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

Semi-Annual Reportfor the 15th Fiscal Period
from February 1, 2023 to July 31, 2023

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)

Basic Principles

1. A diversified REIT

2. Steady growth

Portfolio developed withdiversified assets located mainlyin the Tokyo Area (Note)

Pursuit of internal growth by the
Asset Manager with abundant
experience and know-how aswell as external growth based on
asset management performedby the Star Asia GroupFOR INVESTORSStar Asia Investment Corporation (SAR) makes investments
through a “unitholders’ interest-first” mindset in principle,

3. Initiatives focusing
on unitholder value
Constant, “out-of-the-box”
active management(Note) “Tokyo area”: “Tokyo area” refers to Tokyo and the three prefectures of Kanagawa, Saitama and Chiba. The same shall apply hereinafter.

entrusting asset management to Star Asia Investment
Investment Policy

Management Co., Ltd., which belongs to Star Asia Group, an
independent real estate investment group that has
accumulated a track record in the Japanese real estate market.
SAR aims to maximize unitholders’ interests by conducting
flexible and agile portfolio management based on its unique

GROWTH

Prioritized, focusedinvestment in the Tokyo Area

market analyses while focusing on income stability and growth

Investment ratio 70% or
higher in the Tokyo Areaof income, and implementing highly transparent management

Achieving income stability
and growth throughdiversification of asset
types

Investment primarily
in middle-size assetsthat discloses information necessary for unitholders in a timely
and appropriate manner.
Financial Highlights for 15th Fiscal Period (As of the end of July 2023)
TOKYO AREA

Contents
To Our Unitholders 

2Initiatives Related to ESG 

4

Portfolio Overview 

5Financial 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 

Operating revenue

Operating income

Ordinary income

Net income

6,946 million yen

3,606 million yen

3,073 million yen

3,073 million yen

Actual and Forecasted Cash Distributions Per Unit
STABILITY
12th FP Actual

13th FP Actual

14th FP Actual

1,478 yen

1,476 yen

1,491 yen

17

15th FP Actual

16th FP Forecast

17th FP Forecast

Supplementary Schedules 

34

Independent Auditor’s Report 42

1,586 yen

1,513 yen

1,520 yen

* In this report, amounts are rounded down to the unit displayed and percentages are rounded to the first decimal place.

To Our Unitholders
Increase in composition ratio of hotels in the portfolio
SAR acquired seven hotels totaling 45.4 billion yen in September 2023 with the fund procurement through public
offering in August 2023. The purpose was to expand the exposure to hotels at the best timing as portfolio management of diversified REITs. After the series of initiatives, the ratio of hotel to all assets under management will be
28.7%. All hotels are located at the center of major cities with many tourism resources and close to stations withhigh transportation convenience, and are believed to capture not only leisure demand but also business demand.

Star Asia Investment Corporation
Executive Director

All seven hotels that were newly acquired have the same rent structure of fixed ＋ variable rent. It is believed to be a

Atsushi Kato

directly incorporate the future improvement of accommodation demand into the revenue of SAR.

structure in which variable rent can be received if GOP × 85% exceeds the fixed rent at each property and that can

All seven hotels are leased and operated by a company under the umbrella of Polaris Holdings Co., Ltd., which
belongs to Star Asia Group. Even amid the COVID-19 pandemic, SAR is expanding its business in cooperation
with Star Asia Group and conducting sales utilizing the economies of scale as well as efficient operation in terms of
cost.

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. In the fiscal period under review (fiscal period ended July 2023), SAR conducted asset replacement andstrengthened its real estate portfolio as well as realized gain on sale. In August 2023, SAR executed a public offering
for the third consecutive year after the formulation of the medium-term management plan in March 2021 (sixth timesince listing) (assets (to be) acquired: seven hotels three residences, total (planned) acquisition price: 49.1 billion yen).
After the series of initiatives, the asset size is expected to be 242.2 billion yen. SAR is steadily expanding its asset size
toward achieving the medium-term management plan of “increasing the asset size to 300 billion yen by 2026.”
Furthermore, SAR continues to implement initiatives related to ESG to achieve the SDGs. SAR participated in the
GRESB Real Estate Assessment also in fiscal 2023 (Note 1). In addition, SAR continues to acquire environmental certifications for its properties, and the acquisition rate of environmental certifications has increased to 42.8% as of July 31,
2023 (target of acquisition of environmental certification: 50% by 2026). SAR has also set numerical targets regarding
the environment, and is focusing on the achievement of such targets (Note 1). SAR continues to implement initiatives
on the environment (E), society (S) and governance (G), and will further strengthen its initiatives related to ESG tofulfill its responsibilities as a REIT with a public nature, in parallel with the pursuit of maximizing unitholders’ interests.

In March 2021, as a medium-term management plan, SAR set a goal to achieve an asset size of 300 billion yen
and increase cash distributions per unit to 1,600 yen or more by 2026.
As for the expansion of asset size (external growth), SAR executed a public offering in August 2023, and incorporated 11 properties (total (planned) acquisition price: 49.1 billion yen) into its portfolio (as of the end of September
2023, eight properties have been acquired and three properties are scheduled to be acquired in December 2023).
As a result, the asset size is expected to be 242.2 billion yen, and we believe that such increase is a significant
progress towards the achievement of the medium-term management plan (external growth target). Going forward,
SAR aims for further external growth by taking full advantage of the opportunity to acquire properties from Star
Asia Group, centering on properties for which preferential negotiation rights have been acquired (12 hotels,appraisal value: 57.6 billion yen), and the Asset Manager’s unique network.
In terms of the growth of cash distributions per unit (internal growth), it is essential to execute management andoperation aimed at increasing profitability of each property included in the portfolio and reducing costs. In addition,
SAR is implementing the extension of Funabashi Hi-Tech Park Factory I, a logistics facility with unused floor area,
and we believe it will contribute to internal growth after the completion of the extension (scheduled for December2023). At Suroy Mall Chikushino, a suburban retail facility, SAR attracted
become an anchor tenant, and the ability of the entire facility to attract

as well as seeking to increase profitability of its properties and cost reduction, SAR posted operating revenue ofcustomers has increased. We believe that this will contribute to the attrac-

6,946 million yen, ordinary income of 3,073 million yen, net income of 3,073 million yen and cash distributions pertion of new tenants in addition to the increase in revenue due to the rents

unit of 1,586 yen.

from such tenants. In addition to the maintenance and improvement of

We would like to report on the performance results as well as express our deep gratitude to our unitholders foroccupancy rates of each property and the increase in revenue throughyour support and understanding.

cost reduction, SAR will continue to implement the above initiatives to(Note 1) For details, please check our website.

After Public Offering“LOPIA,” a supermarket with a high ability to attract customers which will

For the 15th Fiscal Period, as a result of conducting management pursuing maximization of unitholders’ interests

Going forward, we would appreciate your continued support and guidance.

2

Toward achieving medium-term management planpursue further internal growth and aim to achieve the goal of cash distributions per unit.

Student residence 0.6%
Office
30.9%

Hotel
28.7%

242.2

billion yen

Logistics
12.2%

Retail
11.5%
Residence 16.1%

3

Initiatives Related to ESG

Portfolio Overview (As of July 31, 2023)
OFC-01

ESG Policy
Our Company, as a member of the Star Asia Group, shares its Investment Philosophy and Guiding Principles.

OFC-03

OFC-04

OFC-06

OFC-08

OFC-09Minami-Azabu
Shibuya Building

Honmachibashi
Tower

Nishi-Shinjuku
Matsuya Building

Urban Center
Shibuya East (Note 1)

Urban Center
Yokohama West (Note 2)

Hakata-eki
East Place

Completed: Jun. 15, 1993

Completed: Feb. 8, 2010

Completed: May 28, 1987

Completed: Jul. 31, 1993

Completed: Nov. 25, 1994

Completed: Feb. 24, 1986

Furthermore, as the asset management company for Star Asia Investment Corporation, we engage in the realestate investment management business which gives consideration to the environment, society, and governance in order to enhance corporate value and exert comprehensive competitiveness by pursuing long-termsustainability and recognizing the role Star Asia Investment Corporation has been given in society in accordance with our basic philosophy of “Client First.”
OFC-10

Environmental Initiatives

OFC-11

OFC-12

OFC-13

OFC-14OFC-15

Nihonbashi Hamacho
Park Building

Amusement Media
Gakuin Honkan

Higashi-KobeCenter Building

Amusement Media
Gakuin Shinkan

Seishin BLDG.

Urban Center
Kanda Suda-choCompleted: Jul. 13, 1992

Completed: Nov. 2, 1994

Completed: Jan. 6, 1992

Completed: Jan. 25, 1999

Completed: Mar. 31, 1989

Completed: Oct. 28, 1991

Acquisition of Environmental Certifications As of July 31, 2023
DBJ Green Building
Certification

Building-Housing Energy-efficiency
Labeling System (BELS)

CASBEE Real Estate
Assessment

Goals

Achieve at least 50% of
the ratio at environmental
certifications (Note 2) by 2026
OFC-16★★★ 1 property★★ 5 properties★ 2 properties★★★ 1 property★★ 1 property (Note1)★★★★★ 1 property★★★★ 2 properties(Note 1) Even in cases where a property with multiple
buildings acquires certifications at eachbuilding, it is counted as one property.

