Star Asia Investment Corporation
http://starasia-reit.com/en/

Semi-Annual Reportfor the 13th Fiscal Period
from February 1, 2022 to July 31, 2022

Star Asia Investment Corporation (Securities CODE 3468)
Atago Green Hills MORI Tower, 18th Floor 2-5-1 Atago, Minato - ku, Tokyo, Japan

Investment
Philosophy

FUND MANAGEMENT

Characteristics of Star Asia Investment Corporation (SAR)

1. A diversified REIT
Portfolio developed with diversified assets located mainly in the Tokyo Area (Note 1)

Basic Principles

FOR INVESTORSStar Asia Investment Corporation (SAR) makes investments

2. Steady growththrough a “unitholders’ interest-first” mindset in principle,

Pursuit of internal growth by the Asset Manager with abundant experience and know-how as well as
external growth based on asset management performed by the Star Asia Group

entrusting asset management to Star Asia Investment
Management Co., Ltd., which belongs to Star Asia Group, an

3. Initiatives focusing on unitholder value

independent real estate investment group that has
accumulated a track record in the Japanese real estate market.

Constant, “out-of-the-box” active management

SAR aims to maximize unitholders’ interests by conducting
flexible and agile portfolio management based on its unique

GROWTH

Investment policy

market analyses while focusing on income stability and growthof income, and implementing highly transparent managementthat discloses information necessary for unitholders in a timely
and appropriate manner.

TOKYO AREA

Contents
To Our Unitholders 

2Initiatives Related to ESG 

4

Portfolio Overview 

6Financial Summary 

8Balance Sheet 

10Statement of Income and Retained Earnings 

12Statement of Changes in Unitholders' Equity 

13Statement of Cash Distributions 

15Statement of Cash Flows 

16

Notes to Financial Statements 

17Supplementary Schedules 

34

Independent Auditor’s Report 

42

Prioritized,
focused investmentin the Tokyo Area (Note 1)
Investment ratio 70% or
higher in the Tokyo Area

Achieving income stability
and growth throughdiversification of asset
types

Investment primarily
in middle-size assets (Note 2)

STABILITY(Note 1)	“Tokyo area”: “Tokyo area” refers to Tokyo’s 23 wards and the cities of Kawasaki and Yokohama for office properties and retail facilities, and Tokyo and the three prefectures of Kanagawa, Saitama and Chiba for residential properties, logistics facilities, hotels andstudent residences.
(Note 2)	“Middle-size assets” are properties with acquisition prices of less than JPY10bn.

To Our Unitholders
We would like to report on the performance results as well as express our deep gratitude to our unitholders foryour support and understanding.
Going forward, we would appreciate your continued support and guidance.

Progression Status of the Medium-term Management Plan
Star Asia Investment Corporation
Executive Director

In March 2021, SAR set a medium-term management plan until 2026 to achieve an asset size of 300 billion yen

Atsushi Kato

As stated above, with regard to the expansion of asset size (external growth), SAR executed a public offering inand a cash distribution per unit of 1,600 yen or more.

August 2022 for the second consecutive year and for the fifth time since listing, and incorporated three properties(total acquisition price: 15.1 billion yen) into its portfolio. The newly acquired properties consist of urban retail facilities and hotels that are expected to realize internal growth (increase in revenue) and offices located in the greater
Tokyo area in which stable revenue is expected, with a view to the end of the COVID-19 pandemic. Furthermore,
as for all of these three properties, SAR identified projects by utilizing the Asset Manager's unique network, and led

Message
We appreciate your continued support and guidance of Star Asia Investment Corporation (SAR) and the asset
management company Star Asia Investment Management Co., Ltd.
With the Asset Manager, SAR continues to implement initiatives to maximize unitholders' interests since its listing in
April 2016. Most recently, in August 2022, SAR executed property acquisition (three properties/ total acquisition
price: 15.1 billion yen) through a public offering for the fifth time since listing and for the second consecutive year
after the formulation of the medium-term management plan in order to achieve the medium-term management
plan of "increasing the asset size to 300 billion yen by 2026" (formulated in March 2021). As a result, the asset size
increased to 194.8 billion yen (63 properties), and the stability of revenue further increased in the portfolio. Some of
the newly acquired properties are believed to have high potential capacity for internal growth, and we intend to
draw out such capacity through future management. We will continue to pursue further revenue stability, incorporate properties with potential internal growth capacity and promote external growth to achieve our medium-term
management plan.
Furthermore, SAR continues to implement initiatives related to ESG to achieve the SDGs. Upon the public offeringsuch effort to the acquisition of the properties. With this new acquisition, the asset size has increased to 194.8
billion yen, and we believe that steady progress is being made towards the achievement of the medium-term management plan. SAR will continue to pursue external growth by maximizing the opportunities to acquire properties
from the Asset Manager's unique network and Star Asia Group, which continues to conduct investment activities
in Japan (total amount of properties under management as of July 31, 2022: 191.8 billion yen (Note)).
In the growth of cash distribution per unit (internal growth), the basic policy is to develop management and operation aiming to increase revenue and reduce costs at each property that has been incorporated into the portfolio.
Especially, at the newly acquired properties, we believe that internal growth is highly feasible and it is important torealize such internal growth at an early stage. In addition, SAR believes that it will become able to also consider the“redevelopment” and “extension” of its properties due to (1) decreasing the proportion of revenue per property by
expanding the asset size and (2) securing resources to stabilize distributions by increasing internal reserves including negative goodwill and that the properties taking such measures can expect to improve profitability. As the firststep towards specific planning, SAR concluded a basic agreement with the tenant on the extension of Funabashi
Hi-Tech Park Factory I in the 13th fiscal period. Profitability will increase after the extension. SAR will continue topursue the growth of cash distribution per unit based on the measures to improve profitability of its properties andalso by adopting discontinuous measures to increase revenue through redevelopment, etc.

in August 2022, SAR executed borrowings through green loan worth 7.2 billion yen in total based on the “Green(Note) Total appraisal value stated in the most recent appraisal report

Finance Framework” for which SAR obtained the highest rating of “Green1 (F)”. In addition, SAR continues toacquire environmental certifications for its properties, and the acquisition rate of environmental certifications has
increased to 42.7% as of August 31, 2022 (38.3% at the end of the 12th fiscal period). Moreover, SAR has set
numerical targets regarding the environment, and the status for fiscal 2021 can be seen on SAR's website. SAR
continues to implement initiatives on the environment (E), society (S) and governance (G), and will further
strengthen its initiatives related to ESG to fulfill its responsibilities as a REIT with a public nature, in parallel with themeasures to maximize unitholders' interests.
For the 13th Fiscal Period, as a result of conducting management pursuing maximization of unitholders' interests
as well as seeking to increase profitability of its properties and cost reduction, SAR posted operating revenue of
6,088 million yen, operating income of 3,047 million yen, ordinary income of 2,560 million yen, net income of 2,559
million yen and cash distribution per unit of 1,476 yen.
2

Medium-term Management Plan
(Target year FY2026)
Asset Size (Target)

300 billion yen
Indicative number of properties: 100

Asset Size / Portfolio Composition
13th Fiscal Period (as of July 31, 2022)
Hotel 11.4%
Logistics
16.9%

Office40.5%

After acquisition of new properties
Hotel 12.4%
Logistics
15.6%

179.6

billion yen

Office
38.4%

194.8

billion yen

Distribution Per Unit (Target)

1,600 yen or more
Growth objective of 2% per annum

Residence
21.0%

Retail10.2%

Residence
19.4%

Retail14.2%

3

Initiatives Related to ESG
Social Initiatives

ESG Policy
Our Company, as a member of the Star Asia Group, shares its Investment Philosophy and Guiding Principles.
Furthermore, as the asset management company for Star Asia Investment Corporation, we engage in the real

Regional Contribution

estate investment management business while giving consideration to the environment, society, and gover-At the retail facilities it owns, SAR conducted events contributing to the regional com-nance in order to enhance corporate value and exert comprehensive competitiveness by pursuing long-term

munity organized by the municipal government office and by public interest founda-

sustainability and recognizing the role Star Asia Investment Corporation has been given in society in accor-

tions which aim to create a sustainable and peaceful global community.

dance with our basic philosophy of "Client First."

Tenant satisfaction surveys are conductedperiodically towards
tenants of owned properties. Based on the
results of the survey,
measures to improve
operations and management are considered.

Peace PalInternational Art Contest(International children's art
exhibition with the themeof global peace)

External Evaluation
GRESB Real Estate Assessment

Kishiwada
Environmental
Fair 2022

In the 2022 GRESB Real Estate Assessment, SAR received a “3 Star” rating in GRESB Rating, which isbased on GRESB Overall Score and its quintile position relative to global participants. It also won a

Improvement of tenantsatisfaction“Green Star” designation for the second consecutive year by achieving high performance both in“Management Component” that evaluates policies and organizational structure for ESG promotion, andGovernance Initiatives“Performance Component” that assesses environmental performance and tenant engagement of properties owned.
SAR also received the highest “A Level” for GRESB Public Disclosure, which assesses the width of ESG disclosure. Based on the ESG Policy, we will continue to pursue initiatives that give further consideration to environment,

The asset management fees which the Asset Manager receives from SAR for provision of daily asset management

society and governance through maintaining and improving the rating of the GRESB Real Estate Assessment.

services as of the end of each fiscal period is composed of Management Fee I which is linked to the balance ofassets under management, and Management Fee II which is linked to management performance (net income ofThird-Party Evaluation of the Green Finance Framework
SAR formulated the "Green Finance
Framework" for the issuance of green
finance including green bonds, andobtained a “Green 1 (F)” evaluation, which is
the highest rank under the JCR Green
Finance Framework Evaluation, from Japan
Credit Rating Agency, Ltd. (JCR). Funds
procured through green finance will beappropriated to the acquisition of properties
which satisfy the eligibility criteria stipulated
in the framework, implementation of renovation works, or refinancing of such funds.

the managed properties: NOI).

Eligibility Criteria-1
Properties which have obtained or renewed certification from one of the following
third-party certifying organizations, or otherwise intend to obtain or renew suchcertification in the future.
1. DBJ Green Building Certification: 3 star, 4 star, or 5 star
2. BELS assessment: 3 star, 4 star, or 5 star
3. CASBEE certification: B+ rank, A rank, or S rank
Eligibility Criteria-2
Facilities and equipment etc. renovation works which satisfy one of the following criteria.
1. Renovation works which aim to improve one of the assessments or certifications
under Eligibility Criteria-1 by at least one star or one rank
2. Facilities and equipment renovation works to be conducted for managed realestate for the purpose of making beneficial improvements from an environmental
perspective, such as energy efficiency, water consumption capacity etc. (suchworks where usage volume reduction effects of 30% or higher are anticipatedcompared to before).
3. Installation of or acquisition of equipment related to renewable energy.

