Independent Auditor’s Report

The Board of Directors
MORI TRUST Sogo Reit, Inc.
OpinionWe have audited the accompanying financial statements of MORI TRUST Sogo Reit, Inc. (theCompany), which comprise the balance sheet as at September 30, 2022, and the statements ofincome and retained earnings, changes in net assets, cash distributions, and cash flows for thesix-month period then ended, and notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, thefinancial position of the Company as at September 30, 2022, and its financial performance andits cash flows for the six-month period then ended in accordance with accounting principles
generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report. We are independent of the Company
in accordance with the ethical requirements that are relevant to our audit of the financial statements
in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Emphasis of Matter
We draw attention to Note 18. SUBSEQUENT EVENTS to the financial statements, which
describes the Company, at the Company’s Board of Directors meeting held on November 22, 2022,
resolved to undertake an absorption-type merger, with March 1, 2023 as the effective date, whereby
the Company will be the surviving corporation and MORI TRUST Hotel Reit, Inc. will be thedissolving corporation in the merger, and also executed a merger agreement on November 22,
2022. Our opinion is not modified in respect of this matter.
Other Information
The other information comprises the information included in the Audited Financial Statementsthat contains audited financial statements but does not include the financial statements and our
auditor’s report thereon.
We have concluded that the other information did not exist. Accordingly, we have not performed
any work related to the other information.

Ernst & Young ShinNihon LLC

Responsibilities of Management and the Supervisory Director for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statementsin accordance with accounting principles generally accepted in Japan, and for such internal control
as management determines is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s
ability to continue as a going concern and disclosing, as required by accounting principles generally
accepted in Japan, matters related to going concern.
The Supervisory Director is responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:・ Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the financial statements is not expressing an opinion on the effectiveness of the Company’s
internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related toevents or conditions that may cast significant doubt on the Company’s ability to continue asa going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the Company to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation in accordance with accounting principles
generally accepted in Japan.
We communicate with the Executive Director regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
Ernst & Young ShinNihon LLC

We also provide the Executive Director with a statement that we have complied with the ethicalrequirements regarding independence that are relevant to our audit of the financial statements inJapan, and to communicate with them all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, related safeguards.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company whichis required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
Ernst & Young ShinNihon LLC
Tokyo, Japan
December 21, 2022/s/ 吉田 雅彦
Masahiko Yoshida
Designated Engagement Partner
Certified Public Accountant/s/ 佐藤 賢治
Kenji Sato
Designated Engagement Partner
Certified Public Accountant

Ernst & Young ShinNihon LLC

FINANCIAL STATEMENTS
BALANCE SHEETS
Thousands of yen
As of September 30, 2022

As of March 31, 2022
AssetsCurrent assets
Cash and deposits

14,680,828

16,534,395

3,197,268

3,089,760

Operating accounts receivable
Accounts receivable - other

41,862

77,534

1,334-

Prepaid expenses

47,914

86,346

Other

9,296

15,44917,978,504

19,803,486

Cash and deposits in trust

Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation

34,980,281

35,007,630(17,770,794)(18,237,032)

Buildings, net

17,209,486

16,770,597

Structures
Accumulated depreciation

443,976

443,976(412,958)(413,582)

31,01730,393Structures, net
Machinery and equipment
Accumulated depreciation

153,655

153,655(125,012)(127,417)

Machinery and equipment, net

28,642

26,237

Tools, furniture and fixtures
Accumulated depreciation

109,138

111,307(85,331)(87,823)

Tools, furniture and fixtures, net

23,80723,483

Land

114,585,335

114,585,335

Buildings in trust
Accumulated depreciation

33,902,566(12,761,396)

33,964,244(13,395,018)

Buildings in trust, net

21,141,169

20,569,225

Structures in trust
Accumulated depreciation

187,292

187,293(111,516)(116,015)

Structures in trust, net

75,77571,277

Machinery and equipment in trust
Accumulated depreciation

61,690(6,234)66,552(8,450)Machinery and equipment in trust, net

55,456

58,102Tools, furniture and fixtures in trust
Accumulated depreciation

102,316(65,339)

102,790(69,394)

Tools, furniture and fixtures in trust, net

36,97633,395Land in trust

153,797,970

153,798,827

Total property, plant and equipment

306,985,638

305,966,876

240

240

Intangible assets
Other

1

Thousands of yen
As of September 30, 2022

As of March 31, 2022
Total intangible assets
Investments and other assets
Guarantee deposits
Long-term prepaid expenses
Other
Total investments and other assets

240

240

10,00038,9682,815

10,00066,825
2,815

51,78379,640307,037,662

306,046,756

Deferred assets
Investment corporation bond issuance costs

55,401

58,984

Total deferred assets

55,401

58,984

325,071,568

325,909,227

Total non-current assets

Total assets
Liabilities
Current liabilities
Operating accounts payable

242,061

307,709

Short-term loans payable

6,000,000

6,000,000

Current portion of investment corporation bonds
Current portion of long-term loans payable

4,000,000

4,000,000

25,500,000

18,000,000

Accrued expenses

110,421429,156

58,604430,289

Dividends payable

7,185

8,073

Accounts payable – other

Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Total current liabilities

879

867

108,676

233,884913,270916

809,224322

37,312,567

29,848,976

Non-current liabilities
Investment corporation bonds

9,000,000

11,000,000

Long-term loans payable

109,500,000

117,000,000

7,565,023

7,555,628

932,717918,125

Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Deferred tax liabilities

803,422514,820

Total non-current liabilities

127,801,163

136,988,574

Total liabilities

165,113,730

166,837,550

153,990,040

153,990,040

1,430,418

1,750,398

Net assets
Unitholders' equity
Unitholders' capital
Surplus
Voluntary retained earnings
Reserve for reduction entry
Total voluntary retained earnings
Unappropriated retained earnings

2

1,430,418

1,750,398

4,537,379

3,331,238

Thousands of yen
As of March 31, 2022
Total surplus
Total unitholders' equity
Total net assets
Total liabilities and net assets
The accompanying notes form an integral part of these financial statements.

3

As of September 30, 2022

5,967,798

5,081,637

159,957,838

159,071,677

159,957,838

159,071,677

325,071,568

325,909,227

STATEMENTS OF INCOME AND RETAINED EARNINGSFor the six-month period from April 1, 2022 to September 30, 2022
Thousands of yen
For the period
from April 1, 2022
to September 30, 2022

For the period
from October 1, 2021
to March 31, 2022
Operating revenue
Lease business revenue

6,739,063

6,603,932

337,252

298,407

Other lease business revenue
Gain on sale of investment property

1,452,077-

Total operating revenue

8,528,392

6,902,340

3,025,005

3,057,896

Asset custody fee

329,091
13,102

307,505
12,987Administrative service fees

45,86945,076

Directors' compensations
Other operating expenses

3,600

3,600

69,376

46,950Total operating expenses

3,486,044

3,474,016

5,042,348

3,428,323

Operating expenses
Expenses related to rent business
Asset management fee

Operating income
Non-operating income
Interest income

104

90

Reversal of dividends payable

753

845

Interest on refund

110-

Total non-operating income

969

936

325,041

345,823

22,83327,158

8,933

8,874

Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds
Amortization of investment corporation bondissuance costs
other

1,374

3,886

358,184

385,741

Ordinary income

4,685,132

3,043,518

Profit before income taxes

4,685,132

3,043,518

Income taxes - current

895

881

Income taxes - deferred

146,858(288,601)

Total income taxes

147,753(287,720)

Total non-operating expenses

Profit

4,537,379

3,331,238

Unappropriated retained earnings

4,537,379

3,331,238

The accompanying notes form an integral part of these financial statements.

