(REIT) Financial Report for the Fiscal Period Ended June 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

August 17, 2018
Tokyo Stock Exchange
http://www.marimo-reit.co.jp/

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

September 19, 2018
September 27, 2018

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 June 2018 (from January 1, 2018 to June 30, 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%
Ended June 2018
1,057
40.0
472
49.9
395
50.1
394
50.3
Ended Dec. 2017
755
1.4
314
(0.8)
263
(1.8)
262
(1.8)
Fiscal period

Net income per unit

Return on equity

yen
3,100
2,886

Ended June 2018
Ended Dec. 2017

Ratio of ordinary income to Ratio of ordinary income tototal assets
operating revenue
%
%
%
3.8
1.7
37.4
3.2
1.4
34.9

(2) Dividends

Fiscal period

Ended June 2018
Ended Dec. 2017

Dividends
per unit

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

yen
2,982
2,887

million yen
394
262

Dividends
in excess ofearnings
per unit

Total
dividends
in excess ofearnings

yen
459
544

million yen
60
49

Dividends
per unit

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

yen
3,441
3,431

million yen
455
312

Payout
ratio
%
100.0
100.0

Ratio ofdividends to
net assets
%
3.2
3.2

(Note 1) The breakdown of total dividends in excess of earnings for the fiscal period ended December 2017 is total dividends from allowance for temporary
difference adjustments of 1 million yen (12 yen per unit) and total dividends from distribution accompanying decrease in capital, etc. under tax law of
48 million yen (532 yen per unit).
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).
(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
December 2017 is 0.007 and for the fiscal period ended June 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
Ended June 2018
27,746
Ended Dec. 201719,066

Net assets
million yen
12,6718,250

Equity ratio
%
45.7
43.3

Net assets per unit
yen
95,746
90,691(4) Cash Flows
Fiscal period

Ended June 2018
Ended Dec. 2017

Net cashprovided by (used in)operating activities
million yen
559
439

Net cashprovided by (used in)investing activities
million yen(7,905)(61)

Net cashCash and cash equivalents
provided by (used in)at end of period
financing activities
million yen
million yen
7,823
1,516
(537)
1,038

2. Operating Forecasts for the Fiscal Period Ending December 2018 (from July 1, 2018 to December 31, 2018) andOperating Forecasts for the Fiscal Period Ending June 2019 (from January 1, 2019 to June 30, 2019)(% figures are the rate of period-on-period increase (decrease))
Fiscal periodEnding Dec. 2018
Ending June 2019

Operating revenue Operating income Ordinary income
mn yen
1,086
1,086

%
2.7
0.0

mn yen
467
461

%
(1.0)
(1.3)

mn yen
391
387

%
(1.0)
(1.2)

Dividends per unit
Dividends per unit
Dividends(excluding dividends(including dividends
Net income
in excess ofin excess ofin excess ofearnings per unit
earnings)
earnings)
mn yen
%
yen
yen
yen
390
(1.0)
2,953
473
3,426
386
(1.2)
2,918
486
3,404

(Reference) Forecast net income per unit (Forecast net income ÷ Forecast average number of investment units during period)
Fiscal period ending December 2018: 2,953 yen
Fiscal period ending June 2019: 2,918 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 June 2018
132,340 units
Fiscal period ended Dec. 2017
90,968 units② Number of treasury investment units at end of period
Fiscal period ended June 2018
0 units

Fiscal period ended Dec. 2017

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 December 2018 (from July 1, 2018 to December 31, 2018) and Fiscal Period Ending
June 2019 (from January 1, 2019 to June 30, 2019)” on page 9.

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

Table of Contents
1.

2.

3.

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

2(1) Structure of marimo REIT ……………………………………………………………………………………………………………………………………………….
(2) Name, Operational Role and Outline of Involved Operations of marimo REIT and marimo REIT’s Related Parties …………

22(3) Key Related Parties of marimo REIT Other Than the Above …………………………………………………………………………………………….
(4) Structure of Investments in Silent Partnership, Etc. ………………………………………………………………………………………………………..

