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

Semi-Annual Reportfor the 14th Fiscal Period
from August 1, 2022 to January 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 14th Fiscal Period (As of the end of January 2023)
TOKYO AREA

Contents
To Our Unitholders 

2Initiatives Related to ESG 

4

Portfolio Overview 

6Financial Summary 

8Balance Sheet 

10Statement of Income and Retained Earnings 

12Statement of Changes in Unitholders' Equity 

13Statement of Cash Distributions 

15Statement of Cash Flows 

16

Notes to Financial Statements 

Operating revenue

Operating income

Ordinary income

Net income

6,486 million yen

3,349 million yen

2,782 million yen

2,781 million yen

Actual and Forecasted Cash Distribution Per Unit
STABILITY
11th FP Actual

12th FP Actual

13th FP Actual

1,462 yen

1,478 yen

1,476 yen

17

14th FP Actual

15th FP Forecast

16th FP Forecast

Supplementary Schedules 

34

Independent Auditor’s Report 42

1,491 yen

1,552 yen

1,513 yen

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

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

Amendment to the Management Guidelines
Star Asia Investment Corporation
Executive Director

Atsushi KatoIn order to further accelerate external growth, we amended the Management Guidelines, which are the basic rules
for investment management at the Asset Manager, in March 2023. There are no changes to the main investment
policies, which are (1) Prioritized and concentrated investments in the Tokyo Area (Note 1) / Tokyo Area ratio of 70% or
more, (2) Achieve “stability” and “growth” of revenues by diversifying asset type (uses), and (3) Investment mainly in
middle-sized assets (Note 2), however, the definition of investment target areas has been mainly changed. Suchamendment was made as we believe that the impact on all assets under management of individual properties has
decreased and risk tolerance has expanded due to the expansion of the portfolio of assets under management.
(Note 1) The definition of Tokyo Area has been changed within the amendment of the Management Guidelines this time. For details, pleaserefer to the table below.

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 August 2022, the beginning of the fiscal period under review (fiscal period ended January 2023),(Note 2) Defined in the Management Guidelines as properties whose purchase price is less than 10 billion yen.

<Before amendment>
Area Classification

the medium-term management plan of “increasing the asset size to 300 billion yen by 2026” (formulated in March
2021). Most recently, SAR carried out the eighth asset replacement (sale of logistics facility and acquisition of mezzanine loan debt) in February 2023. As a result, the asset size as of the end of March 2023 increased to 194.8
billion yen (62 properties, etc. and 2 mezzanine loan debt investments), and the profitability of assets under man-Tokyo, Kanagawa, Saitama, and Chiba prefectures

Greater Tokyo Area

Main cities in Suburban Tokyo (other than the 23 wards),
Kanagawa prefecture (excluding Kawasaki-shi and Yokohama-shi),and Saitama prefecture

Osaka Area

Osaka-shi, Osaka prefecture

Nagoya Area

Nagoya-shi, Aichi prefecture

Fukuoka Area

Fukuoka-shi, Fukuoka prefecture

Sapporo Area

Sapporo-shi, Hokkaido prefecture

Other ordinance-designatedcitiesSendai-shi, Miyagi prefecture, Niigata-shi, Niigata prefecture,
Kyoto-shi, Kyoto prefecture, Sakai-shi, Osaka prefecture,
Kobe-shi, Hyogo prefecture, Hiroshima-shi, Hiroshima prefecture,
Kitakyushu-shi, Fukuoka prefecture

agement was further stabilized. We will continue to focus on the acquisition of properties with potential internal
growth capacity and mezzanine loan debt that are expected to increase cash distributions and pursue further revenue stability as well as promote external growth to achieve our medium-term management plan.

Specific Investment Target Areas
Tokyo 23 wards, Kawasaki-shi, Yokohama-shi

Tokyo Area

SAR executed property acquisition (three properties/ total acquisition price: 15.1 billion yen) through a public offering for the second consecutive year after the formulation of the medium-term management plan in order to achieve

Concept of Investment Target Areas
Investment Ratio
70% or more

Less than 30%

Furthermore, SAR continues to implement initiatives related to ESG to achieve the SDGs. Following fiscal 2021,
SAR participated in the GRESB Real Estate Assessment in fiscal 2022 and received “3 Star” and “Green Star.” In
addition, SAR continues to acquire environmental certifications for its properties, and the acquisition rate of environmental certifications has increased to 42.7% as of January 31, 2023 (target of acquisition of environmental certification: 50% by 2026). Moreover, SAR has set numerical targets regarding the environment, and the status for<After amendment>
Area Classification
Tokyo Area

(S) and governance (G), and will further strengthen its initiatives related to ESG to fulfill its responsibilities as a REIT
with a public nature, in parallel with the pursuit of maximizing unitholders’ interests.
For the 14th Fiscal Period, as a result of conducting management pursuing maximization of unitholders’ interests
as well as seeking to increase profitability of its properties and cost reduction, SAR posted operating revenue of
6,486 million yen, ordinary income of 2,782 million yen, net income of 2,781 million yen and cash distribution per

Tokyo, Kanagawa, Saitama, and Chiba prefectures
Osaka Area

fiscal 2021 can be seen on SAR’s website. SAR continues to implement initiatives on the environment (E), society
Major
Metropolitan
Areas

Specific Investment Target Areas

Nagoya Area
Fukuoka Area

Osaka-shi, Osaka prefecture *Nagoya-shi, Aichi prefecture *Fukuoka-shi, Fukuoka prefecture *Ordinance-designated cities other than the above investment target areas

Investment Ratio
In principle,
70% or more
In principle,
less than 30%
In principle,
less than 10%* For residences and logistics facilities, also includes the neighboring areas*F or logistics facilities, areas other than the above investment target areas can be invested in, if it is determined that tenant demand will
be high in the medium term

unit of 1,491 yen.
2

3

Initiatives Related to ESG
Social Initiatives

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

Regional Contribution and Improvement of Tenant Satisfaction

estate investment management business while giving consideration to the environment, society, and gover-

Collaborate with other businesses in the area
and the municipality, and contribute to theneighboring areas

nance 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 accor-

Displayed posters at held properties forthe “Human Rights Week” promoted by
the human rights protection institute of the
Ministry of Justice. Conducted awareness-raising activities to disseminate andpromote the idea of respecting human rights

dance with our basic philosophy of “Client First.”

External Evaluation

Tenant satisfaction surveys

GRESB Real Estate Assessment
Haruki Area Danjiri Festival(provided as a resting place)In the 2022 GRESB Real Estate Assessment, SAR received a “3 Star” rating in GRESB
Rating, which is based on GRESB Overall Score and its quintile position relative to global

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.