4

STATEMENTS OF CHANGES IN NET ASSETSFor the six-month period from October 1, 2021 to March 31, 2022
Thousands of yen
Unitholders' equity
Surplus
Unitholders'
capitalBalance at beginning ofcurrent period
Changes of items during
periodProvision of reserve for
reduction entry
Reversal of reserve for
reduction entry

Total unitholders' Total net assets
equityVoluntary retained earnings

UnappropriatedReserve for
Total voluntary retained earnings
reduction entry retained earnings (undisposed loss)
1,074,447

1,074,447

5,041,970

6,116,418

160,106,458

160,106,458

490,085

490,085(490,085)---(134,114)(134,114)

134,114---

Dividends of surplus(4,686,000)(4,686,000)(4,686,000)(4,686,000)

Profit

4,537,379

4,537,379

4,537,379

4,537,379

Total changes of items
during period
Balance at end of current
period153,990,040

Total surplus-

355,970

355,970(504,591)(148,620)(148,620)(148,620)

153,990,040

1,430,418

1,430,418

4,537,379

5,967,798

159,957,838

159,957,838

The accompanying notes form an integral part of these financial statements.
For the six-month period from April 1, 2022 to September 30, 2022
Thousands of yen
Unitholders' equity
Surplus
Unitholders'
capitalBalance at beginning ofcurrent period
Changes of items during
periodProvision of reserve for
reduction entry
Reversal of reserve for
reduction entry

Total unitholders' Total net assets
equityVoluntary retained earnings

Unappropriatedretainedearnings
Reserve for
Total voluntary
reduction entry retained earnings (undisposed loss)
1,430,418

1,430,418

4,537,379

5,967,798

159,957,838

159,957,838

454,094454,094(454,094)---(134,114)(134,114)

134,114---

Dividends of surplus(4,217,400)(4,217,400)(4,217,400)(4,217,400)

Profit3,331,238

3,331,238

3,331,238

3,331,238

Total changes of items
during period
Balance at end of current
period153,990,040

Total surplus-

319,979

319,979(1,206,140)(886,161)(886,161)(886,161)

153,990,040

1,750,398

1,750,398

3,331,238

5,081,637

159,071,677

159,071,677

The accompanying notes form an integral part of these financial statements.

5

STATEMENTS OF CASH DISTRIBUTIONS
For the six-month period from April 1,2022 to September 30,2022
Fiscal period ended
March 31, 2022
(October 1, 2021 to March 31, 2022)
I. Unappropriated retained earnings
Ⅱ.

Reversalofvoluntary

Unit: yen
Fiscal period ended
September 30, 2022
(April 1, 2022 to September 30, 2022)

4,537,379,582

3,331,238,876

134,114,736

628,761,124

4,217,400,000(3,195)3,960,000,000(3,000)454,094,318-

retainedearnings
Reversal of reserve for reduction
entry
Ⅲ. Distribution amount(Distribution amount per unit)
Ⅳ. Voluntary retained earnings
Provision of reserve for reduction
entry
Ⅴ. Retained earnings carried forward
Calculation
amountmethodofdistribution--

In accordance with Paragraph 1,

In accordance with Paragraph 1,

Article 29 of the Investment

Article 29 of the Investment

Corporation’s Articles of Incorporation,
MTR decided to distribute the total

Corporation’s Articles of Incorporation,
MTR decided to distribute the totalbalance of unappropriated retainedbalance of unappropriated retained

earnings after adding the reversal of theearnings after adding the reversal of thereserve for reduction entry under Article

reserve for reduction entry under Article66-2 of the Act on Special Measures
Concerning Taxation and deducting

66-2 of the Act on Special Measures
Concerning Taxation , the amount ofprovision of the reserve for reduction

which is 3,960,000,000 yen.

entry under Article 65-7 of the Act on

In addition, MTR does not distribute

Special Measures Concerning Taxation,

dividends in excess of accounting profit

the amount of which is 4,217,400,000

as set forth in Paragraph 2, Article 29 ofyen.
In addition, MTR does not distributethe Investment Corporation’s Articles ofIncorporation.

dividends in excess of accounting profit
as set forth in Paragraph 2, Article 29 of
the Investment Corporation’s Articles ofIncorporation.

6

STATEMENTS OF CASH FLOWSFor the six-month period from April 1, 2022 to September 30, 2022
Thousands of yen
For the period
from April 1, 2022
to September 30, 2022

For the period
from October 1, 2021
to March 31, 2022
Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of investment corporation bond issuance
costs
Interest income

4,685,132
1,125,735

3,043,518
1,116,153

8,933

8,874

(104)

(90)

Decrease (Increase) in operating accounts receivable

347,875(522)

372,981(35,671)

Increase (Decrease) in operating accounts payable(80,181)(10,983)

Increase (Decrease) in accrued consumption taxes
Increase (Decrease) in advances received

99,050125,207(86,145)(104,045)

Other, net

12,520,098(106,676)(89,768)

Subtotal

18,513,195

4,426,175

Interest income received

104(346,685)

90(353,781)

Interest expenses

Decrease due to sale of investment property

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

(622)

(892)

18,165,991

4,071,591(34,126)(69,009)

Purchase of property, plant and equipment in trust
Repayments of tenant leasehold and security deposits(14,344,757)(80,198)(2,385,217)(90,166)

Proceeds from tenant leasehold and security deposits

326,611160,283(16,369)(25,275)

5,120

7,804

Repayments of tenant leasehold and security deposits intrust
Proceeds from tenant leasehold and security deposits in
trust
Other

393

-

Net cash used in investing activities(16,448,345)(96,562)

Cash flows from financing activities
Proceeds from long-term loans payable

14,500,000

17,000,000

Repayments of long-term loans payable(14,500,000)(17,000,000)

2,000,000

2,000,000(3,000,000)-

Proceeds from issuance of investment corporation bonds
Redemption of investment corporation bonds
Payments for investment corporation bond issuance costs(15,558)(12,457)

Dividends paid

(4,687,104)(4,216,512)(2,228,969)

Net cash used in financing activities(5,072,662)

Net increase (decrease) in cash and cash equivalents(3,985,015)

1,746,059

Cash and cash equivalents at beginning of period

21,863,112

17,878,096

Cash and cash equivalents at end of period

17,878,096

19,624,156

The accompanying notes form an integral part of these financial statements.

7

NOTES TO FINANCIAL STATEMENTS
For the six-month period from April 1, 2022 to September 30, 2022

1. ORGANIZATION AND BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
Organization
MORI TRUST Sogo Reit, Inc. (“MTR”), a Japanese real estate investment corporation, was incorporated on October 2, 2001
under the Law Concerning Investment Trusts and Investment Corporations of Japan, or the Investment Trust Law. MTR was
originally formed by Mori Trust Co., Ltd., and commenced operations on March 28, 2002 by acquiring a property. MTR isprovided professional asset management services of properties of various types by a licensed asset management company, MORI
TRUST Asset Management Co., Ltd. (“MTAM”). MTAM is currently owned 95% by MORI TRUST Co., Ltd., and 5% by Mori
Trust Hotels & Resorts Co., Ltd. On February 13, 2004, MTR was listed on the J-REIT section of the Tokyo Stock Exchange(securities code: 8961). As of September 30, 2022, MTR owned a portfolio of 16 properties with a total rentable area of
417,553.51 sq. meters occupied by 106 tenants. The occupancy rate was 96.5%.

