Mori Hills REIT Investment Corporation
Semiannual Report
32nd Fiscal Period(February 1, 2022 – July 31, 2022)

1

To Our Unitholders
All of us at Mori Hills REIT Investment Corporation (“MHR”) wish to extend our deep appreciation to ourunitholders for your continuous support of MHR. I am pleased to report on MHR’s performance for the thirtysecond fiscal period which ended July 31, 2022.
In the thirty-second fiscal period, although the inflation caused by the rapid depreciation of the yen and therise in resource prices resulted in downward pressure on economic activity, the Japanese economy managed toremain strong with recovery centered on consumer spending due to the easing of movement restrictions
implemented as a countermeasure against the spread of COVID-19.
In such an economic environment, in the rental office market, the decrease in demand due to the spread of
remote work triggered by the pandemic has gradually moderated, but rent levels maintained their sluggish
conditions given weak demand for office expansion and vacancy rates remained at a relatively high level. As forthe luxury rental housing market, occupancy rates and rent levels remained solid, driven by the ongoing stabledemand for quality housing in central Tokyo amid new supply remaining at a certain level. In terms of the realestate trading market, the transaction amount decreased significantly driven particularly by reduced property
acquisition activities by J-REITs, but transaction prices continued to be high with the ongoing favorable fundraising environment backed by the continued accommodative monetary easing policy.
In the thirty-second fiscal period, MHR strove to maintain and enhance tenant satisfaction through measures
such as efficient and systematic operational management and maintenance and repair of properties in its
portfolio by better understanding tenant needs. Moreover, MHR maintained and enhanced occupancy rates andrents by proactively launching leasing activities targeting new and existing tenants while foreseeing trends inrental market conditions.
MHR’s real estate portfolio, as of the end of the thirty-second fiscal period, was comprised of 11 properties
under management with a total leasable area of 181,339.35m2. MHR has already invested 409,252 million yen(based on the acquisition price) into this portfolio. The occupancy rate at the end of the thirty-second fiscal
period was 98.3%.
The asset management activities described above resulted in MHR recording in the thirty-second fiscal period
11,197 million yen in operating revenue, 6,985 million yen in operating income, 6,443 million yen in ordinary
income, 6,443 million yen in net income and 3,030 yen in dividend per unit. MHR disposed of a part of Laforet
Harajuku (Land) (disposition price: 2,898 million yen) on July 1, 2022. Of the 1,347 million yen from gain on
this disposition, 636 million yen was reserved for reduction entry.
In addition, MHR plans to dispose of a further part of Laforet Harajuku (Land) (disposition price: 2,898 million
yen) on December 1, 2022. For the thirty-third fiscal period ending January 31, 2023, dividends per unit isexpected to be 3,040 yen.
MHR will continue to seek maximization of unitholder value by maintaining and increasing dividends
continuously while retaining stability of earnings through fixed-rent master leases alongside actively pursuing
external growth utilizing the property pipeline of Mori Building Group.
I would like to ask for your continued support.
Hideyuki Isobe
Executive Director, Mori Hills REIT Investment Corporation
President and CEO, Mori Building Investment Management Co., Ltd.

2

Financial Highlights
Dividend per unit: 32nd period

Dividend per unit: 33rd period forecast*

3,040 yen

3,030 yen

* The forecasted figure for the 33rd fiscal period is a projection from historical figures based on certain assumptions.
Accordingly, the figure may differ from actual results. Furthermore, the forecast shall not be construed as a guarantee of dividend amount.

Change in dividend per unit
(yen/
unit)

8th
period
Jul.
2010

9th
period
Jan.
2011

10th
period
Jul.
2011

・・・

17th
period
Jan.
2015

18th
period
Jul.
2015

19th
period
Jan.
2016

20th
period
Jul.
2016

21st
period
Jan.
2017

22nd
period
Jul.
2017

23rd
period
Jan.
2018

24th
period
Jul.
2018

25th
period
Jan.
2019

26th
period
Jul.
2019

27th
period
Jan.
2020

28th
period
Jul.
2020

29th
period
Jan.
2021

30th
period
Jul.
2021

31st
period
Jan.
2022

32nd
period
Jul.
2022

3,200

33rd
periodJan.
2023(forecast)

3,030 3,040
3,000

2,927

24 consecutive
fiscal period
increase

2,800

2,600

2,400

2,200

2,000

1,800

1,600

1,400

1,315

1,200
* Implemented a 5-for-1 investment unit split effective on February 1, 2014.
Actual dividends per unit were divided by 5 for the periods before the split of investment units in the graph.

Changes in major financial indicators
31st period

32nd period

August 1, 2021 January 31, 2022 (184 days)

February 1, 2022 July 31, 2022 (181 days)

32nd - 31st period

Operating revenue

9,820 million yen

11,197 million yen+1,376 million yen

Operating income

6,085 million yen

6,985 million yen+899 million yen

Ordinary income

5,514 million yen

6,443 million yen+929 million yen

Net income

5,513 million yen

6,443 million yen+929 million yen

Dividend/unit

2,927 yen/unit

3,030 yen/unit+ 103 yen/unit

Total units outstanding

1,916,330 units

1,916,330 units

410,780 million yen

409,252 million yen

Acquisition price(Note) Unless otherwise stated in this document, all amounts are rounded down below the unit and all fractions and areas are rounded up below the decimal point.

3

Overview of Portfolio
MHR has developed an urban portfolio mainly in Central Tokyo through its “investment in the city” concept,
taking advantage of market opportunities and our competitive strengths to enhance profitability as well as
portfolio value.
Portfolio breakdown
Area

Type

Size

5.0%

1.6%

6.1%

88.9%

98.4%

■ 30,000 ㎡ or more

■ Office■ Residential■ Retail■ Under 30,000 ㎡(Note 1) The ratios represent proportion of acquisition price to total acquisition price.
(Note 2) Chart showing “Size” does not include Laforet Harajuku (Land).
(Note 3) For calculation of breakdown by type, acquisition price for Akasaka Tameike Tower and Atago Green Hills are divided into offices and residences.

Portfolio list4

5

Earthquake-resistance capacity
A group of properties based on high quake-resistant engineering standards stipulated by Mori Building, thesponsor of MHR
Property name

Level above the newearthquake resistancestandard (Note 1)

PML (Note 2)

Roppongi Hills Mori Tower

◎

0.59%

ARK Mori Building

◎

0.78%

Koraku Mori Building

◎

0.73%

ARK Hills South Tower

◎

1.56%

Toranomon Hills Mori Tower

◎

0.50%

Holland Hills Mori Tower

◎

0.85%

Akasaka Tameike Tower

◎

1.79%

Atago Green Hills MORI Tower

◎

2.35%

(Note 1) Earthquake resistance performance above standards stipulated in the current Building Standards Act(Note 2) PML refers to the probable maximum loss ratio expected to result from an earthquake.
A smaller percentage indicates superiority in earthquake-resistance.

Environmental performance
Highest quality ratio of green building (GB) certified properties among all J-REITs

Ratio of GB
Certified properties
in portfolio

93.5%
In highest ratings
72.1%* Based on acquisition price excluding Laforet Harajuku (Land)

6

Financial Status
MHR’s cost of debt has decreased along with the improvement in LTV ratio (appraisal value basis). We willcontinue to maintain a debt duration level that enables us to sustain our healthy financial base.
Trend in LTV (appraisal value basis) and average interest rate (including borrowing expenses)
(%)
65.0

(%)
2.5
■ LTV (appraisal value basis)

2.0%

60.0

2.1%

■ Average interest rate

2.1%
2.0

55.0
1.5
50.0
0.74%

45.0

1.0
0.71%

0.69%

0.69%

0.68%

0.66%

0.63%

0.61%

0.58%

0.56%
0.5

40.0

・・・

35.0

57.4%

56.4%

53.7%

42.3%

41.9%

40.4%

39.4%

38.2%

38.0%

38.1%

38.3%

37.7%

36.6%

9th
period10th
period11th
period23rd
period24th
period25th
period26th
period27th
period28th
period29th
period30th
period31st
period32nd
period

Jan.
2011

Jul.
2011

Jan.
2012

Jan.
2018

Jul.
2018

Jan.
2019

Jul.
2019

Jan.
2020

Jul.
2020

Jan.
2021

Jul.
2021

Jan.
2022

Jul.
2022

・・・

(Note) Average interest rate is calculated as [(interest expenses + interest expenses on investment corporation bonds + borrowing expenses + amortization of
investment corporation bond issuance costs) × 365 ÷ operating days during each period ÷ average interest-bearing debt balance during each period].

Extension in remaining duration of debt
(years)

5.5
5.0
4.4

4.3

4.5

4.6

4.7

4.6

4.5

4.6

4.5

4.0

4.0

3.7

3.5
3.0
2.5
2.0
1.5

1.5
1.2

1.4

・・・

1.0
9th
period
Jan.
2011

10th
period
Jul.
2011

11th
period
Jan.
2012

・・・

23rd
period
Jan.
2018

24th
period
Jul.
2018

25th
period
Jan.
2019

7

26th
period
Jul.
2019

27th
period
Jan.
2020

28th
period
Jul.
2020

29th
period
Jan.
2021

30th
period
Jul.
2021

31st
period
Jan.
2022

32nd
period
Jul.
2022

0.0

Overview of debt financing
End of the 31st period
Jan. 31, 2022

End of the 32nd period
Jul. 31, 2022

192,422 mn yen

192,422 mn yen

46.8%

46.6%

37.7%

36.6%

4.6 years

4.5 years

Debt Balance
LTV (book value basis)(Note 1)

LTV (appraisal value basis)(Note 2)

Avg. remaining duration(Note 1) LTV (book value basis) is calculated as [Interest bearing debt / Total assets].
(Note 2) LTV (appraisal value basis) is calculated as [Interest-bearing debt / Appraisal value based total assets (Total assets + Total appraisal value Total book value)].

Long-term debt ratio / Fixed rate ratio

Rating[Long and short-term debt ratio][Fixed rate ratio]

Japan Credit Rating (JCR)
Long-term issuer rating

Long-term
100%

AA

Fixed
88.4%

(Stable)Overview of maturity (as of July 31, 2022)(billion yen)

20
Investment corporation bonds

Long-term loans

15

10

8.0

5

9.2

11.2

8.2

9.1

2.0

2.0

8.8
9.8
11.0

13.6

14.2

13.1

14.3

12.4

7.6

6.0

5.0

0

4.0

4.8
6.3
2.8

2.0

3.8

1.5

1.0

33rd 34th 35th 36th 37th 38th 39th 40th
41st 42nd 43rd 44th 45th 46th 47th 48th 49th 50th
51st 52nd
period period period period period period period period period period period period period period period period period period period period
Jan.
2023

Jul.
2023

Jan.
2024

Jul.
2024

Jan.
2025

Jul.
2025

Jan.
2026

Jul.
2026

Jan.
2027

Jul.
2027

8

Jan.
2028

Jul.
2028

Jan.
2029

Jul.
2029

Jan.
2030

Jul.
2030

Jan.
2031

Jul.
2031

Jan.
2032

Jul.
2032

Portfolio Management
MHR maintained and enhanced occupancy rates and rents by proactively launching marketing activities targeting
new and existing tenants based on a flexible price policy.
Rent and occupancy rate
[Office](yen/tsubo)(%)

40,000100

30,00090
20,00080
10,000

0

70

Aug.
2021

Sep.

Oct.

Nov.

Dec.

Jan.
2022

Feb.

Mar.

Apr.

May

Jun.

Jul.

Rent (yen/tsubo)

31,13531,154

31,166

31,117

31,10931,13031,18331,005

31,10731,153

31,11931,089

Occupancy rate

98.0%

98.1%

97.8%

98.2%

98.0%

97.8%

98.2%

98.4%

98.1%

98.1%

98.1%

98.3%

[Residential](yen/tsubo)(%)

25,000100

20,00090
15,00010,000
80
5,000

0

70

Aug.
2021

Sep.

Oct.

Nov.

Dec.

Jan.
2022

Feb.

Mar.

Apr.

May

Jun.

Jul.

Rent (yen/tsubo)

15,796

15,78915,81915,81815,76515,852

15,791

15,811

15,83015,932

16,03915,999

Occupancy rate

95.2%

95.3%

94.4%

94.3%

94.2%

95.1%

95.6%

96.3%

97.2%

98.2%

97.6%

97.8%

Result of tenants’ rent revision (pass-through type)[Office][Residential]

(%)

+8

(%)

+8

+7.1%

+6.0%

+5.6%

+6

+6
+3.6%

+4

+2

+3.6%

+4

+1.5%

+2

+0.6%

+0

+2.7%
+1.1%

+0
※Average of all contracts subject to revision

△2

+4.8%

27th
Jan. 2020

28th
Jul. 2020

29th
Jan. 2021

30thJul. 2021※Average of all contracts subject to revision

△0.7%

31st
Jan. 2022

△1.2%
32nd
Jul. 2022△2

27thJan. 2020

28th
Jul. 2020

29th
Jan. 2021

30thJul. 2021

31stJan. 2022(Note 1) Figures indicate the results of rent revisions of properties at which pass-through master lease agreements are applied.
(Note 2) Figures are calculated based on asset acquisition and monthly rents which reflect move outs of end tenants confirmed as of July 31, 2022.

