Message to Our Unitholders
We would like to express our sincere appreciation to all unitholders for your loyal patronage to SANKEI REAL ESTATE Inc.
(“SANKEI REAL ESTATE”).
Let us express our deepest sympathies to those who have been stricken with COVID-19 infections, related people andthose affected by the spread of the infection, as well as our sincere hope for their earliest possible recovery.
Having settled the 5th fiscal period ended August 2021, we are pleased to report on the performance results of SANKEIREAL ESTATE. We would like to thank all of our unitholders for your continued support and cooperation.
SANKEI REAL ESTATE sets “office buildings,” located mainly in major metropolitan areas (Greater Tokyo, Osaka City andNagoya City), as its primary investment target. We also set “sub assets” as the secondary investment target in which we
allocate a certain percentage of investments, with an aim to build a strong portfolio that features both stability of earnings
and growth potential. Sub assets are what we collectively call the asset types that possess characteristics different from “officebuildings” and contribute to the stability of the portfolio revenue. Under the strong support of The Sankei Building Co., Ltd.,
our sponsor, we are poised to build a high-quality portfolio of properties.
In the 5th fiscal period ended August 2021, operating revenue and operating income increased compared with the previous
fiscal period. In addition, accurately seizing the trend of recovery in investment unit prices in the fiscal period, we passed
a resolution in August for capital increase through public offering and newly acquired 4 office buildings through strong
sponsorship support in September. With this expanding our asset size to 96.6 billion yen, we have almost reached ourshort-term target (asset size of 100 billion yen).
Concerning distribution per unit for the 5th fiscal period, operating income increased due to portfolio properties’ rental
revenue and such increasing and expenses related to rent business decreasing, but net income decreased due to recording
non-operating expenses (mainly, borrowing related expenses) associated with the acquisition of the 4 new properties,
resulting in distribution of net income per unit of 2,842 yen. As such, we decided on distribution in excess of earnings(20 yen per unit) to be distributed one-off this time as a contribution refund that falls under distribution through the reductionin unitholders’ capital for tax purposes in order to maintain and distribute 2,862 yen, the forecast made at the beginning of
the fiscal period. As for forecast distribution per unit for the 6th fiscal period ending February 2022, we expect 2,958 yen,up 3.4% from the 5th fiscal period, considering the 4 new acquisition properties contributing to revenue and other factors.
For the 7th fiscal period ending August 2022, we expect distribution per unit to be 2,703 yen, down 8.6% from the forecast
for the 6th fiscal period, considering the impact of expensing of fixed asset tax, etc. on the 4 new acquisition properties andcontract cancellations by tenants. In spite of this, we will endeavor to achieve better results than the forecast.
The impact of the COVID-19 pandemic on social and economic activities in and outside Japan continues to require attention.
While working to discern the trends of the economy and the financial and capital markets going forward, we will securely
implement the growth strategy envisioned by SANKEI REAL ESTATE and do our best to maximize unitholder value.
We ask you, our unitholders, to extend to us your continued consideration and support of our operations for many years.
Yuichi Ota
Executive Director, SANKEI REAL ESTATE Inc.
President and Representative Director, Sankei Building Asset Management Co., Ltd.

2

I. Asset Management Report
1. Overview of Asset Management(1) Changes in operating results and other management data
Fiscal period
Closing of accounts
Operating revenue[Operating revenue from real estate leasing]Operating expenses[Operating expenses from real estate leasing]Operating income
Ordinary income
Net income
Unitholders’ capital
Total number of investment units issued andoutstanding
Net assets[Period-on-period change]
Total assets[Period-on-period change]
Total interest-bearing liabilities
Net assets per unit (Note 4)
Net income per unit (Note 3)
Total distribution
Distribution per unit
[Distribution of net income per unit][Distribution in excess of net income per unit]
Ratio of ordinary income to total assets (Note 4)
Annualized (Note 5)
Return on equity (Note 4)
Annualized (Note 5)
Equity ratio (Note 4)[Period-on-period change]
Payout ratio (Note 4)[Other reference information]
Days of operation (Note 1)
Number of investment properties at end of period
Depreciation
Capital expenditures
Leasing NOI (Net Operating Income) (Note 4)
FFO (Funds from Operation) (Note 4)
FFO per unit (Note 4)
Ratio of interest-bearing liabilities to total assets
at end of period (LTV) (Note 4)

million yen
million yen
million yen
million yen
million yen
million yen
million yen
million yen

1st fiscal period 2nd fiscal period 3rd fiscal period 4th fiscal period 5th fiscal period
August 2019
February 2020
August 2020
February 2021
August 2021
1,157
1,933
2,005
2,147
2,176
[1,157][1,933][2,005][2,147][2,176]
457
767
1,009
1,029
1,034
[315]
[577]
[778]
[790]
[793]
699
1,166
996
1,118
1,141
336
1,069
904
1,017
1,014
335
1,068
903
1,016
1,014
23,12436,54036,54036,54036,540units

239,600

356,800

356,800

356,800

356,800

million yen%
million yen%
million yenyenyen
million yen
yen
yen
yen
%
%
%
%
%
%

23,460[-]48,718[-]22,313
97,913
2,312
335
1,399
[1,399]
[-]
0.7
[1.4]
1.5
[2.9]
48.2
[-]
100.0

37,609[60.3]
76,186[56.4]
33,956
105,408
3,007
1,068
2,995
[2,995]
[-]
1.7
[3.4]
3.5
[7.0]
49.4
[1.2]
100.0

37,444[(0.4)]
76,195[0.0]
33,500104,945
2,532
903
2,532
[2,532]
[-]
1.2
[2.4]
2.4
[4.8]
49.1
[(0.3)]
100.0

37,557[0.3]
79,482[4.3]
37,800105,262
2,849
1,016
2,849
[2,849]
[-]
1.3
[2.6]
2.7
[5.4]
47.3
[(1.8)]
100.0

37,555[(0.0)]
79,848[0.5]
37,800105,255
2,841
1,021
2,862
[2,842]
[20]
1.3
[2.5]
2.7
[5.4]
47.0
[(0.3)]
100.0

days
properties
million yen
million yen
million yen
million yen
yen

173
8
123
25
966
459
1,916

182
11
215
69
1,571
1,284
3,600

184
11
219
54
1,446
1,122
3,147

181
12
227
42
1,585
1,243
3,485

184
12
228
57
1,610
1,242
3,482

%

45.8

44.6

44.0

47.6

47.3

(Note 1) The calculation period for the first fiscal period of SANKEI REAL ESTATE Inc. (“SANKEI REAL ESTATE”) was 286 days from November 19, 2018 to August 31, 2019, but
the actual asset management period was 173 days from March 12, 2019.
(Note 2) C onsumption tax is not included in operating revenue, etc.
(Note 3) N et income per unit is calculated by dividing net income by daily weighted average number of investment units (1st fiscal period: 144,970 units; 2nd fiscal period: 355,420
units; 3rd fiscal period: 356,800 units; 4th fiscal period: 356,800 units; 5th fiscal period: 356,800 units). In the meantime, net income per unit for the 1st fiscal period is
1,410 yen if calculated by deeming March 12, 2019, when actual asset management started, as the beginning of the period and using daily weighted average number ofinvestment units (237,695 units).
(Note 4) The indicators are calculated by using the following formulas. Furthermore, as actual asset management for the 1st fiscal period started on March 12, 2019, the ratio of
ordinary income to total assets and return on equity have been calculated by deeming the said date as the beginning of the period.
Net assets per unit

Net assets ÷ total number of investment units issued and outstanding

Ratio of ordinary income to total assets
Return on equity
Equity ratio

Ordinary income ÷ [(total assets at beginning of period + total assets at end of period) ÷ 2] × 100
Net income ÷ [(net assets at beginning of period + net assets at end of period) ÷ 2] × 100
Net assets at end of period ÷ total assets at end of period × 100
Distribution per unit (excluding distribution in excess of earnings) ÷ net income per unit × 100
The payout ratio for the 1st fiscal period and the 2nd fiscal period is calculated by the following formula, as the number ofinvestment units during the period changed due to issuance of new investment units in the period:
Total distribution (excluding distribution in excess of earnings) ÷ net income × 100
Operating revenue from real estate leasing - operating expenses from real estate leasing + depreciation
Net income + depreciation - gain or loss on sale of real estate
FFO ÷ total number of investment units issued and outstanding

Payout ratio
Leasing NOI (Net Operating Income)FFO (Funds from Operation)
FFO per unit
Ratio of interest-bearing liabilities to total
assets at end of period (LTV)

Balance of interest-bearing liabilities at end of period ÷ total assets at end of period × 100(Note 5) For the 1st fiscal period, annualized figures are calculated based on the practical days of operation (173 days from March 12, 2019 to August 31, 2019).
(Note 6) Unless otherwise stated, the figures less than the specified unit are rounded down for monetary amounts and rounded off to the nearest specified unit for percentage
figures in this report.

3

(2) Asset management review for the fiscal period
1) Brief History of the Investment Corporation
SANKEI REAL ESTATE was incorporated under the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951, as amended;hereinafter, the “Investment Trusts Act”) with Sankei Building Asset Management Co., Ltd. (hereinafter, the “Asset Management Company”) as
the organizer and investments in capital of 100 million yen (1,000 units) on November 19, 2018, and completed the registration with the Kanto
Local Finance Bureau pursuant to Article 187 of the Investment Trusts Act on December 17, 2018 (Registration No. 140 with the Director-Generalof the Kanto Local Finance Bureau). Later, SANKEI REAL ESTATE was listed on the Real Estate Investment Trust Securities Market of Tokyo Stock
Exchange, Inc. (hereinafter, the Tokyo Stock Exchange”) on March 12, 2019 (TSE code: 2972).
As of the last day of the fiscal period under review (August 31, 2021), the total number of investment units issued and outstanding was 356,800 units,
and unitholders’ capital was 36,540 million yen.

2) Management Environment
In the fiscal period under review (fiscal period ended August 2021), amid difficult conditions due to the impact of COVID-19, the Japanese economy showed
movements of picking up due to advances made with vaccination. However, the spread of infection caused by variant strains of the virus led to a rapid
increase in the number of cases even during the state of emergency and area-focused intensive measures for prevention of the spread of infection based on
the Act on Special Measures for Pandemic Influenza and New Infectious Diseases Preparedness and Responses (Act No. 31 of 2012, as amended). This,
among other factors, made it an environment in which economic developments continued to require attention. Overseas, while economies continued to pickup, it was a situation in which attention should be given to the risk of COVID-19 spreading again.
Under such economic circumstances, in terms of the office building market, which SANKEI REAL ESTATE sets as the primary investment target, there
were movements to cancel lease agreements due to factors such as the consolidation of locations, and the vacancy rate continued to rise while rents
declined slightly or remained the same in Tokyo and Osaka where SANKEI REAL ESTATE’s portfolio assets are located. As for the hotel market in which
SANKEI REAL ESTATE invests as sub-assets, the total number of guests and occupancy rate improved year on year in almost all months during the
fiscal period under review according to the Overnight Travel Statistics Survey by the Japan Tourism Agency, but the number of foreign tourists continued todecrease significantly due to restrictions on entry into Japan taken as a preventive measure against with the spread of COVID-19. Furthermore, the situation
did not improve significantly due to factors such as the Tokyo Olympic and Paralympic Games being held without spectators during the state of emergency.

3) Management Performance
SANKEI REAL ESTATE did not acquire or sell any assets in the fiscal period under review. The portfolio of SANKEI REAL ESTATE as of the last day of the fiscal
period under review consisted of 12 properties with an asset size (total acquisition price) of 71,525 million yen, the same as that in the preceding fiscal period.
As a result, the occupancy rate (Note) of the 12 portfolio properties as of the last day of the fiscal period under review remained high at 98.2%, andoperating revenue from real estate leasing was 2,176 million yen, 1.3% higher than that at the end of the previous fiscal period. The appraisal value as of thelast day of the fiscal period under review was 79,326 million yen.
SANKEI REAL ESTATE has sought to improve satisfaction through reinforcement and enhancement of the relationship with existing tenants, aiming at
expansion of revenue and stable growth of earnings from assets under management as in the past. For existing tenants approaching contract renewal, aneffort was made to limit reductions in rent as much as possible and renew contracts with upward revision or no change in rent through careful efforts basedon the condition of the COVID-19 pandemic and trends of the rental market. In addition, repairs and capital expenditures were narrowed down to those that
contribute to maintenance and improvement of the competitiveness of the assets under management. On the other hand, there are movements of consolidationof bases, mainly among companies based in several locations, and notices of contract cancellation and such associated with consolidation of bases havebeen received from some tenants even at the assets under management of SANKEI REAL ESTATE in the previous fiscal period, but there is little impact onmanagement performance in the fiscal period under review.
The number of requests for rent decrease, deferment of rent payment, etc. due to the spread of COVID-19 from some tenants, mainly retail tenants occupying
portions of office buildings that are assets under management, was very low in the fiscal period under review compared with the previous fiscal period, andthe impact on management performance in the fiscal period under review is minimal because the assets under management are mainly office buildings. In
addition, although the two hotel properties held by SANKEI REAL ESTATE saw impact associated with the spread of COVID-19, fixed rent based on thecurrent contract has been secured as usual for rent business revenue in the fiscal period under review.
SANKEI REAL ESTATE, along with the Asset Management Company, intends to conduct management with consideration for ESG, meaning the Environment,
Social and Governance, for the purpose of sustainability of society and increasing the medium- to long-term investor value.
The Asset Management Company established a new “Sustainability Policy” in the Asset Management Company’s management guidelines in March 2021
for the purpose of strengthening sustainability initiatives, and has established a variety of rules for its implementation.
In July 2021, SANKEI REAL ESTATE applied to participate in the GRESB Real Estate Assessment that is a global investment benchmark established as atool for use in selection of and dialogue with investment destinations by measuring ESG considerations in individual companies and funds in the real estate
sector, and acquired 3 Star and Green Star ratings in October 2021.
(Note) “Occupancy rate” is the ratio of total leased area to total leasable area, rounded to one decimal place. Moreover, for total leasable area and total leased area, each total iscalculated based on the area corresponding to SANKEI REAL ESTATE’s ownership interest in each portfolio property.