4
4

Management Policy and Management Status …………………………………………………………………………………………………………………….

5(1) Management Policy ……………………………………………………………………………………………………………………………………………………….
(2) Management Status ……………………………………………………………………………………………………………………………………………………….

55(3) Investment Risks …………………………………………………………………………………………………………………………………………………………….

11

Financial Statements ………………………………………………………………………………………………………………………………………………………….
(1) Balance Sheet …………………………………………………………………………………………………………………………………………………………………

1212(2) Statement of Income ……………………………………………………………………………………………………………………………………………………..

14(3) Statement of Unitholders’ Equity ……………………………………………………………………………………………………………………………………
(4) Statement of Distribution of Cash ………………………………………………………………………………………………………………………………….

1517(5) Statement of Cash Flows ………………………………………………………………………………………………………………………………………………..

18(6) Notes on the Going Concern Assumption ……………………………………………………………………………………………………………………….
(7) Notes on Matters Concerning Significant Accounting Policies …………………………………………………………………………………………

19
19

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1 －

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

1. Related Parties of the Investment Corporation(1) Structure of marimo REIT

Investment Corporation

Unitholder Register Administrator
Asset Custodian

marimo Regional Revitalization
REIT, Inc.
Specified Related Party(Asset Manager’s Parent Company)(b)

Administrative Agent
Sumitomo Mitsui Trust Bank,

General Meeting ofLimitedUnitholders
Marimo Holdings Co., Ltd.
Board of Directors(100% stake)Specified Related Party
SponsorExecutive Director:
Takashi Kitagata
Supervisory Director:
Yoshio Fujima
Supervisory Director:
Miho Tanaka

Marimo Co., Ltd.

Financial Auditor

(e)

(c)

Administrative (Tax) Agent
Heiseikaikeisha Tax Corporation

Supporting Companies

The Mie Bank, Ltd.
PricewaterhouseCoopers

The Michinoku Bank, Ltd.

Arata LLC

The Tokyo Star Bank, Limited(d)

The Chugoku Bank, Limited(a)Kansai Urban Banking Corporation
The Hiroshima Bank, Ltd.

Asset Manager
Marimo AssetManagement Co., Ltd.

(f)

The Ashikaga Bank, Ltd.
ReBITA Inc.

(Investment in capital)<Name of agreement>(a) Asset management agreement
(b)
(c)
(d)
(e)
(f)

Asset custody agreement, administrative agency agreement, and unitholder register administration agreement
Tax agency agreement
Sponsor pipeline and support agreement
Real estate trust beneficiary right sale and purchase agreement, and master lease agreement and property managementagreement for real estate that are the trust assets of the trust with trustees for portfolio assets
Support agreement (Note)(Note) marimo REIT and Marimo Asset Management Co., Ltd. (hereinafter, the “Asset Manager”) have entered into a support agreement with eachsupporting company (refers to a party with which marimo REIT and the Asset Manager have entered into a support agreement; the same shallapply hereinafter) individually.

The Asset Manager approved at the meeting of its Board of Directors held on July 27, 2018 the transfer of the shares that ReBITA
Inc. (hereinafter, “ReBITA”) holds in the Asset Manager to Marimo Holdings Co., Ltd. (hereinafter, “Marimo Holdings”) (thetransfer was executed on said date). In tandem with this, the “sponsor pipeline and support agreement” entered by ReBITA,
marimo REIT and the Asset Manager on February 12, 2016 (as amended) was cancelled by agreement on July 27, 2018 and a“support agreement” was newly entered by the three parties on said date.
(2) Name, Operational Role and Outline of Involved Operations of marimo REIT and marimo REIT’s Related Parties
Operational role
Investment corporation

Name

Outline of involved operations

marimo Regional
Revitalization REIT, Inc.

