FP12 Results Final Keynote6.6
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i Earnings Presentation 12th t February 1, 2016 to July 31, 2016 Advance Residence Investment Corporation Index Advance Residence Investment Corporation P-106 RESIDIA Shinagawa The Largest Portfolio Among Residential J-REITs 3 Solid Track Record, Solid Growth 4-5 Executive Summary of Fiscal Period July 2016 Results 6-7 Enhance Unit-holders’ Value through Public Offering 8 Internal Growth 9-14 External Growth 15-19 Finances 21-23 Management Policies & Earnings Guidance 24-27 Appendix 29-55 TSE Ticker Code : 3269 Abbreviation : ADR Fiscal Period End : End of January & July Main Sponsor : Itochu Corporation Asset Type : Residential The purpose of this material is to present you with an update on the financial performance of Advance Residence Investment Corporation (the “Corporation”). We do not intend to conduct any advertising or solicitation with respect to any units of the Corporation in connection with this material. Nothing in this material should be regarded as an offer to sell or a solicitation of an offer to buy, a recommendation to sell or buy, or a direct or indirect offer or placement of, any units of the Corporation, except for the purpose of meeting certain requirements under the European Alternative Investment Fund Managers Directive (European Directive 2011/61/EU)(the”AIFMD”) as described below. Disclaimer for Dutch Investors：The prospectus containing the information required under Article 23(1) and (2) of the AIFMD as implemented in the Netherlands is available at [http://www.adr- reit.com/en/financial/en/financial/sonota/]. Any reproduction or use of this material other than for its intended purpose is prohibited without prior permission. © 2016 Advance Residence Investment Corporation All Rights Reserved 2 The Largest* Portfolio Among Residential J-REITs * According to data collected by ADIM from the latest disclosures made by each residential J-REITs as of Sept. 30, 2016. Advance Residence Investment Corporation Number of Properties Total Leasable Area Leasable units Assets Under Management (Acquisition Price) as of Jul. 31, 2016 255 properties 766,881㎡ 20,455 units 433.6 billion yen ** as of Apr. 18, 2017 260 properties 781,760㎡ 20,842 units 442.7 billion yen ** Five assets scheduled to be acquired from August 2016 onwards are included. Investment Location Building Age Walking Minutes to Train Station Tenant Category (by acquisition price as of April 18, 2017) (by acquisition price as of Sept 30, 2016) (by acquisition price as of April 18, 2017) (by no. of units as of Jul. 31, 2016) Over 15 min Under 5 yrs 1% Students Major Regional Cities 6% 9% 19% 10 min to 15 min Tokyo Central 7 Guaranteed rent 7% 13% Tokyo Metropolitan 39% Over 10 yrs 5 to 10 min Individuals 9% 49% Over 5 yrs to 10 yrs 35% Under 5 min 47% 45% 57% Corporate Central Tokyo ex 7 32% 33% Weighted Average Age Tokyo 23 Wards 71% 10.4 yrs Under 10 min 92% Pass-through contract tenants 78% (Incl. assets-to-be acquired) NOI Yields (%)*** by location Unit type Rents (as of Jul. 31, 2016) (by no. of units as of Apr. 18, 2017) (by no. of units as of Jul. 31, 2016) Offices & Stores Over 500K yen Portfolio Yield 1% 0.4% Dormitory Under 500K yen Book value NOI yield % Tokyo Central 5.2% 5.7 2% 1% Yield after Depreciation 4.5% Large Under 300K yen 7 Wards 4.2% Family 2% 3% Central Tokyo 5.8% 15% Under 250K yen 4.5% ex 7 Wards 21% Tokyo 6.4% Single Under 100K yen Metropolitan 4.7% Compact 56%56% 52% Major Regional 6.5% 25% Under 150K yen Cities 5.0% 23% 0.0% 2.0% 4.0% 6.0% 8.0% Single & Compact type units Unit rents under 250K yen 81% 96% *** Book value NOI is calculated as “annualized NOI” ÷ “book value at the end of FP2016/7”. NOI is annualize according to actual number of days of operation for each property during FP2016/7. Yield after Depreciation is calculated as (annualized NOI - depreciation) ÷ book value as of end of FP2016/7. © 2016 Advance Residence Investment Corporation All Rights Reserved 3 Solid Track Record, Solid Growth Advance Residence Investment Corporation Increasing EPS by Implementing Various Measures Portfolio Tokyo Central 7 Central Tokyo ex 7 Tokyo Metropolitan Major Regional Cities Period End % Occupancy 100.0 Portfolio 96.6% 95.0 Tokyo Central 7 Maintaining 95.6% High Central Tokyo ex 7 90.0 97.3% Occupancy 96.4% 96.4% 96.1% 96.6% 96.5% 96.8% Tokyo Metropolitan Rate 85.0 7th Period 