OFC-17

OFC-18

Urban Center Kanda
Tsukasamachi

Takadanobaba
AccessAzabu Amerex
BLDG.

Hiei-Kudan BLDG.

OFC-19Urban Center
Shin-Yokohama

OFC-20

The Portal Akihabara

OFC-21

Completed: Jan. 20, 1988

Completed: Jan. 14, 1994

Completed: Jun. 30, 1988

Completed: Sep. 17, 1991

Completed: Mar. 17, 1992

Completed: May 31, 2002

(Note 2) Ratio of each floor area to the gross floorarea of SAR portfolio (535,375.36 m2).

Acquisition ratio (Note 2) 42.8%

Social Initiatives
Kishiwada Environment Fair 2023
A panel exhibition of environmental protection initiatives taken by Kishiwada City and various
groups. Based on the advocation by the Environment Agency, June has been designated as
Environment Month from fiscal 1991, and initiatives were taken to promote interest and understanding of environmental protection matters, and awareness campaigns were launched toincrease motivation towards proactive conservation activities.

OFC-22

OFC-23

OFC-24

Urban Center
Tachikawa

Urban Center
HakataUrban Center
Fujisawa

La Park Kishiwada

RTL-01

Suroy Mall
Chikushino

RTL-02

Seiyu Minakuchi

RTL-03Completed: May 30, 1990

Completed: Aug. 27, 2020

Completed: Apr. 9, 1991

Completed: Aug. 30, 1994

Completed: Jun. 22, 2007

Completed: May 31, 1999

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

Governance Initiatives
Decision-Making Process

RSC-01

Urban Park
Azabujuban

Completed: Nov. 20, 1992

Completed: Jan. 31, 2012

Completed: Nov. 29, 1999

RSC-02

RSC-05

Urban Park Daikanyama

Urban Park Namba

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

Urban Park
Gokokuji (Note 3)

RSC-06

Completed: Jan. 9, 2013

Completed: Feb. 28, 1990

ProposalCompliance Officer

parency by complying with laws andReview 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

4

RTL-06abeno nini (Retail)

Department• Implement decision-making with high transregulations

RTL-05

BAGUS IkebukuroWest

SAR’s Board of Directors Meetings
Review and approval

Return
RSC-07

Rejected
Rejected

RSC-10

RSC-11

Urban Park Kashiwa

Urban Park
Ryokuchi Koen

RSC-08

Urban Park
Koenji (Note 3)

RSC-09Urban Park Ichigao

Urban Park Gyotoku

Shiroi Logiman

RSC-12Completed: Aug. 28, 1997

Completed: Mar. 10, 1989

Completed: Oct. 13, 1987

Completed: Jul. 10, 1998

Completed: Mar. 24, 1995

Completed: May 9, 1995

Rejected
Unapproved(Note 1) The name was changed on July 1, 2023 (former property name: Shibuya MK Building).
(Note 2) The name was changed on July 1, 2023 (former property name: Asahi Building).

(Note 3) Disposed as of August 31, 2023.

5

Portfolio Overview (As of July 31, 2023)

RSC-13

RSC-14

RSC-15

RSC-16

RSC-17

RSC-18

Urban Park Sekime

Urban Park Imazato

Urban Park Yoyogi

Urban Park Tokiwadai Koen

Urban Park Mitsuike Koen

Urban Park Ryogoku

Completed: Aug. 18, 1989

Completed: Dec. 20, 1991

Completed: Sep. 4, 2017

Completed: Feb. 17, 1994

Completed: Mar. 24, 1992

Completed: Oct. 31, 1997

RSC-19

RSC-20

RSC-21

LGC-02

LGC-03

Urban Park Mizonokuchi

Urban Park Miyamaedaira

Urban Park Tsurumi

Iwatsuki Logistics

Yokohama Logistics

Funabashi Logistics

Completed: Aug. 23, 1988

Completed: Jun. 10, 2021

Completed: Feb. 17, 1994

Completed: Oct. 29, 2014

Completed: Oct. 1, 1994

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

LGC-04

LGC-05

LGC-07

LGC-01

LGC-08

LGC-09Tokorozawa
Logistics

Funabashi Nishiura
Logistics II

Matsubushi
Logistics

Funabashi Hi-Tech
Park Factory I

R&B Hotel
Umeda East

Completed: Aug. 14, 2015

Completed: Apr. 30, 1999

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

Completed: May 19, 2003

Completed: Oct. 20, 2000

HTL-03

HTL-04HTL-10

HTL-11

KOKO HOTEL Ginza 1-Chome

KOKO HOTEL Sapporo Ekimae

KOKO HOTEL Fukuoka Tenjin

KOKO HOTEL Hiroshima Ekimae

Completed: Oct. 29, 2014

Completed: Oct. 20, 2015

Completed: Aug. 20, 2007

Completed: Dec. 17, 2019

HTL-14HTL-15

HTL-05

HTL-06

HTL-07REMBRANDT STYLETokyo Nishikasai

BEST WESTERN
Yokohama

The BREAKFAST HOTELFUKUOKA TENJIN

GLANSITAKIHABARAREMBRANDT STYLETokyo Nishikasai GrandeCompleted: Feb. 6, 2008

Completed: Mar. 19, 1991

Completed: Sep. 21, 1987

Completed: Feb. 20, 2017

Completed: Sep. 20, 2017

Completed: Feb. 7, 2017

Fino Hotel Sapporo OdoriBest Western Plus
Fukuoka Tenjin-minami

Completed: Apr. 19, 2019

Completed: Jun. 9, 2020

Completed: Aug. 31, 2020

• As of June 30, 2023, Polaris Holdings operates 48 hotels with a total of 8,722 rooms (including overseas hotels
and hotels planned for operation)• During the pandemic, Polaris opportunistically increased hotels under operation, increasing revenues and lowering breakeven point• Star Asia Group, which has senior investment professionals with deep experience inmanaging real estate investments, has joined forces with Polaris (previously
Kachikaihatsu Co., Ltd.), an operator of diverse hotels• Together, they are pursuing hotel operations that leverage Star Asia Group’s strong
track record in opportunistic investments

Listed on TSE Standard
MarketCode: 3010

HTL-09abeno nini (Hotel)

Completed: Apr. 7, 2017

Completed: Jan. 31, 2012

HTL-16

KOKO HOTEL
Kagoshima Tenmonkan

Star Asia Group

KOKO HOTEL Osaka Namba

HTL-13Strategic Initiatives in the Hotel Business by Polaris Holdings(affiliate of the Star Asia Group)

Smile Hotel Namba

HTL-08

HTL-12

HTL-01Baraki Logistics

HTL-02

Properties Newly Acquired (Hotel)

Hotel operations

Investment management

More efficient hotel operations and maximization of investment value
Expand fee-revenue
hotelsIncrease the number of hotels operating under management contracts, providing the owners with feebased revenues and reducing the per-room burden of tenancy fees

Effective hotel
operation

Optimize staff number at each hotel through efficient shift assignments and multitasking which results in
reducing personnel costs on a per-guest-room basis

Lower
breakeven Promote business as Eliminate annual fixed rent payment obligation by acquiring properties as owner and operating them as
pointowner/operators
operator.

Properties Newly Acquired (Residence)
RSC-22

6

RSC-23

Expand operations platform

RSC-24

RSC-25

Urban Park Mitaka

Urban Park Kamata Minami I

Urban Park Kamata Minami II

Urban Park UmejimaCompleted: Jun. 8, 2023

Completed: Sep. 2, 2022

Planned completion: Oct. 31, 2023

Planned completion: Nov. 30, 2023

Develop highly competitive hotels and grow the number of guest rooms in hotels under management
Pursue economies of scale by expanding the operation platform and maximize revenue

Hotel Brands Owned by Polaris Holdings

KOKO HOTELBest Western

Value The Hotel

Red Planet Hotels

Operates 18 hotels in major cities
throughout Japan

Operates 9 hotels in major cities
throughout Japan as a global hotel brandOperates 5 hotels in the
Tohoku region of Japan

Operates 14 hotels in Philippines

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.