－

Invest in assets under management with real estate related
assets as the main investment target for the purpose of
securing stable profit and steady growth of assets undermanagement over the medium to long term based on the
Articles of Incorporation.
2 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended June 2018
Operational role

Name

Outline of involved operations

Asset manager

Marimo Asset Management
Co., Ltd.

Unitholder register administrator
Administrative agent
Asset custodian

Sumitomo Mitsui Trust Bank,
LimitedEntered into an asset management agreement with marimo
REIT on February 5, 2016.
As an asset management company under the Act on
Investment Trusts and Investment Corporations (Act No. 198of 1951, as amended; hereinafter, the “Investment TrustsAct”), performs operations pertaining to investment of assets(Article 198, Paragraph 1 of the Investment Trusts Act) inaccordance with the asset management targets and policy
provided in marimo REIT’s Articles of Incorporation based on
the agreement.
The outline of operations entrusted to the Asset Manager is(a) operations pertaining to investment of assets of marimo
REIT, (b) operations pertaining to financing of marimo REIT,(c) reporting to marimo REIT, and (d) other operations related
or incidental to the preceding (a) through (c) entrusted bymarimo REIT as needed (including reporting by attending
meetings of marimo REIT’s Board of Directors).
Entered into a transfer agency agreement with the AssetManager, as the organizer of marimo REIT, on January 29,
2016 (marimo REIT succeeded the position under theagreement from the Asset Manager on February 5, 2016),
and entered into an administrative agency agreement and an
asset custody agreement with marimo REIT on February 5,
2016.
As an administrative agent under the Investment Trusts Act,
performs administrative processes based on the transfer
agency agreement, including (a) preparation and keeping of
the unitholder register and investment unit option register,and other administrative processes concerning theunitholder register and investment unit option register, (b)administrative processes concerning issuance of investment
securities and investment unit option certificates, (c)administrative processes concerning payment of cash for
distribution to unitholders, (d) administrative processes
concerning acceptance of requests for exercise of rights byunitholders and other applications from unitholders, (e)administrative processes concerning acceptance of requests
for exercise of rights by investment unit option holders andother applications from investment unit option holders, and(f) administrative processes concerning operation ofadministrative instruments for unitholder meetings. In
addition, performs administrative processes based on theadministrative
agencyagreement,
including(a)administrative processes concerning operation ofadministrative instruments (but excluding administrative
processes concerning delivery of unitholder meeting related
documents, and receipt and aggregation of voting forms), (b)administrative processes concerning accounts, (c)administrative processes concerning preparation of
accounting books, and (d) administrative processes
concerning tax payments.
Moreover, as an asset custody company under theInvestment Trusts Act (Article 208, Paragraph 1 of theInvestment Trusts Act), performs operations based on theasset custody agreement, including operations pertaining tocustody of assets held by marimo REIT.

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3 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended June 2018
Operational role

Name

Outline of involved operations

Administrative (tax) agent

Heiseikaikeisha Tax

Entered into a contract on entrustment of certified public tax

Corporationaccountant services (as amended; hereinafter, the “taxagency agreement”) with marimo REIT on February 5, 2016.
As an administrative agent under the Investment Trusts Act,
performs administrative processes concerning tax payments
based on the tax agency agreement.

Specified related party
Sponsor (Note 1)

Marimo Co., Ltd. (Note 2)

Entered into a sponsor pipeline and support agreement withmarimo REIT and the Asset Manager on February 24, 2016,
and thereby provides sponsor support, including provision ofproperty information.
Transferred some assets under management to marimo REIT
based on a real estate trust beneficiary right sale andpurchase agreement entered into with marimo REIT. During
the fiscal period under review, 7 properties of the portfolio
assets were transferred to marimo REIT for 7,700 million yen(total acquisition price) on January 23, 2018 based on a realestate trust beneficiary right sale and purchase agreement
entered into with marimo REIT on January 4, 2018.
Moreover, leases all portfolio assets from trustees based ona master lease agreement (as amended) entered into withtrustees. Furthermore, the agreement is a fixed-rent-type
master lease agreement in the case of Yamada Denki Tecc
Land Mihara Store and a pass-through-type master leaseagreement otherwise.
Additionally, entrusted with all property management
operations for portfolio assets based on a property
management agreement (as amended) entered into withtrustees.