44) Overview of Fund Procurement
In the fiscal period under review, 4,800 million yen was borrowed from Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Development Bank of Japan
Inc., Mizuho Trust & Banking Co., Ltd., Sumitomo Mitsui Trust Bank, Limited, Shinsei Bank, Limited, and Resona Bank, Limited through a loan syndicate
with Mizuho Bank, Ltd. and Sumitomo Mitsui Banking Corporation as the arrangers on March 12, 2021, to repay 4,800 million yen of long-term loans due forrepayment on March 12, 2021. The borrowing was made with a borrowing period of 4 years and fixed interest rate, thereby promoting extension of the averagetime to maturity, improvement in the ratio of fixed-rate debt, and staggering of maturities of interest-bearing liabilities.
As a result, as of the last day of the fiscal period under review, the balance of loans outstanding was 37,800 million yen and the ratio of interest-bearing
liabilities to total assets (hereinafter, “LTV ratio”) was 47.3%.

5) Overview of Business Performance and Distribution
As a result of the management described above, business performance in the fiscal period under review was operating revenue of 2,176 million yen,operating income of 1,141 million yen, ordinary income of 1,014 million yen, and net income of 1,014 million yen. Concerning distribution, in accordancewith SANKEI REAL ESTATE’s distribution policy (Article 36 of the articles of incorporation), SANKEI REAL ESTATE intends to have the maximum amountof distribution of earnings included in deductible expenses by application of special provisions for taxation on investment corporations (Article 67-15 of the
Act on Special Measures Concerning Taxation (Act No. 26 of 1957, as amended)). For the fiscal period under review, the decision was made to distribute
1,014,025,600 yen, which is the entire amount of unappropriated retained earnings, excluding fractions of distribution per unit of less than 1 yen. This
resulted in distribution per unit of 2,842 yen (however, excluding distributions in excess of earnings). Furthermore, pursuant to the policy on the distribution
in excess of earnings specified in Article 36, Paragraph 2 of SANKEI REAL ESTATE’s articles of incorporation, due to net income decreasing in the fiscal
period under review as a result of recording temporary borrowing related expenses associated with borrowing for the acquisition of real estate trust
beneficiary rights of 4 properties on September 2, 2021, 7,136,000 yen was distributed as a contribution refund that falls under distribution through the
reduction in unitholders’ capital for tax purposes, and distribution in excess of earnings per unit was 20 yen. As a result, the distribution per unit was 2,862 yenin the fiscal period under review.

(3) Capital increases
Changes in the total number of investment units issued and outstanding and unitholders’ capital from the incorporation of SANKEI REAL ESTATE to thelast day of the fiscal period under review (August 31, 2021) are as follows:
Total number of investment units
issued and outstanding (units)
Increase
Balance(Decrease)

Unitholders’ capital (million yen)

Date

Description

Nov. 19, 2018

Incorporation through private placement

1,000

1,000

100

100

(Note 1)Mar. 11, 2019

Capital increase through public offering

227,238

228,238

21,92822,028(Note 2)

Apr. 10, 2019

Capital increase through third-party allotment

11,362

239,600

1,096

23,124(Note 3)

Sep. 2, 2019

Capital increase through public offering

111,619

351,219

12,77735,902(Note 4)

Sep. 26, 2019

Capital increase through third-party allotment

5,581

356,800

638

36,540(Note 5)

Increase(Decrease)

Balance

Remarks(Note 1) Investment units were issued at a paid-in amount of 100,000 yen per unit upon the incorporation of SANKEI REAL ESTATE.
(Note 2) New investment units were issued through public offering at an issue price of 100,000 yen (paid-in amount of 96,500 yen) per unit for the purpose of
procuring funds for acquisition of new properties.
(Note 3) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in amount of 96,500 yen per unit.
(Note 4) N ew investment units were issued through public offering at an issue price of 118,734 yen (paid-in amount of 114,471 yen) per unit for the purpose of procuring
funds for acquisition of new properties.
(Note 5) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in amount of 114,471 yen per unit.

[Changes in market price of investment certificates]
The highest and lowest (closing price) market prices on the Real Estate Investment Trust Securities Market of the Tokyo Stock Exchange, on which
SANKEI REAL ESTATE’s investment certificates are listed, in each fiscal period are as follows:
Fiscal period

1st fiscal period

2nd fiscal period

3rd fiscal period

4th fiscal period

5th fiscal period

Closing of accounts

August 2019

February 2020

August 2020

February 2021

August 2021

Highest (yen)126,000

139,300

127,600

117,400

135,200

Lowest (yen)100,500

116,500

66,90090,100108,300(Note) SANKEI REAL ESTATE’s investment certificates were listed on the Real Estate Investment Trust Securities Market of the Tokyo Stock Exchange on March 12, 2019.

5

(4) Performance of distribution, etc.
Concerning distribution for the fiscal period under review, SANKEI REAL ESTATE decided to distribute the entire amount of unappropriated retained earnings,
excluding fractions of distribution per unit of less than 1 yen, with the intent of having the maximum amount of distribution of earnings included indeductible expenses by application of special provisions for taxation on investment corporations (Article 67-15 of the Act on Special Measures Concerning
Taxation). Furthermore, due to net income decreasing in the fiscal period under review as a result of recording temporary borrowing-related expenses
associated with borrowing for the acquisition of real estate trust beneficiary rights of 4 properties on September 2, 2021, 7,136,000 yen was
distributed as a contribution refund that falls under distribution through the reduction in unitholders’ capital for tax purposes. As a result, the distribution
per unit was 2,862 yen.
Fiscal period

1st fiscal period

2nd fiscal period

3rd fiscal period

4th fiscal period

5th fiscal period

From Nov. 19, 2018 From Sep. 1, 2019 From Mar. 1, 2020 From Sep. 1, 2020 From Mar. 1, 2021
to Aug. 31, 2019
to Feb. 29, 2020
to Aug. 31, 2020
to Feb. 28, 2021
to Aug. 31, 2021

Business period
Total unappropriated retained earnings (thousand yen)335,209

1,068,783

903,625

1,016,734

1,014,232

Retained earnings(thousand yen)

8

167

207

210

207

Total cash distributions(thousand yen)335,200

1,068,616

903,417

1,016,523

1,021,161[Distribution per unit][Total distribution of earnings](yen)[1,399][2,995][2,532][2,849][2,862](thousand yen)335,200

1,068,616

903,417

1,016,523

1,014,025(yen)[Distribution of net income per unit][Total contribution refund][1,399][2,995][2,532][2,849][2,842](thousand yen)

-

-

-

-

7,136

(yen)

[-]

[-]

[-]

[-]

[20]

(thousand yen)

-

-

-

-

-

(yen)

[-]

[-]

[-]

[-]

[-]

(thousand yen)

-

-

-

-

7,136

(yen)

[-]

[-]

[-]

[-]

[20]

[Contribution refund per unit]
Of the total contribution refund,
distribution of the reserve fortemporary difference adjustments[Of the contribution refund per unit,
distribution per unit of the reserve
for temporary difference adjustments]
Of the total contribution refund,
distribution through the reduction inunitholders’ capital for tax purposes[Of the contribution refund per unit,
distribution per unit through the
reduction in unitholders’ capital fortax purposes](Note) Amounts are rounded down to the nearest unit.

(5) Future asset management policy and issues to be addressed
General Management Outlook
Although the impact of COVID-19 on social and economic activities in Japan and abroad is expected to be alleviated due to factors such as progress invaccinations ahead, there is no guarantee that it will lead to containment. As such, the environment will likely continue to be one in which downside risks
to the Japanese and overseas economies, the impact on fluctuations in the financial and capital markets, etc. warrant close attention.
In terms of the office building market, vacancy rates have risen and rents have continued to decrease or remain the same. Social and economic
activities are expected to recover with rising vaccination rates, but it is necessary to monitor trends in office demand such as changes in work styles andmoves to reduce fixed expenses (rent payments, etc.). At SANKEI REAL ESTATE, too, progress in consolidation of bases and reduction of office space
due to the expansion of remote working such as working from home and the intention to reduce fixed expenses (rent payments, etc.) could lead to lease
contract cancellations arising. We will further reinforce the relationship with tenants and continue consultations and responses as required, while closely
monitoring tenants’ business performance, etc.
In terms of the hotel market, while recovery in the number of international visitors to Japan looks unlikely, domestic travelers and business travelers
are expected to increase with the recovery in social and economic activities, but the severe situation is still expected to continue. A severe operating
environment is foreseen for also the two hotel properties held by SANKEI REAL ESTATE, but no impact on SANKEI REAL ESTATE is expected as
GRANVISTA Hotels & Resorts Co., Ltd., which is a tenant of the two properties and a wholly owned subsidiary of SANKEI REAL ESTATE’s sponsor, The
Sankei Building Co., Ltd. (hereinafter, “Sankei Building” or “Sponsor”), continues to pay fixed rent based on the fixed-term building lease agreement.

1) External Growth Strategy
While carefully assessing the economic impact of the spread of COVID-19, the real estate investment market conditions, and other factors, SANKEIREAL ESTATE will continue to maintain external growth through acquisition of Sankei Building’s portfolio properties as well as properties held by third
parties by leveraging the sourcing capabilities of Sankei Building through full utilization of sponsorship support.
In external growth, we will conduct diversified investment conscious of the balance of the portfolio matrix such as area and yield, and strive to improve
the profitability and stability of the portfolio.

62) Internal Growth Strategy
SANKEI REAL ESTATE aims for steady internal growth through reinforcement of the relationship with existing tenants and improvement in tenantsatisfaction. Specifically, we will raise rents upon contract renewal based on the deviation from market rent and continue to implement strategic leasing
such as activities to extend the cancellation notification period from tenants and disperse end dates of rental contracts from the viewpoint of termination
risk for properties where the end dates of multiple tenants are the same. Furthermore, we will continue to take proactive measures to improve tenantsatisfaction such as activities to improve the quality of hygiene and planned implementation of maintenance and repairs under the COVID-19 pandemic.
SANKEI REAL ESTATE will utilize the Sankei Building Group’s comprehensive operation and management functions ranging from real estate planningand development to lease-up, operation, and management through collaboration within the Sankei Building Group with Sankei Building at the core.
In addition, SANKEI REAL ESTATE will execute the following measures, etc. to aim for greater revenue and stable growth of earnings from assets
under management.
(a) Strive to provide services for tenants’ comfortable use while strengthening and enhancing tenant relationships in order to maintain and improvetenant satisfaction so as to maintain and improve the occupancy rate and rent of assets under management.
(b) Seek to maintain and improve the market competitiveness of assets under management through planning and implementation of repairs and capital
expenditures by taking into consideration the state and characteristics of assets under management, real estate market conditions, tenant needs,
and other factors and carefully examining them.
(c) Strive to maintain and improve earnings by conducting agile leasing activities with a continual grasp of leasing market trends.
(d) Adopt ongoing initiatives to reduce operating and management costs and consider the environment by periodically verifying the validity ofoperations, management level, and costs of assets under management. In doing so, the balance with the market competitiveness of assets undermanagement and perspective of maintaining and improving tenant satisfaction are taken into consideration.
(e) Conduct investment conscious of ESG, such as reduction of the environmental impact of assets under management and cooperation with external
stakeholders.

3) Financial Strategy
SANKEI REAL ESTATE will conduct appropriate and sound financial management while considering agility of financing activities, stability of cash flows,
and other matters in order to secure stable earnings and steady growth of assets under management over the medium to long term.
In addition, to secure financial soundness, the basic policy shall be to set the upper limit for the LTV ratio at 60% in principle (however, the LTV ratio
may temporarily exceed the range of the upper limit for the purpose of new asset acquisition, etc.). As a rule, SANKEI REAL ESTATE will maintain an
approximate range of 40% to 50% during normal operations.
(a) Equity financing
Issuance of new investment units shall be in an agile manner with due consideration to investment unit dilution, while also comprehensively taking
into account capital market trends, financial environment, timing of acquisition of real estate, etc. to be newly acquired, ratio of interest-bearing
liabilities to total assets and other factors.
(b) Debt financing
Upon borrowing, etc., fund procurement shall be executed in an appropriate manner by taking into account the balance between interest rate
trends, market levels, financial agility, long-term business relationships, and security, and by considering the borrowing period, fixed or floatinginterest rate, provision of collateral or not, fees, and other terms and conditions of procurement of interest-bearing liabilities.

