Presentation Material for the Second Fiscal Period (Ended August 2014) October 17, 2014 Securities code ：3290 http://www.sia-reit.com/en/index.html Table of Contents 1 Second Fiscal Period Topics 5 Appendix 1. Second Fiscal Period Topics 3 About the SIA Group 27 (Ended August 2014) Support of Sponsor and Support Companies 31 2 Overview of Financial Results Statement of Income 32 for the Second Fiscal Period (Ended August 2014) Balance Sheet 33 1. Statement of Income 6 Characteristics of SIA REIT 34 2. Balance Sheet 7 Portfolio Map 35 3. Management Status 8 Portfolio List 36 4. Financial Status 17 List of Appraisal Values 40 3 Earnings Forecasts Lease Business Revenue and Expenditure by Property 41 for the Third Fiscal Period (Ending February 2015) List of Borrowings 43 and Fourth Fiscal Period (Ending August 2015) Unitholder Status as of End of Second Fiscal Period 44 1. Earnings Forecasts 19 (Ended August 2014) for the Third Fiscal Period (Ending February 2015) Governance System and Management Fee Scheme 45 and Fourth Fiscal Period (Ending August 2015) Overview of SIA REIT 46 2. Future Outlook 20 (Third Fiscal Period Onward) Overview of the Asset Management Company 47 Disclaimer 48 4 Future Growth Strategies 1. Growth Cycle, Challenges and Actions of SIA REIT 22 2. Roadmap for Growth (Medium-Term Goal) 23 3. External Growth Strategy 24 4. Financial Strategy 25 SIA REIT Presentation Material for the Second Fiscal Period (Ended August 2014) 1 1 Second Fiscal Period Topics (Ended August 2014) SIA REIT Presentation Material for the Second Fiscal Period (Ended August 2014) 2 1 Second Fiscal Period Topics (Ended August 2014) 1 – (1) Second Fiscal Period Topics (Ended August 2014) ① Internal Growth The portfolio occupancy rate recovered from 88.5% at the end of the first fiscal period to 91.4% at the end of the second fiscal period. In terms of the 19 properties excluding J Tower, the occupancy rate increased from 92.4% to 95.7% Leasing advanced at various properties, and 100% occupancy was attained at properties at issue such as Karasuma Plaza 21, Stoke Building Nagoya and CP10 The occupancy rates of J Tower and Minami-Shinagawa JN Building / N Building that decreased due to terminations by major tenants are recovering gradually; Focus is placed on leasing for further recovery of occupancy rates External Growth As for NEXT21 at which a potential purchaser whose offer far exceeds the acquisition price has emerged, sale of the property was determined after comprehensive considerations of conditions such as future cash flow and gain on sale Continue focusing on property information sourcing for property acquisitions that utilize sponsor’s warehousing and bridge funds Financial Strategy / Other Initiatives Strengthened lender formation through partial loan transfer from Sumitomo Mitsui Banking Corporation to The Mie Bank LTV decreased from 53.5% at the end of the first fiscal period to 52.0% at the end of the second fiscal period through scheduled repayment of ¥200 million (Apr. 2014) and early repayment of ¥1,600 million (June 2014) Negotiating with lenders in order to increase the ratio of long-term borrowings and ratio of fixed-interest borrowings, as well as diversify maturity dates with refinancing in the third fiscal period Participated in GRESB Certification (acquired Green Star and selected as Sector Leader) and acquired Rank A in CASBEE for Market Promotion SIA REIT Presentation Material for the Second Fiscal Period (Ended August 2014) 3 1 Second Fiscal Period Topics (Ended August 2014) 1 – (1) Second Fiscal Period Topics (Ended August 2014) ② Historical Investment Unit Price (yen) (yen) 500,000 16,000 14,000 Jul. 23 Announced sale of NEXT21 12,000 450,000 10,000 Jan. 30 Announced conclusion of contract with large 8,000 tenant at J Tower Apr. 14 Closing price on Announced 1st FP August 29, 2014 financial results 6,000 400,000 ¥446,000 4,000 2,000 350,000 0 13/10Oct. 13/11Nov. 13/12Dec. 14/01Jan. 14/02Feb. 14/03Mar. 14/04Apr. 14/05May 14/06June 14/07July 1Aug.4/08 2013 2013 2013 2014 2014 2014 2014 2014 2014 2014 2014 Trading出来高（右軸） volume (right axis) SIA リート REIT Forecast and Actual Earnings and Dividend Operating Operating Recurring Net income Dividend 2nd FP revenues profit profit per unit (Aug. 2014) (millions of yen) (million of yen) (millions of yen) (millions of yen) (yen) Forecast (announced Apr. 14, 2014) 3,109 1,301 1,002 1,001 13,331 Comparison with forecast dividend per unit Actual 3,179 1,326 1,034 1,033 13,760 +¥429 (+3.2%) SIA REIT Presentation Material for the Second Fiscal Period (Ended August 2014) 4 2 Overview of Financial Results for the Second Fiscal Period (Ended August 2014) SIA REIT Presentation Material for the Second Fiscal Period (Ended August 2014) 5 Overview of Financial Results 