Specified related party
Asset manager’s parent company

Marimo Holdings Co., Ltd.
(Note 2)The parent company of Marimo Asset Management Co., Ltd.
and Marimo Co., Ltd.

(Note 1) “Sponsor” refers to a party with which marimo REIT and the Asset Manager have entered into a sponsor pipeline and support agreement. The
same shall apply hereinafter.
(Note 2) Marimo Co., Ltd. and Marimo Holdings fall under the category of specified affiliated juridical person provided in Article 12, Paragraph 3 of the
Cabinet Office Order on Disclosure of Information on Regulated Securities (Ministry of Finance Order No. 22 of 1993, as amended).

(3) Key Related Parties of marimo REIT Other Than the Above
Role
Supporting companies

Name

Outline of operations

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.
ReBITA Inc.

Provides support based on a support agreement.
Of the supporting companies, The Mie Bank, Ltd. and The
Michinoku Bank, Ltd. are shareholders of the Asset Manager.

(4) Structure of Investments in Silent Partnership, Etc.
marimo REIT has not made investments in silent partnership equity interests, etc. as of the date of this document.

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4 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended June 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 March 29, 2018).
(2) Management Status(Overview of the Fiscal Period under Review)① Brief History of the Investment Corporation
marimo REIT was incorporated under the Investment Trusts Act with the Asset Manager as the organizer and investments incapital 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 thepayment due date, and listed on the Real Estate Investment Trust Securities Market of Tokyo Stock Exchange, Inc. 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. In the fiscal period under review (4th fiscal period: fiscal period ended June2018), 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 and outstanding 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 economic conditions were improvement in the employment and income
situation, but consumer sentiment remaining cautious. With these and other factors, real GDP growth rate for the period
from January to March 2018 (seasonally adjusted; second preliminary estimate) was an annualized rate of -0.6% period-onperiod, marking the first negative growth since the period from October to December 2015. On the other hand, trade
statistics show high growth in exports and domestic demand, too, is picking up centering on private consumption andbusiness fixed investment, and front-loaded increase in demand prior to the consumption tax hike and construction
investment prior to the Olympic Games mean acceleration in growth can also be expected. These suggest that strong showing
will continue.
(Financial Market)
Due to Bank of Japan’s monetary easing policy effects, the JBA 3-month Japanese Yen TIBOR maintained a stable level at
0.06727% from early October 2017 through the immediately following three months, and also remained at no more than anincrease of 0.00182% compared with the end of the previous fiscal period at 0.06909% at the end of the fiscal period underreview. The trend of interest increase is seen to continue, calling for the need to take heed of financial market volatility impact.
(Real Estate Transaction Market)
Fiscal 2017’s domestic real estate transaction amount was close to 900 billion yen higher than the previous fiscal year,
resulting in a total transaction amount of approximately 5 trillion yen. Foreign corporations served as the driver in both theselling and buying sides of transactions, and large-sized transactions where the transaction is at least 10 billion yen increased.
However, the market is becoming increasingly harsh as evident by such factors as decrease in real estate cap rates andshortage of investment-grade properties. Nevertheless, the real estate transaction market is seen to keep remaining strong.
(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.

