26th Fiscal Period Financial Report (REIT) - heiwa-re.co.jp · PDF file26th FP ¥2,854...
Transcript of 26th Fiscal Period Financial Report (REIT) - heiwa-re.co.jp · PDF file26th FP ¥2,854...
1
26th Fiscal Period Financial Report (REIT)
January 21, 2015
REIT Issuer: HEIWA REAL ESTATE REIT, Inc. Stock Exchange Listing: TSE
Securities Code: 8966 URL: http://www.heiwa-re.co.jp/
Representative: (Title) Executive Director (Name) Masaaki Higashihara
Asset Management Company: HEIWA REAL ESTATE Asset Management CO., LTD.
Representative: (Title) President & Representative Director (Name) Takaya Ichikawa
Inquiries: (Title) General Manager, Planning & Finance Department (Name) Shinya Ito
TEL: +81-3-3669-8771
Scheduled date of submission of periodic securities report (yuka shoken hokokusho): February 25, 2015
Scheduled date of commencement of distribution payments: February 17, 2015
Supplementary materials: Attached
IR Conference: Yes (for institutional investors, securities analysts)
[Amounts are rounded down to the nearest million yen]
1. Status of Management and Assets for the 26th Fiscal Period
26th Fiscal Period (26th FP): Fiscal period ended November 2014 (from June 1, 2014 to November 30, 2014)
(1) Management
[% figures show the period-on-period increase (decrease)]
Operating revenue Operating income Ordinary income Net income
26th FP ¥5,052 million (0.1%) ¥2,148 million (0.9%) ¥1,502 million 3.9% ¥1,501 million 3.9%
25th FP ¥5,059 million 9.6% ¥2,168 million 8.2% ¥1,445 million 8.2% ¥1,444 million 8.2%
Net income
per unit
Ratio of
net income to
unitholders’ equity
Ratio of
ordinary income to
total assets
Ratio of
ordinary income to
operating revenue
26th FP ¥1,703 1.8% 1.0% 29.7%
25th FP ¥1,653 1.8% 1.0% 28.6%
(2) Distributions
Distribution per unit
(excluding distribution
in excess of earnings)
Total distributions
(excluding distribution
in excess of earnings)
Distribution in
excess of earnings
per unit
Total distributions
in excess of
earnings
Payout ratio
(Note 1)
Ratio of
distributions
to net assets
(Note 2)
26th FP ¥1,703 ¥1,501 million ¥0 ¥0 million 100.0% 1.8%
25th FP ¥1,670 ¥1,472 million ¥0 ¥0 million 101.9% 1.9%
(Note 1) Payout ratio shows figures that have been calculated using the following formula:
Total distributions (excluding total distributions in excess of earnings) ÷ Net income × 100
(Note 2) Ratio of distributions to net assets shows figures that have been calculated using the following formula:
Total distributions (excluding total distributions in excess of earnings) ÷ [(Net assets at beginning of period + Net assets at
end of period) ÷ 2] × 100
(Note 3) Sources of funds for paying total distributions for the 25th Fiscal Period include funds applied from retained earnings
brought forward (¥27 million) and therefore the amount of total distributions differs from the amount of net income.
(3) Financial Position
Total assets Net assets
Ratio of
unitholders’ equity to
total assets
Net assets
per unit
26th FP ¥157,382 million ¥82,033 million 52.1% ¥93,067
25th FP ¥157,016 million ¥82,115 million 52.3% ¥93,160
(4) Cash Flows
Net cash
provided by (used in)
operating activities
Net cash
provided by (used in)
investing activities
Net cash
provided by (used in)
financing activities
Cash and
cash equivalents
at end of period
26th FP ¥2,854 million (¥2,324 million) (¥1,472 million) ¥7,066 million
25th FP ¥2,144 million (¥9,954 million) ¥8,326 million ¥8,009 million
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
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2. Management Status Forecasts for the 27th and 28th Fiscal Period
27th Fiscal Period (27th FP): Fiscal period ending May 2015 (from December 1, 2014 to May 31, 2015)
28th Fiscal Period (28th FP): Fiscal period ending November 2015 (from June 1, 2015 to November 30, 2015)
[% figures show the period-on-period increase (decrease)]
Operating revenue Operating income Ordinary income Net income
Distribution per unit
(excluding
distribution in
excess of earnings)
Distribution in
excess of earnings
per unit
27th
FP
¥5,394
million 6.8%
¥2,299
million 7.0%
¥1,658
million 10.4%
¥1,657
million 10.4% ¥1,742 ¥0
28th
FP
¥5,391
million (0.1%)
¥2,268
million (1.3%)
¥1,628
million (1.8%)
¥1,627
million (1.8%) ¥1,711 ¥0
(Reference) Estimated net income per unit: 27th Fiscal Period: ¥1,742 28th Fiscal Period: ¥1,711
* Other
(1) Changes in Accounting Policies, Changes in Accounting Estimates, Restatements
(i) Changes in accounting policies accompanying amendments to accounting standards, etc.: No
(ii) Changes in accounting policies other than (i): No
(iii) Changes in accounting estimates: No
(iv) Restatements No
(2) Number of Investment Units Issued and Outstanding
(i) Number of investment units issued and outstanding at
end of period (including own investment units):
26th Fiscal
Period: 881,447 units
25th Fiscal
Period: 881,447 units
(ii) Number of own investment units at end of period: 26th Fiscal
Period: 0 units
25th Fiscal
Period: 0 units
(Note) For the number of investment units on which the calculation of net income per unit is based, see “Note on per-unit
information” on page 33 of the Japanese version of the “26th Fiscal Period Financial Report (REIT)” for the period ended November 2014.
* Statement on Status of Review Procedures
Financial statement review procedures based on the Financial Instruments and Exchange Act are still ongoing at the time of
disclosure of this financial report.
* Explanation on the Appropriate Use of the Management Status Forecasts, and Other Matters of Special Note
(Caution Concerning Forward-Looking Statements, Etc.)
The management status outlook and other forward-looking statements contained in this document are based on information currently
available to and certain assumptions deemed reasonable by the Investment Corporation. Accordingly, actual management status and
other results may vary materially due to various factors. This forecast is not a guarantee of actual distributions paid. See the Japanese
version of the “Management status forecast assumptions for 27th and 28th Fiscal Period (from December 1, 2014 to May 31, 2015 and
from June 1, 2015 to November 30, 2015 respectively)” on page 10 for notes on assumptions used in management status forecasts and
on the use of management status forecasts.
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
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1. Related Corporations of the REIT
No disclosure necessary, since there have been no material changes from “Structure of the REIT” in the most
recent Annual Securities Report (submitted August 27, 2014).
2. Operating Policies and Operations
(1) Operating policies
No disclosure necessary, since there have been no material changes from “Investment policies,” “Targets of
investments” and “Distributions policy” in the most recent Annual Securities Report (submitted August 27,
2014).
(2) Operations
a. General situation during the 26th Fiscal Period
The REIT is striving based on its Basic Philosophy of “Steady Growth of Assets Under Management” and
“Stable Medium- to Long-Term Profits,” as well as “Active Use of the Heiwa Real Estate Group” (below,
collectively referring to Heiwa Real Estate Co., Ltd. [below, “Heiwa Real Estate”] and the subsidiaries of Heiwa
Real Estate; the same hereinafter) to manage its assets with the purpose of maximizing investor’s value.
Following is a summary of our asset management during the 26th Fiscal Period.
(i) Brief background of the REIT
Investment units in the REIT have been listed on the Real Estate Investment Trust Section (J-REIT Section) of
the Tokyo Stock Exchange (below, TSE) since March 8, 2005 (Securities Code: 8966). Subsequently, the REIT
executed a capital increase through public offering and underwriting of investment units issued through private
placement on several occasions and an investment unit split and investment unit issuance through a merger with
Japan Single-residence REIT Inc. (below, JSR) on October 1, 2010 (below, this event is referred to as the merger)
by the 25th Fiscal Period. As a result, total investment units outstanding were 881,447 and unitholders' capital
was 70,527 million yen as of the end of the 26th Fiscal Period.