Basis of presentation of financial statements
MTR maintains its accounting records and prepares its financial statements in accordance with accounting principles generally
accepted in Japan (“Japanese GAAP”), including provisions set forth in the Investment Trust Law, the Financial Instruments andExchange Law of Japan and the related regulations, which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards. The accompanying financial statements are a translation of thefinancial statements of MTR, which were prepared in accordance with Japanese GAAP and were presented in the Securities
Report of MTR filed with the Kanto Local Finance Bureau. In preparing the accompanying financial statements, certain
reclassifications have been made to the financial statements issued domestically in order to present them in a format which ismore familiar to readers outside Japan. In addition, the notes to financial statements include information which might not be
required under Japanese GAAP but is presented herein as additional information. As permitted under the Japanese Financial
Instruments and Exchange Law, amounts of less than one million yen have been omitted. As a result, the totals shown in theaccompanying financial statements do not necessarily agree with the sum of the individual amounts. MTR does not prepare
consolidated financial statements as it has no subsidiaries.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESProperty and equipment
Property and equipment is stated at cost less accumulated depreciation. The costs of land, buildings and building improvements
include the purchase prices of properties, legal fees and acquisition costs. Depreciation of property and equipment is calculated
on a straight-line basis over the estimated useful lives of the respective assets ranging as follows:
Buildings including trust accounts.................................................. 3 - 81 years
Structures including trust accounts..................................................2 - 45 years
Machinery and equipment including trust accounts........................ 2 - 17 years
Tools, furniture and fixtures including trust accounts..................... 2 - 18 years
Expenditures for repairs and maintenance are charged to income as incurred. Significant renewals and betterments arecapitalized.

Intangible assets
Intangible assets are amortized on a straight-line basis.

Deferred assets
Deferred investment corporation bond issuance costs are amortized using the straight-line method over the respective terms of thebonds.

Taxes on property and equipment
Property and equipment is subject to property taxes and city planning taxes on a calendar year basis. These taxes are generally
expensed during the period. The sellers of the properties were liable for property taxes for the calendar year including the period
from the date of purchase by MTR through the end of the year since the taxes were imposed on the registered owners as ofJanuary 1, based on assessments made by local governments.

Revenue recognition
The main performance obligations related to revenue arising from contracts with customers of the MTR and the normal time forsatisfying such performance obligations (the normal time for recognizing revenue) are as follows.
(1) Sales of real estate and other assets

8MTR recognizes revenue from the sale of real estate and other assets when the buyer, as the customer, obtains control of the realestate and other assets by fulfilling the delivery obligations stipulated in the contract for the sale of real estate and other assets.
(2) Utility revenues
Utility revenues are recognized based on the supply of electricity, water, etc. to the lessee, the customer, in accordance with theterms of the real estate lease contract and related agreements.
With regard to utility charge reimbursements which MTR deems to fall under that for an agent, the net amount sought by
subtracting the amount paid to another party from the amount that is received as charge for electric power, gas, etc. which issupplied by another concerned party is recognized as revenue.

Accounting treatment of beneficiary interests in trust assets including real estate
For trust beneficiary interests in real estate, all accounts of assets and liabilities within assets in trust as well as all income
generated and expenses incurred from assets in trust are recorded in the relevant balance sheets and statements of income andretained earnings accounts.

Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks and short-term investments which are highly liquid,readily convertible to cash and with an insignificant risk of price fluctuation, and with an original maturity of three months or
less.

9

3. PROPERTY AND EQUIPMENT
Property and equipment at March 31, 2022 and September 30, 2022 consisted of the following:

Land
Buildings and structures
Accumulated depreciation
Machinery and equipment
Accumulated depreciation
Tools, furniture and fixtures
Accumulated depreciation
Land in trust
Buildings and structures in trust
Accumulated depreciation
Machinery and equipment in trust
Accumulated depreciation
Tools, furniture and fixtures in trust
Accumulated depreciation
Total

Thousands of yen
As of March 31, 2022
As of September 30, 2022
Acquisition Cost
Book Value
Acquisition Cost
Book Value
114,585,335
114,585,335
114,585,335
114,585,335
35,424,257
35,451,606(18,183,753)
17,340,504(18,650,615)
16,800,991
153,655
153,655(125,012)
28,642(127,417)
26,237
109,138
111,307(85,331)23,807(87,823)
23,483
153,797,970
153,797,970
153,798,827
153,798,827
34,089,858
34,151,537(12,872,913)
21,216,945(13,511,034)
20,640,503
61,69066,552(6,234)55,456(8,450)58,102
10,316
102,790(65,339)
36,976(69,394)
33,395306,985,638
305,966,876

The compressed amount of tangible assets with government grants under the Corporation Tax Law of Japan was ¥38,340
thousand at March 31, 2022 and ¥38,340 thousand at September 30, 2022.

10

4. INVESTMENT CORPORATION BONDS
Investment corporation bonds at March 31, 2022 and September 30, 2022 consisted of the following:Thousands of yen
As of
As of
September 30,
March 31,2022
2022
4,000,000
4,000,000
3,000,000
3,000,000
1,000,000
1,000,000
1,000,000
1,000,000
2,000,000－
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
13,000,000
15,000,000

Unsecured bonds due on February 20, 2020
Unsecured bonds due on February 25, 2021
Unsecured bonds due on February 21, 2022
Unsecured bonds due on February 26, 2015
Unsecured bonds due on June 20, 2022
Unsecured bonds due on February 25, 2021
Unsecured bonds due on February 21, 2022
Unsecured bonds due on February 25, 2021
Unsecured bonds due on February 23, 2017
Total

Averageinterest rate
(%)
0.10
0.17
0.11
1.06
0.42
0.50
0.50
0.75
1.08
－

Due onFebruary 20, 2023
February 22, 2024
February 28, 2025
February 26, 2027
February 29, 2028
February 25, 2031
February 27, 2032
February 25, 2036
February 23, 2037－

Use of
funds

Note

(1)

(2)

−

−

(1) Use of the above funds includes acquisition of real estate or beneficiary interests.
(2) The above loans are unsecured and non-guaranteed with floating rates.
(3) Investment corporation bonds repayable expected to be repaid during each of the 5 years subsequent tothe current balance sheet date are summarized as follows (except for investment corporation bonds due within one year):
1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

3,000,000

1,000,000−

1,000,000

Investment corporation bonds(Thousands of yen)

5. SHORT-TERM LOANS PAYABLE
Short-term loans payable at March 31, 2022 and September 30, 2022 consisted of the following:

LenderMizuho Bank, Ltd.
Resona Bank, Limited
Sumitomo Mitsui Banking Corporation
Resona Bank, Limited
Mizuho Bank, Ltd.
Resona Bank, Limited
Total short-term loans

Thousands of yen
As of
As of
September 30,
March 31,2022
2022
2,000,000－
1,000,000－
2,500,000
2,500,000
500,000
500,000－
2,000,000－
1,000,000
6,000,000
6,000,000

Averageinterest rate(%) (1)
－
－
0.20
0.22
0.21
0.21
－

Due on－－October 7, 2022
October 14, 2022
April 7, 2023
August 31, 2023－

Use of
funds

Note

－

－

(2)

(3)

－

－

(1) Average interest rate for each loan has been rounded to the second decimal place.
(2) Use of the above funds includes acquisition of real estate or beneficiary interests.
(3) The above loans are unsecured and non-guaranteed with floating rates.
MTR has entered into line of credit loan agreements totaling ¥20,000 million with banks to reduce refinancing risk. The unused
amount of such credit lines was ¥20,000 million at September 30, 2022.

6. LONG-TERM LOANS PAYABLE
Long-term loans payable at March 31, 2022 and September 30, 2022 consisted of the following:

LenderMizuho Bank, Ltd
Aozora Bank, Ltd.
MUFG Bank, Ltd.
The Ashikaga Bank, Ltd.
Sumitomo Mitsui Banking Corporation.
Sumitomo Mitsui Trust Bank, Ltd.