Environmental Initiatives

DBJ Green Building
Certification★★★ 1 property★★ 5 properties★ 2 properties

Building-Housing Energy-Efficiency
Labeling System (BELS)★★★ 1 property★★ 1 property (Note1)
Acquisition ratio

In order to incentivize increase in distribution amounts to investors (increase NOI), the fee structure is designed sothat the ratio of Management Fee II is higher.
Fees for daily
management operations

Other fees

Calculation formula

Management fees I

Total valuation amount of managed
assets (Note 1) x 0.2% (upper limit)

Management fees II

NOI (Note 2) x 7.5% (upper limit)(Note 2)

42.7%

CASBEE Real Estate
Assessment(Note 1) Total valuation amount of managed assets is the total amountcalculated by multiplying the lower of either the appraisal value ofeach relevant asset as of the last day of the relevant businessperiod or the acquisition price by the actual total number of days
during the relevant business period in which such assets were held,
divided by the total number of days in a year.
(Note 2) NOI is the total amount of real estate leasing income from therelevant business period after deducting real estate leasing expenses(other than depreciation costs and fixed assets retirement losses)

Transfer fee

Transfer price x 1% (Note 1) (upper limit)

Merger fee

Valuation amount of held assets (Note 2) x 1% (Note 3)(upper limit)(Note 1) 0.5% if SAR transact with its interested parties.
(Note 2) Merger fee indicates the valuation amount as of the date of effectuation of the real estate related assets held by the counterparty of aconsolidation-type merger or absorption-type merger.
(Note 3) 0.5% if SAR merges with an investment corporation that falls within
the category of interested parties, or an investment corporation forwhich any of the interested parties is entrusted with the management of assets.

★★★★★ 1 property★★★★ 2 properties

Department
Proposal• Implement decision-making with high trans-

Compliance Officer

parency by complying with laws and
Goals

Achieve at least 50% of
the ratio at environmental
certifications (Note 2) by 2026

(Note 1) Even in case when a property with multiple
buildings acquires certifications at each building, it is counted as one property.
(Note 2) Ratio of each floor area to the gross floor areaof SAR portfolio (547,221.14 m2).

regulations

Calculation formula

Acquisition fee Acquisition price x 1% (Note 1) (upper limit)

Decision-Making Process

Acquisition of Environmental Certifications As of August 31, 2022

4

Asset Management Fees

Review and approval

Investment Committee (including external directors)
Review and resolution• Maintain a high sense of ethics and execute

Compliance Committee (including external directors)

operations as a manager of investors' funds

Review and resolution

Board of Directors
Review and resolution
Items that do not need to be discussed at the Compliance Committee
Items that need to be discussed at the Compliance Committee

SAR’s Board of Directors Meetings
Review and approval

ReturnRejected
Rejected
Rejected
Unapproved

5

Portfolio Overview (As of July 31, 2022)
RSC-19

RSC-20Minami-Azabu
Shibuya Building

OFC-01

Honmachibashi
Tower

Nishi-Shinjuku
Matsuya Building

Shibuya MK Building

Asahi Building

Hakata-eki
East PlaceUrban Park Yoyogi

Urban Park
Tokiwadai Koen

Urban Park
Mitsuike Koen

Urban Park Ryogoku

Urban Park
Mizonokuchi

Urban Park
MiyamaedairaCompleted: Jun. 15, 1993

Completed: Feb. 8, 2010

Completed: May 28, 1987

Completed: Jul. 31, 1993

Completed: Nov. 25, 1994

Completed: Feb. 24, 1986

Completed: Sep. 4, 2017

Completed: Feb. 17, 1994

Completed: Mar. 24, 1992

Completed: Oct. 31, 1997

Completed: Aug. 23, 1988

Completed: Jun. 10, 2021

OFC-10

OFC-03

OFC-12

OFC-06

OFC-13

OFC-08OFC-14

OFC-09

RSC-15

RSC-16

LGC-01

RSC-18OFC-15

RSC-21

LGC-02

LGC-03

Amusement Media
Gakuin Honkan

Higashi-KobeCenter Building

Amusement Media
Gakuin Shinkan

Seishin BLDG.

Urban Center
Kanda Suda-cho (Note 1)

Urban Park Tsurumi

Iwatsuki Logistics

Yokohama Logistics

Funabashi Logistics

Baraki Logistics

Completed: Jul. 13, 1992

Completed: Nov. 2, 1994

Completed: Jan. 6, 1992

Completed: Jan. 25, 1999

Completed: Mar. 31, 1989

Completed: Oct. 28, 1991

Completed: Feb. 17, 1994

Completed: Oct. 29, 2014

Completed: Oct. 1, 1994

Completed:
Sep. 25, 1992 (Building 1)
Aug. 5, 1997 (Building 2)

Tokorozawa
Logistics

Completed: Aug. 14, 2015

Completed: Apr. 30, 1999

LGC-05

OFC-17

OFC-18OFC-19OFC-20

OFC-21

LGC-07

LGC-09

LGC-10

Takadanobaba
AccessAzabu Amerex
BLDG.

Hiei-Kudan BLDG.

Urban Center
Shin-Yokohama (Note 1)

The Portal Akihabara

Funabashi Nishiura
Logistics II

Matsubushi
Logistics

Funabashi Hi-Tech
Park Factory I

Funabashi Hi-Tech
Park Factory II

R&B Hotel
Umeda East

Smile Hotel Namba

Completed: Jan. 20, 1988

Completed: Jan. 14, 1994

Completed: Jun. 30, 1988

Completed: Sep. 17, 1991

Completed: Mar. 17, 1992

Completed: May 31, 2002

Completed:
Mar. 20, 1991 (Warehouse)
May 15, 1972 (Factory)
May 13, 1986 (Office)Completed: Mar. 31, 1997

Completed: May 19, 2003

Completed: Sep. 5, 2001

Completed: Oct. 20, 2000

Completed: Feb. 6, 2008

RTL-03

RTL-05

OFC-23

Urban Center
HakataLa Park Kishiwada

Suroy Mall
Chikushino

Seiyu Minakuchi

BAGUS IkebukuroWest

REMBRANDT STYLETokyo Nishikasai

BEST WESTERN
Yokohama

The BREAKFAST HOTELFUKUOKA TENJIN

GLANSITAKIHABARAREMBRANDT STYLETokyo Nishikasai Grande

KOKO HOTEL
Osaka Namba

Completed: May 30, 1990

Completed: Aug. 27, 2020

Completed: Aug. 30, 1994

Completed: Jun. 22, 2007

Completed: May 31, 1999

Completed: Nov. 20, 1992

Completed: Mar. 19, 1991

Completed: Sep. 21, 1987

Completed: Feb. 20, 2017

Completed: Sep. 20, 2017

Completed: Feb. 7, 2017

Completed: Apr. 7, 2017

RSC-02

RSC-05

RSC-06

RSC-07

Urban Park Daikanyama

Urban Park Namba

Urban Park Gokokuji

Urban Park Kashiwa

Completed:Nov. 15, 1982 (Existing)May 30, 2006 (Newly built)

Urban Park
Ryokuchi Koen

Completed: Jan. 9, 2013

Completed: Feb. 28, 1990

Completed: Aug. 28, 1997

Completed: Mar. 10, 1989

HTL-03

HTL-04

RSC-10

RSC-11

RSC-13

RSC-14

Urban Park Koenji

Urban Park Ichigao

Urban Park Gyotoku

Shiroi Logiman

Urban Park Sekime

Urban Park Imazato

Completed: Oct. 13, 1987

Completed: Jul. 10, 1998

Completed: Mar. 24, 1995

Completed: May 9, 1995

Completed: Aug. 18, 1989

Completed: Dec. 20, 1991

(Note 1) Name as of the end of Aug. 2022 is indicated.

RSC-12

HTL-06

HTL-07

HTL-08

RSC-08Properties Newly Acquired in the 14th Fiscal Period
OFC-24

RSC-09

HTL-05

HTL-02

OFC-22Completed: Nov. 29, 1999

RTL-02

HTL-01

Urban Center
Tachikawa

RSC-01

RTL-01

LGC-08

LGC-04

Urban Center Kanda
Tsukasamachi

Urban Park
Azabujuban

6

RSC-17

Nihonbashi Hamacho
Park Building

OFC-16

OFC-11

OFC-04

RTL-06

HTL-09Urban Center Fujisawa

abeno nini (Retail)abeno nini (Hotel)

Completed: Apr. 9, 1991

Completed: Jan. 31, 2012

Completed: Jan. 31, 2012

7

Financial Summary
Historical Operating Trends(Note 1) The operating periods for Star Asia Investment Corporation (SAR) are the six-month periods from February 1 to July 31 and August 1
to January 31 of the following year.

9th Fiscal
PeriodFiscal Period

10th Fiscal
Period11th Fiscal
Period12th Fiscal
Period13th Fiscal
Period(February 1, 2020 (August 1, 2020 to (February 1, 2021 (August 1, 2021 to (February 1, 2022
to July 31, 2020) January 31, 2021) to July 31, 2021) January 31, 2022) to July 31, 2022)(Note 2) Unless otherwise specifically noted, amounts are rounded down to the unit displayed and percentages are rounded to the first decimal place.

(million yen)

3,996

6,672

5,560

5,960

6,088

(Note 3) SAR conducted an investment unit split to carry out a 2-for-1 split of investment units with July 31, 2020 as the record date andAugust 1, 2020 as the effective date for the investment unit split. Net assets per unit and FFO per unit are calculated assuming thatthe investment unit split was conducted at the beginning of the 9th fiscal period.

Operating revenue from real estate leasing (million yen)

3,314

5,648

5,536

5,890

6,060

(Note 4) It is calculated based on the following formula.