(ii) Operating environment
The Japanese economy during the 26th Fiscal Period showed signs of weakness mainly on the personal
consumption and production fronts, with unexpected negative growth in real GDP for July-September 2014,
reflecting the impact of decline in reaction to the rush demand before the consumption tax hike, production
adjustments in the manufacturing industry and unseasonable weather. However, the economy returned to a
modest recovery track in the second half of the fiscal period, as the stimulus measures adopted by the Japanese
Government and continued quantitative and qualitative monetary easing by the Bank of Japan fostered continued
improvement in corporate earnings and the employment and income environment, and a gradual recovery in
personal consumption and capital investment. The economy is expected to continue recovering in the future,
largely due to additional monetary easing by the Bank of Japan, the postponement of a further consumption tax
hike, a weakening yen and low oil prices. Under these circumstances, the TSE REIT Index recorded a substantial
rise to 1,826.72 points as of November 30, 2014, after ending the previous fiscal period at 1,565.02, primarily
due to the effect of additional monetary easing by the Bank of Japan on October 31.
(a) Office building leasing market
The latest office building market data from Miki Shoji Co., Ltd. shows a decline in the average office building
vacancy rate in the five central wards of Tokyo (Chiyoda, Minato, Chuo, Shibuya and Shinjuku), to 5.55% at
the end of the 26th Fiscal period (November 2014) from 6.52% as of the end of the 25th Fiscal Period (May
2014), as a result of steady reduction in vacancies in both new and existing office buildings. This was the 17th
month consecutive decline in the average office building vacancy rate in the survey. The office building leasing
market is showing signs of a steady improvement trend driven by an increase in demand for office space
backed by improved corporate economic sentiment. Average asking rents levels for a standard floor also rose
steadily from 16,501 yen per tsubo at the end of the previous Fiscal Period to 16,950 yen per tsubo as at the end
of the Fiscal period under review, suggesting a trend of bottoming out of market rents.
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
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(b) Residential leasing market
According to the IPD/Recruit Residential Index, rents for rental apartments in the metropolitan areas in
November 2014 rose 0.94% compared to the same month of the previous year, indicating that demand for
rental housing is decent due to continuous net positive migration into the metropolitan areas and an
increasing number of households with relatively few members. Since new housing starts for rental housing
decreased year on year and supply was limited compared with previous peak levels, the supply-demand trend
on the residential leasing market remained firm. For assets under management by the REIT, occupancy rates
remained high throughout the Fiscal Period under review, and the number of properties with higher rent
levels increased, contributing to a steady rise in profitability. The outlook for the residential market
remains stable, buoyed by the further advancement of improvements in employment and consumption in
the economic recovery process.
(c) Real estate
According to the Land Price Survey by prefectural governments as of July 1, 2014, which was announced
in September 2014, in the Tokyo and Osaka areas, official land prices in residential areas began to rise on
the back of growing housing demand fuelled by improved consumer sentiment, and, in the three
metropolitan areas, official land prices in commercial areas also grew at a faster pace than the year before.
The rise in official land prices in residential areas can be largely attributed to firm housing demand driven
by low interest rates and mortgage tax breaks, whilst the increase in official land prices in commercial areas
is primarily attributable to a succession of large-scale developments and greater willingness to invest in real
estate due to low interest rates. On the other hand, official land prices in the regional areas continued to
fall, both in the residential and commercial areas. However, in the regional government ordinance
designated cities that the REIT regards as investment target areas, the prices in both commercial and
residential areas have actually been rising.
(iii) Management performance
(a) External growth
For the 26th Fiscal Period, the REIT acquired no new properties, not die it transfer any of its existing
properties. As a result, portfolio assets as of the period end were 92 properties (total acquisition price 147,669
million yen) (excluding the acquisition of equity interest in a silent partnership), including 28 office buildings
(total acquisition price 62,266 million yen), 60 residential buildings (total acquisition price 81,223 million yen)
and four hotels (total acquisition price 4,180 million yen).
(b) Internal growth
The REIT has consistently endeavored to increase profitability by improving and maintaining its occupancy
rates. During the 26th Fiscal Period, with the aim of maintaining the high occupancy rate achieved at the
end of the previous fiscal period, the REIT continued to be engaged in tenant leasing activities, working to
shorten vacancy duration as well as systematic efforts to increase its investment value based on tenant
needs and the characteristics of each individual property. Partly as a result of these initiatives of
improving and maintaining the competitiveness of its assets, the occupancy rate for all properties held by
the REIT climber further to 97.31% as at the end of the 26th Fiscal Period, compared to 96.24% as at the
end of the previous fiscal period. Moreover, as in the previous fiscal period, the REIT successfully maintained
a high and stable average month-end occupancy rate of more than 96% throughout the fiscal period under
review. Moreover, as part of the initiatives that the REIT has been working on continuously, it changed
the names of the following two managed assets in the period between the start of the fiscal period under
review and the date of this report, for the purpose of seeking to improve the caliber of its appeal to
potential tenants and achieve more efficient leasing.
Properties renamed on January 5, 2015
Property no. Former property name New property name
Of-31 Nihonbashi Hamacho Central Building HF Nihonbashi Hamacho Building
Of-32 Sendai Green Place HF Sendai Honcho Building
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
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(iv) Procurement of funds
On October 31, 2014, the REIT took out Term Loan 24 Tranches A, B and C (loan amounts of 800 million
yen, 2,531 million yen and 2,400 million yen respectively) to repay Term Loan 10 (loan balance 5,731
million yen), the principal of which was maturing on the same date. An overview of the loan is provided
below. This has enabled the REIT to extend its borrowing periods and diversify its maturities (average
borrowing period as of the end of November: 5.41 years, average remaining period 3.53 years) and to lower
its borrowing cost (average borrowing interest rate as of the end of November 1.28%). On June 3, 2014, the
REIT executed interest rate swap agreements for the previously borrowed three term loans (loan balance
7,678 million yen) to fix interest rates and to hedge against the risk of higher interest expenses in the event
that rates rise in the future (ratio of fixed interest rate debt as of the end of November 86.54% (including
interest rate caps)). [Term Loan 24 Tranche A]
Lender Loan amount Principal
repayment date
Principal
repayment method Purpose Summary
ORIX Bank Corporation 800 million yen May 31, 2019
(Note)
Lump sum
repayment on the
principal
repayment date
Funds to repay
existing loans
Unsecured
Non-
guaranteed
[Term Loan 24 Tranche B]
Lender Loan amount Principal
repayment date
Principal
repayment method Purpose Summary
Sumitomo Mitsui Banking
Corporation
The Norinchukin Bank
The Bank of Fukuoka
Sompo Japan Nipponkoa
Insurance Inc.
2,531 million
yen
May 31, 2019
(Note)
Lump sum
repayment on the
principal
repayment date
Funds to repay
existing loans
Unsecured
Non-
guaranteed
[Term Loan 24 Tranche C]
Lender Loan amount Principal
repayment date
Principal
repayment method Purpose Summary
Sumitomo Mitsui Banking
Corporation
Aozora Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.
The Bank of Fukuoka
2,400 million
yen
October 31, 2022
(Note)
Lump sum
repayment on the
principal
repayment date
Funds to repay
existing loans
Unsecured
Non-
guaranteed
(Note) Or the previous business day if the date shown is not a business day.
As a result, the total loan amount at period end was 69,011 million yen (period end LTV: 43.8%).
The ratings of the REIT as of the date of this document are as follows:
Credit rating agency Issuer rating
Rating and Investment Information, Inc. (R & I) Rating: A-; Rating outlook: Stable
Japan Credit Rating Agency, Ltd. (JCR) Rating: A-; Rating outlook: Stable
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
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(v) Performance and distributions
The management described above led to 26th Fiscal Period results of 5,052 million yen in operating revenues,
2,148 million yen in operating income, and after deducting interest expenses on loans, 1,502 million yen in
ordinary income and 1,501 million yen in net income.