Thousands of yen
As of
As of
March 31,
September 30,
2022
2022
4,000,000－
1,000,000－
2,000,000－
1,000,000－
2,000,000－
500,000－

11

Averageinterest rate(%) (1)
－
－
－
－
－
－

Due onUse of
funds

Note

－
－
－
－
－
－

－

－

Sumitomo Mitsui Trust Bank, Ltd.
Sumitomo Mitsui Trust Bank, Ltd.
Sumitomo Mitsui Trust Bank, Ltd.
Sumitomo Mitsui Trust Bank, Ltd.
Mizuho Bank, Ltd
MUFG Bank, Ltd.
Mizuho Bank, Ltd
Sumitomo Mitsui Trust Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.
Mizuho Bank, Ltd
The Bank of Fukuoka, Ltd.
The Nishi-Nippon City Bank, Ltd.
Mizuho Bank, Ltd
Development Bank of Japan Inc.
Resona Bank, Limited.
MUFG Bank, Ltd.
Development Bank of Japan Inc.
Resona Bank, Limited.
Mizuho Bank, Ltd
Development Bank of Japan Inc.
Aozora Bank, Ltd.
Shinkin Central Bank
Sumitomo Mitsui Banking Corporation
Development Bank of Japan Inc.
Mizuho Bank, Ltd
Mizuho Bank, Ltd
The Bank of Fukuoka, Ltd.
Sumitomo Mitsui Banking Corporation.
Sumitomo Mitsui Banking Corporation.
The Nishi-Nippon City Bank, Ltd.
Mizuho Bank, Ltd
MUFG Bank, Ltd.
Sumitomo Mitsui Trust Bank, Ltd.
Mizuho Bank, Ltd
Sumitomo Mitsui Banking Corporation.
The 82 Bank, Ltd.
MUFG Bank, Ltd.
Development Bank of Japan Inc.
Sumitomo Mitsui Banking Corporation.
Sumitomo Mitsui Trust Bank, Ltd.
MUFG Bank, Ltd.
Sumitomo Mitsui Banking Corporation.
MUFG Bank, Ltd.
Sumitomo Mitsui Banking Corporation.
The Bank of Fukuoka, Ltd.
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Ltd.
Sumitomo Mitsui Banking Corporation.
Sumitomo Mitsui Trust Bank, Ltd.
Development Bank of Japan Inc.
Nippon Life Insurance Company
Resona Bank, Limited.
Aozora Bank, Ltd.
Resona Bank, Limited.
Sumitomo Mitsui Trust Bank, Ltd.
Development Bank of Japan Inc.
The Nishi-Nippon City Bank, Ltd.
The 77 Bank, Ltd.
Nippon Life Insurance Company

3,500,000
2,000,000
1,000,000
1,500,000
500,000
2,500,000
2,000,000
1,000,000
1,000,000
3,500,000
1,000,000
500,000
1,500,000
1,000,000
1,000,000
500,000
500,000
1,000,000
3,000,000
1,500,000
2,000,000
2,000,000
3,000,000
2,000,000
1,000,000
3,000,000
1,000,000
3,000,000
1,000,000
500,000
1,500,000
500,000
3,000,000
1,000,000
1,000,000
1,000,000
500,000
1,000,000
2,500,000
4,000,000
1,000,000
3,000,000
3,000,000
1,000,000
1,000,000
1,500,000
1,500,000
1,000,000－
1,000,000
500,000
1,000,000
500,000
500,000－
1,000,000
1,000,000
500,000
500,000－－－
1,500,000
500,000
2,500,000
2,000,000
1,000,000
1,000,000
3,500,000
1,000,000
500,000
1,500,000
1,000,000
1,000,000
500,000
500,000
1,000,000
3,000,000
1,500,000
2,000,000
2,000,000
3,000,000
2,000,000
1,000,000
3,000,000
1,000,000
3,000,000
1,000,000
500,000
1,500,000
500,000
3,000,000
1,000,000
1,000,000
1,000,000
500,000
1,000,000
2,500,000
4,000,000
1,000,000
3,000,000
3,000,000
1,000,000
1,000,000
1,500,000
1,500,000
1,000,000
1,000,000
1,000,000
500,000
1,000,000
500,000
500,000
2,000,000
1,000,000
1,000,000
500,000
500,000

12

－
－
－
0.44
0.44
0.49
0.49
0.45
0.45
0.47
0.43
0.49
0.48
0.51
0.48
0.43
0.54
0.46
0.17
0.64
0.54
0.57
0.27
0.36
0.36
0.56
0.56
0.29
0.30
0.43
0.56
0.56
0.32
0.65
0.65
0.34
0.65
0.64
0.33
0.37
0.32
0.46
0.68
0.43
0.42
0.47
0.41
0.52
0.50
0.41
0.36
0.39
0.72
0.39
0.55
0.33
0.41
0.31
0.40

－
－
－
January 19, 2023
January 19, 2023
February 28, 2023
February 28, 2023
February 28, 2023
February 28, 2023
April 12, 2023
April 21, 2023
April 24, 2023
August 31, 2023
August 31, 2023
August 31, 2023
August 31, 2023
September 29, 2023
October 18, 2023
February 29, 2024
February 29, 2024
March 11, 2024
March 19, 2024
April 9, 2024
April 11, 2024
April 11, 2024
April 24, 2024
May 31, 2024
October 9, 2024
October 9, 2024
December 26, 2024
January 17, 2025
January 17, 2025
February 28, 2025
February 28, 2025
February 28, 2025
February 28, 2025
February 28, 2025
March 19, 2025
April 9, 2025
April 11, 2025
April 11, 2025
April 24, 2025
August 29, 2025
January 19, 2026
January 30, 2026
February 27, 2026
February 27, 2026
February 27, 2026
February 27, 2026
March 12, 2026
March 31, 2026
April 22, 2026
April 24, 2026
May 29, 2026
August 31, 2026
August 31, 2026
August 31, 2026
August 31, 2026
September 18, 2026

(2)

(3)

Mitsui Sumitomo Insurance Company, Limited
Sumitomo Mitsui Trust Bank, Ltd.
MUFG Bank, Ltd.
Resona Bank, Limited.
The Bank of Fukuoka, Ltd.
Mizuho Bank, Ltd
The Bank of Fukuoka, Ltd.
The Norinchukin Bank
Sumitomo Mitsui Trust Bank, Ltd.
The Ashikaga Bank, Ltd.
Aozora Bank, Ltd.
SUMITOMO LIFE INSURANCE COMPANY
The Bank of Fukuoka, Ltd.
Sumitomo Mitsui Trust Bank, Ltd.
The Norinchukin Bank
The Nishi-Nippon City Bank, Ltd.
Resona Bank, Limited.
SUMITOMO LIFE INSURANCE COMPANY
The Dai-ichi Life Insurance Company, Limited
Development Bank of Japan Inc.
Sumitomo Mitsui Trust Bank, Ltd.
MUFG Bank, Ltd.
Mizuho Bank, Ltd
Mizuho Bank, Ltd
Mizuho Bank, Ltd
Development Bank of Japan Inc.
MUFG Bank, Ltd.
Sumitomo Mitsui Banking Corporation.
Sumitomo Mitsui Banking Corporation.
Aozora Bank, Ltd.
Mizuho Bank, Ltd
The 77 Bank, Ltd.
Shinsei Bank Limited
Mitsui Sumitomo Insurance Company, Limited
Development Bank of Japan Inc.
Mizuho Bank, Ltd
Aozora Bank, Ltd.
MUFG Bank, Ltd.
Mizuho Bank, Ltd
MUFG Bank, Ltd.
Sumitomo Mitsui Banking Corporation.
Sumitomo Mitsui Banking Corporation.
Mizuho Bank, Ltd
Mizuho Bank, Ltd
Sumitomo Mitsui Banking Corporation.
Mizuho Bank, Ltd
Mizuho Bank, Ltd
Total long-term loans

500,000
1,000,000
1,000,000
500,000
500,000
500,000
1,000,000
3,000,000－－
500,000
500,000
1,000,000－
1,500,000
1,500,000
500,000
500,000
500,000
1,000,000－
1,500,000
1,000,000
1,000,000
1,000,000
500,000
1,500,000
1,500,000
1,500,000－
1,500,000
1,000,000
1,000,000
1,500,000
3,000,000－
1,500,000
500,000－－
1,000,000
1,500,000
1,000,000
500,000－
1,500,000－
135,000,000