2022 Citizen’s Movement
Promotion Council to
Beautify the Town

participants. It also won a “Green Star” designation by achieving high performance both in“Management Component” that evaluates policies and organizational structure for ESG promotion, andGovernance Initiatives“Performance Component” that assesses environmental performance and tenant engagement of properties owned.
As ESG disclosure initiatives were highly evaluated, SAR also received the highest “A Level” for GRESB Public

Asset Management Fees

Disclosure, which assesses the width of ESG disclosure. Based on the ESG Policy, we will continue to pursue ini-

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

tiatives that give further consideration to environment, society and governance through maintaining and improving

services as of the end of each fiscal period is composed of Management Fee I which is linked to the balance ofthe rating of the GRESB Real Estate Assessment.

assets under management, and Management Fee II which is linked to management performance (net income of
the managed properties: NOI).

Third-Party Evaluation of the Green Finance Framework
SAR formulated the “Green Finance
Framework” for the issuance of green
finance including green bonds, andobtained a “Green 1 (F)” evaluation, which is
the highest rank under the JCR Green
Finance Framework Evaluation, from Japan
Credit Rating Agency, Ltd. (JCR). Funds
procured through green finance will beappropriated to the acquisition of properties
which satisfy the eligibility criteria stipulated
in the framework, implementation of renovation works, or refinancing of such funds.

In order to incentivize increase in cash distributions to investors (increase NOI), the fee structure is designed so that

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

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)

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

Department
ProposalCompliance Officer

parency by complying with laws andregulations
Goals

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

Calculation formula

Acquisition fee Acquisition price x 1% (Note 1) (upper limit)• Implement decision-making with high trans-

Acquisition of Environmental Certifications As of January 31, 2023
Building-Housing Energy-Efficiency
Labeling System (BELS)

Fees for daily
management operations

Decision-Making Process

Environmental Initiatives

DBJ Green Building
Certification

the ratio of Management Fee II is higher.

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★★★ 1 property★★ 5 properties★ 2 properties4★★★ 1 property★★ 1 property (Note1)
Acquisition ratio (Note 2) 42.7%★★★★★ 1 property★★★★ 2 properties(Note 1) Even in cases where a property with multiple
buildings acquires certifications at each building, it is counted as one property.
(Note 2) Ratio of each floor area to the gross floor areaof SAR portfolio (547,221.14 m2).

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, 2023)
RSC-13

RSC-14

RSC-15

Minami-Azabu
Shibuya Building

OFC-01

Honmachibashi
Tower

Nishi-Shinjuku
Matsuya Building

Shibuya MK Building

Asahi Building

Hakata-eki
East PlaceUrban Park Sekime

Urban Park Imazato

Urban Park Yoyogi

Urban Park
Tokiwadai Koen

Urban Park
Mitsuike Koen

Urban Park Ryogoku

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: Aug. 18, 1989

Completed: Dec. 20, 1991

Completed: Sep. 4, 2017

Completed: Feb. 17, 1994

Completed: Mar. 24, 1992

Completed: Oct. 31, 1997

OFC-10

OFC-03

OFC-12

OFC-06

OFC-13

OFC-08

RSC-19

RSC-20

LGC-02

LGC-03Seishin BLDG.

Urban Center
Kanda Suda-cho

Urban Park
Mizonokuchi

Urban Park
Miyamaedaira

Urban Park Tsurumi

Iwatsuki Logistics

Yokohama Logistics

Funabashi Logistics

Completed: Jul. 13, 1992

Completed: Nov. 2, 1994

Completed: Jan. 6, 1992

Completed: Jan. 25, 1999

Completed: Mar. 31, 1989

Completed: Oct. 28, 1991

Completed: 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)

OFC-17

OFC-18

LGC-09

LGC-10Urban Center Kanda
Tsukasamachi

Takadanobaba
AccessAzabu Amerex
BLDG.

Hiei-Kudan BLDG.

Urban Center
Shin-Yokohama

The Portal Akihabara

Baraki Logistics

Tokorozawa
Logistics

Funabashi Nishiura
Logistics II

Matsubushi
Logistics

Funabashi Hi-Tech
Park Factory I

Funabashi Hi-Tech
Park Factory II (Note)

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: 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: Sep. 5, 2001

OFC-23

OFC-24

Urban Center
Fujisawa

La Park Kishiwada

Suroy Mall
Chikushino

Seiyu Minakuchi

R&B Hotel
Umeda East

Smile Hotel Namba

REMBRANDT STYLETokyo Nishikasai

BEST WESTERN
Yokohama

The BREAKFAST HOTELFUKUOKA TENJIN

GLANSITAKIHABARA

Completed: May 30, 1990

Completed: Aug. 27, 2020

Completed: Apr. 9, 1991

Completed: Aug. 30, 1994

Completed: Jun. 22, 2007

Completed: May 31, 1999

Completed: Oct. 20, 2000

Completed: Feb. 6, 2008

Completed: Mar. 19, 1991

Completed: Sep. 21, 1987

Completed: Feb. 20, 2017

Completed: Sep. 20, 2017

RTL-06

RSC-01

Urban Park
Azabujuban

Completed: Nov. 20, 1992

Completed: Jan. 31, 2012

Completed: Nov. 29, 1999

RSC-07

RSC-08

RSC-09

HTL-01

HTL-02

RSC-02

RSC-05

RSC-06

HTL-07

Urban Park Daikanyama

Urban Park Namba

Urban Park Gokokuji

KOKO HOTEL
Osaka Namba

abeno nini (Hotel)

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

REMBRANDT STYLETokyo Nishikasai GrandeCompleted: Jan. 9, 2013

Completed: Feb. 28, 1990

Completed: Feb. 7, 2017

Completed: Apr. 7, 2017

Completed: Jan. 31, 2012

RSC-10

RSC-11

Urban Park Kashiwa

Urban Park
Ryokuchi Koen

Urban Park Koenji

Urban Park Ichigao

Urban Park Gyotoku

Shiroi LogimanCompleted: Aug. 28, 1997

Completed: Mar. 10, 1989

Completed: Oct. 13, 1987

Completed: Jul. 10, 1998

Completed: Mar. 24, 1995

Completed: May 9, 1995

HTL-08

HTL-03

LGC-08

Urban Center
Hakataabeno nini (Retail)RTL-03

LGC-07

OFC-22

RTL-05

RTL-02

LGC-05

Urban Center
Tachikawa

BAGUS IkebukuroWest

RTL-01

LGC-04

LGC-01

RSC-18

Amusement Media
Gakuin Shinkan

OFC-21

RSC-21

RSC-17

Higashi-KobeCenter Building

OFC-20

OFC-15

RSC-16

Amusement Media
Gakuin Honkan

OFC-19OFC-14

OFC-09

Nihonbashi Hamacho
Park Building

OFC-16

OFC-11

OFC-04

HTL-04

HTL-05

HTL-06

HTL-09

RSC-12(Note) Disposed as of February 20, 2023.

6

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.