Concerning the distribution of monies (“distributions”) as prescribed in Article 137 of the Act on Investment
Trusts and Investment Corporations (Act No. 198 of 1951 and subsequent amendments; “the Investment
Trusts Act”), the REIT shall not make distributions in excess of unappropriated retained earnings for the
current fiscal period under review as stipulated in Article 32, paragraph 1 of its articles of incorporation
(“Articles of Incorporation”), and the amount of distributions shall be more than 90% of the earnings
available for distribution in accordance with Article 67-15 of the Act on Special Measures Concerning
Taxation (Act No. 26 of 1957 and subsequent amendments; “the Special Taxation Measures Act”). Based on
the above policy, the REIT decided the distributions from earnings that it shall pay out shall be
1,501,104,241 yen, which is the maximum value of the integral multiple of the number of units issued and
outstanding (881,447 units) in an amount that is not in excess of net income. The resulting distributions per
investment unit were 1,703 yen.
b. Outlook for next period
Management policy and future issues
The REIT has developed and managed a high quality portfolio, primarily consisting of office and residence
properties located in Tokyo’s 23 Wards, with the aim of maximizing investor value through our Basic Philosophy
of “Steady Growth of Assets under Management” and “Stable Medium- to Long-Term Profits” as well as through
the “use of the Heiwa Real Estate Group.” In subsequent periods we will continue to adhere to the above
philosophy, aiming to further maximize investor value through the stable management of our portfolio and
pursuing a strategy of steady growth.
(a) External growth
The REIT has endeavored in particular to enhance the quality of its portfolio and bolster its financial
footing. As noted below, using capital procured through new investment unit issuances determined on
November 7, 2014 and November 17, 2014, as well as Term Loan 25 Tranches A, B and C (loan amounts
of 1,300 million yen, 1,300 million yen and 900 million yen respectively) newly borrowed on December 4,
2014, the REIT acquired three office properties (Of-33 Daiwa Ueno Building (trust beneficial interest,
acquisition price: 3,400 million yen), Of-34 Kojimachi HF Building (trust beneficial interest, acquisition price:
1,350 million yen), Of-35 HF Kudan-Minami Building (trust beneficial interest, acquisition price: 2,720
million yen) and one residential property (Re-75 HF Sendai Residence East (trust beneficial interest,
acquisition price: 1,630 million yen) with support from Heiwa Real Estate on December 4, 2014. While the
REIT will aim to continually expand the scale of its assets and consider the replacement of assets, it will
continue to strive to increase profitability and investor value by acquiring properties in its endeavors to
enhance its medium-to long-term portfolio quality in the future. Given the sound financing environment and
the expectations for higher property prices on the back of the expected economic recovery, competitors are
maintaining a strong appetite for the acquisition of properties. As a result, the property acquisition environment
is likely to remain challenging. We will endeavor to promptly obtain information on excellent properties by
using our pipeline with Heiwa Real Estate and building up our unique information routes as an asset
management company. As a basic strategy, we aim to increase opportunities for primarily acquiring properties
owned and developed by Heiwa Real Estate, and additionally for acquiring properties owned and developed by
other developers to expand our portfolio, contributing to stable profitability over the medium to long term.
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
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(b) Internal growth
The REIT believes that by using the database and information network developed by the Heiwa Real Estate
Group and its property management company, it can quickly detect leasing market trends and conduct precise
property management, enabling it to maintain and increase occupancy rates and rent levels in assets under
management. To maintain and increase occupancy rates, it will deal with tenants by focusing on minimizing
departures and will undertake leasing management, including reducing the period of time for work for
restoration to the original state, to shorten the period between the time when properties are vacated and the
acquisition of new tenants. To make our properties more competitive, we continuously and actively make
value-building investments in repairs and improvements of assets under management to maintain and enhance
their medium- to long-term value, taking into account each property’s asset age, facility level and other aspects.
Through these measures, our goal is to maintain and further improve occupancy rates at high and stable levels.
(c) Financial strategy
The REIT actively implements measures in an effort to stabilize its financial foundations and achieve
sustainable growth. Concerning borrowings, the REIT will continue to strive to extend its borrowing
periods and diversify its maturities by maintaining an appropriate loan-to-value ratio, while promoting
measures to reduce risks from higher interest rates in the future and cut financial costs. It will also
endeavour to further strengthen its bank formation by strengthening its relationships with financial
institutions. By achieving these measures and initiatives on a continuous basis, the REIT will strive to
build sound financial systems that are resilient to changes in the funding environment.
(d) Promotion of more timely disclosure
We practice information disclosure that is accurate, fair and timely, complying with the TSE’s Securities
Listing Regulations and other regulations, laws, etc. relating to timely disclosure. The REIT discloses
information on its decisions on the acquisition of new properties, etc. as a rule at the time of the decision by a
REIT organization such as the Board of Directors, while events such as damage to assets under management
resulting from incidental occurrences are disclosed at the time they are discovered. As a rule, REIT information
is disclosed through the TSE’s TDnet, press releases to the TSE press club (Kabuto Club), Ministry of Land,
Infrastructure, Transport and Tourism Press Club, etc., and through the REIT’s website.
c. Significant subsequent events
A. New investment unit issuance
At meetings of the Board of Directors convened on November 7 and November 17, 2014, decisions were
reached to issue new investment units as detailed below. Payments were completed for the new investment
units issued through public offering on December 1, 2014, and for the new investment units issued through
private placement on December 24, 2014. As a result, as of the date of this report, the total value of the REIT’’s
capital subscription was 76,372 million yen, while the number of its total outstanding investment units was
951,147 units.
1. New investment unit issuance through general offering (public subscription)
a. New investment units issued 66,400 units
b. Issue price 86,790 yen
c. Total issue price 5,762,856,000 yen
d. Issue value 83,852 yen
e. Total issue value 5,567,772,800 yen
f. Payment due date December 1, 2014
g. Distribution initial reckoning date December 1, 2014
2. New investment issuance through private placement
a. New investment units issued 3,300 units
b. Issue value 83,852 yen
c. Total issue value 276,711,600 yen
d. Allotted to SMBC Nikko Securities Inc.
e. Payment due date December 24, 2014
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
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B. Borrowing of capital
The following capital loans were taken out on December 4, 2014 for purposes including allocation to the
acquisition capital of the four properties acquired on the same date (see “C. Asset Acquisitions” below).
[Term Loan 25 Tranche A]
Lender Loan amount Principal
repayment date
Principal
repayment method Purpose Summary
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank,
Limited
The Bank of Fukuoka
Mitsubishi UFJ Trust and Banking
The 77 Bank, Ltd.
1,300 million
yen
May 31, 2018
(Note)
Lump sum
repayment on the
principal
repayment date
Funds to repay
existing loans
Unsecured
Non-
guaranteed
[Term Loan 25 Tranche B]
Lender Loan amount Principal
repayment date
Principal
repayment method Purpose Summary
Sumitomo Mitsui Banking
Corporation
Aozora Bank, Ltd.
Sumitomo Mitsui Trust Bank,
Limited
The Bank of Fukuoka
Mitsubishi UFJ Trust and Banking
The 77 Bank, Ltd.
1,300 million
yen
October 31, 2018
(Note)
Lump sum
repayment on the
principal
repayment date
Funds to repay
existing loans
Unsecured
Non-
guaranteed
[Term Loan 25 Tranche C]
Lender Loan amount Principal
repayment date
Principal
repayment method Purpose Summary
Development Bank of Japan Inc. 900 million yen October 31, 2022
(Note)
Lump sum
repayment on the
principal
repayment date
Funds to repay
existing loans
Unsecured
Non-
guaranteed
(Note) Or the previous business day if the date shown is not a business day.
C. Asset Acquisitions
Pursuant to the basic policy on asset management as prescribed in the REIT’s Articles of Incorporation,
the four properties listed below were acquired on December 4, 2014 using the net proceeds from new
investment unit issuances (see “A. New investment unit issuance”) and borrowings (see “B. Borrowing of
capital”).