500,000
1,000,000
1,000,000
500,000
500,000
500,000
1,000,000
3,000,000
1,500,000
1,000,000
500,000
500,000
1,000,000
1,500,000
1,500,000
1,500,000
500,000
500,000
500,000
1,000,000
1,000,000
1,500,000
1,000,000
1,000,000
1,000,000
500,000
1,500,000
1,500,000
1,500,000
1,000,000
1,500,000
1,000,000
1,000,000
1,500,000
3,000,000
1,000,000
1,500,000
500,000
1,500,000
2,000,000
1,000,000
1,500,000
1,000,000
500,000
2,000,000
1,500,000
1,500,000
135,000,000

0.39
0.42
0.40
0.56
0.56
0.50
0.51
0.38
0.59
0.63
0.45
0.59
0.55
0.63
0.38
0.48
0.48
0.38
0.56
0.43
0.74
0.50
0.63
0.47
0.55
0.47
0.53
0.54
0.51
0.71
0.51
0.54
0.53
0.59
0.71
0.82
0.59
0.79
0.90
0.92
0.65
0.76
0.62
0.63
0.98
0.66
0.98
－

September 30, 2026
December 24, 2026
December 25, 2026
December 25, 2026
December 25, 2026
January 19, 2027
January 29, 2027
February 26, 2027
February 26, 2027
April 22, 2027
June 24, 2027
June 25, 2027
July 30, 2027
August 31, 2027
August 31, 2027
August 31, 2027
August 31, 2027
August 31, 2027
August 31, 2027
September 10, 2027
September 30, 2027
October 13, 2027
December 24, 2027
January 19, 2028
January 19, 2028
January 19, 2028
March 31, 2028
April 7, 2028
April 11, 2028
April 11, 2028
April 17, 2028
August 31, 2028
August 31, 2028
October 31, 2028
February 28, 2029
April 11, 2029
April 23, 2029
February 28, 2030
April 11, 2030
April 12, 2030
June 24, 2030
July 19, 2030
August 30, 2030
August 30, 2030
October 28, 2030
February 28, 2031
April 11, 2031－－－

(1) Average interest rate for each loan has been rounded to the second decimal place.
(2) Use of the above funds includes acquisition of real estate or beneficiary interests.
(3) The above loans are unsecured and non-guaranteed with fixed interest rates.
(4) The total amounts of long-term loans repayable expected to be repaid during each of the 5 years subsequent to the current
balance sheet date are summarized as follows (except for long-term loans payable due within one year):
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
Amount of loans
19,000,000
24,000,000
21,000,000
13,000,000(Thousands of yen)13

7. NET ASSETS
MTR is required to maintain net assets of at least ¥50 million as required pursuant to the Investment Trust Law.

8. INCOME TAXESAt March 31, 2022 and September 30, 2022 MTR’s deferred tax assets consisted mainly of enterprise tax payable, which is notdeductible for tax purposes.
The significant components of deferred tax assets and liabilities as of March 31, 2022 and September 30, 2022 were as follows:
As of March 31, 2022
As of September 30, 2022
Thousands of yen

Deferred tax assets:
Accrued enterprise tax
Total deferred tax assets
Deferred tax liabilities:
Reserve for advanced depreciation of non-current assets
Total deferred tax liabilities
Net deferred tax assets (liabilities)

13
13

13
13

803,436
803,436(803,422)

514,833
514,833(514,820)

A reconciliation of the tax rate differences between the adjusted statutory tax rate and the effective tax rates for the six months
ended April 31, 2022 and September 30, 2022 was as follows:
October 1, 2021 toApril 1, 2022 toMarch 31, 2022
September 30, 2022
Statutory tax rate
31.46%
31.46%
Deductible dividend distribution(28.32%)(40.93%)
Others0.01%
0.02%
Effective tax rates
3.15%(9.45%)
MTR is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation Measures
Law (STML) of Japan, an investment corporation is allowed to deduct dividends of accounting profits, or dividend distributions,paid to investors from its taxable income if certain tax requirements are satisfied. Such tax requirements include dividend
distributions in excess of 90% of the investment corporation’s distributable profit for the accounting period as stipulated in
Article 67-15 of the STML. Based on the distribution policy provided by its Articles of Incorporation, MTR made a dividend
distribution of approximately 100% of retained earnings in the amount of ¥3,960,000 thousand at September 30, 2022 and treated
it as a tax-deductible distribution. MTR does not distribute dividends in excess of accounting profit in accordance with its
Articles of Incorporation.

9. PER SHARE INFORMATION
The following table summarizes information about net assets per share and net income per share at March 31, 2022 andSeptember 30, 2022 and for the six-month period then ended:Yen
Net assets per share at period end
Net income per share
Weighted-average number of shares

October 1, 2021 toMarch 31, 2022
121,180
3,437
1,320,000 shares

April 1, 2022 toSeptember 30, 2022
120,508
2,523
1,320,000 shares

In calculating net assets per share, the amount of the net assets has been adjusted for the cash distribution declared in thesubsequent period. Net income per share is computed by dividing net income by the weighted-average number of shares
outstanding during each period. Diluted net income per share has not been presented since no warrants or convertible bonds were
outstanding during the period.

1410. RELATED PARTY TRANSACTIONSMTR entered into the following related party transactions:(1) Parent company and major corporate shareholders: None applicable(2) Subsidiaries: None applicable(3) Sister companies:(For the six months ended March 31, 2022)
Party type
Party name
Address
CapitalBusiness
Percentage of voting rights held
Concurrent board appointment
Business relationship
Details of transactions
Transaction amountAccount name and balance atperiod end

Subsidiary of other related company*
Mori Trust Co., Ltd.
Minato-ku Tokyo, Japan¥30,000,000 thousand
Urban development; hotel management andinvestment businessLeasing
Buying property¥13,980,000 thousand
Sale of property¥13,980,000 thousand
Rental revenues¥1,752,122 thousand
Property management revenues¥221,573 thousand
Rental and other receivables¥4,464 thousand
Rents received in advance¥24,761 thousand
Leasehold and security deposits including trust
accounts¥964,671 thousand
Trade accounts payable¥65,958 thousand
Accrued expenses¥1,073 thousand* MTR deemed Mori Trust Co., Ltd. to be a “Subsidiary of other related company” under Article 8 of Regulations Concerning
Financial Statements.

(For the six months ended September 30, 2022)
Party type
Party name
Address
CapitalBusiness
Percentage of voting rights held
Concurrent board appointment
Business relationship
Details of transactions
Transaction amount

Subsidiary of other related company*
Mori Trust Co., Ltd.
Minato-ku Tokyo, Japan¥30,000,000 thousand
Urban development; hotel management andinvestment businessLeasing
Buying property
Sale of property-

15

Account name and balance atperiod end

Rental revenues¥1,811,460 thousand
Property management revenues¥219,868 thousand
Rental and other receivables¥5,208 thousand
Rents received in advance¥24,761 thousand
Leasehold and security deposits including trust
accounts¥883,417 thousand
Trade accounts payable¥157,705 thousand
Accrued expenses¥430 thousand* MTR deemed Mori Trust Co., Ltd. to be a “Subsidiary of other related company” under Article 8 of Regulations Concerning
Financial Statements.