10th Fiscal
PeriodFiscal Period

11th Fiscal
Period12th Fiscal
Period13th Fiscal
Period14th Fiscal
Period(August 1, 2020 to (February 1, 2021 (August 1, 2021 to (February 1, 2022 (August 1, 2022 toJanuary 31, 2021) to July 31, 2021) January 31, 2022) to July 31, 2022) January 31, 2023)

Operating revenue(million yen)

6,672

5,560

5,960

6,088

6,486

Operating revenue from real estate leasing (million yen)

5,648

5,536

5,890

6,060

6,463

(million yen)

3,295

2,721

2,872

3,041

3,136

(million yen)

2,179

2,189

2,311

2,494

2,556

Operating income(million yen)

3,376

2,838

3,087

3,047

3,349

Ordinary income(million yen)

2,911

2,407

2,517

2,560

2,782

Net income(million yen)

11,801

2,407

2,516

2,559

2,781

Total assets(million yen)

179,789

179,170

193,316

193,488

208,766(%)(59.1)(-0.3)

(7.9)

(0.1)

(7.9)

(million yen)

89,60089,17995,753

95,803

103,455(%)(64.1)(-0.5)

(7.4)

(0.1)

(8.0)

Interest-bearing debt

(million yen)

82,44082,44089,64089,64096,840Unitholders’ capital(million yen)

52,74552,745

59,115

59,115

66,123

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

1,674,389

1,789,389

1,789,389

1,921,689

Net assets per unit

(yen)

53,51253,26053,51153,53953,835(million yen)

2,806

2,447

2,644

2,641

2,865

(yen)

1,676

1,462

1,478

1,476

1,491

Cash distribution of earnings per unit

(yen)

1,676

1,462

1,478

1,476

1,491

Cash distributions in excess of earnings
per unit

(yen)

–

–

–

–

–

Ratio of ordinary income to total assets (Note 3)

(%)

2.0

1.3

1.4

1.3

1.4

[Annualized]

(%)

(3.9)

(2.7)

(2.7)

(2.7)

(2.7)

(%)

16.4

2.7

2.7

2.7

2.8

(%)

(32.5)

(5.4)

(5.4)

(5.4)

(5.5)

(%)

49.8

49.8

49.5

49.5

49.6

(1.5)

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

(0.0)

(%)

23.8

101.7

105.1

103.2

103.0

(days)

184

181

184

181

184

Number of properties at end of period(properties)

53

53

60

60

63

Depreciation(million yen)

628

633

682

697

743

Capital expenditures(million yen)

331

363

424

471

605

(million yen)

4,097

3,980

4,261

4,263

4,650

(million yen)

2,564

3,040

3,199

3,257

3,525

(yen)

1,531

1,815

1,787

1,820

1,834

(%)

45.9

46.0

46.4

46.3

46.4

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

Total cash distribution
Cash distribution 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 distribution per unit (excluding cash distribution 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 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 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)

13th fiscal period

14th fiscal period

13th fiscal period

14th fiscal period(As of July 31, 2022)(As of January 31, 2023)(As of July 31, 2022)(As of January 31, 2023)

662,398

906,069

16,390,000

15,630,000

AssetsLiabilities

Current assets

Current liabilities

Cash and deposits

4,265,178

3,488,637

Operating accounts payable

Cash and deposits in trust

8,075,474

8,549,954

Current portion of long-term borrowings

Operating accounts receivable

137,598

147,713

Accounts payable - other495,977

539,516

Prepaid expenses

196,009211,249

Accrued expenses

59,09977,453–

181,189

Income taxes payable

605

605

9,011

7,000

Accrued consumption taxes

234,089

47,405

12,683,272

12,585,743

Advances received

974,728

1,019,524

Others36,80434,89918,853,703

18,255,474

Consumption taxes receivable
OthersTotal current assets
Non-current assets
Property, plant and equipment
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Buildings in trust

Total current liabilities
114

114

Non-current liabilities

(100)

(114)

14

0

53,471,574

56,299,699

Leasehold and guarantee deposits received

Investment corporation bonds

1,000,000

1,000,000

Long-term borrowings

72,250,000

80,210,000

5,187

5,880

5,559,508

5,840,152

16,759–78,831,455

87,056,032

97,685,158

105,311,507

59,115,701

66,123,367

25,132,218

25,132,218*2 8,713,411*2 8,624,499

8,713,411

8,624,499

Accumulated depreciation(5,441,732)(6,169,727)

Leasehold and guarantee deposits received in trust

Buildings in trust, net

48,029,841

50,129,971

Others21,64025,348(5,856)(6,646)Structures in trust
Accumulated depreciation
Structures in trust, net

Total non-current liabilities
Total liabilities
Net assets

15,78418,702

Machinery and equipment in trust

119,343

163,565

Accumulated depreciation(28,905)(35,247)

Unitholders’ capital

Machinery and equipment in trust, net

90,437

128,318

SurplusTools, furniture and fixtures in trust

100,966

125,782

Unitholders’ capital surplus

Accumulated depreciation(30,688)(39,013)

Voluntary reserve

Tools, furniture and fixtures in trust, net

70,27886,768127,283,507

140,397,333

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

–

1,282

175,489,864

190,762,377

Intangible assets

Unitholders’ equity

Reserve for temporary difference adjustment
Total voluntary reserve
Unappropriated retained earnings (undisposed loss)

2,813,756

3,043,461

Total surplus

36,659,386

36,800,179

95,775,087

102,923,546
531,551

Total unitholders’ equity

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

28,297

Total valuation and translation adjustments

28,297

531,551* 95,803,384* 103,455,098

193,488,543

208,766,606

Investments and other assets
Investment securities

800,000

400,000

Long-term prepaid expenses

337,433

330,923

Leasehold and guarantee deposits

10,35910,359Others45,353533,969

1,193,146

1,275,251

180,765,311

196,119,929

Investment corporation bond issuance costs

12,583

11,563

Investment unit issuance costs

27,37549,370Total 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

39,95960,933

193,488,543

208,766,606
11

Financial Statements

Financial Statements

Statement of Income and Retained Earnings

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

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

13th fiscal period

14th fiscal period(From February 1, 2022
to July 31, 2022)(From August 1, 2022
to January 31, 2023)*1 5,611,196*1 5,995,567* 449,218* 467,828

28,52522,857

6,088,939

6,486,253*1 2,494,593*1 2,556,151

Asset management fee

392,584

424,410

Asset custody and administrative service fees

38,42840,528

Directors’ compensations

2,400

2,400

Other operating expenses

113,213113,204

Total operating expenses

3,041,220

3,136,696

3,047,719

3,349,557

55

56

1,470

1,476

Operating revenue
Rental revenue
Other lease business revenue
Other revenue
Total operating revenue