2 for the Second Fiscal Period (Ended August 2014) 2 – (1) Statement of Income Dividend per unit increased ¥429 to ¥13,760 (+3.2%) compared to the initial forecast of ¥13,331 due to increase of NOI, reduction of general and administrative expenses, early loan repayments with tax refunds (decrease of interest expenses) and other factors Second Fiscal Period Results and Comparison with Factors for Change of Profit Earnings Forecast (April 14, 2014) (Comparison with forecast) (Unit: Millions of yen) (Unit: Millions of yen) Second fiscal period Comparison Major factors Second fiscal period earnings forecast First fiscal period results (actual) Comparison results (actual) (April 14, 2014) Utilities revenue +28 Operating revenues Operating revenues +69 3,179 3,109 +69 2,493 Rent and common space charges +15 Operating profit 1,326 1,301 +25 1,199 Property-related Utilities -49 expenses -60 Property management fees -8 Recurring profit 1,034 1,002 +31 368 Depreciation +2 Net income 1,033 1,001 +32 366 General and administrative +13 Reduction of expenses +13 Dividend per unit ¥13,760 ¥13,331 +¥429 ¥4,884 expenses Operating profit +25 【【【Differences between 2nd FP results and forecast 】】】 (Unit: Yen) Non-operating profit +2 Interest on consumption tax refund +1 +36 13,760 +56 Non-operating +4 Interest expenses, etc. +4 +176 Other expenses Decrease of interest Recurring profit +36 expenses +31 +125 Reduction of Decrease of general and 13,331 depreciation administrative Corporate tax, etc. +0 expenses Increase of NOI Net income +32 Initial forecast for Results for 2nd FP 2nd FP (Note) Amounts are rounded down to the nearest million yen or nearest yen. SIA REIT Presentation Material for the Second Fiscal Period (Ended August 2014) 6 Overview of Financial Results 2 for the Second Fiscal Period (Ended August 2014) 2 – (2) Balance Sheet Balance Sheet Major Factors for Change (Unit: Millions of yen) End of 1st FP End of 2nd FP Comparison Current assets, current liabilities and noncurrent liabilities Current assets 7,138 6,426 -712 Cash and deposits 5,299 6,188 +889 Early repayment with consumption tax refunds -¥1,600 million Other 1,839 237 -1,602 Noncurrent assets 75,290 74,957 -332 Buildings and structures, buildings Main Content and structures in trust 32,711 32,843 +132 Assets Accumulated depreciation -348 -770 -421 Land and land in trust 39,322 39,322 - Noncurrent assets Other 3,605 3,561 -43 Balance sheet amounts for 20 properties ¥74,761 million Total assets 82,428 81,383 -1,044 (appraisal values at the end of the second fiscal period) (¥75,973 million) End of 1st FP End of 2nd FP Comparison Leasehold, etc. ¥3,365 million Current liabilities 16,282 15,168 -1,114 Short-term borrowing and long-term borrowings scheduled to be repaid 15,382 14,033 -1,348 Liabilities within one year Other 900 1,134 +234 Balance of borrowings ¥42,340 million Noncurrent liabilities 33,140 32,543 -597 (LTV = Balance of borrowings ÷ Total assets × 100 = 52.0%) Long-term borrowings 28,757 28,306 -451 Liabilities Tenant lease and guarantee deposits 4,367 4,224 -143 Other 15 13 -2 Net assets Total liabilities 49,423 47,712 -1,711 Net assets * net assets per unit: ¥448,360 ¥33,671 million Unitholders’ equity 33,005 33,671 +666 * NAV per unit (Note 1) : ¥450,734 Unitholders’ capital 32,638 32,638 - (Note 1) Calculated with the formula: (Unitholders’ capital + Total appraisal value of real Net Surplus 366 1,033 +666 ÷ assets estate – Total book value of real estate) Fiscal period’s outstanding number of Total net assets 33,005 33,671 +666 investment units Total liabilities and net assets 82,428 81,383 -1,044 (Note) Amounts are rounded down to the nearest million yen. SIA REIT Presentation Material for the Second Fiscal Period (Ended August 2014) 7 Overview of Financial Results 2 for the Second Fiscal Period (Ended August 2014) 2 – (3) Management Status: Occupancy Rate The portfolio occupancy rate at the end of the second fiscal period was 91.4% (up 2.9% from the end of the first fiscal period); Average occupancy rate of the 19 properties (excluding J Tower) increased to 95.7% at the end of the second fiscal period 13 of the 20 portfolio properties are operating with 100% occupancy Occupancy Rate (Unit: Millions of yen) First fiscal period Second fiscal period Type/area No. Property name End of End of End of End of End of End of End of Feb. 2014 Mar. 2014 Apr. 2014 May 2014 June 2014 July 2014 Aug. 2014 OT-1 J Tower 76.0% 67.0% 78.3% 78.8% 78.8% 81.4% 77.7% OT-2 SIA Kanda Square 99.0% 100.0% 100.0% 100.0% 99.0% 100.0% 100.0% OT-3 Tachikawa Nishiki-cho Building 96.8% 96.8% 100.0% 100.0% 100.0% 100.0% 100.0% OT-4 CP10 Building 85.2% 85.2% 85.2% 85.2% 85.2% 85.2% 100.0% OT-5 Yokohama AP Building 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% OT-6