(4) Directors and major individual shareholders: None applicable1611. BREAKDOWN OF PROPERTY-RELATED REVENUES AND EXPENSES
A breakdown of property-related revenues and expenses for the six-month period ended March 31, 2022 and September 30, 2022
is summarized as follows:(1) Rental revenues and property-related expenses

Property-Related Revenues:
Property rental revenues
Common charges
Land rental revenues
Other rental revenues
Parking revenues
Utilities revenues
Penalty revenues
Other revenues
Property-Related Expenses:
Property management fees
Utilities expenses
Property and other taxes
Casualty insurance
Repairs and maintenance
Depreciation
Other rental expenses
ProfitThousands of yen
October 1, 2021 toApril 1, 2022 toMarch 31, 2022
September 30, 2022
6,739,063
6,603,932
6,378,952
6,244,322
236,502
236,001
123,609
123,609337,252
298,407
91,66690,701
133,470
144,763－
25,172
112,114
37,771
3,025,005
3,057,896
694,543
717,358
212,236
255,836
872,062
881,367
18,494
19,14272,707
41,623
1,125,735
1,116,153
29,225
26,414
4,051,310
3,844,443(2) Gain on sale of real estate

Income from sale of real estate
Cost of real estate sales
Other expenses on sale
Gain on sale of real estate

Thousands of yen
October 1, 2021 toApril 1, 2022 toMarch 31, 2022
September 30, 2022
Tokyo Shiodome Building
13,980,000
12,520,098
7,824
1,452,077

17

－
－
－
－
－

12. FINANCIAL INSTRUMENTS
Overview(1) Policy for financial instruments
For efficient and stable management operations, MTR raises funds required for acquisition and renovation of assets, payment ofdividends and debt and regular operations mainly through bank borrowings, issuance of investment corporation bonds andissuance of new investment shares. MTR manages cash surpluses carefully in consideration of safety, liquidity, interest rateenvironment and cash flow plans.
(2) Types of financial instruments, related risk and risk management for financial instruments
Loans, issuance of investment corporation bonds and issuance of new investment shares are undertaken for acquisition of realestate or real estate trust beneficiary rights.
Loans and security deposits are exposed to liquidity risk. MTR prepares and updates its cash flow plans based on reports fromeach division and maintains the ready liquidity to manage liquidity risk.
In addition, MTR has established commitment lines of credit to ensure flexible fund procurement.
(3) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market priceavailable, fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value,
different assumptions and factors could result in different fair values.

Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet as of March 31, 2022 and estimated fair value are shown in thefollowing table. Notes on “Cash and deposits,” “Cash and deposits in trust,” and “Short-term loans payable” are omitted because
their fair value approximates their book value due to cash and short term settlements.
Thousands of yen
Carrying
Value

Estimated
Fair Value (1)Difference1) Current portion of
investment corporation bonds2) Current portion of long-termloans payable3) Investment corporation bonds

4,000,000

3,973,298(26,701)

25,500,000

25,458,335(41,664)

9,000,000

8,774,831(225,168)4) Long-term loans payable

109,500,000

107,550,641(1,949,358)

7,565,023

7,114,959(450,063)

932,717860,922(71,794)

156,497,740

153,732,989(2,764,751)

5)Tenant leasehold and security deposits
6)Tenant leasehold and security deposits
in trust
Total Liabilities

The carrying value of financial instruments on the balance sheet as of September 30, 2022 and estimated fair value are shown in
the following table. Notes on “Cash and deposits,” “Cash and deposits in trust,” and “Short-term loans payable” are omitted
because their fair value approximates their book value due to cash and short term settlements.
Thousands of yen
Carrying
Value

Liabilities
1) Current portion of
investment corporation bonds2) Current portion of long-termloans payable3) Investment corporation bonds

Estimated
Fair Value (1)Difference

4,000,000

3,986,259(13,740)

18,000,000

17,953,691(46,308)

11,000,000

10,560,560(439,439)

184) Long-term loans payable5)Tenant leasehold and security deposits
6)Tenant leasehold and security deposits
in trust
Total Liabilities

117,000,000

114,113,240(2,886,759)

7,555,628

6,708,856(846,772)

918,125

827,109(91,016)

158,473,754

154,149,718(4,324,036)(1) Methods to determine the estimated fair value of financial instruments
Current portion of investment corporation bonds and investment corporation bonds
The fair value of investment corporation bonds is calculated based on the present value of the total of principal and interest
discounted at the current interest rate estimated by taking into consideration the remaining term of the investment
corporation bonds and their credit risk.
Current portion of long-term loans payable and long-term loans payable
The fair value of long-term loans is based on the present value of the total of principal and interest discounted by the interest
rate to be applied if similar new borrowings were entered into.
Tenant leasehold and security deposits and Tenant leasehold and security deposits in trust
The fair value of tenant leasehold and security deposits including trust accounts is based on the present value of the total of
cash flow discounted by an interest rate determined taking into account the remaining period of each item and current creditrisk.
(2) The redemption schedule for loans(As of March 31, 2022)
Due in1 year or lessCurrent portion of investment
corporation bonds
Current portion of long-term loans
payableInvestment corporation bonds

4,000,000-

25,500,000

Long-term loans payable

Thousands of yen
Due inDue in2 to 3 years
3 to 4 years

Due in1 to 2 years

-

-

-

-

-

3,000,000

1,000,000-

19,000,000

24,000,000

Due in1 to 2 years

Due in4 to 5 years

Due after
5 years
-

-

-

-

-

1,000,000

4,000,000

21,000,000

13,000,000

32,500,000

Thousands of yen
Due inDue in2 to 3 years
3 to 4 years

Due in4 to 5 years

Due after
5 years-(As of September 30, 2022)
Due in1 year or lessCurrent portion of investment
corporation bonds
Current portion of long-term loans
payableInvestment corporation bonds
Long-term loans payable

4,000,000-

18,000,000

-

-

-

-

-

3,000,000

1,000,000-

19,500,000

27,500,000

19-

16,000,000

-

-

-

1,000,000

6,000,000

20,000,000

34,000,000

13. CASH AND CASH EQUIVALENTS
Cash and cash equivalents as of March 31, 2022 and September 30, 2022 were as follows:
Thousands of yen
As of March 31, 2022
As of September 30, 2022
14,680,828
16,534,395
3,197,268
3,089,760
17,878,096
19,624,156

Cash and deposits
Cash and deposits in trust
Cash and cash equivalents

14. LEASESMTR leases properties and earns rental revenues. Future lease revenues subsequent to March 31, 2022 and September 30, 2022
under non-cancelable operating leases were as follows:

Due within one year
Due after one year
Total

Thousands of yen
As of March 31, 2022
As of September 30, 2022
6,741,780
7,654,988
14,810,423
32,185,923
21,552,203
39,840,912

15. REVENUE RECOGNITION
1.Breakdown of revenue from contracts with customers
For the period from October 1, 2021 to March 31, 2022

Sales of real estate properties *2
Utilities income
Others
Total

Thousands of yen
Revenue from contracts with customers *1
Revenue from external customers
13,980,000
1,452,077
133,639
133,639
6,942,676
14,113,639
8,528,392

For the period from April 1, 2022 to September 30, 2022

Sales of real estate properties
Utilities income
Others
Total

Thousands of yen
Revenue from contracts with customers *1
Revenue from external customers
145,016
145,016
6,757,323
145,016
6,902,340*1 Rent revenues subject to Accounting Standard for Lease Transactions (ASBJ Statement No. 13) are excluded from “Revenue
from contracts with customers” as such revenues are not subject to Accounting Standard for Revenue Recognition. Revenue
from contracts with customers mainly represents revenues from the sale of real estate and utilities.
*2 Sales of real estate properties are recorded as gains or losses on sales of real estate properties in the statements of income areretained earnings in accordance with Article 48-2 of the Regulations on Accounting of Investment Corporation (Cabinet
Office Ordinance No. 47 of 2006), and therefore the amount represents the proceeds from sales of real estate properties, lessthe cost of real estate properties sold and other sales expenses.
2. Information that provides a basis for understanding revenue from contracts with customers
For the period from October 1, 2021 to March 31, 2022
As described in the Summary of Significant Accounting Policies.
For the period from April 1, 2022 to September 30, 2022
As described in the Summary of Significant Accounting Policies.