11th Fiscal
PeriodFiscal Period

12th Fiscal
Period13th Fiscal
Period14th Fiscal
Period15th Fiscal
Period(February 1, 2021 (August 1, 2021 to (February 1, 2022 (August 1, 2022 to (February 1, 2023
to July 31, 2021) January 31, 2022) to July 31, 2022) January 31, 2023) to July 31, 2023)

Operating revenue(million yen)

5,560

5,960

6,088

6,486

6,946

Operating revenue from real estate leasing (million yen)

5,536

5,890

6,060

6,463

6,503

(million yen)

2,721

2,872

3,041

3,136

3,340

(million yen)

2,189

2,311

2,494

2,556

2,744

Operating income(million yen)

2,838

3,087

3,047

3,349

3,606

Ordinary income(million yen)

2,407

2,517

2,560

2,782

3,073

Net income(million yen)

2,407

2,516

2,559

2,781

3,073

Total assets(million yen)

179,170

193,316

193,488

208,766

209,259(%)(-0.3)

(7.9)

(0.1)

(7.9)

(0.2)

(million yen)

89,17995,753

95,803

103,455

103,224(%)(-0.5)

(7.4)

(0.1)

(8.0)

(-0.2)

Interest-bearing debt

(million yen)

82,44089,64089,64096,84096,840Unitholders’ capital(million yen)

52,745

59,115

59,115

66,123

66,123

Total number of investment units issued andoutstanding(units)1,674,389

1,789,389

1,789,389

1,921,689

1,921,689

Net assets per unit

(yen)

53,26053,51153,53953,83553,715(million yen)

2,447

2,644

2,641

2,865

3,047

(yen)

1,462

1,478

1,476

1,491

1,586

Cash distributions of earnings per unit

(yen)

1,462

1,478

1,476

1,491

1,586

Cash distributions in excess of earnings
per unit

(yen)

–

–

–

–

–

Ratio of ordinary income to total assets (Note 3)

(%)

1.3

1.4

1.3

1.4

1.5

[Annualized]

(%)

(2.7)

(2.7)

(2.7)

(2.7)

(3.0)

(%)

2.7

2.7

2.7

2.8

3.0

(%)

(5.4)

(5.4)

(5.4)

(5.5)

(6.0)

(%)

49.8

49.5

49.5

49.6

49.3

(-0.1)(-0.2)(-0.0)(0.0)(-0.2)

(%)

101.7

105.1

103.2

103.0

99.2

(days)

181

184

181

184

181

Number of properties at end of period(properties)

53

60

60

63

62

Depreciation(million yen)

633

682

697

743

763

Capital expenditures(million yen)

363

424

471

605

787

(million yen)

3,980

4,261

4,263

4,650

4,521

(million yen)

3,040

3,199

3,257

3,525

3,422

(yen)

1,815

1,787

1,820

1,834

1,780

(%)

46.0

46.4

46.3

46.4

46.3

Operating expenses
Operating expenses from real estateleasing[Period-on-period variation]
Net assets[Period-on-period variation]

Total cash distributions
Cash distributions per unit

Return on equity(Note 3)

[Annualized]
Equity ratio at end of period(Note 3)

[Period-on-period variation]
Cash distribution payout ratio(Note 3)(Note 2) Unless otherwise specifically noted, amounts are rounded down to the unit displayed and percentages are rounded to the first decimal place.
(Note 3) It is calculated based on the following formula.
Ratio of ordinary income
Ordinary income ÷ {(total assets at beginning of period + total assets at end of period) ÷ 2} × 100
to total assets
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

Cash distributions per unit (excluding cash distributions in excess of earnings) ÷ net income per unit × 100
Cash distribution payout The figures for the 12th and 14th fiscal periods were calculated based on the formula below as investment
ratio
units outstanding changed during the period as a result of a public offering of investment units.
Total cash distributions (excluding cash distributions 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

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 3)(Note 3)(Note 3)

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)

14th fiscal period

15th fiscal period

14th fiscal period

15th fiscal period(As of January 31, 2023)(As of July 31, 2023)(As of January 31, 2023)(As of July 31, 2023)

AssetsLiabilities

Current assets

Current liabilities

Cash and deposits

3,488,637

3,262,429

Operating accounts payable

Cash and deposits in trust

8,549,954

8,525,306

Current portion of long-term borrowings

147,713

139,180

Prepaid expenses

211,249

197,986

Consumption taxes receivable

181,189–

7,000

14,462

12,585,743

12,139,365

Operating accounts receivable

OthersTotal current assets
Non-current assets

Accumulated depreciation
Tools, furniture and fixtures, net
Buildings in trust

995,681
14,340,000

Accounts payable – others

539,516

534,593

Accrued expenses

77,45375,324

Income taxes payable

605

605

47,405

252,695

1,019,524

1,236,897

34,89935,505

18,255,474

17,471,301

Investment corporation bonds

1,000,000

1,000,000

Long-term borrowings

80,210,000

81,500,000

Accrued consumption taxes
Advances received
OthersProperty, plant and equipment
Tools, furniture and fixtures

906,069
15,630,000

Total current liabilities
114

114

(114)

(114)

0

0

Non-current liabilities

56,299,699

56,821,886

Leasehold and guarantee deposits received

Accumulated depreciation(6,169,727)(6,898,692)

Leasehold and guarantee deposits received in trust

Buildings in trust, net

50,129,971

49,923,193

Others

Structures in trust

25,34825,744

Accumulated depreciation(6,646)(7,577)Structures in trust, net

18,702

18,166

Machinery and equipment in trust

163,565

251,570

Accumulated depreciation(35,247)(44,740)

Unitholders’ capital

Machinery and equipment in trust, net

128,318

206,829

SurplusTools, furniture and fixtures in trust

125,782

139,432

Unitholders’ capital surplus

Accumulated depreciation(39,013)(48,732)

Voluntary reserve

Tools, furniture and fixtures in trust, net

86,76890,699140,397,333

139,857,495

1,282

33,095

190,762,377

190,129,480

Land in trust
Construction in progress in trust
Total property, plant and equipment

Total non-current liabilities
Total liabilities

4,179
5,965,643–

93,57887,056,032

88,563,401

105,311,507

106,034,702

66,123,367

66,123,367

25,132,218

25,132,218*2 8,624,499*2 8,535,586

8,624,499

8,535,586

3,043,461

3,340,372

Net assets
Unitholders’ equity

Reserve for temporary difference adjustment
Total voluntary reserve
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity

Intangible assets

5,880
5,840,152

36,800,179

37,008,177

102,923,546

103,131,545
92,917

Leasehold rights in trust

4,082,300

4,082,300

Valuation and translation adjustments

Total intangible assets

4,082,300

4,082,300

Deferred gains or losses on hedges

531,551

Total valuation and translation adjustments

531,551

92,917* 103,455,098* 103,224,463

208,766,606

209,259,165

Investments and other assets
Investments in other securities of subsidiaries and associates–

1,588,015

Investment securities

400,000

740,000

Long-term prepaid expenses

330,923331,220

Leasehold and guarantee deposits

10,35910,359Others533,969

191,1221,275,251

2,860,717

196,119,929

197,072,498

Investment corporation bond issuance costs

11,563

10,543

Investment unit issuance costs

49,37036,758

Total investments and other assets
Total non-current assets

Total net assets
Total liabilities and net assets

1

1

Deferred assets

Total deferred assets
Total assets
10

60,93347,301

208,766,606

209,259,165
11

Financial Statements

Financial Statements

Statement of Income and Retained Earnings

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

14th fiscal period (from August 1, 2022 to January 31, 2023)(Unit: thousand yen)

14th fiscal period

15th fiscal period(From August 1, 2022
to January 31, 2023)(From February 1, 2023
to July 31, 2023)*1 5,995,567*1 6,048,231* 467,828* 454,964–* 414,166

22,85729,564

6,486,253

6,946,926* 2,556,151* 2,744,572

Asset management fee

424,410

418,486

Asset custody and administrative service fees

40,52842,395

Directors’ compensations

2,400

2,400

Other operating expenses

113,204

132,242

Total operating expenses

3,136,696

3,340,096

3,349,557

3,606,830

56

53

1,476

1,046

Reversal ofreserve fortemporarydifference
adjustment

Subsidy income–

504

Net income

Interest on refund

1

315

1,534

1,918

Net changesof items
other thanunitholders’equity372,916

377,649

3,500

3,500

178,507

140,125

Amortization of investment corporation bond issuance costs

1,020

1,020

Amortization of investment unit issuance costs

12,611

12,611

Total non-operating expenses

568,555

534,906

Ordinary income

2,782,535

3,073,841

Income before income taxes

2,782,535

3,073,841

Income taxes - current

605

605

Total income taxes

605

605

2,781,930

3,073,236

261,530

267,135

3,043,461

3,340,372

Operating revenue
Rental revenue
Other lease business revenue

1

Gain on sale of real estate
Other revenue
Total operating revenue
Expenses related to rent business

Operating income

1

Reversal of unpaid distributions

Total non-operating income

1

Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds
Borrowing related expenses

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

12

Voluntary reserve
Unitholders’capital2Non-operating income
Interest income

Surplus1

Operating expenses

Valuation andtranslation
adjustments

Unitholders’ equity

Balance at
beginning of
the period

Unitholders’ Reserve forcapitaltemporarysurplusdifference
adjustment

59,115,701 25,132,218

8,713,411

Total
voluntary
reserve

8,713,411

Unappropriatedretainedearnings(undisposed
loss)

Total
surplusTotal
unitholders’equity2,813,756 36,659,386

95,775,087

Total
Deferred valuation
gains orandlosses on translation
hedgesadjustments

28,29728,297

Total net
assets

95,803,384

Changes of
items during
the period
Issuance of
new investment units

7,007,666

Dividends
from surplus

Total changesof items during
the period
Balance at
end of theperiod(88,912)

7,007,666(88,912)–(88,912)(88,912)*1 66,123,367 25,132,218

8,624,499

8,624,499

7,007,666

7,007,666(2,641,138)(2,641,138)(2,641,138)(2,641,138)