Property no.: Of-33 Property name: DAIWA UENO BUILDING
Acquisition date December 4, 2014
Acquisition price 3,400 million yen
Address (Indication of
residential address) 5-6-10 Ueno, Taito-ku, Tokyo
Use Offices, parking space
Completed February 7, 1990
Structure Steel frame, steel-frame reinforced concrete flat-roofed
10-story structure with 1 underground level
Total floor area 6,212.84 m2
Total available rental area 4,160.67 m2
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
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Property no.: Of-34 Property name: KOJIMACHI HF BUILDING
Acquisition date December 4, 2014
Acquisition price 1,350 million yen
Address (Indication of
residential address) 3-2-4 Kojimachi, Chiyoda-ku, Tokyo
Use Offices, parking space
Completed March 31, 1994
Structure Steel frame, steel-frame reinforced concrete flat-roofed
9-story structure with 1 underground level
Total floor area 3,314.53 m2
Total available rental area 2,117.45 m2
Property no.: Of-35 Property name: HF KUDAN MINAMI BUILDING
Acquisition date December 4, 2014
Acquisition price 2,720 million yen
Address (Indication of
residential address) 3-9-14 Kudan-Minami, Chiyoda-ku, Tokyo
Use Offices, garage
Completed March 31, 1991
Structure Steel frame, steel-frame reinforced concrete flat-roofed
8-story structure with 1 underground level
Total floor area 3,836.10 m2
Total available rental area 2,614.25 m2
Property no.: Re-75 Property name: HF SENDAI RESIDENCE EAST (Note 1)
Acquisition date December 4, 2014
Acquisition price 1,630 million yen
Address (Lot number)
219-3, 219-4, 220-1, 220-2, 221, 222, 223 and 223-1
Mototera-Koji, Miyagino-ku, Sendai, Miyagi Prefecture,
and 5-14 Kakyoindori, Miyagino-ku, Sendai, Miyagi
Prefecture (See Note 2)
Use Co-housing
Completed July 23, 2008
Structure Steel-frame reinforced concrete flat-roofed 12-story
structure
Total floor area 5,662.45 m2
Total available rental area 4,088.40 m2
(Note 1) The name of the building as of the date of this report is Agilia Sendai East. However, since the name of
the building will be changed to HF Sendai East on February 1, 2015, this report show the name after the
change.
(Note 2) The building address according to land registry is shown as there is no indication of a residential address.
The site area is subject to designation of replotting. However, the address in the table is the location of
the former plot according to the land registry.
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
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d. Outlook for the 27th and 28th Fiscal Period
Operations are forecast to be as follows during the 27th Fiscal Period (from December 1, 2014 to May 31, 2015).
See “Management status forecast assumptions for 27th Fiscal Period (from December 1, 2014 to May 31, 2015)
and 28th Fiscal Period (from June 1, 2015 to November 30, 2015)” below for assumptions used in this forecast.
Operating revenues 5,394 million yen
Operating income 2,299 million yen
Ordinary income 1,658 million yen
Net income 1,657 million yen
Distributions per unit
(excluding distributions in excess of earnings) 1,742 yen
Distributions in excess of earnings per unit ‒ yen
(Note) The above forecast figures were calculated using a fixed set of assumptions and are valid as of the time of
this notice. Actual net income, distributions, etc., may vary due to changes in conditions. Forecast figures
are not a guarantee of the amount of distributions.
Operations are forecast to be as follows during the 28th Fiscal Period (from June 1, 2015 to November 30, 2015).
See “Management status forecast assumptions for 27th Fiscal Period (from December 1, 2014 to May 31, 2015)
and 28th Fiscal Period (from June 1, 2015 to November 30, 2015)” below for assumptions used in this forecast.
Operating revenues 5,391 million yen
Operating income 2,268 million yen
Ordinary income 1,628 million yen
Net income 1,627 million yen
Distributions per unit
(excluding distributions in excess of earnings) 1,711 yen
Distributions in excess of earnings per unit ‒ yen
(Note) The above forecast figures were calculated using a fixed set of assumptions and are valid as of the time of
this notice. Actual net income, distributions, etc., may vary due to changes in conditions. Forecast figures
are not a guarantee of the amount of distributions.
Management status forecast assumptions for 27th Fiscal Period (from December 1, 2014 to May 31, 2015) and
28th Fiscal Period (from June 1, 2015 to November 30, 2015)
Item Assumptions
Management period 27th Fiscal Period: from December 1, 2014 to May 31, 2015 (182 days)
28th Fiscal Period: from June 1, 2015 to November 30, 2015 (183 days)
Assets under
management
Assumption of 96 properties under management, with Daiwa Ueno Building, Kojimachi HF
Building, HF Kudan-Minami Building and HF Sendai Residence East acquired on December
4, 2014 (below, collectively Acquired Assets) added to the 92 properties owned at the end of
November 2014.The actual number of properties owned may vary if properties are newly
acquired, transferred, etc. With respect to its equity interest in the silent partnership whose
assets under management were Daiwa Ueno Building and Kojimachi HF Building, the REIT
received profit distributions commensurate with its equity interest and the return of its equity
interest in the period ending May 2015 (the 27th Fiscal Period) due to the end of management
by the silent partnership as a result of acquisition by the REIT.
Total outstanding
investment units
Assumption of 951,147 total outstanding investment units, comprised of the 881,447 units at
the end of November 2014 plus the new investment units (66,400 units) issued through the
general offering determined by meetings of the Board of Directors on November 7 and
November 17, 2014, and the new investment units (3,300 units) pertaining to private
placement accompanying sale through over allotment.
Per-unit net income and distributions for the fiscal period under review calculated on
treatment of the aforementioned 951,147 units as the outstanding investment units as of the
end of each fiscal period.
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
11
Item Assumptions
Operating revenues
Operating revenues are calculated based on the assumption of the above assets under
management.
Operating revenues are calculated taking into account such factors as cancellation notices
currently received and the future market environment, using the history of acquired assets as
our standard.
Operating expenses
Operating expenses are calculated based on the assumption of the above assets under
management.
Assumptions concerning major operating expenses are as follows:
27th Fiscal Period: from December 1, 2014 to May 31, 2015
Public charges and taxes (fixed property tax, city planning tax, etc.): 360 million yen
Maintenance and repair fees: 187 million yen
Management commissions: 562 million yen
Depreciation: 899 million yen
28th Fiscal Period: from June 1, 2015 to November 30, 2015
Public charges and taxes (fixed property tax, city planning tax, etc.): 391 million yen
Maintenance and repair fees: 164 million yen
Management commissions: 545 million yen
Depreciation: 906 million yen
For fixed asset taxes, city planning taxes and other taxes pertaining to owned properties, of
the amount of tax for which assessments have been determined, adopted for expense
processing is the method of treating the amount corresponding to the calculation periods in
question as rental business expenses. The general approach to real estate and other
transactions with regard to fixed asset taxes, city planning taxes and other taxes is to conduct
calculations pursuant to proportional division of periods with the previous owners, with the
precision calculations made at the time of acquisition. However, because the portions
equivalent to the said precisely calculated amounts are included in the acquisition cost, they
are not listed as expenses. The portion equivalent to the precisely calculated amounts of fixed
asset taxes, city planning taxes and other taxes expected to be included in the acquisition costs
of real estate, etc. are anticipated to be 5 million yen.
Maintenance and repair fees are based on the amount deemed necessary during the period.
However, emergency maintenance and repair fees may arise as a result of unforeseeable
factors and actual fees may therefore vary significantly from the forecast.
Non-operating
expenses
We forecast 623 million yen in interest payment and borrowing-related expenses for the 27th Fiscal Period, and 626 million yen in such expenses for the 28th Fiscal Period. We additionally forecast 17 million yen in amortization of investment unit issuance expenses for the 27th Fiscal Period, and another 17 million yen in such expenses for the 28th Fiscal Period.
Interest-bearing
liabilities
The balance of interest-bearing liabilities at the end of the 25th Fiscal Period was 69,011 million yen.
Calculations are based upon assumptions of a borrowing balance of 72,511 million yen on the final day of the 27th Fiscal Period and 72,511 million yen on the final day of the 28th Fiscal Period, resulting from new borrowings of 3,500 million yen as one portion of the acquisition capital for the Acquired Assets in December 2014.
We assume full refinancing of the value of borrowings for which repayment dates will come due in May and October of 2015, respectively.
Distributions per unit
(excluding
distributions in
excess of earnings)
Distributions per unit (excluding distributions in excess of earnings) are calculated assuming the distribution of monies policy prescribed by the REIT’s bylaws. Total distributions for the 27th Fiscal Period are assumed to be 1,657 million yen (1,742 yen distribution per unit), based on the forecast net income of 1,657 million yen.. Total distributions for the 28th Fiscal Period are assumed to be 1,627 million yen (1,711 yen distribution per unit), based on the forecast net income of 1,627 million yen.
Distributions per unit (excluding distributions in excess of earnings) may change because of
various factors, including changes in leasing income attributable to changes of assets under
management or changes in tenants or to unexpected maintenance and repair work.