8th Period 9th Period 10th Period 11th Period 12th Period 98.8% Occupancy Major Regional Cities 07-2013 01-2014 07-2014 01-2015 07-2015 01-2016 07-2016 96.0% 5.5% 5.6% 5.6% 5.7% 5.6% 5.7% 5.7% 4.3% 4.4% 4.4% 4.5% 4.4% 4.5% 4.5% Stable Yield Levels Yield (forecast) FP 01-2014 FP 07-2014 FP 01-2015 FP 07-2015 FP 01-2016 FP 07-2016 FP 07-2017 Book-value NOI Yield * NOI yield = annualized NOI ÷ book value. The NOI are annualized according to the number of actual days of operation for each properties during the periods. Assets Yield after Depreciation * Yield after depreciation = (annualized NOI - depreciation) ÷ book value. No. of Properties 210 221 240 249 251 255 260 No. of Leasable Units 18,113 19,078 19,572 20,122 20,231 20,455 20,842 The Largest Portfolio Among 442.7bn 401.8bn 417.6bn 410.5bn 424.1bn 425.8bn 433.6bn Residential 15.2% 16.7% 19.1% 19.3% 18.9% 19.3% 19.8% 9.5% 9.3% 10.5% 10.1% 10.0% 9.7% 9.7% J-REITs AUM 29.3% 28.8% 30.8% 31.5% 31.3% 32.2% 32.6% Topping Major Regional Cities Tokyo Metropolitan 71.6% 71.4% Central Tokyo ex 7 430 bn yen Tokyo Central 7 44.9% 44.4% 39.4% 39.7% 39.7% 39.4% 38.9% (as of FP July 2016) FP 01-2014 FP 07-2014 FP 01-2015 FP 07-2015 FP 01-2016 FP 07-2016 April 18, 2017 (planned) © 2016 Advance Residence Investment Corporation All Rights Reserved 4 For the foreseeable future, maximum leverage will be 50% for appraisal LTV, 53% for Total Assets LTV. Lowered LTV Range to Guideline Range Maintain Flexibility in 5th Follow-On Offering Preparation for Future 55% Asset Replacements Financial Volatility 51.6% 52.2% max 53% 52.3% 51.0% 50.1% 51.4% 49.7% 52.1% 50% max 50% Acquisition Capacity LTV 50.1% (@ Total Assets LTV of 53%) 47.2% 47.3% approx. th 45.9% 46.0% 4 Follow-On Offering 43.3% 30.0 bn yen FP 01-2014 FP 07-2014 FP 01-2015 FP 07-2015 FP 01-2016 FP 07-2016 FP 07-2017 (estimate for FP ending July 2017) * Appraisal LTV = (Outstanding amount of loan at the fiscal period end + Outstanding amount of bond) ÷ Appraised value of the fiscal period end property holdings (forecast) 1.26% 1.23% 1.21% Liabilities 1.16% Average Interest Rate Lowered Interest Rate 1.14% Debt Duration 1.05% Fixed Interest Ratio While Extending Duration and 99.8% 98.7% 98.4% Maintaining Fixed 93.5% 4.1yrs 94.8% 4.1yrs 4.1yrs 3.9yrs 4.3yrs 92.6% Debts 3.8yrs Interest Rate Debt FP 01-2014 FP 07-2014 FP 01-2015 FP 07-2015 FP 01-2016 FP 07-2016 Ratio * In calculating the average interest rate, the effect of interest rate swaps are reflected. If there are any discrepancies between the principal amount of the swap and the underlining amount of debt, the swap’s principal amount will be capped at the underlining amount of debt in the calculation. FP 01-2017 (forecast) in yen / unit Drawdown from Dividend Reserve 5,130 DPU 4,859 Dividend Paid from Net Income 4,979 Net Gain 4,774 on Sales 249 Steadily Growing EPU 4,615 4,593 503 4,572 4,578 4,500 Outstanding Dividend 5,070 4,773 4,730 Reserve 4,415 4,523 4,572 4,577 33.5 bn yen Dividends (as of FP July 2016) FP 01-2014 FP 07-2014 FP 01-2015 FP 07-2015 FP 01-2016 FP 07-2016 FP 07-2017 (forecast) Equities in yen / unit NAV / Unit 171,850 182,367 198,261 207,281 216,739 223,586 Increasing NAV per Unit FP 01-2014 FP 07-2014 FP 01-2015 FP 07-2015 FP 01-2016 FP 07-2016 th th th th th th Net Asset Value 7 FP 8 FP 9 FP 10 FP 11 FP 12 FP * NAV / Unit is calculated as follows. (FP end net asset + FP end unrealized gain or loss - dividend amount for the FP) ÷ FP end number of issued and outstanding units. © 2016 Advance Residence Investment Corporation All Rights Reserved 5 Executive Summary Committed in Delivering Strong and Stable Dividend Advance Residence Investment Corporation Results for Fiscal Period ended July 31, 2016 Increase in Revenue, Profits and Dividend Due to rise in occupancy rate and lowering of renovation cost by optimizing chg. from initial forecast chg. from last period * Dividend per Unit 4,774yen +184yen +196yen * Dividend per unit might be abbreviated as DPU and earnings per share as EPU, hereafter. Fiscal Highlights Maintained High Occupancy, Succeeded in Raising Rents and Acquired Five Properties Internal Growth External Growth Fund Raising Activities Maintaining High Occupancy Acquired Five Properties, Mostly Sponsor Lengthened Duration and Lowered Financing Cost while Succeeding to Raise Rents Developed and Located in the Tokyo 23 Wards increase from forecast Average Period Occupancy 96.8% +0.3%pt chg.