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

Semi-Annual Reportfor the 12th Fiscal Period
from August 1, 2021 to January 31, 2022

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

Investment
Philosophy

FUND MANAGEMENT

Characteristics of Star Asia Investment Corporation (SAR)

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

Basic Principles

FOR INVESTORSStar Asia Investment Corporation (SAR) makes investments

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

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

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

3. Initiatives focusing on unitholder value

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

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

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

GROWTH

Investment policy

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

TOKYO AREA

Contents
To Our Unitholders 

2Initiatives Related to ESG 

4

Portfolio Overview 

6Financial Summary 

8Balance Sheet 

10Statement of Income and Retained Earnings 

12Statement of Changes in Unitholders' Equity 

13Statement of Cash Distributions 

14Statement of Cash Flows 15

Notes to Financial Statements 

16Supplementary Schedules 

36

Independent Auditor’s Report 

43

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

Achieving income stability
and growth throughdiversification of asset
types

Investment primarily
in middle-size assets (Note 2)

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

To Our Unitholders
We would like to report on the performance results as well as express our deep gratitude to our unitholders foryour support and understanding.
We thank you for your continued support and encouragement and we hope that the current conditions will cometo an end as early as possible, as well as for your good health.

Medium-Term Management Plan
In March 2021, SAR set a medium-term management plan for next five years to achieve an asset size of 300 billion
yen and a cash distribution per unit of 1,600 yen.

Star Asia Investment Corporation
Executive Director

As stated above, SAR executed an acquisition of properties through a public offering executed in August 2021

Atsushi Kato

acquired properties include offices with environmentally friendly and tenant friendly functions developed by Star

(seven properties/total acquisition price: 12.9 billion yen) as a first step to expand the asset size. The newly
Asia Sogo Kaihatsu Co., Ltd. under the Star Asia group. SAR will, in order to realize targets of the medium-term
management plan, capitalize on various functions of Star Asia group including such development initiatives.
In addition, SAR recognizes the need to develop management pursuing revenue increase and cost reduction in each
property under management for growth of cash distribution per unit, and working on it every day. SAR will pursue
increase of cash distributions per unit by maintaining such stance including increase of cash distributions throughexternal growth (property acquisitions). However, for the time being with impact of the COVID-19 pandemic remains,
SAR plans to maintain the cash distribution level through the use of internal reserves including negative goodwill.

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.

SAR is committed to initiatives related to ESG in order to achieve SDGs, which has become a global policy issue.

We believe that there are people facing unprecedented crisis and challenges caused by the novel coronavirus

SAR established at Star Asia Investment Management, the Sustainability Promotion Division and organized the(COVID-19) pandemic among our unitholders, so we would like to express our sincere hope that such conditions

Sustainability Promotion Committee in January 2021.

will be resolved, and that peaceful daily life will be regained as early as possible.

2

ESG

During 2021, various measures were implemented under the leadership of the Sustainability Promotion Division.

SAR achieved steady growth by continuously executing measures in pursuing to maximize unitholders' interests

SAR set up concrete numerical values regarding reduction of GHG (greenhouse gases) and energy consumption,

since its listing in April 2016. The asset size expanded to 179.6 billion yen (60 properties) with the acquisition ofwater resource management and waste management as its initiatives related to E (environment), and is monitoring

properties through a public offering executed in August 2021. The executed acquisitions of properties are posi-

its effectiveness every year. In addition, it is also implementing initiatives related to S (social) such as creating ationed as the initial step towards the asset size target of 300 billion yen in the medium-term management plan

comfortable work environment at Star Asia Investment Management and providing spaces that contributes to theestablished in March 2021. With expansion of the asset size and increase of number of properties, we consider

local community at its properties (holding social observation events for elementary school students and providingthat we have been able to establish a portfolio with a stable profit. We will continue to pursue to achieve further

spectator seating, resting spaces, etc. for local festivals). SAR will continue these initiatives related to ESG.

stable profit and establish a portfolio with growth potential.

Furthermore, SAR participated in the 2021 GRESB Real Estate Assessment, which is participated by real estate

During the 12th Fiscal Period, we have received a 3 Star rating under the 5-grade rating in the 2021 GRESB Realcompanies and funds around the world and comparatively evaluates initiatives related to ESG, and was awarded 3

Estate Assessment and realized inclusion in a global index, and thus we consider that expansion of investors andStars and Green Star ratings. We believe that this is the result of enhancing initiatives related to ESG centering on

liquidity of investment units can be expected.

the Sustainability Promotion Division and the cooperation of the sub-sponsor NIPPON KANZAI group.

For the 12th Fiscal Period, as a result of conducting management pursuing maximization of unitholders' interests

SAR will continue initiatives related to ESG and aim to establish better environment (E), society (S) and governanceas well as seeking to increase profitability of its properties and cost reduction, SAR posted operating revenue of(G) and in order to fulfill the responsibilities of J-REIT with a strong public nature.

5,960 million yen, ordinary income of 2,517 million yen, net income of 2,516 million yen and cash distribution per

As mentioned in the Semiannual Report of 11th Fiscal Period, SAR has largely enhanced information disclosure on

unit of 1,478 yen.

initiatives related to ESG on SAR’s website. We hope you would take a look at the website (http://starasia-reit.com/).

3

Initiatives Related to ESG
Social Initiatives

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

Regional Contribution and Improvement of Tenant Satisfaction
During the “Human Rights
Week” prescribed by thehuman rights protection organization of the Ministry of
Legal Affairs, Human Rights
Week posters were put up on
message boards of owned
properties. Awareness-raising
activities were held in order todisseminate and raise awareness towards respect forhuman rights.

estate investment management business while giving consideration to the environment, society, and governance in order to enhance corporate value and exert comprehensive competitiveness while 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."

GRESB Real Estate Assessment
From an environmental consideration
perspective, distribute eco-bags at
commercial facilities in order to reduce
the use of plastic grocery bags.

SAR was awarded 3 Stars and Green Star ratings in the 2021 GRESB Real Estate Assessment.
SAR has set in the medium-term management plan formulated in March 2021 to target theacquisition of “3 Star” regarding the medium-term target concerning GRESB Real Estate
Assessment, and has achieved the medium-term target in the first year of participation. We

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

Governance Initiatives

consider that this is the result of enhancing the initiatives related to ESG centered on the
Sustainability Promotion Division, which was newly established in January 2021. Based on

Asset Management Fees

the ESG Policy, we will continue to pursue initiatives that gives further consideration toenvironment, society and governance through maintaining and improving the rating of the

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

GRESB Real Estate Assessment.

services as of the end of each fiscal period is composed of Management Fee I which is linked to the balance ofassets under management, and Management Fee II which is linked to management performance (net income of
the managed properties: NOI).

Environmental Initiatives

In order to incentivize increase in distribution amounts to investors (increase NOI), the fee structure is designed so

Acquisition of Environmental Certifications

that the ratio of Management Fee II is higher.

★★★
DBJ Green Building Certification
Building-Housing Energy-Efficiency
Labeling System (BELS)

1 property
1 property★★

★

5 properties
1 property(Note 1) Even in case when a property with two buildings acquires certifications at eachbuilding, it is counted as one property.
(Note 2) Ratio of each floor area to the gross floor area of SAR portfolio (530,196.80m2).

3 properties
0 properties

Goals

Total number ofproperties (Note 1)

Ratio (Note 2)

9 properties
2 properties

37.3%
1.1%

Achieve at least 50% of the ratio at
environmental certifications by 2026

Initiatives at Urban Center Hakata

Fees for daily
management operations

Other fees

Calculation formula

Management fees I

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

Management fees II

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

Calculation formula

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

Transfer fee

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

Merger fee

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

Urban Center Hakata held by SAR is the first office development

4

project by Star Asia Sogo Kaihatsu Co. Ltd. under the Star Asia

Decision-making processgroup. Star Asia Group’s Construction Management Department• Implement decision-making with high trans-

supervised the specifications from interior and exterior design andparency by complying with laws andfacilities to the final finishing, assuming the needs of the tenants

regulations

entering the property, and acquired BELS★★★.