(6) Significant Subsequent Events
Issuance of new investment units
At the meetings of the board of directors held on August 16, 2021, and August 24, 2021, SANKEI REAL ESTATE approved the following resolutions to
issue new investment units, and payments were completed on September 1, 2021, for the issuance of new investment units through public offeringand on September 29, 2021, for the issuance of new investment units through third-party allotment. As a result, as of September 29, 2021, unitholders’capital was 49,442,685 thousand yen and the total number of investment units issued and outstanding was 467,099 units.
The proceeds from the issuance of new investment units through public offering were used for part of the funds for acquisition of real estate trust
beneficiary rights of 4 properties stated in “(Reference Information) (B) Acquisition of Assets” below, which were acquired on September 2, 2021.
Furthermore, the proceeds from the issuance of new investment units through the third-party allotment are planned to be used as part of the funds foracquisition of specified assets or part of the funds for repayment of loans in the future, until which the funds will be deposited with a financial institution
as funds on hand.

(Issuance of new investment units through public offering)Number of new investment units issued:			

105,047 units

Amount of issue price (offer price):			

121,327 yen per unit

Total amount of issue price (total offer price):		

12,745,037,369 yen

Amount to be paid in (issue amount):			

116,971 yen per unit

Total amount to be paid in (issue amount):		

12,287,452,637 yen

Payment due date:				

September 1, 2021

(Issuance of new investment units through third-party allotment)
Number of new investment units issued:			

5,252 units

Amount to be paid in (issue amount):			

116,971 yen per unit

Total amount to be paid in (issue amount):		

614,331,692 yen

Payment due date:				

September 29, 2021

Allottee:					Daiwa Securities Co. Ltd.

7

(Reference Information)(A) Borrowing of Funds
SANKEI REAL ESTATE conducted the following borrowing of funds on September 2, 2021, to use as part of the funds for acquisition and incidental
expenses upon acquisition of the real estate trust beneficiary rights of 4 properties as described later in this document under “(B) Acquisition of Assets”
along with the proceeds from the issuance of new investment units through public offering stated in “Issuance of new investment units” above.
Borrowingamount(million yen)Interest rate (Note)

Maturity date

Repayment
methodRemarks

400

Base rate (JBA 1-month
Japanese Yen TIBOR)+0.150%Aug. 31,2022

Lump-sum
repayment
at maturity

Unsecuredand non-guaranteed

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation

600

Base rate (JBA 1-month
Japanese Yen TIBOR)+0.150%Aug. 31,2022

Lump-sum
repayment
at maturity

Unsecuredand non-guaranteed

Long-term

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Development Bank of Japan Inc.
Mizuho Trust & Banking Co., Ltd.
Sumitomo Mitsui Trust Bank, Limited
Shinsei Bank, Limited
Resona Bank, Limited
The Nishi-Nippon City Bank, Ltd.
Kansai Mirai Bank, Limited
The Chiba Bank, Ltd.

6,200

0.29655%

Sep. 2,2025

Lump-sum
repayment
at maturity

Unsecuredand non-guaranteed

Long-term

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Development Bank of Japan Inc.
Mizuho Trust & Banking Co., Ltd.
Sumitomo Mitsui Trust Bank, Limited
Shinsei Bank, Limited
Resona Bank, LimitedAozora Bank, Ltd.
The Nishi-Nippon City Bank, Ltd.
Kansai Mirai Bank, Limited
The Chiba Bank, Ltd.

6,200

0.35542%

Sep. 2,2026

Lump-sum
repayment
at maturity

Unsecuredand non-guaranteed

Category

LenderShort-term

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation

Short-term(Note) The base rate applicable to the calculation period for the interest payable on each interest payment date shall be decided two business days prior to the immediately preceding
interest payment date (the drawdown date in the case of the first interest calculation period). For the JBA Japanese Yen TIBOR, please check the website of JBA TIBOR
Administration (https://www.jbatibor.or.jp/english/rate/).

Furthermore, the 4,300 million yen of long-term loans due for repayment on October 1, 2021, was refinanced on the same day as follows.

Category

LenderLong-term

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Development Bank of Japan Inc.
Mizuho Trust & Banking Co., Ltd.
Sumitomo Mitsui Trust Bank, Limited
Shinsei Bank, Limited
Resona Bank, LimitedAozora Bank, Ltd.

Borrowingamount(million yen)Interest rate

Maturity date

Repayment
methodRemarks

4,300

0.38044%

Apr. 1,2026

Lump-sum
repayment
at maturity

Unsecuredand non-guaranteed(B) Acquisition of Assets
SANKEI REAL ESTATE conducted the following acquisition of real estate trust beneficiary rights of 4 properties (total acquisition price: 25,100 million
yen) on September 2, 2021.
Asset
type

Officebuilding

Property
number

Property nameLocation

Acquisition asset

Acquisition price(million yen) (Note)

SellerAcquisition
date

A-8

Shinagawa Seaside TS Tower Shinagawa-ku,(additional acquisition)
Tokyo

Real estate trust
beneficiary right

10,900Godo Kaisha
SKB 2

Sep. 2,2021

A-10

S-GATE AKASAKA(additional acquisition)

Minato-ku,
TokyoReal estate trust
beneficiary right

1,400

The Sankei Building
Co., Ltd.

Sep. 2,
2021

A-11

Miyazakidai Garden OfficeMiyamae-ku,
Kawasaki-shi,
Kanagawa

Real estate trust
beneficiary right

2,800

Godo Kaisha
SKB Miyazakidai

Sep. 2,2021

A-12

Hitachi Kyushu Building

Sawara-ku,
Fukuoka-shi,
Fukuoka

Real estate trust
beneficiary right

10,000Godo Kaisha
SKB Momochi

Sep. 2,2021--

25,100Total (4 properties)--(Note) “Acquisition price” is the sale and purchase price of each trust beneficiary right stated in the trust beneficiary right transfer agreement for each acquired asset, rounded
down to the nearest million yen. The sale and purchase prices do not include consumption tax, local consumption tax and the various expenses required for the acquisition.
The acquisition price for “Shinagawa Seaside TS Tower” presented is the figure equivalent to the 25% quasi co-ownership interest in sectional ownership of the building, etc.
additionally acquired by SANKEI REAL ESTATE, and the acquisition price for “S-GATE AKASAKA” is the figure equivalent to the 20% quasi co-ownership interest additionallyacquired by SANKEI REAL ESTATE. After these additional acquisitions, SANKEI REAL ESTATE holds 50% quasi co-ownership interest in sectional ownership of the buildings,
etc. of Shinagawa Seaside TS Tower, and 80% quasi co-ownership interest in S-GATE AKASAKA.

8

2. Overview of the Investment Corporation(1) Summary of unitholders’ capital
1st fiscal period
2nd fiscal period
3rd fiscal period
4th fiscal period
5th fiscal period(as of Aug. 31, 2019) (as of Feb. 29, 2020) (as of Aug. 31, 2020) (as of Feb. 28, 2021) (as of Aug. 31, 2021)
Total number of investment
units authorized
Total number ofinvestment units
issued and outstanding(units)

10,000,000

10,000,000

10,000,000

10,000,000

10,000,000(units)239,600

356,800

356,800

356,800

356,800

Unitholders’ capital(million yen)

23,12436,54036,54036,54036,540

Number of unitholders(persons)

6,626

7,848

7,725

7,682

7,328

(2) Matters related to investment units
The following table shows the major unitholders (Note 1) of SANKEI REAL ESTATE as of August 31, 2021.
Number of investment
units held
(units)Name

Ratio to the total number ofinvestment units
issued and outstanding(%) (Note 2)

The Master Trust Bank of Japan, Ltd. (Trust Account)

75,201

21.07

Custody Bank of Japan, Ltd. (Trust Account)

66,287

18.57

The Nomura Trust and Banking Co., Ltd. (Investment Trust Account)

21,876

6.13

Custody Bank of Japan, Ltd. (Securities Investment Trust Account)

20,473

5.73

The Sankei Building Co., Ltd.

17,4794.89

12,053

3.37

9,250

2.59

Aozora Bank, Ltd.

8,079

2.26

SCBHK AC LIECHTENSTEINISCHE LANDESBANK AG

5,727

1.60

The Bank of Yokohama, Ltd.

5,036

1.41

241,461

67.67

BNP PARIBAS SECURITIES SERVICESLUXEMBOURG/JASDEC/SECURITIES-AIFM
BNYM SA/NV FOR BNYM FOR BNY GCM
CLIENT ACCOUNTS M LSCB RD

Total(Note 1) “ Major unitholders” refers to the ten largest entities among the unitholders according to the ratio of their investment units held to the total numberof investment units issued and outstanding.
(Note 2) Ratio to the total number of investment units issued and outstanding is rounded down to two decimal places.

(3) Matters related to directors
The following table shows the directors, etc. of SANKEI REAL ESTATE as of August 31, 2021.

Position
Executive
Director
Supervisory
Director
Financial
AuditorName

Major concurrent assignments

Yuichi Ota

President and Representative Director, Sankei Building
Asset Management Co., Ltd.

Susumu Motoyoshi

Representative, Motoyoshi Total Accounting Office

Kohmei Shimizu
Ernst & Young
ShinNihon LLC

Partner, Utsunomiya Shimizu & Haruki
Adjunct Professor, Hosei University Law School-

Total remuneration for each position
during the period under review(thousand yen)
1,800
1,800
8,500

(Note 1) N one of the Executive Director or Supervisory Directors own investment units in SANKEI REAL ESTATE, either in their own name or in someone
else’s name. Moreover, although they may be officers of corporations other than those mentioned above, they have no conflict of interest with
SANKEI REAL ESTATE at those and the above positions.
(Note 2) The remuneration for the Executive Director and Supervisory Directors are the amounts paid to them in the fiscal period under review, and the
remuneration to the Financial Auditor is the amount payable to it for audits pertaining to the fiscal period under review.
(Note 3) The dismissal of the Financial Auditor shall be considered in accordance with the provisions of the Investment Trusts Act. The decision to notreappoint the Financial Auditor shall be studied at SANKEI REAL ESTATE’s Board of Directors by comprehensively considering the audit quality,
audit fee and other various conditions.

9(4) Matters related to directors and officers liability insurance contract
The directors and officers liability insurance contract concluded by SANKEI REAL ESTATE is as follows:
Scope of insured parties

Summary of the content of the contract

Executive directors andsupervisory directors(Outline of insured events)
Insurance coverage is provided for damages incurred by the insured parties should claims be madeagainst the insured parties for compensation for damages arising from acts in their capacity as
directors of SANKEI REAL ESTATE.
(Share of burden of insurance expenses)
The insurance contract contains a rider covering executive directors and supervisory directors, theinsurance expenses for which are borne by the executive directors and supervisory directors. The
insurance expenses other than these are borne by SANKEI REAL ESTATE.
(Measures to ensure not to impair the propriety of the execution of duties)
Insurance coverage is not provided for cases such as damages incurred by the insured parties from
criminal acts, intentional illegal acts, etc.

(5) Asset management company, asset custodian and administrative agentsThe following are the asset management company, asset custodian and administrative agents of SANKEI REAL ESTATE as ofAugust 31, 2021.
Entrustment category

Name

Asset management company

Sankei Building Asset Management Co., Ltd.

Asset custodian

Sumitomo Mitsui Trust Bank, Limited

Administrative agent (unitholder register administrator)

Mizuho Trust & Banking Co., Ltd.

Administrative agent (operation of administrative instruments)

Mizuho Trust & Banking Co., Ltd.

Administrative agent (accounting, bookkeeping)Reiwa Accounting Holdings Co., Ltd.