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5 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended June 2018
(Retail Property Market)
According to the “Current Survey of Commerce” by the Ministry of Economy, Trade and Industry, for the period from January
to March 2018, the rate of increase in sales value compared with the same period of the previous year for supermarkets was+1.2% as a national average. Although there were regional differences, particularly with high rate of increase at +1.8% for
the Shikoku area, +1.7% for the Chugoku area and +1.4% for the Hokkaido area, but -0.3% for the Kinki area, the trend
generally across Japan was an increasing trend. In addition, the rate of increase for drug stores was +7.4% as a national
average and notably over 10% for the Kinki and Okinawa areas, one of the underlying factors of which is seen to be the effects
of inbound tourism demand. The sales value of supermarkets and drug stores, selling daily necessities, is seen to continue tobe stable.
(Hotel Market)
According to the “Overnight Travel Statistics Survey” by the Japan Tourism Agency of the Ministry of Land, Infrastructure,
Transport and Tourism, the year-on-year rate of increase in the number of international overnight guests from January to
December 2017 was +16.0% for regional areas, a substantially larger increase than the +5.5% for the Tokyo metropolitanarea, suggesting that tourism demand for regional areas is active and on an increasing trend. The guest room occupancy rate
for business hotels in Japan steadily increased to 75.3% (+1.0% year-on-year), with Japan’s highest guest room occupancy
rate in Japan being Osaka Prefecture’s 85.1% (-0.1% year-on-year) and Japan’s top in terms of the year-on-year rate ofincrease in the total number of overnight guests being Kagoshima Prefecture (+12.0% year-on-year). The number ofinternational visitors to Japan in 2017 continued strong, increasing by 19.3% year-on-year to 28.69 million. These suggestthat business hotels can continue to expect stable occupancy.
(Office Leasing Market)
According to the “Japan Office MarketView Q1 2018” by CBRE K.K., in the first quarter of 2018, vacancy rate for major regional
cities remained pretty much unchanged quarter-on-quarter in the case of Sapporo City at 0.3% (-0.1pts quarter-on-quarter),Hiroshima City at 2.9% (+0.1pts quarter-on-quarter) and Fukuoka City at 0.4% (-0.1pts quarter-on-quarter), but was -0.7pts
quarter-on-quarter in the case of Osaka City at 1.7% (-0.7pts quarter-on-quarter) and Nagoya City at 1.8% (-0.7pts quarteron-quarter) for robust office demand. In addition, in terms of contracted rent, little new supply and strong needs for new
office openings or office expansions kept contracted rent on an upward trend and, amid tight supply-demand, the upward
trend in rent is likely to continue.
③ Management Performance
In the fiscal period under review, a total of 7 properties (total acquisition price: 7,700 million yen), one of which was MRR
Kumamoto, were newly acquired from the sponsor Marimo Co., Ltd. on January 23, 2018. In addition, management for
maintaining and enhancing the competitiveness of portfolio assets were underway through integrated promotion of property
management operations of the Asset Manager and each of the bases of the property management company Marimo Co.,
Ltd. at all properties, conducting leasing activities according to the characteristics 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 and equipment and flooring materials of outstanding design anddurability at residential properties upon tenant replacement, and additionally striving for new installation of parcel delivery
boxes and other enhancement of functionality, convenience, etc. As a result, marimo REIT’s portfolio assets as of the end of
the fiscal period under review (25 properties; total acquisition price: 24,525 million yen) has occupancy rate of 98.3% 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 Hakataeki-Minami and, as environmental consideration/initiatives,switching lighting in common areas to LED at MRR Sasebo, MRR Itoshima and Tarumiekimae Gold Building.
(Note 1) “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.
(Note 2) In switching to LED at MRR Itoshima, some sections will be completed during the 5th fiscal period (fiscal period ending December 2018) due
to the construction schedule and other circumstances.