Property nameUrban Center Hakata• BCP response (Install emergency-use USB ports)• Energy saving effect by use of automatic dimming lighting• Control humidity by use of desiccant outside air processing equipment• No-water injection humidifying which does not require installation ofpipes in the exclusively owned areas• Use of recycled water, rain water

Asset type

OfficeLocation

Fukuoka-shi, Fukuoka

Acquisition price

2,870 million yen

Construction completion August 27, 2020
Acquisition dateAugust 19, 2021

Total floor area

3,566.56m2

Department
ProposalCompliance Officer
Review and approval

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

Compliance Committee (including external directors)

operations as a manager of investors' funds

Review and resolution

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

SAR’s Board of Directors Meetings
Review and approval

ReturnRejected
Rejected
Rejected
Unapproved

5

Portfolio Overview (As of January 31, 2022)
RSC-10

RSC-11

RSC-13

RSC-14

Minami-Azabu
Shibuya Building

OFC-01

Honmachibashi
Tower

Nishi-Shinjuku
Matsuya Building

Shibuya MK Building

Asahi Building

Hakata-eki
East PlaceUrban Park Koenji

Urban Park Ichigao

Urban Park Gyotoku

Shiroi Logiman

Urban Park Sekime

Urban Park Imazato

Completed: Jun. 15, 1993

Completed: Feb. 8, 2010

Completed: May 28, 1987

Completed: Jul. 31, 1993

Completed: Nov. 25, 1994

Completed: Feb. 24, 1986

Completed: Oct. 13, 1987

Completed: Jul. 10, 1998

Completed: Mar. 24, 1995

Completed: May 9, 1995

Completed: Aug. 18, 1989

Completed: Dec. 20, 1991

OFC-10

OFC-04OFC-11

OFC-12

OFC-06

OFC-13

OFC-08

RSC-15

RSC-16

RSC-12

RSC-17

RSC-18

RSC-19

RSC-20Higashi-KobeCenter Building

Amusement Media
Gakuin Shinkan

Seishin BLDG.

NK BLDG.

Urban Park Yoyogi

Urban Park
Tokiwadai Koen

Urban Park Mitsuike
Koen

Urban Park Ryogoku

Urban Park
Mizonokuchi

Urban Park
MiyamaedairaCompleted: Jul. 13, 1992

Completed: Nov. 2, 1994

Completed: Jan. 6, 1992

Completed: Jan. 25, 1999

Completed: Mar. 31, 1989

Completed: Oct. 28, 1991

Completed: Sep. 4, 2017

Completed: Feb. 17, 1994

Completed: Mar. 24, 1992

Completed: Oct. 31, 1997

Completed: Aug. 23, 1988

Completed: Jun. 10, 2021

OFC-17

OFC-18

OFC-21

RSC-21

LGC-02

LGC-03

Urban Center Kanda
Tsukasamachi (Note 1)

Takadanobaba
AccessAzabu Amerex
BLDG.

Hiei-Kudan BLDG.

Shin-Yokohama
Nara BLDG.

The Portal Akihabara

Urban Park Tsurumi

Iwatsuki Logistics

Yokohama Logistics

Funabashi Logistics

Completed: Jan. 20, 1988

Completed: Jan. 14, 1994

Completed: Jun. 30, 1988

Completed: Sep. 17, 1991

Completed: Mar. 17, 1992

Completed: May 31, 2002

Completed: Feb. 17, 1994

Completed: Oct. 29, 2014

Completed: Oct. 1, 1994

OFC-22

RTL-03Completed: Aug. 14, 2015

Completed: Apr. 30, 1999

RTL-05

LGC-07

LGC-09

LGC-10

HTL-01

HTL-02

Suroy Mall
Chikushino

Seiyu Minakuchi

BAGUS Ikebukuro
West

Funabashi Nishiura
Logistics II

Matsubushi
Logistics

Funabashi Hi-Tech
Park Factory I

Funabashi Hi-Tech
Park Factory II

R&B Hotel Umeda
East

Smile Hotel Namba

Completed: May 30, 1990

Completed: Aug. 27, 2020

Completed: Aug. 30, 1994

Completed: Jun. 22, 2007

Completed: May 31, 1999

Completed: Nov. 20, 1992

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

Completed: May 19, 2003

Completed: Sep. 5, 2001

Completed: Oct. 20, 2000

Completed: Feb. 6, 2008

RSC-02

RSC-05

RSC-06

RSC-07

Urban Park Daikanyama

Urban Park Namba

Urban Park Gokokuji

Urban Park Kashiwa

Urban Park
Ryokuchi Koen

REMBRANDT STYLETokyo Nishikasai

BEST WESTERN
Yokohama

The BREAKFAST HOTELFUKUOKA TENJIN (Note 3)

GLANSITAKIHABARAREMBRANDT STYLETokyo Nishikasai Grande

KOKO HOTEL
Osaka Namba

Completed: Jan. 9, 2013

Completed: Feb. 28, 1990

Completed: Aug. 28, 1997

Completed: Mar. 10, 1989

Completed: Mar. 19, 1991

Completed: Sep. 21, 1987

Completed: Feb. 20, 2017

Completed: Sep. 20, 2017

Completed: Feb. 7, 2017

Completed: Apr. 7, 2017

Completed:Nov. 15, 1982 (Existing)May 30, 2006 (Newly built)(Note 1) Name as of Jan. 31, 2022 was Tsukasamachi BLDG.
(Note 2) Name as of Jan. 31, 2022 was OHA Building.

RSC-08

HTL-03

LGC-08

LGC-05Tokorozawa
Logistics

La Park Kishiwada

Completed: Nov. 29, 1999

RTL-02Completed:
Sep. 25, 1992 (Building 1)
Aug. 5, 1997 (Building 2)

LGC-04

Baraki Logistics

Urban Center
Hakata

RSC-01

RTL-01

LGC-01

Urban Center
Tachikawa (Note 2)

Urban Park
Azabujuban

OFC-23

OFC-20

OFC-15

RSC-09Amusement Media
Gakuin Honkan

OFC-19OFC-14

OFC-09

Nihonbashi Hamacho
Park Building

OFC-16

6

OFC-03

HTL-04

HTL-05

HTL-06

HTL-07

HTL-08(Note 3) Name as of Jan. 31, 2022 was Hotel WBF Fukuoka Tenjin Minami.

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.

8th Fiscal
PeriodFiscal Period

9th Fiscal
Period10th Fiscal
Period11th Fiscal
Period12th Fiscal
Period(August 1, 2019 to (February 1, 2020 (August 1, 2020 to (February 1, 2021 (August 1, 2021 toJanuary 31, 2020) to July 31, 2020) January 31, 2021) to July 31, 2021) January 31, 2022)(Note 2) Unless otherwise specifically noted, amounts are rounded down to the unit displayed and percentages are rounded to the first decimal place.