Administrative agent (taxes)

Reiwakaikeisha Tax Corporation

10

3. Status of Asset under Management of the Investment Corporation(1) SANKEI REAL ESTATE’s asset structure

Type of asset

Geographic area
(Note 1)

Asset type4th fiscal period(as of Feb. 28, 2021)
Total amount held(million yen)
(Note 2)

Greater Tokyo, Osaka City andNagoya City

As a percentage
of total assets(%) (Note 3)

Total amount held(million yen)
(Note 2)

As a percentage
of total assets(%) (Note 3)

2,612

3.3

2,612

3.3

Cities designated by government
ordinance (excluding above), corecities and major regional cities

-

-

-

-

Greater Tokyo, Osaka City andNagoya City

-

-

-

-

Cities designated by government
ordinance (excluding above), corecities and major regional cities

-

-

-

-

56,72871.4

56,609

70.9

-

-

-

-

Greater Tokyo, Osaka City andNagoya City

9,004

11.3

8,978

11.2

Cities designated by government
ordinance (excluding above), corecities and major regional cities

3,974

5.0

3,949

4.9

Greater Tokyo, Osaka City andNagoya City

9,004

11.3

8,978

11.2

Cities designated by government
ordinance (excluding above), corecities and major regional cities

3,974

5.0

3,949

4.9

Subtotal

72,32091.0

72,14990.4

Deposits and other assets

7,162

9.0

7,698

9.6

Total assets

79,482100.0

79,848100.0

Office buildings
Real estate
Sub assets

Greater Tokyo, Osaka City andNagoya City
Office buildings

Real estate intrust

5th fiscal period(as of Aug. 31, 2021)

Sub assets

HotelsCities designated by government
ordinance (excluding above), corecities and major regional cities(Note 1) “Greater Tokyo” refers to Tokyo, Kanagawa Prefecture, Saitama Prefecture and Chiba Prefecture.
“Core cities” refers to cities with population of 200,000 or more (excluding Greater Tokyo, Osaka City and Nagoya City, and other cities designated by government
ordinance).“Major regional cities” refers to cities that are municipalities with population of less than 200,000 and the Asset Management Company has deemedcertain demand can be found for specific asset types.
(Note 2) “Total amount held” is based on the carrying amount (in the case of real estate and real estate in trust, the depreciated book value), rounded down to the nearest million
yen. Furthermore, the total amount held for real estate in trust with hotel as the asset type includes the book value of movables incidental to hotels.
(Note 3) “As a percentage of total assets” is rounded to one decimal place.

11

(2) Major assets held
The following is an overview of the major assets (top ten properties on a book value basis) held by SANKEI REAL ESTATE as ofAugust 31, 2021.

Property nameBREEZÉ TOWER (Note 4)

Book value(million yen)
(Note 1)

Total
leasable area(m2) (Note 2)

Total
leased area(m2) (Note 2)

Occupancyrate(%) (Note 2)

Ratio to total
rent businessrevenue (%)(Note 3)Main use

13,076

12,146.02

12,122.05

99.8

25.1

Office buildings

Shinagawa Seaside TS Tower (Note 4)

10,107

Not disclosed(Note 5)

Not disclosed(Note 5)100.0

Not disclosed(Note 5)

Office buildings

Hotel Intergate Tokyo Kyobashi

8,9786,006.53

6,006.53

100.0

9.5

HotelsS-GATE NIHONBASHI-HONCHO (Note 4)

6,707

3,171.83

3,171.83

100.0

7.4

Office buildings

Hibiya Sankei Building

6,057

3,439.61

3,439.61

100.0

9.4

Office buildings

Omori Park Building

5,463

7,469.72

7,131.88

95.5

7.3

Office buildings

Hatchobori Sankei Building

5,011

5,594.90

5,594.90

100.0

8.2

Office buildings

S-GATE AKASAKA (Note 4)

4,242

1,984.86

1,984.86

100.0

Not disclosed(Note 5)

Office buildings

Hotel Intergate Hiroshima

3,949

9,160.15

9,160.15

100.0

5.5

HotelsToyo Park Building

3,892

4,224.52

3,497.61

82.8

5.1

Office buildings

67,485

Not disclosed(Note 5)

Not disclosed(Note 5)

98.2

94.5

-

Total

(Note 1) “Book value” is the depreciated book value for each portfolio asset as of August 31, 2021, rounded down to the nearest million yen. The same shall apply hereinafter.
(Note 2) F igures for “total leasable area,” “total leased area” and “occupancy rate” are based on the data as of August 31, 2021. Furthermore, “total leasable area” is the area
(excluding area of warehouse, signboard, parking lot, etc.) expected to be leasable based on the lease agreement, drawing, etc. of the buildings for each portfolio
asset, rounded down to two decimal places. “Total leased area” is the total leased area (excluding area of warehouse, signboard, parking lot, etc.) stated in the leaseagreement (excluding leased agreements under which the lease period is yet to commence) for each portfolio asset, rounded down to two decimal places. With respect
to the portion which comes under the pass-through-type master lease agreement, the total area for which the lease agreement has actually been concluded with theend tenant and for which the lease period has commenced is indicated, rounded down to two decimal places. “Occupancy rate” is the ratio of total leased area to total
leasable area for each portfolio asset, rounded to one decimal place. In addition, “occupancy rate” in the total column is the ratio of the sum total of total leased area tothe sum total of total leasable area for each portfolio asset, rounded to one decimal place. The same shall apply for occupancy rate hereinafter.
(Note 3) “Ratio to total rent business revenue” is rounded to one decimal place. The same shall apply hereinafter.
(Note 4) The book value, total leasable area and total leased area are the figures equivalent to the co-ownership interest (51% for “S-GATE NIHONBASHI-HONCHO”) and thequasi co-ownership interest (45% for “BREEZÉ TOWER,” 25% for “Shinagawa Seaside TS Tower” and 60% for “S-GATE AKASAKA”) held by SANKEI REAL ESTATE.
(Note 5) Not disclosed, due to unavoidable circumstances in that such contains information for which consent for disclosure has not been obtained from the tenant, relevant party,
etc. or information from which confidential information can be derived.

12

(3) Real estate assets in the portfolio
The following table shows the overview of the assets held by SANKEI REAL ESTATE as of August 31, 2021.
Property nameTokyo Sankei Building (Note 3)

Period-end appraisal value(million yen)
(Note 2)Form ofownership(Note 1)

Location
1-7-2 Otemachi, Chiyoda-ku, Tokyo

Real estate

BREEZÉ TOWER (Note 3)

2-4-9 Umeda, Kita-ku, Osaka-shi, Osaka

S-GATE NIHONBASHI-HONCHO (Note 3)

1-9-1 Nihonbashi-Honcho, Chuo-ku,
Tokyo

S-GATE AKIHABARA

2-4-6 Higashi-Kanda, Chiyoda-ku, Tokyo

Hibiya Sankei Building

1-9-1 Yurakucho, Chiyoda-ku, Tokyo

Hatchobori Sankei Building

2-7-1 Hatchobori, Chuo-ku, Tokyo

Toyo Park Building

5-29-17 Toyo, Koto-ku, Tokyo

Shinagawa Seaside TS Tower (Note 3)

4-12-3 Higashi-Shinagawa,Shinagawa-ku, Tokyo

Omori Park Building

1-6-1 Omori-Honcho, Ota-ku, Tokyo

S-GATE AKASAKA (Note 3)

6-2-4 Akasaka, Minato-ku, Tokyo

Hotel Intergate Tokyo Kyobashi

3-7-8 Kyobashi, Chuo-ku, Tokyo

Hotel Intergate Hiroshima

5-16 Teppocho, Naka-ku, Hiroshima-shi,
Hiroshima

Real estate trust
beneficiary rightReal estate trust
beneficiary rightReal estate trust
beneficiary rightReal estate trust
beneficiary rightReal estate trust
beneficiary rightReal estate trust
beneficiary rightReal estate trust
beneficiary rightReal estate trust
beneficiary rightReal estate trust
beneficiary rightReal estate trust
beneficiary rightReal estate trust
beneficiary right

Total

Book value(million yen)

2,690

2,612

17,28013,076

7,470

6,707

2,530

2,051

6,410

6,057

5,500

5,011

3,610

3,892

11,00010,107

5,490

5,463

4,266

4,242

9,010

8,978

4,070

3,949

79,326

72,149(Note 1) “Real estate trust beneficiary right” refers to trust beneficiary right that has real estate as main trust assets.
(Note 2) “Period-end appraisal value” indicates the appraisal value or the price in the price survey that is conducted using the method similar to that used by real estateappraisers, with the last day of the fiscal period as the survey date, based on SANKEI REAL ESTATE’s articles of incorporation and the “Regulations on Calculations ofInvestment Corporations” (Cabinet Office Order No. 47 of 2006, as amended).
(Note 3) The period-end appraisal value and book value are the figures equivalent to the co-ownership interest (2% for “Tokyo Sankei Building” and 51% for “S-GATENIHONBASHI-HONCHO”) and the quasi co-ownership interest (45% for “BREEZÉ TOWER,” 25% for “Shinagawa Seaside TS Tower” and 60% for “S-GATE AKASAKA”)
held by SANKEI REAL ESTATE.

The following table shows the overview of the rent business for each of the assets under management held by SANKEI REAL ESTATE.
4th fiscal period
From Sep. 1, 2020 to Feb. 28, 2021
Property name

Number of Occupancy
ratetenants(at period (at period
end)
end)
(%)
(Note 1)

5th fiscal period
From Mar. 1, 2021 to Aug. 31, 2021

Operating revenue
Ratio tofrom real estate
total rent
leasingbusiness(during period)
revenue(million yen)(%)
(Note 2)

Number of Occupancy
ratetenants(at period (at period
end)
end)
(%)
(Note 1)

Operating revenue
Ratio to total
from real estate
rent businessleasingrevenue(during period)(%)(million yen)
(Note 2)

Tokyo Sankei Building

45

91.6

60

2.8

46

93.7

51

2.4

BREEZÉ TOWER

38

100.0

531

24.7

38

99.8

545

25.1

S-GATE NIHONBASHI-HONCHO

3

100.0

160

7.5

3

100.0

159

7.4

S-GATE AKIHABARA

6

100.0

62

2.9

6

100.0

68

3.1

Hibiya Sankei Building

11

100.0

209

9.8

11

100.0

204

9.4

Hatchobori Sankei Building

10

100.0

176

8.2

10

100.0

179

8.2

5

100.0

115

4

82.8

109

5.1

100.0

Not disclosed(Note 3)

Toyo Park Building
Shinagawa Seaside TS Tower
Omori Park Building

Not
disclosed(Note 3)9100.0

Not disclosed(Note 3)

100.0

154

5.4
Not
disclosed(Note 3)
7.2
Notdisclosed(Note 3)Not
disclosed(Note 3)
9

95.5

159

2

100.0

Not disclosed(Note 3)Not disclosed(Note 3)
7.3

S-GATE AKASAKA

2

100.0

Not disclosed(Note 3)

Hotel Intergate Tokyo Kyobashi

1

100.0

206

9.6

1

100.0

206

9.5

Hotel Intergate Hiroshima

1

100.0

118

5.5

1

100.0

118

5.5

98.2

2,176

100.0

Total

Not
disclosed(Note 3)

99.9

2,147

100.0

Not
disclosed(Note 3)Not disclosed(Note 3)(Note 1) “ Number of tenants” indicates the total number of tenants of the respective portfolio assets held as of August 31, 2021, based on the lease agreement of the relevant
assets. When a pass-through-type master lease agreement has been concluded for the assets, however, the total number of end tenants is indicated for the portion
covered by the pass-through-type master lease agreement among such assets. In cases in which one tenant has concluded lease agreements of different use types forthe same single asset, the tenant shall be counted as one for each use type.
(Note 2) Figures for “operating revenue from real estate leasing” are rounded down to the nearest million yen.
(Note 3) Not disclosed due to unavoidable circumstances in that such contains information for which consent for disclosure has not been obtained from the tenant, relevant party,
etc. or information from which confidential information can be derived.

13

(4) Schedule of renewable energy generation facilities in the portfolio
Not applicable.

(5) Schedule of the rights to operate public facilities, etc. in the portfolio
Not applicable.

(6) Status of other assets
Real estate and trust beneficiary rights that have real estate as trust assets, etc. held by SANKEI REAL ESTATE are listed altogether on the
aforementioned (3) Real estate assets in the portfolio.

1) Schedule of Securities Incorporated in the Portfolio
Not applicable.

2) Status of Contract Amounts, Etc. and Fair Value of Specified Transactions
Not applicable.

(7) Status of assets held in each country/region
Not applicable for any country or region outside Japan.

14

4. Capital Expenditures for Real Estate Held(1) Schedule of capital expenditures
Of capital expenditures associated with renovation work, etc. currently planned for assets held by SANKEI REAL ESTATE as of August 31, 2021,
the following are the major estimated amounts (10 million yen or more). The estimated construction costs below may include the portion separately
charged to expenses in accounting.
Expected construction cost (million yen)
Name of real estate, etc.
(Location)

Amount of
Total amountpayment
already paid
during period

PurposeScheduled period

Hibiya Sankei Building(Chiyoda-ku, Tokyo)

Renewal of power distribution
panel equipment

From: Nov. 1, 2021
To: Nov. 30, 2021

12

-

-

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Renewal of telephone andswitching equipment
Renewal of switching peripheral
equipment

From: Feb. 1, 2022
To: Feb. 28, 2022

11

-

-

Total amount(2) Capital expenditures during the fiscal period
Major construction works falling under the category of capital expenditures of 10 million yen or more conducted in the fiscal period under review for
assets held by SANKEI REAL ESTATE as of August 31, 2021, are as follows: For the fiscal period under review, capital expenditures amounted to
57 million yen and repair expenses separately charged to expenses amounted to 39 million yen for a combined total of 96 million yen of construction
works implemented.
Name of real estate, etc.
(Location)
Toyo Park Building(Koto-ku, Tokyo)

PurposeAmount of payment(million yen)

PeriodFrom: July 1, 2021
To: Aug. 25, 2021

Installation of raised flooring

12

Other

44

Total

57

(3) Cash reserves for long-term repair plans
Based on long-term repair plans formulated on a property-by-property basis, SANKEI REAL ESTATE makes the following provision of reserve for repairs
from cash flows during the fiscal period for the purpose of allocating to medium- to long-term future large-scale repairs and other funds.