88,912–––

2,781,930

2,781,930

2,781,930

2,781,930

503,254503,254503,254

7,148,459

503,254503,254

7,651,713

3,043,461 36,800,179 102,923,546

531,551

531,551

103,455,098

229,705

140,792

13

Financial Statements

Financial Statements

Statement of Changes in Unitholders’ Equity

Statement of Cash Distributions

15th fiscal period (from February 1, 2023 to July 31, 2023)(Unit: yen)
(Unit: thousand yen)

Valuation andtranslation
adjustments

Unitholders’ equity

Voluntary reserve

Balance at
beginning of
the period

Unitholders’ Reserve forcapitaltemporarysurplusdifference
adjustment

66,123,367 25,132,218

8,624,499

Total
voluntary
reserve

8,624,499

Unappropriatedretainedearnings(undisposed
loss)

Total
unitholders’equityTotal
surplus3,043,461 36,800,179 102,923,546

Total
Deferred valuation
gains orandlosses on translation
hedgesadjustments

531,551

531,551

Total net
assets

Reversal ofreserve fortemporarydifference
adjustment

103,455,098(88,912)(88,912)Net income(2,865,238)(2,865,238)(2,865,238)(2,865,238)

88,912–––

3,073,236

3,073,236

3,073,236

3,073,236

Net changesof items
other thanunitholders’equity14

3,340,372,051

88,912,365

88,912,365

2,865,238,299

3,047,798,754[Cash distributions per unit](1,491)(1,586)

Cash distribution of earnings

2,865,238,299

3,047,798,754(1,491)(1,586)

267,135,346

381,485,662

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 distributions in excess of earnings), the decision was made to distribute
2,865,238,299 yen, which is equivalent
to the sum of the amount remaining
after reserving 5,605,038 yen from net
income and the amount of reversal ofreserve for temporary difference adjustment of 88,912,365 yen.

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 distributions in excess of earnings), the decision was made to distribute
3,047,798,754 yen, which is equivalent
to the sum of the amount remaining
after reserving 114,350,316 yen fromnet income and the amount of reversalof reserve for temporary difference
adjustment of 88,912,365 yen.

Reversal of reserve for temporary
difference adjustment *1[Cash distributions of earnings per unit]
IV. Retained earnings carried forward

Dividends
from surplus

Balance at
end of theperiod

3,043,461,280

Unappropriated retained earnings

III. Cash distribution

Changes of
items during
the period

Total changesof items during
the period

15th fiscal period(From February 1, 2023 to July 31, 2023)

II. Reversal of voluntary reserve

Surplus
Unitholders’capitalI.

14th fiscal period(From August 1, 2022 to January 31, 2023)––(88,912)(88,912)*1 66,123,367 25,132,218

8,535,586

8,535,586(438,633)(438,633)(438,633)

207,998(438,633)(438,633)(230,635)

3,340,372 37,008,177 103,131,545

92,917

92,917103,224,463

296,910

207,998

Method of calculation of amount of cash
distributions

15

Financial Statements

Financial Statements

Statement of Cash Flows

Notes to Financial Statements(Unit: thousand yen)

14th fiscal period

15th fiscal period(From August 1, 2022
to January 31, 2023)(From February 1, 2023
to July 31, 2023)

Depreciation

December 1, 2015 under the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951, as

2,782,535

3,073,841(securities code: 3468). SAR has assigned the asset management of its portfolio to Star Asia Investment
Management Co., Ltd., a financial instruments business operator under the Financial Instruments and743,661

763,353

Amortization of investment corporation bond issuance costs

1,020

1,020

Exchange Act (Act No. 25 of 1948, as amended), through which SAR executed active management pursuing to

Amortization of investment unit issuance costs

12,611

12,611

maximize interest of unitholders and thrived to expand its asset size and to increase cash distributions per unit.

(56)

(53)

Interest expenses

376,416

381,149

Decrease (increase) in operating accounts receivable(10,114)

8,532

Decrease (increase) in consumption taxes receivable(181,189)

181,189

after the end of the fiscal period under review (fiscal period ended July 2023), SAR executed property

Increase (decrease) in accrued consumption taxes(186,683)

205,289

Decrease (increase) in prepaid expenses(15,239)

13,262acquisitions (11 properties with a total acquisition price of 49,191 million yen. Of such properties, three

Decrease (increase) in long-term prepaid expenses

6,510

(297)

Increase (decrease) in operating accounts payable

133,000(42,522)

Increase (decrease) in accounts payable - other

32,850(4,176)

Increase (decrease) in advances received

44,796217,372–

688,594(4,161)(9,408)3,735,958

5,489,759

56

53(358,062)(383,278)

42

1,406

3,377,994

5,107,940

The financial statements attached hereto are a translation of audited financial statements prepared from SAR’s(15,895,451)(698,358)

Instruments and Exchange Act for the purpose of domestic disclosure.

Repayments of leasehold and guarantee deposits received–(1,701)

Proceeds from leasehold and guarantee deposits received

693–

Repayments of leasehold and guarantee deposits received in trust(222,276)(130,365)

Proceeds from leasehold and guarantee deposits received in trust

502,920

255,855

Purchase of investments in other securities of subsidiaries andassociates–(1,578,073)

Purchase of investment securities–(340,000)

400,000–(15,214,114)(2,492,642)

Interest income

Decrease in property, plant and equipment in trust due to sale
OthersSubtotalInterest 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 redemption of investment securities
Net cash used in investing activities
Proceeds from long-term borrowings

12,800,000

10,790,000

Repayments of long-term borrowings(5,600,000)(10,790,000)

Proceeds from issuance of investment units

6,973,060–

Dividends paid

(2,639,001)(2,866,153)

Net cash provided by (used in) financing activities

11,534,058(2,866,153)(302,061)(250,855)

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

The asset size as of the end of 15th fiscal period is 196,429 million yen (on the basis of acquisition price. The
properties succeeded from Sakura Sogo REIT Investment Corporation with the absorption-type merger inAugust 2020 are on the basis of receipt price. The same shall apply hereinafter.) Furthermore, in August 2023,

properties with a total acquisition price of 3,048 million yen are scheduled to be acquired on December 1,2023) accompanied by the sixth public offering since its listing and sales of two residential properties (“Urban
Park Gokokuji” and “Urban Park Koenji”) resulting from asset replacements, and the asset size after the series
of initiatives is scheduled to increase to 243,423 million yen.

Basis of Presentation
SAR prepared the financial statements attached hereto in accordance with the accounting principles generally
accepted in Japan (J-GAAP), but J-GAAP differs from international accounting standards in certain aspects ofaccounting modifications and disclosure standards.
accounting records and submitted to the Kanto Local Finance Bureau in accordance with the Financial
Upon preparation of the financial statements attached hereto, treatments including additions to notes related to
the financial statements issued in Japan are made in order to present in a format more familiar to the readers
outside Japan.
SAR’s fiscal periods are for six months ending at the end of every January and July.
As SAR has no subsidiaries, consolidated financial statements are not prepared.

Notes on the Going Concern Assumption
Not applicable.

Cash flows from financing activities

16

Star Asia Investment Corporation (SAR) was established as a diversified real estate investment trust on
amended) and was listed on the Tokyo Stock Exchange Real Estate Investment Trust Section on April 20, 2016

Cash flows from operating activities
Income before income taxes

Organization

12,340,653

12,038,591*1 12,038,591*1 11,787,736
17Financial Statements
Notes to Financial Statements

Notes on Matters Relating to Significant Accounting Policies
1. Evaluation standards and methods of valuation of securities(1) Investments in other securities of subsidiaries and associates
Cost method through moving-average method(2) Other securities

2) Utilities income
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 to it.
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.

Those with market price5. Hedge accounting approach

Fair value method or market value method (Variances are directly included in net assets.)

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:(1) Hedge accounting approach
Deferral hedge accounting is adopted.
(2) Hedging instruments and hedged items
Hedging instruments: Interest rate swap transaction

Buildings

2-69 years

Structures

7-30 years

Machinery and equipment

7-17 years

SAR conducts derivative transactions for the purpose of hedging the risks provided in its Articles ofTools, furniture and fixtures

2-15 years

Incorporation pursuant to basic rules on risk management.