(million yen)

3,227

3,996

6,672

5,560

5,960

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

Operating revenue from real estate leasing (million yen)

3,200

3,314

5,648

5,536

5,890

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

(million yen)

1,506

1,864

3,295

2,721

2,872

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

1,189

1,173

2,179

2,189

2,311

Return on equity

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

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

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

1,721

2,131

3,376

2,838

3,087

Ordinary income(million yen)

1,494

1,857

2,911

2,407

2,517

Net income(million yen)

1,493

1,857

11,801

2,407

2,516

Total assets(million yen)

109,649

113,035

179,789

179,170

193,316(%)(-0.5)(3.1)(59.1)(-0.3)(7.9)(million yen)

54,29954,61489,60089,17995,753(%)(-0.8)(0.6)(64.1)(-0.5)(7.4)

Interest-bearing debt

(million yen)

51,58054,32082,44082,44089,640Unitholders’ capital(million yen)

52,74552,74552,74552,745

59,115

Total number of investment units issued andoutstanding(units)

540,824

540,824

1,674,389

1,674,389

1,789,389

Net assets per unit (Note 3)(yen)

100,401

50,49253,51253,26053,511(million yen)

1,507

1,858

2,806

2,447

2,644

(yen)

2,788

3,436

1,676

1,462

1,478

Cash distribution of earnings per unit

(yen)

2,788

3,436

1,676

1,462

1,478

Cash distributions in excess of earnings
per unit

(yen)

–

–

–

–

–

Ratio of ordinary income to total assets (Note 4)

(%)

1.4

1.7

2.0

1.3

1.4

[Annualized]

(%)

(2.7)

(3.3)

(3.9)

(2.7)

(2.7)

(%)

2.7

3.4

16.4

2.7

2.7

(%)

(5.4)

(6.8)

(32.5)

(5.4)

(5.4)

(%)

49.5

48.3

49.8

49.8

49.5

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

(%)

100.9

100.1

23.8

101.7

105.1

(days)

184

182

184

181

184

Number of properties at end of period(properties)

34

36

53

53

60

Depreciation(million yen)

420

432

628

633

682

Capital expenditures(million yen)

131

188

331

363

424

(million yen)

2,431

2,573

4,097

3,980

4,261

(million yen)

1,914

1,640

2,564

3,040

3,199

(yen)

3,539

1,516

1,531

1,815

1,787

(%)

47.0

48.1

45.9

46.0

46.4

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

Total cash distribution
Cash distributions per unit

Return on equity(Note 4)

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

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

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

FFO(Funds from Operation)

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

FFO per unit

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

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

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

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

Balance Sheet(Unit: thousand yen)		

(Unit: thousand yen)

11th fiscal period

12th fiscal period

11th fiscal period

12th fiscal period(As of July 31, 2021)(As of January 31, 2022)(As of July 31, 2021)(As of January 31, 2022)

544,542789,397

AssetsLiabilities

Current assets

Current liabilities

Cash and deposits

3,169,688

3,774,975

Operating accounts payable

Cash and deposits in trust

7,536,399

7,950,192

Short-term borrowings

2,150,000–

Operating accounts receivable

96,187

88,581

Current portion of long-term borrowings

23,450,000

15,350,000

Prepaid expenses

177,085

200,093

Accounts payable - other492,764

500,649

Consumption taxes receivable

83,497

155,777

Accrued expenses

41,56249,478Others

7,506

14,763

Income taxes payable

605

605

11,070,364

12,184,385

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

114

114

Accumulated depreciation

(42)

(71)

Tools, furniture and fixtures, net

7142

Buildings in trust

Accrued consumption taxes

71,861

46,037

Advances received

913,623

915,355

Others23,83430,771

27,688,794

17,682,295–

1,000,000

56,840,000

73,290,000

6,142

5,074

5,217,745

5,476,752

Total current liabilities
Non-current liabilities
Investment corporation bonds

49,655,872

53,053,772

Long-term borrowings

Accumulated depreciation(4,084,344)(4,755,763)

Leasehold and guarantee deposits received

Buildings in trust, net

45,571,527

48,298,008

Leasehold and guarantee deposits received in trust

Structures in trust

20,635

20,635

Others

Accumulated depreciation(4,393)(5,115)

Total non-current liabilities

238,654

109,745

62,302,542

79,881,571

Structures in trust, net

16,242

15,52089,991,336

97,563,867

52,745,966

59,115,701

25,132,218

25,132,218*2 8,891,236*2 8,802,324

8,891,236

8,802,324

Unappropriated retained earnings (undisposed loss)

2,651,806

2,809,755

Total surplus

36,675,261

36,744,298

89,421,227

95,859,999

Deferred gains or losses on hedges(241,749)(106,910)

Total valuation and translation adjustments(241,749)(106,910)* 89,179,478* 95,753,089

179,170,815

193,316,956

Total liabilities
Net assets

Machinery and equipment in trust

97,214

99,519

Accumulated depreciation(18,872)(23,762)

Machinery and equipment in trust, net

78,34175,756Unitholders’ capital
Surplus

Unitholders’ equity

Tools, furniture and fixtures in trust

56,65467,545

Accumulated depreciation(20,334)(24,969)

Unitholders’ capital surplus

Tools, furniture and fixtures in trust, net

36,31942,576

Voluntary reserve

117,051,893

127,283,507

550–

162,754,946

175,715,413

Leasehold rights in trust

4,082,300

4,082,300

Total intangible assets

4,082,300

4,082,300

Investment securities

692,234

922,220

Long-term loans receivable

300,000–

Long-term prepaid expenses

260,510351,116

Leasehold and guarantee deposits

10,45910,379–3,317

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

Investments and other assets

OthersTotal investments and other assets

1,263,203

1,287,033

168,100,450

181,084,747

Investment corporation bond issuance costs–

13,603

Investment unit issuance costs–

34,219Total deferred assets–

47,823

179,170,815

193,316,956

Total non-current assets

Reserve for temporary difference adjustment
Total voluntary reserve

Total unitholders’ equity
Valuation and translation adjustments

Total net assets
Total liabilities and net assets

1

1

Deferred assets

Total assets
10

11

Financial Statements

Financial Statements

Statement of Income and Retained Earnings

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

11th fiscal period (from February 1, 2021 to July 31, 2021)(Unit: thousand yen)

12th fiscal period
11th fiscal period(From February 1, 2021 (From August 1, 2021
to January 31, 2022)
to July 31, 2021)

SurplusOperating revenue
Rental revenue
Other lease business revenue
Other revenue
Total operating revenue* 5,184,498* 5,467,061*1 351,786*1 423,937

24,49569,4185,560,780

5,960,418

1*1 2,189,167*1 2,311,905

Asset management fee

380,024

392,495

Asset custody and administrative service fees

38,69942,732

Directors’ compensations

2,400

2,400

Other operating expenses

111,699

122,935

Total operating expenses

2,721,990

2,872,468

2,838,789

3,087,950

63

48

3,390

1,326

1

106

3,454

1,481

301,653

337,121–2,473

132,679

224,543

Amortization of investment corporation bond issuance costs–

850

Amortization of investment unit issuance costs

–

6,843

434,333

571,833

Ordinary income

2,407,910

2,517,598

Income before income taxes

2,407,910

2,517,598

Income taxes - current

605

605

Total income taxes

605

605

2,407,305

2,516,993

244,500

292,762

2,651,806

2,809,755

Operating income
Non-operating income
Interest income
Reversal of unpaid distribution
Interest on refund
Total non-operating income

Interest expenses on investment corporation bonds
Borrowing related expenses

Total non-operating expenses

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

12

Unitholders’capitalBalance at
beginning of
periodUnitholders’ Reserve forcapitaltemporarysurplusdifference
adjustment

52,745,966 25,132,218

–

Total
voluntary
reserve–

Unappropriatedretainedearnings(undisposed
loss)

Total
unitholders’equityTotal
surplus11,942,013 37,074,231 89,820,197

Total
Deferred valuation
gains orandlosses on translation
hedgesadjustments(219,679)(219,679)

Total net
assets89,600,518

Changes of
items during
periodDividends
from surplus
Provision ofreserve fortemporarydifference
adjustment

8,891,236

8,891,236

Net income

Non-operating expenses
Interest expenses

Voluntary reserve

1

Operating expenses
Expenses related to rent business

Valuation and translation adjustments

Unitholders’ equity(2,806,275)(2,806,275)(2,806,275)(2,806,275)(8,891,236)

–

–

–

2,407,305

2,407,305

2,407,305

2,407,305

Net changesof items otherthan unitholders’ equity
Total changesof items during
period–(398,970)(22,069)(22,069)(22,069)–

8,891,236

8,891,236(9,290,206)(398,970)(22,069)(22,069)(421,039)

Balance at end 1* 52,745,966 25,132,218
of period

8,891,236

8,891,236

2,651,806 36,675,261 89,421,227(241,749)(241,749)

89,179,478

13Financial Statements

Financial Statements

Statement of Changes in Unitholders’ Equity

Statement of Cash Distributions

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

Valuation and translation adjustments

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

52,745,966 25,132,218

8,891,236

Total
voluntary
reserve

Unappropriatedretainedearnings(undisposed
loss)