(million yen)

1,864

3,295

2,721

2,872

3,041

Ratio of ordinary income
Ordinary income ÷ {(total assets at beginning of period + total assets at end of period) ÷ 2} × 100
to total assets(million yen)

1,173

2,179

2,189

2,311

2,494

Return on equity

Net income ÷ {(net assets at beginning of period + net assets at end of period) ÷ 2} × 100

Equity ratio at end of
periodNet assets at end of period ÷ total assets at end of period × 100

Operating revenue
Operating expenses
Operating expenses from real estateleasing
Operating income(million yen)

2,131

3,376

2,838

3,087

3,047

Ordinary income(million yen)

1,857

2,911

2,407

2,517

2,560

Net income(million yen)

1,857

11,801

2,407

2,516

2,559

Total assets(million yen)

113,035

179,789

179,170

193,316

193,488

(%)

(3.1)

(59.1)(-0.3)

(7.9)

(0.1)

(million yen)

54,61489,60089,17995,753

95,803(%)(0.6)(64.1)(-0.5)

(7.4)

(0.1)

Interest-bearing debt

(million yen)

54,32082,44082,44089,64089,640Unitholders’ capital(million yen)

52,74552,74552,745

59,115

59,115

Total number of investment units issued andoutstanding(units)

540,824

1,674,389

1,674,389

1,789,389

1,789,389

Net assets per unit (Note 3)(yen)

50,49253,51253,26053,51153,539(million yen)

1,858

2,806

2,447

2,644

2,641

(yen)

3,436

1,676

1,462

1,478

1,476

Cash distribution of earnings per unit

(yen)

3,436

1,676

1,462

1,478

1,476

Cash distributions in excess of earnings
per unit

(yen)

–

–

–

–

–

Ratio of ordinary income to total assets (Note 4)

(%)

1.7

2.0

1.3

1.4

1.3

[Annualized]

(%)

(3.3)

(3.9)

(2.7)

(2.7)

(2.7)

(%)

3.4

16.4

2.7

2.7

2.7

(%)

(6.8)

(32.5)

(5.4)

(5.4)

(5.4)

(%)

48.3

49.8

49.8

49.5

49.5

(-1.2)(1.5)(-0.1)(-0.2)(-0.0)

(%)

100.1

23.8

101.7

105.1

103.2

(days)

182

184

181

184

181

Number of properties at end of period(properties)

36

53

53

60

60

Depreciation(million yen)

432

628

633

682

697

Capital expenditures(million yen)

188

331

363

424

471

(million yen)

2,573

4,097

3,980

4,261

4,263

(million yen)

1,640

2,564

3,040

3,199

3,257

(yen)

1,516

1,531

1,815

1,787

1,820

(%)

48.1

45.9

46.0

46.4

46.3

[Period-on-period variation]
Net assets[Period-on-period variation]

Total cash distribution
Cash distribution per unit

Return on equity(Note 4)

[Annualized]
Equity ratio at end of period(Note 4)

[Period-on-period variation]
Cash distribution payout ratio(Note 4)

Cash distribution per unit (excluding cash distribution in excess of earnings) ÷ net income per unit × 100
Cash distribution payout The figure for the 12th fiscal periods was calculated based on the formula below as investment units
ratio
outstanding changed during the period as a result of a public offering of investment units.
Total cash distribution (excluding cash distribution in excess of earnings) ÷ net income × 100
Lease NOI(Net Operating Income)Operating revenue from real estate leasing - operating expenses from real estate leasing + depreciation

FFO(Funds from Operation)

Net income + Depreciation - gain (loss) on sales of real estate
The figures of 10th fiscal period is calculated after deducting 8,891 million yen of gain on negative goodwill
from net income.

FFO per unit

FFO ÷ total number of investment units issued and outstanding[Other reference Information]
Number of operating days

Lease NOI (Net Operating Income)FFO (Funds from Operation)
FFO per unit

(Note 4)(Note 4)(Note 3) (Note 4)

Ratio of interest-bearing debt to total assets
at end of period (LTV)89Financial Statements

Balance Sheet(Unit: thousand yen)		

(Unit: thousand yen)

12th fiscal period

13th fiscal period

12th fiscal period

13th fiscal period(As of January 31, 2022)(As of July 31, 2022)(As of January 31, 2022)(As of July 31, 2022)

789,397662,398

AssetsLiabilities

Current assets

Current liabilities

Cash and deposits

3,774,975

4,265,178

Operating accounts payable

Cash and deposits in trust

Current portion of long-term borrowings

7,950,192

8,075,474

15,350,000

16,390,000

Operating accounts receivable

88,581

137,598

Accounts payable – other500,649

495,977

Prepaid expenses

200,093

196,009

Accrued expenses

49,47859,099Consumption taxes receivable

155,777–

Others

14,763

9,011

12,184,385

12,683,272

Total current assets
Non-current assets
Property, plant and equipment
Tools, furniture and fixtures

605

605

Accrued consumption taxes

46,037

234,089

Advances received

915,355974,728

Others30,77136,804

17,682,295

18,853,703

Investment corporation bonds

1,000,000

1,000,000

Long-term borrowings

73,290,000

72,250,000

Total current liabilities
114

114

Accumulated depreciation

(71)

(100)

Tools, furniture and fixtures, net

42

14

Buildings in trust

Income taxes payableNon-current liabilities

53,053,772

53,471,574

Leasehold and guarantee deposits received

Accumulated depreciation(4,755,763)(5,441,732)

Leasehold and guarantee deposits received in trust

Buildings in trust, net

48,298,008

48,029,841

Others

Structures in trust

20,635

21,640

Accumulated depreciation(5,115)(5,856)Structures in trust, net

15,52015,784

Machinery and equipment in trust

99,519119,343

Accumulated depreciation(23,762)(28,905)

Unitholders’ capital

Machinery and equipment in trust, net

75,75690,437

SurplusTools, furniture and fixtures in trust

67,545100,966

Unitholders' capital surplus

Accumulated depreciation(24,969)(30,688)

Voluntary reserve

Tools, furniture and fixtures in trust, net

42,57670,278Land in trust

127,283,507

127,283,507

Total property, plant and equipment

175,715,413

175,489,864

Intangible assets
Leasehold rights in trust

4,082,300

4,082,300

Total intangible assets

4,082,300

4,082,300

Investment securities

922,220

800,000

Long-term prepaid expenses

351,116

337,433

Leasehold and guarantee deposits

10,37910,3593,317

45,353

1,287,033

1,193,146

181,084,747

180,765,311

Investment corporation bond issuance costs

13,603

12,583

Investment unit issuance costs

34,21927,375

Total investments and other assets
Total non-current assets

5,187
5,559,508

109,745

16,75979,881,571

78,831,455

97,563,867

97,685,158

59,115,701

59,115,701

25,132,218

25,132,218*2 8,802,324*2 8,713,411

Net assets
Unitholders’ equity

Reserve for temporary difference adjustment

8,802,324

8,713,411

Unappropriated retained earnings (undisposed loss)

Total voluntary reserve

2,809,755

2,813,756

Total surplus

36,744,298

36,659,386

95,859,999

95,775,087(106,910)

28,297

Total unitholders’ equity
Valuation and translation adjustments
Deferred gains or losses on hedges

Investments and other assets

OthersTotal non-current liabilities
Total liabilities

5,074
5,476,752

Total valuation and translation adjustments
Total net assets
Total liabilities and net assets(106,910)

28,297*1 95,753,089*1 95,803,384

193,316,956

193,488,543

Deferred assets

Total deferred assets
Total assets

1047,82339,959193,316,956

193,488,543

11Financial Statements

Financial Statements

Statement of Income and Retained Earnings

Statement of Changes in Unitholders’ Equity(Unit: thousand yen)

12th fiscal period

13th fiscal period(From August 1, 2021
to January 31, 2022)(From February 1, 2022
to July 31, 2022)

12th fiscal period (from August 1, 2021 to January 31, 2022)(Unit: thousand yen)

SurplusOperating revenue
Rental revenue
Other lease business revenue
Other revenue
Total operating revenue* 5,467,061* 5,611,196*1 423,937*1 449,218

69,41828,5255,960,418

6,088,939

1*1 2,311,905*1 2,494,593

Asset management fee

392,495

392,584

Asset custody and administrative service fees

42,732

38,428

Directors’ compensations

2,400

2,400

Other operating expenses

122,935

113,213

Total operating expenses

2,872,468

3,041,220

3,087,950

3,047,719

48

55

1,326

1,470

106

262

–

516

1,481

2,305

Operating income
Non-operating income
Interest income
Reversal of unpaid distribution
Interest on refund
Gain on donation of non-current assets
Total non-operating income
Non-operating expenses
Interest expenses

337,121338,087

2,473

3,500

224,543

140,164

850

1,020

6,843

6,843

571,833

489,615

Ordinary income

2,517,598

2,560,409

Income before income taxes

2,517,598

2,560,409

Income taxes - current

605

605

Total income taxes

605

605

2,516,993

2,559,804

292,762

253,951

2,809,755

2,813,756

Interest expenses on investment corporation bonds
Borrowing related expenses
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Total non-operating expenses

Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

12

Voluntary reserve

1

Operating expenses
Expenses related to rent business

Valuation and translation adjustments

Unitholders’ equity

Unitholders’capitalBalance at
beginning of
periodUnitholders’ Reserve forcapitaltemporarysurplusdifference
adjustment

52,745,966 25,132,218

8,891,236

Total
voluntary
reserve
8,891,236

Unappropriatedretainedearnings(undisposed
loss)

Total
unitholders’equityTotal
surplus2,651,806 36,675,261 89,421,227

Total
Deferred valuation
gains orandlosses on translation
hedgesadjustments(241,749)(241,749)

Total net
assets89,179,478

Changes of
items during
periodIssuance of
new investment units

6,369,735

Dividends
from surplus
Reversal ofreserve fortemporarydifference
adjustment(88,912)(88,912)Net income

6,369,735

6,369,735(2,447,956)(2,447,956)(2,447,956)(2,447,956)

88,912–––2,516,993

2,516,993

2,516,993

2,516,993

Net changesof items otherthan unitholders’ equity
Total changesof items during
period6,369,735–(88,912)(88,912)

Balance at end 1* 59,115,701 25,132,218
of period

8,802,324

8,802,324

134,838

134,838

134,838

6,438,772

134,838

134,838

6,573,610

2,809,755 36,744,298 95,859,999(106,910)(106,910)

95,753,089

157,949

69,037

13

Financial Statements

Financial Statements

Statement of Changes in Unitholders’ Equity

Statement of Cash Distributions

13th fiscal period (from February 1, 2022 to July 31, 2022)(Unit: yen)
(Unit: thousand yen)

Valuation and translation adjustments

Unitholders’ equity
Surplus
Voluntary reserve
Unitholders’capitalBalance at
beginning of
periodUnitholders’ Reserve forcapitaltemporarysurplusdifference
adjustment

59,115,701 25,132,218

8,802,324

Total
voluntary
reserve

Unappropriatedretainedearnings(undisposed
loss)

Total
unitholders’equityTotal
surplus

Total
Deferred valuation
gains orandlosses on translation
hedgesadjustments

I.
Total net
assets2,809,755 36,744,298 95,859,999(106,910)(106,910)

95,753,089

Cash distribution of earnings[Cash distribution of earnings per unit]
IV. Retained earnings carried forward

Dividends
from surplus
Reversal ofreserve fortemporarydifference
adjustment(88,912)(88,912)Net income(2,644,716)(2,644,716)(2,644,716)(2,644,716)

88,912–––2,559,804

2,559,804

2,559,804

2,559,804

Net changesof items otherthan unitholders’ equity

14

Reversal of reserve for temporary
difference adjustment *1[Cash distribution per unit]

8,802,324––(88,912)(88,912)

Balance at end 1* 59,115,701 25,132,218
of period

8,713,411

8,713,411

135,208

135,208

135,208(84,912)135,208

135,208

50,2952,813,756 36,659,386 95,775,087

28,29728,29795,803,384

4,000(84,912)13th fiscal period(From February 1, 2022 to July 31, 2022)

2,809,755,972

2,813,756,107

88,912,365

88,912,365

2,644,716,942

2,641,138,164(1,478)(1,476)2,644,716,942

2,641,138,164(1,478)(1,476)

253,951,395

261,530,308

Pursuant to the cash distribution policy
provided in Article 35, Paragraph 1 of
SAR’s Articles of Incorporation, SAR
shall distribute in excess of the amountequivalent to 90% of the amount of
distributable earnings of SAR as definedin Article 67-15, Paragraph 1 of the Act
on Special Measures Concerning
Taxation. In accordance with suchpolicy, concerning cash distribution of
earnings (not including cash distribution
in excess of earnings), the decision wasmade to distribute 2,644,716,942 yen,which is equivalent to the amountobtained by adding part of retained
earnings brought forward of 38,810,690
yen and the reversal of reserve for temporary difference adjustment of
88,912,365 yen to net income.

