka Chikushi Dori Takamiya Namba Briller Kencho Mae Koen Apr. 15, 2015 Apr. 15, 2015 Apr. 15, 2015 May 1, 2015 Apr. 15, 2015 May 1, 2015 Apr. 15, 2015 Jul. 1, 2015 Acquisition price (million yen) 635 2, , ,340 2,020 Price Composition ratio 2.1% 9.3% 2.4% 3.8% 3.2% 2.6% 4.3% 6.5% information Balance sheet amount (million yen) 661 3, ,223 1, ,419 2,122 Total leasable area ( m2 ) 1, , , , , , , , Leasing Leased area ( m2 ) 1, , , , , , , , information Occupancy rate 87.8% 97.5% 93.8% 97.8% 99.0% 95.3% 92.4% 100.0% (as of Jan. 31, 2016) Number of operating days 292days 292days 292days 276days 292days 276days 292days 215days 1 Total real estate rental income 31, ,723 46,219 64,797 54,744 40,878 78,618 79,174 (thousand yen) Real estate rental revenues 29, ,508 42,170 53,676 52,113 38,651 70,062 74,242 Other lease business revenues 1,732 41,214 4,048 11,120 2,630 2,227 8,555 4,931 2 Real estate rental expenses 8,053 27,908 8,542 17,763 7,380 8,532 14,262 11,964 (thousand yen) Management service fee 1,815 8,770 2,070 2,397 2,576 2,081 3,174 3,030 Income Taxes and dues and Utilities expenses 501 1, , expenses Repair Cost 2,218 5,928 2,319 6,715 1,462 2,772 3, information Insurance expenses Trust fees Other 2,978 10,629 2,716 7,091 2,048 2,409 4,178 6,660 3 NOI (= 1-2) (thousand yen) 23, ,814 37,676 47,034 47,363 32,346 64,355 67,209 4 Depreciation (thousand yen) 8,865 42,044 16,137 16,021 14,369 13,072 19,392 15,997 5 Real estate rental income 14, ,770 21,539 31,013 32,994 19,274 44,962 51,212 (= 3-4) (thousand yen) 6 Capital Expenditures (thousand yen) 7 NCF (= 3-6) (thousand yen) 23, ,814 37,676 47,034 47,363 32,346 64,355 67,209 37

38 Income and Expenditure by Property (2) Fiscal Period Ending January 2016 (As of January 31, 2016) Area category Property No. Property name Acquisition date Major regional cities A-09 A-10 A-11 A-12 A-13 A-14 A-15 A-16 S-FORT S-RESIDENCE S-FORT S-FORT S-FORT S-FORT Kyoto S-FORT S-FORT Tsurumai Kobe Rokuban-cho Nakajima Koen Hokudai Mae Nishioji Katahira Gakuenmae marks Isogamidori Jul. 1, 2015 Jul. 1, 2015 Jul. 1, 2015 Jul. 1, 2015 Jul. 1, 2015 Jul. 1, 2015 Jul. 1, 2015 Oct. 1, 2015 Acquisition price (million yen) 1, , , , Price Composition ratio 3.3% 2.3% 5.1% 2.2% 8.0% 2.4% 7.5% 1.5% information Balance sheet amount (million yen) 1, , , , Total leasable area ( m2 ) 2, , , , , , , , Leasing Leased area ( m2 ) 2, , , , , , , , information Occupancy rate 100.0% 96.6% 90.3% 94.7% 99.1% 90.2% 95.9% 87.2% (as of Jan. 31, 2016) Number of operating days 215days 215days 215days 215days 215days 215days 215days 123days 1 Total real estate rental income 41,031 27,396 71,778 29,646 99,005 28,988 97,318 11,080 (thousand yen) Real estate rental revenues 37,307 25,275 63,003 27,027 90,823 25,983 91,943 9,538 Other lease business revenues 3,723 2,121 8,775 2,618 8,182 3,005 5,374 1,541 2 Real estate rental expenses 7,732 5,111 12,507 5,518 10,821 9,167 13,074 1,993 (thousand yen) Management service fee 1,904 1,491 3,106 1,165 3,149 1,703 4, Income Taxes and dues and Utilities expenses , expenses Repair Cost 54 1,336 3, ,888 2,428 5, information Insurance expenses Trust fees Other 5,054 1,616 3,719 2,783 4,604 3,531 1, NOI (= 1-2) (thousand yen) 33,298 22,285 59,270 24,128 88,184 19,820 84,243 9,086 4 Depreciation (thousand yen) 10,903 8,659 15,377 6,144 21,262 9,140 32,429 3,069 5 Real estate rental income 22,394 13,625 43,893 17,983 66,922 10,680 51,814 6,017 (= 3-4) (thousand yen) 6 Capital Expenditures (thousand yen) 7 NCF (= 3-6) (thousand yen) 33,062 22,112 58,745 24,128 88,184 19,679 84,078 8,872 38

