(REIT) Financial Report for the Fiscal Period Ended December 2018
REIT Securities Issuer:
Securities Code:
Representative:

marimo Regional Revitalization REIT, Inc.
3470
Takashi Kitagata, Executive Director

Listing:
URL:

Asset Manager:
Representative:
Contact:

Marimo Asset Management Co., Ltd.
Takashi Kitagata, CEO
Katsuhiro Shimada, Financial Management Officer
TEL: +81-3-6205-4755

February 18, 2019
Tokyo Stock Exchange
https://www.marimo-reit.co.jp/en/

Scheduled date of commencement of dividends payment:
Scheduled date of submission of securities report:

March 19, 2019
March 28, 2019

Preparation of supplementary financial results briefing materials:
Holding of financial results briefing session:

Yes
Yes (for institutional investors and analysts)(Amounts are rounded down to the nearest million yen)

1. Status of Management and Assets for the Fiscal Period Ended December 2018 (from July 1, 2018 to December 31, 2018)(1) Operating Results(% figures are the rate of period-on-period increase (decrease))
Fiscal period
Operating revenue
Operating income
Ordinary income
Net income
million yen%
million yen%
million yen%
million yen
%
1,093
3.4
471
(0.2)
395
0.1
395
0.1
Ended Dec. 2018
Ended June 2018
1,057
40.0
472
49.9
395
50.1
394
50.3
Fiscal period

Net income per unit

Return on equity

yen
2,984
3,100

Ended Dec. 2018
Ended June 2018

Ratio of ordinary income to Ratio of ordinary income tototal assets
operating revenue
%
%
%
3.1
1.4
36.2
3.8
1.7
37.4

(2) Dividends

Fiscal period

Ended Dec. 2018
Ended June 2018

Dividends
per unit

Total
dividends(excluding
dividends
in excess ofearnings)(excluding
dividends
in excess ofearnings)

yen
2,985
2,982

million yen
395
394

Dividends
in excess ofearnings
per unit

Total
dividends
in excess ofearnings

yen
460
459

million yen
60
60

Dividends
per unit

Total
dividends(including
dividends
in excess ofearnings)(including
dividends
in excess ofearnings)

yen
3,445
3,441

million yen
455
455

Payout
ratio
%
100.0
100.0

Ratio ofdividends to
net assets
%
3.1
3.2

(Note 1) The breakdown of total dividends in excess of earnings for the fiscal period ended June 2018 is total dividends from allowance for temporary difference
adjustments of 1 million yen (8 yen per unit) and total dividends from distribution accompanying decrease in capital, etc. under tax law of 59 million yen(451 yen per unit).
The breakdown of total dividends in excess of earnings for the fiscal period ended December 2018 is total dividends from allowance for temporary
difference adjustments of 1 million yen (9 yen per unit) and total dividends from distribution accompanying decrease in capital, etc. under tax law of 59
million yen (451 yen per unit).
(Note 2) The ratio of decreasing surplus, etc. attributable to distribution in excess of earnings (refund of investments in capital) for the fiscal period ended June2018 is 0.005 and for the fiscal period ended December 2018 is 0.005.
(Note 3) Payout ratio is the figure calculated by the following formula, rounded to the first decimal place.
Payout ratio = Total dividends (excluding dividends in excess of earnings) ÷ Net income × 100(3) Financial Position
Fiscal period
Total assets
million yen
27,492Ended Dec. 2018
Ended June 2018
27,746

Net assets
million yen
12,61012,671Equity ratio
%
45.9
45.7

Net assets per unit
yen
95,29095,746

(4) Cash Flows
Fiscal period

Ended Dec. 2018
Ended June 2018

Net cashprovided by (used in)operating activities
million yen
772559

Net cashprovided by (used in)investing activities
million yen(84)(7,905)

Net cashCash and cash equivalents
provided by (used in)at end of period
financing activities
million yen
million yen
(615)
1,589
7,823
1,516

2. Operating Forecasts for the Fiscal Period Ending June 2019 (from January 1, 2019 to June 30, 2019) andOperating Forecasts for the Fiscal Period Ending December 2019 (from July 1, 2019 to December 31, 2019)(% figures are the rate of period-on-period increase (decrease))
Fiscal periodEnding June 2019
Ending Dec. 2019

Operating revenue Operating income Ordinary income
mn yen
1,111
1,105

%
1.6
(0.5)

mn yen
467
468

%
(0.8)
0.2

mn yen
391
385

%
(1.0)
(1.7)

Dividends per unit
Dividends per unit
Dividends(excluding dividends(including dividends
in excess of
Net income
in excess ofin excess ofearnings per unit
earnings)
earnings)
mn yen
%
yen
yen
yen
390
(1.0)
2,953
502
3,455
384
(1.7)
2,903
497
3,400

(Reference) Forecast net income per unit (Forecast net income ÷ Forecast average number of investment units during period)
Fiscal period ending June 2019: 2,953 yen
Fiscal period ending December 2019: 2,903 yen* Other(1) Changes in Accounting Policies, Changes in Accounting Estimates, and Retrospective Restatements① Changes in accounting policies accompanying amendments to accounting standards, etc.: None
② Changes in accounting policies other than ①:None③ Changes in accounting estimates:
None④ Retrospective restatements:
None(2) Total Number of Investment Units Issued and Outstanding① Total number of investment units issued and outstanding (including treasury investment units) at end of period
Fiscal period ended Dec.2018132,340 units
Fiscal period ended June 2018
132,340 units② Number of treasury investment units at end of period
Fiscal period ended Dec.2018

0 units

Fiscal period ended June 2018

0 units* Presentation of the Status of Implementation of Audit ProceduresThis financial report is exempt from the audit procedures pursuant to the Financial Instruments and Exchange Act (Act No. 25 of1948, as amended) and, at the time of disclosure of this financial report, the audit procedures for financial statements pursuant to
the Financial Instruments and Exchange Act have not been completed.
* Explanation of Appropriate Use of Operating Forecasts, and Other Matters of Special Note
The operating forecasts and other forward-looking statements contained in this document are based on information currently
available to and certain assumptions deemed reasonable by marimo Regional Revitalization REIT, Inc. (hereinafter, “marimo REIT”).
Accordingly, the actual operating results, etc. may differ materially due to various factors. In addition, the forecasts are not aguarantee of the amount of dividends.
Furthermore, for details on the assumptions underlying the forecast figures above, please refer to “Assumptions Underlying the
Operating Forecasts for the Fiscal Period Ending June 2019 (from January 1, 2019 to June 30, 2019) and Fiscal Period Ending
December 2019 (from July 1, 2019 to December 31, 2019)” on page 7.

marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018

Table of Contents
1.

Related Parties of the Investment Corporation …………………………………………………………………………………………………………………..

2

2.

Management Policy and Management Status …………………………………………………………………………………………………………………….
(1) Management Policy ……………………………………………………………………………………………………………………………………………………….