1

Expenses related to rent business

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

262

1Gain on donation of non-current assets

516

–

2,305

1,534

Total non-operating income
Non-operating expenses
Interest expenses

338,087

372,916

3,500

3,500

140,164

178,507

Amortization of investment corporation bond issuance costs

1,020

1,020

Amortization of investment unit issuance costs

6,843

12,611

489,615

568,555

Ordinary income

2,560,409

2,782,535

Income before income taxes

2,560,409

2,782,535

Income taxes - current

605

605

Total income taxes

605

605

2,559,804

2,781,930

253,951

261,530

2,813,756

3,043,461

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

Surplus
Voluntary reserve

1

Operating expenses

Valuation andtranslation
adjustments

Unitholders’ equity

Unitholders’capitalBalance at
beginning of
the period

Unitholders’ Reserve forcapitaltemporarysurplusdifference
adjustment

59,115,701 25,132,218

8,802,324

Total
voluntary
reserve

8,802,324

Total net
assetsTotal
surplusTotal
unitholders’equityTotal
Deferred valuation
gains or and translosses onlationhedgesadjustments

2,809,755 36,744,298

95,859,999(106,910)

95,753,089(2,644,716)(2,644,716)(2,644,716)(2,644,716)

88,912–––2,559,804

2,559,804

2,559,804

2,559,804

Unappropriatedretainedearnings(undisposed
loss)(106,910)

Changes of
items during
the period
Dividends
from surplus
Reversal ofreserve fortemporarydifference
adjustment(88,912)(88,912)Net income
Net changesof items
other thanunitholders’equityTotal changesof items during
the period
Balance at
end of theperiod––(88,912)(88,912)*1 59,115,701 25,132,218

8,713,411

8,713,411

4,000

135,208

135,208

135,208(84,912)(84,912)135,208

135,208

50,2952,813,756 36,659,386

95,775,087

28,29728,29795,803,384

13Financial Statements

Financial Statements

Statement of Changes in Unitholders’ Equity

Statement of Cash Distributions

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

Valuation andtranslation
adjustments

Unitholders’ equity

Voluntary reserve

Balance at
beginning of
the period

Unitholders’ Reserve forcapitaltemporarysurplusdifference
adjustment

Total
voluntary
reserve

Unappropriatedretainedearnings(undisposed
loss)

Total
unitholders’equityTotal
surplus

Total
Deferred valuation
gains orandlosses on translation
hedgesadjustments

Total net
assets[Cash distribution per unit]
Cash distribution of earnings

59,115,701 25,132,218

8,713,411

8,713,411

2,813,756 36,659,386

95,775,087

28,29728,29795,803,384

7,007,666

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

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

Net changesof items
other thanunitholders’equityBalance at
end of theperiod14[Cash distribution of earnings per unit]
IV. Retained earnings carried forward

Dividends
from surplus

Total changesof items during
the period

Reversal of reserve for temporary
difference adjustment *1
III. Cash distribution

Changes of
items during
the period
Issuance of
new investment units

Unappropriated retained earnings

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

8,624,499

8,624,499

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

2,813,756,107

3,043,461,280

88,912,365

88,912,365

2,641,138,164

2,865,238,299(1,476)(1,491)2,641,138,164

2,865,238,299(1,476)(1,491)

261,530,308

267,135,346

II. Reversal of voluntary reserve

Surplus
Unitholders’capitalI.

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

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

Method of calculation of amount of cash
distributions

Pursuant to the cash distribution policy Pursuant to the cash distribution policy
provided in Article 35, Paragraph 1 ofprovided in Article 35, Paragraph 1 of
SAR’s Articles of Incorporation, SAR
SAR’s Articles of Incorporation, SAR
shall distribute in excess of the amount shall distribute in excess of the amountequivalent to 90% of the amount ofequivalent to 90% of the amount of
distributable earnings of SAR as defined distributable earnings of SAR as definedin Article 67-15, Paragraph 1 of the Act in Article 67-15, Paragraph 1 of the Act
on Special Measures Concerningon Special Measures Concerning
Taxation. In accordance with suchTaxation. In accordance with suchpolicy, concerning cash distribution ofpolicy, concerning cash distribution of
earnings (not including cash distribution earnings (not including cash distribution
in excess of earnings), the decision was in excess of earnings), the decision wasmade to distribute 2,641,138,164 yen, made to distribute 2,865,238,299 yen,which is equivalent to the sum of thewhich is equivalent to the sum of theamount remaining after reserving
amount remaining after reserving
7,578,913 yen from net income and the 5,605,038 yen from net income and theamount of reversal of reserve for tempo- amount of reversal of reserve for temporary difference adjustment ofrary difference adjustment of
88,912,365 yen.
88,912,365 yen.

15

Financial Statements

Financial Statements

Statement of Cash Flows

Notes to Financial Statements(Unit: thousand yen)

13th fiscal period

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

Organization
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

Cash flows from operating activities
2,560,409

2,782,535(securities code: 3468). SAR has assigned the asset management of its portfolio to Star Asia Investment

697,599743,661

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

6,843

12,611

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

(55)

(56)

341,587

376,416

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.)

Income before income taxes
Depreciation

Interest income
Interest expenses

The asset size as of the end of 14th fiscal period is 194,829 million yen (on the basis of acquisition price. The

Decrease (increase) in operating accounts receivable(49,016)(10,114)

Decrease (increase) in consumption taxes receivable

155,777(181,189)

Increase (decrease) in accrued consumption taxes

188,051(186,683)

Decrease (increase) in prepaid expenses

4,084(15,239)

Decrease (increase) in long-term prepaid expenses

13,6826,510

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

Increase (decrease) in operating accounts payable(96,424)

133,000

accepted in Japan (J-GAAP), but J-GAAP differs from international accounting standards in certain aspects ofIncrease (decrease) in accounts payable - other

4,636

32,850accounting modifications and disclosure standards.

Increase (decrease) in advances received

59,372

44,796

The financial statements attached hereto are a translation of audited financial statements prepared from SAR’s

Others

8,685(4,161)accounting records and submitted to the Kanto Local Finance Bureau in accordance with the Financial

3,896,255

3,735,958

55

56(331,966)(358,062)

2,645

42

3,566,990

3,377,994

SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities(511,417)(15,895,451)

Repayments of leasehold and guarantee deposits received

(103)

–

Proceeds from leasehold and guarantee deposits received

216

693

Repayments of leasehold and guarantee deposits received in trust(170,274)(222,276)

Proceeds from leasehold and guarantee deposits received in trust

253,030

502,920

20–

Proceeds from redemption of investment securities

122,220400,000

Net cash used in investing activities(306,308)(15,214,114)

Proceeds from short-term borrowings

500,000–

Repayments of short-term borrowings(500,000)–

Proceeds from long-term borrowings

9,750,000

12,800,000

Repayments of long-term borrowings(9,750,000)(5,600,000)–

6,973,060

Dividends paid

(2,645,197)(2,639,001)

Net cash provided by (used in) financing activities(2,645,197)

11,534,058

615,484(302,061)

Proceeds from collection of leasehold and guarantee deposits

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

Cash flows from investing activities
Purchase of property, plant and equipment in trust

Basis of Presentation

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

Notes on the Going Concern Assumption
Not applicable.