Distributions in
excess of earnings
per unit We do not expect any distributions in excess of earnings at this time.
Other
We assume no amendments to laws, the tax system, accounting standards, TSE rules, or The
Investment Trusts Association, Japan rules, etc., that would affect the above forecast figures.
We assume that no major unforeseen changes will occur in the general economic trends, real
estate market conditions, etc.
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
12
(3) Investment risk
No disclosure necessary, since there have been no material changes from “Investment risk” in the most recent
Annual Securities Report (submitted August 27, 2014).
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
13
3. Financial Statements
(1) Balance Sheet
(Unit: 1,000 yen)
25th Fiscal Period
(As of May 31, 2014)
26th Fiscal Period
(As of November 30, 2014)
Assets
Current assets
Cash and deposits 5,408,327 6,472,394
Cash and deposits in trust 5,715,432 5,726,641
Operating accounts receivable 102,193 103,949
Prepaid expenses 268,841 250,304
Consumption taxes receivable, etc. 210,729 –
Other 1,334 7,051
Allowance for doubtful accounts (466) (387)
Total current assets 11,706,392 12,559,953
Noncurrent assets
Property, plant and equipment
Buildings 12,065,890 12,153,844
Accumulated depreciation (2,789,087) (2,975,396)
Buildings, net 9,276,802 9,178,448
Structures 70,571 71,302
Accumulated depreciation (28,528) (30,617)
Structures, net 42,042 40,685
Machinery and equipment 232,499 235,299
Accumulated depreciation (108,637) (115,818)
Machinery and equipment, net 123,861 119,481
Tools, furniture and fixture 102,942 124,226
Accumulated depreciation (54,963) (60,939)
Tools, furniture and fixtures, net 47,979 63,286
Land 27,452,042 27,452,042
Buildings in trust 40,753,734 41,050,370
Accumulated depreciation (5,571,655) (6,153,977)
Buildings in trust, net 35,182,079 34,896,392
Structures in trust 288,274 288,274
Accumulated depreciation (45,190) (50,616)
Structures in trust, net 243,083 237,657
Machinery and equipment in trust 339,857 377,681
Accumulated depreciation (111,815) (127,437)
Machinery and equipment in trust, net 228,042 250,244
Tools, furniture and fixtures in trust 565,753 627,365
Accumulated depreciation (310,663) (344,116)
Tools, furniture and fixtures in trust, net 255,089 283,249
Land in trust 67,315,435 67,315,435
Total property, plant and equipment 140,166,458 139,836,924
Intangible assets
Leasehold right 715,719 715,719
Leasehold rights in trust 3,315,665 3,315,665
Other 3,669 2,485
Total intangible assets 4,035,055 4,033,871
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
14
(Unit: 1,000 yen)
25th Fiscal Period
(As of May 31, 2014)
26th Fiscal Period
(As of November 30, 2014)
Investment and other assets
Investment securities 143,061 143,061
Guarantee deposits 10,016 10,016
Long-term prepaid expenses 498,724 434,040
Derivatives 224,729 134,898
Other 185,322 195,396
Total investments and other assets 1,061,854 917,413
Total noncurrent assets 145,263,367 144,788,209
Deferred assets
Investment unit issuance 46,454 34,619
Total deferred assets 46,454 34,619
Total assets 157,016,215 157,382,782
Liabilities
Current liabilities
Operating accounts payable 336,028 615,028
Current portion of long-term loans payable 10,531,000 10,620,000
Accrued expenses 650,449 658,496
Accrued consumption tax, etc. – 97,748
Advances received 807,945 779,315
Other 11,253 8,284
Total current liabilities 12,336,678 12,778,872
Noncurrent liabilities
Long-term loans payable 58,480,700 58,391,700
Tenant leasehold and security deposits 948,709 922,620
Tenant leasehold and security deposits in trust 3,101,410 3,132,314
Derivative liabilities 32,812 123,460
Total noncurrent liabilities 62,563,632 62,570,095
Total liabilities 74,900,310 75,348,968
Net Assets
Unitholders’ equity
Unitholders’ capital 70,527,819 70,527,819
Surplus
Investment surplus 7,406,652 7,406,652
Unappropriated retained earnings (undisposed loss) 4,534,660 4,564,300
Total surplus 11,941,312 11,970,952
Total unitholders’ equity 82,469,131 82,498,771
Valuation and translation adjustments
Deferred hedge gain or loss (353,226) (464,957)
Total valuation and translation adjustments (353,226) (464,957)
Total net assets 82,115,904 82,033,814
Total liabilities and net assets 157,016,215 157,382,782
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
15
(2) Profit and Loss Statement
(Unit: 1,000 yen)
25th Fiscal Period
(December 1, 2013 –
May 31, 2014)
26th Fiscal Period
(June 1, 2014 –
November 30, 2014)
Operating Revenues
Rent revenue-real estate 4,626,607 4,650,423
Other lease business revenue 424,889 395,900
Dividend distribution from silent partnership 8,103 6,395
Total operating revenue 5,059,600 5,052,718
Operating expenses
Expenses related to rent business 2,267,121 2,269,925
Asset management fee 452,301 455,872
Asset custody fee 19,635 19,346
Administrative service fees 42,372 39,575
Directors’ compensation 8,006 8,006
Audit fee 9,660 9,664
Other operating expenses 92,083 101,572
Total operating expenses 2,891,181 2,903,964
Operating income 2,168,419 2,148,754
Non-operating income
Interest income 756 818
Reversal of dividends payable 847 817
Other 2,470 2,243
Total non-operating income 4,074 3,880
Non-operating expenses
Interest expenses 514,004 501,843
Borrowing related expenses 199,129 134,377
Amortization of investment unit issuance expenses 11,834 11,834
Other 2,237 2,316
Total non-operating expenses 727,206 650,372
Ordinary income 1,445,287 1,502,261
Income before income taxes 1,445,287 1,502,261
Income taxes-current 605 605
Total income taxes 605 605
Net income 1,444,682 1,501,656
Retained earnings brought forward 3,089,977 3,062,643
Unappropriated retained earnings (undisposed loss) 4,534,660 4,564,300
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
16
(3) Statements of Changes in Net Assets (Unitholders’ Equity)
25th Fiscal Period (December 1, 2013 – May 31, 2014) (Unit: 1,000 yen)
Unitholders’ equity
Unitholders’
capital /
Total Capital
Surplus
Total unitholders’
equity Investment surplus
Unappropriated
retained earnings
(undisposed loss)
Total surplus
Balance at the beginning of the
period 64,652,643 7,406,652 4,405,647 11,812,299 76,464,942
Changes of items during the period
Issuance of new investment
units 5,875,176 5,875,176
Dividends from surplus (1,315,669) (1,315,669) (1,315,669)
Net income 1,444,682 1,444,682 1,444,682
Net changes of items other than
unitholders’ equity
Total changes of items during the
period 5,875,176 – 129,013 129,013 6,004,189
Balance at the end of the current
period 70,527,819 7,406,652 4,534,660 11,941,312 82,469,131
Valuation and translation adjustments
Total net assets
Deferred hedge
gain or loss
Total valuation
and translation
adjustments
Balance at the beginning of the
period (272,482) (272,482) 76,192,460
Changes of items during the period
Issuance of new investment
units 5,875,176
Dividends from surplus (1,315,669)
Net income 1,444,682
Net changes of items other than
unitholders’ equity (80,744) (80,744) (80,744)
Total changes of items during the
period (80,744) (80,744) 5,923,444
Balance at the end of the current
period (353,226) (353,226) 82,115,904
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
17
26th Fiscal Period (June 1, 2014 – November 30, 2014)
(Unit: 1,000 yen)
Unitholders’ equity
Unitholders’
capital /
Total Capital
Surplus
Total unitholders’
equity Investment surplus
Unappropriated
retained earnings
(undisposed loss)
Total surplus
Balance at the beginning of the
period 70,527,819 7,406,652 4,534,660 11,941,312 82,469,131
Changes of items during the period
Dividends from surplus (1,472,016) (1,472,016) (1,472,016)
Net income 1,501,656 1,501,656 1,501,656
Net changes of items other than
unitholders’ equity
Total changes of items during the
period 29,640 29,640 29,640
Balance at the end of the current
period 70,527,819 7,406,652 4,564,300 11,970,952 82,498,771
Valuation and translation adjustments
Total net assets
Deferred hedge
gain or loss
Total valuation
and translation
adjustments
Balance at the beginning of the
period (353,226) (353,226) 82,115,904
Changes of items during the period
Dividends from surplus (1,472,016)
Net income 1,501,656
Net changes of items other than
unitholders’ equity (111,730) (111,730) (111,730)
Total changes of items during the
period (111,730) (111,730) (82,090)
Balance at the end of the current
period (464,957) (464,957) 82,033,814
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
18
(4) Statements of Cash Dividend Distributions
(Unit: yen)
25th Fiscal Period
(December 1, 2013 –
May 31, 2014)
26th Fiscal Period
(June 1, 2014 –
November 30, 2014)
I. Unappropriated retained earnings 4,534,660,431 4,564,300,558
II. Distributions 1,472,016,490 1,501,104,241
Distributions per unit (excluding
distributions in excess of earnings) 1,670 1,703
III. Retained earnings brought forward 3,062,643,941 3,063,196,317
How distributions were calculated
Following the policy prescribed in Article
32-1 of the REIT’s bylaws, distributions are
defined as anything in excess of 90% of the
“amount of distributable income” stipulated
in Article 67-15 of the Act on Special
Measures Concerning Taxation, up to the
amount of the REIT’s unappropriated
retained earnings. Based on this policy, we
applied 27,333,815 yen in retained earnings
from the previous fiscal period to
1,444,682,675 yen in net income from the
fiscal period under review, distributing
1,472,016,490 yen as profit distributions.