Pursuant to the cash distribution policy
provided in Article 35, Paragraph 1 of
SAR’s Articles of Incorporation, SAR
shall distribute in excess of the amountequivalent to 90% of the amount of
distributable earnings of SAR as definedin Article 67-15, Paragraph 1 of the Act
on Special Measures Concerning
Taxation. In accordance with suchpolicy, concerning cash distribution of
earnings (not including cash distribution
in excess of earnings), the decision wasmade to distribute 2,641,138,164 yen,which is equivalent to the amountobtained by adding the reversal ofreserve for temporary difference adjustment of 88,912,365 yen to net income
remaining after reserving 7,578,913 yen.

II. Reversal of voluntary reserve

III. Cash distribution

Changes of
items during
periodTotal changesof items during
periodUnappropriated retained earnings

12th fiscal period(From August 1, 2021 to January 31, 2022)

Method of calculation of amount of cash
distributions

15

Financial Statements

Financial Statements

Statement of Cash Flows

Notes to Financial Statements(Unit: thousand yen)

13th fiscal period(From August 1, 2021
to January 31, 2022)(From February 1, 2022
to July 31, 2022)

2,517,598

2,560,409(securities code: 3468). SAR has assigned the asset management of its portfolio to Star Asia Investment

682,245

697,599

Management Co., Ltd., a financial instruments business operator under the Financial Instruments and

850

1,020

6,843

6,843

(48)

(55)

339,595

341,587

Decrease (increase) in operating accounts receivable

7,605(49,016)

Decrease (increase) in consumption taxes receivable(72,280)

155,777

August 2020 are on the basis of receipt price. The same shall apply hereinafter.), and has grown by

Increase (decrease) in accrued consumption taxes(25,824)

188,051

approximately 2.9 times from 61,493 million yen, the asset size as of the listing. Furthermore, SAR conducted

Decrease (increase) in prepaid expenses(23,008)

4,084

property acquisitions (3 properties, total acquisition price of 15,154 million yen) involving capital increase

Decrease (increase) in long-term prepaid expenses(90,606)

13,682through public offering in August 2022 after the end of the 13th fiscal period (fiscal period ended July 2022),
and the asset size as of the date of this document is 194,829 million yen.

Cash flows from operating activities

Star Asia Investment Corporation (SAR) was established as a diversified real estate investment trust on
December 1, 2015 under the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951, as
amended) and was listed on the Tokyo Stock Exchange Real Estate Investment Trust Section on April 20, 2016

Income before income taxes
Depreciation
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Interest income
Interest expenses

Exchange Act (Act No. 25 of 1948, as amended), through which SAR executed active management pursuing tomaximize interest of unitholders and thrived to expand its asset size and to increase cash distributions per unit.
The asset size as of the end of 13th fiscal period is 179,675 million yen (on the basis of acquisition price. The
properties succeeded from Sakura Sogo REIT Investment Corporation with the absorption-type merger in

Increase (decrease) in operating accounts payable

143,883(96,424)

Increase (decrease) in accounts payable - other

7,276

4,636

Increase (decrease) in advances received

1,732

59,372Others, net(28,806)

8,685

Subtotal

3,467,056

3,896,255

SAR prepared the financial statements attached hereto in accordance with the accounting principles generally

48

55

accepted in Japan (J-GAAP), but J-GAAP differs from international accounting standards in certain aspects of(331,705)(331,966)(5,381)

2,645

3,130,019

3,566,990

The financial statements attached hereto are a translation of audited financial statements prepared from SAR’s(13,552,890)(511,417)

Instruments and Exchange Act for the purpose of domestic disclosure.

Repayments of leasehold and guarantee deposits received(1,068)(103)

Upon preparation of the financial statements attached hereto, treatments including additions to notes related toProceeds from leasehold and guarantee deposits received–

216

Repayments of leasehold and guarantee deposits received in trust(181,994)(170,274)

the financial statements issued in Japan are made in order to present in a format more familiar to the readers

Proceeds from leasehold and guarantee deposits received in trust

441,001

253,03080

20

SAR’s fiscal periods are for six months ending at the end of every January and July.

Purchase of investment securities(400,000)–

As SAR has no subsidiaries, consolidated financial statements are not prepared.

Proceeds from redemption of investment securities

216,472

122,220

Interest income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Purchase of property, plant and equipment in trust

Proceeds from collection of lease and guarantee deposits

Proceeds from collection of long-term loans receivable

300,000–(13,178,398)(306,308)

Proceeds from short-term borrowings–

500,000

Repayments of short-term borrowings(2,150,000)(500,000)

Proceeds from long-term borrowings

22,050,000

9,750,000

Repayments of long-term borrowings(13,700,000)(9,750,000)

985,545–

Proceeds from issuance of investment units

6,328,671–

Dividends paid

(2,446,756)(2,645,197)

Net cash provided by (used in) financing activities

11,067,460(2,645,197)

1,019,080

615,484

Net cash used in investing activities
Cash flows from financing activities

Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Basis of Presentationaccounting modifications and disclosure standards.
accounting records and submitted to the Kanto Local Finance Bureau in accordance with the Financial

outside Japan.

Notes on the Going Concern Assumption
Not applicable.

Proceeds from issuance of investment corporation bonds

16

Organization

12th fiscal period

10,706,087

11,725,168* 11,725,168* 12,340,653

1

Notes on Matters Relating to Significant Accounting Policies
1. Evaluation standards and methods of valuation of securities
Other securitiesThose with market price
Fair value method or market value method (Variances are directly included in net assets.)1

17Financial Statements
Notes to Financial Statements

2. Method of depreciation of non-current assets
Property, plant and equipment (including trust assets)
The straight-line method is adopted. The useful life of primary property, plant and equipment is as follows:

5. Hedge accounting approach(1) Hedge accounting approach
Deferral hedge accounting is adopted.

Buildings

2-69 years

Structures

7-30 years

Hedging instruments: Interest rate swap transaction

Machinery and equipment

7-17 years

Hedged items: Interest on borrowings

Tools, furniture and fixtures

2-15 years

3. Accounting for deferred assets(1) Investment unit issuance costs
Investment unit issuance costs are amortized by the straight-line method over 3 years.
(2) Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized by the straight-line method over the period
through redemption.

4. Revenue and expense recognition(1) Accounting for fixed property tax, etc.
Accounting for fixed property tax, city planning tax, depreciable asset tax, etc. (“fixed property tax, etc.”) on
real estate or beneficiary interest in trust for real estate held is that the amount corresponding to the fiscal
period out of the tax amount assessed and determined is expensed as expenses related to lease business.
The amount equivalent to fixed property tax, etc. in the initial fiscal year borne by SAR upon acquisition of(2) Hedging instruments and hedged items(3) Hedging policy
SAR conducts derivative transactions for the purpose of hedging the risks provided in its Articles ofIncorporation pursuant to basic rules on risk management.
(4) Method of assessing the effectiveness of hedging
The effectiveness of hedging is assessed by comparing the cumulative change in cash flows of the hedging
instruments with the cumulative change in cash flows of the hedged items and verifying the ratio of theamount of change in the two.

6. Cash and cash equivalents
Cash and cash equivalents in the statement of cash flows comprise cash on hand and cash in trust, demand
deposits and deposits in trust, and short-term investments with a maturity of three months or less from the dateof acquisition that are readily convertible to cash and that are subject to an insignificant risk of changes in value.

7. Other matters serving as the basis for preparation of financial statements(1) Accounting for beneficiary interest in trust for real estate, etc.

real estate or beneficiary interest in trust for real estate is not recorded as expenses but included in the cost

Concerning beneficiary interest in trust for real estate, etc. held, all accounts of assets and liabilities withinof acquisition of the related real estate, etc. In the fiscal period under review, there was no amount equivalenttrust assets as well as all accounts of revenue and expenses from the trust assets are recognized in theto fixed property tax, etc. included in the cost of acquisition of real estate, etc.

relevant account item of the balance sheet and the statement of income and retained earnings.

(2) Standards for recording revenue
The details of main performance obligations concerning revenue generated from contracts between SAR

The following material items of the trust assets recognized in the relevant account item are separately listedon the balance sheet.

and its customers and the ordinary time to fulfil said performance obligations (ordinary time to recognize

1) Cash and deposits in trust

revenue) are as follows:

2) Buildings in trust; Structures in trust; Machinery and equipment in trust; Tools, furniture and fixtures in1) Sale of real estate

trust; Land in trust

For revenue from sale of real estate, SAR records revenue when the purchaser who is a customer

3) Leasehold rights in trust

obtains control of the relevant real estate as a result of the seller fulfilling its delivery obligations

4) Leasehold and guarantee deposits received in trust

stipulated in the transaction agreement of the real estate.
2) Utilities income(2) Accounting for consumption taxes
Non-deductible consumption tax on acquisition of assets is included in the acquisition cost of each asset.

SAR records utilities income in accordance with the supply of electricity and water, etc. to the lessee
who is a customer based on the lease agreement of real estate and details of agreements incidental toit.
Of the utilities income, in the case that SAR deems itself to be an agent, the net amount obtained bydeducting the amount it pays to other parties from the amount it receives as charges for electricity andgas, etc. supplied by the said other parties is recognized as revenue.

18

19

Financial Statements
Notes to Financial Statements

Notes to the Balance Sheet

Notes to the Statement of Income and Retained Earnings*1	Minimum net assets as provided in Article 67, Paragraph 4 of the Act on Investment Trusts
and Investment Corporations*1 Breakdown of operating income from real estate leasing(Unit: thousand yen)

12th fiscal period

13th fiscal period(From August 1, 2021 toJanuary 31, 2022)(From February 1, 2022
to July 31, 2022)

4,696,720

4,829,210

Common area maintenance revenue

534,187544,319

Parking revenue

199,390

201,621

Facility use revenue

30,98530,608Other rental revenue

5,778

5,436

5,467,061

5,611,196

Utilities income

296,154314,831

Other revenue

127,783

134,386

423,937

449,218

5,890,999

6,060,414

Management fee

438,037

449,514

Utilities expenses

310,409343,623

Property taxes

421,139458,313

Repair expenses

181,998

255,200

Trust fee

25,60325,175

Insurance premium

13,01012,855

Depreciation

682,245

697,599

Other expenses

239,461

252,311

Total operating expenses from real estate leasing

2,311,905

2,494,593

C. Operating income from real estate leasing [A—B]

3,579,094

3,565,820(Unit: thousand yen)

12th fiscal period (As of January 31, 2022)

13th fiscal period (As of July 31, 2022)

50,00050,000

A. Operating revenue from real estate leasing*2 Matters on provision and reversal of reserve for temporary difference adjustment
12th fiscal period (As of January 31, 2022)(Unit: thousand yen)

InitialamountGain onnegativegoodwill (Note)(Note)

Reversal
Provision
Balance at
beginning of amount during amount during
the period
the period
the period

Balance at
end of theperiodReasons for provisionand reversal

8,891,236

8,891,236–

88,9128,802,324

Appropriate for distribution

13th fiscal period (As of July 31, 2022)
Reversal
Provision
Balance at
Initial amount beginning of amount during amount during
the period
the period
the period
8,891,236

8,802,324

Other lease business revenue

Total
Total operating revenue from real estate leasing
B. Operating expenses from real estate leasing(Unit: thousand yen)

(Note)

Rent revenue

Total

It is the balance of amount subdivided into the gains on negative goodwill which were allocated in the past fiscal periods. SAR willreverse an amount equivalent to more than 1% of the initial amount (equivalent to the averaged amount for 50 years) in each fiscal
period, starting with the fiscal period ended January 31, 2022.