203. Information about the relationship between the fulfillment of performance obligations under contracts with customers and cash
flows arising from those contracts, and the amount and timing of revenue expected to be recognized in subsequent periods fromcontracts with customers that existed at the end of the current period
For the period from October 1, 2021 to March 31, 2022
(1) Balance of contract assets and contract liabilities

Claims arising from contracts with customers (At beginning of period)
Claims arising from contracts with customers (At end of period)
Contract assets (At beginning of period)
Contract assets (At end of period)
Contract liabilities (At beginning of period)
Contract liabilities (At end of period)

Thousands of yen
October 1, 2021 toMarch 31, 2022
26,23324,828-(2) Transaction price allocated to remaining performance obligations
In accordance with Paragraph 19 of the Guidance on Accounting Standard for Revenue Recognition, MTR recognizes utility
revenues at the amount it has the right to charge, because MTR has the right to receive from the customer the amount ofconsideration that directly corresponds to the value to the customer, the lessee, of the portion of the performance completed
by the end of the fiscal year. Accordingly, MTR has applied the provisions of paragraph 80-22(2) of the AccountingStandard for Revenue Recognition and has not included in the notes the transaction price allocated to the remaining
performance obligations.
For the period from April 1, 2022 to September 30, 2022
(1) Balance of contract assets and contract liabilities

Claims arising from contracts with customers (At beginning of period)
Claims arising from contracts with customers (At end of period)
Contract assets (At beginning of period)
Contract assets (At end of period)
Contract liabilities (At beginning of period)
Contract liabilities (At end of period)

Thousands of yen
April 1, 2022 toSeptember 30, 2022
24,82836,980-(2) Transaction price allocated to remaining performance obligations
As of September 30, 2022, the total transaction price allocated to the remaining performance obligations for the sale of realestate is 21,800,000 thousand yen for the real estate for which a sale contract was executed on July 28, 2022.
MTR expects to recognize revenue for such remaining performance obligations upon delivery of such real estate properties,
which is expected to occur on February 28, 2023, August 31, 2023 and February 29, 2024.
In accordance with Paragraph 19 of the Guidance on Accounting Standard for Revenue Recognition, MTR recognizes
utility revenues at the amount it has the right to charge, because MTR has the right to receive from the customer the amountof consideration that directly corresponds to the value to the customer, the lessee, of the portion of the performancecompleted by the end of the fiscal year. Accordingly, MTR has applied the provisions of paragraph 80-22(2) of the
Accounting Standard for Revenue Recognition and has not included in the notes the transaction price allocated to theremaining performance obligations.

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16. INVESTMENT AND RENTAL PROPERTIESMTR owns office buildings and retail facilities for lease mainly in Tokyo and other areas. The carrying value in the balance
sheet and corresponding fair value of those properties are as follows:
Thousands of yen
Fair Value(3)

Carrying Value(1)

Use
Officebuildings
Retailfacilities
OthersTotal

As of
September
30, 2021

Net Changes

Carrying Value
(1)

As of
March
31, 2022

As of
March
31, 2022

Net Changes

(2)

As of
March
31, 2022

218,552,974

1,070,360

219,623,334

239,390,000

68,815,401(127,710)

68,687,691

18,869,248(194,635)

306,237,624

748,014

Fair Value
(3)

(2)

As of
September
30, 2022

As of
September
30, 2022

219,623,334(712,059)

218,911,274

243,710,000

85,310,000

68,687,691(124,916)

68,562,774

85,140,000

18,674,613

21,110,000

18,674,613(181,785)

18,492,827

21,150,000

306,985,638

346,110,000

306,985,638(1,018,762)

305,966,876

350,000,000(1)The carrying value represents the acquisition cost less accumulated depreciation.
(2) In the previous period, the main reason for the increase was the acquisition of Kamiyacho Trust Tower, and the reason for thedecrease was the transfer of Tokyo Shiodome Building and depreciation.
In the current period, the components of net change in carrying value included increases mainly due to renovation work on theproperties and decreases mainly due to depreciation.
(3)The fair value is an appraisal value or a price estimated by real estate appraisers outside MTR.
The profit and loss for the six-month period ended March 31, 2022 and September 30, 2022 concerning rental properties is asfollows:
Thousands of yen

October 1, 2021 toMarch 31, 2022
Use

Officebuildings
Retailfacilities
Others
Total

RentalRevenues(1)

PropertyrelatedExpenses(1)

4,551,268

2,372,315

1,797,177

322,948

April 1, 2022 toSeptember 30, 2022
Gain onSale ofInvestment
Property(2)

RentalRevenues(1)

PropertyrelatedExpenses(1)

Net Income

Gain onSale ofInvestment
Property(2)

2,178,953

1,452,077

4,671,481

2,432,069

2,239,412-

1,474,229-

1,492,640

305,184

1,187,456-

Net Income

727,869

329,741

398,127-

738,218

320,643

417,574-

7,076,315

3,025,005

4,051,310

1,452,077

6,902,340

3,057,896

3,844,443-(1)“Rental revenues” and “Property-related expenses”, which are rental revenues and related expenses (depreciation, repairs andmaintenance, casualty insurance, property and other taxes etc.), are presented in the statements of income and retained earnings
as “Operating revenue” and “Operating expenses”.
(2)“Gain on sale of investment property” is presented in the statements of income and retained earnings under “Operating
revenue”.

17. SEGMENT AND RELATED INFORMATION
Segment Information
Since the business of MTR consists of only the “real estate leasing business”, there are no reporting segments. Therefore,
segment disclosures have been omitted.
(For the six months ended March 31, 2022)

Related Information(1)Information about products and services

22

Since the proportion of operating revenues from external customers for each product and service exceeds 90% of operating
revenues, product and service disclosures have been omitted.
(2)Information about geographical areas①Operating revenues
Since the proportion of operating revenues from external customers in Japan exceeds 90% of operating revenues,
geographic area disclosures have been omitted.
②Property and equipment
Since the proportion of property and equipment located in Japan exceeds 90% of property and equipment located in all
countries, property and equipment disclosures have been omitted.
(3)Information about major customers
Thousands of yen

Name of major customers
Mori Trust Co., Ltd.

Operating Revenues
3,204,199

Related Segment
Leasing Business(For the six months ended September 30, 2022)

Related Information(1)Information about products and services
Since the proportion of operating revenues from external customers for each product and service exceeds 90% of operating
revenues, product and service disclosures have been omitted.
(2)Information about geographical areas①Operating revenues
Since the proportion of operating revenues from external customers in Japan exceeds 90% of operating revenues,
geographic area disclosures have been omitted.
②Property and equipment
Since the proportion of property and equipment located in Japan exceeds 90% of property and equipment located in all
countries, property and equipment disclosures have been omitted.
(3)Information about major customers
Thousands of yen

Name of major customers
Mori Trust Co., Ltd.

Operating Revenues
1,811,460

Related Segment
Leasing Business18. SUBSEQUENT EVENTS
MTR and MORI TRUST Hotel Reit, Inc. (“MTH”), at each investment corporation’s Board of Directors meeting held on
November 22, 2022, resolved to undertake an absorption-type merger, with March 1, 2023 as the effective date, whereby MTR
will be the surviving corporation and MTH will be the dissolving corporation in the merger (the “Merger”), and also executed amerger agreement (the “Merger Agreement”) to that effect as set forth below.

I.