The REIT does not distribute monies in
excess of income as prescribed in Article
32-2 of its bylaws.
Following the policy prescribed in Article
32-1 of the REIT’s bylaws, distributions are
defined as anything in excess of 90% of the
“amount of distributable income” stipulated
in Article 67-15 of the Act on Special
Measures Concerning Taxation, up to the
amount of the REIT’s unappropriated
retained earnings. Based on this policy, the
REIT decided the distributions from
earnings that it shall pay out shall be
1,501,104,241 yen, which is the maximum
value of the integral multiple of the number
of units issued and outstanding
(881,447units) in an amount that is not in
excess of net income. The REIT does not
distribute monies in excess of income as
prescribed in Article 32-2 of its bylaws.
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
19
(5) Cash Flow Statement
(Unit: 1,000 yen)
25th Fiscal Period
(December 1, 2013 –
May 31, 2014)
26th Fiscal Period
(June 1, 2014 –
November 30, 2014)
Cash Flows from Operating Activities
Income before income taxes 1,445,287 1,502,261
Depreciation 836,500 838,593
Increase (decrease) in allowance for doubtful accounts 100 (78)
Investment unit issuance amortization 11,834 11,834
Interest income (756) (818)
Interest expenses 514,004 501,843
Decrease (increase) of operating accounts receivable (18,085) (2,289)
Decrease (increase) of consumption taxes receivable (210,729) 210,729
Increase (decrease) in accrued consumption taxes (78,051) 97,748
Decrease (increase) of long-term prepaid expenses 35,740 64,683
Increase (decrease) in operating accounts payable (69,447) 80,589
Increase (decrease) in accrued expenses 33,358 14,096
Increase (decrease) in advances received 96,519 (28,630)
Increase (decrease) in deposits received 1,554 (2,020)
Other (9,101) 9,828
Subtotal 2,588,729 3,298,371
Interest income received 756 818
Interest expenses paid (443,862) (443,783)
Income taxes paid (1,461) (1,251)
Cash Flows from Operating Activities 2,144,162 2,854,154
Cash Flows from Investment Activities
Payments into time deposits – (2,000,000)
Purchase of property, plant and equipment (122,645) (85,013)
Purchase of property, plant and equipment in trust (7,349,333) (213,245)
Purchase of intangible assets (2,472,255) -
Proceeds from receipt of tenant leasehold and security deposits 39,592 139,879
Repayments of tenant leasehold and security deposits (49,576) (165,968)
Proceeds from tenant leasehold and security deposits in trust 670,940 89,319
Repayments of tenant leasehold and security deposits in trust (112,190) (71,535)
Proceeds from payment of trust deposits corresponding to tenant
leasehold and security deposits in trust 112,190 71,535
Deposits of trust deposits corresponding to tenant leasehold and
security deposits in trust (670,940) (89,319)
Cash Flows from Investment Activities (9,954,217) (2,324,348)
Cash Flows from Financing Activities
Proceeds from long-term loans payable 9,508,700 5,731,000
Repayment of investment corporation bonds (5,708,700) (5,731,000)
Proceeds from issuance of investment units 5,875,176 –
Payments for investment unit issuance expenses (32,849) –
Distributions paid (1,315,668) (1,472,315)
Cash Flows from Financing Activities 8,326,657 (1,472,315)
Increase (decrease) in cash and cash equivalents 516,602 (942,508)
Cash and cash equivalents at beginning of period 7,492,626 8,009,229
Cash and cash equivalents at end of period 8,009,229 7,066,721
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
20
4. Reference Information
(1) Investment status
Asset
type Use Area
25th Fiscal Period
(As of May 31, 2014)
26th Fiscal Period
(As of November 30, 2014)
Value of holding
(Million yen)
(Note 1)
Ratio to total
assets
(%)
Value of holding
(Million yen)
(Note 1)
Ratio to total
assets
(%)
Real estate
(Note 2)
Office
Tokyo 23 Wards 16,586 10.6 16,556 10.5
Metropolitan Area
(Note 3) 5,107 3.3 5,073 3.2
Residence
Tokyo 23 Wards 11,839 7.5 11,823 7.5
Metropolitan Area
(Note 3) 4,125 2.6 4,116 2.6
Subtotal 37,658 24.0 37,569 23.9
Real estate
in trust
(Note 2)
Office
Tokyo 23 Wards 26,135 16.6 26,084 16.6
Other (Note 4) 14,313 9.1 14,288 9.1
Residence
Tokyo 23 Wards 48,491 30.9 48,412 30.8
Metropolitan Area
(Note 3) 1,211 0.8 1,204 0.8
Other (Note 4) 12,452 7.9 12,400 7.9
Hotel
Metropolitan Area
(Note 3) 990 0.6 983 0.6
Other (Note 4) 2,945 1.9 2,924 1.9
Subtotal 106,539 67.9 106,298 67.5
Real estate, etc., subtotal 144,197 91.8 143,868 91.4
Equity interest in silent partnership (Note 5) 143 0.1 143 0.1
Deposits and other assets 12,675 8.1 13,371 8.5
Total assets 157,016 100.0 157,382 100.0
(Note 1) “Value of holding” is based on the balance sheet amount (carrying amount after depreciation in the case of real estate in trust,
etc.) as of the end of the period.
(Note 2) Values for “Real estate” and “Real estate in trust” do not include value of assets under construction.
(Note 3) “Metropolitan Area” refers to Tokyo (other than Tokyo 23 Wards) and Kanagawa, Saitama and Chiba prefectures.
(Note 4) “Other” refers to investment areas other than Tokyo 23 Wards and Metropolitan Area.
(Note 5) All “equity interest in silent partnership” is equity interest in a silent partnership that is related to the silent partnership under
the management of Herb, a limited liability company.
25th Fiscal Period
(As of May 31, 2014)
26th Fiscal Period
(As of November 30, 2014)
Balance sheet amount
(Million yen)
Ratio to total assets
(%)
Balance sheet amount
(Million yen)
Ratio to total assets
(%)
Liabilities 74,900 47.7 75,348 47.9
Net assets 82,115 52.3 82,033 52.1
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
21
(2) Investment assets
(i) Main issues of investment securities
The summary of investment securities held by the REIT as of November 30, 2014 is as follows:
Asset type Issues Book value
(Million yen)
Appraised value
(Million yen)
(Note 1)
Ratio to total assets
(%)
Equity interest in silent
partnership
Equity interest in a silent
partnership under the
management of Herb, a
limited liability company
(Note 2)
143 143 0.1
(Note 1) The book value is stated as the appraised value.