Fiscal period
Balance of reserveat beginning of period(thousand yen)

5th fiscal period
4th fiscal period
3rd fiscal period
2nd fiscal period
1st fiscal period
From Nov. 19, 2018 From Sep. 1, 2019 From Mar. 1, 2020 From Sep. 1, 2020 From Mar. 1, 2021
to Aug. 31, 2021
to Feb. 28, 2021
to Aug. 31, 2020
to Feb. 29, 2020
to Aug. 31, 2019-95,103

130,466

217,842

175,880

Provision of reserve
during period(thousand yen)

95,103

105,897

128,187

59,29359,293

Reversal of reserve
during period(thousand yen)-

70,53440,812

101,255

25,496

95,103

130,466

217,842

175,880

209,678

Reserve carried forward(thousand yen)15

5. Status of Expenses and Liabilities(1) Details of expenses related to asset management(Unit: thousand yen)Item

4th fiscal period
From Sep. 1, 2020
to Feb. 28, 2021

5th fiscal period
From Mar. 1, 2021
to Aug. 31, 2021

186,562

195,532

Asset custody fee

Asset management fee

1,568

1,575

Administrative service fees

7,065

7,100

Remuneration for directors (and other officers)

3,600

3,600

Other expenses

40,51033,203

239,306

241,011Total(2) Status of loans
The status of loans from respective financial institutions as of August 31, 2021, is as follows:

Category

Balanceat beginningof period(million yen)

Balanceat end ofperiod(million yen)

1,331

-

929

-

796

-

509

-

465

-

Shinsei Bank, Limited

385-

Resona Bank, Limited

385

-

1,574

1,574

1,084

1,084

929

929

593

593

542

542

Shinsei Bank, Limited

439

439

Resona Bank, Limited

439

439

Mizuho Bank, Ltd.

972

972

716

716

614

614

392

392

LenderDrawdown
date

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Development Bank ofJapan Inc.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Trust
Bank, Limited

Mar. 12,2019

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Development Bank ofJapan Inc.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Long-term
loans

Sumitomo Mitsui Banking
Corporation
Development Bank ofJapan Inc.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Trust
Bank, Limited

Mar. 12,2019Mar. 12,
2019

358

358

Shinsei Bank, Limited

324

324

Resona Bank, Limited

324

324

Mizuho Bank, Ltd.

856

856

639

639

548

548

350

350

319

319

Shinsei Bank, Limited

294

294

Resona Bank, Limited

294

294

Sumitomo Mitsui Banking
Corporation
Development Bank ofJapan Inc.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Trust
Bank, Limited

Mar. 12,2019

16

Averageinterest rate
(Note 1)Maturity
date(Note 2)

Repayment
methodUse offunds

Remarks0.25409%(floatinginterest rate)

Mar. 12,2021

Lump-sum
repayment
at maturity(Note 3)

Unsecured/Non-guaranteed

0.36969%(fixedinterest rate)

Mar. 12,2022

Lump-sum
repayment
at maturity(Note 3)

Unsecured/Non-guaranteed

0.42346%(fixedinterest rate)

Mar. 12,2023

Lump-sum
repayment
at maturity(Note 3)

Unsecured/Non-guaranteed

0.49096%(fixedinterest rate)

Mar. 12,2024

Lump-sum
repayment
at maturity(Note 3)

Unsecured/Non-guaranteedCategory

Balanceat beginningof period(million yen)

Balanceat end ofperiod(million yen)

2,250

2,250

1,500

1,500

620

620

550

550

Shinsei Bank, Limited

490

490

Resona Bank, Limited

490

490

Mizuho Bank, Ltd.

950

950

800

800

2,000

2,000

620

620

550

550

Shinsei Bank, Limited

490

490

Resona Bank, Limited

490

490

1,167

1,167

832

832

713

713

456

456

416

416

Shinsei Bank, Limited

358

358

Resona Bank, Limited

358

358

4,300

4,300

-

1,331

-

929

-

796

-

509

-

465

Shinsei Bank, Limited-

385

Resona Bank, Limited-

385

37,80037,800

LenderDrawdown
date

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Trust
Bank, Limited

Sumitomo Mitsui Banking
Corporation
Development Bank ofJapan Inc.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Trust
Bank, Limited

Sep. 3,2019

Sep. 3,2019

Mizuho Bank, Ltd.
Long-term
loans

Sumitomo Mitsui Banking
Corporation
Development Bank ofJapan Inc.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Trust
Bank, Limited

Mizuho Bank, Ltd.

Mar. 12,2020

Oct. 1,
2020

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Development Bank ofJapan Inc.
Mizuho Trust & Banking
Co., Ltd.
Sumitomo Mitsui Trust
Bank, Limited

Mar. 12,
2021

Total

Averageinterest rate
(Note 1)Maturity
date(Note 2)

Repayment
methodUse offunds

Remarks

0.27425%(floatinginterest rate)

Sep. 3,2022

Lump-sum
repayment
at maturity(Note 3)

Unsecured/Non-guaranteed

0.36200%(fixed interest
rate)

Sep. 3,2023

Lump-sum
repayment
at maturity(Note 3)

Unsecured/Non-guaranteed

0.32923%(fixed interest
rate)

Sep. 12,2024

Lump-sum
repayment
at maturity(Note 4)

Unsecured/Non-guaranteed

0.23235%(floatinginterest rate)

Oct. 1,2021

Lump-sum
repayment
at maturity(Note 3)

Unsecured/Non-guaranteed

0.36978%(fixed interest
rate)

Mar. 12,2025

Lump-sum
repayment
at maturity(Note 4)

Unsecured/Non-guaranteed(Note 1) The average interest rate is a weighted-average figure during the fiscal period and is rounded to five decimal places.
(Note 2) If the maturity date is not a business day, the immediately following business day shall be the maturity date.
(Note 3) These funds are used for acquiring real estate or real estate trust beneficiary rights and accompanying expenses.
(Note 4) The funds are used to repay existing loans.

(3) Investment corporation bonds
Not applicable.

(4) Short-term investment corporation bonds
Not applicable.

(5) Investment unit acquisition rights
Not applicable.

176. Acquisitions and Sales during the Fiscal Period(1) Acquisition and sale of real estate, asset-backed securities, infrastructure assets, etc. andinfrastructure-related assets, etc.
Not applicable.

(2) Acquisition and sale of other assets
Main assets other than the above real estate and asset-backed securities, etc. are bank deposits or bank deposits within trust assets.

(3) Survey on prices of specified assets, etc.
Not applicable.

(4) Transactions with interested parties, etc.
1) Transaction status
Not applicable.

2) Amount of fees paid, etc.
Category

Total amount of fees
paid, etc. (A)Property management fees

32,287 thousand yen

Building management fees

137,364 thousand yen

Breakdown of transactions with interested parties, etc.
Paid party
The Sankei Building Co., Ltd.

Paid amount (B)Percentage of
total amount (B/A)

18,939 thousand yen

58.7%

The Sankei Building Management Co., Ltd.

10,913 thousand yen

33.8%

The Sankei Building Management Co., Ltd.

117,791 thousand yen

85.8%3) Major payments to other interested parties, etc.
The amounts paid to interested parties, etc. other than the fees paid, etc. above are as follows:
The Sankei Building Management Co., Ltd.

25,084 thousand yen(Repair expenses)

Sankei Shimbun Co., Ltd.

1,135 thousand yen(Land rent)

Fuji Media Holdings, Inc.

683 thousand yen(Land rent)

4) Leasing transactions, etc.
Leasing transactions conducted with interested parties, etc. are as follows:
GRANVISTA Hotels & Resorts Co., Ltd.
The Sankei Building Co., Ltd.

325,755 thousand yen(Rental revenue)

2,948 thousand yen(Rental revenue).

(5) Transactions with the asset management company regarding concurrent work conductedby the asset management company
As of August 31, 2021, Sankei Building Asset Management Co., Ltd., the asset management company of SANKEI REAL ESTATE, concurrently
conducts investment advisory and agency business and type II financial instruments business under the Financial Instruments and Exchange Act, but has
no such transactions with SANKEI REAL ESTATE. Moreover, the asset management company does not concurrently conduct any of the type I financial
instruments business, building lots and buildings transaction business, or real estate specified joint enterprise, and has no such transactions with
SANKEI REAL ESTATE.

18

7. Overview of Accounting(1) Assets, liabilities, principal, and profits and loss
Please refer to Balance Sheet, Statement of Income and Retained Earnings, Statement of Changes in Unitholders’ Equity, Notes to Financial Statements
and Statement of Cash Distributions on later pages of this report.

(2) Changes in calculation method of depreciation
Not applicable.

(3) Changes in valuation method of real estate and infrastructure assets, etc.
Not applicable.

(4) Status, etc. of self-managed investment trust beneficiary certificates, etc.
Not applicable.

8. Other(1) Notices
Board of Directors of the investment corporation
The main overviews of the major conclusions and changes of contracts that were approved by the Board of Directors of SANKEI REAL ESTATE during
the fiscal period under review are as follows:
Approval date

Item

Overview

August 16, 2021

Conclusion of agreements such as an underwriting
agreement for new investment units

Conclusion of agreements such as an underwriting agreement for new
investment units with Daiwa Securities Co. Ltd., Mizuho Securities Co.,
Ltd., and Nomura Securities Co., Ltd.

(2) Disclosure on corporation owning foreign real estate
Not applicable.

(3) Disclosure on real estate owned by corporation owning foreign real estate
Not applicable.

(4) Other
Unless otherwise stated, the figures less than the specified unit are rounded down for monetary amounts and rounded off to the nearest specified unit forpercentage figures in this Report.

191. Financial Statements(1) Balance Sheet(Unit: thousand yen)

4th fiscal period(as of Feb. 28, 2021)

5th fiscal period(as of Aug. 31, 2021)

AssetsCurrent assets
Cash and deposits

4,147,117

4,457,965

Cash and deposits in trust

2,797,010

2,799,257

Operating accounts receivable

54,09636,079Prepaid expenses

46,59759,212

Consumption taxes receivable

9,321

-

Other

41,01577

7,095,157

7,352,593

166,032

169,301

Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation(11,908)(15,201)

Buildings, net

154,123

154,100

353

544

Structures
Accumulated depreciation

(16)

(25)

Structures, net

336

518

Land

2,457,766

2,457,766

Buildings in trust

14,296,308

14,340,970

Accumulated depreciation
Buildings in trust, net
Structures in trust(769,403)(992,106)

13,526,905

13,348,864

23,602

23,832

Accumulated depreciation(1,122)(1,435)Structures in trust, net

22,47922,396

Machinery and equipment in trust

2,875

11,302

Accumulated depreciation

(348)

(564)

Machinery and equipment in trust, net

2,526

10,737

Tools, furniture and fixtures in trust

27,88928,239

Accumulated depreciation(3,719)(5,727)

Tools, furniture and fixtures in trust, net

24,17022,51256,132,321

56,132,575

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

8,103

281,344

72,328,733

72,430,815

Intangible assets
Software

5,773

4,833

Total intangible assets

5,773

4,833

43,23743,724

Investments and other assets
Long-term prepaid expenses
Deferred tax assets
Lease and guarantee deposits
Total investments and other assets

13

13

10,00010,00053,25153,73872,387,757

72,489,387

Investment unit issuance costs

-

6,488

Total deferred assets

-

6,488

79,482,915

79,848,468

Total non-current assets
Deferred assets

Total assets

22

(Unit: thousand yen)

4th fiscal period(as of Feb. 28, 2021)

5th fiscal period(as of Aug. 31, 2021)

Liabilities
Current liabilities
Operating accounts payable

170,112225,346

9,100,000

9,900,000

Accounts payable - other219,582494,644

Accrued expenses

26,17527,936Long-term loans due within one year

Income taxes payable

879

875

-

89,208Advances received

373,814339,943

Deposits received

7,496

14,065

9,898,060

11,092,019

28,700,000

27,900,000

Consumption taxes payable

Total current liabilities
Non-current liabilities
Long-term loans
Lease and guarantee deposits received

79,585

82,139Lease and guarantee deposits received in trust

3,247,634

3,219,176

Total non-current liabilities

32,027,219

31,201,315

41,925,280

42,293,334

36,540,901

36,540,901

1,016,734

1,014,232

Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus
Unappropriated retained earnings(undisposed loss)
Total surplus

1,016,734

1,014,232

Total unitholders’ equity

37,557,635

37,555,134*1 37,557,635*1 37,555,134

79,482,915

79,848,468

Total net assets
Total liabilities and net assets

23

(2) Statement of Income and Retained Earnings(Unit: thousand yen)

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

4th fiscal period
From: Sep. 1, 2020
To: Feb. 28, 2021
Operating revenue
Rent business revenue*1 2,015,771*1 2,032,902