9

32ndJul. 2022

Sustainability Initiatives
Approach to Sustainability
MHR and Mori Building Investment Management Co., Ltd. (MIM), the asset manager, aim to contribute to thecreation and development of cities by providing investment opportunities in high-quality urban assets toinvestors while maximizing unitholder value through investment focused on the competitiveness and ability tocreate value of the “City,” as stated in the Basic Policy and Company Mission of MHR and MIM.
Society today is faced with various challenges, and companies are expected to contribute to solving theseissues as they conduct business activities. We believe that working on these issues will in fact lead toincreasing our competitiveness.
MHR and MIM aim to contribute to the realization of a sustainable society and maximization of unitholder
value in the medium to long term by focusing on ESG (Environmental, Social and Governance) initiatives andinvesting in high-quality urban assets while striving to improve various social issues.
Promotion of sustainability-related operations requires initiatives that involve the whole supply chain. We will
pursue joint initiatives with various stakeholders while sharing sense of values with them.
Sustainability Promotion System
MHR‘s operations connected to sustainability will be promoted primarily by the Sustainability Committee to beestablished by MIM.
The Chairperson of the Committee shall be the President & CEO while all directors and some planningdepartment staff shall comprise the committeepersons. Various initiatives will be implemented based on the
Sustainability Promotion Program which is established every fiscal year.
In principle, the Committee shall meet four times a year and shall formulate policies and the content of the
Sustainability Promotion Program, monitor progress of programs, deliberate on various suggestions fromdepartments, etc. in light of social conditions and the operating status of MHR. The President & CEO approves
the policies and promotion programs, constantly monitors the thorough promotion of sustainability, andestablishes and maintains a sustainability promotion structure as a responsible party in promoting
sustainability.
Moreover, sustainability-related efforts shall be reported on periodically to the Board of Directors of both MHR
and MIM. Each Board oversees the status of initiatives for important issues related to ESG and the status ofcompliance and risk management.
Initiatives throughout the Entire Supply Chain
Promotion of sustainability operations, whether environmental or social, requires initiatives that involve thewhole supply chain. We believe that joint initiatives with various stakeholders with aligned values arenecessary.
By actively stimulating interactive communication with stakeholders such as tenants, local residents, property
management companies and with our sponsor Mori Building, and by aligning our values, we aim to contributeto the realization of a sustainable society.

10Sustainability Initiatives: 1) Environment
MHR aims to contribute to the realization of a sustainable society and maximization of unitholder value in themedium to long term by investing in high-quality urban assets while striving to improve various environmental
and social performance levels.
MIM obtains a third-party sustainability evaluation in order to better understand its own achievement level anduses this as a benchmark for further improvement.
Green Building Certified Properties
Property Name

Type of Assessment

RatingRoppongi Hills Mori Tower

Rank S

ARK Mori Building

Rank S

Koraku Mori Building

CASBEE for Real Estate

Rank A

Akasaka Tameike Tower

Rank A

Atago Green Hills MORI Tower

Rank SARK Hills South Tower

DBJ Green Building Certification

Toranomon Hills Mori Tower

4 stars
Rank SCASBEE for Real Estate

Holland Hills Mori Tower

Rank S(Certificates Coverage Ratio)
Short-range objective

Long-range objective

Performance

Performance (reference)(FY 2024)(FY 2030)(As of August 2,2021)(As of August 2,2021)

Maintain over 90%

Maintain over 90%

93.5%

84.1%

(in acquisition price)(in acquisition price)(in acquisition price)(in leasable floor area)

80.0%(in number of properties:
8/10 properties)* Excluding Laforet Harajuku (Land)

Promotion of Energy-conservation(Roppongi View Tower: Renovation of common area with LED lighting)

MHR promotes energy-conservation through

Before renovation

After renovation

initiatives such as replacement of LED lighting
in common areas and repair work of airconditioning. MHR also makes active efforts to
reduce environmental loads through proper
separation and disposal of waste.

Collaborating with Tenants
MHR holds an environmental countermeasure council once or twice a year depending on the office building.
The council generates a report on the efforts to improve sustainability and raises awareness for power saving
methods. As a reference for tenants to draw specific measures for conservation of energy, MHR has provided,
at all office properties it owns, “WEB cloud services” as a tool to make tenants’ energy usage visible.
(Properties with the service as a percentage of all owned properties: 98% based on acquisition price)
In addition to these efforts, MHR is further deepening relationships with tenants by introducing “green leases”
which secure commitments from both parties. MHR is gradually expanding this approach since the introductionof the first green lease in ARK Hills South Tower.

11

CO2 (Climate Change)
Working to reduce greenhouse gas emissions and engaging in other measures against global warming willcontribute to easing the impact on the climate. Moreover, providing real estate properties with excellent
functionality in terms of addressing these challenges is likely to engender more positive opinion and stronger
support from tenants and this will lead to the enhanced competitiveness of the portfolio.
MHR and MIM will aim to match compact cities compounded with multifaceted urban functions together withthe various high energy-efficient systems to realize cities with excellent environmental efficiency.
Through comprehensive and high-quality management of these urban areas, we will continue our efforts to
reduce carbon emissions and engage in initiatives to counter global warming and climate change.
(Reduction Greenhouse Gas Emissions)
MHR revised its targets in June 2022 to promote further reduction.
We aim to reduce CO2 emissions of MHR’s and MIM’s offices and properties owned by MHR (total emissions：
Scopes 1, 2 and 3) by 50% by FY 2030 when compared with FY 2019 as the baseline year and achieve netzero emissions by FY 2050.
Medium-term target

Long-term target

Performance(FY 2030)(FY 2050)(FY 2021)

50% reduction

6.9% reduction

Net-Zero(total amount basis: vs FY 2019)(total amount basis: vs FY 2019)(Carbon Dioxide Emission and Intensity)
Figures, with certain exceptions, are verified and validated by an independent third party. Scope 1 is entirely
CO2.
[Boundary] Offices of MHR and MIM and properties owned by MHR (Cover rate: See the table below)
2(kg-CO2/m )(t-CO2)50,000

120
103.7

101.0

95.9

100

40,00081.5
31,89430,00031,251

29,33728,49377.9

80

29,09460

20,00040
10,000020

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

Scope 1

1,626

1,843

1,767

1,718

1,696

Scope 2

18,376

19,285

18,952

16,151

15,770

Scope 3

9,335

10,766

10,531

10,624

11,627

Intensity

103.7

101.0

95.9

81.5

77.9

Verification/Guarantee rate

78.9%

77.4%

77.4%

77.7%

78.2%

Cover rate

87.0%

87.4%

87.6%

87.8%

88.0%

* Carbon dioxide emissions are calculated based on the "Manual for Calculating and Reporting Greenhouse Gas Emissions" by the
Ministry of the Environment and the Ministry of Economy, Trade and Industry.
* Intensity is calculated by dividing the carbon dioxide emissions (Scope1, 2&3) by the calculated total floor area.
* For Scope 3, the calculation target was expanded in accordance with the above manual starting in FY 2020. The figures for FY
2019 and before were changed in accordance with the new standard.

120Sustainability Initiatives: 2) Social
Problems concerning human rights and labor are critical global concerns, and in Japan the rectification of long
working hours and the promotion of women and elderly people have become significant social issues as thelabor force shrinks alongside a declining birthrate and an aging population.
We believe that employing diverse and excellent people and supporting the continued development of theirabilities is not just a source of competitiveness for MHR but also the duty of MHR towards its employees.
MHR and MIM respect human rights and it is our policy to not discriminate against employees based on theirbeliefs, religion, age, gender, origin, mental and physical disabilities, etc.
We will work to establish a diversity-oriented working environment where our staff can be effective. We will
introduce multifaceted systems and measures so that each and every employee with diverse lifestyles andvalues can maximize their abilities and grow their career in a healthy and safe manner.
Talent Development
In order to realize MIM's company mission (“MIM is dedicated to the creation and development of major
metropolitan cities and MIM will provide investment opportunities in high-quality urban assets to investors
both in Japan and overseas as a leading professional in the real estate investment fund business.”), MIM
believes that it is essential to attract and retain a diverse and capable workforce and to continuously support
their career growth and self-development.
To cultivate human resources with flexible thinking and high ethical standards together with a high degree ofexpertise, mainly in real estate and finance, MIM introduces essential knowledge and skills through on-thejob-training (OJT) and conventional training to improve staff effectiveness, to clarify company issues and toconstantly improve management methods. MIM conducts a semi-annual staff assessment program "Personnel Assessment and Feedback" as a core component of our talent development strategy.
MIM also subsidizes the expense for acquiring licenses and qualifications by public and private organizations
necessary for work to improve employees' skills as professionals in the real estate fund business.
(Qualifications held by employees as of the end of March 2022)
・ ARES Certified Master: 11
・ Real Estate Appraiser: 3
・ Real Estate Transaction Agent: 10
・ Certified Building Administrator: 2・ Certified Public Accountant: 4・ Chartered Member of Securities Analysts Association of Japan: 1

Employee Stock Ownership Plan (ESOP)MHR established the "ESOP" by aligning interests of MHR’s investors and MIM’s employees aiming to improve
unitholders' value over the medium to long term, and to improve welfare benefits for MIM’s employees.
Promoting Women’s Participation
MHR is aiming for a workplace environment where each employee can fully demonstrate their individuality andabilities and MHR is working on creating a pleasant working environment for women. A child-care leavesystem and flexible working hours are provided and MHR promotes active use of a part-time work system andpaid holidays.

13

Tenant Satisfaction Surveys
MHR conducts “tenant satisfaction surveys” once every two years in office buildings and once a year in mostresidential properties.
The survey content starts with general matters such as location and image and extends to matters related tofacilities and other hard aspects as well as soft aspects such as management systems. The thoughts of thetenants are used as a reference in our property management.
Local Communities
MHR aims to foster a rich environment for the local community through various communication activities. In
MHR’s properties such as Roppongi Hills and ARK Hills, events and activities are held like the “Hills Marche”
and “Hills Machi-Iku Project” in which local people can participate.

All Japanese Listed Companies' Website Ranking
Nikko Investor Relations Co., Ltd. announces a valuation of websites of
all listed companies by investigating the degree of information disclosure
based on objective evaluation items from its unique perspective.
MHR’s website has received “Total Ranking: The Best Site" for the seventh
consecutive year.

14

Sustainability Initiatives: 3) GovernanceIn order to contribute to the realization of a sustainable society, we aim to maximize unitholder value over the
medium to long term. We believe that it is absolutely imperative to remain a company that is trusted bysociety.
By firmly acknowledging this belief, MHR and MIM work on building fair and effective corporate governanceand strive to enhance internal control through thorough compliance and risk management based on an
appropriate compliance and internal control structure.
Corporate GovernanceIn addition to a general meeting of all unitholders, MHR’s governance structure consists of one executive director,
four supervisory directors, the board of directors and an accounting auditor as required by the Act on Investment
Trusts and Investment Corporations.
The executive director undertakes executive management and represents MHR. The supervisory directors
oversee the executive director's performance of the position’s duties.
The board of directors is comprised of the executive director and the supervisory directors and makes important
decisions regarding the execution of MHR’s duties, such as approval of the executive director's execution of
MHR’s important duties and approval of financial statements.
The executive director reports to the supervisory directors from time to time regarding the status of asset
management, compliance and risk management and other matters.
Each supervisory director oversees the execution of duties by the executive director through the reporting on
investigation requested by the supervisory directors.
The Accounting Auditor performs the audit of financial statements etc. of MHR and reports to the supervisory
directors in the event of discovering any serious actions in violation of laws and regulations or actions violating
the proper execution of duties by the executive director.
(MIM’s organization)
General Meeting of
Shareholders

Corporate Auditor

Board of Directors

President & CEO

Investment
Committee

Investment
Dept.

Asset
Management
Dept.

Compliance
Committee

Financial
Dept.

Accounting
Dept.

15

Administration
Dept.

Planning
Dept.

Compliance
Dept.

Compliance
The Compliance Department conducts inspections on legal compliance and confirms consistency with internal
rules. MIM confirms whether there exist any conflict of interest transactions with related parties. In this way,
MIM is striving to ensure comprehensive internal control, while also striving to enhance its risk management
structure as well as its effectiveness.
Furthermore, MIM has a set of internal rules (self-imposed regulations) which stipulate rules such as its Related
Parties Transaction Guidelines. These Guidelines stipulate matters concerning transactions, etc. with relatedparties. Through MIM’s compliance with these Guidelines, MIM has established a structure which ensures thatthe aforementioned transactions are managed appropriately and that MIM sufficiently executes the duty of careof a good manager and duty of loyalty to MHR.
(Process to counter transactions involving conflicts of interest)
Approved by MHR's Board of Directors(In case of an acquisition fromany related party)

Reject or pass back the proposal

Deliberation and resolution at MIM's Board of Directors (Note)

Deliberation and resolution at the Compliance Committee

Deliberation and resolution at the Investment Committee

Review by the Compliance Officer

Selection of investment grade properties and preparation of an
original proposal by the Investment Department(Note) The Director (Part-time) is unable to participate in the resolution of the Board of Directors since this individual will be considered a board member of a related
party when acquiring asset from a related party.

16

Important ESG Issues (MHR’s Materiality)

17

MSCI ESGMHR has been selected as a constituent of the MSCI Japan ESG Select Leaders Index, provided by MSCI. This
index is composed of companies selected by MSCI from among the constituents of the MSCI Japan IMI Index
for excellence in ESG initiatives, and has been selected by the Government Pension Investment Fund (GPIF)
for its passive management index.

DISCLAIMER
THE INCLUSION OF MHR IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN,
DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF MHR BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXESARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCIOR ITS AFFILIATES.