22(2) Management Status ……………………………………………………………………………………………………………………………………………………….
(3) Investment Risks …………………………………………………………………………………………………………………………………………………………….

2
9

3.

Financial Statements ………………………………………………………………………………………………………………………………………………………….

10(1) Balance Sheet …………………………………………………………………………………………………………………………………………………………………
(2) Statement of Income ……………………………………………………………………………………………………………………………………………………..

1012(3) Statement of Unitholders’ Equity ……………………………………………………………………………………………………………………………………

13(4) Statement of Distribution of Cash ………………………………………………………………………………………………………………………………….
(5) Statement of Cash Flows ………………………………………………………………………………………………………………………………………………..

1516(6) Notes on the Going Concern Assumption ……………………………………………………………………………………………………………………….

17(7) Notes on Matters Concerning Significant Accounting Policies …………………………………………………………………………………………

17

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1 －

marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018

1. Related Parties of the Investment Corporation
Disclosure is omitted, because there is no significant change from “Structure of the Investment Corporation” in the most recent
securities report (submitted on September 27, 2018).

2. Management Policy and Management Status(1) Management Policy
Disclosure is omitted, because there is no significant change from “Investment Policy,” “Investment Targets” and “Distribution
Policy” in the most recent securities report (submitted on September 27, 2018).
(2) Management Status(Overview of the Fiscal Period under Review)① Brief History of the Investment Corporation
marimo REIT was incorporated under the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951, as
amended; hereinafter, the “Investment Trusts Act”) with Marimo Asset Management Co., Ltd. (hereinafter, the “AssetManager”) as the organizer and investments in capital of 200 million yen (2,000 units) on February 5, 2016, and completed
the registration with the Kanto Local Finance Bureau on March 16, 2016 (Registration No. 113 with the Director-General of
the Kanto Local Finance Bureau). marimo REIT then implemented an issuance of new investment units through public offering(88,500 units) with July 28, 2016 as the payment due date, and listed on the Real Estate Investment Trust Securities Marketof Tokyo Stock Exchange, Inc. (hereinafter, the “J-REIT Market”) on July 29, 2016 (securities code: 3470). Later, 468 units were
issued through third-party allotment accompanying secondary offering through over-allotment on August 31, 2016.
Furthermore, marimo REIT implemented an issuance of new investment units through public offering (39,500 units) on
January 22, 2018 and issuance of new investment units through third-party allotment accompanying secondary offering
through overallotment (1,872 units) on February 16, 2018. These resulted in total number of investment units issued andoutstanding of 132,340 units as of the end of the fiscal period under review.
(Note) Amounts are rounded down to the nearest million yen. The same shall apply hereinafter.

② Investment Environment
In the fiscal period under review, the Japanese economy experienced a negative growth with an annualized real GDP growthrate of -2.5% for the period from July to September 2018 (seasonally adjusted; second preliminary estimate) against the
backdrop of the weakened consumer appetite and restricted production, transport, etc. due to a string of natural disasters.
While this could be partly attributed to temporary factors, capital investments by private companies have fallen significantly
and domestic and foreign demands have both turned to negative. Going forward, although growth backed by rush demandahead of the consumption tax hike and construction investment prior to the Olympic Games can be expected, attention
should be paid to the trend of crude oil prices, measures for the consumption tax hike and such.
(Financial Market)
Due to Bank of Japan’s monetary easing policy effects, the JBA 3-month Japanese Yen TIBOR has maintained a stable level at
0.06909% since late January 2018, and the TIBOR for the fiscal period under review also remained at the same level as thatin late January 2018. Since the outlook continues to be uncertain due to the U.S. interest rate hike and the Brexit, the impactof financial market volatility should be carefully watched going forward.
(Real Estate Transaction Market)
According to “ARES Monthly Report (January 2019)” published by The Association for Real Estate Securitization, the J-REIT
real estate transaction market in fiscal 2018 expanded by approximately 439.1 billion yen (+32.8% year-on-year) from fiscal
2017 to 1,778.6 billion yen in terms of acquisition price, against the backdrop of steady rise of investment unit prices, etc. By
property use, office increased by approximately 327.1 billion yen (+101.3% year-on-year), logistics facility increased by 189.5
billion yen (+57.4%) and residence increased by approximately 68.8 billion yen (+68.6% year-on-year). Although
circumstances change along with trends in each year, the real estate transaction market is expected to remain strong in
general.

－2 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018
(Residential Leasing Market)
According to the number of households by type of rental housing from 1993 to 2013 for the Tokyo metropolitan area andthe rest of Japan (“Housing and Land Survey” by the Statistics Bureau of the Ministry of Internal Affairs and Communications),
the number of households living in privately-owned rental housing (non-wooden) is increasing, suggesting that demand forrental housing is stable and demand for rental housing in Japan is likely to continue to grow.
(Note)“Tokyo metropolitan area” refers to Tokyo, Kanagawa, Chiba and Saitama. The same shall apply hereinafter.