Other rent business revenue*1 132,163*1 143,210

Total operating revenue

2,147,934

2,176,113*1 790,014*1 793,758

186,562

195,532

Asset custody fee

1,568

1,575

Administrative service fees

7,065

7,100

Remuneration for directors (and other officers)

3,600

3,600

Other operating expenses

40,51033,203

Total operating expenses

1,029,320

1,034,769

1,118,614

1,141,343

Operating expenses
Expenses related to rent business
Asset management fee

Operating income
Non-operating income
Interest income
Insurance claim income

21

31

-

994
50

Interest on refund

-

Other

0

15

Total non-operating income

21

1,091

Interest expenses

61,56566,412

Borrowing related expenses

37,66061,120

Other

2,000

-

101,225

127,533

Ordinary income

1,017,409

1,014,902

Net income before income taxes

1,017,409

1,014,902

Income taxes - current

882

880

Income taxes - deferred

0

0

883

880

1,016,526

1,014,021

Non-operating expenses

Total non-operating expenses

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

24

207

210

1,016,734

1,014,232

(3) Statement of Changes in Unitholders’ Equity
4th fiscal period (from September 1, 2020 to February 28, 2021)(Unit: thousand yen)

Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning of period

Unappropriatedretained earnings(undisposed loss)

36,540,901

Total
surplus

Total unitholders’equityTotal net assets

903,625

903,625

37,444,526

37,444,526

Distributions from surplus(903,417)(903,417)(903,417)(903,417)

Net income

1,016,526

1,016,526

1,016,526

1,016,526-

113,108

113,108

113,108

113,108*1 36,540,901

1,016,734

1,016,734

37,557,635

37,557,635

Changes in items during period

Total changes in items during period
Balance at end of period

5th fiscal period (from March 1, 2021 to August 31, 2021)(Unit: thousand yen)

Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning of period

Unappropriatedretained earnings(undisposed loss)

36,540,901

Total
surplus

Total unitholders’equityTotal net assets

1,016,734

1,016,734

37,557,635

37,557,635

Distributions from surplus(1,016,523)(1,016,523)(1,016,523)(1,016,523)

Net income

1,014,021

1,014,021

1,014,021

1,014,021-(2,501)(2,501)(2,501)(2,501)*1 36,540,901

1,014,232

1,014,232

37,555,134

37,555,134

Changes in items during period

Total changes in items during period
Balance at end of period25

(4) Statement of Cash Distributions(Unit: yen)

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

4th fiscal period
From: Sep. 1, 2020
To: Feb. 28, 2021
I. Unappropriated retained earnings

1,016,734,169

1,014,232,892-

7,136,000

II. Additional distribution in excess of earnings
Deduction from unitholders’ capital
III. Amount of distribution

1,016,523,200

1,021,161,600[Amount of distribution per unit][2,849][2,862]of which, distribution of earnings

1,016,523,200

1,014,025,600[of which, distribution of earnings per unit][2,849][2,842]of which, distribution in excess of earnings-

7,136,000[of which, distribution in excess of earnings per
unit]

[-]

[20]

210,969

207,293

In accordance with the policy on distribution
specified in Article 36, Paragraph 1 of SANKEIREAL ESTATE’s articles of incorporation, theamount of distribution shall be limited to theamount of net income in excess of the amountequivalent to 90% of distributable profit, as
stipulated in Article 67-15 of the Act on Special
Measures Concerning Taxation. Based on thispolicy, the decision was made to distribute
1,016,523,200 yen, which is the largest integral
multiple of the total number of investment units
issued and outstanding (356,800 units) not inexcess of unappropriated retained earnings.
The distribution in excess of earnings
specified in Article 36, Paragraph 2 of SANKEIREAL ESTATE’s articles of incorporation will not
be made.

In accordance with the policy on distribution
specified in Article 36, Paragraph 1 of SANKEIREAL ESTATE’s articles of incorporation, theamount of distribution shall be limited to theamount of net income in excess of the amountequivalent to 90% of distributable profit, as
stipulated in Article 67-15 of the Act on Special
Measures Concerning Taxation. Based on thispolicy, the decision was made to distribute
1,014,025,600 yen, which is the largest integral
multiple of the total number of investment units
issued and outstanding (356,800 units) not inexcess of unappropriated retained earnings.
Furthermore, pursuant to the policy on the
distribution in excess of earnings specified
in Article 36, Paragraph 2 of SANKEI REALESTATE’s articles of incorporation, due to net
income decreasing in the fiscal period underreview as a result of recording temporary
borrowing-related expenses associated withborrowing for the acquisition of real estate trust
beneficiary rights of 4 properties on September
2, 2021, 7,136,000 yen was distributed as acontribution refund that falls under distribution
through reduction in unitholders’ capital for tax
purposes. As a result, the amount of distribution
was 1,021,161,600 yen in the fiscal period underreview.

IV. Retained earnings carried forward
Method of calculation of amount of distribution26

(5) Statement of Cash Flows(Unit: thousand yen)

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

4th fiscal period
From: Sep. 1, 2020
To: Feb. 28, 2021
Cash flows from operating activities
Net income before income taxes
Depreciation
Interest income

1,017,409

1,014,902

228,057

229,481

(21)

(31)

Interest expenses

61,56566,412

Decrease (increase) in operating accounts receivable

34,103

20,672

Decrease (increase) in consumption taxes refund receivable(9,321)

9,321

Decrease (increase) in prepaid expenses

5,300(12,615)

Increase (decrease) in operating accounts payable(54,667)

18,847

Increase (decrease) in accounts payable - other

4,076

12,407

Increase (decrease) in consumption taxes payable(129,470)

89,208

Increase (decrease) in advances received

45,256(33,871)

Increase (decrease) in deposits received(1,197,677)

6,568

Decrease (increase) in long-term prepaid expenses

17,555(487)

Decrease (increase) in other assets

526,775

40,937

Subtotal

548,943

1,461,754

Interest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities

21

31(61,662)(64,651)

(896)

(884)

486,405

1,396,250

Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Proceeds from lease and guarantee deposits received(493)(3,460)(4,286,634)(28,670)

81

2,572

Refund of lease and guarantee deposits received(12,724)(19)

Proceeds from lease and guarantee deposits received in trust

232,800

3,970(33,127)(35,084)(4,100,099)(60,691)

Refund of lease and guarantee deposits received in trust
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from long-term loans

4,300,000

4,800,000

Repayments of long-term loans-(4,800,000)-(6,488)Distributions paid

Payments of investment unit issuance costs(902,512)(1,015,975)(1,022,464)

Net cash provided by (used in) financing activities

3,397,487

Net increase (decrease) in cash and cash equivalents(216,205)

313,095

Cash and cash equivalents at beginning of period

7,160,333

6,944,127*1 6,944,127*1 7,257,223

Cash and cash equivalents at end of period27

(6) Notes to Financial Statements(Notes on the Going Concern Assumption)
Not applicable.
(Notes on Matters Concerning Significant Accounting Policies)
1. Method of depreciation of non-current
assets(1) Property, plant and equipment (including trust assets)
The straight-line method is adopted. Furthermore, the useful lives of major property, plant andequipment are as follows:
Buildings			
3-65 years
Structures			
6-59 years
Machinery and equipment
8-10 years
Tools, furniture and fixtures
4-8 years(2) Intangible assets
The straight-line method is adopted.
(3) Long-term prepaid expenses
The straight-line method is adopted.

2. Accounting for deferred assets

Investment unit issuance costs
They are amortized by the straight-line method over 3 years.

3. Standards for revenue and expense
recognition

Accounting for fixed asset tax, etc.
For fixed asset tax, city planning tax, depreciable asset tax, etc. on real estate or trust beneficiary rightsof real estate, the tax levied corresponding to the calculation period is recorded as expenses related torent business.
Furthermore, the amount equivalent to fixed asset tax, etc. in the initial fiscal year paid by SANKEIREAL ESTATE upon acquisition of real estate or trust beneficiary rights of real estate is included in
the cost of acquisition of the real estate, etc., not recognized as expenses. The amount equivalent to
fixed asset tax, etc. included in the cost of acquisition of real estate, etc. was 3,425 thousand yen in theprevious fiscal period. The amount equivalent to fixed asset tax, etc. included in the cost of acquisitionof real estate, etc. was nil in the current fiscal period.

4. Scope of cash (cash and cash equivalents)
in the statement of cash flows

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 orless from the date of acquisition that are readily convertible to cash and that are subject to an insignificant
risk of changes in value.

5. Other significant matters related to thebasis for preparation of the financial
statements(1) Accounting for trust beneficiary rights that have real estate, etc. as trust assets
Concerning trust beneficiary rights that have real estate, etc. as trust assets held, all accounts ofassets and liabilities within trust assets and all accounts of revenue and expenses from the trust
assets are recognized in the relevant account item of the balance sheet and the statement ofincome and retained earnings.
Furthermore, the following material items of the trust assets recognized in the relevant accountitem are separately listed on the balance sheet.
i. Cash and deposits in trustii. Buildings in trust; Structures in trust; Machinery and equipment in trust; Tools, furniture andfixtures in trust; Land in trust; Construction in progress in trustiii. Lease and guarantee deposits received in trust(2) Accounting for consumption tax, etc.
The accounting for consumption tax and local consumption tax is by the method of exclusion of thetaxes.

(Notes on Accounting Standards, Etc. Yet to be Applied)・ “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (ASBJ) Statement No. 29 issued on March 31, 2020)
・ “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30 issued on March 26, 2021)
・ “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued on March 31, 2020)28

1. Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) in the United States have jointly
developed comprehensive accounting standards for revenue recognition and issued “Revenue from Contracts with Customers” (IFRS 15 by
IASB and Topic 606 by FASB) in May 2014. Given the situation where IFRS 15 will be applied from fiscal years beginning on or after January
1, 2018, and that Topic 606 will be applied from fiscal years beginning after December 15, 2017, the ASBJ has developed a comprehensive
accounting standard for revenue recognition and issued such together with an implementation guidance.
The basic policy for the ASBJ when it developed the accounting standard for revenue recognition was to determine the accounting standard,
incorporating the basic principles of IFRS 15 as a starting point, from the perspective of comparability between financial statements, which isone of the benefits of consistency with IFRS 15. If there is an item to which consideration should be given, such as practices that have been
conducted thus far in Japan, alternative treatments shall be added to the extent to which comparability is not impaired.

2. Scheduled application dateThose standards and guidance will be applied at the beginning of the fiscal period ending February 28, 2022.

3. Impact of applying the accounting standards, etc.
The impact on the financial statements of the applying of this standard and guidance is currently under review.
・ “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30 issued on July 4, 2019)
・ “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10 issued on July 4, 2019)
・ “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31 issued on June 17, 2021)
・ “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued on March 31, 2020)

1. Overview
The IASB and the FASB in the United States set up detailed guidance on fair value measurement (IFRS 13 “Fair Value Measurement” by IASB
and Topic 820 “Fair Value Measurement” by FASB). To improve the comparability with the provisions of these international accounting standards,
the ASBJ discussed the guidance and disclosure regarding mainly the fair value of financial instruments, and announced an accounting standard
for fair value measurement and an implementation guidance on the accounting standard for fair value measurement.
The basic policy for the ASBJ when it developed the accounting standard for fair value measurement was to incorporate basically all of theprovisions of IFRS 13, from the perspective of improving the comparability between financial statements among domestic and international
companies by using a unified method of measurement. To the extent that the comparability between financial statements is not significantly
impaired, other treatments of individual items shall be determined considering practices that have been conducted thus far in Japan, etc.

2. Scheduled application dateThose standards and guidance will be applied at the beginning of the fiscal period ending February 28, 2022.

3. Impact of applying the accounting standards, etc.
The impact on the financial statements of the applying of this standard and guidance is currently under review.