(Note 2) The asset under management by the manager is real estate trust beneficiary rights for trust properties, Daiwa Ueno Building
and Kojimachi HF Building.
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
22
(3) Investment real estate properties
(i) Overview of portfolio assets
Property
no. Property name Address
Form of asset
(Note 1)
Appraisal
value
(Million yen)
Balance sheet amount
(Million yen)
(Note 2)
Acquisition price
(Million yen)
(Note 3)
Percentage of investments
(%)
(Note 4)
Of-01 HF GOTANDA BUILDING Shinagawa-ku,
Tokyo
Trust beneficial
interest 1,283 1,349 1,290 0.87
Of-05 Suitengu Heiwa Bldg Chuo-ku, Tokyo Trust beneficial
interest 1,246 1,461 1,550 1.05
Of-06 HF MONZEN-NAKACHO BUILDING Koto-ku, Tokyo Trust beneficial
interest 2,310 2,404 2,500 1.69
Of-07 HF HAMAMATSUCHO BUILDING Minato-ku,
Tokyo
Trust beneficial
interest 1,520 1,547 1,530 1.04
Of-08 Kokusai Tameike Bldg Minato-ku,
Tokyo Trust beneficial
interest 2,590 2,789 2,700 1.83
Of-09 Grace Building Sengakujimae Minato-ku,
Tokyo
Trust beneficial
interest 1,490 1,177 1,220 0.83
Of-10 HF SHIN-YOKOHAMA BUILDING Yokohama-shi,
Kanagawa Real estate 1,080 1,417 1,550 1.05
Of-11 Nihonbashi Daiichi Bldg Chuo-ku, Tokyo Trust beneficial
interest 1,760 2,239 2,150 1.46
Of-12 Hatchobori SF Bldg Chuo-ku, Tokyo Real estate 2,410 3,126 3,092 2.09
Of-13 Shibuya AX Hills Shibuya-ku,
Tokyo Real estate 1,400 1,829 1,860 1.26
Of-14 KCA Bldg Chiyoda-ku,
Tokyo Real estate 1,086 1,727 1,730 1.17
Of-15 HF NAKAMEGURO BUILDING Meguro-ku,
Tokyo Real estate 2,080 2,913 2,870 1.94
Of-16 Anwa Tsukasacho Bldg Chiyoda-ku,
Tokyo Real estate 1,100 1,313 1,385 0.94
Of-17 Hatchobori MF Bldg Chuo-ku, Tokyo Real estate 935 1,125 1,110 0.75
Of-18 M2 Harajuku Shibuya-ku,
Tokyo
Trust beneficial
interest 4,315 3,496 3,418 2.31
Of-20 Funabashi Face Bldg Funabashi-shi,
Chiba Real estate 2,920 3,656 3,900 2.64
Of-21 Adesso Nishiazabu Minato-ku,
Tokyo Trust beneficial
interest 456 624 640 0.43
Of-22 HF TORANOMON BUILDING Minato-ku,
Tokyo Real estate 1,271 1,729 1,675 1.13
Of-23 HF IKEBUKURO BUILDING Toshima-ku,
Tokyo Real estate 1,110 1,331 1,314 0.89
Of-24 HF YUSHIMA BUILDING Bunkyo-ku,
Tokyo Real estate 1,410 1,457 1,434 0.97
Of-25 Kayabacho Heiwa Bldg Chuo-ku, Tokyo Trust beneficial
interest 5,770 4,814 4,798 3.25
Of-26 HIROKOJI AQUA PLACE Nagoya-shi,
Aichi
Trust beneficial
interest 4,097 2,848 2,930 1.98
Of-27 Kobe Kyukyoryuchi Heiwa Building Kobe-shi, Hyogo Trust beneficial
interest 2,580 2,285 2,310 1.56
Of-28 Mita Heiwa Building (leasehold land) Minato-ku,
Tokyo
Trust beneficial
interest 2,563 2,269 2,230 1.51
Of-29 Sakae Minami Heiwa Building Nagoya-shi,
Aichi
Trust beneficial
interest 1,810 1,557 1,580 1.07
Of-30 HF SAKURADORI Building Nagoya-shi,
Aichi Trust beneficial
interest 5,580 4,868 4,900 3.32
Of-31 HF Nihonbashi Hamacho Building Chuo-ku, Tokyo Trust beneficial
interest 2,150 1,908 1,900 1.29
Of-32 HF Sendai Honcho Building Sendai-shi,
Miyagi
Trust beneficial
interest 3,050 2,728 2,700 1.83
Office subtotal 61,372 62,002 62,266 42.17
Re-03 HF ICHIKAWA RESIDENCE Ichikawa-shi,
Chiba
Trust beneficial
interest 491 396 430 0.29
Re-05 HF MEGURO RESIDENCE Meguro-ku,
Tokyo
Trust beneficial
interest 599 649 660 0.45
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
23
Property
no. Property name Address
Form of asset
(Note 1)
Appraisal
value
(Million yen)
Balance sheet
amount
(Million yen)
(Note 2)
Acquisition
price
(Million yen)
(Note 3)
Percentage of
investments
(%)
(Note 4)
Re-09 HF KASAI RESIDENCE Edogawa-ku,
Tokyo
Trust beneficial
interest 664 596 650 0.44
Re-11 HF WAKABAYASHI-KOEN
RESIDENCE
Setagaya-ku,
Tokyo
Trust beneficial
interest 3,775 3,247 3,610 2.44
Re-12 HF HIMONYA RESIDENCE Meguro-ku,
Tokyo
Trust beneficial
interest 1,519 1,458 1,560 1.06
Re-14 HF MINAMIAZABU RESIDENCE Minato-ku,
Tokyo
Trust beneficial
interest 1,212 1,316 1,370 0.93
Re-15 HF AZABUJUBAN RESIDENCE Minato-ku,
Tokyo
Trust beneficial
interest 1,080 1,183 1,260 0.85
Re-16 HF GAKUGEIDAIGAKU RESIDENCE Meguro-ku,
Tokyo
Trust beneficial
interest 881 938 1,000 0.68
Re-17 HF HIGASHIKANDA RESIDENCE Chiyoda-ku,
Tokyo
Trust beneficial
interest 1,190 967 1,100 0.74
Re-18 HF HIGASHINIHONBASHI
RESIDENCE Chuo-ku, Tokyo
Trust beneficial
interest 1,370 1,071 1,210 0.82
Re-19 HF NERIMA RESIDENCE Nerima-ku,
Tokyo
Trust beneficial
interest 721 609 690 0.47
Re-20 HF SHIROKANETAKANAWA
RESIDENCE
Minato-ku,
Tokyo Real estate 3,950 3,852 4,030 2.73
Re-21 HF MEIDAIMAE RESIDENCE Setagaya-ku,
Tokyo Real estate 903 1,013 1,070 0.72
Re-22 HF NIHONBASHI RESIDENCE Chuo-ku, Tokyo Trust beneficial
interest 975 1,088 1,130 0.77
Re-23 HF KAMISHAKUJII RESIDENCE Nerima-ku,
Tokyo Real estate 897 905 950 0.64
Re-24 HF KINSHICHO RESIDENCE Sumida-ku,
Tokyo Real estate 1,040 1,100 1,100 0.74
Re-25 HF GINZA RESIDENCE EAST Chuo-ku, Tokyo Trust beneficial
interest 4,350 5,689 5,940 4.02
Re-26 HF SHIN-YOKOHAMA RESIDENCE Yokohama-shi,
Kanagawa Real estate 2,520 3,148 3,350 2.27
Re-29 HF HAKUSAN RESIDENCE Bunkyo-ku,
Tokyo Real estate 1,700 2,330 2,350 1.59
Re-30 HF MAGOME RESIDENCE Ota-ku, Tokyo Real estate 1,210 1,579 1,630 1.10
Re-31 HF GAKUGEIDAIGAKU RESIDENCE
II
Meguro-ku,
Tokyo
Trust beneficial
interest 1,110 1,602 1,650 1.12
Re-33 HF KAMEIDO RESIDENCE Koto-ku, Tokyo Real estate 1,010 1,042 1,050 0.71
Re-34 HF TANASHI RESIDENCE Nishitokyo-shi,
Tokyo Real estate 753 968 911 0.62
Re-35 HF SHIBA-KOEN RESIDENCE Minato-ku,
Tokyo
Trust beneficial
interest 793 808 836 0.57
Re-36 HF MITA RESIDENCE Minato-ku,
Tokyo
Trust beneficial
interest 1,120 1,042 1,080 0.73
Re-37 HF TAKANAWA RESIDENCE Minato-ku,
Tokyo
Trust beneficial
interest 774 722 749 0.51
Re-38 La Residence de Shirokanedai Minato-ku,
Tokyo