Cash flows from financing activities

Proceeds from issuance of investment units

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

11,725,168

12,340,653*1 12,340,653*1 12,038,591
17Financial Statements
Notes to Financial Statements

Notes on Matters Relating to Significant Accounting Policies
1. Evaluation standards and methods of valuation of securities
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 byThose with market pricededucting the amount it pays to other parties from the amount it receives as charges for electricity andFair 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:gas, etc. supplied by the said other parties is recognized as revenue.

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
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.

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

Concerning beneficiary interest in trust for real estate, etc. held, all accounts of assets and liabilities withinof acquisition of the related real estate, etc. In the fiscal period under review, the amount equivalent to fixed

trust assets as well as all accounts of revenue and expenses from the trust assets are recognized in theproperty tax, etc. included in the cost of acquisition of real estate, etc. was 19,049 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 in1) Sale of real estate

trust; Land in trust; Construction in progress in trust

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

3) Leasehold rights in trust

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

4) Leasehold and guarantee deposits received in trust

stipulated in the transaction agreement of the real estate.

(2) Accounting for consumption taxes
Non-deductible consumption tax on acquisition of assets is included in the acquisition cost of each asset.

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)

13th fiscal period

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

4,829,210

5,182,484

Common area maintenance revenue

544,319570,233

Parking revenue

201,621204,917

Facility use revenue

30,60831,533

Other rental revenue

5,436

6,399

5,611,196

5,995,567

Utilities income

314,831419,588

Other revenue

134,386

48,240449,218

467,828

6,060,414

6,463,396

Management fee

449,514441,402

Utilities expenses

343,623

462,373

Property taxes

458,313458,246

Repair expenses

255,200

173,257

Trust fee

25,175

26,166

Insurance premium

12,855

13,598Depreciation

697,599743,661

Other expenses

252,311

237,444

Total operating expenses from real estate leasing

2,494,593

2,556,151

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

3,565,820

3,907,244(Unit: thousand yen)

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

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

50,00050,000

A. Operating revenue from real estate leasing*2 Matters on provision and reversal of reserve for temporary difference adjustment
13th fiscal period (As of July 31, 2022)(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

8,802,324–

88,912

8,713,411

Appropriate for distribution

14th fiscal period (As of January 31, 2023)
Reversal
Provision
Balance at
Initial amount beginning of amount during amount during
the period
the period
the period
8,891,236

8,713,411

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

8,624,499

Appropriate for distribution

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

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

20

13th fiscal period

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

Total number of investment units authorized

10,000,000 units

10,000,000 units

Total number of investment units issued and outstanding

1,789,389 units

1,921,689 units

21

Financial Statements
Notes to Financial Statements

Notes to the Statement of Cash Distributions

Notes on Financial Instruments

13th fiscal period

14th fiscal period(From February 1, 2022 to July 31, 2022)(From August 1, 2022 to January 31, 2023)*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.

1. Matters relating to status of financial instruments(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 Flows

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*1	Reconciliation of cash and cash equivalents at end of the period to the amount of balance
sheet itemswith floating interest rates are exposed to interest rate fluctuation risk, but derivative transactions (interest
rate swap transactions) are utilized as hedging instruments to, in effect, convert interest rates to fixed rates(Unit: thousand yen)

13th fiscal period

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

Cash and deposits

4,265,178

3,488,637

Cash and deposits in trust

8,075,474

8,549,954

Cash and cash equivalents

12,340,653

12,038,591

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.

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

Notes on Lease Transactions

The carrying amount, fair value and the amount of difference between them, are as follows. Because “cash andOperating leases (as lessor)

deposits” and “cash and deposits in trust” are cash and settled in a short period of time and the fair values

Future minimum lease payments

approximate the book values accordingly, notes on such are omitted.
(Unit: thousand yen)

13th fiscal period

14th fiscal period(As of July 31, 2022)(As of January 31, 2023)

Not later than 1 year

5,379,733

5,287,040

Later than 1 year

7,047,465

7,653,000

Total

12,427,198

12,940,040

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

Carrying amount

Difference(1) Current portion of long-term borrowings

16,390,000

16,394,349

4,349(2) Investment corporation bonds

1,000,000

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

72,250,000

72,241,065(8,934)

89,640,000

89,629,914(10,085)

28,29728,297–

Liabilities total(4) Derivative transactions **1

22

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

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

Carrying amount

Fair value

Difference(1) Current portion of long-term borrowings

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)

Liabilities total

96,840,000

96,719,050(120,949)(4) Derivative transactions *1

531,551

531,551–*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.

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

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

Carrying
amount lessthan or equal
to acquisition
cost

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

Difference

–

–

–

1) Government bonds, municipal bonds, etc.

–

–

–

2) Corporate bonds

–

–

–

3) Others–––(3) Others

–

–

–

Subtotal–––(1) Stocks

–

–

–

–

–

–

800,000

800,000

–

–

–

–

(3) Others

–

–

–

Subtotal

800,000

800,000–

800,000

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

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

Carrying amount Acquisition cost

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

Not later
than 1 year
Investment corporation bonds

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

1,000,000

Long-term borrowings

16,390,000

13,340,000

11,085,000

17,810,000

19,965,000

10,050,000

Total

16,390,000

13,340,000

11,085,000

17,810,000

19,965,000

11,050,000

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

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(Unit: thousand yen)

Later than
5 years–

Not later
than 1 year

14th fiscal period (As of January 31, 2023)
Category(1) Stocks
Carrying
amountgreater thanacquisition
cost

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

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

–

–

–

–

–

–

400,000

400,000

–

–

–

–

(3) Others

–

–

–

Subtotal

400,000

400,000–

400,000

400,000–(2) Bonds(2) Bonds
1) Government bonds, municipal bonds, etc.
2) Corporate bonds3) Others

25

Financial Statements
Notes to Financial Statements

Notes on Derivative Transactions

Notes on Tax-Effect Accounting

1. Derivative transactions to which hedge accounting is not applied

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

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

14th fiscal period(As of July 31, 2022)(As of January 31, 2023)

1,148,955

1,123,529

Acquisition cost of securities

2,923

1,284

Deferred gains or losses on hedges

5,365

760

204

–

Not applicable.
14th fiscal period (As of January 31, 2023)

Deferred tax assets
Valuation adjustment upon merger

Not applicable.

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

Otherclosing date for each hedge accounting approach.