29

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

4th fiscal period(as of Feb. 28, 2021)

5th fiscal period(as of Aug. 31, 2021)

50,00050,000(Notes to the Statement of Income and Retained Earnings)*1. Breakdown of operating income (loss) from real estate leasing(Unit: thousand yen)

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

4th fiscal period
From: Sep. 1, 2020
To: Feb. 28, 2021
A. Operating revenue from real estate leasing
Rent business revenue
Rental revenue

1,868,319

Common area maintenance revenue

1,890,879

147,452

142,0222,015,771

2,032,902

Utilities revenue

93,36689,327

Parking revenue

30,655

31,102Other rental revenue

8,141

22,780Total rent business revenue
Other rent business revenue

Total other rent business revenue
Total operating revenue from real estate leasing

132,163

143,210

2,147,934

2,176,113

169,652

B. Operating expenses from real estate leasing
Expenses related to rent businessOutsourcing expenses

183,374

Utilities expenses

110,924

116,632

Property taxes

214,815

223,015

Land rent

1,818

1,818

Repair expenses

35,84439,331

Insurance premium

4,664

4,354

Trust fee
Depreciation
Other expenses related to rent business

2,371

2,752

227,117228,541

9,081

7,658

Total expenses related to rent business

790,014793,758

Total operating expenses from real estate leasing

790,014793,758

C. Operating income (loss) from real estate leasing[A−B]

1,357,920

1,382,355(Notes to the Statement of Changes in Unitholders’ Equity)*1. Total number of investment units authorized and total number of investment units issued and outstanding(Unit: units)

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

4th fiscal period
From: Sep. 1, 2020
To: Feb. 28, 2021
Total number of investment units authorized
Total number of investment units issued and outstanding30

10,000,000

10,000,000

356,800

356,800

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

4th fiscal period
From: Sep. 1, 2020
To: Feb. 28, 2021

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

Cash and deposits
Cash and deposits in trust

4,147,117
2,797,010

4,457,965
2,799,257

Cash and cash equivalents

6,944,127

7,257,223(Notes on Lease Transactions)Operating lease transactions (as lessor)
Future minimum lease payments(Unit: thousand yen)

4th fiscal period(as of Feb. 28, 2021)

5th fiscal period(as of Aug. 31, 2021)

Due within 1 year

2,692,306

2,519,482

Due after 1 year

15,407,566

14,482,652

Total

18,099,872

17,002,135(Notes on Financial Instruments)

1. Matters concerning status of financial instruments(1) Policy for handling financial instruments
SANKEI REAL ESTATE shall procure funds in a well-balanced manner through borrowing from financial institutions, issuance of investment
corporation bonds, issuance of new investment units, etc. to contribute to steady growth of assets under management as well as efficient
operation and stability of management.
Upon borrowing from financial institutions, issuance of investment corporation bonds, etc., the fund procurement shall be in a mannerthat gives due consideration to the balance between agility in fund procurement and financial stability, characteristics of to-be-acquired realestate, etc. Specifically, the procurement means, ratio of long-term debt, ratio of fixed-rate debt, staggering of maturities, provision of collateralor not, etc. shall be considered. If borrowing, lenders shall be limited to the qualified institutional investors provided in the Financial Instruments
and Exchange Act (however, limited to the institutional investors provided in Article 67-15 of the Act on Special Measures Concerning
Taxation).
Issuance of new investment units shall be for the purpose of expansion of asset size and enhancement of profitability, as well as
implementation decided by taking into account the LTV ratio, dilution of existing unitholders’ rights and accompanying decline in transaction
price of investment units, etc. and in light of the financial environment.
Derivative transactions may be conducted for the purpose of hedging the risk of fluctuation in interest rates and other risks on SANKEIREAL ESTATE arising from the concerned liabilities. No derivative transactions were conducted in the current fiscal period.

(2) Description of financial instruments and associated risks, and risk management system
Loans are mainly for the purpose of procuring funds for acquisition of assets and funds for repayment of obligations. Loans are exposed to
the risk of inability to refinance upon becoming due for repayment, risk of rise in the interest rate payable, etc., but the risks are mitigatedby considering fund procurement that is well balanced through issuance of investment units, etc. while also diversifying fund procurement
sources and staggering maturities. In addition, the risk of rise in interest rates on SANKEI REAL ESTATE’s operations is managed by closely
watching interest rate trends and keeping the LTV ratio under control in an appropriate manner.

(3) Supplementary explanation to matters concerning fair value, etc. of financial instruments
The fair value of financial instruments is values based on market price, but may otherwise include values based on reasonable calculation
when no market price is available. Certain assumptions, etc. are adopted in the calculation of the concerned values. Accordingly, theconcerned values may vary when different assumptions, etc. are adopted.

31

2. Matters concerning fair value, etc. of financial instruments
The following are the carrying amount and fair value as of February 28, 2021, and the amount of difference between these. Financial
instruments for which estimation of fair value is recognized to be extremely difficult are not included in the following table (Note 2).
(Unit: thousand yen)

Carrying amount(1) Cash and deposits(2) Cash and deposits in trust
Total assets(1) Long-term loans due within one year
(2) Long-term loans
Total liabilities

Fair value

Amount of difference

4,147,117
2,797,010

4,147,117
2,797,010-

6,944,127

6,944,127-

9,100,000
28,700,000

9,100,000
28,744,574

44,57437,800,000

37,844,574

44,574

The following are the carrying amount and fair value as of August 31, 2021, and the amount of difference between these. Financial
instruments for which estimation of fair value is recognized to be extremely difficult are not included in the following table (Note 2).
(Unit: thousand yen)

Carrying amount(1) Cash and deposits(2) Cash and deposits in trust
Total assets(1) Long-term loans due within one year
(2) Long-term loans
Total liabilities

Fair value

Amount of difference

4,457,965
2,799,257

4,457,965
2,799,257-

7,257,223

7,257,223-

9,900,000
27,900,000

9,908,903
27,976,223

8,903
76,22337,800,000

37,885,127

85,127(Note 1) Method of calculation of the fair value of financial instruments

Assets(1) Cash and deposits; (2) Cash and deposits in trust
Because these are settled in a short period of time, the fair value is approximately the same as the book value and thus stated at that book value.
Liabilities(1) Long-term loans due within one year; (2) Long-term loans
Of long-term loans, because those with floating interest rates reflect market interest rates in a short period of time, the fair value is thought toresemble the book value and thus stated at that book value. However, in the case of long-term loans with fixed interest rates, the fair value iscalculated based on the present value of their future cash flows discounted over the time to maturity and at the rate adjusted for credit risks.
(Note 2) Financial instruments for which estimation of fair value is recognized to be extremely difficult(Unit: thousand yen)

4th fiscal period(as of Feb. 28, 2021)
Lease and guarantee deposits received
Lease and guarantee deposits received in trust

5th fiscal period(as of Aug. 31, 2021)

79,585

82,1393,247,634

3,219,176*	“Lease and guarantee deposits received” and “Lease and guarantee deposits received in trust” are not subject to disclosure of fair value
because there is no market price and, even if the lease contract period has been set, there being the possibility of contract cancellation before
expiration, contract extension or contract renewal make calculating the actual deposit period impossible and reasonable projection of future
cash flows is thus recognized to be extremely difficult.
(Note 3) Amount of redemption of monetary claims scheduled to be due after the end of the fiscal period (February 28, 2021)(Unit: thousand yen)

Due within
1 yearDue after
1 to 2 years

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years

Due after
5 years

Cash and deposits

4,147,117

-

-

-

-

-

Cash and deposits in trust

2,797,010

-

-

-

-

-

6,944,127

-

-

-

-

-

Total

32

Amount of redemption of monetary claims scheduled to be due after the end of the fiscal period (August 31, 2021)(Unit: thousand yen)

Due within
1 yearDue after
1 to 2 years

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years

Due after
5 years

Cash and deposits

4,457,965

-

-

-

-

-

Cash and deposits in trust

2,799,257

-

-

-

-

-

7,257,223

-

-

-

-

-

Total

(Note 4) Amount of repayment of loans scheduled to be due after the end of the fiscal period (February 28, 2021)(Unit: thousand yen)

Due within
1 yearLong-term loans due within one year

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years

Due after
5 years

9,100,000

-

-

-

-

-

-

11,500,000

9,600,000

7,600,000--

9,100,000

11,500,000

9,600,000

7,600,000--

Long-term loans
Total

Due after
1 to 2 years

Amount of repayment of loans scheduled to be due after the end of the fiscal period (August 31, 2021)(Unit: thousand yen)

Due within
1 yearLong-term loans due within one year
Long-term loans
Total

Due after
1 to 2 years

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years

Due after
5 years

9,900,000

-

-

-

-

-

-

9,600,000

9,200,000

9,100,000--

9,900,000

9,600,000

9,200,000

9,100,000--(Notes on Securities)
4th fiscal period (as of February 28, 2021)
Not applicable.
5th fiscal period (as of August 31, 2021)
Not applicable.
(Notes on Derivative Transactions)
4th fiscal period (as of February 28, 2021)
Not applicable.
5th fiscal period (as of August 31, 2021)
Not applicable.
(Notes on Retirement Benefits)
4th fiscal period (as of February 28, 2021)
Not applicable.
5th fiscal period (as of August 31, 2021)
Not applicable.
(Notes on Tax-Effect Accounting)

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

4th fiscal period(as of Feb. 28, 2021)

5th fiscal period(as of Aug. 31, 2021)

Non-deductible accrued enterprise tax

13

13

Total

13

13

13

13

Deferred tax assets

Deferred tax assets, net

33

2. Reconciliation of significant differences between the statutory tax rate and the effective income tax rate
(Unit: %)4th fiscal period(as of Feb. 28, 2021)

5th fiscal period(as of Aug. 31, 2021)

31.46

31.46

(31.43)(31.43)

Other

0.06

0.06

Effective income tax rate after application oftax-effect accounting

0.09

0.09

Statutory tax rate
[Adjustments]
Deductible distribution payable(Notes on Share of Profit (Loss) of Entities Accounted for Using Equity Method)
4th fiscal period (from September 1, 2020 to February 28, 2021)
Not applicable.
5th fiscal period (from March 1, 2021 to August 31, 2021)
Not applicable.
(Notes on Related-Party Transactions)

1. Parent company, major corporate unitholder, etc.
4th fiscal period (from September 1, 2020 to February 28, 2021)
Not applicable.
5th fiscal period (from March 1, 2021 to August 31, 2021)
Not applicable.

2. Affiliated company, etc.
4th fiscal period (from September 1, 2020 to February 28, 2021)
Not applicable.
5th fiscal period (from March 1, 2021 to August 31, 2021)
Not applicable.

3. Fellow subsidiary, etc.
4th fiscal period (from September 1, 2020 to February 28, 2021)
Not applicable.
5th fiscal period (from March 1, 2021 to August 31, 2021)
Not applicable.

34

4. Director, major individual unitholder, etc.
4th fiscal period (from September 1, 2020 to February 28, 2021)
Sharecapital or
Name ofinvestments
company,
Attribute
Locationin capital
etc. or name(thousandof personyen)

Description ofbusiness or
occupation

Description ofPercentage ofrelationshipvoting rights,
Description
etc. held by Concurrentof(in) SANKEI holding of Business
transaction
REAL ESTATE positions, relationshipetc. by(%)
directors

Director

Executive
Director of
SANKEI REALESTATE, andPresident andRepresentative
Director of
Sankei Building
AssetManagement
Co., Ltd.

Payment
Executive Directorof assetof SANKEI REALESTATE, and President management
fee to asset
and Representative
management
Director of Sankei
company
Building Asset(Note 3)
Management Co., Ltd.

Yuichi Ota

-

-

-

Transaction
amount(thousandyen)

Account
item

Balanceat end ofperiod(thousandyen)

228,562(Note 4)

Accounts
payable other

205,218(Note 1) Of the related-party transactions subject to disclosure, the related-party transactions including significant transactions are disclosed.
(Note 2) O f the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period includes consumption tax, etc.
Amounts are rounded down to the nearest thousand yen.
(Note 3) P ayment of asset management fee is for transactions conducted by Yuichi Ota as representative of Sankei Building Asset Management Co., Ltd.,and transaction amount is based on the terms and conditions provided in SANKEI REAL ESTATE’s articles of incorporation.
(Note 4) Asset management fee includes the portion of the fee for property acquisition included in the book value of individual real estate, etc. (42,000 thousand yen).
(Note 5) Transaction terms and conditions are decided based on the actual market conditions.

5th fiscal period (from March 1, 2021 to August 31, 2021)
Sharecapital or
Name ofinvestments
company,
Attribute
Locationin capital
etc. or name(thousandof personyen)

Description ofbusiness or
occupation

Description ofPercentage ofrelationshipvoting rights,
Description
Concurrent
etc. held byof(in) SANKEI holding of Business
transaction
REAL ESTATE positions, relationshipetc. by(%)
directors

Director

Executive
Director of
SANKEI REALESTATE, andPresident andRepresentative
Director of
Sankei Building
AssetManagement
Co., Ltd.

Payment
Executive Directorof assetof SANKEI REALESTATE, and President management
fee to asset
and Representative
management
Director of Sankei
company
Building Asset(Note 3)
Management Co., Ltd.

Yuichi Ota

-

-

-

Transaction
amount(thousandyen)

Account
item

Balanceat end ofperiod(thousandyen)

195,532

Accounts
payable other

215,085(Note 1) Of the related-party transactions subject to disclosure, the related-party transactions including significant transactions are disclosed.
(Note 2) O f the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period includes consumption tax, etc.
Amounts are rounded down to the nearest thousand yen.
(Note 3) P ayment of asset management fee is for transactions conducted by Yuichi Ota as representative of Sankei Building Asset Management Co., Ltd.,and transaction amount is based on the terms and conditions provided in SANKEI REAL ESTATE’s articles of incorporation.
(Note 4) Transaction terms and conditions are decided based on the actual market conditions.

(Notes on Asset Retirement Obligations)
4th fiscal period (from September 1, 2020 to February 28, 2021)
Not applicable.
5th fiscal period (from March 1, 2021 to August 31, 2021)
Not applicable.