Gain onnegativegoodwill (Note)

Rental revenue–

88,912

Balance at
end of theperiodReasons for provisionand reversal

8,713,411

Appropriate for distribution

It is the balance of amount subdivided into the gains on negative goodwill which were allocated in the past fiscal periods. SAR willreverse an amount equivalent to more than 1% of the initial amount (equivalent to the averaged amount for 50 years) in each fiscal
period, starting with the fiscal period ended January 31, 2022.

Expenses related to rent businessNotes to the Statement of Changes in Unitholders’ Equity*1	Total number of investment units authorized and total number of investment units issued
and outstanding

20

12th fiscal period

13th fiscal period(From August 1, 2021 toJanuary 31, 2022)(From February 1, 2022
to July 31, 2022)

Total number of investment units authorized

10,000,000 units

10,000,000 units

Total number of investment units issued and outstanding

1,789,389 units

1,789,389 units

21

Financial Statements
Notes to Financial Statements

Notes to the Statement of Cash Distributions(2) Description of financial instruments and associated risks, and risk management system
The funds procured through borrowings, which shall be for the purpose of mainly acquisition of assets, are12th fiscal period

13th fiscal period(From August 1, 2021 to January 31, 2022)(From February 1, 2022 to July 31, 2022)

exposed to liquidity risk until the repayment date, but the concerned risks are managed by taking such

*1 Reserve for temporary difference adjustment
SAR accumulated 8,891,236 thousand yen as reserve fortemporary difference adjustment in the 10th fiscal period.
From the 11th fiscal period, SAR plans to reverse the sameamount or more in each fiscal period over a period of up to
50 years. In the fiscal period under review, SAR decided toreverse 88,912 thousand yen.

*1 Reserve for temporary difference adjustment
SAR accumulated 8,891,236 thousand yen as reserve fortemporary difference adjustment in the 10th fiscal period.
From the 11th fiscal period, SAR plans to reverse the sameamount or more in each fiscal period over a period of up to
50 years. In the fiscal period under review, SAR decided toreverse 88,912 thousand yen.

measures as lengthening the procurement periods and staggering the maturities. In addition, borrowings
with floating interest rates are exposed to interest rate fluctuation risk, but derivative transactions (interest
rate swap transactions) are utilized as hedging instruments to, in effect, convert interest rates to fixed rates
in order to mitigate that risk. For the hedge accounting approach, hedging instruments, hedged items,
hedging policy and method of assessing the effectiveness of hedging, please refer to “5. Hedge accounting
approach” described under “Notes on Matters Relating to Significant Accounting Policies” earlier in thisdocument.

Notes to the Statement of Cash Flows(3) Supplementary explanation to matters relating to fair value, etc. of financial instruments*1	Reconciliation of cash and cash equivalents at end of period to the amount of balance
sheet items(Unit: thousand yen)

12th fiscal period

13th fiscal period(From August 1, 2021 toJanuary 31, 2022)(From February 1, 2022
to July 31, 2022)

Cash and deposits

3,774,975

4,265,178

Cash and deposits in trust

7,950,192

8,075,474

Cash and cash equivalents

11,725,168

12,340,653

Not applicable.

2. Matters relating to fair value, etc. of financial instruments
The carrying amount, fair value and the amount of difference between them, are as follows. Because "cash anddeposits" and "cash and deposits in trust" are cash and settled in a short period of time and the fair values
approximate the book values accordingly, notes on such are omitted.

12th fiscal period (As of January 31, 2022)(Unit: thousand yen)

Carrying amountNotes on Lease Transactions
Operating leases (as lessor)

12th fiscal period

13th fiscal period(As of January 31, 2022)(As of July 31, 2022)

Not later than 1 year

5,584,037

5,379,733

Later than 1 year

7,200,564

7,047,465

Total

12,784,602

12,427,198

Notes on Financial Instruments

15,350,000

15,350,378378(2) Investment corporation bonds

1,000,000

996,200(3,800)(3) Long-term borrowings

73,290,000

73,302,563

12,563Liabilities total

89,640,000

89,649,141

9,141(4) Derivative transactions *1(106,910)(106,910)–*1

SAR shall procure funds to allocate to acquisition of real estate related assets, repayment of interest-bearing
liabilities, etc. through mainly issuance of investment units, borrowing from financial institutions, issuance ofAssets and liabilities arising from derivative transactions are offset and presented in the net amount, with the balance shown in parentheses ( ) when in a net liability position.

13th fiscal period (As of July 31, 2022)(Unit: thousand yen)

Carrying amount

Fair value

Difference(1) Current portion of long-term borrowings

16,390,000

16,394,349

4,349(2) Investment corporation bonds

1,000,000

994,500(5,500)(3) Long-term borrowings

72,250,000

72,241,065(8,934)

89,640,000

89,629,914(10,085)

28,29728,297–

1. Matters relating to status of financial instruments(1) Policy for handling financial instruments

Difference(1) Current portion of long-term borrowings

Future minimum lease payments(Unit: thousand yen)

Fair value

Liabilities total(4) Derivative transactions **1

1

Assets and liabilities arising from derivative transactions are offset and presented in the net amount, with the balance shown in parentheses ( ) when in a net liability position.

investment corporation bonds, etc. Upon procuring funds through interest-bearing liabilities, dueconsideration shall be given to fund procurement agility and financial stability.

22

23

Financial Statements
Notes to Financial Statements

Notes on Securities(Note 1) Method of calculation of the fair value of financial instruments(1) Current portion of long-term borrowings; (3) Long-term borrowings		Of these, the fair values of those with fixed interest rates are calculated by the present value obtained by discounting the total
principal and interest by the rate expected when similar funds are additionally borrowed in correspondence with the remaining
term. Since those with floating interest rates are under terms and conditions that interest rates be renewed every set period oftime, the fair values are approximately the same as the book value, and thus such are used.

Other securities
12th fiscal period (As of January 31, 2022)(Unit: thousand yen)

Category(2) Investment corporation bonds(1) Stocks		The refence value announced by Japan Securities Dealers Association is stated.
(4) Derivative transactions
		

Please refer to “Notes on Derivative Transactions” later in this document.

(Note 2) Amount of redemption/repayment of investment corporation bonds and loans to be due after the closing date
12th fiscal period (As of January 31, 2022)(Unit: thousand yen)

Not later
than 1 year
Investment corporation bonds

Later than
Later than
Later than
Later than
1 year and2 years and3 years and4 years andnot later than not later than not later than not later than
2 years
3 years
4 years
5 years

Later than
5 years

–

–

–

–

–

1,000,000

Long-term borrowings

15,350,000

14,630,000

12,285,000

19,150,000

17,175,000

10,050,000

Total

15,350,000

14,630,000

12,285,000

19,150,000

17,175,000

11,050,000

13th fiscal period (As of July 31, 2022)(Unit: thousand yen)

Not later
than 1 year
Investment corporation bonds

Later than
Later than
Later than
Later than
1 year and2 years and3 years and4 years andnot later than not later than not later than not later than
2 years
3 years
4 years
5 years

Carrying
amountgreater thanacquisition
cost

Carrying
amount lessthan or equal
to acquisition
cost

–

–

1) Government bonds, municipal bonds, etc.

–

–

–

2) Corporate bonds

–

–

–

3) Others–––(3) Others

–

–

–

Subtotal–––(1) Stocks

–

–

–

–

–

–

800,000

800,000

–

–

–

–

(3) Others

122,220

122,220–

Subtotal

922,220922,220–922,220922,220–(2) Bonds(2) Bonds
1) Government bonds, municipal bonds, etc.
2) Corporate bonds3) Others

Total

13th fiscal period (As of July 31, 2022)

–

–

–

–

1,000,000

Long-term borrowings

16,390,000

13,340,000

11,085,000

17,810,000

19,965,000

10,050,000

Total

16,390,000

13,340,000

11,085,000

17,810,000

19,965,000

11,050,000(Unit: thousand yen)

Category(1) Stocks
Carrying
amountgreater thanacquisition
cost

Carrying
amount lessthan or equal
to acquisition
cost

Total

24

Difference–

Later than
5 years–

Carrying amount Acquisition cost

Carrying amount Acquisition cost

Difference

–

–

–

1) Government bonds, municipal bonds, etc.

–

–

–

2) Corporate bonds

–

–

–

3) Others–––(3) Others

–

–

–

Subtotal–––(1) Stocks

–

–

–

–

–

–

800,000

800,000

–

–

–

–

(3) Others

–

–

–

Subtotal

800,000

800,000–

800,000

800,000–(2) Bonds(2) Bonds
1) Government bonds, municipal bonds, etc.
2) Corporate bonds3) Others

25

Financial Statements
Notes to Financial Statements

Notes on Derivative Transactions

Notes on Tax-Effect Accounting

1. Derivative transactions to which hedge accounting is not applied

1. Breakdown of main causes for occurrence of deferred tax assets and deferred tax liabilities(Unit: thousand yen)

12th fiscal period (As of January 31, 2022)
12th fiscal period

13th fiscal period(As of January 31, 2022)(As of July 31, 2022)

1,175,788

1,148,955

Acquisition cost of securities

2,998

2,923

Deferred gains or losses on hedges

33,634

5,365

–

204

Not applicable.
13th fiscal period (As of July 31, 2022)

Deferred tax assets
Valuation adjustment upon merger

Not applicable.

2. Derivative transactions to which hedge accounting is applied
The following is the contract amount or the amount equivalent to the principal provided in the contract as of the

Otherclosing date for each hedge accounting approach.

