Investment Strategy

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Priority investment in Prime Properties centering on
"Strategic Location" and "High Quality"

Prime Properties

Based on the fundamental recognition that there is a growing need for real estate located at sites suited for "bases for sustainable living" for residents or sites suited for "sustainable bases of operation" of tenant companies and needs for real estate with high, basic functionality as residences, such as comfort and safety, and functionality desired by tenant companies, SHR designates high quality residential and commercial properties, located at strategic locations "Prime Properties" and prioritize investments in Prime Properties.

≪Concepts of Strategic Location and High Quality≫

Asset Category Strategic Location High Quality
Residential Properties Sites suited for "bases for sustainable living" for residents As residences, provide high basic functionality,
such as comfort and safety, and give due consideration to the environment
as a societal request to make comprehensive determinations
regarding buildings suited to the neighborhoods and the like
Commercial Properties Sites suited for "sustainable bases of operation" of tenant companies In addition to the functionality wanted by tenant companies,
give consideration to the environment as a societal request establish
specifications suitable for BCP sites to make comprehensive determinations
regarding buildings suited to the neighborhoods and the like

SHR selects Prime Properties through a comprehensive assessment by focusing on an analysis of the below 6 factors.

≪6 Factors of Prime Properties≫

Portfolio Development Policy

Investment Ratio by Asset Category

SHR positions and invests in residences, which form "the bases of living" for residents, and office buildings, which form "the basis of operation for businesses", as the core assets of portfolio, and considers in investment in hotels with growth prospects; by doing so SHR will aim to build a portfolio characterized by both high stability and high quality.
Portfolio Investment ratios (aquisition price basis) by asset category is shown in the table below.

Asset Category Asset Type Portfolio
Investment Ratio
(acquisition price basis)
Residential Properties Residence 70%~100%
Commercial Properties Office building, etc. 0%~30%
(Note) As a result of acquisition, disposition, or merger, etc., of investment target assets, the ratio may temporarily differ from the above ratio.

Investment Ratio by Area

SHR has set priority investment areas in light of the characteristics of each asset category, as shown in the following chart. SHR considers Greater Tokyo as its priority investment area for residential properties, with a particular focus on Tokyo 23 wards, where it foresees ample leasing demand and a supply of superior properties, and the Three Major Metropolitan Areas as its priority investment areas for commercial properties with a particular focus on the three largest cities (Tokyo 23 wards, Osaka and Nagoya) where it believes it can achieve stable investment results against a backdrop of robust demand by tenants for bases of business operations. Regarding overseas real estate investment, for the time being, investment shall be limited to residential properties.
Furthermore, SHR will comprehensively analyze the markets in which the investment target assets are located, including real estate market trends, systems, and regulations in each country, based on macro perspectives such as political trends, demographic trends, and economic growth.
In addition to verifying investment profitability and potential investment risks (investment grade verification), local management and operation (risk management) after acquisition are required. Therefore, in principle, SHR shall invest in real estate in which the sponsor, Sekisui House, or an entity, etc., in which Sekisui House has a stake, are involved in the development, and is operated by a reliable real estate operator in the country or region concerned, and sufficient information and support for management and operation are readily available. SHR will invest primarily in Singapore, Australia, and the U.S., where Sekisui House has extensive knowledge based on its development experience. For the time being, investment shall be limited to the U.S. In addition, SHR shall invest carefully, taking into consideration the risks associated with each country's legal system, accounting system, tax system, etc., as well as foreign exchange risks related to investment and profit return.

≪Investment Ratio for Residential Properties by Geographical Area≫

Category Specific Area Investment Ratio
(acquisition price basis)
Including overseas Only domestic
Domestic Greater Tokyo
≪priority investment area≫
②Kanagawa Prefecture
③Chiba Prefecture
④Saitama Prefecture
70% or more 70% or more
Major cities ①Designated cities, etc.(Note 1)
②Commutable areas of (1) above(Note 2)
30% or lower
Overseas U.S. - 30% or lower -
(Note 1) "Designated cities, etc." means cities outside of Greater Tokyo which fall under government designated cities, heartland cities, cities which were specially designated cities at the time of the abolishment of the former Specially Designated Cities System or seats of prefectural governments.
(Note 2) "Commutable area" means the region within 30 minutes' commuting distance from a particular city.

≪Investment Ratio for Commercial Properties by Geographical Area≫

Category Specific Area Investment Ratio
(acquisition price basis)
Three Major Metropolitan Areas
≪priority investment area≫
①Greater Tokyo
②Osaka Area
③Nagoya Area
80% or more
Other All of Japan outside of the Three Major Metropolitan Areas 20% or lower

Click here for current investment ratio data

Investment Policy for Hotel

Based on the investment strategy of investing primarily in Prime Properties, SHR invests in hotels that can be expected to be highly competitive over the medium to long term and, in principle, does not invest in simplified accommodations and the like.
SHR's specific investment areas and investment classes of hotels have been clarified as follows.

≪Strategic Location for Investment in Hotels≫

・Mainly target hotels with business and tourism demand located within the Class S Area for investment

Area Class Area Investment Policy
(acquisition price basis)
Class S Area Tokyo 23 wards, Yokohama-shi, Hakone-machi, Kyoto-shi, Osaka-shi, Kobe-shi, Sapporo-shi, Fukuoka-shi, Nagoya-shi, Hiroshima-shi, Kanazawa-shi, Naha-shi and Urayasu-shi Main investment area
(80% or more)
Class A Area Tokyo, Kanagawa, Osaka, Kyoto, Hyogo, Hokkaido, Fukuoka, Okinawa, Nara, Nagano, Shizuoka and Miyagi other than Class S Area, or areas where hotels that capture narrowed demand are located (ex. Airport Terminal Hotel, etc.) Investable area
Class B Area Other than Class S or A area Selective investment

≪High Quality for Investment in Hotels≫

・Highly competitive Luxury or Upper Upscale hotels are main investment target

Hotel Class
Content Investment Policy
(acquisition price basis)

Upper Upscale
Worldwide luxury hotel brands

Worldwide exclusive hotel brands
Main investment class
(70% or more)

Upper Midscale
Globally recognized standard hotel brands
for higher end-level business/tourist use

Globally recognized standard hotel brands
for general business/tourist use
Investable class

Budget and economic hotel brands

Lower price range than Midscale
Not invested
in principle
(Note) Hotel class will be decided base on the hotel class as of the date of acquisition.