Deferred tax assets, subtotal

1,157,448

1,125,574

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

Valuation allowance(1,157,448)(1,125,574)

–

–

–

–

(Unit: thousand yen)

Hedge accounting
approachPrinciple method of
accounting

Type, etc. of derivativetransaction

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

Interest rate swap transaction
Long-term(floating receivable; fixedborrowings
payable)Of which, later
than 1 year
64,405,000

59,715,000

Deferred tax assets, total
Deferred tax assets, net

Fair value(Note 2)

2.	Breakdown of major components that caused any significant differences between thestatutory tax rate and the effective income tax rate after application of tax-effect accounting

28,297(Unit: %)13th fiscal period

14th fiscal period(As of July 31, 2022)(As of January 31, 2023)

31.46

31.46

Deductible distributions payable(30.61)(30.66)

Reversal of excess depreciation(0.77)(0.70)

Other(0.05)(0.08)

Effective income tax rate after application of tax-effect accounting

0.02

0.02

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

Statutory tax rate

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

[Adjustments]

14th fiscal period (As of January 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
77,205,000(Note 1) Contract amount, etc. are based on notional principal.
(Note 2) Fair value is calculated based on the price quoted by lending financial institutions, etc.

Notes on Retirement Benefits

67,675,000

Fair value(Note 2)531,551

Notes on Share of Profit or Loss of Entities Accounted for Using Equity Method, etc.
13th fiscal period (As of July 31, 2022)
Not applicable.
14th fiscal period (As of January 31, 2023)
Not applicable.

13th fiscal period (As of July 31, 2022)
Not applicable.
14th fiscal period (As of January 31, 2023)
Not applicable.

26

27

Financial Statements
Notes to Financial Statements

Notes on Related-Party Transactions

Notes on Asset Retirement Obligations
13th fiscal period (from February 1, 2022 to July 31, 2022)

1. Parent company, major corporate unitholders, etc.

Not applicable.

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

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

Not applicable.

Not applicable.

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

Notes on Investments in Rental Properties

2. Affiliated companies, etc.

SAR owns rental real estate, etc. for the purpose of earning revenue from leasing. The carrying amount, amount13th fiscal period (from February 1, 2022 to July 31, 2022)

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

Not applicable.

(Unit: thousand yen)

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

13th fiscal period

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

179,797,713

179,572,164(225,548)

15,271,229

179,572,164

194,843,394

195,794,000

214,581,000

Carrying amount

3. Fellow subsidiaries, etc.

Balance at beginning of the period

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

Amount of increase (decrease) during the period

Not applicable.

Balance at end of the period

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

Fair value at end of the period

Not applicable.

(Note 1) Carrying amount is the amount of the cost of acquisition, less accumulated depreciation.

4. Directors, major individual unitholders, etc.
13th fiscal period (from February 1, 2022 to July 31, 2022)(Unit: thousand yen)

Category

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

Director,or close
relative of
director

Atsushi
Kato––

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

0.03%

Payment ofasset management fee
to the AssetManager (Note 1)

392,584(Note 2)

Account
item

Accounts
payable- other

Balanceat end oftheperiod431,842(Note 2)

(Note 2) Of the amount of increase (decrease) in investments in rental properties during the 13th fiscal period, the amount of increase ismainly attributable to capital expenditures (471,534 thousand yen), while the amount of decrease is mainly attributable to depreciation (697,599 thousand yen). Of the amount of increase (decrease) during the 14th fiscal period, the amount of increase is mainly
attributable to acquisition of real estate beneficiary interest in trust of three properties (15,409,595 thousand yen) and capital
expenditures (605,932 thousand yen), while the amount of decrease is mainly attributable to depreciation (743,661 thousandyen).
(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.

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

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- other

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)

(Note 1) The transaction was conducted by Atsushi Kato as President and CEO of a third party (the Asset Manager), and the transaction
amount is based on the terms and conditions provided in the Articles of Incorporation of SAR.
(Note 2) Of the amounts above, the transaction amount does not include consumption tax, while the balance at the end of the period
includes consumption tax.
(Note 3) The asset management fee for the 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.

28

29

Financial Statements
Notes to Financial Statements

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

1. Breakdown information on revenue from contracts with customers

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

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

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

Sales to external customers

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

314,831314,831

Other–

5,774,107

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

314,8316,088,939

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

Utilities income(Note)

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

(Unit: thousand yen)

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

419,588419,588

Other–

6,066,665

Total

419,5886,486,253(Note)

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

Sales to external customers–

Utilities income

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

1. Segment information

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

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

2. Related information
13th fiscal period (from February 1, 2022 to July 31, 2022)(1) Information about products and services
Information about products and services is omitted because net sales to external customers for a single
product and service category are in excess of 90% of operating revenue on the statement of income andretained earnings.
(2) Information about geographic areas

2. Foundational information for understanding revenue from contracts with customers

1) Net sales

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

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

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

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

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

13th fiscal period

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

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

54,922

73,083

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

73,08387,858Contract 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)––

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.

31

Financial Statements
Notes to Financial Statements

Notes on Significant Subsequent Events

14th fiscal period (from August 1, 2022 to January 31, 2023)(1) Information about products and services

Asset transfer

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

The transfer of Funabashi Hi-Tech Park Factory II has completed and the transfer of Urban Park Gokokuji wasproduct and service category are in excess of 90% of operating revenue on the statement of income anddecided as follows:

retained earnings.

<Funabashi Hi-Tech Park Factory II>(2) Information about geographic areas

Asset transferred:

1) Net sales

domestic real estate

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
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.
(3) Information about each major customer

Contract date:February 1, 2023

Transfer date:February 20, 2023

Location:

631-13 Toyotomicho, Funabashi-shi, Chiba

Buyer:TOCALO Co., Ltd.

Transfer price:

1,150,000 thousand yen

Impact on income (loss):

Operating revenue from gain on sale of real estate is expected tobe recorded in the amount of approximately 413 million yen inInformation about each major customer is omitted because all net sales to a single external customer are

the fiscal period ending July 31, 2023.

less than 10% of the operating revenue on the statement of income and retained earnings.

<Urban Park Gokokuji>
Asset to be transferred:

Notes on Per Unit Information
13th fiscal period

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

Net assets per unit

53,53953,835

Net income per unit

1,430

1,455

(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:(Unit: thousand yen)

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

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

2,559,804

2,781,930––

Net income attributable to common investment units

2,559,804

2,781,930

Average number of investment units during the period (units)

1,789,389

1,910,903

Amount not attributable to common unitholders

32

Trust beneficiary interest in which the main trust asset isdomestic real estate(Unit: yen)

Net income

Trust beneficiary interest in which the main trust asset isContract date:

March 16, 2023

Planned transfer date:August 31, 2023, or other date separately agreed upon by SAR
and the planned buyer

Location (indication of residential address): 1-5-4 Zoshigaya, Toshima-ku, Tokyo
Planned buyer:

A.D. Works Co., Ltd.

Planned 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.

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)

Category

Corporatebonds

Name of the security

Book
value

Star Asia Mezzanine
Loan Debt Investment
Series 7

400,000

400,000

3,433–

400,000

3,433

Total

Fair
value

Unrealized
gain orRemarks
loss–

400,000––

400,000–

Prepaid
Accruedaccruedinterest
interest

Total
face
value

(Note 1)
(Note 2)

(Note 1) Because interest income etc. from mezzanine loan debt (corporate bonds) are based on floating interest rates and to be
renewed or revised every certain period, the fair value is approximately the same as the book value and thus stated at thatbook value.
(Note 2) The underlying assets are trust beneficiary interests in a trust mainly comprised of Quintessa Hotel Tokyo Haneda Comic &Books (former property name: Relief Premium Haneda).