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 ofreal estate or beneficiary interest in trust for real estate is not recorded as expenses but included in the costof acquisition of the related real estate, etc. In the fiscal period under review, there was no amount equivalent
to fixed property tax, etc. included in the cost of acquisition of real estate, etc.
(2) Standards for recording revenue
The details of main performance obligations concerning revenue generated from contracts between SAR
and its customers and the ordinary time to fulfil said performance obligations (ordinary time to recognize
revenue) are as follows.
1) Sale of real estate
For revenue from sale of real estate, SAR records revenue when the purchaser who is a customer
obtains control of the relevant real estate as a result of the seller fulfilling its delivery obligations

Hedged items: Interest on borrowings(3) Hedging policy(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
The funds (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 thedate of 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.
Concerning beneficiary interest in trust for real estate, etc. held, all accounts of assets and liabilities withintrust assets as well as all accounts of revenue and expenses from the trust assets are recognized in therelevant account item of the balance sheet and the statement of income and retained earnings.
The following material items of the trust assets recognized in the relevant account item are separately listedon the balance sheet.
1) Cash and deposits in trust2) Buildings in trust; Structures in trust; Machinery and equipment in trust; Tools, furniture and fixtures intrust; Land in trust; Construction in progress in trust3) Leasehold rights in trust4) Leasehold and guarantee deposits received in trust(2) Accounting for consumption taxes
Non-deductible consumption tax on acquisition of assets is included in the acquisition cost of each asset.

stipulated in the transaction agreement of the real estate.
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)

14th fiscal period

15th fiscal period(From August 1, 2022
to January 31, 2023)(From February 1, 2023
to July 31, 2023)

5,182,484

5,232,657

Common area maintenance revenue

570,233

570,304

Parking revenue

204,917

206,214

Facility use revenue

31,53331,807

Other rental revenue

6,399

7,247

5,995,567

6,048,231

Utilities income

419,588358,375

Other revenue

48,24096,588467,828454,964

6,463,396

6,503,195

Management fee

441,402452,917

Utilities expenses

462,373

389,316

Property taxes

458,246

493,000

Repair expenses

173,257

308,817

Trust fee

26,16630,653

Insurance premium

13,59813,322

Depreciation

743,661

763,353

Other expenses

237,444

293,1902,556,151

2,744,572

3,907,244

3,758,623(Unit: thousand yen)

14th fiscal period (As of January 31, 2023)

15th fiscal period (As of July 31, 2023)

50,00050,000

A. Operating revenue from real estate leasing*2 Matters on provision and reversal of reserve for temporary difference adjustment
14th fiscal period (As of January 31, 2023)(Unit: thousand yen)

Reversal
Provision
Balance at
Initial amount beginning of amount during amount during
the period
the period
the period
Gain onnegativegoodwill (Note)(Note)

Balance at
end of theperiodReasons for provisionand reversal

8,891,236

8,713,411–

88,9128,624,499

Appropriate for distribution

15th fiscal period (As of July 31, 2023)
Reversal
Provision
Balance at
Initial amount beginning of amount during amount during
the period
the period
the period
8,891,236

8,624,499

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

8,535,586

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 businessTotal operating expenses from real estate leasing
C. Operating income (loss) from real estate leasing [A—B]*2 Breakdown of gain (loss) on sale of real estate
14th fiscal period (from August 1, 2022 to January 31, 2023)
Not applicable.
15th fiscal period (from February 1, 2023 to July 31, 2023)(Unit: thousand yen)

Funabashi Hi-Tech Park Factory II
Proceeds from sale of real estate20

1,150,000

Cost of sale of real estate

688,594

Other sales expenses

47,239Gain on sale of real estate

414,166

21

Financial Statements
Notes to Financial Statements

Notes to the Statement of Changes in Unitholders’ Equity

Notes on Financial Instruments*1	Total number of investment units authorized and total number of investment units issued
and outstanding

1. Matters relating to status of financial instruments

14th fiscal period

15th fiscal period(From August 1, 2022
to January 31, 2023)(From February 1, 2023
to July 31, 2023)

Total number of investment units authorized

10,000,000 units

10,000,000 units

Total number of investment units issued and outstanding

1,921,689 units

1,921,689 units(1) Policy for handling financial instruments
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 ofinvestment corporation bonds, etc. Upon procuring funds through interest bearing liabilities, dueconsideration shall be given to fund procurement agility and financial stability.
(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, areNotes to the Statement of Cash Distributions

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

14th fiscal period

15th fiscal period

measures as lengthening the procurement periods and staggering the maturities. In addition, borrowings(From August 1, 2022 to January 31, 2023)(From February 1, 2023 to July 31, 2023)

with floating interest rates are exposed to interest rate fluctuation risk, but derivative transactions (interest*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.

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.
(3) Supplementary explanation to matters relating to fair value, etc. of financial instruments
Not applicable.

Notes to the Statement of Cash Flows*1	Reconciliation of cash and cash equivalents at end of the period to the amount of balance
sheet items(Unit: thousand yen)

14th fiscal period

15th fiscal period(From August 1, 2022
to January 31, 2023)(From February 1, 2023
to July 31, 2023)

Cash and deposits

3,488,637

3,262,429

Cash and deposits in trust

8,549,954

8,525,306

Cash and cash equivalents

12,038,591

11,787,736

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.
14th fiscal period (As of January 31, 2023)(Unit: thousand yen)

Carrying amount
15,630,000

15,630,321

321(2) Investment corporation bonds

1,000,000

986,200(13,800)(3) Long-term borrowings

80,210,000

80,102,528(107,471)

96,840,000

96,719,050(120,949)

531,551

531,551–(4) Derivative transactions *Operating leases (as lessor)*1

Future minimum lease payments

Difference(1) Current portion of long-term borrowings

Liabilities total

Notes on Lease Transactions

Fair value

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.

(Unit: thousand yen)

22

14th fiscal period

15th fiscal period(As of January 31, 2023)(As of July 31, 2023)

Not later than 1 year

5,287,040

5,715,787

Later than 1 year

7,653,000

9,733,645

Total

12,940,040

15,449,432

23Financial Statements
Notes to Financial Statements

Notes on Derivative Transactions

15th fiscal period (As of July 31, 2023)(Unit: thousand yen)

Carrying amount

Fair value

Difference(1) Current portion of long-term borrowings

14,340,000

14,340,000–(2) Investment corporation bonds

1,000,000

990,900(9,100)(3) Long-term borrowings

81,500,000

81,455,187(44,812)

Liabilities total

96,840,000

96,786,087(53,912)92,917

92,917–(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.

1. Derivative transactions to which hedge accounting is not applied
14th fiscal period (As of January 31, 2023)
Not applicable.
15th fiscal period (As of July 31, 2023)
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 theclosing date for each hedge accounting approach.

(Note 1) Method of calculation of the fair value of financial instruments

14th fiscal period (As of January 31, 2023)(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.

(Unit: thousand yen)

Hedge accounting
approach(2) Investment corporation bonds

Principle method of
accounting		The refence value announced by Japan Securities Dealers Association is stated.
(4) Derivative transactions
		Type, etc. of derivativetransaction

Contract amount, etc.
Main hedged item

Interest rate swap transaction
Long-term(floating receivable; fixedborrowings
payable)(Note 1)

Of which, later
than 1 year
77,205,000

67,675,000

Fair value(Note 2)531,551

Please refer to “Notes on Derivative Transactions” later in this document.
(Note 1) Contract amount, etc. are based on notional principal.

(Note 2) Amount of redemption/repayment of investment corporation bonds and loans to be due after the closing date

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

14th fiscal period (As of January 31, 2023)(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

15,630,000

12,285,000

19,150,000

20,275,000

18,450,000

10,050,000

Total

15,630,000

12,285,000

19,150,000

20,275,000

18,450,000

11,050,000

15th fiscal period (As of July 31, 2023)

15th fiscal period (As of July 31, 2023)(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
82,305,000

68,965,000

Fair value(Note 2)

92,917(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(Note 1) Contract amount, etc. are based on notional principal.
Later than
5 years

–

–

–

–

–

1,000,000

Long-term borrowings

14,340,000

11,085,000

20,910,000

19,965,000

19,490,000

10,050,000

Total

14,340,000

11,085,000

20,910,000

19,965,000

19,490,000

11,050,000(Note 2) Fair value is calculated based on the price quoted by lending financial institutions, etc.

Notes on Retirement Benefits
14th fiscal period (As of January 31, 2023)
Not applicable.

Notes on Securities
14th fiscal period (As of January 31, 2023)

15th fiscal period (As of July 31, 2023)
Not applicable.

Notes are omitted because they lack significance.
15th fiscal period (As of July 31, 2023)
Notes are omitted because they lack significance.

24

25

Financial Statements
Notes to Financial Statements

Notes on Tax-Effect Accounting

2. Affiliated companies, etc.

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

14th fiscal period

15th fiscal period(As of January 31, 2023)(As of July 31, 2023)

1,123,529

1,090,958

1,284

3,030

760

30,895

Deferred tax assets, subtotal

1,125,574

1,124,884

Valuation allowance(1,125,574)(1,124,884)

–

–

–

–

Acquisition cost of securities
Deferred gains or losses on hedges

Deferred tax assets, total
Deferred tax assets, net

Not applicable.

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(Unit: %)Statutory tax rate

14th fiscal period

15th fiscal period(As of January 31, 2023)(As of July 31, 2023)

31.46

31.46

[Adjustments]
Deductible distributions payable(30.66)(31.19)

Reversal of excess depreciation(0.70)(0.90)

Other(0.08)

0.65

Effective income tax rate after application of tax-effect accounting

0.02

0.02

Notes on Share of Profit or Loss of Entities Accounted for Using Equity Method, etc.
14th fiscal period (As of January 31, 2023)
Not applicable.
15th fiscal period (As of July 31, 2023)
Notes are omitted because they lack significance.