Purpose of the Merger
Each of these investment corporations has performed aiming for the medium- to long-term stabilized revenue and growthby leveraging its characteristics respectively, that is, stability of office assets for MTR and growth potential of hotel assets
for MTH. However, MTR has challenges in the future growth potential in terms of office assets, which are its maininvestment targets, due to decreasing opportunities for newly obtaining large-scale prime properties and declining
profitability caused by moving out of tenants triggered by COVID-19, while MTH has faced an issue of how to securestable revenue concerning its investment target, hotel assets, because a risk of revenue fluctuation has become apparent
during the COVID-19 pandemic. Accordingly, MTR and MTH have come to recognize an issue that they have limited
opportunities for independent growth respectively. In order for MTR and MTH to mutually solve these issues andcontribute to the continuous improvement of the unitholder value by creating a comprehensive REIT with offices and hotels
as its core assets, which is truly equipped with asset potential, stability and growth potential, MTR and MTH agreed to startnegotiation for merger and carefully proceeded with the deliberation. As a result, MTR and MTH have judged that building23

a portfolio equipped with stability of office assets and growth potential of hotel assets through the Merger and returning to a
growth path by leveraging the sponsor support will lead to further improvement of the unitholder value; therefore, and also
executed the Merger Agreement on November 22, 2022.

II.

Effective Date of Merger
March 1 ,2023

III. Form of the Merger
MTR will be the surviving corporation under an absorption-type merger and MTH will be dissolved in the Merger.

IV. Allocation of Investment Units under the Merger
MTR（Surviving corporation in theabsorption-type merger）

MTH（Dissolving corporation in theabsorption-type merger）
1.84

Allocation of investment units
under the Merger

1（Reference）
Before the Investment Unit Split
0.92(Note) The number of new MTR investment units to be issued as a result of the Merger (the number of units after the Investment Unit
Split of MTR): 920,000

V.

Unit Split

MTR plans to split 1 investment unit into 2 investment units with February 28, 2023 as the record date for splitting theinvestment units and March 1, 2023 as the effective date of the split; the allocation ratio shown above and the number of
new investment units MTR will allocate and deliver are subject to the Investment Unit Split taking effect. If 0.92 MTR
investment units are allocated and delivered against 1 MTH investment unit on the basis of the merger ratio before theInvestment Unit Split, there will be many MTH unitholders being allocated fractions of less than one MTR investment unit.
To make it possible for MTH unitholders to continue holding MTR investment units after the Merger, a split of MTR
investment units will be carried out before the allocation towards MTH unitholders, in the ratio of two MTR investment
units to one MTR investment unit for the purpose of delivering to all MTH unitholders at least one MTR investment unit,
and for every one MTH investment unit, 1.84 MTR investment unit post- Investment Unit Split will be allocated anddelivered.
（ⅰ）Increase in number of MTR units due to unit split（a）Total number of investment units issued and outstanding before unit split:1,320,000（b）Increase in number of investment units due to unit split:1,320,000（c）Total number of investment units issued and outstanding after unit split:2,640,000（d）Total number of investment units authorized after unit split:20,000,000（ⅱ）Effect on the Fund's per unit information
Per unit information for the current fiscal period, assuming that the unit split had been executed at the beginning of thecurrent fiscal period, would be as follows.
（a）Net assets per unit:¥60,254（b）Net income per unit:¥1,261

VI. Merger grant
In addition to the abovementioned investment units, MTR intends to pay MTH unitholders (the unitholders stated orrecorded in the final unitholders’ register on the day before the effective date of the Merger (excluding MTR, MTH
and those MTH unitholders who have demanded the purchase of their investment units pursuant to Article 149-3 ofthe Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951, as amended; the “Investment TrustsAct”) (excluding those who have withdrawn such demand for purchase) (hereinafter referred to as the “Unitholders

24

Subject to Allocation”), in lieu of cash distributions for the last business period of MTH which ends the day before
the effective date of the Merger, the money delivered due to the Merger in the form of cash distribution based on
MTH’s distributable income for that same period of an amount (disregarding fractions of a yen) which is the quotientresulting from a division of the amount of MTH’s distributable income on the date before the effective date of the
Merger by the number of issued MTH investment units on that date as reduced by the number of investment units
held by unitholders other than the Unitholders Subject to Allocation. The money delivered due to the Merger will be
paid within a reasonable period from the effective date of the Merger.

VII. Corporation dissolved in absorption-type merger (MTH) for the immediately preceding fiscal period (ending August2022)
Business Activities:To manage assets mainly as investments in specified assets as defined in the Investment Trust Law.
Operating revenue:¥2,053,000,000
Profit:¥1,144,000,000
Total assets:¥110,357,000,000
Total liabilities:¥59,212,000,000
Total net assets:¥51,144,000,000（Additional Information)
Transfer of property
MTR has transferred the following asset as of July 29, 2022.
Shinbashi ekimae MTR Building(i) Outline of the transfer
Property to be transferred:
Real estate trust’s beneficiary interest
Transfer price:¥21,800,000,000(1st: ¥7,266,666,667, 2nd: ¥7,266,666,667 , 3rd: ¥7,266,666,666 )(Excluding transfer cost, property taxes, city planning taxes and consumption
taxes)
Gain on transfer:
MTR expects to record gains on sales of real estate of approximately¥1,300,000,000 in the fiscal period ending February 2023 and August 2023,
respectively, and approximately ¥1,400,000,000 in the fiscal period ending
February 2024.
Date of transfer:
1st：February 28, 2023, 2nd：August 31, 2023, 3rd：February 29, 2024
Buyer:MORI TRUST CO., LTD.
Remarks
The property will be transferred in three installments: the first installment will betransferred after establishing a trust for one-third of the co-ownership interest as ofFebruary 28, 2023, the second installment will be transferred after placing an
additional trust for one-third of the co-ownership interest as of August 31, 2023,
and the third installment will be transferred after placing an additional trust for
one-third of the co-ownership interest as of February 29, 2024.
Other
This transfer constitutes a forward commitment, etc. as defined in the“Comprehensive Supervisory Guidelines for Financial Instruments Business
Operators, etc.” established by the Financial Services Agency. The Transfer may
be terminated only in the case of willful misconduct or gross negligence on thepart of the other party, on the grounds of a material breach by the other party of its
obligations under the purchase agreement relating to the Transfer. If the Transfer isterminated due to a breach of obligation, the party causing the termination shall
pay to the other party an amount equivalent to 20% of the relevant purchase priceas a penalty.

25

Acquisition of property
MTR completed the acquisition of the following asset on July 29, 2022.
Sendai MT Building(i) Outline of the acquisition
Property to be acquired:

Acquisition price:

Date of acquisition:
Seller:Remarks

Other

Real estate trust’s beneficiary interest
Land ownership and land lease rights (co-owned interest 90,845 of 1,000,000)
Sectionally owned building¥15,800,000,000(1st: ¥5,266,666,667 , 2nd: ¥5,266,666,667 , 3rd: ¥5,266,666,666 )(Excluding acquisition cost, property taxes, city planning taxes and consumption
taxes)
1st：February 28, 2023, 2nd：August 31, 2023, 3rd：February 29, 2024
MORI TRUST CO., LTD.
The acquisition is planned to be made in three installments, with the first
installment being made on February 28, 2023 with 90,845/300,000 of
co-ownership interests held in trust, the second installment being made on August
31, 2023 with an additional 90,845/300,000 of co-ownership interests held in trust
and the third installment being made on February 29, 2024 with an additional
90,845/300,000 of co-ownership interests held in trust, respectively.
The Acquisition constitutes a forward commitment, etc. as defined in the“Comprehensive Supervisory Guidelines for Financial Instruments Business
Operators, etc.” established by the Financial Services Agency. The Acquisition
may be terminated only in the case of willful misconduct or gross negligence on
the part of the other party, on the grounds of a material breach by the other partyof its obligations under the purchase agreement for the Acquisition. If theAcquisition is cancelled due to a breach of obligation, the party causing thecancellation shall pay to the other party an amount equivalent to 20% of therelevant purchase price as a penalty.

26