Trust beneficial
interest 813 707 730 0.49
Re-39 HF GINZA RESIDENCE EAST II Chuo-ku, Tokyo Trust beneficial
interest 1,530 1,447 1,460 0.99
Re-40 HF HACCHOBORI RESIDENCE II Chuo-ku, Tokyo Trust beneficial
interest 1,970 1,822 1,890 1.28
Re-41 HF HACCHOBORI RESIDENCE III Chuo-ku, Tokyo Trust beneficial
interest 889 743 793 0.54
Re-42 HF GINZA RESIDENCE Chuo-ku, Tokyo Trust beneficial
interest 1,030 879 944 0.64
Re-43 HF KOMAZAWA-KOEN RESIDENCE
TOWER
Setagaya-ku,
Tokyo
Trust beneficial
interest 6,650 6,562 6,520 4.42
Re-44 HF UMEDA RESIDENCE TOWER Osaka-shi, Osaka Trust beneficial
interest 1,990 1,774 1,920 1.30
Re-45 HF NAKANOSHIMA RESIDENCE Osaka-shi, Osaka Trust beneficial
interest 472 434 453 0.31
Re-46 HF AWAZA RESIDENCE Osaka-shi, Osaka Trust beneficial
interest 648 537 577 0.39
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
24
Property
no. Property name Address
Form of asset
(Note 1)
Appraisal
value
(Million yen)
Balance sheet
amount
(Million yen)
(Note 2)
Acquisition
price
(Million yen)
(Note 3)
Percentage of
investments
(%)
(Note 4)
Re-47 HF MARUNOUCHI RESIDENCE Nagoya-shi,
Aichi
Trust beneficial
interest 673 576 624 0.42
Re-48 HF HIRAO RESIDENCE Fukuoka-shi,
Fukuoka
Trust beneficial
interest 1,820 1,676 1,780 1.21
Re-49 HF KAWARAMACHI NIJO
RESIDENCE Kyoto-shi, Kyoto
Trust beneficial
interest 514 512 534 0.36
Re-52 HF TENJIN-HIGASHI RESIDENCE Fukuoka-shi,
Fukuoka
Trust beneficial
interest 553 453 502 0.34
Re-53 HF SHIJO KAWARAMACHI
RESIDENCE Kyoto-shi, Kyoto
Trust beneficial
interest 2,050 1,727 1,820 1.23
Re-54 La Residence de Sendagi Bunkyo-ku,
Tokyo
Trust beneficial
interest 883 793 820 0.56
Re-55 HF SENDAGI RESIDENCE Bunkyo-ku,
Tokyo
Trust beneficial
interest 946 838 870 0.59
Re-56 HF KOMAZAWA-KOEN RESIDENCE Setagaya-ku,
Tokyo
Trust beneficial
interest 647 589 615 0.42
Re-57 HF MUSASHI KOYAMA RESIDENCE Shinagawa-ku,
Tokyo
Trust beneficial
interest 974 813 842 0.57
Re-58 HF KOKUBUNJI RESIDENCE Kokubunji-shi,
Tokyo
Trust beneficial
interest 879 808 839 0.57
Re-59 HF HISAYAODORI RESIDENCE Nagoya-shi,
Aichi
Trust beneficial
interest 1,140 1,033 1,080 0.73
Re-60 HF KARASUMA KURAMAGUCHI
RESIDENCE Kyoto-shi, Kyoto
Trust beneficial
interest 627 544 572 0.39
Re-61 HF NISHI-SHINJUKU RESIDENCE
WEST
Shinjuku-ku,
Tokyo
Trust beneficial
interest 2,160 2,000 1,990 1.35
Re-62 HF NISHI-SHINJUKU RESIDENCE
EAST
Shinjuku-ku,
Tokyo
Trust beneficial
interest 1,260 1,175 1,170 0.79
Re-63 HF HIGASHI SHINJUKU RESIDENCE Shinjuku-ku,
Tokyo
Trust beneficial
interest 1,480 1,307 1,360 0.92
Re-64 HF HIGASHI-SHINSAIBASHI
RESIDENCE Osaka-shi, Osaka
Trust beneficial
interest 602 546 566 0.38
Re-65 HF KITA-YOBANCHO RESIDENCE Sendai-shi,
Miyagi
Trust beneficial
interest 966 764 809 0.55
Re-66 HF ATAGOBASHI RESIDENCE Sendai-shi,
Miyagi
Trust beneficial
interest 807 631 684 0.46
Re-67 HF KYUDAIBYOINMAE RESIDENCE Fukuoka-shi,
Fukuoka
Trust beneficial
interest 456 399 426 0.29
Re-68 HF ASAKUSABASHI RESIDENCE Taito-ku, Tokyo Trust beneficial
interest 827 742 771 0.52
Re-69 HF ICHIBANCHO RESIDENCE Sendai-shi,
Miyagi
Trust beneficial
interest 969 785 834 0.56
Re-70 HF HIGASHI-NAKANO RESIDENCE Nakano-ku,
Tokyo
Trust beneficial
interest 991 909 942 0.64
Re-72 HF WASEDA RESIDENCE Shinjuku-ku,
Tokyo
Trust beneficial
interest 2,280 2,027 2,090 1.42
Re-73 HF WASEDA RESIDENCE II Shinjuku-ku,
Tokyo
Trust beneficial
interest 932 847 872 0.59
Re-74 HF WAKAMATSUKAWADA
RESIDENCE
Shinjuku-ku,
Tokyo
Trust beneficial
interest 1,210 1,208 1,158 0.78
Residence subtotal 79,245 77,958 81,223 55.00
Ho-01 Super Hotel Osaka Tennoji Osaka-shi,
Osaka
Trust beneficial
interest 1,170 1,016 1,080 0.73
Ho-02 Super Hotel Kyoto Karasumagojyo Kyoto-shi,
Kyoto
Trust beneficial
interest 989 847 900 0.61
Ho-03 Super Hotel Saitama Omiya Saitama-shi,
Saitama
Trust beneficial
interest 1,130 983 1,050 0.71
Ho-04 Super Hotel Sendai Hirose-dori Sendai-shi,
Miyagi
Trust beneficial
interest 1,270 1,060 1,150 0.78
Hotel subtotal 4,559 3,907 4,180 2.83
Total 145,176 143,868 147,669 100.00
HEIWA REAL ESTATE REIT, Inc. (8966) 26th Fiscal Period Financial Report
25
(Note 1) The “Form of asset” column shows the REIT’s form of ownership of the asset. The form is shown as “Trust beneficial interest” if the REIT is listed as
a beneficiary in the registry and as “Real estate” if the REIT is listed as the owner.
(Note 2) The “Balance sheet amount” column shows the acquisition price (including acquisition-related costs and subsequent capital expenditures) minus
cumulated depreciation as of November 30, 2014.
(Note 3) The “Acquisition price” column shows the sales value listed in the real estate sales agreement or trust beneficial interest sales agreement (not including
amount corresponding to consumption taxes or costs necessary to make acquisition; same applies below). However, for properties acquired as a result
of the merger (40 properties, from Re-35 HF SHIBA-KOEN RESIDENCE through Re-73 HF WASEDA RESIDENCE II, and from Ho-01 Super Hotel
Osaka Tennoji through Ho-04 Super Hotel Sendai Hirose-dori), the column shows the appraisal value as of October 1, 2010, the day the merger took
effect.
(Note 4) The “Percentage of investments” column shows the percentage of each property’s acquisition price to total acquisition price of all acquired assets,
rounded to the nearest one-hundredth of one percent.
DISCLAIMER:
Heiwa Real Estate REIT, Inc. makes no assurance or warranty with respect to the completeness or accuracy of this
English translation. In the event of any discrepancy between the Japanese original and this English translation, the
Japanese original shall prevail. For complete and accurate information, please refer to the Japanese original.