Not applicable.
15th fiscal period (from February 1, 2023 to July 31, 2023)

Deferred tax assets
Valuation adjustment upon merger

14th fiscal period (from August 1, 2022 to January 31, 2023)

3. Fellow subsidiaries, etc.
14th fiscal period (from August 1, 2022 to January 31, 2023)
Not applicable.
15th fiscal period (from February 1, 2023 to July 31, 2023)
Not applicable.

4. Directors, major individual unitholders, etc.
14th fiscal period (from August 1, 2022 to January 31, 2023)(Unit: thousand yen)

Name ofCapitalPercentage of
Description ofcompany,
stock orvoting rights, Description Transaction
Category
Address
business oretc. orinvestments
etc. held by of transaction
amountoccupation
personin capital(in) SAR

Account
item

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

Accounts
payable– others

Director,or close
relative of
director

Atsushi
Kato

–

–

0.03%

Payment ofasset management fee
to the AssetManager (Note 1)

575,950(Note 2)
(Note 3)

Balanceat end oftheperiod466,852(Note 2)

15th fiscal period (from February 1, 2023 to July 31, 2023)(Unit: thousand yen)

Name ofCapitalPercentage of
Description ofcompany,
stock orvoting rights, Description Transaction
Category
Address
business oretc. orinvestments
etc. held by of transaction
amountoccupation
personin capital(in) SAR

Account
item

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

Accounts
payable– others

Director,or close
relative of
director

Atsushi
Kato

–

–

0.03%

Payment ofasset management fee
to the AssetManager (Note 1)

445,612(Note 2)
(Note 3)

Balanceat end oftheperiod456,595(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.

Notes on Related-Party Transactions
1. Parent company, major corporate unitholders, etc.

(Note 3) The asset management fee for the 14th fiscal period includes the acquisition incentive portion included in the book value of individual real estate, etc. in the amount of 151,540 thousand yen. The asset management fee for the 15th fiscal period includes theacquisition incentive portion included in the book value of preferred equity securities in the amount of 15,625 thousand yen andthe property transfer incentive portion in the amount of 11,500 thousand yen.

14th fiscal period (from August 1, 2022 to January 31, 2023)
Not applicable.
15th fiscal period (from February 1, 2023 to July 31, 2023)
Not applicable.

26

27

Financial Statements
Notes to Financial Statements

Notes on Asset Retirement Obligations

Notes on Revenue Recognition

14th fiscal period (from August 1, 2022 to January 31, 2023)

1. Breakdown information on revenue from contracts with customers

Not applicable.

14th fiscal period (from August 1, 2022 to January 31, 2023)

15th fiscal period (from February 1, 2023 to July 31, 2023)(Unit: thousand yen)

Revenue from contracts withcustomers (Note)

Not applicable.
Proceeds from sale of real estate

Notes on Investments in Rental Properties

Utilities income

Sales to external customers––

419,588419,588

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

Other

–

6,066,665

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

Total

419,5886,486,253(Unit: thousand yen)

(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.

14th fiscal period

15th fiscal period(From August 1, 2022
to January 31, 2023)(From February 1, 2023
to July 31, 2023)

Balance at beginning of the period

179,572,164

194,843,394

Amount of increase (decrease) during the period

15,271,229(664,708)

Balance at end of the period

194,843,394

194,178,685

Proceeds from sale of real estate (Note 2)

414,166

414,166

214,581,000

215,096,000

Utilities income

358,375

358,375

Other–

6,174,384

Total

772,5426,946,926

15th fiscal period (from February 1, 2023 to July 31, 2023)

Carrying amount

Fair value at end of the period(Unit: thousand yen)

(Note 1) Carrying amount is the amount of the cost of acquisition, less accumulated depreciation.
(Note 2) Of the amount of increase (decrease) in investments in rental properties during the 14th fiscal period, the amount of increase ismainly attributable to acquisition of real estate beneficiary interest in trust of three properties (15,409,595 thousand yen) andcapital expenditures (605,932 thousand yen), while the amount of decrease is mainly attributable to depreciation (743,661 thousand yen). During the 15th fiscal period, the amount of increase is mainly attributable to capital expenditures (787,991 thousandyen), while the amount of decrease is mainly attributable to disposition of real estate beneficiary interest in trust of a property(688,594 thousand yen) and depreciation (763,353 thousand yen).
(Note 3) Fair value at the end of the period is the appraisal value by an outside real estate appraiser. Of the fair value at the end of the 14th
fiscal period, that of Funabashi Hi-Tech Park Factory II is based on the transfer price (1,150,000 thousand yen) stated in the trust
beneficiary interest sale and purchase agreement dated February 1, 2023 and that of Urban Park Gokokuji is based on the transfer price (1,800,000 thousand yen) stated in the trust beneficiary interest sale and purchase agreement dated March 16, 2023. In
addition, of the fair value at the end of the 15th fiscal period, that of Urban Park Gokokuji is based on the transfer price(1,800,000 thousand yen) stated in the trust beneficiary interest sale and purchase agreement dated March 16, 2023 and that ofUrban Park Koenji is based on the transfer price (1,315,000 thousand yen) stated in the trust beneficiary interest sale and purchase agreement dated August 7, 2023.

Revenue from contracts withcustomers (Note 1)

Sales to external customers(Note 1) 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.
(Note 2) Proceeds from sale of real estate is recorded as gain on sale of property in the statement of income. Therefore, the amount calculated by deducting the cost of sale of real estate and other sales expenses from the proceeds from sale of real estate is indicated.

2. Foundational information for understanding revenue from contracts with customers
The information is as indicated in the Notes on Matters Relating to Significant Accounting Policies.

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

28

29

Financial Statements
Notes to Financial Statements

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.

(2) Information about geographic areas
1) Net sales
Information about net sales is omitted because net sales to external customers in Japan are in excess of
90% of operating revenue on the statement of income and retained earnings.

(1) Balance of contract assets and contract liabilities, etc.
(Unit: thousand yen)

2) Property, plant and equipment
Information about property, plant and equipment is omitted because the amount of property, plant and14th fiscal period

15th fiscal period(From August 1, 2022
to January 31, 2023)(From February 1, 2023
to July 31, 2023)

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

73,08387,858

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

87,85871,460Contract assets (balance at beginning of the period)––

Contract assets (balance at end of the period)––

Contract liabilities (balance at beginning of the period)––

Contract liabilities (balance at end of the period)––

equipment located in Japan is in excess of 90% of the amount of property, plant and equipment on thebalance 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.
15th fiscal period (from February 1, 2023 to July 31, 2023)(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 and(2) Transaction value allocated to remaining performance obligations
Not applicable.
SAR does not include contracts whose terms are initially expected to be one year or less in the note ontransaction value allocated to remaining performance obligations as an expedient in practice. Also, withregard 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

retained earnings.
(2) Information about geographic areas
1) Net sales
Information about net sales is omitted because net sales to external customers in Japan are in excess of
90% of operating revenue on the statement of income and retained earnings.
2) Property, plant and equipment

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

Information about property, plant and equipment is omitted because the amount of property, plant andis not included in the note on transaction value allocated to remaining performance obligations throughequipment located in Japan is in excess of 90% of the amount of property, plant and equipment on theapplication of the provisions of Paragraph 80-22 (2) of the Accounting Standard for Revenue Recognition.

balance sheet.
(3) Information about each major customer

Notes on Segment Information
1. Segment information

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.

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

2. Related information
14th fiscal period (from August 1, 2022 to January 31, 2023)(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.

30

31

Financial Statements
Notes to Financial Statements

Notes on Per Unit Information

Asset transfer(Unit: yen)

The transfer of Urban Park Gokokuji and Urban Park Koenji have completed as follows:

14th fiscal period

15th fiscal period(From August 1, 2022
to January 31, 2023)(From February 1, 2023
to July 31, 2023)

Net assets per unit

53,83553,715

Net income per unit

1,455

1,599

Contract date:

March 16, 2023

(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.

Transfer date:August 31, 2023

(Unit: thousand yen)

14th fiscal period(From August 1, 2022
to January 31, 2023)

15th fiscal period(From February 1, 2023
to July 31, 2023)

2,781,930

3,073,236––

Net income attributable to common investment units

2,781,930

3,073,236

Average number of investment units during the period (units)

1,910,903

1,921,689

Amount not attributable to common unitholders

Asset transferred:

Trust beneficiary interest in which the main trust asset isdomestic real estate

Location (indication of residential address): 1-5-4 Zoshigaya, Toshima-ku, Tokyo(Note 2) The basis for calculation of net income per unit is as follows:

Net income<Urban Park Gokokuji>

Buyer:

A.D. Works Co., Ltd.

Transfer price:

1,800,000 thousand yen

Impact on income (loss):

Operating revenue from gain on sale of real estate is expected tobe recorded in the amount of approximately 271 million yen in
the fiscal period ending January 31, 2024.

<Urban Park Koenji>
Asset transferred:

Notes on Significant Subsequent Events

Trust beneficiary interest in which the main trust asset isdomestic real estate

Issuance of new investment units

Contract date:August 7, 2023

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

Transfer date:August 31, 2023

the Board of Directors’ meetings held on August 7, 2023, and August 15, 2023, and payment was completed

Location (indication of residential address): 3-19-12 Koenji-kita, Suginami-ku, Tokyo

on August 21, 2023.
<Issuance of new investment units through primary offering>

Buyer:

A.D. Works Co., Ltd.