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6 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended June 2018
④ Financing Status
In the fiscal period under review, upon the acquisition of real estate trust beneficiary rights to 7 properties, 4,142 million yen
was procured in funds from issuance of new investment units through public offering on January 22, 2018 and 196 million
yen from issuance of new investment units through third-party allotment accompanying secondary offering through overallotment on February 16, 2018. In addition, 4,985 million yen was borrowed on January 23, 2018, which was allocated toearly repayment of short-term loans in the amount of 1,140 million yen and also part of the funds for the acquisition of realestate trust beneficiary rights to 7 properties and related expenses.
Of long-term loans, funds on hand were used to make contractual repayment of 7 million yen on February 1, 2018 and 7
million yen on May 1, 2018. As a result, as at the end of the fiscal period under review (end of June 2018), the balance ofloans outstanding was 13,262 million yen and the ratio of interest-bearing liabilities to total assets (hereinafter, “LTV ratio”)
was 47.8%.
⑤ Overview of Business Performance
As a result of the above, business performance for the fiscal period under review was operating revenue of 1,057 million yen,operating income of 472 million yen, ordinary income of 395 million yen and net income of 394 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 2,982 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 459 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 8 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 4th fiscal period (fiscal period ended June 2018) was 28,471 million yen, which
exceeds the sum total of total book value of real estate, etc. (24,569 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 5th fiscal period (115 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 24,565
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 62 million yen for the fiscal period ending December 2018 and 59 million yen for the fiscal period ending June
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.

－

7 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended June 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 a network of seven bases across Japan, through which a wide variety of realestate information gathered from all over Japan is shared and analysis of asset value and assurance of liquidity andsubstitutability 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) 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 withthe 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.
② Significant Subsequent Events
The Asset Manager approved at the meeting of its Board of Directors held on July 27, 2018 the transfer of the shares that
ReBITA holds in the Asset Manager to Marimo Holdings (the transfer was executed on said date). In tandem with this, the“sponsor pipeline and support agreement” entered by ReBITA, marimo REIT and the Asset Manager on February 12, 2016(as amended) was cancelled by agreement on July 27, 2018 and a “support agreement” was newly entered by the threeparties on said date.
－

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

Assumptions

Accounting
period● Fiscal period ending December 2018 (5th fiscal period) (from July 1, 2018 to December 31, 2018) (184 days)● Fiscal period ending June 2019 (6th fiscal period) (from January 1, 2019 to June 30, 2019) (181 days)● The assumption is that marimo REIT will continue to hold the real estate trust beneficiary rights to 25 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 June 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 627 million yen for the fiscal period ending
December 2018 and 618 million yen for the fiscal period ending June 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. is expensed starting from the fiscal period ending June 2019 in the case of the assets that were newly
acquired in the fiscal period ended June 2018. Furthermore, the total amount of fixed asset tax, city planningtax, etc. to be expensed is expected to be 81 million yen for the fiscal period ending June 2019 and 81 million
yen for the fiscal period ending December 2019. Of these, the amount of the effect of the acquisition of the
newly acquired assets is expected to be 26 million yen for the fiscal period ending June 2019 and 26 million
yen for the fiscal period ending December 2019.
● Repair expenses for buildings based on medium- to long-term repair plans formulated by the Asset Manager
are expected to be 52 million yen for the fiscal period ending December 2018 and 33 million yen for the fiscal
period ending June 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 213 million yen for the fiscal period ending December 2018and 215 million yen for the fiscal period ending June 2019.
● Interest expenses and other borrowing related expenses are expected to be 69 million yen for the fiscal period
ending December 2018 and 68 million yen for the fiscal period ending June 2019.
● Amortization of investment unit issuance expenses is expected to be 5 million yen for the fiscal period ending
December 2018 and 5 million yen for the fiscal period ending June 2019.
● The assumption is that, with refund of consumption taxes in the fiscal period ending December 2018, theconcerned refund will be used as the source of funds to repay 145 million yen in the fiscal period ending
December 2018.
● The assumption is that, in addition to the above, internal reserves from a portion of depreciation will be usedas the source of funds to repay principal of 15 million yen every fiscal period.
● The assumption is that total interest-bearing liabilities will be 13,102 million yen at the end of the fiscal period
ending December 2018 and 13,087 million yen at the end of the fiscal period ending June 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 June 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)－

