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Investment Policy

As an integrated REIT focusing on residential properties, our basic policy is to conduct management with the aim of obtaining stable earnings and steady growth of assets under management from a medium- to long-term perspective.

Building a portfolio centering on high quality rental residential properties developed by Sekisui House, Ltd.

The Investment Corporation’s basic strategy is to build a portfolio that centers on high-quality rental residential properties developed by Sekisui House, Ltd., the sponsor, with an aim to maximize its business value as well as the unitholder interests.
From a perspective of securing earnings based on stable demand and enhancing the effect of diversification on risks, the Investment Corporation sets real estate-related assets that are mainly used (Note) as residence to be the investment target.
Residential properties include student dorms, company housing and serviced housing for the elderly.

Note:
“Mainly used” means that a majority of the total exclusive area of the relevant real estate-related asset is allocated for a specific use.
Features of Residential Properties

Since residences are real estate properties which form foundations of living, they are less prone to be affected by economic fluctuations and such compared to retail properties and office buildings. Therefore, steady tenant demand can be expected and their market rent can be considered to be relatively stable. Since high tenant demand can be expected in particular for major urban areas where it is believed that finding tenants is relatively easy, a contribution to stable earnings of the Investment Corporation is expected. In addition, investment in small-scale real estate assets is easier compared to retail properties or office buildings, and we believe that investment in residences will provide the benefit of further diversification of risk.

We will, in a timely manner, consider making a decision to dispose HAMAMATSU Plaza, the only retail property we own, while putting efforts to stably manage it, aim to increase the attractiveness of the entire facility and improve asset value in collaboration with Sekisui House, Ltd.

Investment Diversification by Region with Greater Tokyo / Major Urban Areas as the Focused Investment Area

In accordance with its Articles of Incorporation, the Investment Corporation shall invest in investment assets located in Greater Tokyo (Tokyo, Kanagawa Prefecture, Chiba Prefecture and Saitama Prefecture), and major cities in Japan such as government designated cities and neighboring areas within commuting distance.
As identified in the Management Guidelines, the key investment areas will be Greater Tokyo / Major Urban Areas, and we will aim to secure stable earnings as outlined in the Investment Corporation’s Articles of Incorporation.
Furthermore, the Investment Corporation shall invest in Greater Tokyo / Other Urban Areas and Major Cities Nationwide including the Major Urban Areas by making the best use of the nationwide network of the Sekisui House Group, in order to reduce concentrated risk on the portfolio such as regional economic risk and earthquake risk, from the viewpoint of diversfied investment in areas other than Greater Tokyo / Majoy Urban Areas.

Characteristics and Positioning of Target Investment Areas

Greater Tokyo / Major Urban Areas:
Abundant rental demand and supply of properties is expected for this area comprising of Tokyo’s wards and major nearby urban areas. It is a focused investment area and, positioning the area as central to the portfolio, we will conduct acquisitions by comprehensively determining asset value, occupancy status and profitability of properties.
Greater Tokyo / Other Urban Areas:
A wide variety of demand can be expected for the areas surrounding Greater Tokyo / Major Urban Areas. Positioning the area as having an effect of diversifying risk of the Greater Tokyo residential portfolio, we will conduct acquisitions through comprehensively determining asset value, occupancy status and profitability of properties.
Major Urban Areas:
Major Urban Areas are the areas among the major cities nationwide that play central roles in the public administration and economic activities of surrounding regions and where relatively stable rental demand can be expected. Positioning the areas as investment areas having an effect of diversifying the risks of the residential portfolio, we will conduct acquisitions through comprehensively determining the balance of the asset value, occupancy status and profitability of properties.
Other Major Cities Nationwide:
Other Major Cities Nationwide are areas within major cities nationwide not included in the “Major Urban Areas” mentioned above that play central roles and where various rental demand can be expected. Positioning the areas as investment areas having an effect of diversifying the risks of the residential portfolio, we will conduct acquisitions through comprehensively determining the asset value, occupancy status and profitability of properties as well as future possibilities of the region and other factors.

Investment Assets by Region

With an aim to secure stable earnings over a medium- to long- term, the Investment Corporation develops the portfolio adhering to the investment allocation by area for residential properties, etc. described below.

Investment Area Specific Area Allocation Ratio
(Note 3)
(Acquisition Price Basis)
Greater
Tokyo
Greater Tokyo / Major Urban Areas
(focused investment area)
1)Tokyo Tokyo 23 wards,
Musashino City
Mitaka City and
Koganei City
2)Kanagawa Prefecture Yokohama City and
Kawasaki City
Approx. 70%
Greater Tokyo / Other Urban Areas
1) All areas of Tokyo other than the above areas (except islands) and kanagawa other than the above
2) Chiba Prefecture and Saitama Prefecture
Approx. 30%
(10% or less for Other Major Cities Nationwide)
Major Cities
Nationwide
Major Urban Areas
1) Sapporo City, Sendai City, Nagoya City, Kyoto City, Osaka City, Kobe City, Hiroshima City and Fukuoka City
2) Areas within commuting distance around the cities of above(1) (Note 1)
Other Major Cities Nationwide Government designated cities, etc. other than the above (Note 2)
Note 1:
“Areas within commuting distance” represent the peripheral areas from which it generally requires around 30 minutes to commute to the central parts of Sapporo City, Sendai City, Nagoya City, Kyoto City, Osaka City, Kobe City, Hiroshima City and Fukuoka City.
Note 2:
“Government designated cities, etc. other than the above” represent cities in areas other than Greater Tokyo and that fall under the category of either government designated cities, core cities, special ordinance cities at the entry into force or prefectural capitals in areas other than Major Urban Areas.
Note 3:
“Approx.” in the allocation ratio means ±10%.
Note 4:
Existing the retail property has been excluded from the calculation of the above allocation ratio.

Responding to the diverse Needs of Residents through Investment in Various Types of Residences

We will invest in properties comprised mainly of Family Type residences for which stable earnings can be expected in addition to properties comprised mainly of Single and Compact Types for which relatively high rental demand and profitability can be expected, giving due consideration to area characteristics. Also, we will selectively invest in properties comprised mainly of Large Types upon careful analysis of site environments and such.

Residential Type Investment Criteria and Classification Method
I Single
・Main tenants : Singles, persons living alone due to company circumstances
・Preferable site environment : Environment with traffic and commercial convenience
II Compact
・Main tenants : Dual income no kids, high-income singles, singles and couples under company circumstances, older couples whose children have moved out, small office/home office
・Preferable site environment : Environment with traffic and commercial convenience and also near cultural facilities
III Family
・Main tenants : General families with 2 to 4 members, high-income singles, singles, couples and families under company circumstances
・Preferable site environment : Environment with commuting convenience, good access to educational facilities and quiet and safe neighborhoods
IV Large
・Main tenants Wealthy individuals such as business owners, sole proprietors and foreign expatriates
・Preferable site environment Very select areas of Greater Tokyo / Major Urban Areas, with remarkable commuting convenience and quiet and safe neighborhoods

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