GRESB Assessment
In the 2022 GRESB Real Estate Assessment, MHR received a “Green Star” rating forthe eleventh consecutive year, and received the highest evaluation of “5 Stars” in
the GRESB Rating (Note).
(Note) The comparative assessment of the overall score was initially introduced in 2016.
It is a global ranking utilizing a five-star scale (“5 Stars” as the highest rank).

GRESB is an annual benchmarking assessment to measure ESG (Environmental, Social and Governance)
integration of real estate companies and funds, as well as the name of organization which runs theassessment. It was founded in 2009 by a group of major European pension funds who played leading roles
in launching Principles for Responsible Investment (PRI).

18

Integrated Report (Japanese)
This report describes the overall efforts of MHR and the AssetManager Mori Building Investment Management Co., Ltd. tocontribute to the realization of a sustainable society and to
maximize unitholder value over the medium to long term.

URL: https://www.mori-hills-reit.co.jp/ir/tabid/442/Default.aspx

MHR’s Website
The pages dedicated to ESG have expanded, and information isproactively disclosed.

URL: https://www.mori-hills-reit.co.jp/en/outline/Sustainability/tabid/171/Default.aspx

19Mori Building’s Extensive Property Pipeline
Mori Building’s total assets have an estimated value of 2.3 trillion yen and the number of properties undermanagement is 97 buildings. (Note 1)
MHR has the “preferential negotiation rights” (Note 2) on sales of Mori Building Co., Ltd. properties, which serves
as the driving force for external growth.
Recent redevelopment projects in Toranomon Hills area

Toranomon Hills Residential Tower
Completed Jan. 2022
Toranomon Hills Mori Tower
Completed May 2014
Toranomon Hills Station Tower (Note 3)
Projected completion Jul. 2023

Toranomon Hills Business Tower
Completed Jan. 2020

Total area: approx. 7.5ha
Total floor area: approx. 800,000m2
Office space: approx. 300,000m2
Residential units: approx. 720

Toranomon Hills Station of
Hibiya subway line
Opened Jun. 2020

Retail space: approx. 26,000m2
Green space: approx. 15,000m2

Toranomon-Azabudai Project (Projected completion 2023)

Main Tower(A district)

West Tower(B-1 district)

East Tower(B-2 district)Total area: approx. 8.1ha
Total floor area: approx. 861,500m2
Office space: approx. 213,900m2
Residential units: approx. 1,400
Green space: approx. 24,000m2ⓒDBOX for Mori Building Co.

20

In Operation

MHR (Note 4)

MB Group (Note 5)

Planning/Under Construction(Source) Prepared by the Asset Manager based on Mori Building’s “Mori Building Handy Map/ Mori Building Map/Home Route Support Map 2022.”(Note 1) “Total asset” is as of the end of March 2022 and number of properties under management is as of April 2022.
(Note 2) There are some exceptions.
(Note 3) Mori Building participates as a member of the project.
(Note 4) Some of the properties have been partially acquired and held by MHR.
(Note 5) Properties are developed, owned, managed and planned for development by Mori Building Group as of October 1, 2022 and there are no properties anticipated to be acquired by MHR.

21

Unit Price Performance(yen)(Note) TSE REIT Index is adjusted as of the 8th period result announcement (Sep. 14, 2010) and shows the relative performance vs. MHR’s unit price performance.

Unitholders Breakdown (as of July 31, 2022)＜Number of unitholders＞＜Number of investment units＞

Other domestic
Financialcorporations

institutions

1.7%

Foreigncorporations

Foreign(Incl. securities

corporations

companies)

and individuals

1.3%

2.2%

and individuals

Individuals
6.0%

17.1%

Other
domestic
corporations
16.7%

Individuals

Financial
institutions(Incl. securities
companies)

60.2%(Investment

94.8%

trust 32.8%)

22

Risk Factors
An investment in our units involves significant risks. The principal risks with respect to investment in Mori Hills REIT
Investment Corporation are as follows.
Property and Business Risks
Any adverse conditions in the Japanese economy could adversely affect our properties.
We may not be able to acquire properties to execute our growth and investment strategy in a manner that is accretive
to earnings and the amount of dividends per unit.
The high concentration in our portfolio of premium properties in central Tokyo could have a material adverse effecton our business.
Increases in prevailing market interest rates may increase our interest expense and may result in a decline in themarket price of our units.
Our reliance on Mori Building Co., Ltd. and other Mori Building Group companies could have a material adverse
effect on our business.
Competition for tenants may adversely affect our ability to retain our current tenants, find new tenants and achievefavorable rental rates.
We may suffer large losses if any of our properties incur damage from a natural or man-made disaster or acts ofviolence.
We may incur unexpected expenses, expenditure or other losses for repair or maintenance of our properties.
We may be strictly liable for any unforeseen loss, damage or injury suffered by a third party at our properties.
Because most of our operating expenses are largely fixed, we may suffer adverse consequences if our rental
revenues decline.
Illiquidity in the real estate market may limit our ability to grow or adjust our portfolio.
Defects relating to our properties may adversely affect our financial condition and results of operations.
We rely on expert reports for appraisals and PML percentages, and these reports are subject to significant
uncertainties.
We rely on industry and market data that are subject to significant uncertainties.
The environmental assessments of our properties made prior to our ownership may not have uncovered allenvironmental liabilities, and Japanese laws subject property owners to strict environmental liabilities.
To the extent we purchase or commit to purchase properties still in the development stage, we will be exposed toincreased risks and uncertainties.
We may lose rental revenues in the event of lease terminations, decreased lease renewals, defaults, nonpayment bytenants on rental obligations or requests or demands for reduction in rents or if tenants experience financial
difficulties or insolvency.
Any of our current or future properties, may violate earthquake resistance or other building codes, and any suchbuildings may collapse in even minor earthquakes or may be required to be strengthened or demolished by us atsignificant expense.
23

Master lease agreements expose us to the risk of becoming an unsecured creditor of Mori Building Co., Ltd. as ourmaster lessee in the event of its insolvency.
Decreases in tenant lease and guarantee deposits would increase our funding costs.
Any inability to obtain financing for future acquisitions, or any restrictions on our activities under our financing
arrangements, could adversely affect us.
A high LTV ratio may increase our exposure to changes in interest rates and adversely affect us.
We may suffer impairment losses relating to our properties and may also suffer adverse tax effects upon recognizing
impairments.
A downgrading of our credit rating may affect payments of principal of or interest on our bonds.
The past performance of our sponsor, Mori Building Co., Ltd., is not an indicator or guarantee of our future results.
Our financial statements are prepared in accordance with Japanese GAAP, which differs in certain material respects
from IFRS, U.S. GAAP and generally accepted accounting principles and financial reporting standards in otherjurisdictions.
An epidemic such as SARS, MERS and COVID-19 may have a significant long-term adverse impact on economic
activities which in turn may adversely affect the performance of the portfolio and market price of our units.

Management and Governance Risks
Our success depends on the performances of service providers to which we are required to assign various key
functions.
There are potential conflicts of interest between us and certain Mori Building Group companies, including the AssetManager.
We depend on the efforts of key personnel of the Asset Manager.
Unitholders have limited control over our investment policies.
J-REITs and their asset managers are subject to tight supervision by the regulatory authorities.
If unitholders do not exercise their voting rights, we may count their votes in favor of proposals at a general meetingof unitholders.

Taxation Risks
Our failure to satisfy a complex series of requirements pursuant to Japanese tax regulations would disqualify us fromcertain taxation benefits and significantly reduce our distributions to our unitholders.
If the Japanese tax authorities disagree with the interpretations we used for prior periods, we may be forced to pay
additional taxes for those periods.
We may not be able to benefit from reductions in certain real estate transfer taxes enjoyed by qualified J-REITs.
Changes in Japanese tax laws may significantly increase our tax burden.
We expect to be treated as a “passive foreign investment company” for U.S. federal income tax purposes.
Unitholders may be subject to U.S. Foreign Account Tax Compliance Act (FATCA) withholding tax after 2018.

24

Legal and Regulatory Risks
Our ownership rights in some of our properties may be declared invalid or limited.
We may lose our rights in a property we own if the purchase of the property is recharacterized as a secured
financing.
Our leasehold or subleasehold rights may be terminated or may not be asserted against a third party in some cases,or our leases with our tenants could be modified.
Properties for which third parties hold leasehold rights in the land and own the buildings may subject us to various
risks.
Many of our properties are in the form of compartmentalized ownership interests (kubun shoyū-ken) and our rights
relating to such properties may be affected by the intentions of other owners.
Many of our properties are in the form of property co-ownership (kyōyū) or trust beneficiary interest coownership(junkyōyū) and our rights relating to such properties may be affected by the intentions of other owners.
Some of our properties are subject to preferential purchase rights, rights of first refusal or other similar rights heldby lessees, tenants or other third parties.
Tax increases or adverse changes in applicable laws may affect our potential liabilities relating to our properties andoperations.
Our costs of complying with regulations applicable to our properties could adversely affect our results of operations.
We own a substantial portion of our properties through trust beneficiary interests and may suffer losses as a trust
beneficiary.
The AIFMD may negatively affect our ability to market our units in the EEA and increase our compliance costs
associated with marketing of our units in the EEA.
Our units may be deemed to constitute “plan assets” for ERISA purposes, which may lead to the rescission of certaintransactions, tax or fiduciary liability and our being held in violation of ERISA requirements.

25

Disclaimer
This report has been prepared by Mori Hills REIT Investment Corporation (“MHR”) for informational purposes only andshould not be construed as an offer of any transactions or the solicitation of an offer of any transactions. Please inquire withthe various securities companies concerning the purchase of MHR investment units. This report’s content includes forwardlooking statements about business performance; however, no guarantees are implied concerning future business performance.
Although the data and opinions contained in this report are derived from what we believe are reliable and accurate sources, we
do not guarantee their accuracy or completeness. The contents contained herein may change or cease to exist without priornotice. Regardless of the purpose, any reproduction and/or use of this document in any shape or form without the prior writtenconsent from MHR is prohibited.
This report contains charts, data, etc. that were prepared by Mori Building Investment Management Co., Ltd. (hereafter, the“asset manager”) based on charts, data, indicators, etc. released by third parties. Furthermore, this report includes statements
based on analyses, judgments, and other observations concerning such matters by the asset manager as of the date of
preparation.

26

FINANCIAL STATEMENTS
BALANCE SHEET(Unit: thousands of yen)
As ofJuly 31, 2022

January 31, 2022

AssetsCurrent assets
Cash and deposits

10,640,215

6,950,040

Cash and deposits in trust

4,951,864

5,175,674

Operating accounts receivable

169,483

195,564

Prepaid expenses

397,453414,958

Total current assets

16,159,015

12,736,238

Noncurrent assets
Property, plant and equipmentLand－

22,074,160

88,375,623

87,764,517

Accumulated depreciation(22,205,594 )(21,172,240)

Buildings in trust, net

66,170,029

66,592,276

Buildings in trust

Structures in trust

997,248994,871

Accumulated depreciation(361,830 )(352,563)

Structures in trust, net

635,418

642,307

Machinery and equipment in trust

1,064,061

1,060,856

Accumulated depreciation(412,114 )(383,732)

Machinery and equipment in trust, net

651,947

677,124

395,463332,762

Accumulated depreciation(232,767 )(215,637)

Tools, furniture and fixtures in trust, net

162,696

117,124

297,041,684

276,512,715

Tools, furniture and fixtures in trust

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

8,311

8,093

364,670,087

366,623,801

30,650,962

30,650,962

Intangible assets
Leasehold rights in trust
Other intangible assets in trust
Total intangible assets

964

1,073

30,651,927

30,652,036

Investments and other assets
Lease and guarantee deposits

10,00010,000Long-term prepaid expenses

760,317

802,906

Deferred tax assets
Derivatives
Total investments and other assets

13

13

544,952

323,661

1,315,283

1,136,581

396,637,298

398,412,419

Investment corporation bonds issuance cost

85,846

94,636

Investment unit issuance cost

10,717

16,076

Total noncurrent assets
Deferred assets

Total deferred assets
Total assets

1

96,564

110,713412,892,878

411,259,371

(Unit: thousands of yen)
As ofJuly 31, 2022

January 31, 2022

Liabilities
Current liabilities
Operating accounts payable
Current portion of long-term loans payable

147,399

262,494

15,200,000

15,500,000

Accounts payable – other

15,205

11,781

Accrued expenses

789,774

323,177

Income taxes payable

877

869

240,777

102,385

Advances received

1,297,483

1,283,127

Deposits received

25,94933,272

Accrued consumption taxes

Derivatives liabilities
Total current liabilities

2,545

361

17,720,012

17,517,469

Noncurrent liabilities
Investment corporation bonds

20,300,000

20,300,000

Long-term loans payable

156,922,000

156,622,000

Lease and guarantee deposits in trust

15,022,491

14,944,553

131,037

217,873

192,375,528

192,084,427

210,095,541

209,601,896

195,718,191

195,718,191－(482,669 )－(482,669 )

195,718,191

195,235,522

Reserve for reduction entry

196,766

291,944

Total voluntary retained earnings

196,766

291,944

Unappropriated retained earnings

6,471,008

6,024,581

Total surplus

6,667,775

6,316,525

202,385,967

201,552,048

411,370

105,426

Derivatives liabilities
Total noncurrent liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Deduction from unitholders' capital
Allowance for temporary difference adjustments(Note9)Total deduction from unitholders' capital
Unitholders' capital, net
Surplus
Voluntary retained earnings

Total unitholders’ equity
Valuation and translation adjustments
Deferred gains or losses on hedges