9 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended June 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 December 2018 and fiscal period ending June 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 213 million yen for the fiscal period ending December 2018and 215 million yen for the fiscal period ending June 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 62 million yen for the fiscal period ending December 2018 and 59
million yen for the fiscal period ending June 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 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 be residual 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 December 2018 and fiscal period ending June 2019. As such, forthe fiscal period ending December 2018, total dividends in excess of earnings is expected to be 62 million yenof which total dividends of allowance for temporary difference adjustments is 1 million yen and total otherdividends in excess of earnings is 61 million yen, and for the fiscal period ending June 2019, total dividends inexcess of earnings is expected to be 64 million yen of which total dividends of allowance for temporary
difference adjustments is 1 million yen and other distribution in excess of earnings is 63 million yen (Note 1).
In this case, the total dividends in excess of earnings is expected to be the amount equivalent to 29.3% and29.8%, respectively, of the depreciation expected to be incurred in the concerned accounting period, andpayout ratio (Note 2) is expected to be 75.0% and 74.9%, 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 5th fiscal period (fiscal period ending
December 2018) and 6th fiscal period (fiscal period ending June 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 December 2018 and fiscal period
ending June 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 December 2018 andfiscal period ending June 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.
－

10 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended June 2018(3) Investment Risks
Disclosure is omitted, because there is no significant change from “Investment Risks” in the most recent securities report(submitted on March 29, 2018).

－

11 －

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

3. Financial Statements(1) Balance Sheet(Unit: thousand yen)
3rd fiscal period(As of Dec. 31, 2017)
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Deferred tax assets
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
Total property, plant and equipment
Intangible assets
Leasehold rights in trust
SoftwareTotal intangible assets
Investments and other assets
Guarantee deposits
Lease and guarantee deposits in trust
Long-term prepaid expenses
Total investments and other assets
Total non-current assets
Deferred assets
Investment unit issuance expenses
Total deferred assets
Total assets

－

12 －

4th fiscal period(As of June 30, 2018)

633,879
1,517,503
1,535
30,72615－－
2,183,659

931,688
1,966,582
7,430
35,11816
130,174323
3,071,334

8,247,640(434,191)
7,813,448
192,823(13,422)
179,400
114,331(7,721)
106,610
5,347
(590)
4,757
8,709,677
16,813,894

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

4,348
4,132
8,480

4,221
3,541
7,762

10,00013,50036,66260,162
16,882,537

10,00013,50050,11573,61524,646,705－－
19,066,197

28,14628,146
27,746,186

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

(Unit: thousand yen)
3rd fiscal period(As of Dec. 31, 2017)
Liabilities
Current liabilities
Operating accounts payable
Short-term loans 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

－

13 －

4th fiscal period(As of June 30, 2018)

42,1331,140,000
30,00096,388924
20,112
119,057
51,8172,989
1,503,423

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

8,262,500
1,032,063
18,202
4
9,312,770
10,816,194

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

8,074,023

12,412,622(2,001)(84,691)(86,692)
7,987,331(3,092)(133,086)(136,179)
12,276,443

262,671
262,671
8,250,002
8,250,002
19,066,197

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

marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended June 2018(2) Statement of Income(Unit: thousand yen)
3rd fiscal period
From: July 1, 2017
To: Dec. 31, 2017
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
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)

－

14 －

4th fiscal period
From: Jan. 1, 2018
To: June 30, 2018

738,005
17,416755,4221,000,078
57,7701,057,848

312,826
69,232
1,200
11,5782,400
6,960
36,303
440,502
314,919447,063
79,465
1,349
12,8862,400
9,354
33,255585,775
472,073

11
225
237

12
384
396

35,981
15,204－421
51,607
263,550
263,550926
0
926
262,62348
262,671

48,38622,4335,629
419
76,868395,601
395,601952(1)
951
394,65047394,697marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended June 2018(3) Statement of Unitholders’ Equity
3rd fiscal period (from July 1, 2017 to December 31, 2017)(Unit: thousand yen)
Unitholders’ equity
Unitholders’ capital
Deduction from unitholders’ capital
Unitholders’capitalBalance at beginning of current period

Allowance fortemporarydifference
adjustments

8,074,023

(909)

Other
deduction fromunitholders’capitalTotal
deduction fromunitholders’capitalUnitholders’capital, net(38,388)(39,298)