Transfer price:

1,315,000 thousand yen

Impact on income (loss):

Operating revenue from gain on sale of real estate is expected to

Number of new investment units issued:

450,311 units

Issue price (offer price):

53,235 yen per unit

be recorded in the amount of approximately 109 million yen in

Total issue price (total offer price):

23,972,306,085 yen

the fiscal period ending January 31, 2024.

Issue amount (paid-in amount):

51,504 yen per unit

Total issue amount (total paid-in amount):

23,192,817,744 yen

Payment date:August 21, 2023

The proceeds from the issuance of new investment units were and will be used to partially fund the acquisitionof 8 properties (total acquisition price: 46,143 million yen) acquired as of September 1, 2023, and 3 properties(total planned acquisition price: 3,048 million yen) to be acquired as of December 1, 2023, respectively.

32

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.

Balance at
beginningof theperiodType of asset(2) Securities other than stocks(Unit: thousand yen)

Name of the security

Total
face
value

Book
value

Star Asia Mezzanine
Corporate
Loan Debt Investment
bonds
Series 7

400,000

400,000

Category

Star Asia Mezzanine
Trustbeneficiary Loan Debt Investment
Series 8interest
Preferredequitysecurity–

GSA JP Project 1
Tokutei Mokuteki
Kaisha (TMK) Preferred
Equity Securities

–

Total

–

340,000

1,588,015

2,328,015

Prepaid
Accruedaccruedinterest
interest
3,392

4,190

–

7,582

–

–

–

–

Unrealized
Fair value
gain or Remarks
loss
400,000

340,000

1,803,536

2,543,536––

215,520(Note 1)
(Note 4)(Note 2)
(Note 4)(Note 3)(Note 5)

Property,plant andequipment

215,520(Note 1) The underlying assets are trust beneficiary interests in a trust mainly comprised of Quintessa Hotel Tokyo Haneda Comic &Books.

(Note 3) The underlying assets are trust beneficiary interests in a trust mainly comprised of HAKUSAN HOUSE.

(Note 5) The fair value of preferred equity securities is the amount that is attributable to the equity held by SAR out of the net asset
value of the issuer of preferred equity securities based on the appraisal value of the underlying assets.

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

Transaction other thanmarket transaction
Total

Type
Interest rate swap transaction(floating receivable; fixed payable)

Of which, later
than 1 year

Fair value (Note 2)

68,965,000

92,91782,305,000

114–

Buildings intrust

56,299,699

685,940

Structures intrust

25,348396

025,744

Machineryand equipment in trust

163,565

88,005–Tools,
furniture andfixtures in trust

125,782

13,650–Land in trust 140,397,333–

Subtotal(Note 4) Because interest income etc. from mezzanine loan debt are based on floating interest rates, the fair value is approximately thesame as the acquisition cost and thus stated at that acquisition cost.

Category

Tools,
furniture andfixtures

Constructionin progressin trust(Note 2) The underlying assets are trust beneficiary interests in a trust mainly comprised of Centurion Hotel Grand Akasaka.

(Note 1) Contract amount, etc. of interest rate swaps are based on notional principal.
(Note 2) Fair value is calculated based on the price quoted by lending financial institutions, etc.

68,965,000

114

period114–

0

163,753 56,821,886 6,898,692

743,20949,923,193

7,577

931

18,166

251,570

44,7409,493

206,829

139,432

48,732

9,719

90,699539,838 139,857,495–– 139,857,495––

32,585

197,013,126

820,576

4,082,300––

4,082,300––

4,082,300

4,082,300––

4,082,300––

4,082,300

201,095,427

820,576

LeaseholdIntangible rights in trust
assetsSubtotal
Total–

Accumulated depreciation or accumu- Net balance
lated amortization
at end of Remarks
theperiod
For

1,282

772

33,095704,364 197,129,339 6,999,858

704,364 201,211,639 6,999,858

33,095

763,353 190,129,480

763,353 194,211,780

4. Schedule of other specified assets
Not applicable.

5. Schedule of investment corporation bonds(Unit: thousand yen)

Name of the security

82,305,000

AmountAmount ofBalance atofincreasedecrease end of theduring theperiodduring theperiodperiod92,917First Series Unsecured Investment
Corporation Bonds(ranking pari passu among specified investment corporation bonds)(Note)

Balance at Amount of
Balance at
beginning decrease
Issue dateend of theof theduring theperiodperiodperiodSeptember
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
beginning of
the period

Amount ofincreaseduringthe period

Amount ofdecreaseduringthe period

Balance at
end ofthe period

Sumitomo Mitsui
Banking
Corporation

970,000–

970,000–

Mizuho Bank, Ltd.

920,000–

920,000–

Sumitomo Mitsui
Trust Bank, Limited

800,000–

800,000–

Long-term borrowings

Lender36

Aozora Bank, Ltd.

500,000–

500,000–

SBI Shinsei Bank,
Limited

500,000–

500,000–

Resona Bank,
Limited

500,000–

500,000–

The Bank ofFukuoka, Ltd.

500,000–

500,000–

Sumitomo Mitsui
Banking
Corporation

1,950,000–

1,950,000–

SBI Shinsei Bank,
Limited

1,950,000–

1,950,000–

0.7300%(Note 3)

1.0778%February
20, 2023

February28, 2023

800,000–

800,000–

Resona Bank,
Limited

400,000–

400,000–

Sumitomo Mitsui
Banking
Corporation

850,000––

850,000

Mizuho Bank, Ltd.

750,000––

750,000

Sumitomo Mitsui
Trust Bank, Limited

700,000––

700,000

500,000––

500,000

SBI Shinsei Bank,
Limited

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––

600,000

0.8120%(Note 3)September
20, 2023

Lump sum
repaymentonrepayment
date

Lump sum
repaymentonrepayment
date

Lump sum
repaymentonrepayment
date(Note 5)(Note 5)

Remarks(Note 5)

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Amount ofincreaseduringthe period

Amount ofdecreaseduringthe period

Balance at
end ofthe period

Sumitomo Mitsui
Banking
Corporation

1,950,000––

1,950,000

Mizuho Bank, Ltd.

2,500,000––

2,500,000

Sumitomo Mitsui
Trust Bank, Limited

1,050,000––

1,050,000

Aozora Bank, Ltd.

600,000––

600,000

SBI Shinsei Bank,
Limited

600,000––

600,000

Resona Bank,
Limited

600,000––

600,000

Lender(Note 1)

(Note 4)

Aozora Bank, Ltd.

Aozora Bank, Ltd.

Averageinterest Repayment Repayment
Use
rate
date
methodLong-term borrowings

Category (Note 2)

Balance at
beginning of
the period

The Bank ofFukuoka, Ltd.

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––

1,000,000

SBI Shinsei Bank,
Limited

600,000––

600,000

500,000––

500,000

Sumitomo Mitsui
Banking
Corporation

2,200,000––

2,200,000

Aozora Bank, Ltd.

600,000––

600,000

Mizuho Bank, Ltd.

2,050,000––

2,050,000

Sumitomo Mitsui
Trust Bank, Limited

550,000––

550,000

Sumitomo Mitsui
Trust Bank, Limited

1,250,000––

1,250,000

750,000––

750,000

Aozora Bank, Ltd.

700,000––

700,000

Sumitomo Mitsui
Banking
Corporation

SBI Shinsei Bank,
Limited

700,000––

700,000

Mizuho Bank, Ltd.

750,000––

750,000

Resona Bank,
Limited

700,000––

700,000

Mizuho Trust &Banking. Co., Ltd.

400,000––

400,000(Note 3)

April 22,2024

Lump sum
repaymentonrepayment
date(Note 5)

Unsecured
andunguaranteed

April 21,2025

Lump sum
repaymentonrepayment
date

February29, 2024

Lump sum
repaymentonrepayment
date

August 29,
2025

Lump sum
repaymentonrepayment
date

0.6850% October 31,(Note 3)2025

Lump sum
repaymentonrepayment
date

0.7588%0.5360%(Note 3)0.6975%(Note 3)0.7025%(Note 3)

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

Remarks(Note 1)

(Note 3)

The Nishi-Nippon
City Bank, Ltd.

0.7532%Averageinterest Repayment Repayment
Use
rate
date
method

0.9455%(Note 3)

April 30,2026

Lump sum
repaymentonrepayment
date

April 28,
2028

Lump sum
repaymentonrepayment
date(Note 5)(Note 5)(Note 5)(Note 5)(Note 5)(Note 5)

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

37

Financial Statements
Supplementary Schedules

Balance at
beginning of
the period

Amount ofincreaseduringthe period

Amount ofdecreaseduringthe period

Balance at
end ofthe period

Sumitomo Mitsui
Banking
Corporation

750,000––

750,000

Mizuho Bank, Ltd.

750,000––

750,000

LenderLong-term borrowings

Sumitomo Mitsui
Trust Bank, Limited––

500,000

500,000––

500,000

The Bank of
Yokohama, Ltd.