Total
unitholders’equityTotal
surplus

Total
Deferred valuation
gains orandlosses on translation
hedgesadjustments

I.
Total net
assets2,651,806 36,675,261 89,421,227(241,749)(241,749)

89,179,478

IV. Retained earnings carried forward

6,369,735

Reversal ofreserve fortemporarydifference
adjustment(88,912)(88,912)Net income

6,369,735

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

88,912–––2,516,993

2,516,993

2,516,993

2,516,993

Net changesof items otherthan unitholders’ equity

14

Cash distribution of earnings[Cash distribution of earnings per unit]

Dividends
from surplus

Total changesof items during
periodReversal of reserve for temporary
difference adjustment *1[Cash distribution per unit]

8,891,236

6,369,735–(88,912)(88,912)

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

8,802,324

8,802,324

134,838

134,838

134,838

6,438,772

134,838

134,838

6,573,610

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

95,753,089

157,949

69,03712th fiscal period(From August 1, 2021 to January 31, 2022)

2,651,806,438

2,809,755,972

88,912,365

88,912,365

2,447,956,718

2,644,716,942(1,462)(1,478)2,447,956,718

2,644,716,942(1,462)(1,478)292,762,085

253,951,395

Pursuant to the cash distribution policy
provided in Article 35, Paragraph 1 of
SAR’s Articles of Incorporation, SAR
shall distribute in excess of the amountequivalent to 90% of the amount of
distributable earnings of SAR as definedin Article 67-15, Paragraph 1 of the Act
on Special Measures Concerning
Taxation. In accordance with suchpolicy, concerning cash distribution of
earnings (not including cash distribution
in excess of earnings), the decision wasmade to distribute 2,447,956,718 yen,which is equivalent to the sum of theamount remaining after reserving
48,261,396 yen from net income andthe amount of reversal of reserve fortemporary 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 distribution
in excess of earnings), the decision wasmade to distribute 2,644,716,942 yen,which is equivalent to the amountobtained by adding part of retained
earnings brought forward of 38,810,690
yen and the reversal of reserve for temporary difference adjustment of
88,912,365 yen to net income.

II. Reversal of voluntary reserve

III. Cash distribution

Changes of
items during
periodIssuance of
new investment units

Unappropriated retained earnings

11th fiscal period(From February 1, 2021 to July 31, 2021)

Method of calculation of amount of cash
distributions

15

Financial Statements

Financial Statements

Statement of Cash Flows

Notes to Financial Statements(Unit: thousand yen)

12th fiscal period
11th fiscal period(From February 1, 2021 (From August 1, 2021
to January 31, 2022)
to July 31, 2021)
Cash flows from operating activities
Income before income taxes

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

2,407,910

2,517,598(securities code: 3468). SAR has assigned the asset management of its portfolio to Star Asia Investment

633,013682,245

Management Co., Ltd., a financial instruments business operator under the Financial Instruments andAmortization of investment corporation bond issuance costs–

850

Amortization of investment unit issuance costs

–

6,843

(63)

(48)

Interest expenses

301,653

339,595

Decrease (increase) in operating accounts receivable(13,838)

7,605

Decrease (increase) in consumption taxes receivable(83,497)(72,280)

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

Increase (decrease) in accrued consumption taxes(180,619)(25,824)

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

Decrease (increase) in prepaid expenses

11,412(23,008)

Decrease (increase) in long-term prepaid expenses(15,453)(90,606)

Increase (decrease) in operating accounts payable(123,131)

143,883

Increase (decrease) in accounts payable - other(35,359)

7,276

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

Increase (decrease) in advances received

78,5091,732

accepted in Japan (J-GAAP), but J-GAAP differs from international accounting standards in certain aspects ofDepreciation

Interest income

Others, net(3,762)(28,806)

2,976,775

3,467,056

63

48(303,625)(331,705)(443)(5,381)

2,672,769

3,130,019(330,859)(13,552,890)

Repayments of leasehold and guarantee deposits received(72)(1,068)Proceeds from leasehold and guarantee deposits received

72–

Repayments of leasehold and guarantee deposits received in trust(124,421)(181,994)

Proceeds from leasehold and guarantee deposits received in trust

145,144441,001

Proceeds from collection of lease and guarantee deposits

10,06080–(400,000)

57,887

216,472

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

Purchase of investment securities
Proceeds from redemption of investment securities
Proceeds from collection of long-term loans receivable
Net cash used in investing activities

Exchange Act (Act No. 25 of 1948, as amended), through which SAR executed active management pursuing tomaximize interest of unitholders and thrived to expand its asset size and to increase cash distributions per unit.
The asset size as of the end of 12th fiscal period is 179,675 million yen (on the basis of acquisition price. The
properties succeeded from Sakura Sogo REIT Investment Corporation with the absorption-type merger inBasis of Presentationaccounting modifications and disclosure standards.
The financial statements attached hereto are a translation of audited financial statements prepared from SAR’s
accounting records and submitted to the Kanto Local Finance Bureau in accordance with the Financial
Instruments and Exchange Act for the purpose of domestic disclosure.
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

Cash flows from investing activities–

300,000(242,189)(13,178,398)

Cash flows from financing activities

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.

Notes on Matters Relating to Significant Accounting Policies

Proceeds from short-term borrowings

1,660,000–

Repayments of short-term borrowings(1,660,000)(2,150,000)

Proceeds from long-term borrowings

8,960,000

22,050,000

Other securities

Repayments of long-term borrowings(8,960,000)(13,700,000)

Those with market price

Proceeds from issuance of investment corporation bonds–

985,545

Proceeds from issuance of investment units–

6,328,671

Dividends paid

(2,805,455)(2,446,756)

Net cash used in financing activities(2,805,455)

11,067,460(374,875)

1,019,080

11,080,963

10,706,087*1 10,706,087*1 11,725,168

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
16

Organization

1. Evaluation standards and methods of valuation of securities

Fair value method or market value method (Variances are directly included in net assets.)
Stocks, etc. with no market price
Cost method through moving-average method
As for silent partnership equity interests, the method of incorporating the amount equivalent to equity
interests corresponding to net amount of gain or loss from silent partnership is adopted.

17

Financial Statements
Notes to Financial Statements

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

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

Buildings

2-69 years

Structures

7-30 years

Hedging instruments: Interest rate swap transaction

Machinery and equipment

7-17 years

Hedged items: Interest on borrowings

Tools, furniture and fixtures

2-15 years

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

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

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

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

real estate or beneficiary interest in trust for real estate is not recognized as expenses but included in theConcerning beneficiary interest in trust for real estate, etc. held, all accounts of assets and liabilities withincost of acquisition of the related real estate, etc. In the fiscal period under review, the amount equivalent totrust assets as well as all accounts of revenue and expenses from the trust assets are recognized in the

fixed property tax, etc. included in the cost of acquisition of real estate, etc. was 16,601 thousand yen.

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

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

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

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

1) Cash and deposits in trust

revenue) are as follows:

2) Buildings in trust; Structures in trust; Machinery and equipment in trust; Tools, furniture and fixtures intrust; Land in trust; Construction in progress in trust

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

3) Leasehold rights in trust

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

4) Leasehold and guarantee deposits received in trust

stipulated in the transaction agreement of the real estate.
2) Utilities income(2) Accounting for consumption taxes
Taxes are excluded from the transaction amounts in accounting for consumption tax and local consumption

SAR records utilities income in accordance with the supply of electricity and water, etc. to the lessee

tax.

who is a customer based on the lease agreement of real estate and details of agreements incidental to

Non-deductible consumption tax on acquisition of assets is included in the acquisition cost of each asset.

it. Of the utilities income, in the case that SAR deems itself to be an agent, the net amount obtainedby deducting the amount it pays to other parties from the amount it receives as charges for electricity
and gas, etc. supplied by the said other parties is recognized as revenue.