(Retail Property Market)
According to the “Current Survey of Commerce” by the Ministry of Economy, Trade and Industry, for the period from July to
September 2018, the rate of increase in sales value compared with the same period of the previous year for supermarkets
was +2.2% as a national average. By area, the rate steadily grew with +3.3% for the Chubu area, +2.6% for the Shikoku area,+2.1% for the Hokkaido and Tohoku areas. As for drug stores, the rate of increase was +5.3% on national average with +12.3%
for the Okinawa area, +7.4% for the Chugoku area, +6.8% for the Shikoku area and +6.6% for the Kinki area, showing an
upward trends across the nation. The sales value of supermarkets and drug stores, selling daily necessities, is expected tocontinue to be stable.
(Hotel Market)
According to "Visitor Arrivals to Japan (December 2018 and annual estimate)” by Japan National Tourism Organization, thenumber of international visitors to Japan in 2018 increased to 31.19 million or up 8.7% from the previous year. As a result,according to the “Overnight Travel Statistics Survey (October 2018/second preliminary estimates, November 2018/ firstpreliminary estimates)” by the Japan Tourism Agency of the Ministry of Land, Infrastructure, Transport and Tourism, the total
number of overnight international guests for January to October 2018 increased to 73.83 million (+10.7% year-on-year); andthe guest room occupancy rates by accommodation facility type continued to show upward trends with 77.7% (+2.1% yearon-year) for city hotels, 72.7% (+2.1% year-on-year) for business hotels and 54.9% (+2.0% year-on-year) for resort hotels,suggesting that stable occupancy can be expected going forward as well.
(Office Leasing Market)
According to the “Japan Office MarketView Q4 2018” by CBRE K.K., in the fourth quarter of 2018, vacancy rate for major
regional cities continued on a decreasing trend in general, with 0.4% (-0.1pts quarter-on-quarter) for Fukuoka City, 1.1%(+0.2pts quarter-on-quarter) for Sapporo City, 1.1% (-0.2pts quarter-on-quarter) for Nagoya City, 1.7% (-0.2pts quarter-onquarter) for Osaka City and 2.3% (-0.6pts quarter-on-quarter) for Hiroshima City. In addition, assumed contract rents showed
an upward trend, with 14,800 yen/tsubo (+2.2% quarter-on-quarter) for Fukuoka City and 11,230 yen/tsubo (+0.9% quarteron-quarter) for Hiroshima City. Thus, the upward trend in rent is likely to continue amid tight supply-demand.
③ Management Performance
In the fiscal period under review, several renovation works were carried out for portfolio properties, including a major repair
work at ArtizA Sobudai. In addition, management for maintaining and enhancing the competitiveness of portfolio assets wasunderway through integrated promotion of property management operations of the Asset Manager and each of the basesof the property management company, Marimo Co., Ltd., at all properties, conducting leasing activities according to thecharacteristics of each region, setting tenant seeking terms and conditions according to the characteristics and occupancy
status of individual properties, etc., and further implementing value enhancement work to install wet area facilities andequipment and flooring materials of outstanding design and durability at residential properties upon tenant replacement,
and additionally striving for enhancement of functionality, convenience, etc. including attraction of coin parking operation
for some parking spaces on the premises, introduction of free Wi-Fi service, new installation of parcel delivery boxes andimplementing measures for enhancement of customer satisfaction. As a result, marimo REIT’s portfolio assets as of the endof the fiscal period under review (25 properties; total acquisition price: 24,525 million yen) has occupancy rate of 98.1% andperiod-average occupancy rate of 98.4%. In addition, cost reduction, too, was implemented through reduction of utility
expenses by switching the electric power utility at ArtizA Kamimaezu II, ArtizA Chiyoda, MRR Kumamoto, MRR Sasebo and
MRR Itoshima. Furthermore, replacement of air-conditioning system and installation of LED for signboard lighting were
implemented at MRR Delta Building and MRR Itoshima, respectively, as environmental consideration/initiatives.
(Note) “Acquisition price” is the sale and purchase price of each real estate trust beneficiary right stated in the trust beneficiary right sale andpurchase contract for each portfolio asset, not including consumption tax and local consumption tax or brokerage fees and other various
expenses.

－3 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018
④ Financing Status
In the fiscal period under review, early repayment of long-term loans borrowed on January 23, 2018 (Tranche 3-B: loanbalance of 145 million yen) was conducted on November 1, 2018 with consumption tax refund (130 million yen) reimbursed
on September 14, 2018 and funds on hand. Of long-term loans borrowed on August 1, 2016 (Tranche D: loan balance of
1,447 million yen), funds on hand were used to make contractual repayment of 7 million yen on August 1, 2018 and 7 million
yen on November 1, 2018. As a result, as at the end of the fiscal period under review (end of December 2018), the balanceof loans outstanding was 13,102 million yen and the ratio of interest-bearing liabilities to total assets (hereinafter, “LTV ratio”)
was 47.7%.
(Note 1) Amounts are rounded down to the nearest million yen.
(Note 2) As described in “(Outlook for the Next Fiscal Period) ② Significant Subsequent Events (Reference Information) (A) Borrowing of Funds”
below, “Notice Concerning Revision of Operating and Dividend Forecasts for the Fiscal Period Ending June 2019” dated December 19, 2018
and “Notice Concerning Borrowing of Funds” dated December 19, 2018, marimo REIT borrowed 700 million yen on January 4, 2019. With
this, the balance of loans outstanding of marimo REIT stands at 13,795 million yen as of the date of this document.

⑤ Overview of Business Performance
As a result of the above, business performance for the fiscal period under review was operating revenue of 1,093 million yen,operating income of 471 million yen, ordinary income of 395 million yen and net income of 395 million yen.
In addition, concerning dividends, in accordance with the distribution policy provided in marimo REIT’s Articles ofIncorporation, the decision was made to distribute the entire amount of unappropriated retained earnings, excluding
fractions of dividends per unit of less than 1 yen, by application of special provisions for taxation on investment corporations(Article 67-15 of the Act on Special Measures Concerning Taxation). This resulted in dividends per unit of 2,985 yen.
In addition to this, marimo REIT shall execute distribution of cash in excess of earnings (hereinafter, “distribution in excess ofearnings”) in the fiscal period under review as part of cash management. Based on this, the decision was made to distribute
60 million yen, which is the amount roughly equivalent to 29% of depreciation for the fiscal period under review, as dividends
in excess of earnings. This resulted in dividends in excess of earnings per unit of 460 yen. Furthermore, included in thedividends in excess of earnings is distribution of allowance for temporary difference adjustments of 1 million yen, resulting
in allowance for temporary difference adjustments per unit of 9 yen.
In addition, payout ratio (ratio of total dividends including distribution in excess of earnings to the amount of net income
plus depreciation) was 75.0%.
(Note 1) Distribution in excess of earnings shall be executed only when total appraisal value of real estate, etc. held as at the end of the accounting
period (refers to the appraisal value in the real estate appraisal report with the end of the accounting period as the date of value that was
obtained for real estate, etc. held by marimo REIT; the same shall apply hereinafter) exceeds total book value of real estate, etc. for theconcerned accounting period plus total planned capital expenditures (refers to the total amount of reserve for capital expenditures) for theconcerned accounting period’s next period, but after also considering other options, such as utilization for repair expenses and capital
expenditures and allocation to funds for repayment of borrowings or acquisition of new properties.
Total appraisal value of real estate, etc. at the end of the 5th fiscal period (fiscal period ended December 2018) was 28,477 million yen, which
exceeds the sum total of total book value of real estate, etc. (24,415 million yen) and the total amount of reserve for the planned amount ofconstruction of repair and renewal expenses (capital expenditures) planned to be implemented in the 6th fiscal period (117 million yen).
(Note 2) The breakdown of total book value of real estate, etc. is the sum total of the carrying amount of property, plant and equipment of 24,411
million yen and leasehold interest posted to intangible assets of 4 million yen.
(Note 3) For the 25 properties held by marimo REIT as of the end of the fiscal period under review, the 6-month average amount of the sum total
amount of the estimated amount of emergency repair expenses, estimated amount of short-term repair expenses and estimated amount oflong-term repair expenses (each those falling under the category of renewal expenses (capital expenditures)) stated in the engineering reportis 60 million yen. In addition, the planned amount of repairs (those falling under the category of capital expenditures) currently assumed bymarimo REIT is no more than 59 million yen for the fiscal period ending June 2019 and 53 million yen for the fiscal period ending December
2019. Therefore, even if an amount equivalent to the funds expected as reserve for the purpose of future capital expenditures for maintaining
the function of buildings, etc. or working capital, etc. and certain funds in preparation for investment that would serve to enhance theincome-producing potential of the portfolio are retained from the cash and deposits on hand in an amount equivalent to depreciation on
the last day of each accounting period, there is still expected to be residual free cash flows. Accordingly, the decision was made to executethe abovementioned distribution in excess of earnings as part of cash management under the judgment that it is within the scope that soundfinancial stability will be maintained.