Deferred tax assets, subtotal

1,212,421

1,157,448

12th fiscal period (As of January 31, 2022)

Valuation allowance(1,212,421)(1,157,448)

–

–

–

–

(Unit: thousand yen)

Hedge accounting
approachPrinciple method of
accounting

Type, etc. of derivativetransaction

Contract amount, etc. (Note 1)
Main hedged item

Interest rate swap transaction
Long-term(floating receivable; fixedborrowings
payable)Of which, later
than 1 year
72,555,000

64,405,000

Deferred tax assets, total
Deferred tax assets, net

Fair value(Note 2)

2.	Breakdown of major components that caused any significant differences between thestatutory tax rate and the effective income tax rate after application of tax-effect accounting(106,910)(Unit: %)12th fiscal period

13th fiscal period(As of January 31, 2022)(As of July 31, 2022)

31.46

31.46

Deductible distributions payable(30.61)(30.61)

Reversal of excess depreciation(0.82)(0.77)

Other(0.00)(0.05)

Effective income tax rate after application of tax-effect accounting

0.02

0.02

(Note 1) Contract amount, etc. are based on notional principal.

Statutory tax rate

(Note 2) Fair value is calculated based on the price quoted by lending financial institutions, etc.

[Adjustments]

13th fiscal period (As of July 31, 2022)(Unit: thousand yen)

Hedge accounting
approachPrinciple method of
accounting

Type, etc. of derivativetransaction

Contract amount, etc. (Note 1)
Main hedged item

Interest rate swap transaction
Long-term(floating receivable; fixedborrowings
payable)Of which, later
than 1 year
64,405,000(Note 1) Contract amount, etc. are based on notional principal.
(Note 2) Fair value is calculated based on the price quoted by lending financial institutions, etc.

59,715,000

Fair value(Note 2)

28,297

Notes on Share of Profit or Loss of Entities Accounted for Using Equity Method,etc.
12th fiscal period (As of January 31, 2022)
Not applicable.

Notes on Retirement Benefits
12th fiscal period (As of January 31, 2022)

13th fiscal period (As of July 31, 2022)
Not applicable.

Not applicable.
13th fiscal period (As of July 31, 2022)
Not applicable.

Notes on Related-Party Transactions
1. Parent company, major corporate unitholders, etc.
12th fiscal period (from August 1, 2021 to January 31, 2022)
Not applicable.
13th fiscal period (from February 1, 2022 to July 31, 2022)
Not applicable.

26

27

Financial Statements
Notes to Financial Statements

Notes on Asset Retirement Obligations

2. Affiliated companies, etc.
12th fiscal period (from August 1, 2021 to January 31, 2022)

12th fiscal period (from August 1, 2021 to January 31, 2022)

Not applicable.

Not applicable.

13th fiscal period (from February 1, 2022 to July 31, 2022)

13th fiscal period (from February 1, 2022 to July 31, 2022)

Not applicable.

Not applicable.

3. Fellow subsidiaries, etc.

Notes on Investments in Rental Properties

12th fiscal period (from August 1, 2021 to January 31, 2022)

SAR owns rental real estate, etc. for the purpose of earning revenue from leasing. The carrying amount, amountNot applicable.

of increase (decrease) during the period and fair value of these investments in rental properties are as follows:

13th fiscal period (from February 1, 2022 to July 31, 2022)(Unit: thousand yen)

Not applicable.

12th fiscal period

13th fiscal period(From August 1, 2021 toJanuary 31, 2022)(From February 1, 2022
to July 31, 2022)

Balance at beginning of period

166,836,697

179,797,713

Amount of increase (decrease) during period

12,961,016(225,548)

Balance at end of period

179,797,713

179,572,164

193,604,000

195,794,000

4. Directors, major individual unitholders, etc.
12th fiscal period (from August 1, 2021 to January 31, 2022)

Carrying amount(Unit: thousand yen)

Name ofcompany,
Category
etc. orpersonDirector,or close
relative of
director

Atsushi
Kato

Address–

Capitalstock orinvestments incapital–Description ofbusiness or
occupation

Percentage
of votingDescription Transaction
rights, etc.
of transaction
amountheld by (in)SAR

Account
item

Executive
Director of SAR,
and President
and CEO of theAsset Manager

Payment ofasset management fee
to the AssetManager (Note 1)

Accounts
payable- other

0.02%

472,980(Note 2)
(Note 3)

Balanceat end ofperiod(Note 1) Carrying amount is the amount of the cost of acquisition, less accumulated depreciation.
429,545(Note 2)13th fiscal period (from February 1, 2022 to July 31, 2022)(Unit: thousand yen)

Name ofcompany,
Category
etc. orpersonDirector,or close
relative of
director

Atsushi
Kato

Address–

Capitalstock orinvestments incapital–Description ofbusiness or
occupation

Account
item

Executive
Director of SAR,
and President
and CEO of theAsset Manager

Payment ofasset management fee
to the AssetManager (Note 1)

Accounts
payable- other

392,584(Note 2)

(Note 2) Of the amount of increase (decrease) in investments in rental properties during the 12th fiscal period, the amount of increase ismainly attributable to acquisition of real estate beneficiary interest in trust of seven properties (13,230,298 thousand yen) andcapital expenditures (424,722 thousand yen), while the amount of decrease is mainly attributable to depreciation (682,245 thousand yen). Of the amount of increase (decrease) during the 13th fiscal period, the amount of increase is mainly attributable tocapital expenditures (471,534 thousand yen), while the amount of decrease is mainly attributable to depreciation (697,599 thousand yen).
(Note 3) Fair value at the end of the period is the appraisal value by an outside real estate appraiser.

Percentage
of votingDescription Transaction
rights, etc.
of transaction
amountheld by (in)
SAR

0.03%

Fair value at end of period

Balanceat end ofperiodIncome (loss) from investments in rental properties is as stated in “Notes to the Statement of Income andRetained Earnings” earlier in this document.

431,842(Note 2)

(Note 1) The transaction was conducted by Atsushi Kato as President and CEO of a third party (the Asset Manager), and the transaction
amount is based on the terms and conditions provided in the Articles of Incorporation of SAR.
(Note 2) Of the amounts above, the transaction amount does not include consumption tax, while the balance at the end of the period
includes consumption tax.
(Note 3) The asset management fee for the 12th fiscal period includes the acquisition incentive portion included in the book value of individual real estate, etc. in the amount of 80,485 thousand yen.

28

29

Financial Statements
Notes to Financial Statements

Notes on Revenue Recognition(2) Transaction value allocated to remaining performance obligations
Not applicable.

1. Breakdown information on revenue from contracts with customers

SAR does not include contracts whose terms are initially expected to be one year or less in the note on

12th fiscal period (from August 1, 2021 to January 31, 2022)(Unit: thousand yen)

Revenue from contracts withcustomers (Note)
Proceeds from sale of real estate

Sales to external customers

regard to utilities income, as SAR has the right to receive from customers an amount directly corresponding
to the value for the lessees who are customers of portions for which performance is complete by the end of
the fiscal period, the amount it has the right to claim according to Paragraph 19 of the Application––

296,154

296,154

Other–

5,664,264

is not included in the note on transaction value allocated to remaining performance obligations throughTotal

296,154

5,960,418

application of the provisions of Paragraph 80-22 (2) of the Accounting Standard for Revenue Recognition.

Utilities income(Note)

Rental revenue, etc. subject to the “Accounting Standard for Lease Transactions” (ASBJ Statement No.13) are excluded from theabove amount as such revenue is not subject to the Revenue Recognition Accounting Standard. Revenue from contracts withcustomers mainly represents proceeds from sale of real estate and utilities income.

(Unit: thousand yen)

Revenue from contracts withcustomers (Note)
Proceeds from sale of real estate–

314,831314,831

Other–

5,774,107

Total

314,8316,088,939(Note)

Notes on Segment Information
Segment information is omitted because SAR operates a single segment, which is the real estate leasing
business.

Sales to external customers–

Utilities income

Guidelines of the Accounting Standard for Revenue Recognition is recognized as revenue. Accordingly, such

1. Segment information

13th fiscal period (from February 1, 2022 to July 31, 2022)

Rental revenue, etc. subject to the “Accounting Standard for Lease Transactions” (ASBJ Statement No.13) are excluded from theabove amount as such revenue is not subject to the Revenue Recognition Accounting Standard. Revenue from contracts withcustomers mainly represents proceeds from sale of real estate and utilities income.

2. Related information
12th fiscal period (from August 1, 2021 to January 31, 2022)(1) Information about products and services
Information about products and services is omitted because net sales to external customers for a single
product and service category are in excess of 90% of operating revenue on the statement of income andretained earnings.
(2) Information about geographic areas

2. Foundational information for understanding revenue from contracts with customers

1) Net sales

The information is as indicated in the Notes on Matters Relating to Significant Accounting Policies.

Information about net sales is omitted because net sales to external customers in Japan are in excess of

3. Information on relationship of fulfillment of performance obligations based on contracts
with customers with cashflow generated from said contracts and amount and period ofrevenue expected to be recognized in the next fiscal period or thereafter from contracts
with customers existing at the end of the current fiscal period.

90% of operating revenue on the statement of income and retained earnings.
2) Property, plant and equipment
Information about property, plant and equipment is omitted because the amount of property, plant andequipment located in Japan is in excess of 90% of the amount of property, plant and equipment on the(1) Balance of contract assets and contract liabilities, etc.
(Unit: thousand yen)30

transaction value allocated to remaining performance obligations as an expedient in practice. Also, withbalance sheet.
(3) Information about each major customer

12th fiscal period

13th fiscal period(From August 1, 2021 toJanuary 31, 2022)(From February 1, 2022
to July 31, 2022)

Receivables generated from contracts with customers(balance at beginning of period)

57,60954,922

Receivables generated from contracts with customers(balance at end of period)

54,922

73,083Contract assets (balance at beginning of period)––

Information about products and services is omitted because net sales to external customers for a single

Contract assets (balance at end of period)––

product and service category are in excess of 90% of operating revenue on the statement of income andContract liabilities (balance at beginning of period)––

retained earnings.

Contract liabilities (balance at end of period)––

Information about each major customer is omitted because all net sales to a single external customer areless than 10% of the operating revenue on the statement of income and retained earnings.
13th fiscal period (from February 1, 2022 to July 31, 2022)(1) Information about products and services

31

Financial Statements
Notes to Financial Statements

Notes on Significant Subsequent Events(2) Information about geographic areas
1) Net sales

Issuance of new investment units

Information about net sales is omitted because net sales to external customers in Japan are in excess of

The issuance of new investment units for the purpose of acquiring real estate, etc. was resolved as follows at

90% of operating revenue on the statement of income and retained earnings.

the Board of Directors’ meetings held on August 1, 2022, and August 9, 2022, and payment was completed on
August 16, 2022.

2) Property, plant and equipment
Information about property, plant and equipment is omitted because the amount of property, plant and<Issuance of new investment units through primary offering>equipment located in Japan is in excess of 90% of the amount of property, plant and equipment on the

Number of new investment units to be issued: 132,300 units

balance sheet.
(3) Information about each major customer
Information about each major customer is omitted because all net sales to a single external customer areless than 10% of the operating revenue on the statement of income and retained earnings.