39 Income and Expenditure by Property (3) Fiscal Period Ending January 2016 (As of January 31, 2016) Area category Property No. Property name Acquisition date Other regional cities Greater Tokyo area B-01 B-02 B-03 B-04 C-01 C-02 C-03 C-04 S-FORT S-FORT S-FORT S-FORT S-FORT S-FORT S-FORT Maita Shizuoka Yokkaichi Nihonbashi Itabashi S-FORT Shiomi Suminodo Suzuka Koen Hondori Motomachi Hakozaki Shimura Apr. 15, 2015 Apr. 15, 2015 Jul. 1, 2015 Jul. 1, 2015 Apr. 15, 2015 Jul. 1, 2015 Jul. 1, 2015 Jul. 1, 2015 Acquisition price (million yen) 297 1, Price Composition ratio 1.0% 4.6% 1.6% 1.9% 3.2% 3.0% 2.1% 2.8% information Balance sheet amount (million yen) 313 1, , Total leasable area ( m2 ) , , , , , , , Leasing Leased area ( m2 ) , , , , , , , information Occupancy rate 92.9% 95.9% 100.0% 92.0% 91.7% 92.3% 90.9% 98.1% (as of Jan. 31, 2016) Number of operating days 292days 292days 215days 215days 292days 215days 215days 215days 1 Total real estate rental income 17,217 86,646 25,179 31,654 50,222 29,182 23,279 33,327 (thousand yen) Real estate rental revenues 16,155 74,299 22,009 25,143 46,816 25,487 20,150 30,806 Other lease business revenues 1,062 12,347 3,170 6,511 3,406 3,694 3,129 2,521 2 Real estate rental expenses 6,406 13,390 4,934 5,041 9,917 9,710 7,160 5,233 (thousand yen) Management service fee 1,922 2,837 1,643 1,850 4,230 1,854 1,262 2,102 Income Taxes and dues and Utilities expenses 233 3, , expenses Repair Cost 2,041 2, ,541 4,348 2,876 1,169 information Insurance expenses Trust fees Other 1,685 4,051 1, ,698 2,448 2, NOI (= 1-2) (thousand yen) 10,811 73,256 20,244 26,613 40,305 19,471 16,119 28,094 4 Depreciation (thousand yen) 4,892 23,571 7,222 8,460 16,033 5,529 4,785 7,011 5 Real estate rental income 5,919 49,684 13,022 18,152 24,271 13,942 11,333 21,083 (= 3-4) (thousand yen) 6 Capital Expenditures , (thousand yen) 7 NCF (= 3-6) (thousand yen) 10,811 73,256 20,008 26,471 40,175 13,389 16,119 28,094 39