－

4 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018
(Outlook for the Next Fiscal Period)① General Management Outlook(A) External Growth Strategy
The policy is to build a stable and highly profitable diversified portfolio, centering on regional areas, by increasing
opportunities to acquire mainly “residential” properties, for which leasing demand is relatively stable with the increase in
the number of households, and “retail” properties, such as food supermarkets, drug stores, hardware stores and discountstores selling daily necessities, and conducting activities that lead to future external growth, while pursuing close
collaboration with Marimo Co., Ltd., which has seven bases across Japan, through which a wide variety of real estate
information gathered from all over Japan is shared and analysis of asset value and assurance of liquidity and substitutability
are verified with deep insight based on the many years of experience in regional areas.
In addition, the policy is to pursue expansion of asset size while being granted preferential negotiation rights for sales
transactions pertaining to the acquisition of properties, including the “ArtizA” series of rental condominiums developed by
Marimo Co., Ltd., income-producing real estate held or purchased by Marimo Co., Ltd. and retail or hotel properties
developed in Marimo Co., Ltd.’s urban redevelopment business, etc., based on the sponsor pipeline and support agreement.
Along with this, the policy is to keep fully utilizing the abundant property network, property information sourcing strengths,etc. of Marimo Co., Ltd. and the eight supporting companies (The Mie Bank, Ltd., The Michinoku Bank, Ltd., The Tokyo Star
Bank, Limited, The Chugoku Bank, Limited, Kansai Urban Banking Corporation, The Hiroshima Bank, Ltd., The Ashikaga Bank,
Ltd. and ReBITA Inc.) and also property information obtained based on the network accumulated in the real estate industry
by the employees of the Asset Manager and property information obtained based on maintaining favorable relationships
with the tenants of portfolio properties for the steady external growth of marimo REIT.
Moreover, sale or replacement of properties are considered in cases where deemed appropriate over the medium to longterm in portfolio building in light of market conditions.
(Note) Urban redevelopment refers to redevelopment to promote reasonable and sound high-level use and renewal of urban functions of land in
urban areas.

(B) Internal Growth Strategy
Through appropriate management of assets with the provision of property management services, etc., provision of leasing
support, provision of support in renovation of portfolio assets, provision of fixed-rent-type master lease agreements andother various support pertaining to internal growth from Marimo Co., Ltd. by setting the securing of stable revenue fromleasing over the medium to long term as a target, marimo REIT shall aim for stability of revenue and enhancement of incomeproducing potential and thereby aim for maximization of unitholder value over the medium to long term.
Continuing on from the fiscal period under review, marimo REIT shall work to enhance lease business revenue, such as
maintain asset value and competitiveness by implementing strategic value enhancement work, enhance occupancy rate,
raise rent upon tenant replacement, and increase parking revenue and other incidental revenue, in light of the operational
status of portfolio assets, surrounding competitive property trends and other real estate market conditions.
In addition, along with the measures serving to enhance lease business revenue, marimo REIT shall work to enhance revenue
from leasing by striving for reduction of restoration and other repair and construction expenses, reduction of utility expenses
by switching the electric power utility, environmental consideration/initiatives and cost reduction by switching lighting incommon areas to LED, and reduction of offering expenses and other various expenses.
(C) Financial Strategy
marimo REIT shall engage in financing that would be for the realization of building of a stable asset management base,efficiency of asset management and soundness of financial standing over the medium to long term.
Debt financing shall be with staggering of debt maturities, lengthening of borrowing periods, lowering of borrowing interest
rates and conversion of borrowing interest rates to fixed rates in mind, and efforts shall be made to maintain a bank formation
comprising several financial institutions, including city banks, trust banks, and regional financial institutions that fully
understand the characteristics of each region.
Issuance of new investment units shall be decided in light of the financial environment in due consideration of the dilutionof existing unitholders’ rights and accompanying investment unit transaction price trends, etc., and also comprehensively
taking into account various factors, such as the demand for funds for acquisition of properties, level of LTV ratio andrepayment plan for interest-bearing liabilities.

－

5 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018
② Significant Subsequent Events
Not applicable.
(Reference Information)(A) Borrowing of Funds
marimo REIT borrowed 700 million yen from Sumitomo Mitsui Banking Corporation on January 4, 2019 as part of theacquisition funds and incidental expenses of the property described in “(B) Acquisition of Asset” below. Details are as follows.
Loan amount(million yen)

LenderSumitomo Mitsui Banking
Corporation(Note 1)

Interest rate

Drawdown date

Base rate +0.2%
700(floating rate)(Note 1)January 4, 2019

Maturity dateAugust 1, 2019
(Note 2)

Repayment
methodNote

Lump-sum
Unsecured andrepayment at
unguaranteedmaturity

The interest rate is applicable from February 1, 2019 to March 1, 2019. The applicable rate is JBA 1-month Japanese Yen TIBOR (base rate) +0.2%. The base rate applicable to the calculation period for the interest payable on each interest payment date shall be decided two businessdays prior to each interest payment date (the drawdown date in the case of the first interest calculation period), which is the first day of the(Note 2)

calculation period. If the JBA 1-month Japanese Yen TIBOR falls below 0%, then the base rate shall be 0%.
If the date is not a business day, then it shall be the next business day, but if that next business day falls into the next calendar month, thenit shall be the business day preceding the concerned date.

(B) Acquisition of Assetmarimo REIT acquired the following property (acquisition price: 700 million yen) on January 4, 2019.
Property number(Note 1)

Property nameLocation

SellerAcquisition
Appraisal
price
value
(million yen) (million yen)
(Note 2)

Rp-08
(Note 1)

ArtizA
Higashi-Shimada

Okayama City,
Okayama

Marimo Co., Ltd.

700

Acquisition date

(Note 3)730

January 4, 2019

”Property number” indicates a number given to each property in marimo REIT’s portfolio, which is a combination of categories for“investment target” and “investment ratio by region.” As to “investment target,” R refers to residential properties, C to retail facilities, H tohotels and O to offices, while p refers to regional areas and t to Tokyo metropolitan area. For multiple-use facilities, a use type accounting
for the largest rent income ratio when full occupancy is assumed is indicated as the investment target.

(Note 2)

(Note 3)

”Acquisition price” indicates the purchase price of real estate trust beneficiary rights stated in the trust beneficiary right sale and purchase
contract (excluding consumption tax, local consumption tax and other miscellaneous expense such as broker’s commissions) for the acquired
asset, rounded down to the nearest million yen.
”Appraisal value” is as of October 31, 2018.