Notes on Per Unit Information(Unit: yen)

54,795 yen per unit

Total issue price (total offer price):

7,249,378,500 yen

Issue amount (paid-in amount):

52,968 yen per unit

Total issue amount (paid-in amount):

7,007,666,400 yen

Payment date:August 16, 2022

Net proceeds from the issuance of new investment units were appropriated to a portion of the acquisition
funds, and real estate trust beneficiary interest in three properties was acquired on August 18, 2022 (total

12th fiscal period

13th fiscal period(From August 1, 2021 toJanuary 31, 2022)(From February 1, 2022
to July 31, 2022)

Net assets per unit

53,51153,539Net income per unit

1,414

1,430

acquisition price: 15,154 million yen).

Additional Information(Accounting estimates due to the spread of COVID-19)(Note 1) Net income per unit is calculated by dividing net income by the daily weighted average number of investment units. In addition,
diluted net income per unit is not stated, because there are no diluted investment units.

A rent system in which rents are entirely linked to the operating revenue, etc. of hotels has been adopted forsome hotel properties owned by SAR, and rent revenue has decreased significantly as of the end of the(Note 2) The basis for calculation of net income per unit is as follows:(Unit: thousand yen)

13th fiscal period due to the decline in occupancy rates of hotels, etc. SAR estimates future cash flow

12th fiscal period(From August 1, 2021 toJanuary 31, 2022)

13th fiscal period(From February 1, 2022
to July 31, 2022)

2,516,993

2,559,804––

Net income attributable to common investment units

2,516,993

2,559,804

Therefore, the operating condition or financial condition of SAR may be influenced by the spread of COVID-

Average number of investment units during period (units)

1,779,389

1,789,389

19 in the future.

Net income (thousand yen)Amount not attributable to common unitholders

32

Issue price (offer price):

based on the assumption that the economic environment surrounding these properties will recovermoderately upon the application of impairment accounting of non-current assets.
It is difficult to accurately predict when COVID-19 will be contained as well as the extent of its impact.

33

Financial Statements

Supplementary Schedules
1. Schedule of securities

3. Schedule of property, plant and equipment and intangible assets(Unit: thousand yen)

(1) Stocks
Not applicable.
Type of asset(2) Securities other than stocks(Unit: thousand yen)

Name of the security

Total
face
value

Book
value

SpecifiedcorporatebondStar Asia Mezzanine
Loan Debt Investment
Series 6

400,000

400,000

Corporatebonds

Star Asia Mezzanine
Loan Debt Investment
Series 7

Prepaid
Accruedaccruedinterest
interest

Fair
value

Unrealized
gain orRemarks
loss

400,000–

Balance at
beginningof period

AmountAmount ofBalance atofincreaseend ofdecreaseduringperiodduringperiodperiodTools,
furniture andfixtures114–

Buildings intrust

53,053,772

417,801

20,635

1,004–

21,64099,51919,823–67,54533,421–(Note 2) The underlying assets are trust beneficiary interests in a trust mainly comprised of Tajimi Logistics Center.

Tools,
furniture andfixtures intrust(Note 3) The underlying assets are trust beneficiary interests in a trust mainly comprised of Relief Premium Haneda.

Land in trust 127,283,507–

Category

Total

3,640

–

400,000

400,000

167–

400,000––

800,000

3,807–

800,000–(Note 1)
(Note 2)

(Note 1)
(Note 3)Structures in
Property, trust
plant and Machineryand equipequipment in trust
ment(Note 1) Because interest income etc. from mezzanine loan debt (specified corporate bond and corporate bonds) are based on floating interest rates and to be renewed or revised every certain period, the fair value is approximately the same as the bookvalue and thus stated at that book value.

2.	Contracted amount, etc. and fair value of derivative transactions and forward exchangetransactions(Unit: thousand yen)Contract amount, etc. (Note 1)
Category

Type

Transaction other thanmarket transaction

Interest rate swap transaction(floating receivable; fixed payable)

Total

Of which, later
than 1 year

Fair value (Note 2)

64,405,000

59,715,000

28,29764,405,000

59,715,000

28,297

Subtotal

114

period100

28

14– 53,471,574 5,441,732

685,968

48,029,841

5,856

740

15,784

119,343

28,905

5,143

90,437

100,966

30,688

5,719

70,278– 127,283,507–– 127,283,507– 180,997,147 5,507,282

697,599 175,489,864

180,525,096

472,051

4,082,300––

4,082,300––

4,082,300

4,082,300––

4,082,300––

4,082,300

184,607,396

472,051

Intangible Leasehold
rights in trust
assetsSubtotal
Total–

Accumulated depreciation or accumu- Net balance
lated amortization
at end of Remarks
periodFor– 185,079,447 5,507,282

697,599 179,572,164

4. Schedule of other specified assets
Not applicable.

5. Schedule of investment corporation bonds(Note 1) Contract amount, etc. of interest rate swaps are based on notional principal.

(Unit: thousand yen)

(Note 2) Fair value is calculated based on the price quoted by lending financial institutions, etc.
Name of the security
First Series Unsecured
Investment Corporation Bonds(ranking pari passu among
specified investment corporation bonds)(Note)

Issue
date

Balance at
Amount ofBalance at
beginning
decreaseend ofof period during period
periodSeptember
1,000,000
24, 2021–

1,000,000

Interest
rate

Redemption
date

0.700%

September
21, 2028

Use

Collateral

Unsecured
Repayment
andof borrowunguaranings, etc.
teed

The yearly schedule of redemption for investment corporation bonds within five years of the balance sheet date is as follows:(Unit: thousand yen)

Not later
than 1 year
Investment corporation bonds

34–

Later than 1 year Later than 2 years Later than 3 years Later than 4 years
and not later than and not later than and not later than and not later than
2 years
3 years
4 years
5 years
–

–

–

–

35

Financial Statements
Supplementary Schedules

6. Schedule of borrowings

Category (Note 2)(Unit: thousand yen)

Balance at
beginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodBalance at
end ofperiodSumitomo Mitsui
Banking
Corporation–

250,000

250,000–

Mizuho Bank, Ltd.

–

250,000

250,000–

Subtotal–

500,000

500,000–

Long-term borrowings

Short-term borrowings

Lender36

Sumitomo Mitsui
Banking
Corporation

1,400,000–

1,400,000–

Mizuho Bank, Ltd.

1,050,000–

1,050,000–

Sumitomo Mitsui
Trust Bank, Limited

500,000–

500,000–

Aozora Bank, Ltd.

400,000–

400,000–

Shinsei Bank,
Limited

400,000–

400,000–

Resona Bank,
Limited

400,000–

400,000–

Sumitomo Mitsui
Banking
Corporation

2,500,000––

2,500,000

Resona Bank,
Limited

600,000––

600,000

Shinsei Bank,
Limited

2,500,000––

2,500,000

Sumitomo Mitsui
Banking
Corporation

970,000––

970,000

Mizuho Bank, Ltd.

920,000––

920,000

Sumitomo Mitsui
Trust Bank, Limited

800,000––

800,000

Averageinterest Repayment Repayment
Use
rate
date
methodLender

0.2797%0.7100%(Note 3)0.8779%0.7300%

May 31,
2022

April 20,2022

August 31,
2022

February
20, 2023

Lump sum
repaymenton repayment date

Lump sum
repaymenton repayment date

Lump sum
repaymenton repayment date

Lump sum
repaymenton repayment date

(Note 4)(Note 4)(Note 4)(Note 4)

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodBalance at
end ofperiodRemarks

Sumitomo Mitsui
Banking
Corporation

500,000–

500,000–

Unsecured
andunguaranteed

Mizuho Bank, Ltd.

450,000–

450,000–

Sumitomo Mitsui
Trust Bank, Limited

700,000–

700,000–

Aozora Bank, Ltd.

500,000–

500,000–(Note 1)

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Long-term borrowings

Category (Note 2)

Balance at
beginningof period

Shinsei Bank,
Limited

600,000–

600,000–

Resona Bank,
Limited

500,000–

500,000–

The Bank ofFukuoka, Ltd.

250,000–

250,000–

The Nishi-Nippon
City Bank, Ltd.

500,000–

500,000–

Sumitomo Mitsui
Banking
Corporation

850,000––

850,000

Mizuho Bank, Ltd.

750,000––

750,000

Sumitomo Mitsui
Trust Bank, Limited

700,000––

700,000

Aozora Bank, Ltd.

500,000––

500,000

Shinsei Bank,
Limited

600,000––

600,000

Resona Bank,
Limited

500,000––

500,000

The Bank ofFukuoka, Ltd.

240,000––

240,000

Mizuho Trust &Banking. Co., Ltd.

200,000––

200,000

The Nishi-Nippon
City Bank, Ltd.

500,000––

500,000

Sumitomo Mitsui
Banking
Corporation

2,200,000––

2,200,000

500,000––

500,000

Shinsei Bank,
Limited

500,000––

500,000

Resona Bank,
Limited

500,000––

500,000

Mizuho Bank, Ltd.

2,050,000––

2,050,000

The Bank ofFukuoka, Ltd.

500,000

500,000

Sumitomo Mitsui
Trust Bank, Limited

1,250,000––

1,250,000

Sumitomo Mitsui
Banking
Corporation

Aozora Bank, Ltd.

700,000––

700,000

1,950,000

Shinsei Bank,
Limited

700,000––

700,000

Shinsei Bank,
Limited

1,950,000––

1,950,000

Resona Bank,
Limited

700,000––

700,000

Aozora Bank, Ltd.

800,000––

800,000

400,000––

400,000

Resona Bank,
LimitedMizuho Trust &Banking. Co., Ltd.

400,000––

400,000

Sumitomo Mitsui
Banking
Corporation

450,000–

450,000–

The Nishi-Nippon
City Bank, Ltd.

500,000–

500,000–

Shinsei Bank,
Limited

450,000–

450,000–

Aozora Bank, Ltd.

200,000–

200,000

–

–
–

–
–

1,950,000

1.0778%February28, 2023

Lump sum
repaymenton repayment date

(Note 4)

Unsecured
andunguaranteed

Remarks(Note 1)0.6095%(Note 3)0.8120%(Note 3)

Aozora Bank, Ltd.

(Note 3)

Averageinterest Repayment Repayment
Use
rate
date
method

0.7532%(Note 3)0.7685%

March 22,2022

Lump sum
repaymenton repayment date

September
20, 2023

Lump sum
repaymenton repayment date

April 22,2024

Lump sum
repaymenton repayment date

May 31,2022

Lump sum
repaymenton repayment date

(Note 4)(Note 4)(Note 4)(Note 4)

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

37

Financial Statements
Supplementary Schedules

Category (Note 2)

Balance at
beginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodBalance at
end ofperiodSumitomo Mitsui
Banking
Corporation

1,950,000––

1,950,000

Mizuho Bank, Ltd.

2,500,000––

2,500,000

LenderRemarks

Lump sum
repaymenton repayment date

Balance at
beginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodBalance at
end ofperiodSumitomo Mitsui
Banking
Corporation

750,000––

750,000

Mizuho Bank, Ltd.