40 Income and Expenditure by Property (4) Fiscal Period Ending January 2016 (As of January 31, 2016) Area category Property No. Greater Tokyo area Total C-05 C-06 C-07 C-08 C Properties S-FORT S-FORT S-FORT S-FORT S-FORT Property name Shonan Noborito Nishifunabashi Maihama Ichikawa Hiratsuka Acquisition date Jul. 1, 2015 Jul. 1, 2015 Jul. 1, 2015 Jul. 1, 2015 Jul. 1, 2015 Acquisition price (million yen) , ,962 Price Composition ratio 2.2% 2.6% 2.4% 3.6% 2.6% information Balance sheet amount (million yen) , ,607 Total leasable area ( m2 ) 1, , , , , , Leasing Leased area ( m2 ) , , , , , information Occupancy rate 95.0% 87.6% 100.0% 98.8% 87.3% 95.2% (as of Jan. 31, 2016) Number of operating days 215days 215days 215days 215days 215days 1 Total real estate rental income 22,555 30,643 27,643 43,317 31,059 1,458,576 (thousand yen) Real estate rental revenues 21,344 29,277 25,142 38,829 29,629 1,299,936 Other lease business revenues 1,210 1,365 2,501 4,487 1, ,639 2 Real estate rental expenses 4,843 6,827 7,585 7,275 7, ,244 (thousand yen) Management service fee 1,233 1,692 1,648 1,860 2,703 70,345 Income Taxes and dues and Utilities expenses ,742 expenses Repair Cost ,529 1,793 1,640 64,195 information Insurance expenses ,512 Trust fees ,710 Other 2,234 4,054 3,450 2,183 1,977 91,738 3 NOI (= 1-2) (thousand yen) 17,712 23,815 20,058 36,041 23,474 1,192,331 4 Depreciation (thousand yen) 6,194 7,475 7,104 7,855 3, ,572 5 Real estate rental income 11,517 16,340 12,953 28,185 19, ,758 (= 3-4) (thousand yen) 6 Capital Expenditures ,390 (thousand yen) 7 NCF (= 3-6) (thousand yen) 17,605 23,815 19,818 36,041 23,474 1,183,940 40

41 Financial Documents: Balance Sheet (Unit: thousand yen) (Unit: thousand yen) Current Fiscal Year (January 31, 2016) Current Fiscal Year (January 31, 2016) Assets Liabilities Current assets Current liabilities Cash and deposits 276,619 Operating accounts payable 72,714 Cash and deposits in trust 705,877 Short-term loans payable 1,162,000 Operating accounts receivable 4,243 Accounts payable other 161,846 Prepaid expenses 42,931 Accrued expenses 1,166 Consumption tax receivable 144,140 Income taxes payable 1,581 deferred income tax asset 27 Advances received 143,550 Total current assets 1,173,839 Deposits received 12,870 Non-current assets Total current liabilities 1,555,730 Property, plant and equipment Non-current liabilities Buildings in trust 20,131,994 Long-term loans payable 16,000,000 Accumulated depreciation 351,345 Tenant leasehold and security deposits in trust 150,602 Buildings in trust, net 19,780,648 Total non-current liabilities 16,150,602 Machinery and equipment in trust 358,415 Total Liabilities 17,706,332 Accumulated depreciation 10,831 Net assets Machinery and equipment in trust, net 347,584 Unitholdersʼ equity Tools, furniture and fixtures in trust 2,894 Unitholdersʼ capital 16,015,052 Accumulated depreciation 396 Surplus Tools, furniture and fixtures in trust, net 2,498 Unappropriated retained earnings 168,963 Land in trust 12,477,166 Total surplus 168,963 Total property, plant and equipment 32,607,898 Total unitholdersʼ equity 16,184,016 Investments and other assets Total net assets 16,184,016 Lease and guarantee deposits 10,284 Total liabilities and net assets 33,890,349 Long-term prepaid expenses 98,327 Total investments and other assets 108,611 Total non-current assets 32,716,510 Total assets 33,890,349 41

42 Financial Documents: Statement of Income (Unit: thousand yen) Current Fiscal Year From: March 16, 2015 To: January 31, 2016 Operating revenue Rent revenue - real estate 1,299,936 Other lease business revenues 158,639 Total operating revenue 1,458,576 Operating expenses Expenses related to rent business 628,836 Asset management fee 91,851 Asset custody fee 5,015 Administrative service fees 28,454 Directorsʼ compensations 4,400 Other operating expenses 101,288 Total operating expenses 859,846 Operating income 598,729 Non-operating income Interest income 71 Total non-operating income 71 Non-operating expenses Interest expenses 120,663 Borrowing related expenses 180,020 Deferred organization expenses 70,000 Investment unit issuance costs 57,584 Total non-operating expenses 428,268 Ordinary income 170,532 Net income before income taxes 170,532 Income taxes current 1,596 Income taxes deferred 27 Total income taxes 1,569 Net income 168,963 Unappropriated retained earnings 168,963 42