411,370

105,426

Total net assets (Note9)

Total valuation and translation adjustments

202,797,337

201,657,474

Total liabilities and net assets

412,892,878

411,259,371

2

STATEMENT OF INCOME AND RETAINED EARNINGS(Unit: thousands of yen)
For the six months ended
July 31, 2022

January 31, 2022

Operating revenue
Rent revenues (Note13)
Other operating revenues (Note13)

9,652,181

9,626,195

197,178

194,479

Gain on transfer of real estate properties(Note13)

1,347,808－

Total operating revenue

11,197,167

9,820,674

3,448,193

3,401,656

643,528

232,424

Operating expenses
Expenses related to properties (Note13)
Asset management fee
Directors’ compensation

8,400

8,400

Asset custody fee

10,281

10,123Administrative service fees

17,733

18,676

Other operating expenses

84,01063,900Total operating expenses

4,212,146

3,735,181

6,985,020

6,085,492

54

53

Operating income
Non-operating income
Interest income
Gain on forfeiture of unclaimed dividends

805

1,044

3,600

－

5

－

4,466

1,097

Interest expenses

352,779

371,586

Interest expenses on investment corporation bonds

52,95050,969

8,790

8,465

123,798

133,516

5,358

5,358

Subsidy income
Other
Total non-operating income
Non-operating expenses

Amortization of investment corporation bonds
issuance cost
Borrowing expenses
Amortization of investment unit issuance cost
Other

1,907

1,884

545,584

571,781

Ordinary income

6,443,902

5,514,809

Income before income taxes

6,443,902

5,514,809

885

877

Total non-operating expenses

Income taxes-current
Income taxes-deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

3

(0)

11

885

888

6,443,017

5,513,920

27,991

510,660

6,471,008

6,024,581

STATEMENT OF CHANGES IN NET ASSETSFor the six months ended July 31, 2022
(Unit: thousands of yen)
Unitholders’ equity

Unitholders’capitalBalance at February 1, 2022

Unitholders’ capital

Surplus

Deduction fromunitholders' capital
Allowance
Total
for
deduction
temporaryfromdifference
unitholders'adjustments
capitalVoluntary retained
earnings

195,718,191(482,669)

Change during the period
Reversal of reserve for
reduction entry
Dividends from surplus
Reversal of allowance fortemporary difference
adjustments
Net income
Net changes of items otherthan unitholders’ equity
Total changes of items during
the period
Balance at July 31, 2022

(482,669)

Unitholders'
capital, net

195,235,522

Reserve for
reduction
entry

Total
voluntary
retainedearnings

291,944

291,944(95,177)(95,177)

482,669

482,669

482,669－

482,669

482,669

482,669(95,177)(95,177)

195,718,191－－

195,718,191

196,766

196,766

Valuation and translation
adjustments

Unitholders’ equity
Surplus

Balance at February 1, 2022
Change during the period
Reversal of reserve for
reduction entry
Dividends from surplus
Reversal of allowance fortemporary difference
adjustments
Net income
Net changes of items otherthan unitholders’ equity
Total changes of items during
the period
Balance at July 31, 2022

Total
unitholders’equityDeferred
gains orlosses onhedgesTotalvaluationandtranslation
adjustments

Total net
assetsUnappropri
ated
retainedearnings

Total
surplus6,024,581

6,316,525

201,552,048

95,177－－－(5,609,097)(5,609,097)(5,609,097)(5,609,097)(482,669)(482,669)－－

6,443,017

6,443,017

6,443,017

6,443,017

105,426

105,426

201,657,474

305,943

305,943

305,943446,427

351,250

833,919

305,943

305,943

1,139,862

6,471,008

6,667,775

202,385,967

411,370

411,370

202,797,337

4

For the six months ended January 31, 2022
(Unit: thousands of yen)
Unitholders’ equity

Unitholders’capitalBalance at August 1, 2021

Unitholders’ capital

Surplus

Deduction fromunitholders' capital
Allowance
Total
for
deduction
temporaryfromdifference
unitholders'adjustments
capitalVoluntary retained
earnings

195,718,191

Balance at January 31, 2022

Reserve for
reduction
entry

Total
voluntary
retainedearnings

291,944

291,944(529,400)(529,400)

195,188,791

46,731

46,731

46,731－

46,731

46,731

46,731－－

195,718,191(482,669)(482,669)

195,235,522

291,944

291,944

Change during the period
Dividends from surplus
Reversal of allowance fortemporary difference
adjustments
Net income
Net changes of items otherthan unitholders’ equity
Total changes of items during
the period

Unitholders'
capital, net

Valuation and translation
adjustments

Unitholders’ equity
Surplus

Balance at August 1, 2021
Change during the period
Dividends from surplus
Reversal of allowance fortemporary difference
adjustments
Net income
Net changes of items otherthan unitholders’ equity

Total
unitholders’equityDeferred
gains orlosses onhedgesTotalvaluationandtranslation
adjustments

Total net
assetsUnappropri
ated
retainedearnings

Total
surplus6,139,661

6,431,605

201,620,396(5,582,269)(5,582,269)(5,582,269)(5,582,269)(46,731)(46,731)－－5,513,920

5,513,920

5,513,920

5,513,920(801,727)(801,727)

200,818,669

907,154907,154907,154

Total changes of items during
the period(115,079)(115,079)(68,348)

907,154907,154

838,805

Balance at January 31, 2022

6,024,581

6,316,525

201,552,048

105,426

105,426

201,657,474

5

STATEMENT OF CASH DISTRIBUTIONS(Unit: yen)
For the six months ended

For the six months ended

July 31, 2022

January 31, 2022

Ⅰ. Unappropriated retained earnings

6,471,008,689

6,024,581,500

Ⅱ. Reversal of voluntary retained earnings
Reversal of reserve for reduction entry
Ⅲ. Capitalization
Reversal of allowance for temporary
difference adjustments
Ⅳ. Amount of Dividends
Amount of dividends per unit－

95,177,162－

482,669,237－

482,669,237

5,806,479,900

5,609,097,910

3,030

2,927

636,537,274－

Ⅴ. Voluntary retained earnings
Reserve for reduction entry
Ⅵ. Retained earnings carried forward
Method of calculating the amount ofdividends

27,991,515

27,991,515

Pursuant to the terms of the
distribution policy set forth in Article 37(1) of the Company’s Articles ofIncorporation, the amount of dividends
shall be in excess of an amountequivalent to 90% of the Company’s
earnings available for dividends as
defined in Article 67-15 of the Special
Taxation Measures Law, but not inexcess of the amount of earnings as
defined in Article 136, Paragraph 1 ofthe Investment Trust Act. In the thirtysecond fiscal period, the Company
decided to accumulate part of the gain ontransfer of Laforet Harajuku (Land),
which was transferred in July 2022, as
reserve for reduction entry by applying
Article 65-7 “Special Provisions for
Taxation in Cases of Replacement of
Certain Assets” of the Special Taxation
Measures
Law.
Accordingly,
theCompany decided to pay out dividends ofearnings (5,806,479,900 yen), which is
the maximum integral multiple of thetotal number of investment units issued
and outstanding (1,916,330 units), out of
the amount remaining after reserving
said reserve for reduction entry andretained earnings carried forward fromthe unappropriated retained earnings.
As a result, the Company declared
dividends per unit of 3,030 yen.

Pursuant to the terms of the
distribution policy set forth in Article 37(1) of the Company’s Articles ofIncorporation, the amount of dividends
shall be in excess of an amountequivalent to 90% of the Company’s
earnings available for dividends as
defined in Article 67-15 of the Special
Taxation Measures Law, but not inexcess of the amount of earnings as
defined in Article 136, Paragraph 1 of theInvestment Trust Act. Based on suchpolicy, the Company decided to pay out
dividends of earnings (5,609,097,910
yen), which is the integral multiple of thetotal number of investment units issued
and outstanding (1,916,330 units), out of
the amount remaining of retained
earnings after adding the reversal of thereserve for reduction entry to theunappropriated retained earnings andsubtracting the reversal of allowance fortemporary difference adjustments (asdefined in Article 2, Paragraph 2, Item
30 of the Ordinance on Accountings ofInvestment Corporations).
As a result, the Company declared
dividends per unit of 2,927 yen.

6

STATEMENT OF CASH FLOWS(Unit: thousands of yen)
For the six months ended
July 31, 2022

January 31, 2022

Net cash provided by (used in) operating activities
Income before income taxes

6,443,902

5,514,809

Depreciation and amortization

1,088,391

1,079,135

8,790

8,465

5,358

5,358

(54)

(53)

Amortization of investment corporation bonds
issuance cost
Amortization of investment unit issuance cost
Interest income
Gain on forfeiture of unclaimed dividends
Interest expenses(805)(1,044)

405,729422,555

Decrease (increase) in operating accounts receivable

5,677

55,114

Increase (decrease) in operating accounts payable(29,889)(16,964)

Increase (decrease) in accounts payable – other

3,596(9,080)

Increase (decrease) in accrued expenses

458,826(24,006)

Increase (decrease) in accrued consumption taxes

138,392(236,008)

Increase (decrease) in advances received

14,35633,010

Increase (decrease) in deposits received(7,322)

16,114

Decrease (increase) in prepaid expenses

17,505(3,505)42,58853,063

1,545,191－

Decrease (increase) in long-term prepaid expenses
Decrease in property, plant and equipment in trust due to sale
Other, net

(150)

－

10,140,084

6,896,965

54

53(397,959)(413,483)(877)(1,115)9,741,302

6,482,419(734,691)(8,084,650)(1,092)－

Repayments of lease and guarantee deposits in trust(120,529)(493,630)

Proceeds from lease and guarantee deposits in trust

189,840

499,196

Net cash provided by (used in) investing activities(666,472)(8,079,083)

Proceeds from long-term loans payable

9,500,000

17,200,000

Repayments of long-term loans payable(9,500,000)(12,500,000)－

1,486,886

Cash dividends paid

(5,608,464)(5,580,604)

Net cash provided by (used in) financing activities(5,608,464)

606,281SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Purchase of property, plant and equipment in trust
Purchase of intangible assets in trust

Net cash provided by (used in) financing activities

Proceeds from issuance of investment corporation bonds

Net increase (decrease) in cash and cash equivalents

3,466,364(990,382)

Cash and cash equivalents at beginning of the period

12,125,714

13,116,097

Cash and cash equivalents at end of the period (Note17)

15,592,079

12,125,714

7

NOTES TO FINANCIAL STATEMENTS
For the six months ended July 31, 2022 and January 31, 2022

1. ORGANIZATION
Mori Hills REIT Investment Corporation (“the Company”) was incorporated by Mori Building Investment
Management Co., Ltd. (the Company’s Asset Manager) on February 2, 2006 with 100 million yen in capital (200 units),
and registration was approved based on Article 187 of the Act on Investment Trusts and Investment Corporations ofJapan (the “Investment Trust Act”) on March 6, 2006 (Registration No. 51 filed with the Director-General of the Kanto
Local Finance Bureau). Subsequently, the Company was listed on the Real Estate Investment Trust Section of theTokyo Stock Exchange on November 30, 2006 (Securities Code: 3234).
The Company’s real estate portfolio as of July 31, 2022 was comprised of 11 properties under management witha total leasable floor area of 181,339.35m2. The Company has already invested 409,252 million yen (based on acquisition
price) into this portfolio. The occupancy rate as of July 31, 2022 was 98.3 %.

2. BASIS OF PRESENTATION
The financial statements of the Company have been prepared in accordance with accounting principles
generally accepted in Japan (“Japanese GAAP”), including provisions set forth in the Financial Instruments andExchange Act of Japan and the Investment Trust Act and 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 basically a translation of the financial statements of the Company, which were prepared inaccordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto
Local Finance Bureau of the Ministry of Finance. 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 is more familiar to readers outside Japan. The amounts have been rounded down to the nearest thousand yen
in the accompanying financial statements. The Company does not prepare consolidated financial statements, as theCompany has no subsidiaries.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(1) Property, plant and equipment (including assets in trust) and depreciation
Depreciation of property, plant and equipment of the Company is calculated principally by the straight-line
method based on the following estimated useful lives determined by the Company. Significant renewals and additions
are capitalized at cost. Maintenance and repairs are charged to income.
Buildings
3~68 years
Structures

3~68 years

Machinery and equipment

8~33 years

Tools, furniture and fixtures 3~15 years(2) Intangible assets (including assets in trust)Intangible assets are amortized by the straight-line method based on the estimated useful lives.
(3) Long-term prepaid expenses
Long-term prepaid expenses are amortized by the straight-line method based on the estimated useful lives.
(4) Investment corporation bonds issuance cost
Investment corporation bonds issuance cost is amortized using the straight-line method over the term of thebonds.
(5) Investment unit issuance cost
Investment unit issuance cost is amortized using the straight-line method over three years.