750,000––

750,000

Sumitomo Mitsui
Trust Bank, Limited

500,000––

500,000

Aozora Bank, Ltd.

500,000––

500,000

Lender(Note 1)

Unsecured
andunguaranteed

1,050,000––

1,050,000

Aozora Bank, Ltd.

600,000––

600,000

Shinsei Bank,
Limited

600,000––

600,000

The Bank of
Yokohama, Ltd.

500,000––

500,000

Resona Bank,
Limited

600,000––

600,000

The Minato Bank,
Ltd.

750,000––

750,000

Sumitomo Mitsui
Banking
Corporation

750,000––

750,000

Mizuho Bank, Ltd.

750,000––

750,000

0.7588%(Note 3)500,000––

500,000

Sumitomo Mitsui
Banking
Corporation

2,150,000––

2,150,000

Mizuho Bank, Ltd.

2,000,000––

2,000,000

Aozora Bank, Ltd.

1,500,000––

1,500,000

Sumitomo Mitsui
Trust Bank, Limited

1,000,000––

1,000,000

The Nishi-Nippon
City Bank, Ltd.

1,000,000––

1,000,000

Resona Bank,
Limited

600,000––

600,000

Sumitomo Mitsui
Banking
Corporation

1,350,000––

1,350,000

Mizuho Bank, Ltd.

1,000,000––

1,000,000

Sumitomo Mitsui
Trust Bank, Limited

850,000––

850,000

Aozora Bank, Ltd.

400,000––

400,000

Sumitomo Mitsui
Banking
Corporation

1,680,000––

1,680,000

Mizuho Bank, Ltd.

1,530,000––

1,530,000

The Bank of
Yokohama, Ltd.

1,000,000

Shinsei Bank,
Limited

600,000––

600,000

Aozora Bank, Ltd.

600,000––

600,000

Sumitomo Mitsui
Trust Bank, Limited

550,000––

550,000

Sumitomo Mitsui
Banking
Corporation

750,000––

750,000

Mizuho Bank, Ltd.

750,000––

750,000

Sumitomo Mitsui
Trust Bank, Limited

500,000––

500,000

The Kiyo Bank, Ltd.

500,000––

500,000

Fukoku Mutual Life
Insurance
Company

500,000––

500,000––

1,000,000

0.5360%(Note 3)0.6975%(Note 3)

April 21,2025

February29, 2024

August 29,2025

0.6850% October 31,(Note 3)2025

Lump sum
repaymenton repayment date

Lump sum
repaymenton repayment date

Lump sum
repaymenton repayment date

(Note 4)(Note 4)(Note 4)(Note 4)

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Long-term borrowings

Long-term borrowings

Category (Note 2)

Sumitomo Mitsui
Trust Bank, Limited

The Bank ofFukuoka, Ltd.

38

Averageinterest Repayment Repayment
Use
rate
date
method500,000––

500,000

Aozora Bank, Ltd.

500,000––

500,000

The Minato Bank,
Ltd.

750,000––

750,000

Sumitomo Mitsui
Banking
Corporation

1,150,000––

1,150,000

Mizuho Bank, Ltd.

540,000––

540,000

2,160,000––

2,160,000

The Minato Bank,
Ltd.

500,000––

500,000

Sumitomo Mitsui
Banking
Corporation

800,000––

800,000

Mizuho Bank, Ltd.

500,000––

500,000

Shinsei Bank,
Limited0.7025%(Note 3)0.9455%(Note 3)

April 30,
2026

April 28,
2028

Lump sum
repaymenton repayment date

Lump sum
repaymenton repayment date

(Note 4)(Note 4)

Unsecured
andunguaranteed

Unsecured
andunguaranteed

August 19,
2026

Lump sum
repaymenton repayment dateAugust 21,
2028

Lump sum
repaymenton repayment dateAugust 31,
2026

Lump sum
repaymenton repayment dateAugust 31,
2028

Lump sum
repaymenton repayment date

October 21,
0.4673%2024

Lump sum
repaymenton repayment date

0.6780%0.8894%(Note 3)0.6955%(Note 3)1,500,000––

1,500,000

Aozora Bank, Ltd.

500,000––

500,000

San ju San Bank,
Ltd.

500,000––

500,000

Sumitomo Mitsui
Banking
Corporation

932,500––

932,500

Mizuho Bank, Ltd.

857,500––

857,500

Shinsei Bank,
Limited

300,000––

300,000

Sumitomo Mitsui
Trust Bank, Limited

525,000––

525,000

Aozora Bank, Ltd.

300,000––

300,000

Resona Bank,
Limited

100,000––

100,000

The Bank ofFukuoka, Ltd.

170,000––

170,000

Mizuho Trust &Banking. Co., Ltd.

100,000––

100,000

The Dai-ichi Life
Insurance
Company, Limited

500,000––

500,000

Remarks(Note 1)

(Note 3)

Sumitomo Mitsui
Trust Bank, Limited

Shinsei Bank,
LimitedAverageinterest Repayment Repayment
Use
rate
date
method

0.9106%(Note 3)(Note 4)(Note 4)(Note 4)(Note 4)(Note 4)

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed39

Financial Statements
Supplementary Schedules

Category (Note 2)

Balance at
beginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodBalance at
end ofperiodSumitomo Mitsui
Banking
Corporation

932,500––

932,500

Mizuho Bank, Ltd.

857,500––

857,500

Shinsei Bank,
Limited

300,000––

300,000

Long-term borrowings

Lender525,000––

525,000

Aozora Bank, Ltd.

300,000––

300,000

Resona Bank,
Limited

100,000––

100,000

Mizuho Trust &Banking. Co., Ltd.

100,000––

100,000

Sumitomo Mitsui
Banking
Corporation–

500,000–

500,000

Mizuho Bank, Ltd.

–

450,000–

450,000

Shinsei Bank,
Limited

–600,000–

600,000

Sumitomo Mitsui
Trust Bank, Limited–

700,000–

700,000

Aozora Bank, Ltd.

–

500,000–

500,000

Resona Bank,
Limited

–500,000–

500,000

The Bank ofFukuoka, Ltd.

–

250,000-

250,000

Sumitomo Mitsui
Banking
Corporation–

900,000–

900,000

Mizuho Bank, Ltd.

–

550,000–

550,000

Shinsei Bank,
Limited

–400,000–

400,000

Sumitomo Mitsui
Trust Bank, Limited–

500,000–

500,000

Aozora Bank, Ltd.

–

400,000–

400,000

Resona Bank,
Limited

–400,000–

400,000

Sumitomo Mitsui
Banking
Corporation–

500,000–

500,000

Mizuho Bank, Ltd.

–

500,000–

500,000

Sumitomo Mitsui
Banking
Corporation–

450,000–

450,000

Shinsei Bank,
Limited

–450,000–

450,000

Aozora Bank, Ltd.

–

200,000–

200,000

Subtotal
Total

40(Note 1) Average interest rate is the day-weighted average rate during the fiscal period.
Remarks(Note 2) Long-term borrowings include current portion of long-term borrowings(Note 3) Interest rate swap transactions are undertaken to hedge against the risk of interest rate fluctuations. Interest rate taking into consideration the effect of interest rate swaps (interest rate fixation) is indicated.

(Note 1)

(Note 4) Funds are used for acquisition funds of beneficiary interest in trust, repayment of borrowings, etc.
(Note 5) The yearly schedule of repayment for long-term borrowings within five years of the balance sheet date is as follows:

Sumitomo Mitsui
Trust Bank, Limited

The Kiyo Bank, Ltd.

Averageinterest Repayment Repayment
Use
rate
date
method–1,000,000–

1,000,000

88,640,000

9,750,000

9,750,000

88,640,000

88,640,000

10,250,000

10,250,000

88,640,000(Unit: thousand yen)

0.7505% October 20,(Note 3)2026

Lump sum
repaymenton repayment date

(Note 4)

Unsecured
andunguaranteed
Long-term borrowings

0.8276%

May 31,2027

Lump sum
repaymenton repayment date

0.9067%

May 31,2027

Lump sum
repaymenton repayment date

0.2705%

April 28,
2023

Lump sum
repaymenton repayment date

0.8738%

May 31,2027

Lump sum
repaymenton repayment date

(Note 4)(Note 4)(Note 4)(Note 4)

Not later than
1 yearLater than 1
year and notlater than 2
years

Later than 2
years and notlater than 3
years

Later than 3
years and notlater than 4
years

Later than 4
years and notlater than 5
years

16,390,000

13,340,000

11,085,000

17,810,000

19,965,000

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

41

Financial Statements

Independent Auditor’s Report

Independent Auditor’s Report

The Board of Directors
Star Asia Investment Corporation

Responsibilities of Management and the Supervisory Director for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statementsin accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of financial statementsthat are free from material misstatement, whether due to fraud or error.

OpinionIn preparing the financial statements, management is responsible for assessing the Company’s
ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.

We have audited the accompanying financial statements of Star Asia Investment Corporation(the Company), which comprise the balance sheet as at July 31,2022, and the statements ofincome and retained earnings, changes in unitholders’ equity, cash distributions and cash flows
for the six months period then ended, and notes to the financial statements.

Auditor’s Responsibilities for the Audit of the Financial Statements

The Supervisory Director is responsible for overseeing the Company’s financial reporting
process.

In our opinion, the accompanying financial statements present fairly, in all material respects, thefinancial position of the Company as at July 31,2022, and its financial performance and its cash
flows for the six months period then ended in accordance with accounting principles generally
accepted in Japan.

Our objectives are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these financial statements.

Basis for Opinion

As part of an audit in accordance with auditing standards generally accepted in Japan, we
exercise professional judgment and maintain professional skepticism throughout the audit. We
also:

We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report. We are independent of the Company
in accordance with the ethical requirements that are relevant to our audit of the financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance withthese requirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Other Information
The other information comprises the information included in Semi-Annual Report that contains
audited financial statements but does not include the financial statements and our auditor’sreport thereon. Management is responsible for preparation and disclosure of the otherinformation. The Supervisory Director is responsible for overseeing the Company’s reporting
process of the other information.
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.

・ Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the financial statements is not expressing an opinion on the effectiveness of the Company’s
internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Company to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation in accordance with accounting
principles generally accepted in Japan.

4243
Ernst & Young ShinNihon LLC

Ernst & Young ShinNihon LLC

Financial Statements
Independent Auditor’s Report

We communicate with the Executive Director regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the Executive Director with a statement that we have complied with the ethicalrequirements regarding independence that are relevant to our audit of the financial statements inJapan, and to communicate with them all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, related safeguards.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company whichis required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
Ernst & Young ShinNihon LLC
Tokyo, Japan
November 28,2022/s/ Hitoshi Sakurai
Hitoshi Sakurai
Designated Engagement Partner
Certified Public Accountant/s/ Natsuki Saiki
Natsuki Saiki
Designated Engagement Partner
Certified Public Accountant

44

45
Ernst & Young ShinNihon LLC