Property,plant andequipment

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

Type

Transaction other thanmarket transaction

Interest rate swap transaction(floating receivable; fixed payable)

Total

Of which, later
than 1 year

Fair value (Note 2)

77,205,000

67,675,000

531,551

77,205,000

67,675,000

531,551

Tools,
furniture andfixtures114–

Buildings intrust

53,471,574

2,828,956

Structures intrust

21,6403,708–

25,348

Machineryand equipment in trust

119,343

44,221–Tools,
furniture andfixtures in trust

100,966

24,815–0831 56,299,699 6,169,727

728,189

50,129,971

6,646

790

18,702

163,565

35,247

6,341

128,318

125,782

39,0138,325

86,768Land in trust 127,283,507 13,113,825– 140,397,333–– 140,397,333

Constructionin progressin trust–––

Subtotal

180,997,147 16,016,810

Intangible Leasehold
rights in trust
assets
Total(Note)(Note 2) Fair value is calculated based on the price quoted by lending financial institutions, etc.

1,282

114

period14––

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

114

Subtotal(Note 1) Contract amount, etc. of interest rate swaps are based on notional principal.

AmountAmount ofBalance atofincreasedecrease end of theduring theperiodduring theperiodperiod1,282

831 197,013,126 6,250,749

743,661 190,762,377––

4,082,300––

4,082,300

4,082,300––

4,082,300––

4,082,300

831 201,095,427 6,250,749(Note)

1,282

4,082,300

185,079,447 16,016,810(Note)

743,661 194,844,677

The amount of increase during the period is mainly attributable to the acquisition of properties namely Urban Center Fujisawa, Abeno
nini (retail facility) and Abeno nini (hotel).

4. Schedule of other specified assets
Not applicable.

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

Name of the security
First Series Unsecured Investment
Corporation Bonds(ranking pari passu among specified investment corporation bonds)(Note)

Issue date

Balance at Amount of
Balance at
beginning decrease
end 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)

Category (Note 2)
LenderSumitomo Mitsui
Banking
Corporation

36

Amount ofdecreaseduringthe period

Balance at
end ofthe period

2,500,000–

2,500,000–

600,000–

600,000–

Averageinterest Repayment Repayment
Use
rate
date
methodRemarks(Note 1)0.8800%August 31,
2022

Lump sum
repaymentonrepayment
date(Note 5)

Amount ofincreaseduringthe period

Amount ofdecreaseduringthe period

Balance at
end ofthe period

Sumitomo Mitsui
Banking
Corporation

2,200,000––

2,200,000

Mizuho Bank, Ltd.

2,050,000––

2,050,000

Sumitomo Mitsui
Trust Bank, Limited

1,250,000––

1,250,000

LenderUnsecured
andunguaranteedAozora Bank, Ltd.

700,000––

700,000

SBI Shinsei Bank,
Limited (Note 3)

700,000––

700,000

SBI Shinsei Bank,
Limited (Note 3)

2,500,000–

2,500,000–

Sumitomo Mitsui
Banking
Corporation

970,000––

970,000

Resona Bank,
Limited

700,000––

700,000

Mizuho Bank, Ltd.

920,000––

920,000

Mizuho Trust &Banking. Co., Ltd.

400,000––

400,000

Sumitomo Mitsui
Trust Bank, Limited

800,000––

800,000

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

SBI Shinsei Bank,
Limited (Note 3)

600,000––

600,000

Resona Bank,
Limited

600,000––

600,000

Aozora Bank, Ltd.

500,000––

500,000

SBI Shinsei Bank,
Limited (Note 3)

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 (Note 3)

1,950,000––

1,950,000

Aozora Bank, Ltd.

800,000––

800,000

Resona Bank,
Limited

400,000––

Sumitomo Mitsui
Banking
Corporation

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

SBI Shinsei Bank,
Limited (Note 3)

600,000––

600,000

Resona Bank,
Limited

500,000––

500,000

The Bank ofFukuoka, Ltd.

240,000––

240,000

Mizuho Trust &Banking. Co., Ltd.

200,000––

The Nishi-Nippon
City Bank, Ltd.

500,000––

0.7300%(Note 4)

February
20, 2023

February28, 2023

Lump sum
repaymentonrepayment
date

Lump sum
repaymentonrepayment
date(Note 5)

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Long-term borrowings

Long-term borrowings

Resona Bank,
LimitedBalance at
beginning of
the period

Amount ofincreaseduringthe period

Balance at
beginning of
the period

500,000––

500,000

400,000

Sumitomo Mitsui
Banking
Corporation

2,150,000––

2,150,000

850,000

Mizuho Bank, Ltd.

2,000,000––

2,000,000

Aozora Bank, Ltd.

1,500,000––

1,500,000

1.0778%

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

200,000

Sumitomo Mitsui
Trust Bank, Limited

850,000––

850,000

500,000

Aozora Bank, Ltd.

400,000––

400,000

0.8120%(Note 4)September
20, 2023

Lump sum
repaymentonrepayment
date(Note 5)

Unsecured
andunguaranteed

Remarks(Note 1)

April 22,2024

Lump sum
repaymentonrepayment
date

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 4)2025

Lump sum
repaymentonrepayment
date

0.7532%(Note 4)0.7588%(Note 4)The Bank ofFukuoka, Ltd.

(Note 5)

Averageinterest Repayment Repayment
Use
rate
date
method0.5360%(Note 4)0.6975%(Note 4)(Note 5)(Note 5)(Note 5)(Note 5)(Note 5)

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

1,680,000––

1,680,000

Mizuho Bank, Ltd.

1,530,000––

1,530,000

Long-term borrowings

Lender

38

The Bank of
Yokohama, Ltd.

1,000,000

SBI Shinsei Bank,
Limited (Note 3)

600,000––

600,000

Aozora Bank, Ltd.

600,000––

600,000

Sumitomo Mitsui
Trust Bank, Limited

550,000––

550,000

Sumitomo Mitsui
Banking
Corporation

750,000––

750,000

Mizuho Bank, Ltd.

750,000––

750,000

Sumitomo Mitsui
Trust Bank, Limited

500,000––

500,000

The Kiyo Bank, Ltd.

500,000––

500,000

Fukoku Mutual Life
Insurance
Company

500,000––

500,000

Sumitomo Mitsui
Banking
Corporation

750,000––

750,000

Mizuho Bank, Ltd.

750,000––

750,000––

1,000,000

Averageinterest Repayment Repayment
Use
rate
date
method500,000––

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

0.7025%0.9455%(Note 4)0.6780%(Note 4)

Sumitomo Mitsui
Banking
Corporation

750,000

Mizuho Bank, Ltd.