8(6) Revenue recognition
The details of main performance obligations concerning revenue generated from contracts between the
Company and its customers and the normal point in time to satisfy said performance obligations (normal point intime to recognize revenue) are as follows.
(a) Transfer of real estate
For the proceeds from transfer of real estate, the Company recognizes revenue when the purchaser who is acustomer obtains control of the relevant real estate as a result of the seller fulfilling its delivery obligations stipulated
in the transaction agreement of the real estate.
(b) Utilities income
The Company recognizes utilities income in accordance with the supply of electricity and water, etc. to thelessee who is a customer based on the lease agreement of real estate and details of agreements incidental to it. Of
the utilities income, in the case that the Company deems itself to be an agent, the net amount obtained by deducting
the amount it pays to other parties from the amount it receives as charges for electricity and gas, etc. supplied by
the said other parties is recognized as revenue.
(7) Accounting for property taxes
For property tax, city planning tax and depreciable assets tax, the Company charges the amount of property
taxes assessed and determined applicable to the fiscal period to expenses related to properties.
Registered owners of properties in Japan as of January 1 are responsible for paying property taxes for thecalendar year based on assessments by local governments. Therefore, registered owners who sold properties to theCompany were liable for property taxes for the calendar year, including the period from the date of the acquisition by
the Company until the end of the year. The Company reimbursed sellers of properties for the equivalent amount ofproperty taxes and included the amount in the acquisition cost of real estate. The amount equivalent to property taxes
included in the cost of acquisition of real estate was none for the period ended July 31, 2022 and 10,716 thousand yen
for the period ended January 31, 2022, respectively.
(8) Hedge accounting approach(a) Hedge accounting approach
Deferred hedge accounting is applied for interest rate swap transactions. However, special treatment is applied
for interest rate swaps when the requirements for special treatment are fulfilled.
(b) Hedging instruments and hedged items
Hedging instruments: Interest rate swap transactions
Hedged items:

Borrowing interest rates(c) Hedging policy
The Company conducts derivative transactions to hedge risks as stipulated in the Company’s Articles ofIncorporation in accordance with the Company’s risk management policy.
(d) Method for assessing the effectiveness of hedging
The Company evaluates by comparing the cumulative change in market rates of hedged items and hedging
instruments or cash flow and based on the amount of change in both during the period from the start of hedging towhen the effectiveness is being determined.
However, the assessment of hedge effectiveness is omitted, as it is assumed that important terms of the hedging
instruments and hedged items are identical so that interest rate or cash flow fluctuations will be fully offset at the
inception of the hedge and continuously thereafter. Moreover, assessment of the effectiveness is omitted for interest
rate swaps when the requirements for special treatment are fulfilled.
(9) Cash and cash equivalents
Cash and cash equivalents in the statement of cash flows consist of cash on hand and deposits in trust; deposits
and deposits in trust that can be withdrawn at any time; and short-term investments with a maturity of three months
or less from the date of acquisition, which are readily convertible to cash and bear only an insignificant risk of pricefluctuation.

9(10) Accounting for trust beneficial interest in real estate
For trust beneficial interest in real estate owned by the Company, all accounts of assets and liabilities within
the assets in trust as well as all accounts of revenue generated and expenses incurred from the assets in trust arerecognized in the relevant accounts of the balance sheet and statement of income and retained earnings.
The following material items of the assets in trust recognized in the relevant accounts are separately listed on
the balance sheet.
(a) Cash and deposits in trust(b) Buildings in trust; structures in trust; machinery and equipment in trust; tools, furniture and fixtures in trust; landin trust; construction in progress in trust; leasehold rights in trust; and other intangible assets in trust(c) Lease and guarantee deposits in trust(11) Non-deductible consumption taxes
Non-deductible consumption taxes related to the acquisition of assets are treated as the acquisition cost of
applicable assets.

4. ADDITIONAL INFORMATION
Notes on Provision and Reversal of Allowance for Temporary Difference Adjustments
For the six months ended July 31, 2022
Not applicable.
For the six months ended January 31, 2022
(1) Reason for reversal, and related asset, etc. and amount of reversal(Unit: thousands of yen)
Related asset, etc.

Reason for reversal

Deferred gains or losses on

Changes in fair value of derivative

hedgestransactions

Reversal of allowance for temporary
difference adjustments
482,669(2) Specific method of reversal
Deferred gains or losses on hedges
Reversal in line with changes in fair value of derivative transactions that are the hedging instruments isplanned.

10

5. PROPERTY AND EQUIPMENT
For the six months ended July 31, 2022
(Unit: thousands of yen)
Balance at
beginning of
the period

Amount ofincreaseduring theperiodAmount ofdecreaseduring theperiodBalance at
end of theperiodLand

22,074,160－

22,074,160

－

－

－

－

Buildings in trust

87,764,517

611,106－

88,375,623

22,205,594

1,033,503

66,170,029－

Structures in trust

994,8712,377－

997,248

361,830

9,266

635,418－

Machinery andequipment in trust

1,060,856

3,205

－

1,064,061

412,114

28,382651,947－

Tools, furniture andfixtures in trust

332,762

62,701－

395,463

232,767

17,129162,696－276,512,715

22,074,160

1,545,191

297,041,684－－

297,041,684

8,093

218

－

8,311

－

－

8,311

388,747,976

22,753,769

23,619,351

387,882,394

23,212,306

1,088,282

364,670,087

Leasehold rights
in trust

30,650,962－－

30,650,962－－

30,650,962－

Other intangible
assets in trust

1,092

－

－

1,092

127

109

964

－

Subtotal

30,652,054－－

30,652,054

127

109

30,651,927

Total

419,400,030

22,753,769

23,619,351

418,534,449

23,212,433

1,088,391

395,322,015

Property, plant and equipment

Type of asset

Land in trust
Construction inprogress in trust
Subtotal

Intangible
assets

Accumulated depreciation/
Accumulated amortization Net balance at
end of theRemarks
Depreciation
periodandamortization(Note) The amount of decrease during the period is primarily attributable to the transfer of a part of Laforet Harajuku (Land).

6. SHORT-TERM LOANS PAYABLE
For the six months ended July 31, 2022
Not applicable.

11(Note)(Note)－

7. INVESTMENT CORPORATION BONDS
For the six months ended July 31, 2022
(Unit: thousands of yen)
Bond
Twelfth Series
Unsecured
Investment
Corporation Bonds
Fourteenth Series
Unsecured
Investment
Corporation Bonds
Sixteenth Series
Unsecured
Investment
Corporation Bonds
Seventeenth Series
Unsecured
Investment
Corporation Bonds
Eighteenth Series
Unsecured
Investment
Corporation Bonds
Nineteenth Series
Unsecured
Investment
Corporation Bonds
Twentieth Series
Unsecured
Investment
Corporation Bonds(green bond)Twenty-first Series
Unsecured
Investment
Corporation Bonds(green bond)Twenty-second
SeriesUnsecured
Investment
Corporation Bonds(green bond)Twenty-third
SeriesUnsecured
Investment
Corporation Bonds(green bond)

Issue
date

Balance at
beginning of
the period

Amount ofincreaseduring theperiodAmount ofdecreaseduring theperiodBalance at
end of theperiodInterest
rate

Redemption
maturity
date

Nov. 27,2014

2,000,000－－

2,000,000

0.8650%Nov. 27,2024

May 26,2015

2,000,000－－

2,000,000

0.8200%

May 26,2025

Nov. 26,2015

1,500,000－－

1,500,000

0.8860%Nov. 26,2025

Aug.30,2016

2,000,000－－

2,000,000

0.3400%Aug. 28,2026

Jan. 31,2017

2,000,000－－

2,000,000

0.4900%Jan. 29,2027

Jun. 30,2017

2,000,000－－

2,000,000

0.5000%Jun. 30,
2027

Nov. 25,2020

3,500,000－－

3,500,000

0.2500%Nov. 25,2025

Feb. 22,2021

2,000,000－－

2,000,000

0.5000％Feb. 21,2031

Jul. 30,2021

1,800,000－－

1,800,000

0.4200％Jul. 30,
2031

Nov. 30,2021

1,500,000－－

1,500,000

0.4000％Nov. 28,2031

20,300,000－－

20,300,000

Total

Use offunds

Collateral(Note 1)

none

(Note 1) The funds are used for the acquisition cost of trust beneficial interests, the repayment of loans payable and redemption of investment corporation
bonds.
(Note 2) The redemption schedule of investment corporation bonds for each of the five years after the balance sheet date is as follows.
(Unit: thousands of yen)

Investment corporation bonds

Due within 1 year

Due after 1 year,
but within 2 years

Due after 2 years,
but within 3 years

Due after 3 years,
but within 4 years

Due after 4 years,
but within 5 years－－

4,000,000

5,000,000

6,000,000

12

8. LONG-TERM LOANS PAYABLE
For the six months ended July 31, 2022
(1) Current portion of long-term loans payable(Unit: thousands of yen)
LenderBalance at
beginning of
the period

Amount ofincreaseduring theperiodAmount ofdecreaseduring theperiodBalance at
end of theperiodAverageinterest
rate(Note 1)

Repayment
date

1,098,000－

1,098,000－

0.7020%

May 31, 2022

1,600,000－－

1,600,000

0.4980%Nov. 30, 2022－

2,200,000－

2,200,000

0.3290%Mar. 31, 2023

1,369,000－

1,369,000－

0.7020%

May 31, 2022

1,369,000－

1,369,000－

0.7020%

May 31, 2022

1,600,000－－

1,600,000

0.4980%Nov. 30, 2022－

1,500,000－

1,500,000

0.3290%Mar. 31, 2023－

1,700,000－

1,700,000

0.7963%Mar. 27, 2023－

1,000,000－

1,000,000

0.3290%Mar. 31, 2023－

1,000,000－

1,000,000

0.3290%Mar. 31, 2023

1,000,000－－

1,000,000

0.2300%Nov. 30, 2022

1,000,000－－

1,000,000

0.1795%

Sep. 30, 2022

Resona Bank, Ltd－

800,000－

800,000

0.3290%Mar. 31, 2023

The Nishi-Nippon
City Bank, Ltd.

800,000－－

800,000

0.2570%Aug. 31, 2022

Shinsei Bank, Ltd－

500,000－

500,000

0.3290%Mar. 31, 2023

Mizuho Trust &Banking Co., Ltd.

－

500,000－

500,000

0.3290%Mar. 31, 2023

1,369,000－

1,369,000－

0.7020%

May 31, 2022

3,000,000－

3,000,000－

0.1850%

May 23, 2022

Sumitomo Mitsui
Trust Bank, Ltd.

1,295,000－

1,295,000－

0.7020%

May 31, 2022

Total

15,500,000

9,200,000

9,500,000

15,200,000

Sumitomo Mitsui
Banking
Corporation

Use offunds

Remarks

MUFG Bank, Ltd.

Development Bankof Japan Inc.
The Norinchukin
BankThe Hiroshima
Bank, Ltd.
The Oita Bank,Ltd.
Shinkin Central
Bank

Unsecured/

Mizuho Bank, Ltd

13(Note 2)

Unguaranteed(2) Long-term loans payable(Unit: thousands of yen)
LenderBalance at
beginning of
the period

Amount ofincreaseduring theperiodAmount ofdecreaseduring theperiodBalance at
end of theperiodAverageinterest
rate(Note 1)

Repayment
date

500,000－－

500,000

0.6529%Aug. 31, 2023

500,000－－

500,000

0.6529%Aug. 31, 2023

1,600,000－－

1,600,000

0.6155%

Nov. 30, 2023

1,500,000－

1,500,000－

0.3290%Mar. 31, 2023

1,500,000－－

1,500,000

0.4100%Mar. 29, 2024

600,000－－

600,000

0.4100%Mar. 29, 2024

2,400,000－－

2,400,000

0.5040%Mar. 31, 2025

4,700,000－－

4,700,000

0.4065%

Aug. 31, 2027

5,000,000－－

5,000,000

0.4345%

Feb. 29, 2028

3,904,000－－

3,904,000

0.3025%

Nov. 30, 2028

MUFG Bank, Ltd

Use offunds

Unsecured/(Note 2)2,200,000－－

2,200,000

0.1930%Nov. 30, 2026

2,816,000－－

2,816,000

0.2560%

May 31, 2027

1,400,000－－

1,400,000

0.2130%Aug. 31, 2027

2,400,000－－

2,400,000

0.2160%Nov. 30, 2027

2,738,000－－

2,738,000

0.3524%

May 31, 2029

1,600,000－－

1,600,000

0.3500%Feb. 28, 2029

1,400,000－－

1,400,000

0.3550%Aug. 31, 2029

1,100,000－－

1,100,000

0.4580%Nov. 30, 2029－

1,579,000－

1,579,000

0.5600%Nov. 30, 2029－

800,000－

800,000

0.6000%

May 31, 2030

14Remarks

Unguaranteed(Unit: thousands of yen)
LenderMizuho Bank, Ltd

Balance at
beginning of
the period

Amount ofincreaseduring theperiodAmount ofdecreaseduring theperiodBalance at
end of theperiodAverageinterest
rate(Note 1)

Repayment
date

500,000－－

500,000

0.6529%Aug. 31, 2023

1,600,000－－

1,600,000

0.6155%

Nov. 30, 2023

600,000－－

600,000

0.4100%Mar. 29, 2024

2,400,000－－

2,400,000

0.5040%Mar. 31, 2025

1,100,000－－

1,100,000

0.5775%

Jul. 31, 2029

2,700,000－－

2,700,000

0.6030%Feb. 28, 2030

3,000,000－－

3,000,000

0.4260%Aug. 30, 2024

1,400,000－－

1,400,000

0.4275%

Aug. 31, 2029

1,952,000－－

1,952,000

0.4275%

May 31, 2029

1,000,000－－

1,000,000

0.2010%Aug. 29, 2025

1,100,000－－

1,100,000

0.3290%

May 31, 2027

1,408,000－－

1,408,000

0.3990%

May 31, 2029

1,400,000－－

1,400,000

0.3590%Aug. 31, 2029

1,200,000－－

1,200,000

0.2410%Nov. 30, 2027

1,369,000－－

1,369,000

0.2350%

May 31, 2028

1,500,000－－

1,500,000

0.3170%Aug. 30, 2030

1,300,000－－

1,300,000

0.4244%

Nov. 29, 2030

Use offunds

Unsecured/(Note 2)

Sumitomo Mitsui
Trust Bank, Ltd.