18

19

Financial Statements
Notes to Financial Statements

Notes on Changes in Accounting Policies

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

1. Application of Accounting Standard for Revenue Recognition, etc.
InitialamountReversal
Provision
Balance atBalance atamountamountbeginning of
end of period
during period during period
period8,891,236

8,891,236

SAR has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29 (revised 2020),
issued on March 31, 2020; the “Revenue Recognition Accounting Standard” ), etc. from the beginning of thecurrent fiscal period, and decided to recognize revenue at the amount expected to be received in exchange forthe promised goods or services when control of the goods or services is transferred to the customer. The
impact of this change on the financial statements for the current fiscal period is minimal.

Gain onnegativegoodwill (Note)(Note)

Furthermore, in accordance with the transitional treatment stipulated in Paragraph 89-3 of the Revenue
Recognition Accounting Standard, the note related to revenue recognition for the previous fiscal period is not–

88,9128,802,324

Reasons for provisionand reversal

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.

shown.

Notes to the Statement of Income and Retained Earnings

2. Application of Accounting Standard for Fair Value Measurement, etc.
SAR has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, issued on*1 Breakdown of operating income (loss) from real estate leasing

July 4, 2019; the “Fair Value Measurement Accounting Standard”), etc. from the beginning of the current fiscal(Unit: thousand yen)period, and decided to adopt the new accounting policies set forth by the Fair Value Measurement Accounting

11th fiscal period

12th fiscal period

Standard, etc. going forward in accordance with the transitional treatment as stipulated in Paragraph 19 of the(From February 1, 2021
to July 31, 2021)(From August 1, 2021 toJanuary 31, 2022)

4,413,190

4,696,720

Common area maintenance revenue

540,735

534,187

Parking revenue

195,685

199,390

Facility use revenue

30,67730,985

Other rental revenue

4,209

5,778

5,184,498

5,467,061

Utilities income

258,593

296,154

Other revenue

93,192

127,783

351,786

423,937

5,536,284

5,890,999

Management fee

419,406

438,037

Utilities expenses

260,562

310,409

Property taxes

421,132

421,139

Repair expenses

220,204

181,998

Trust fee

22,86425,603

Insurance premium

12,19213,010Depreciation

633,013682,245

Other expenses

199,789

239,461

2,189,167

2,311,905

3,347,117

3,579,094

Fair Value Measurement Accounting Standard and Paragraph 44-2 of the “Accounting Standard for Financial
Instruments” (ASBJ Statement No. 10 (revised 2019), issued on July 4, 2019). The impact of this change on thefinancial statements for the current fiscal period is minimal.

*1	Minimum net assets as provided in Article 67, Paragraph 4 of the Act on Investment Trusts
and Investment Corporations(Unit: thousand yen)

11th fiscal period (As of July 31, 2021)

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

50,00050,000*2 Matters on provision and reversal of reserve for temporary difference adjustment
11th fiscal period (As of July 31, 2021)(Note)

8,891,236

Reversal
Provision
Balance atBalance atamountamountbeginning of
end of period
during period during period
period–Total
Other lease business revenue

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

Gain onnegativegoodwill (Note)

Rental revenue
Rent revenue

Notes to the Balance Sheet

InitialamountA. Operating revenue from real estate leasing

8,891,236–

8,891,236

Reasons for provisionand reversal
Provision of gain on negative goodwill throughmerger

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]

20

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

11th fiscal period

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

Total number of investment units authorized

10,000,000 units

10,000,000 units

Total number of investment units issued and outstanding

1,674,389 units

1,789,389 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 suchmeasures as lengthening the procurement periods and staggering the maturities. In addition, borrowings with

11th fiscal period

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

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

*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.

swap transactions) are utilized as hedging instruments to, in effect, convert interest rates to fixed rates inorder 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. Method of hedge accounting”
described under “Notes on Matters Relating to Significant Accounting Policies” earlier in this document.
(3) Supplementary explanation to matters relating to fair value, etc. of financial instruments
Not applicable.

2. Matters relating to fair value, etc. of financial instruments

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

11th fiscal period

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

Cash and deposits

3,169,688

3,774,975

Cash and deposits in trust

7,536,399

7,950,192

Cash and cash equivalents

10,706,087

11,725,168

The carrying amount, fair value and the amount of difference between them, are as follows. Because “cash anddeposits,” “cash and deposits in trust” and “short-term borrowings” are cash and settled in a short period oftime and the fair values approximate the book values accordingly, notes on such are omitted.

11th fiscal period (As of July 31, 2021)(Unit: thousand yen)

Carrying amount23,450,000

23,450,000–(3) Long-term borrowings

56,840,000

56,861,428

21,42880,290,000

80,311,428

21,428(241,749)(241,749)–(4) Derivative transactions *1

Operating leases (as lessor)

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

Future minimum lease payments
Carrying amount(Unit: thousand yen)

Fair value

Difference(1) Current portion of long-term borrowings

15,350,000

15,350,378378(2) Investment corporation bonds

1,000,000

996,200(3,800)5,584,037(3) Long-term borrowings

73,290,000

73,302,563

12,563

8,126,573

7,200,564

Liabilities total

89,640,000

89,649,141

9,141

13,454,815

12,784,602(4) Derivative transactions *(106,910)(106,910)–

11th fiscal period

12th fiscal period(As of July 31, 2021)(As of January 31, 2022)

Not later than 1 year

5,328,242

Later than 1 year
Total

*1

22

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.

23

Financial Statements
Notes to Financial Statements

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

Other securities
11th fiscal period (As of July 31, 2021)(Unit: thousand yen)

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

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

(Note 2) Amount of redemption/repayment of investment corporation bonds and loans to be due after the closing date
11th fiscal period (As of July 31, 2021)(Unit: thousand yen)

Not later
than 1 year

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

Long-term borrowings

23,450,000

15,390,000

13,340,000

7,300,000

17,810,000

3,000,000

Total

23,450,000

15,390,000

13,340,000

7,300,000

17,810,000

3,000,000

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

Not later
than 1 year
Investment corporation bonds

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

Carrying
amountgreater thanacquisition
cost

Carrying
amount lessthan or equal
to acquisition
cost

Later than
5 years

–

–

–

–

1,000,000

Long-term borrowings

15,350,000

14,630,000

12,285,000

19,150,000

17,175,000

10,050,000

Total

15,350,000

14,630,000

12,285,000

19,150,000

17,175,000

11,050,000(Note)

Difference

–

–

–

1) Government bonds, municipal bonds, etc.

–

–

–

2) Corporate bonds

–

–

–

3) Others–––(3) Others

–

–

–

Subtotal–––(1) Stocks

–

–

–

–

–

–

400,000

400,000

–

–

–

–

(3) Others

272,850

272,850–

Subtotal

672,850

672,850–

672,850

672,850–(2) Bonds(2) Bonds
1) Government bonds, municipal bonds, etc.
2) Corporate bonds3) Others

Total

–

Carrying amount Acquisition cost

Silent partnership equity interests (carrying amount: 19,384 thousand yen) are not included in above because they have nomarket value and their fair values are extremely difficult to measure.

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

Category(1) Stocks
Carrying
amountgreater thanacquisition
cost

Carrying
amount lessthan or equal
to acquisition
cost

Total

24

Carrying amount Acquisition cost

Difference

–

–

–

1) Government bonds, municipal bonds, etc.

–

–

–

2) Corporate bonds

–

–

–

3) Others–––(3) Others

–

–

–

Subtotal–––(1) Stocks

–

–

–

–

–

–

800,000

800,000

–

–

–

–

(3) Others

122,220

122,220–

Subtotal

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

25

Financial Statements
Notes to Financial Statements

Notes on Derivative Transactions

Notes on Tax-Effect Accounting

1. Derivative transactions to which hedge accounting is not applied

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

11th fiscal period (As of July 31, 2021)
11th fiscal period

12th fiscal period(As of July 31, 2021)(As of January 31, 2022)

1,203,727

1,175,788

Acquisition cost of securities

1,359

2,998

Deferred gains or losses on hedges

76,054

33,634

Not applicable.
12th fiscal period (As of January 31, 2022)

Deferred tax assets
Valuation adjustment upon merger

Not applicable.