－6 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018
Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending June 2019 (from January 1, 2019 to June 30, 2019) andFiscal Period Ending December 2019 (from July 1, 2019 to December 31, 2019)
Item

Assumptions

Accounting
period● Fiscal period ending June 2019 (6th fiscal period) (from January 1, 2019 to June 30, 2019) (181 days)● Fiscal period ending December 2019 (7th fiscal period) (from July 1, 2019 to December 31, 2019) (184 days)● The assumption is that marimo REIT will continue to hold the real estate trust beneficiary rights to 26 properties
held as of the date of this document and that there will be no acquisition of new properties other than thosethrough to the end of the fiscal period ending December 2019.
● In actual practice, change may arise due to acquisition of new properties, disposition of portfolio properties,etc.
● Operating revenue from leasing of portfolio assets is calculated on the basis of rent, etc. stated in lease
contracts in effect as of the date of this document, historical data, etc.
● The assumption is that there will be no delinquent or unpaid rent by tenants.
● Of operating expenses from leasing, which are the main operating expenses, the expenses other thandepreciation are calculated on the basis of historical data, etc. and by reflecting the factors causing fluctuationin expenses.
● Operating income from leasing after operating expenses from leasing (including depreciation) is deducted(excluding gain on sales of real estate properties) is expected to be 631 million yen for the fiscal period ending
June 2019 and 631 million yen for the fiscal period ending December 2019.
● In general, fixed asset tax, city planning tax, etc. are calculated on a pro rata basis and reimbursed at the timeof acquisition with the previous beneficiary, etc. upon transactions of real estate, etc., but because the amountequivalent to the reimbursement is included in the cost of acquisition, fiscal 2019 fixed asset tax, city planningtax, etc. are expensed starting from the fiscal period ending June 2020 in the case of the newly acquired assets.
Furthermore, the total amount of fixed asset tax, city planning tax, etc. to be expensed is expected to be 83
million yen for the fiscal period ending June 2020 and 83 million yen for the fiscal period ending December
2020. Of these, the amount of the effect of the acquisition of the newly acquired assets is expected to be 1
million yen for the fiscal period ending June 2020 and 1 million yen for the fiscal period ending December 2020.
● Repair expenses for buildings based on medium- to long-term repair plans formulated by the Asset Manager
are expected to be 33 million yen for the fiscal period ending June 2019 and 26 million yen for the fiscal period
ending December 2019. Furthermore, emergency repair expenses possibly arising from unforeseeable factors
causing building damage, etc., the amount generally varying materially from fiscal year to fiscal year and not
being an amount that arises periodically, etc. may result in repair expenses for each accounting period differing
materially from the forecast amount.
● Depreciation is calculated by the straight-line method inclusive of incidental expenses and other future
additional capital expenditures, and expected to be 222 million yen for the fiscal period ending June 2019 and219 million yen for the fiscal period ending December 2019.
● Interest expenses and other borrowing related expenses are expected to be 70 million yen for the fiscal period
ending June 2019 and 77 million yen for the fiscal period ending December 2019.
● Amortization of investment unit issuance expenses is expected to be 5 million yen for the fiscal period ending
June 2019 and 5 million yen for the fiscal period ending December 2019.
● marimo REIT borrowed 700 million yen on January 4, 2019 in line with the acquisition of an asset.
● The assumption is that internal reserves from a portion of depreciation will be used as the source of funds torepay principal of 15 million yen every fiscal period.
● The assumption is that total interest-bearing liabilities will be 13,787 million yen at the end of the fiscal period
ending June 2019 and 13,772 million yen at the end of the fiscal period ending December 2019.
● The assumption is the total number of investment units issued and outstanding as of the date of this documentof 132,340 units.
● The assumption is that there will be no change in the number of investment units due to issuance of new
investment units, etc. through to the end of the fiscal period ending December 2019.
● Dividends per unit (excluding dividends in excess of earnings) is calculated based on the assumption that
distribution will be in accordance with the policy on distribution of cash provided in marimo REIT’s Articles ofIncorporation.
● Dividends per unit (excluding dividends in excess of earnings) may vary due to various factors, such as
fluctuation in rent revenue accompanying change in assets under management, change in tenants or otherevent, or incurrence of unexpected repairs.