500,000––

500,000

The Minato Bank,
Ltd.

750,000––

750,000

Sumitomo Mitsui
Banking
Corporation

750,000––

750,000

Mizuho Bank, Ltd.

750,000––

750,000

Sumitomo Mitsui
Trust Bank, Limited

500,000––

500,000

Aozora Bank, Ltd.

500,000––

500,000

The Minato Bank,
Ltd.

750,000––

750,000

Sumitomo Mitsui
Banking
Corporation

1,150,000

Mizuho Bank, Ltd.

540,000––

540,000

SBI Shinsei Bank,
Limited

2,160,000––

2,160,000

The Minato Bank,
Ltd.

500,000––

500,000

Sumitomo Mitsui
Banking
Corporation

800,000––

800,000––

0.6780%0.8894%(Note 3)––

Remarks

August 19,
2026

August 21,
2028

Lump sum
repaymentonrepayment
date

Lump sum
repaymentonrepayment
date(Note 5)(Note 5)0.6955%500,000

SBI Shinsei Bank,
Limited

1,500,000––

1,500,000

Aozora Bank, Ltd.

500,000––

500,000

0.9106%(Note 3)

August 31,
2026

August 31,
2028

Lump sum
repaymentonrepayment
date

Lump sum
repaymentonrepayment
date(Note 5)

Unsecured
andunguaranteed(Note 5)

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Balance at
beginning of
the period

Amount ofincreaseduringthe period

Amount ofdecreaseduringthe period

Balance at
end ofthe period

Sumitomo Mitsui
Banking
Corporation

932,500––

932,500

Mizuho Bank, Ltd.

857,500––

857,500

SBI Shinsei Bank,
Limited

300,000––

300,000

LenderUnsecured
andunguaranteed

1,150,000(Note 3)500,000

Category (Note 2)(Note 1)

(Note 3)

Aozora Bank, Ltd.

Mizuho Bank, Ltd.

38

500,000

Averageinterest Repayment Repayment
Use
rate
date
methodLong-term borrowings

Category (Note 2)

Sumitomo Mitsui
Trust Bank, Limited

525,000––

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

SBI 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

SBI Shinsei Bank,
Limited

400,000––

400,000

Sumitomo Mitsui
Trust Bank, Limited

500,000––

500,000

Aozora Bank, Ltd.

400,000––

400,000

400,000––

400,000–

500,000–

San ju San Bank,
Ltd.

500,000––

500,000

Resona Bank,
LimitedSumitomo Mitsui
Banking
Corporation

932,500––

932,500

Sumitomo Mitsui
Banking
Corporation

500,000

Mizuho Bank, Ltd.

857,500––

857,500

Mizuho Bank, Ltd.

500,000–

500,000–

SBI Shinsei Bank,
Limited

300,000––

300,000

Sumitomo Mitsui
Trust Bank, Limited

450,000––

450,000

525,000––

525,000

Sumitomo Mitsui
Banking
Corporation

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

0.4745%October 21,
2024

Lump sum
repaymentonrepayment
date(Note 5)

Unsecured
andunguaranteed

SBI Shinsei Bank,
LimitedAverageinterest Repayment Repayment
Use
rate
date
method0.7505% October 20,(Note 3)
2026

–

–

450,000

Aozora Bank, Ltd.

200,000––

200,000

The Kiyo Bank, Ltd.

1,000,000––

1,000,000

Lump sum
repaymentonrepayment
date

0.8276%

May 31,2027

Lump sum
repaymentonrepayment
date

0.9067%

May 31,2027

Lump sum
repaymentonrepayment
date

April 28,
2023

Lump sum
repaymentonrepayment
date

May 31,2027

Lump sum
repaymentonrepayment
date

0.2596%450,000

Remarks(Note 1)0.8738%(Note 5)(Note 5)(Note 5)(Note 5)(Note 5)

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed39

Financial Statements
Supplementary Schedules

Balance at
beginning of
the period

Amount ofincreaseduringthe period

Amount ofdecreaseduringthe period

Balance at
end ofthe period

Sumitomo Mitsui
Banking
Corporation

1,400,000––

1,400,000

Mizuho Bank, Ltd.

1,400,000––

1,400,000

SBI Shinsei Bank,
Limited

800,000––

800,000

Lender1,000,000––

1,000,000

Aozora Bank, Ltd.

800,000––

800,000

Resona Bank,
Limited

800,000––

800,000

The Chiba Bank,
Ltd.

1,000,000––

1,000,000

Sumitomo Mitsui
Banking
Corporation

1,380,000––

1,380,000

Long-term borrowings

40

–

–

1,380,000

Resona Bank,
Limited

340,000––

340,000

Sumitomo Mitsui
Banking
Corporation

1,120,000

SBI Shinsei Bank,
Limited––August 31,
2027–

1,120,000

260,000––

260,000

Sumitomo Mitsui
Banking
Corporation–

2,020,000–

2,020,000

Mizuho Bank, Ltd.

–

640,000–

640,000

SBI Shinsei Bank,
Limited

–1,700,000–

1,700,000–

560,000–

560,000

Aozora Bank, Ltd.

–

900,000–

900,000

Resona Bank,
Limited

–620,000–

620,000

The Bank ofFukuoka, Ltd.

–

350,000–

350,000

Sumitomo Mitsui
Banking
Corporation–

900,000–

900,000

Mizuho Bank, Ltd.

–

280,000–

280,000

SBI Shinsei Bank,
Limited

–750,000–

750,000(Note 3)(Note 3)(Note 3)

1.2779%Sumitomo Mitsui
Trust Bank, Limited–

240,000–

240,000

Aozora Bank, Ltd.

–

400,000–

400,000

Resona Bank,
Limited

–280,000–

280,000

The Bank ofFukuoka, Ltd.

–

150,000–

150,000

Amount ofdecreaseduringthe period

Balance at
end ofthe period

Sumitomo Mitsui
Banking
Corporation–

500,000–

500,000

Mizuho Bank, Ltd.

–

500,000–

500,000

95,840,000

10,790,000

10,790,000

95,840,000

95,840,000

10,790,000

10,790,000

95,840,000

Remarks

LenderLump sum
repaymentonrepayment
date(Note 6)

Unsecured
andunguaranteed

Subtotal

Total

Averageinterest Repayment Repayment
Use
rate
date
methodRemarks(Note 1)0.2745%(Note 1)

Average interest rate is the day-weighted average rate during the fiscal period.

(Note 2)Long-term borrowings include current portion of long-term borrowings.

April 30,2024

Lump sum
repaymentonrepayment
date(Note 5)

Unsecured
andunguaranteed(Note 5) Funds are used for acquisition funds of beneficiary interest in trust, repayment of borrowings, etc.

1.1110%Sumitomo Mitsui
Trust Bank, Limited

Amount ofincreaseduringthe period(Note 4) Early repayment of the entire amount was carried out on February 20, 2023.

0.8999%–Balance at
beginning of
the period(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.

April 30,2026

1,120,000

1,120,000

Resona Bank,
Limited(Note 3)0.6999%1,380,000

Category (Note 2)(Note 1)0.8722%

Sumitomo Mitsui
Trust Bank, Limited

SBI Shinsei Bank,
LimitedAverageinterest Repayment Repayment
Use
rate
date
methodLong-term borrowings

Category (Note 2)(Note 3)

Lump sum
repaymentonrepayment
date

August 31,
2027

Lump sum
repaymentonrepayment
date

April 28,
2028

Lump sum
repaymentonrepayment
date

February28, 2029

Lump sum
repaymentonrepayment
date(Note 5)(Note 5)(Note 5)(Note 5)

Unsecured
andunguaranteed

Unsecured
andunguaranteed(Note 6) Funds are used for acquisition funds of beneficiary interest in trust for real estate which is a green eligible asset.
(Note 7) The yearly schedule of repayment for long-term borrowings within five years of the balance sheet date is as follows:(Unit: thousand yen)

Long-term borrowings

Not later than
1 yearLater than
1 year andnot later than
2 years

Later than
2 years andnot later than
3 years

Later than
3 years andnot later than
4 years

Later than
4 years andnot later than
5 years

14,340,000

11,085,000

20,910,000

19,965,000

19,490,000

Unsecured
andunguaranteed

Unsecured
andunguaranteed

41

Financial Statements

Independent Auditor’s Report

Independent Auditor’s Report

The Board of Directors
Star Asia Investment Corporation

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, 2023, 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, 2023, 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.

42

Responsibilities of Management and the Supervisory Director for the Financial Statements

・ 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.

43

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, actions taken to eliminate threats or
safeguards applied.
Fee-related Information
The fees paid or payable to us and other EY Member Firms for the audits of the financial
statements of the Company and other non-audit fees charged in the audit period to the Company
are 13 million yen and 6 million yen, respectively.
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, 2023

/s/ Hitoshi Sakurai
Hitoshi Sakurai
Designated Engagement Partner
Certified Public Accountant/s/ Hiroto Inoue
Hiroto Inoue
Designated Engagement Partner
Certified Public Accountant

44