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

1,281,140

1,212,421

closing date for each hedge accounting approach.

Valuation allowance(1,281,140)(1,212,421)

11th fiscal period (As of July 31, 2021)

Deferred tax assets, total

–

–

–

–

(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

Fair value(Note 2)

Deferred tax assets, net

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: %)54,290,000

46,140,000(241,749)

11th fiscal period

12th fiscal period(As of July 31, 2021)(As of January 31, 2022)

31.46

31.46

Deductible distributions payable(30.49)(30.61)

Reversal of excess depreciation(0.83)(0.82)

Others(0.12)(0.00)

Effective income tax rate after application of tax-effect accounting

0.03

0.02

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

Statutory tax rate

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

[Adjustments]

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

Hedge accounting
approachPrinciple method of
accounting

Type, etc. of derivativetransaction

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

Interest rate swap transaction
Long-term(floating receivable; fixedborrowings
payable)Of which, later
than 1 year
72,555,000(Note 1) Contract amount, etc. is based on notional principal.
(Note 2) Fair value is calculated based on the price quoted by lending financial institutions, etc.

Notes on Retirement Benefits

64,405,000

Fair value(Note 2)

(106,910)

Notes on Share of Profit or Loss of Entities Accounted for Using Equity Method,etc.
11th fiscal period (As of July 31, 2021)
Not applicable.
12th fiscal period (As of January 31, 2022)
Not applicable.

11th fiscal period (As of July 31, 2021)
Not applicable.
12th fiscal period (As of January 31, 2022)
Not applicable.

Notes on Related-Party Transactions
1. Parent company, major corporate unitholders, etc.
11th fiscal period (from February 1, 2021 to July 31, 2021)
Not applicable.
12th fiscal period (from August 1, 2021 to January 31, 2022)
Not applicable.

26

27

Financial Statements
Notes to Financial Statements

Notes on Asset Retirement Obligations

2. Affiliated companies, etc.
11th fiscal period (from February 1, 2021 to July 31, 2021)

11th fiscal period (from February 1, 2021 to July 31, 2021)

Not applicable.

Not applicable.

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

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

Not applicable.

Not applicable.

3. Fellow subsidiaries, etc.

Notes on Investments in Rental Propertie

11th fiscal period (from February 1, 2021 to July 31, 2021)

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

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

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

Not applicable.

4. Directors, major individual unitholders, etc.
11th fiscal period (from February 1, 2021 to July 31, 2021)

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

Atsushi
Kato

Address––

Description ofbusiness or
occupation

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

Account
item

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

Payment ofasset management fee
to the AssetManager (Note 1)

Accounts
payable– others

0.02%

380,024(Note 2)

Balanceat end ofperiod(Note 2)

(Unit: thousand yen)

Director,or close
relative of
director

Atsushi
Kato

Address–

Capitalstock orinvestments incapitalDescription ofbusiness or
occupation

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

Account
item–

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

Payment ofasset management fee
to the AssetManager (Note 1)

Accounts
payable- other

0.02%

472,980(Note 2)
(Note 3)

Balanceat end ofperiod429,545(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.

166,836,697(270,251)

12,961,016

166,836,697

179,797,713

177,211,000

193,604,000

Amount of increase (decrease) during period
Balance at end of period
Fair value at end of period(Note 2) Of the amount of increase (decrease) during the 11th fiscal period, the amount of increase is mainly attributable to capital expenditures (363,439 thousand yen), while the amount of decrease is mainly attributable to depreciation (633,013 thousand yen). Of
the amount of increase (decrease) during the 12th fiscal period, the amount of increase is mainly attributable to acquisition of realestate beneficiary interest in trust of seven properties (13,230,298 thousand yen) and capital expenditures (424,722 thousandyen), while the amount of decrease is mainly attributable to depreciation (682,245 thousand yen).
(Note 3) Fair value at the end of period is the appraisal value by an outside real estate appraiser.

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

Notes on Revenue Recognition
1. Breakdown information on revenue from contracts with customers
12th fiscal period (from August 1, 2021 to January 31, 2022)(Unit: thousand yen)

Revenue from contracts withcustomers (Note)(Note 2) Of the amounts above, the transaction amount does not include consumption tax, while the balance at end of period includes
consumption tax.
(Note 3) The asset management fee for the 12th fiscal period includes the acquisition incentive portion included in the book value of individual real estate, etc. in the amount of 80,485 thousand yen.

Proceeds from sale of real estate
Utilities income
Others
Total(Note)

28

167,106,948

Balance at beginning of period(Note 1) Carrying amount is the amount of the cost of acquisition, less accumulated depreciation.
418,026

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

Name ofcompany,
Category
etc. orperson12th fiscal period(From August 1, 2021 toJanuary 31, 2022)

Carrying amount(Unit: thousand yen)

Capitalstock orinvestments incapital11th fiscal period(From February 1, 2021
to July 31, 2021)

Sales to external customers––

296,154

296,154–5,664,264

296,154

5,960,418

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.

29

Financial Statements
Notes to Financial Statements

2. Foundational information for understanding revenue from contracts with customers(2) Information about geographic areas
1) Net sales

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

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

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

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

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) Property, plant and equipment
Information about property, plant and equipment is omitted because the amount of property, plant andequipment located in Japan is in excess of 90% of the amount of property, plant and equipment on thebalance sheet.

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

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

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

57,609Receivables generated from contracts with customers(balance at end of period)

54,922

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

Contract assets (balance at beginning of period)–

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

retained earnings.

Contract liabilities (balance at beginning of period)–

Contract liabilities (balance at end of period)–(1) Information about products and services(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 on(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

transaction value allocated to remaining performance obligations as an expedient in practice. Also, with

Information about property, plant and equipment is omitted because the amount of property, plant andregard to utilities income, as SAR has the right to receive from customers an amount directly corresponding

equipment located in Japan is in excess of 90% of the amount of property, plant and equipment on theto the value for the lessees who are customers of portions for which performance is complete by the end ofbalance sheet.

the fiscal period, the amount it has the right to claim according to Paragraph 19 of the Application
Guidelines of the Accounting Standard for Revenue Recognition is recognized as revenue. Accordingly, suchis not included in the note on transaction value allocated to remaining performance obligations throughapplication of the provisions of Paragraph 80-22 (2) of the Accounting Standard for Revenue Recognition.

(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.

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

2. Related information
11th fiscal period (from February 1, 2021 to July 31, 2021)(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

Financial Statements

Notes to Financial Statements

Supplementary Schedules

Notes on Per Unit Information

1. Schedule of securities(Unit: yen)

11th fiscal period

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

Net assets per unit

53,26053,511

Net income per unit

1,437

1,414

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

(Unit: thousand yen)

Net income
Amount not attributable to common unitholders

11th fiscal period(From February 1, 2021
to July 31, 2021)

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

2,407,305

2,516,993––

Net income attributable to common investment units

2,407,305

2,516,993

Average number of investment units during period (units)

1,674,389

1,779,389

Not applicable.

–

400,000–16–

122,220–400,000

3,712–

400,000–

922,2207,165–

922,220

–

Book
value

Star Asia Mezzanine
Loan Debt Investment
Series 1

400,000

400,000

3,436

Star Asia Mezzanine
Trust benefiLoan Debt Investment
ciary interests
Series 3–

122,220

Star Asia Mezzanine
Loan Debt Investment
Series 6

400,000–

Corporatebonds

Specifiedcorporate
bond
Total

Notes on Significant Subsequent Events

Unrealized
gain orRemarks
loss

Total
face
value

(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.
(Note 2) The basis for calculation of net income per unit is as follows:

Fair
value

Accrued Prepaid
interest accrued(Note 1)interest

Name of the security

Category(Note 2)
(Note 3)(Note 2)
(Note 4)(Note 2)
(Note 5)(Note 1) Accrued interest includes accrued dividends receivable on trust beneficiary interests.
(Note 2) Because interest income etc. from mezzanine loan debt (corporate bonds and beneficiary interest in trust) are based on
floating interest rates and is to be renewed or revised every certain period, the fair value is approximately the same as thebook value and thus stated at that book value.
(Note 3) The underlying assets are trust beneficiary interests in a trust mainly comprised of Relief Premium Haneda.