Assets undermanagement

Operatingrevenue

OperatingexpensesNon-operating
expenses

Loans

Investment
units
Dividends
per unit(excluding
dividends
in excess ofearnings)－

7 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018
Item

Dividends
in excess ofearnings
per unit

Assumptions● Dividends in excess of earnings per unit is calculated in accordance with the policy provided in marimo REIT’s
Articles of Incorporation and the management guidelines that are the internal rules of the Asset Manager.
● Distribution in excess of earnings is calculated based on the assumption that the sum total amount of taxation
and accounting discrepancies are distributed as allowance for temporary difference adjustments for the
purpose of tax reduction.
● As of the date of this document, marimo REIT deems there to be no specific concerns of substantial
deterioration in the external economic environment, real estate market conditions and financial status ofmarimo REIT.
● For the fiscal period ending June 2019 and fiscal period ending December 2019, there are high needs to retain
certain funds to respond in the event that opportunities to acquire new properties as investment that would
serve to enhance the income-producing potential of the portfolio or such arises, but in light of marimo REIT’s
financial status, projected likelihood of refinancing borrowings, etc., the view is that it is not in a state that calls
for prioritized allocation of funds to reducing interest-bearing liabilities, etc. in both concerned accounting
periods.
● Depreciation for portfolio assets is expected to be 222 million yen for the fiscal period ending June 2019 and219 million yen for the fiscal period ending December 2019. Meanwhile, the 6-month average amount of thesum total amount of the estimated amount of emergency repair expenses, estimated amount of short-term
repair expenses and estimated amount of long-term repair expenses (each those falling under the category of
renewal expenses (capital expenditures)) stated in the engineering report for portfolio assets is 60 million yen.
In addition, the planned amount of repairs (those falling under the category of capital expenditures) currently
assumed by marimo REIT is no more than 59 million yen for the fiscal period ending June 2019 and 53 million
yen for the fiscal period ending December 2019. Therefore, even if an amount equivalent to the funds expected
as reserve for the purpose of future capital expenditures for maintaining the function of buildings, etc. orworking capital, etc. and certain funds in preparation for investment that would serve to enhance the incomeproducing potential of the portfolio as described above are retained from the cash and deposits on hand in an
amount equivalent to depreciation on the last day of each accounting period, there is still expected to beresidual free cash flows.
● In light of the above, as of the date of this document, execution of distribution in excess of earnings is deemed
to be reasonable for the fiscal period ending June 2019 and fiscal period ending December 2019. As such, forthe fiscal period ending June 2019, total dividends in excess of earnings is expected to be 66 million yen ofwhich total dividends of allowance for temporary difference adjustments is 1 million yen and total otherdividends in excess of earnings is 65 million yen, and for the fiscal period ending December 2019, total
dividends in excess of earnings is expected to be 65 million yen of which total dividends of allowance fortemporary difference adjustments is 1 million yen and other distribution in excess of earnings is 64 million yen(Note 1). In this case, the total dividends in excess of earnings is expected to be the amount equivalent to 29.9%
and 29.9%, respectively, of the depreciation expected to be incurred in the concerned accounting period, andpayout ratio (Note 2) is expected to be 74.5% and 74.4%, respectively.
(Note 1) Distribution in excess of earnings shall be executed only when total appraisal value of real estate, etc. held as at the end of
the accounting period (refers to the appraisal value in the real estate appraisal report with the end of the accounting period
as the date of value that was obtained for real estate, etc. held by marimo REIT) exceeds total book value of real estate, etc.
for the concerned accounting period plus total planned capital expenditures (refers to the total amount of reserve for capital
expenditures) for the concerned accounting period’s next period, but after also considering other options, such as utilization
for repair expenses and capital expenditures and allocation to funds for repayment of borrowings or acquisition of new
properties. To that end, distribution in excess of earnings is not executed even in the 6th fiscal period (fiscal period ending
June 2019) and 7th fiscal period (fiscal period ending December 2019) regardless of the forecast above in the event thatsuch conditions are not met.
In addition, as of the date of this document, marimo REIT adopts the policy of distributing as cash in excess of earnings anamount decided by marimo REIT each accounting period that is not to exceed the amount provided in the rules of The
Investment Trusts Association, Japan (hereinafter, “JITA”), no more than the amount equivalent to 30% of depreciation forthe concerned accounting period and within the scope not to exceed payout ratio of 75%. Accordingly, the distribution inexcess of earnings may not take place or the amount of dividends in excess of earnings may decrease in the event of conflictwith these limits.
Moreover, in the event that substantial deterioration in the external economic environment, real estate market conditions,financial status of marimo REIT, etc. or such newly arise in the future, the policy as of the date of this document to execute
distribution in excess of earnings as part of cash management in the fiscal period ending June 2019 and fiscal period ending
December 2019 may be changed and there may also be cases where the distribution in excess of earnings may not takeplace or the amount of dividends in excess of earnings may decrease even in the fiscal period ending June 2019 and fiscal
period ending December 2019 . For instance, each accounting period’s limits on the amount of dividends in excess ofearnings like those above may be revised in the case that large-scale additional incorporation of new assets or other factors
lead to large fluctuation in the revenue and expense structure of the portfolio or such newly arising, in the case of materialchange in the financial environment, real estate investment trust market conditions, etc. or in other cases in the period up
to when the distribution in excess of earnings for the concerned accounting period is ultimately executed.
(Note 2) “Payout ratio” refers to the ratio of total dividends including distribution in excess of earnings to the amount of net income
plus depreciation. The same shall apply hereinafter.

Other● The assumption is that there will be no amendment of laws and regulations, tax systems, accounting standards,
listing regulations, JITA rules, etc. that will impact the forecast figures above.
● The assumption is that there will be no unforeseen material change in general economic trends, real estatemarket conditions, etc.
－

8 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018(3) Investment Risks
Disclosure is omitted, because there is no significant change from “Investment Risks” in the most recent securities report(submitted on September 27, 2018).

－

9 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018

3. Financial Statements(1) Balance Sheet(Unit: thousand yen)
4th fiscal period(As of June 30, 2018)
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets
Leasehold rights in trust
SoftwareTotal intangible assets
Investments and other assets
Long-term prepaid expenses
Deferred tax assets
Guarantee deposits
Lease and guarantee deposits in trust
Total investments and other assets
Total non-current assets
Deferred assets
Investment unit issuance expenses
Total deferred assets
Total assets

－

10 －

5th fiscal period(As of Dec. 31, 2018)931,688
1,966,582
7,430
35,118130,174323
3,071,317

1,018,870
1,923,690
8,474
39,272－93
2,990,402

11,055,066(636,970)
10,418,095
265,363(19,389)
245,974
114,331(10,439)
103,892
7,510(1,114)
6,395
13,790,968－
24,565,326

11,110,758(839,726)
10,271,031
265,363(25,391)
239,971
114,331(13,158)
101,173
10,129(1,749)8,379
13,790,968
112
24,411,637

4,221
3,541
7,762

4,094
2,951
7,045

50,11516
10,00013,50073,632
24,646,722

37,31513
10,00013,50060,82824,479,511

28,14628,146
27,746,186

22,516
22,51627,492,430

marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018

(Unit: thousand yen)
4th fiscal period(As of June 30, 2018)
Liabilities
Current liabilities
Operating accounts payable
Current portion of long-term loans payable
Accrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Current portion of tenant leasehold and security deposits in trust
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Tenant leasehold and security deposits in trust
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Deduction from unitholders’ capital
Allowance for temporary difference adjustments
Other deduction from unitholders’ capital
Total deduction from unitholders’ capital
Unitholders’ capital, net
Surplus
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets

－

11 －

5th fiscal period(As of Dec. 31, 2018)

147,348
175,000
116,626
950－
169,145
51,817
7,022
667,910

97,5853,360,000
135,768875
30,006
168,61251,817
3,622
3,848,288

13,087,500
1,301,219
18,222
193
14,407,134
15,075,045

9,742,500
1,272,545
18,241
78
11,033,366
14,881,654

12,412,622

12,412,622(3,092)(133,086)(136,179)
12,276,443(4,151)(192,771)(196,923)
12,215,699

394,697394,697
12,671,141
12,671,141
27,746,186

395,076
395,076
12,610,776
12,610,776
27,492,430

marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018(2) Statement of Income(Unit: thousand yen)
4th fiscal period
From: Jan. 1, 2018
To: June 30, 2018
Operating revenue
Lease business revenue
Other lease business revenue
Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Directors’ compensations
Taxes and dues
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Interest on refund
Insurance income
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing related expenses
Amortization of investment unit issuance expenses
Other
Total non-operating expenses
Ordinary income
Net income before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

－

12 －

5th fiscal period
From: July 1, 2018
To: Dec. 31, 2018

1,000,078
57,7701,057,848

1,040,211
53,7281,093,940

447,063
79,465
1,349
12,8862,400
9,354
33,255585,775
472,073462,255
98,854
1,378
14,5182,400
9,746
33,585
622,739471,201

12
－
384
396

13
114
52
180

48,38622,4335,629
419
76,868395,601
395,601952(1)
951
394,65047394,697

50,951
18,902
5,629－
75,483395,898
395,898877
3
881
395,01659
395,076marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018(3) Statement of Unitholders’ Equity
4th fiscal period (from January 1, 2018 to June 30, 2018)(Unit: thousand yen)
Unitholders’ equity
Unitholders’ capital
Deduction from unitholders’ capital
Unitholders’capitalBalance at beginning of current period

Allowance fortemporarydifference
adjustments

8,074,023(2,001)Other
deduction fromunitholders’capitalTotal
deduction fromunitholders’capitalUnitholders’capital, net(84,691)(86,692)