－

3,000,000－

3,000,000

0.3173%

May 23, 2031－

1,114,000－

1,114,000

0.3173%

May 30, 2031

500,000－－

500,000

0.6529%Aug. 31, 2023

1,600,000－－

1,600,000

0.6155%

Nov. 30, 2023

600,000－－

600,000

0.4100%Mar. 29, 2024

2,400,000－－

2,400,000

0.5040%Mar. 31, 2025

1,000,000－－

1,000,000

0.5150%Jul. 31, 2026

2,000,000－－

2,000,000

0.4770%Jul. 31, 2028

2,600,000－－

2,600,000

0.5830%Feb. 26, 2027

2,400,000－－

2,400,000

0.3315%

Aug. 31, 2023

1,400,000－－

1,400,000

0.6670%Aug. 31, 2027

1,000,000－－

1,000,000

0.1350%Nov. 29, 2024

834,000－－

834,000

0.2650%

May 30, 2025

960,000－－

960,000

0.2100%Nov. 28, 2025

1,294,000－－

1,294,000

0.2268%May 29, 2026

1,040,000－－

1,040,000

0.2840%Nov. 30, 2026－

1,117,000－

1,117,000

0.2473%

May 31, 2027

15

Remarks

Unguaranteed(Unit: thousands of yen)
LenderSumitomo Mitsui
Banking
Corporation

Balance at
beginning of
the period

Amount ofincreaseduring theperiodAmount ofdecreaseduring theperiodBalance at
end of theperiodAverageinterest
rate(Note 1)

Repayment
date

500,000－－

500,000

0.6529%Aug. 31, 2023

2,200,000－

2,200,000－

0.3290%Mar. 31, 2023

800,000－－

800,000

0.4100%Mar. 29, 2024

1,100,000－－

1,100,000

0.4673%

Jul. 31, 2025

2,650,000－－

2,650,000

0.5460%Feb. 27, 2026

3,600,000－－

3,600,000

0.5640%Aug. 31, 2026

1,144,000－－

1,144,000

0.4000%Nov. 30, 2027

1,600,000－－

1,600,000

0.4720%

May 31, 2028

1,134,000－－

1,134,000

0.4800%Nov. 30, 2028

1,400,000－－

1,400,000

0.3780%Aug. 31, 2028

1,440,000－－

1,440,000

0.3860%Nov. 30, 2028

1,099,000－－

1,099,000

0.3524%

May 31, 2029

1,500,000－－

1,500,000

0.3542%

Aug. 31, 2029

1,560,000－－

1,560,000

0.4580%Nov. 30, 2029－

890,000－

890,000

0.3673%

May 31, 2030

Use offunds

Unsecured/(Note 2)The Bank ofFukuoka, Ltd.

The Norinchukin
Bank

1,000,000－－

1,000,000

0.4100%Mar. 29, 2024

500,000－－

500,000

0.5150%Jul. 31, 2026

500,000－－

500,000

0.4700%Aug. 29, 2025

1,300,000－－

1,300,000

0.3760%Aug. 30, 2024

2,000,000－－

2,000,000

0.1675%

May 29, 2026

2,000,000－－

2,000,000

0.2775%

Nov. 30, 2028

1,000,000－－

1,000,000

0.3075%

May 20, 2030

500,000－－

500,000

0.1910%Jul. 30, 2027

1,000,000－

1,000,000－

0.3290%Mar. 31, 2023

500,000－－

500,000

0.3735%

Jul. 31, 2024

600,000－－

600,000

0.4893%

Nov. 29, 2024

1,300,000－－

1,300,000

0.4260%Aug. 30, 2024

3,000,000－－

3,000,000

0.2675%

May 29, 2026

600,000－－

600,000

0.2610%

May 29, 2026

1,000,000－－

1,000,000

0.3536%

Jul. 31, 2029

16

Remarks

Unguaranteed(Unit: thousands of yen)
LenderResona Bank, Ltd

Shinsei Bank, Ltd

Mizuho Trust &Banking Co., Ltd.

Balance at
beginning of
the period

Amount ofincreaseduring theperiodAmount ofdecreaseduring theperiodBalance at
end of theperiodAverageinterest
rate(Note 1)

Repayment
date

800,000－

800,000－

0.3290%Mar. 31, 2023

500,000－－

500,000

0.6130%Jul. 30, 2027

500,000－－

500,000

0.4700%Aug. 29, 2025

1,300,000－－

1,300,000

0.4805%

Aug. 31, 2028

2,500,000－－

2,500,000

0.3275%

Aug. 31, 2029

830,000－－

830,000

0.3000%

May 31, 2028

1,000,000－－

1,000,000

0.2370%Aug. 31, 2026

1,500,000－－

1,500,000

0.6155%

Nov. 30, 2023

500,000－

500,000－

0.3290%Mar. 31, 2023

500,000－－

500,000

0.5400%Aug. 29, 2025

1,300,000－－

1,300,000

0.5200%Aug. 29, 2025

900,000－－

900,000

0.3550%Nov. 30, 2027

500,000－－

500,000

0.3775%

May 22, 2028

1,000,000－－

1,000,000

0.3536%

Jul. 31, 2029

500,000－

500,000－

0.3290%Mar. 31, 2023

500,000－－

500,000

0.5775%

Jul. 31, 2029

1,500,000－－

1,500,000

0.4700%Aug. 29, 2025

1,300,000－－

1,300,000

0.4700%Aug. 29, 2025

1,000,000－－

1,000,000

0.4480%

May 21, 2029

1,700,000－

1,700,000－

0.7963%Mar. 27, 2023

1,000,000－－

1,000,000

0.4100%Mar. 29, 2024

750,000－－

750,000

0.6430%Feb. 26, 2027

500,000－－

500,000

0.6670%Aug. 31, 2027

2,000,000－－

2,000,000

0.4275%

Nov. 30, 2028

1,000,000－－

1,000,000

0.4893%

Nov. 29, 2024

500,000－－

500,000

0.5400%Aug. 29, 2025

1,000,000－－

1,000,000

0.5725%

May 20, 2030

700,000－－

700,000

0.4886%

Jul. 31, 2031

1,000,000－－

1,000,000

0.2170%Aug. 31, 2026

500,000－－

500,000

0.3200%

May 20, 2027

1,000,000－－

1,000,000

0.2780%Jul. 31, 2028

1,000,000－－

1,000,000

0.4100%Mar. 29, 2024

1,000,000－－

1,000,000

0.3736%

Jul. 31, 2029

1,000,000－－

1,000,000

0.4800%

May 22, 2028

Development Bankof Japan Inc.

The Nishi-Nippon
City Bank, Ltd.

Chugoku Bank
Ltd.

Aozora Bank, Ltd.
Nippon Life
Insurance
Company17

Use offunds

Remarks(Note 2)

Unsecured/
Unguaranteed(Unit: thousands of yen)
Balance at
beginning of
the period

LenderMitsui Sumitomo
Insurance
Company,
LimitedThe Bank of
Yokohama, Ltd.
The Hiroshima
Bank, Ltd.
Total

Amount ofincreaseduring theperiodAmount ofdecreaseduring theperiodBalance at
end of theperiodAverageinterest
rate(Note 1)

Repayment
date

1,000,000－－

1,000,000

0.2800%Jul. 31, 2028－

1,000,000－

1,000,000

0.3673%

May 31, 2032

1,000,000－

1,000,000－

0.3290%Mar. 31, 2023

156,622,000

9,500,000

9,200,000

156,922,000

Use offunds

Remarks(Note 2)

Unsecured/
Unguaranteed(Note 1) “Average interest rate” indicates the interest rate on loans payable for the respective lending financial institutions rounded to fourdecimal places. In addition, concerning the loans payable for which an interest rate swap transaction has been entered into for the
purpose of avoiding the risk of fluctuations in interest rates, the interest rate shown is the interest rate after taking into account theeffect of the interest rate swap transaction.
(Note 2) The funds are used for the acquisition cost of trust beneficial interests, the refinancing of loans payable, redemption of investment
corporation bonds and related expenses.
(Note 3) The repayment schedule of long-term loans payable (excluding the current portion of long-term loans payable) due within 5 years after
the balance sheet date is as follows.
(Unit: thousands of yen)
Due after 1 year,
but within 2 years

Due after 2 years,
but within 3 years

Due after 3 years,
but within 4 years

Due after 4 years,
but within 5 years

18,800,000

17,334,000

19,104,000

18,723,000

Long-term loans payable

9. NET ASSETS(1) Minimum net assets
The Company is required to maintain net assets of at least 50,000 thousand yen pursuant to the Investment
Trust Act.
(2) Allowance for temporary difference adjustments
For the six months ended July 31, 2022(a) Reason for provision or reversal and related asset, etc. and amount of provision(Unit: thousands of yen)
Related asset,
etc.

Reason forprovision

Deferred gains or

Loss on valuation

losses on hedges

of interest swaps

InitialamountBalance at
beginningof theperiodAllowance
set aside
duringperiodReversalduringperiodBalance atthe end of
the period

482,669－

482,669－

Reason for reversal
Changes in fair value

529,400of derivativetransactions(b) Specific method of reversal
Deferred gains or losses on hedges
Reversal in line with changes in fair value of derivative transactions that were the hedging instruments was
made.

18

For the six months ended January 31, 2022(a) Reason for provision or reversal and related asset, etc. and amount of provision(Unit: thousands of yen)
Related asset,
etc.

Reason forprovision

Deferred gains or

Loss on valuation

losses on hedges

of interest swaps

InitialamountBalance at
beginningof theperiodAllowance
set aside
duringperiodReversalduringperiodBalance atthe end of
the period

529,400

529,400－

46,731

482,669

Reason for reversal
Changes in fair valueof derivativetransactions(b) Specific method of reversal
Deferred gains or losses on hedges
Reversal in line with changes in fair value of derivative transactions that are the hedging instruments isplanned.

10. INCOME TAXES(1) Breakdown of significant components of deferred tax assets and deferred tax liabilities(Unit: thousands of yen)
As ofJuly 31, 2022

January 31, 2022

Deferred tax assets
Accrued enterprise tax excluded

13

13

Deferred gains or losses on hedges

42,02568,656

Subtotal deferred tax assets

42,03868,669Valuation allowance(42,025)(68,656)

13

13

13

13

from expenses

Total deferred tax assets
Net deferred tax assets(2) Reconciliation of significant differences between the statutory tax rate and the effective tax rate
As ofJuly 31, 2022
Statutory tax rate

January 31, 2022
31.46%

31.46%

Deductible cash distributions(28.35%)(32.00%)Reserve for reduction entry(3.11%)－

Others

0.01%

0.56%

Effective tax rate

0.01%

0.02%

[Adjustments]

1911. PER UNIT INFORMATION
For the six months ended
July 31, 2022

January 31, 2022

Net assets per unit (yen)105,825

105,231

Net income per unit (yen)

3,362

2,877

(Note 1)

Net income per unit was calculated by dividing the net income by the daily weighted average number of investment units during
the period.
Diluted net income per unit has not been stated as there are no diluted investment units.

(Note 2)

The following is the basis for calculating net income per unit.

For the six months ended
July 31, 2022
Net income (thousands of yen)

January 31, 2022
6,443,017

5,513,920－－

Net income attributable to common
investment units (thousands of yen)

6,443,017

5,513,920

Average number of investment units
during the period (units)

1,916,330

1,916,330

Amounts not attributable to common
unitholders (thousands of yen)20

12. RELATED PARTY TRANSACTIONS(1) Parent company and major corporate unitholders
For the six months ended July 31, 2022

Type

Name

Capital stock
Percentage
orof votingRelationshipinvestments Description of rights held
Locationwithin capitalbusinessin (by)related party(thousands ofrelatedyen)
party

Amount ofBalancetransaction
at end of the
Description of
Account(thousands ofperiodtransaction
item
yen)
(thousands(Note 1)of yen)Transfer ofproperty(Note 2)
(Note 6)

Other
relatedcompanyMori
MinatoBuilding
ku, TokyoCo., Ltd.

79,500,000

Real estatebusiness

15.0%
directly
held byrelatedparty

Leasing andmanagement ofreal estate

Leasing ofproperties(Note 3)(Note 7)
Payment ofproperty
operation andmanagement
fees(Note 8)Deposit of leaseand guarantee(Note 5)(Note 9)2,898,000－－

Advances
1,169,721
received
Lease and
6,425,108
guarantee
10,360,591
deposits
in trust
Prepaid
4,288
expenses
303,158
Operating(Note 4)accounts
60,455payable－Lease andguarantee
deposits
in trust

53,886(Note 1) The amount does not include consumption taxes.
(Note 2) Part of Laforet Harajuku (Land)(Note 3) Roppongi Hills Mori Tower, ARK Mori Building, Atago Green Hills and Toranomon Hills Mori Tower(Note 4) The amount includes fees (38,556 thousand yen) that are not charged to expenses but recognized as assets.
(Note 5) Roppongi View Tower[Transaction terms and conditions and related policies](Note 6) Transfer decisions are made in accordance with the provisions of the Related Parties Transaction Guidelines stipulated by theCompany’s Asset Manager and compliance regulations. Furthermore, transfers are not made at a value below the appraisal value as
determined by an independent third-party real estate appraiser (including corporations).
(Note 7) The Company engages in transactions by conducting adequate procedures in line with the Related Parties Transaction Guidelines
stipulated by the Company’s Asset Manager and compliance regulations, after having comprehensively considered the market situationand other factors.
(Note 8)The Company decides on transactions by conducting adequate procedures in line with the Related Parties Transaction Guidelines
stipulated by the Company’s Asset Manager and compliance regulations, in light of the market situation, the content of services
provided, overall operational capacity and other factors.