Additional Information(Accounting estimates due to the spread of COVID-19)
A rent system in which rents are entirely or partially linked to the operating revenue, etc. of hotels has been
adopted for some hotel properties owned by SAR and variable rents are unlikely to occur as of the end of(Note 4) The underlying assets are trust beneficiary interests in a trust mainly comprised of The Royal Garden Residence Shirokanedai.
(Note 5) The underlying assets are trust beneficiary interests in a trust mainly composed of Tajimi Logistics Center.

2.	Contracted amount, etc. and fair value of derivative transactions and forward exchangetransaction(Unit: thousand yen)the 12th fiscal period due to the temporary closure of hotels and decline in occupancy rates. SAR estimates
Contract amount, etc. (Note 1)

future cash flow based on the assumption that the economic environment surrounding these properties will
Category

Type

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

Interest rate swap transaction(floating receivable; fixed payable)

19 in the future.

Total

recover moderately upon the application of impairment accounting of long-lived assets.
It is difficult to accurately predict when COVID-19 will be contained as well as the extent of its impact.

Of which, later
than 1 year

Fair value (Note 2)

72,555,000

64,405,000(106,910)

72,555,000

64,405,000(106,910)(Note 1) Contract amount, etc. of interest rate swap is based on notional principal.
(Note 2) Fair value is calculated based on the price quoted by lending financial institutions, etc.

32

33

Financial Statements
Supplementary Schedules

3. Schedule of property, plant and equipment and intangible assets

5. Schedule of investment corporation bonds(Unit: thousand yen)Tools, furniture andfixtures114

Buildings intrust

49,655,872

Structures in
trust

20,635

Machinery
Property, and equipplant and ment in trust
equipTools, furnimentture andfixtures in
trust

–

Subtotal
LeaseholdIntangible rights in trust
assetsSubtotal
Total(Note)

114

period71

28

42

3,410,209–

12,309 53,053,772 4,755,763
0

20,635

5,115

671,970721

48,298,008

Issue
date

First Series Unsecured
Investment Corporation Bonds(ranking pari passu among
specified investment corporation bonds)

September
24, 2021

97,2142,305–

99,51923,762

4,890–Interest
rate

Redemption
date

0.700%

September
21, 2028

1,000,000

Use

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

15,52075,756

Collateral

Unsecured
Repayment
andof borrowunguaranings, etc.
teed

(Note)

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

–

–

–

–

–

6. Schedule of borrowings(Unit: thousand yen)

56,654

10,891–

67,54524,9694,634

Category (Note 2)

42,576

Balance at
beginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodBalance at
end ofperiodShinsei Bank,
Limited

1,710,000–

1,710,000–

The Bank ofFukuoka, Ltd.

390,000–

390,000–

Resona Bank,
Limited.

50,000–50,000–Subtotal

2,150,000–

2,150,000–

Sumitomo Mitsui
Banking
Corporation

1,950,000–

1,950,000–

Shinsei Bank,
Limited

1,950,000–

1,950,000–

Resona Bank,
Limited.

600,000–

600,000–

Aozora Bank, Ltd.

Lender550–

166,882,935 13,655,020– 127,283,507
550

–

–

– 127,283,507––

12,859 180,525,096 4,809,682–

682,245 175,715,413

4,082,300––

4,082,300––

4,082,300

4,082,300––

4,082,300––

4,082,300

12,859 184,607,396 4,809,682(Note)

682,245 179,797,713

Breakdown of amount of increase during period for property, plant and equipment was mainly due to acquisition of following
properties.
OHA Building, Urban Center Hakata, BAGUS Ikebukuro West, Urban Park Ryogoku, Urban Park Mizonokuchi, Urban Park
Miyamaedaira, Urban Park Tsurumi

Long-term borrowings

4. Schedule of other specified assets

34–

Investment corporation bonds

170,965,235 13,655,020

Not applicable.

Balance at
Amount ofBalance at
beginning
decreaseend ofof period during period
periodName of the security(Note)

Land in trust 117,051,893 10,231,613
Constructionin progressin trust–

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

Short-term borrowings

Type of asset

Balance at
beginningof period

AmountAmount ofBalance atofincreaseend ofdecreaseduringperiodduringperiodperiod(Unit: thousand yen)

500,000–

500,000–

ORIX Bank
Corporation

1,000,000–

1,000,000–

Sumitomo Mitsui
Banking
Corporation

1,400,000––

1,400,000

Mizuho Bank, Ltd.

1,050,000––

1,050,000

Sumitomo Mitsui
Trust Bank, Limited

500,000––

500,000

Aozora Bank, Ltd.

400,000––

400,000

Shinsei Bank,
Limited

400,000––

400,000

Resona Bank,
Limited.

400,000––

400,000

Sumitomo Mitsui
Banking
Corporation

2,500,000––

2,500,000

Averageinterest Repayment Repayment
Use
rate
date
method

0.2855%

August 31,
2021

Lump sum
repaymenton repayment date

0.9384%

August 31,
2021

Lump sum
repaymenton repayment date

April 20,2022

Lump sum
repaymenton repayment dateAugust 31,
2022

Lump sum
repaymenton repayment date

0.7100%(Note 3)

Resona Bank,
Limited.

600,000––

600,000

Shinsei Bank,
Limited

2,500,000––

2,500,000

Remarks(Note 1)0.8820%(Note 4)(Note 4)(Note 4)(Note 4)

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

35

Financial Statements
Supplementary Schedules

Category (Note 2)

Balance at
beginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodBalance at
end ofperiodSumitomo Mitsui
Banking
Corporation

970,000––

970,000

Mizuho Bank, Ltd.

920,000––

920,000

Sumitomo Mitsui
Trust Bank, Limited

800,000––

800,000

LenderAozora Bank, Ltd.

36

500,000
500,000––––

500,000

Category (Note 2)
Remarks

0.7300%(Note 3)February
20, 2023

500,000

Lump sum
repaymenton repayment date

(Note 4)

Balance at
beginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodBalance at
end ofperiodSumitomo Mitsui
Banking
Corporation

850,000––

850,000

Mizuho Bank, Ltd.

750,000––

750,000

Sumitomo Mitsui
Trust Bank, Limited

700,000––

700,000

Aozora Bank, Ltd.

500,000––

500,000

Shinsei Bank,
Limited

600,000––

600,000

500,000––

500,000

Lender(Note 1)

Unsecured
andunguaranteed

500,000––

500,000

Resona Bank,
Limited.

The Bank ofFukuoka, Ltd.

500,000––

500,000

The Bank ofFukuoka, Ltd.

240,000––

240,000

Sumitomo Mitsui
Banking
Corporation

1,865,000–

1,865,000–

Mizuho Trust &Banking Co., Ltd.

200,000––

200,000

Mizuho Bank, Ltd.

1,715,000–

1,715,000–

The Nishi-Nippon
City Bank, Ltd.

500,000––

500,000

Sumitomo Mitsui
Trust Bank, Limited

1,050,000–

1,050,000–

2,200,000––

2,200,000

Aozora Bank, Ltd.

600,000–

600,000–

Sumitomo Mitsui
Banking
Corporation

Shinsei Bank,
Limited

600,000–

600,000–

Mizuho Bank, Ltd.

2,050,000––

2,050,000

Resona Bank,
Limited.

1,250,000––

1,250,000

600,000–

600,000–

Sumitomo Mitsui
Trust Bank, LimitedAozora Bank, Ltd.

700,000––

700,000

Shinsei Bank,
Limited

700,000––

700,000

Resona Bank,
Limited.

700,000––

700,000

Mizuho Trust &Banking Co., Ltd.