35

(Notes on Investment and Rental Properties)
SANKEI REAL ESTATE owns office buildings, etc. for the purpose of earning revenue from leasing. The carrying amount, amount of change
during period and fair value of these investment and rental properties are as follows:(Unit: thousand yen)

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

4th fiscal period
From: Sep. 1, 2020
To: Feb. 28, 2021
Carrying amount
Balance at beginning of period

68,249,447

72,320,630

Amount of change during period

4,071,182(171,159)

72,320,630

72,149,470

79,181,000

79,326,000

Balance at end of period
Fair value at end of period(Note 1) Carrying amount is the amount of the cost of acquisition, less accumulated depreciation.
(Note 2) Of the amount of change during period, the amount of increase in the previous fiscal period is mainly attributable to new property acquisition of 1 property(4,255,758 thousand yen), etc., while the amount of decrease is mainly attributable to depreciation (227,117 thousand yen). The amount of increase in thecurrent fiscal period is mainly attributable to capital expenditures (57,084 thousand yen), etc., while the amount of decrease is mainly attributable todepreciation (228,541 thousand yen).
(Note 3) Fair value at end of period is the appraisal value by an external real estate appraiser.

Furthermore, the income (loss) concerning investment and rental properties is presented in “Notes to the Statement of Income and Retained
Earnings.”(Notes on Segment Information, Etc.)

1. Segment information
The information is omitted since SANKEI REAL ESTATE has a single segment—the real estate rent business.

2. Related information
4th fiscal period (from September 1, 2020 to February 28, 2021)(1) Information by product and service
The information is omitted since operating revenue to external customers for a single group of products and services exceeds 90% of operating
revenue on the statement of income and retained earnings.

(2) Information by geographic areai. Operating revenue
The information is omitted since operating revenue to external customers in Japan exceeds 90% of operating revenue on the statement ofincome and retained earnings.
ii. Property, plant and equipment
The information is omitted since the amount of property, plant and equipment located in Japan exceeds 90% of the amount of property, plantand equipment on the balance sheet.

(3) Information by major customer(Unit: thousand yen)

Name of customer

Operating revenue

GRANVISTA Hotels & Resorts Co., Ltd.

Related segment
325,755

Sony Corporation

Not disclosed (Note)

Real estate rent business
Real estate rent business(Note) Not disclosed due to unavoidable circumstances in that consent for disclosure has not been obtained from the lessee.

5th fiscal period (from March 1, 2021 to August 31, 2021)(1) Information by product and service
The information is omitted since operating revenue to external customers for a single group of products and services exceeds 90% of operating
revenue on the statement of income and retained earnings.

36

(2) Information by geographic areai. Operating revenue
The information is omitted since operating revenue to external customers in Japan exceeds 90% of operating revenue on the statement ofincome and retained earnings.
ii. Property, plant and equipment
The information is omitted since the amount of property, plant and equipment located in Japan exceeds 90% of the amount of property, plantand equipment on the balance sheet.

(3) Information by major customer(Unit: thousand yen)

Name of customer

Operating revenue

GRANVISTA Hotels & Resorts Co., Ltd.

Related segment
325,755

Sony Group Corporation

Not disclosed (Note)

Real estate rent business
Real estate rent business(Note) Not disclosed due to unavoidable circumstances in that consent for disclosure has not been obtained from the lessee.

(Notes on Per Unit Information)

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

4th fiscal period
From: Sep. 1, 2020
To: Feb. 28, 2021
Net assets per unit

105,262 yen

105,255 yen

Net income per unit

2,849 yen

2,841 yen

(Note 1) N et income per unit is calculated by dividing net income by the period’s daily weighted average number of investment units (fiscal period ended February 2021:
356,800 units; fiscal period ended August 2021: 356,800 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:

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

4th fiscal period
From: Sep. 1, 2020
To: Feb. 28, 2021
Net income (thousand yen)Amount not available to common unitholders (thousand yen)
Net income attributable to common investment units(thousand yen)
Average number of investment units during period (units)

1,016,526

1,014,021--

1,016,526

1,014,021

356,800

356,800(Notes on Significant Subsequent Events)
At the meetings of the board of directors held on August 16, 2021, and August 24, 2021, the following resolutions to issue new investment
units were approved, and payments were completed on September 1, 2021, for the issuance of new investment units through public offeringand on September 29, 2021, for the issuance of new investment units through third-party allotment. As a result, as of September 29, 2021,
unitholders’ capital was 49,442,685 thousand yen and the total number of investment units issued and outstanding was 467,099 units.
(Issuance of new investment units through public offering)Number of new investment units issued:		

105,047 units

Amount of issue price (offer price):			

121,327 yen per unit

Total amount of issue price (total offer price):		

12,745,037,369 yen

Amount to be paid in (issue amount):			

116,971 yen per unit

Total amount to be paid in (issue amount):		

12,287,452,637 yen

Payment due date:				

September 1, 2021

Intended use:

It was used as part of the funds for acquisition of real estate trust beneficiaryrights of 4 properties on September 2, 2021.

37

(Issuance of new investment units through third-party allotment)
Number of new investment units issued:		

5,252 units

Amount to be paid in (issue amount):			

116,971 yen per unit

Total amount to be paid in (issue amount):		

614,331,692 yen

Payment due date:				

September 29, 2021

Allottee:					Daiwa Securities Co. Ltd.

Intended use:

It was used for the entire amount of the funds for early repayment of 600
million yen of short-term loans on November 2, 2021, and the remaining
amount is planned to be used as part of the funds for acquisition of specified
assets or part of the funds for repayment of loans in the future, until which
the funds will be deposited with a financial institution as funds on hand.

(7) Supplementary Schedules
1) Schedule of Securities
a. Shares
Not applicable.
b. Securities other than shares
Not applicable.
2) Status of Contract Amounts, Etc. and Fair Value of Derivative Transactions and Forward Exchange Transactions
Not applicable.
3) Schedule of Assets Related to Real Estate

Type of asset

Property,plant andequipment

Accumulated depreciation
Net balance
BalanceOr
AmountBalance
Decrease
Increaseat end ofat beginning ofaccumulated during period
Remarks
during period during period at end of period
periodperiodamortization (thousand(thousand yen) (thousand yen) (thousand yen)(thousand yen)(thousand yen)(thousand
yen)
yen)

Buildings

166,032

3,269-

169,301

15,201

3,293

154,100(Note)

Structures

353

190

-

544

25

9

518

(Note)

Land

2,457,766--

2,457,766--

2,457,766

Buildings in trust

14,296,308

44,662-

14,340,970

992,106

222,703

13,348,864(Note)

Structures intrust

23,602

230-

23,832

1,435

313

22,396(Note)

Machinery andequipment in
trust

2,875

8,426

-

11,302564

215

10,737(Note)

Tools, furnitureand fixtures intrust

27,889350-

28,239

5,727

2,007

22,512(Note)

56,132,321

253-

56,132,575--

56,132,575(Note)

8,103

273,539298

281,344--281,344(Note)

Subtotal

73,115,252

330,922298

73,445,876

1,015,061

228,541

72,430,815

Software

9,400

-

-

9,400

4,566

940

4,833

Land in trust
Construction inprogress in trust

Intangible
assetsSubtotal
Total(Note)

9,400

-

-

9,400

4,566

940

4,833

73,124,652

330,922298

73,455,276

1,019,627

229,481

72,435,649

The increase during period is mainly attributable to expenses for to-be-acquired properties (265,138 thousand yen in total) and capital expenditures (57,084 thousand yen in total).

4) Schedule of Other Specified Assets
Not applicable.
5) Schedule of Investment Corporation Bonds
Not applicable.

386) Schedule of Loans

Category

LenderBalance at
Average
Increase
Decrease
Balance atMaturity date
beginning ofduring period during period end of period interest rate
(Note 2)
period(thousand yen) (thousand yen) (thousand yen)
(Note 1)

Use offunds

Remarks(thousand yen)Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Development Bank of JapanInc.
Mizuho Trust & Banking Co.,
Ltd.
Sumitomo Mitsui Trust Bank,
LimitedShinsei Bank, Limited
Resona Bank, Limited-

1,331,000-

929,000-

929,000-

796,000-

796,000-

509,000-

509,000-

465,000-

465,000-

385,000-

385,000-

385,000-

385,000-

1,574,000--

1,574,000

1,084,000--

1,084,000

929,000--

929,000

593,000--

593,000

542,000--

542,000

Shinsei Bank, Limited

439,000--

439,000

Resona Bank, Limited

439,000--

439,000

Mizuho Bank, Ltd.

972,000--

972,000

716,000--

716,000

614,000--

614,000

392,000--

392,000

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Development Bank of JapanInc.
Mizuho Trust & Banking Co.,
Ltd.
Sumitomo Mitsui Trust Bank,
LimitedSumitomo Mitsui Banking
Corporation
Development Bank of JapanInc.
Mizuho Trust & Banking Co.,
Ltd.
Sumitomo Mitsui Trust Bank,
LimitedLongterm
loans

1,331,000

358,000--

358,000

Shinsei Bank, Limited

324,000--

324,000

Resona Bank, Limited

324,000--

324,000

Mizuho Bank, Ltd.

856,000--

856,000

639,000--

639,000

548,000--

548,000

350,000--

350,000

319,000--

319,000

Shinsei Bank, Limited

294,000--

294,000

Resona Bank, Limited

294,000--

294,000

2,250,000--

2,250,000

1,500,000--

1,500,000

620,000--

620,000

550,000--

550,000

Shinsei Bank, Limited

490,000--

490,000

Resona Bank, Limited

490,000--

490,000

Mizuho Bank, Ltd.

950,000--

950,000

800,000--

800,000

2,000,000--

2,000,000

620,000--

620,000

550,000--

550,000

Shinsei Bank, Limited

490,000--

490,000

Resona Bank, Limited

490,000--

490,000

Sumitomo Mitsui Banking
Corporation
Development Bank of JapanInc.
Mizuho Trust & Banking Co.,
Ltd.
Sumitomo Mitsui Trust Bank,
LimitedMizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Mizuho Trust & Banking Co.,
Ltd.
Sumitomo Mitsui Trust Bank,
LimitedSumitomo Mitsui Banking
Corporation
Development Bank of JapanInc.
Mizuho Trust & Banking Co.,
Ltd.
Sumitomo Mitsui Trust Bank,
Limited39

0.25409%(floatinginterest rate)

Mar. 12,2021(Note 3)

Unsecured/
Nonguaranteed

0.36969%(fixedinterest rate)

Mar. 12,2022(Note 3)

Unsecured/
Nonguaranteed

0.42346%(fixedinterest rate)

Mar. 12,2023(Note 3)

Unsecured/
Nonguaranteed

0.49096%(fixedinterest rate)

Mar. 12,2024(Note 3)

Unsecured/
Nonguaranteed

0.27425%(floatinginterest rate)

Sep. 3,2022(Note 3)

Unsecured/
Nonguaranteed

0.36200%(fixed interest
rate)

Sep. 3,2023(Note 3)

Unsecured/
NonguaranteedCategory

Balance at
Average
Increase
Decrease
Balance atMaturity date
beginning ofduring period during period end of period interest rate
(Note 2)
period(thousand yen) (thousand yen) (thousand yen)
(Note 1)

LenderUse offunds

Remarks(thousand yen)Mizuho Bank, Ltd.

1,167,000--

1,167,000

832,000--

832,000

713,000--

713,000

456,000--

456,000

416,000--

416,000

Shinsei Bank, Limited

358,000--

358,000

Resona Bank, Limited

358,000--

358,000

Long-term
Mizuho Bank, Ltd.
loans

4,300,000--

4,300,000

Mizuho Bank, Ltd.

-

1,331,000-

1,331,000-

929,000-

929,000-

796,000-

796,000-

509,000-

509,000-

465,000-

465,000

Shinsei Bank, Limited-

385,000-

385,000

Resona Bank, Limited-

385,000-

385,000

37,800,000

4,800,000

4,800,000

37,800,000

Sumitomo Mitsui Banking
Corporation
Development Bank of JapanInc.
Mizuho Trust & Banking Co.,
Ltd.
Sumitomo Mitsui Trust Bank,
LimitedSumitomo Mitsui Banking
Corporation
Development Bank of JapanInc.
Mizuho Trust & Banking Co.,
Ltd.
Sumitomo Mitsui Trust Bank,
LimitedTotal

0.32923%(fixed interest
rate)

Sep. 12,2024(Note 4)

Unsecured/
Nonguaranteed

0.23235%(floatinginterest rate)

Oct. 1,
2021(Note 3)

Unsecured/
Nonguaranteed

0.36978%(fixed interest
rate)

Mar. 12,2025(Note 4)

Unsecured/
Nonguaranteed(Note 1) The average interest rate is a weighted-average figure during the fiscal period and is rounded to five decimal places.
(Note 2) If the maturity date is not a business day, the immediately following business day shall be the maturity date.
(Note 3) These funds are used for acquiring real estate or real estate trust beneficiary rights and accompanying expenses.
(Note 4) The funds are used to repay existing loans.
(Note 5) The total amounts of long-term loans to be repaid for each year within five years after the date of the balance sheet are as follows:(Unit: thousand yen)

Due within 1 year
Long-term loans

9,900,000

Due after 1 to 2 years Due after 2 to 3 years Due after 3 to 4 years Due after 4 to 5 years
9,600,000

9,200,000

40

9,100,000-