7,987,331

Changes of items during period
Issuance of new investment units

4,338,598

4,338,598

Dividends of surplus
Distribution in excess of earnings
attributable to allowance for(1,091)(1,091)(1,091)(48,394)(48,394)(48,394)

temporary difference adjustments
Other distribution in excess ofearnings
Net income
Total changes of items during period

4,338,598(1,091)(48,394)(49,486)

4,289,112

Balance at end of current period

12,412,622(3,092)(133,086)(136,179)

12,276,443(Unit: thousand yen)
Unitholders’ equity
Surplus
Unappropriatedretained earnings(undisposed loss)
Balance at beginning of current period

Total
surplus262,671

262,671Total
unitholders’equityTotal
net assets

8,250,002

8,250,002

4,338,598

4,338,598(262,624)(262,624)

Distribution in excess of earnings
attributable to allowance fortemporary difference adjustments(1,091)(1,091)Other distribution in excess ofearnings(48,394)(48,394)

Changes of items during period
Issuance of new investment units
Dividends of surplus

Net income(262,624)(262,624)

394,650

394,650

394,650

394,650

Total changes of items during period

132,026

132,026

4,421,138

4,421,138

Balance at end of current period

394,697394,697

12,671,141

12,671,141

－

13 －

marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018
5th fiscal period (from July 1, 2018 to December 31, 2018)(Unit: thousand yen)
Unitholders’ equity
Unitholders’ capital
Deduction from unitholders’ capital
Unitholders’capitalBalance at beginning of current period

Allowance fortemporarydifference
adjustments

12,412,622(3,092)Other
deduction fromunitholders’capitalTotal
deduction fromunitholders’capitalUnitholders’capital, net(133,086)(136,179)

12,276,443(1,058)(1,058)(59,685)(59,685)(59,685)

Changes of items during period
Dividends of surplus
Distribution in excess of earnings
attributable to allowance fortemporary difference adjustments(1,058)Other distribution in excess ofearnings
Net income
Total changes of items during period
Balance at end of current period－(1,058)(59,685)(60,744)(60,744)

12,412,622(4,151)(192,771)(196,923)

12,215,699(Unit: thousand yen)
Unitholders’ equity
Surplus
Unappropriatedretained earnings(undisposed loss)
Balance at beginning of current period

Totalunitholders’equityTotal
surplusTotal
net assets

394,697394,697

12,671,141

12,671,141(394,637)(394,637)(394,637)(394,637)

Distribution in excess of earnings
attributable to allowance fortemporary difference adjustments(1,058)(1,058)Other distribution in excess ofearnings(59,685)(59,685)

Changes of items during period
Dividends of surplus

Net income
Total changes of items during period
Balance at end of current period

395,016

395,016

395,016

395,016378

378(60,365)(60,365)

395,076

395,076

12,610,776

12,610,776

－

14 －

marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018(4) Statement of Distribution of Cash
4th fiscal period
From: Jan. 1, 2018
To: June 30, 2018
I.

Unappropriated retained earnings

II. Addition of dividends in excess of earnings
Of which,
Allowance for temporary difference adjustments
Other deduction from unitholders’ capital

5th fiscal period
From: July 1, 2018
To: Dec. 31, 2018394,697,724 yen

395,076,553 yen

60,744,060 yen

60,876,400 yen

1,058,720 yen

1,191,060 yen

59,685,340 yen

59,685,340 yen

455,381,940 yen

455,911,300 yen[3,441 yen]

[3,445 yen]

394,637,880 yen

395,034,900 yen[2,982 yen]
1,058,720 yen[2,985 yen]
1,191,060 yen[8 yen][9 yen]59,685,340 yen

59,685,340 yen[451 yen][451 yen]

59,844 yen

41,653 yen

In accordance with the policy on
distribution of cash provided in Article
25, Paragraph 1 of marimo REIT’s
Articles of Incorporation, dividends
shall be the amount of distribution inexcess of the amount equivalent to
90% of the amount of marimo REIT’s
earnings available for distribution
provided in Article 67-15, Paragraph 1of the Act on Special Measures
Concerning Taxation.
Based on such policy, the decision wasmade to distribute 394,637,880 yen,which is the largest integral multipleof the total number of investment
units issued and outstanding at end of
period in an amount not in excess ofunappropriated retained earnings, as
dividends of earnings.
Furthermore, in accordance with thepolicy on distribution of cash provided
in Article 25, Paragraph 2 of the
Articles of Incorporation, marimo REIT
shall execute distribution in excess ofearnings in the fiscal period underreview as part of cash management.
Based on this, the decision was madeto distribute 60,744,060 yen, which isthe amount roughly equivalent to 29%
of depreciation for the fiscal period
under review, as dividends in excess ofearnings. This resulted in dividends inexcess of earnings per unit of 459 yen.
Furthermore, included in thedividends in excess of earnings is
distributionofallowance
for
temporary difference adjustments of
1,058,720 yen, resulting in allowancefor temporary difference adjustments
per unit of 8 yen.

In accordance with the policy on
distribution of cash provided in Article
25, Paragraph 1 of marimo REIT’s
Articles of Incorporation, dividends
shall be the amount of distribution inexcess of the amount equivalent to
90% of the amount of marimo REIT’s
earnings available for distribution
provided in Article 67-15, Paragraph 1of the Act on Special Measures
Concerning Taxation.
Based on such policy, the decision wasmade to distribute 395,034,900 yen,which is the largest integral multipleof the total number of investment
units issued and outstanding at end of
period in an amount not in excess ofunappropriated retained earnings, as
dividends of earnings.
Furthermore, in accordance with thepolicy on distribution of cash provided
in Article 25, Paragraph 2 of the
Articles of Incorporation, marimo REIT
shall execute distribution in excess ofearnings in the fiscal period underreview as part of cash management.
Based on this, the decision was madeto distribute 60,876,400 yen, which isthe amount roughly equivalent to 29%
of depreciation for the fiscal period
under review, as dividends in excess ofearnings. This resulted in dividends inexcess of earnings per unit of 460 yen.
Furthermore, included in thedividends in excess of earnings is
distributionofallowance
for
temporary difference adjustments of
1,191,060 yen, resulting in allowancefor temporary difference adjustments
per unit of 9 yen.