400,000––

400,000

Sumitomo Mitsui
Banking
Corporation

450,000––

450,000

The Nishi-Nippon
City Bank, Ltd.

500,000––

500,000

Shinsei Bank,
Limited

450,000––

450,000

Aozora Bank, Ltd.

200,000––

200,000

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

Shinsei Bank,
Limited

600,000––

600,000

Resona Bank,
Limited.

600,000––

600,000

The Bank ofFukuoka, Ltd.

170,000–

170,000–

The Dai-ichi Life
Insurance
Company, Limited

500,000–

500,000–

Mizuho Trust &Banking Co., Ltd.

200,000–

200,000–

Sumitomo Mitsui
Banking
Corporation

1,950,000––

1,950,000

Shinsei Bank,
Limited

1,950,000––

1,950,000

Aozora Bank, Ltd.

800,000––

800,000

Resona Bank,
Limited.

400,000––

400,000

Sumitomo Mitsui
Banking
Corporation

500,000––

500,000

Mizuho Bank, Ltd.

450,000––

450,000

Sumitomo Mitsui
Trust Bank, Limited

700,000––

700,000

Aozora Bank, Ltd.

500,000––

500,000

Shinsei Bank,
Limited

600,000––

600,000

Resona Bank,
Limited.

500,000––

500,000

The Bank ofFukuoka, Ltd.

250,000––

250,000

The Nishi-Nippon
City Bank, Ltd.

500,000––

500,000

October 20,
0.5355%2021

1.0778%0.6095%(Note 3)February28, 2023

March 22,2022

Lump sum
repaymenton repayment date

Lump sum
repaymenton repayment date

Lump sum
repaymenton repayment date

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

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

The Bank ofFukuoka, Ltd.

Averageinterest Repayment Repayment
Use
rate
date
method

0.8120%0.7532%(Note 3)0.7685%0.7588%(Note 3)500,000––

500,000

Remarks(Note 1)

(Note 3)

Resona Bank,
Limited.

Long-term borrowings

Long-term borrowings

Shinsei Bank,
LimitedAverageinterest Repayment Repayment
Use
rate
date
method0.5360%(Note 3)September
20, 2023

Lump sum
repaymenton repayment date

April 22,2024

Lump sum
repaymenton repayment date

May 31,2022

Lump sum
repaymenton repayment date

April 21,2025

Lump sum
repaymenton repayment dateFebruary29, 2024

Lump sum
repaymenton repayment date

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

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

37

Financial Statements
Supplementary Schedules

Balance at
beginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodBalance at
end ofperiodSumitomo Mitsui
Banking
Corporation

2,150,000––

2,150,000

Mizuho Bank, Ltd.

2,000,000––

2,000,000

LenderAozora Bank, Ltd.
Sumitomo Mitsui
Trust Bank, Limited
The Nishi-Nippon
City Bank, Ltd.

Long-term borrowings

Resona Bank,
Limited.

38

1,500,000
1,000,000

–
–

–
–

1,500,000
1,000,000

1,000,000––

1,000,000

600,000––

600,000

Resona Bank,
Limited.

400,000

Sumitomo Mitsui
Banking
Corporation

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––

400,000––

Averageinterest Repayment Repayment
Use
rate
date
methodCategory (Note 2)
Remarks

0.6975%(Note 3)

August 29,
2025

October 29,
0.2855%2021

Lump sum
repaymenton repayment date

Lump sum
repaymenton repayment date

(Note 4)(Note 4)

Unsecured
andunguaranteed

Unsecured
andunguaranteed

1,350,000
0.6850% October 31,(Note 3)2025

Lump sum
repaymenton repayment date

Lump sum
repaymenton repayment date

(Note 4)

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Balance at
beginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodBalance at
end ofperiodSumitomo Mitsui
Banking
Corporation–

750,000–

750,000

Mizuho Bank, Ltd.

–

750,000–

750,000

Lender(Note 1)Long-term borrowings

Category (Note 2)

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–

1,150,000

Mizuho Bank, Ltd.

–

540,000–

540,000

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

Mizuho Bank, Ltd.

–

500,000–

500,000

Shinsei Bank,
Limited

–1,500,000–

1,500,000

Aozora Bank, Ltd.

–

500,000–

500,000

San ju San Bank,
Ltd.

–

500,000–

500,000

Sumitomo Mitsui
Banking
Corporation–

932,500–

932,500

Mizuho Bank, Ltd.

–857,500–

857,500

Shinsei Bank,
Limited

–300,000–

300,000

Sumitomo Mitsui
Trust Bank, Limited–

525,000–

525,000

1,000,000

Shinsei Bank,
Limited

600,000––

600,000

Aozora Bank, Ltd.

600,000––

600,000

Sumitomo Mitsui
Trust Bank, Limited

550,000––

550,000

Sumitomo Mitsui
Banking
Corporation

750,000––

750,000

Aozora Bank, Ltd.

–

300,000–

300,000

Mizuho Bank, Ltd.

750,000––

750,000

Resona Bank,
Limited.

–100,000–

100,000

Sumitomo Mitsui
Trust Bank, Limited

500,000––

500,000

The Bank ofFukuoka, Ltd.

–

170,000–

170,000

The Kiyo Bank,
Ltd.

500,000––

500,000

Mizuho Trust &Banking Co., Ltd.

–

100,000–

100,000

Fukoku Mutual Life
Insurance
Company

500,000––

500,000

The Dai-ichi Life
Insurance
Company, Limited–

500,000–

500,000

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 Bank of
Yokohama, Ltd.

–

500,000–

500,000

The Minato Bank,
Ltd.

–

750,000–

750,000–

1,000,000

0.7025%(Note 3)0.9455%(Note 3)0.6780%(Note 3)

April 30,
2026

April 28,
2028

August 19,
2026

Lump sum
repaymenton repayment date

Lump sum
repaymenton repayment date

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

Unsecured
andunguaranteed

Remarks(Note 1)

August 21,
2028

Lump sum
repaymenton repayment dateAugust 31,
2026

Lump sum
repaymenton repayment dateAugust 31,
2028

Lump sum
repaymenton repayment date

October 21,
0.4541%2024

Lump sum
repaymenton repayment date

0.8894%(Note 3)0.6955%(Note 3)

The Bank of
Yokohama, Ltd.

–

Averageinterest Repayment Repayment
Use
rate
date
method

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

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed39

Financial Statements

Financial Statements

Supplementary Schedules

Independent Auditor’s Report

Category (Note 2)

Balance at
beginningof period

Amount ofincreaseduringperiodAmount ofdecreaseduringperiodBalance at
end ofperiodSumitomo Mitsui
Banking
Corporation–

932,500–

932,500

Mizuho Bank, Ltd.

–857,500–

857,500

Shinsei Bank,
Limited

–300,000–

300,000

Long-term borrowings

LenderSumitomo 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

80,290,000

22,050,000

13,700,000

88,640,000

82,440,000

22,050,000

15,850,000

88,640,000

Subtotal
Total

Averageinterest Repayment Repayment
Use
rate
date
methodRemarks(Note 1)0.7505% October 20,(Note 3)2026

Lump sum
repaymenton repayment date

(Note 4)

Unsecured
andunguaranteed(Note 1) Average interest rate is the day-weighted average rate during the fiscal period.
(Note 2) Long-term borrowings includes current portion of long-term borrowings.
(Note 3) Interest rate swap transactions are undertaken to hedge against the risk of interest rate fluctuations. Interest rate taking into consideration the effect of interest rate swaps (interest rate fixation) is indicated.
(Note 4) Funds are used for acquisition funds of beneficiary interest in trust, repayment of borrowings, etc.
(Note 5) The yearly schedule of repayment for long-term borrowings within five years of the balance sheet date is as follows:(Unit: thousand yen)

Long-term borrowings

40

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

Later than 2
years and notlater than 3
years

Later than 3
years and notlater than 4
years

Later than 4
years and notlater than 5
years

15,350,000

14,630,000

12,285,000

19,150,000

17,175,000

41Financial Statements
Independent Auditor’s Report4243