750,000––––

750,000

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

0.8894%(Note 4)0.6955%(Note 4)2,160,000

The Minato Bank,
Ltd.

500,000––––

April 30,
2026

April 28,
2028

August 19,
2026

Lump sum
repaymentonrepayment
date

Lump sum
repaymentonrepayment
date

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

Unsecured
andunguaranteed

Unsecured
andunguaranteed

2,160,000
500,000

August 21,
2028

August 31,
2026

Lump sum
repaymentonrepayment
date

Lump sum
repaymentonrepayment
date(Note 5)(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

800,000––

800,000

Mizuho Bank, Ltd.

500,000––

500,000

LenderUnsecured
andunguaranteed

750,000

Sumitomo Mitsui
Trust Bank, Limited

SBI Shinsei Bank,
Limited (Note 3)

Remarks(Note 1)

(Note 4)

Sumitomo Mitsui
Trust Bank, Limited

Category (Note 2)Long-term borrowings

Category (Note 2)

SBI Shinsei Bank,
Limited (Note 3)

1,500,000––

1,500,000

Aozora Bank, Ltd.

500,000––

500,000

San ju San Bank,
Ltd.

500,000––

500,000

Sumitomo Mitsui
Banking
Corporation

932,500––

932,500

Mizuho Bank, Ltd.

857,500––

857,500

SBI Shinsei Bank,
Limited (Note 3)

300,000––

300,000

Sumitomo Mitsui
Trust Bank, Limited

525,000––

525,000

Aozora Bank, Ltd.

300,000––

300,000

Resona Bank,
Limited

100,000––

100,000

The Bank ofFukuoka, Ltd.

170,000––

170,000

Mizuho Trust &Banking. Co., Ltd.

100,000––

100,000

The Dai-ichi Life
Insurance
Company, Limited

500,000––

500,000

Sumitomo Mitsui
Banking
Corporation

932,500––

932,500

Mizuho Bank, Ltd.

857,500––

857,500

SBI Shinsei Bank,
Limited (Note 3)

300,000––

300,000

Sumitomo Mitsui
Trust Bank, Limited

525,000––

525,000

Aozora Bank, Ltd.

300,000––

300,000

Resona Bank,
Limited

100,000––

100,000

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 (Note 3)

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

Averageinterest Repayment Repayment
Use
rate
date
methodRemarks(Note 1)

August 31,
2028

Lump sum
repaymentonrepayment
date

October 21,
0.4605%2024

Lump sum
repaymentonrepayment
date

0.7505% October 20,(Note 4)2026

Lump sum
repaymentonrepayment
date

0.9106%(Note 4)0.8276%

May 31,2027

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

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed39

Financial Statements
Supplementary Schedules

Category (Note 2)
LenderAmount ofincreaseduringthe period

Amount ofdecreaseduringthe period

Balance at
end ofthe period

900,000––

900,000

Mizuho Bank, Ltd.

550,000––

550,000

400,000

Sumitomo Mitsui
Trust Bank, Limited

500,000––

500,000

Aozora Bank, Ltd.

400,000––

400,000

Resona Bank,
Limited

400,000––

400,000

Sumitomo Mitsui
Banking
Corporation

500,000––

500,000

Mizuho Bank, Ltd.

500,000––

500,000

Sumitomo Mitsui
Banking
Corporation

450,000––

450,000––

400,000

Remarks(Note 1)

(Note 4) 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 6) Funds are used for acquisition funds of beneficiary interest in trust for real estate which is a green eligible asset.

0.9067%––450,000

Aozora Bank, Ltd.

200,000––

200,000

The Kiyo Bank, Ltd.

1,000,000––

1,000,000

Sumitomo Mitsui
Banking
Corporation–

1,400,000–

1,400,000

Mizuho Bank, Ltd.

–

1,400,000–

1,400,000

SBI Shinsei Bank,
Limited (Note 3)–

800,000–

800,000

0.8738%0.8722%

Sumitomo Mitsui
Trust Bank, Limited–

1,000,000–

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(Note 4)0.6999%SBI Shinsei Bank,
Limited (Note 3)–

1,380,000–

1,380,000

Resona Bank,
Limited

–340,000–

340,000

Sumitomo Mitsui
Banking
Corporation–

1,120,000–

1,120,000(Note 4)0.8999%SBI Shinsei Bank,
Limited (Note 3)–

1,120,000–

1,120,000

Resona Bank,
Limited

–260,000–

260,000

88,640,000

12,800,000

5,600,000

95,840,000

88,640,000

12,800,000

5,600,000

95,840,000

May 31,2027

Lump sum
repaymentonrepayment
date(Note 5)

(Unit: thousand yen)Unsecured
andunguaranteed
Long-term borrowings

0.2608%450,000

Total(Note 3) Shinsei Bank, Limited changed its trade name to SBI Shinsei Bank, Limited on January 4, 2023.

(Note 7) The yearly schedule of repayment for long-term borrowings within five years of the balance sheet date is as follows:

SBI Shinsei Bank,
Limited (Note 3)

Subtotal

Averageinterest Repayment Repayment
Use
rate
date
method(Note 5) Funds are used for acquisition funds of beneficiary interest in trust, repayment of borrowings, etc.

Sumitomo Mitsui
Banking
Corporation

SBI Shinsei Bank,
Limited (Note 3)Long-term borrowings

Balance at
beginning of
the period(Note 4)

April 28,
2023

Lump sum
repaymentonrepayment
date

May 31,2027

Lump sum
repaymentonrepayment
date

August 31,
2027

Lump sum
repaymentonrepayment
date

April 30,2026

Lump sum
repaymentonrepayment
date

August 31,
2027

Lump sum
repaymentonrepayment
date(Note 5)(Note 5)(Note 6)(Note 5)(Note 5)

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

15,630,000

12,285,000

19,150,000

20,275,000

18,450,000

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed

Unsecured
andunguaranteed(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.

40

41

Financial Statements

Independent Auditor’s Report

Independent Auditor’s Report

The Board of Directors
Star Asia Investment Corporation

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

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

We have audited the accompanying financial statements of Star Asia Investment Corporation(the Company), which comprise the balance sheet as at January 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 January 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.

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

4243
Ernst & Young ShinNihon LLC

Ernst & Young ShinNihon LLC

Financial Statements
Independent Auditor’s Report

We communicate with the Executive Director regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the Executive Director with a statement that we have complied with the ethicalrequirements regarding independence that are relevant to our audit of the financial statements inJapan, and to communicate with them all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, related safeguards.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company whichis required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
Ernst & Young ShinNihon LLC
Tokyo, JapanMay 31, 2023

/s/ Hitoshi Sakurai
Hitoshi Sakurai
Designated Engagement Partner
Certified Public Accountant/s/ Natsuki Saiki
Natsuki Saiki
Designated Engagement Partner
Certified Public Accountant

44
Ernst & Young ShinNihon LLC