(Note 9) The Company engages in transactions by conducting adequate procedures in line with the Related Parties Transaction Guidelines
stipulated by the Company’s Asset Manager and compliance regulations, after having comprehensively considered the market situationand other factors.

21

For the six months ended January 31, 2022

Type

Name

Capital stock
Percentage
orof votingRelationshipinvestments Description of rights held
Locationwithin capitalbusinessin (by)related party(thousands ofrelatedyen)
party

Amount ofBalancetransaction
at end of the
Description of
Account(thousands ofperiodtransaction
item
yen)
(thousands(Note 1)of yen)Acquisition of
Property（Note 2）
（Note 6）

Other
relatedcompanyMori
MinatoBuilding
ku, TokyoCo., Ltd.

79,500,000

Real estatebusiness

15.0%
directly
held byrelatedparty

Leasing andmanagement ofreal estate

Leasing ofproperties(Note 3)(Note 7)
Payment ofproperty
operation andmanagement
fees(Note 8)Deposit of leaseand guarantee(Note 5)(Note 9)7,870,000－－

Advances
1,165,772
received
Lease and
6,424,190
guarantee
10,360,591
deposits
in trust
Prepaid
3,657
expenses
266,141
Operating(Note 4)accounts
53,837payableLease andguarantee－
deposits
in trust

53,886(Note 1) The amount does not include consumption taxes.
(Note 2) A portion of Toranomon Hills Mori Tower(Note 3) Roppongi Hills Mori Tower, ARK Mori Building, Atago Green Hills and Toranomon Hills Mori Tower(Note 4) The amount includes fees (9,379 thousand yen) that are not charged to expenses but recognized as assets.
(Note 5) Roppongi View Tower[Transaction terms and conditions and related policies](Note 6) Acquisition decisions are made in accordance with the provisions of the Related Parties Transaction Guidelines stipulated by theCompany’s Asset Manager and compliance regulations Furthermore, acquisitions are not made at a value exceeding the appraisal
value as determined by an independent third-party real estate appraiser (including corporations).
(Note 7) The Company engages in transactions by conducting adequate procedures in line with the Related Parties Transaction Guidelines
stipulated by the Company’s Asset Manager and compliance regulations, after having comprehensively considered the market situationand other factors.
(Note 8) The Company decides on transactions by conducting adequate procedures in line with the Related Parties Transaction Guidelines
stipulated by the Company’s Asset Manager and compliance regulations, in light of the market situation, the content of services
provided, overall operational capacity and other factors.
(Note 9) The Company engages in transactions by conducting adequate procedures in line with the Related Parties Transaction Guidelines
stipulated by the Company’s Asset Manager and compliance regulations, after having comprehensively considered the market situationand other factors.

22

(2) Subsidiaries and affiliates
For the six months ended July 31, 2022
Not applicable.
For the six months ended January 31, 2022
Not applicable.
(3) Subsidiaries of parent company
For the six months ended July 31, 2022

Type

Name

Capital stock
Percentage
Amount ofBalanceorof votingRelationshiptransaction
at end ofinvestments Description of rights held
Description of
Account
Locationwith(thousands ofthe period
in capitalbusinessin (by)transaction
item
related party
yen)(thousands(thousands ofrelated(Note 1)of yen)yen)
party

Subsidiary Mori Buildingof otherInvestment Minatorelated Management ku, Tokyo
companyCo., Ltd.

Real estate,
trust
beneficiaryright and
200,000
otherfinancialasset
management
operations

None

Outsourcingof asset
Payment ofmanagement management
fees
Concurrent(Note 2)
post of(Note 3)
directors

643,528

Accruedexpenses

707,881(Note 1) The amount does not include consumption taxes.
(Note 2) The amount of management fees is provided in the “Asset Management Contract” concluded between the Company and the Company’s
Asset Manager.
[Transaction terms and conditions and related policies](Note 3) The Company decides on transactions in light of the market situation, the content of services provided, overall operational capacityand other factors.

For the six months ended January 31, 2022

Type

Name

Capital stock
Percentage
Amount ofBalanceorof votingRelationshiptransaction
at end ofinvestments Description of rights held
Description of
Account
Locationwith(thousands ofthe period
in capitalbusinessin (by)transaction
item
related party
yen)(thousands(thousands ofrelated(Note 1)of yen)yen)
party

Subsidiary Mori Buildingof otherInvestment Minatorelated Management ku, Tokyo
companyCo., Ltd.

Real estate,
trust
beneficiaryright and
200,000
otherfinancialasset
management
operations

None

Outsourcingof asset
Payment ofmanagement management
fees
Concurrent(Note 2)
post of(Note 4)
directors

240,294 Accrued(Note 3) expenses

255,666(Note 1) The amount does not include consumption taxes.
(Note 2) The amount of management fees is provided in the “Asset Management Contract” concluded between the Company and the Company’s
Asset Manager.
(Note 3) The amount of management fees includes 7,870 thousand yen in acquisition fees pertaining to a real estate acquisition included in thebook value of real estate.
[Transaction terms and conditions and related policies](Note 4) The Company decides on transactions in light of the market situation, the content of services provided, overall operational capacityand other factors.

23

(4) Directors and major individual unitholders
For the six months ended July 31, 2022

Type

Name

Directors
and their
close
relatives

Capital stock
Percentage
Amount ofBalanceorof votingDescription ofRelationshiptransaction
at end ofinvestments
rights held
Description of
Account
Locationbusiness orwith(thousands
the period
in capitalin (by)transaction
item
position
related partyof yen)(thousands(thousands ofrelated(Note 1)of yen)yen)
party

Hideyuki
Isobe－

Executive
Director of
the Company,
and President－& CEO ofMori Building
Investment
Management
Co., Ltd.

None

Executive
Payment of
Director of management
the Company,
fees toand President Mori Building& CEO ofInvestment
Mori Building Management
Investment
Co., Ltd.
Management(Note 2)
Co., Ltd.
(Note 3)643,528

Accruedexpenses

707,881(Note 1) The amount does not include consumption taxes.
(Note 2) The transaction was conducted with Hideyuki Isobe as third-party representative (Mori Building Investment Management Co., Ltd.)and the amount of management fees is provided in the “Asset Management Contract” concluded between the Company and theCompany’s Asset Manager.
[Transaction terms and conditions and related policies](Note 3) The Company decides on transactions in light of the market situation, the content of services provided, overall operational capacityand other factors.

For the six months ended January 31, 2022

Type

Name

Directors
and their
close
relatives

Capital stock
Percentage
Amount oforof votingDescription ofRelationshiptransaction
investments
rights held
Description of
Locationbusiness orwith(thousandsin capitalin (by)transaction
position
related partyof yen)(thousands ofrelated(Note 1)
yen)
party

Hideyuki
Isobe－

Executive
Director of
the Company,
and President－& CEO ofMori Building
Investment
Management
Co., Ltd.

None

Executive
Payment of
Director of management
the Company,
fees toand President Mori Building& CEO ofInvestment
Mori Building Management
Investment
Co., Ltd.
Management(Note 2)
Co., Ltd.
(Note 4)240,294(Note 3)

Account
item

Balanceat end ofthe period(thousandsof yen)Accruedexpenses

255,666(Note 1) The amount does not include consumption taxes.
(Note 2) The transaction was conducted with Hideyuki Isobe as third-party representative (Mori Building Investment Management Co., Ltd.)and the amount of management fees is provided in the “Asset Management Contract” concluded between the Company and theCompany’s Asset Manager.
(Note 3) The amount of management fees includes 7,870 thousand yen in acquisition fees pertaining to a real estate acquisition included in thebook value of real estate.
[Transaction terms and conditions and related policies](Note 4) The Company decides on transactions in light of the market situation, the content of services provided, overall operational capacityand other factors.

2413. BREAKDOWN OF PROPERTY-RELATED REVENUE AND EXPENSES(Unit: thousands of yen)

Breakdown of property operating income
For the six months ended
July 31, 2022
A.

January 31, 2022

Property operating revenue
Rent revenues
Rent and common area revenue

9,646,604

Other rent revenue

9,620,466

5,576

9,652,181

5,728

9,626,195

Other operating revenues
Parking revenue

50,43745,810Utilities and other revenue

146,100

148,604

Cancellation penalty

640

197,178

194,479

9,849,359

Total property operating revenue
B.

64

9,820,674

Property operating expenses
Expenses related to properties
Property management fees

1,217,347

1,200,616

Property taxes

779,178

753,174

Utilities

125,787

118,637

Maintenance and repairs

51,61564,033

Insurance premium

20,40020,720

Custodian fees
Depreciation and amortization

C.

5,985

5,986

1,088,391

1,079,135

Rent expenses

144,785

Other lease business expenses

14,700144,5493,448,193

14,8043,401,656

Total property operating expenses

3,448,193

3,401,656

Property operating income [A − B]

6,401,166

6,419,018(Unit: thousands of yen)Transactions with major unitholders
For the six months ended
July 31, 2022

January 31, 2022

From operating transactions
Rent revenues

6,425,108

Gain on transfer of real estate properties

1,347,808－

264,601

256,762

Expenses related to properties

Breakdown of gain on transfer of real estate properties

6,424,190(Unit: thousands of yen)

For the six months ended July 31, 2022
Laforet Harajuku (Land)
Revenue from transfer of real estate properties

2,898,000

Cost of transfer of real estate properties

1,545,191
5,000

Other transfer expenses

1,347,808

Gain on transfer of real estate properties

For the six months ended January 31, 2022
Not applicable.

2514. UNITHOLDERS’ EQUITY
For the six months ended
July 31, 2022

January 31, 2022

Total number of investment
units authorized and total
number of investment units
issued and outstanding
Total number of investment
units authorized

10,000,000 units

10,000,000 units

Total number of investment
units issued and outstanding

1,916,330 units

1,916,330 units

15. FINANCIAL INSTRUMENTS(1) Policy for financial instruments(a) Policy for holding financial instruments
The Company makes use of various financial instruments in order to invest surplus funds efficiently. In
addition, concerning fund procurement, the Company adopts a policy of undertaking such fund raising primarily
through the issuance of investment units, the borrowing of funds and the issuance of investment corporation bonds.
The Company limits derivative transactions to those that are entered into for the purpose of hedging the risk of
future fluctuations in interest rates on loans payable, and does not engage in speculative transactions.
(b) Description of financial instruments and associated risks, and risk management structure
Deposits used for investing the Company’s surplus funds are exposed to credit risks, for example, the failure of
the financial institutions that are holding the deposits, but the Company limits the risks by diversifying financial
institutions.
Investment corporation bonds and long-term loans payable are used for fund procurement associated with theacquisition of real estate related assets or repayment of loans payable. Of these, loans payable with variable interest
rates are exposed to the risk of fluctuations in interest rates, but derivative transactions are utilized as hedging
instruments.
Interest rate swaps are utilized with the Company seeking to, in effect, convert fluctuating interest rates onfund procurement into fixed interest rates. For information on the method of hedge accounting approach, hedging
instruments and hedged items, hedging policy and method for assessing the effectiveness of hedging, please refer to“Summary of significant accounting policies; (8) Hedge accounting approach.”
Concerning derivative transactions, risks are managed pursuant to the risk management policy set forth by theCompany.
(c) Supplementary explanation on matters concerning fair value of financial instruments
Certain assumptions, etc. are used in calculating the fair value of financial instruments, and there can be cases
where the values may vary based on different assumptions, etc. In addition, concerning the contract amount ofderivative transactions in “Derivative transactions” below the amount itself does not represent the value of themarket risks associated with the derivative transactions.

26

(2) Fair value of financial instruments
The following are the carrying amount, fair value and the difference between them of financial instruments as ofJuly 31, 2022. Furthermore, notes on “Cash and deposits,” “Cash and deposits in trust” are omitted as these aresettled with cash and within a short period of time and thus the fair value approximates the book value. Notes on“Tenant leasehold and security deposits” are also omitted as they lack materiality.
(Unit: thousands of yen)
Carrying amount(a) Current portion of investment corporation bonds

Fair value－

Difference－－(b) Current portion of long-term loans payable

15,200,000

15,211,415

11,415(c) Investment corporation bonds

20,300,000

20,309,440

9,440(d) Long-term loans payable

156,922,000

156,877,094(44,905)

Total

192,422,000

192,397,949

4(24,050)

Derivative transactions (Note1)

411,370

411,370－

The following are the carrying amount, fair value and the difference between them of financial instruments as ofJanuary 31, 2022. Furthermore, notes on “Cash and deposits,” “Cash and deposits in trust” are omitted as these aresettled with cash and within a short period of time and thus the fair value approximates the book value. Notes on“Tenant leasehold and security deposits” are also omitted as they lack materiality.
(Unit: thousands of yen)
Carrying amount(a) Current portion of investment corporation bonds

Fair value

Difference

－

－

－

(b) Current portion of long-term loans payable

15,500,000

15,523,874

23,874(c) Investment corporation bonds

20,300,000

20,341,340

41,340(d) Long-term loans payable

156,622,000

156,578,957(43,042)

Total

192,422,000

192,444,171

22,171

Derivative transactions (Note1)

105,426

105,426－(Note 1) Assets and liabilities from derivative transactions are indicated in net amounts and net liabilities are indicated in parentheses.
(Note 2) Method of calculating the fair value of financial instruments, and derivative transactions
Liabilities(a) Current portion of investment corporation bonds; (c) Investment corporation bonds
The fair value of these is based on market prices.
(b) Current portion of long-term loans payable; (d) Long-term loans payable
Of long-term loans payable, as those with variable interest rates reflect market interest rates within a short period of time, the fairvalue is thought to be approximately the same as the book value and is thus stated at that book value (However, long-term loans
payable with variable interest rates that are subject to special treatment for interest rate swaps (please refer to “Derivativetransactions” below) are based on a calculation method of discounting the sum total amount of principal and interest accounted fortogether with said interest rate swaps by the rate reasonably estimated as being applicable in the event of a similar transaction.).
Meanwhile, those with fixed interest rates are based on a calculation method of discounting the sum total amount of principal andinterest by the rate reasonably estimated as being applicable in the event of a similar transaction.
Derivative transactions
Please refer to “Derivative transactions” below.