8,034,725(1,091)(1,091)(46,302)(46,302)(46,302)

Changes of items during period
Dividends of surplus
Distribution in excess of earnings
attributable to allowance for(1,091)

temporary difference adjustments
Other distribution in excess ofearnings
Net income
Total changes of items during period
Balance at end of current period－(1,091)(46,302)(47,394)(47,394)

8,074,023(2,001)(84,691)(86,692)

7,987,331(Unit: thousand yen)
Unitholders’ equity
Surplus
Unappropriatedretained earnings(undisposed loss)
Balance at beginning of current period

Total
surplusTotal
unitholders’equityTotal
net assets

267,585

267,585

8,302,310

8,302,310(267,536)(267,536)(267,536)(267,536)

Distribution in excess of earnings
attributable to allowance fortemporary difference adjustments(1,091)(1,091)Other distribution in excess ofearnings(46,302)(46,302)

Changes of items during period
Dividends of surplus

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

262,623

262,623

262,623

262,623(4,913)(4,913)(52,307)(52,307)262,671

262,671

8,250,002

8,250,002－

15 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended June 2018
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 fortemporary difference adjustments(1,091)Other distribution in excess ofearnings(1,091)(1,091)(48,394)(48,394)(48,394)

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

－

16 －

marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended June 2018(4) Statement of Distribution of Cash
3rd fiscal period
From: July 1, 2017
To: Dec. 31, 2017
I.

Unappropriated retained earnings

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

4th fiscal period
From: Jan. 1, 2018
To: June 30, 2018262,671,625 yen

394,697,724 yen

49,486,592 yen

60,744,060 yen

1,091,616 yen

1,058,720 yen

48,394,976 yen

59,685,340 yen

312,111,208 yen

455,381,940 yen[3,431 yen]

[3,441 yen]

262,624,616 yen

394,637,880 yen[2,887 yen]
1,091,616 yen[2,982 yen]
1,058,720 yen[12 yen][8 yen]48,394,976 yen

59,685,340 yen[532 yen][451 yen]

47,009 yen

59,844 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 262,624,616 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 49,486,592 yen, which isthe amount roughly equivalent to 30%
of depreciation for the fiscal period
under review, as dividends in excess ofearnings. This resulted in dividends inexcess of earnings per unit of 544 yen.
Furthermore, included in thedividends in excess of earnings is
distributionofallowance
for
temporary difference adjustments of
1,091,616 yen, resulting in allowancefor temporary difference adjustments
per unit of 12 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.

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

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17 －

marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended June 2018(5) Statement of Cash Flows(Unit: thousand yen)
3rd fiscal period
From: July 1, 2017
To: Dec. 31, 2017
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
Increase in short-term loans payable
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

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18 －

4th fiscal period
From: Jan. 1, 2018
To: June 30, 2018

263,550
166,381－(11)
35,981
31－
18,297(9,343)(11,612)
2,186
1,560
8,739
216
475,977
11(36,021)(935)
439,032

395,601
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)
559,910(61,691)(0)(61,691)(7,905,333)(0)(7,905,334)

500,000(708,000)－(15,000)－(314,177)(537,177)(159,837)
1,198,338
1,038,501－(1,140,000)
4,985,000(15,000)
4,304,823(311,667)
7,823,156
477,732
1,038,501
1,516,234

marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended June 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 not applicable for the 3rd fiscal period
and 49,641 thousand yen for the 4th 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 trust③ Leadhold 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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19 －marimo Regional Revitalization REIT, Inc. (3470) Financial Report for the Fiscal Period Ended June 2018
[Additional Information][Notes on Provision and Reversal of Allowance for Temporary Difference Adjustments]
3rd fiscal period (from July 1, 2017 to December 31, 2017)1.

Reason, related assets, etc. and amount of provision
The posting of MRR Omuta’s amortization of leadhold interest for leadhold 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 1,091 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.

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 leadhold interest for leadhold 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.

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20 －