43 Financial Documents: Statements of Cash Flows (Unit: thousand yen) (Unit: thousand yen) Current Fiscal Year From: March 16, 2015 To: January 31, 2016 Current Fiscal Year From: March 16, 2015 To: January 31, 2016 Cash flows from operating activities Cash flows from financing activities Net income before income taxes 170,532 Proceeds from short-term loans payable 12,962,000 Depreciation 362,572 Repayments of short-term loans payable 11,800,000 Interest income 71 Proceeds from long-term loans payable 16,000,000 Interest expenses 120,663 Proceeds from the issuance of investment units 15,957,467 Investment unit issuance costs 57,584 Cash flows from financing activities 33,119,467 Decrease (increase) in operating accounts receivable 4,243 Net increase (decrease) in cash and cash equivalents 982,496 Decrease (increase) in consumption taxes receivable 144,140 Cash and cash equivalents at the beginning of period - Decrease (increase) in prepaid expenses 42,931 Cash and cash equivalents at the end of interim period 982,496 Increase (decrease) in operating accounts payable 69,591 Increase (decrease) in accounts payable other 161,306 Increase (decrease) in advances received 143,550 Decrease (increase) in long-term prepaid expenses 98,327 Other, net 32,926 Subtotal 763,160 Interest income received 71 Interest expenses paid 119,496 Income taxes current 14 Cash flows from operating activities 643,721 Cash flows from investing activities Purchase of property, plant and equipment in trust 32,966,807 Payments for lease and guarantee deposits 10,284 Repayments of tenant leasehold and security deposits in trust 19,086 Proceeds from tenant leasehold and security deposits in trust 215,486 Cash flows from investing activities 32,780,692 43

44 Feature of Excess of Earnings and Portfolio Feature of Investments in Residential Properties Located in Regions outside Tokyo Feature of Samty Residential Investment Corporationʼs Portfolio A feature of investing in residential properties located in regions is its tendency to incur depreciation that is relatively large in proportion to the acquisition price of properties. Ex.: Comparison between residential properties in regions and in Greater Tokyo area (Assuming depreciation period as 50 years, NOI yield as 6.0% and 5.0% for regions and Greater Tokyo area respectively. These figures are examples and do not represent any specific property owned by Samty Residential Investment Corporation.) Samty Residential Investment Corporationʼs portfolio is mainly comprised of relatively new properties. Furthermore, in accordance with the sponsor support agreement, exclusive negotiating rights of S-RESIDENCE series, properties newly developed and conveniently located, are granted to Samty Residential Investment Corporation by the sponsor. Therefore, this feature is believed to remain going forward. [Residential property in a region] Building: 3 billion yen Land: 1 billion yen Depreciation: 60 million yen/year NOI yield: 6.0% NOI yield after depreciation :4.5% Depreciation rate:1.5% 1 Portfolio composition with average building age of 7.6 years Ratio of CAPEX to total acquisition price of properties is expected to remain at a low level [Residential property in Greater Tokyo area] Building: 3 billion yen Land: 3 billion yen Depreciation: 60 million yen/year NOI yield: 5.0% NOI yield after depreciation :4.0% Depreciation rate: 1.0% 2 Stable supply of newly developed properties from the sponsor *Depreciation rate is the ratio of depreciation to the acquisition price of properties. 44

45 Unitholder Information (as of January 31, 2016) Number of Units by Unitholder Type Total 163,340 units Number of Unit holders by Unit holder Type Total 10,434 people (people) Major Unitholders (top 10) Unitholder name Investment units Ratio (units) Japan Trustee Services Bank, Ltd. (Trust Account) 17, % Samty Co., Ltd. 10, % Kinki Sangyo Credit Union 7, % The Master Trust Bank of Japan, Ltd. (Trust Account) 6, % Trust & Custody Services Bank, Ltd. (Securities Investment Trust Account) 5, % The Nomura Trust and Banking Co., Ltd. (Trust Account) 3, % Daido shinyoukumiai 3, % Individual 3, % Individual 2, % Osaka co-sei Shinkin Bank 2, % Total 62, % 45