III. Dividends[Dividends per unit]
Of which,
Dividends of earnings[Dividends of earnings per unit]
Allowance for temporary difference adjustments[Dividends in excess of earnings per unit
(attributable toallowance for temporary difference adjustments)]
Other dividends in excess of earnings[Dividends in excess of earnings per unit
(attributable toother dividends in excess of earnings)]
IV. Retained earnings carried forward
Method of calculation of dividends

－

15 －

marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018(5) Statement of Cash Flows(Unit: thousand yen)
4th fiscal period
From: Jan. 1, 2018
To: June 30, 2018
Cash flows from operating activities
Net income before income taxes
Depreciation
Amortization of investment unit issuance expenses
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund receivable
Increase (decrease) in accrued consumption taxes
Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accrued expenses
Increase (decrease) in advances received
Decrease (increase) in long-term prepaid expenses
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment in trust
Payments into restricted deposits
Net cash provided by (used in) investing activities
Cash flows from financing activities
Decrease in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of investment units
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

－

16 －

5th fiscal period
From: July 1, 2018
To: Dec. 31, 2018395,601
212,7255,629(12)
48,386(5,895)(130,174)(20,112)(4,392)
47,12815,13450,088(13,453)3,454
604,10812(43,283)(926)
559,910395,898
212,8505,629(13)
50,951(1,044)130,174
30,006(4,154)(23,586)
19,122(532)
12,800(3,523)
824,579
13(51,044)(952)
772,595(7,905,333)(0)(7,905,334)(84,488)(0)(84,488)(1,140,000)
4,985,000(15,000)
4,304,823(311,667)
7,823,156
477,732
1,038,501
1,516,234－－(160,000)－(455,144)(615,144)
72,963
1,516,234
1,589,197

marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018(6) Notes on the Going Concern Assumption
Not applicable.
(7) Notes on Matters Concerning Significant Accounting Policies
1.

Method of depreciationof non-current assets(1) Property, plant and equipment
The straight-line method is adopted.
Furthermore, the useful life of core property, plant and equipment is as follows:
Buildings in trust
Structures in trust

2–64 years
5–49 years

Machinery and equipment in trust

19–27 years

Tools, furniture and fixtures in trust(2) Intangible assets

3–15 years

The straight-line method is adopted.
Furthermore, the remaining or useful life of core intangible assets is as follows:
Leasehold rights in trust
19 years
Software5 years(3) Long-term prepaid expenses
The straight-line method is adopted.
2.

Accounting for3.

Standards forrevenue and expense
recognition

deferred assets

Investment unit issuance expenses
Amortized using the straight-line method over 3 years.
Accounting for fixed asset tax, etc.
For fixed asset tax, city planning tax, depreciable asset tax, etc. (hereinafter, “fixed asset
tax, etc.”) on real estate or trust beneficiary rights that have real estate as trust assets
held, the accounting is that, of the tax amount assessed and determined, the amountcorresponding to the concerned accounting period is expensed as expenses related torent business.
Furthermore, the amount equivalent to fixed asset tax, etc. in the initial fiscal year borneby marimo REIT upon acquisition of real estate or trust beneficiary rights that have realestate as trust assets is not recognized as expenses but included in the cost of acquisitionof the concerned real estate, etc. The amount equivalent to fixed asset tax, etc. includedin the cost of acquisition of real estate, etc. was 49,641 thousand yen for the 4th fiscal
period and not applicable for the 5th fiscal period.

4.

Scope of funds in thestatement of cash flows

The funds (cash and cash equivalents) in the statement of cash flows comprise cash on handand cash in trust, demand deposits and deposits in trust, and short-term investments with amaturity of 3 months or less from the date of acquisition that are readily convertible to cash
and that are subject to an insignificant risk of changes in value.

5.

Other significant mattersserving as the basis for
preparation of thefinancial statements(1) Accounting for trust beneficiary rights that have real estate, etc. as trust assets
Concerning trust beneficiary rights that have real estate, etc. as trust assets held, allaccounts of assets and liabilities within trust assets and all accounts of revenue andexpenses from the trust assets are recognized in the relevant account item of thebalance sheet and the statement of income. Furthermore, the following material itemsof the trust assets recognized in the relevant account item are separately listed on thebalance sheet.
① Cash and deposits in trust② Buildings in trust; Structures in trust; Machinery and equipment in trust;Tools, furniture and fixtures in trust; Land in trust; Construction in progress in trust③ Leasehold interest in trust④ Lease and guarantee deposits in trust⑤ Current portion of tenant leasehold and security deposits in trust⑥ Tenant leasehold and security deposits in trust(2) Accounting for consumption tax, etc.
The accounting for consumption tax and local consumption tax is that the taxes are
excluded from transaction amounts. Furthermore, non-deductible consumption tax onacquisition of assets is included in the cost of acquisition of each asset.
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17 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended December 2018
[Notes on Changes in Presentation or Classification]
Changes in line with the application of “Partial Amendments to ‘Accounting Standard for Tax Effect Accounting’”
With the application of “Partial Amendments to ‘Accounting Standard for Tax Effect Accounting’” (ASBJ Statement No. 28,
February 16, 2018) from the beginning of the fiscal period, presentation method has been changed to indicate deferred
tax assets under investments and other assets and deferred tax liabilities under non-current liabilities.
Accordingly, the 16 thousand yen of “deferred tax assets” presented under “current assets” in the balance sheet for theprevious fiscal period is included and presented in the 16 thousand yen of “deferred tax assets” under “investments andother assets.”[Additional Information][Notes on Provision and Reversal of Allowance for Temporary Difference Adjustments]
4th fiscal period (from January 1, 2018 to June 30, 2018)
1.

Reason, related assets, etc. and amount of provision
The posting of MRR Omuta’s amortization of leasehold interest for leasehold interest in trust and amount in excess ofdepreciation limit and also asset retirement obligation related expenses led to taxation and accounting discrepancies.
Accordingly, allowance for temporary difference adjustments of 1,058 thousand yen was posted in the statement of
distribution of cash.

2.

Specific method of reversal
For the allowance for temporary difference adjustments of the amortization of leasehold rights for leasehold rights in trust
and amount in excess of depreciation limit, the plan is reversal of the corresponding amount at the time of inclusion in
deductible expenses upon redemption and sale of leasehold rights and accompanying building removal and also building
sale, etc.
In addition, for the allowance for temporary difference adjustments of the asset retirement obligation related expenses,
the plan is reversal of the corresponding amount at the time of inclusion in deductible expenses upon building removal
and sale, etc.

5th fiscal period (from July 1, 2018 to December 31, 2018)
1.

Reason, related assets, etc. and amount of provision
The posting of MRR Omuta’s amortization of leasehold interest for leasehold interest in trust and amount in excess ofdepreciation limit and also asset retirement obligation related expenses led to taxation and accounting discrepancies.
Accordingly, allowance for temporary difference adjustments of 1,191 thousand yen was posted in the statement of
distribution of cash.

2.

Specific method of reversal
For the allowance for temporary difference adjustments of the amortization of leasehold rights for leasehold rights in trust
and amount in excess of depreciation limit, the plan is reversal of the corresponding amount at the time of inclusion in
deductible expenses upon redemption and sale of leasehold rights and accompanying building removal and also building
sale, etc.
In addition, for the allowance for temporary difference adjustments of the asset retirement obligation related expenses,
the plan is reversal of the corresponding amount at the time of inclusion in deductible expenses upon building removal
and sale, etc.

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18 －