27

(Note 3) Investment corporation bonds and long-term loans payable scheduled to be due after the balance sheet date (as of July 31, 2022)

Due within
1 yearInvestment corporation bonds
Long-term loans payable
Total

Due after
1 year,but within
2 years

Due after
2 years,
but within
3 years(Unit: thousands of yen)
Due after
4 years,
Due after
but within
5 years
5 years

Due after
3 years,
but within
4 years－－

4,000,000

5,000,000

6,000,000

5,300,000

15,200,000

18,800,000

17,334,000

19,104,000

18,723,000

82,961,000

15,200,000

18,800,000

21,334,000

24,104,000

24,723,000

88,261,000

Investment corporation bonds and long-term loans payable scheduled to be due after the balance sheet date (as of January 31, 2022)

Due within
1 yearInvestment corporation bonds
Long-term loans payable
Total

Due after
1 year,but within
2 years

Due after
2 years,
but within
3 years(Unit: thousands of yen)
Due after
4 years,
Due after
but within
5 years
5 years

Due after
3 years,
but within
4 years－－

2,000,000

7,000,000

4,000,000

7,300,000

15,500,000

20,400,000

15,800,000

17,194,000

19,884,000

83,344,000

15,500,000

20,400,000

17,800,000

24,194,000

23,884,000

90,644,000

16. DERIVATIVE TRANSACTIONS(1) Transactions for which hedge accounting is not applied
As of July 31, 2022
Not applicable
As of January 31, 2022
Not applicable(2) Transactions for which hedge accounting is applied
As of July 31, 2022
The following is the contract amount or amount equivalent to the principal provided in the contract as of thedate of settlement of accounts based on each method of hedge accounting.
(Unit: thousands of yen)
Method ofhedge accounting
Principle
methodSpecialtreatment forinterest rate
swaps

Type ofderivative transaction
Interest rate swap
transactions
Floating receivable;
Fixed payable
Interest rate swap
transactions
Floating receivable;
Fixed payable

Contract amountMain
hedged item

Due after 1 year

Long-termloans payable

126,666,000

118,366,000

Long-termloans payable

12,000,000

8,800,000

Fair value

Method of calculating
the fair value

411,370

Based on the quoted
price obtained fromcounterparty financial
institutions.

*－*Derivative transactions that are subject to special treatment for interest rate swaps are accounted for together with long-term loans
payable that are the hedged items and the fair value is included in the fair value of those long-term loans payable (please refer to Liabilities(b) and (d) of (Note 2) Method of calculating the fair value of financial instruments, and derivative transactions of “Financial instruments;(2) Fair value of financial instruments” above).

28

As of January 31, 2022
The following is the contract amount or amount equivalent to the principal provided in the contract as of thedate of settlement of accounts based on each method of hedge accounting.
(Unit: thousands of yen)Contract amount

Method ofhedge accounting

Type ofderivative transactionMainhedged item

Principle
methodInterest rate swap
transactions
Floating receivable;
Fixed payable

Long-termloans payable

126,666,000

125,866,000

Specialtreatment forinterest rate
swaps

Interest rate swap
transactions
Floating receivable;
Fixed payable

Long-termloans payable

18,500,000

8,800,000

Due after 1 year

Fair value

Method of calculating
the fair value

105,426

Based on the quoted
price obtained fromcounterparty financial
institutions.

*－*Derivative transactions that are subject to special treatment for interest rate swaps are accounted for together with long-term loans
payable that are the hedged items and the fair value is included in the fair value of those long-term loans payable (please refer to Liabilities(b) and (d) of (Note 2) Method of calculating the fair value of financial instruments, and derivative transactions of “Financial instruments;(2) Fair value of financial instruments” above).

17. CASH AND CASH EQUIVALENTS
Relationship between cash and cash equivalents at end of the period in the statement of cash flows and cash
and deposits stated in the balance sheet(Unit: thousands of yen)
For the six months ended
July 31, 2022

January 31, 2022

Cash and deposits

10,640,215

6,950,040

Cash and deposits in trust

4,951,864

5,175,674

Cash and cash equivalents

15,592,079

12,125,714

18. LEASESOperating lease transactions (as lessor)
Future minimum rent revenues under existing non-cancelable lease agreements(Unit: thousands of yen)
As ofJuly 31, 2022

January 31, 2022

Due within 1 year

4,304,008

4,272,488

Due after 1 year

8,850,205

10,180,240

13,154,213

14,452,728

Total

29

19. INVESTMENT AND RENTAL PROPERTIESThe Company owns real estate (primarily office buildings and residential and retail properties) available for leasein Tokyo. The following are the carrying amount, amount of increase (decrease) during the period and fair value at endof the period for these investment and rental properties.
(Unit: thousands of yen)
For the six months ended
July 31, 2022

January 31, 2022

Carrying amount
Balance at beginning of the period

397,275,838

390,256,560

Amount of increase (decrease)during the period(1,953,823)

7,019,277

Balance at end of the period

395,322,015

397,275,838

507,662,000

495,886,000

Fair value at end of the period(Note 1) The carrying amount is the acquisition cost less accumulated depreciation.
(Note 2)Of the decrease during the period ended July 31, 2022, the decrease is primarily attributable to the transfer of the property (Laforet
Harajuku (Land) (1,545,191thousand yen) and attributable to depreciation and amortization.
Of the increase (decrease) during the period ended January 31, 2022, the increase is primarily attributable to the acquisition of property(Toranomon Hills Mori Tower (approximately 1.5% of total exclusive floor area) (7,893,162 thousand yen)), the decrease is primarily
attributable to depreciation and amortization.

(Note 3)

The fair value at end of the period is the appraisal value by a real estate appraiser (according to the “Real Estate Appraisal Report”
with the date of settlement of accounts as the appraisal date) pursuant to the method of and standards for asset valuation provided in
the Company’s Articles of Incorporation and the rules provided by The Investment Trusts Association, Japan.

Income and loss for investment and rental properties is presented in “Breakdown of property-related revenue andexpenses”

20. Revenue Recognition(1) Breakdown of information on revenue from contracts with customers
For the six months ended July 31, 2022
(Unit: thousands of yen)
Revenue from Contracts with Customers(Note 1)

Sales to External Customers

2,898,000

Transfer of real estate, etc (Note 2)

1,347,808

95,976

95,976

Other－

9,753,383

Total

2,993,976

11,197,167

Utilities income (Note 3)(Note 1)

Rent revenues, etc. subject to the “Accounting Standard for Lease Transactions” (Corporate Accounting Standard No. 13) and thetransfer of real estate, etc. subject to the “Practical Guidelines on Accounting by Transferors for Securitization of Real Estate Using
Special Purpose Companies” (Accounting System Committee Report No. 15 of the Japanese Institute of Certified Public Accountants)are excluded from “Revenue from contracts with customers” as such revenue is not subject to Accounting Standard for Revenue
Recognition. Revenue from contracts with customers mainly represents proceeds from transfer of real estate and utilities income.

(Note2)For the transfer of real estate, etc., the amount obtained by subtracting the cost of transfer of real estate, etc. and other transfer
expenses from the proceeds from transfer of real estate, etc. is indicated to record the amount as gain on transfer of real estate, etc.
in the statement of income and retained earnings based on Article 48, Paragraph 2 of the Ordinance on Accountings of Investment
Corporations (Cabinet Office Ordinance No. 47 of 2006).

(Note3)

Utilities income indicates the amount recorded as revenue in accordance with the supply of electricity and water, etc. to the lessee
who is a customer based on the lease agreement of real estate and details of agreements incidental to it.

30For the six months ended January 31, 2022
(Unit: thousands of yen)
Revenue from Contracts with Customers(Note 1)
Transfer of real estate, etc

Sales to External Customers－－

98,90098,900Other－

9,721,774

Total

98,9009,820,674

Utilities income (Note 2)(Note 1) Rent revenues, etc. subject to the “Accounting Standard for Lease Transactions” (Corporate Accounting Standard No. 13) and thetransfer of real estate, etc. subject to the “Practical Guidelines on Accounting by Transferors for Securitization of Real Estate Using
Special Purpose Companies” (Accounting System Committee Report No. 15 of the Japanese Institute of Certified Public Accountants)are excluded from “Revenue from contracts with customers” as such revenue is not subject to Accounting Standard for Revenue
Recognition. Revenue from contracts with customers mainly represents proceeds from transfer of real estate and utilities income.
(Note 2) Utilities income indicates the amount recorded as revenue in accordance with the supply of electricity and water, etc. to the lessee
who is a customer based on the lease agreement of real estate and details of agreements incidental to it.

(2) Information that provides a basis for understanding revenue from contracts with customers
For the six months ended July 31, 2022
As described in the notes on matters related to significant accounting policies.
For the six months ended January 31, 2022
As described in the notes on matters related to significant accounting policies.
(3) Information on relationship of satisfaction of performance obligations based on contracts with customers with cash
flow generated from said contracts and amount and period of revenue expected to be recognized in the next fiscal
period or thereafter from contracts with customers existing at the end of the fiscal period(a) Balance of contract assets and contract liabilities, etc.
(Unit: thousands of yen)
For the six months
ended July 31, 2022

For the six months
ended January 31, 2022

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

227

433

Claims generated from contracts with customers(balance at end of fiscal period)

714

227

Contract assets (balance at beginning of fiscal period)－－

Contract assets (balance at end of fiscal period)－－

Contract liabilities (balance at beginning of fiscal period)－－

Contract liabilities (balance at end of fiscal period)

－

－

31

(b) Transaction value allocated to the remaining performance obligations
For the six months ended July 31, 2022
As of July 31, 2022, the total amount of the transaction price allocated to remaining performance obligations
pertaining to the transfer of real estate, etc. is 2,898,000 thousand yen due to real estate, etc. for which a transfer
agreement was concluded on March 17, 2022. The Company expects to recognize revenue for these performanceobligations due to the transfer of trust beneficiary interest (7% quasi co-ownership interest) of the above realestate, etc., which was planned for December 1, 2022.
With regard to utilities income, as the Company has the right to receive from customers an amount directly
corresponding to the value for the lessees, or customers, of sections for which performance is complete by the endof the fiscal period, the amount it has the right to claim is recognized as revenue in accordance with Paragraph
19 of the Implementation Guidance on Accounting Standard for Revenue Recognition. Accordingly, such is notincluded in the note on transaction value allocated to remaining performance obligations through application of
the provisions of Paragraph 80-22 (2) of the Accounting Standard for Revenue Recognition.

For the six months ended January 31, 2022
Not applicable.
With regard to utilities income, as the Company has the right to receive from customers an amount directly
corresponding to the value for the lessees, or customers, of sections for which performance is complete by the endof the fiscal period, the amount it has the right to claim is recognized as revenue in accordance with Paragraph
19 of the Implementation Guidance on Accounting Standard for Revenue Recognition. Accordingly, such is notincluded in the note on transaction value allocated to remaining performance obligations through application of
the provisions of Paragraph 80-22 (2) of the Accounting Standard for Revenue Recognition.

21. SEGMENT AND RELATED INFORMATION[Segment Information]
Disclosure is omitted because the Company operates as a single segment – Real estate leasing business.
[Related Information]
For the six months ended July 31, 2022
(1) Information about each product and service
Disclosure is omitted because operating revenue from external customers within a single product and service
category accounts for over 90% of the operating revenue on the statement of income and retained earnings.
(2) Information about each geographical area(a) Operating revenue
Disclosure is omitted because operating revenue from external customers in Japan accounts for over 90%of the operating revenue on the statement of income and retained earnings.
(b) Property, plant and equipment
Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts forover 90% of the amount of property, plant and equipment on the balance sheet.
(3) Information about each major tenant(Unit: thousands of yen)
Name of tenantOperating revenue

Mori Building Co., Ltd.

7,772,916

32

Related segment
Real estate leasing businessFor the six months ended January 31, 2022
(1) Information about each product and service
Disclosure is omitted because operating revenue from external customers within a single product and service
category accounts for over 90% of the operating revenue on the statement of income and retained earnings.
(2) Information about each geographical area(a) Operating revenue
Disclosure is omitted because operating revenue from external customers in Japan accounts for over 90%of the operating revenue on the statement of income and retained earnings.
(b) Property, plant and equipment
Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts forover 90% of the amount of property, plant and equipment on the balance sheet.
(3) Information about each major tenant(Unit: thousands of yen)
Name of tenantOperating revenue

Mori Building Co., Ltd.

6,424,190

22. SUBSEQUENT EVENTS
Not applicable.

33

Related segment
Real estate leasing business