Asset Management Report for the 33rd Period(Semi-Annual Report for the 33rd Period)
From July 1, 2022, to December 31, 2022

Asset Management Report for the 33rd Period (Semi-Annual Report for the 33rd Period)

I. Greetings
To Our Unitholders
We would like to express our sincere gratitude for your continued support of Japan Excellent, Inc. (JEI) and Japan Excellent
Asset Management Co., Ltd.
We hereby report the financial results of JEI for the 33rd period (from July 1, 2022, to December 31, 2022).
In terms of external growth, we acquired Bizcore Shibuya as part of the strategy to expand asset size. This is the third
acquisition from the Bizcore series of medium-sized, high-grade office buildings developed by Nippon Steel Kowa Real
Estate Co., Ltd. We also decided on postdated sale of Shintomicho Building, an old property, in order to secure qualitative
improvement of the portfolio as well as financial strength from the standpoint of stable management of distributions. We
executed the settlement split into the 33rd period (40% equivalent) and the 34th period (60% equivalent), securing
approximately 1.3 billion yen in gain on sale.
In addition, in the 34th period, we decided on a new asset replacement of selling Pacific Square Sengoku and acquiring ShinYokohama Arena-dori Building near Shin-Yokohama Station from the standpoint of improvement in location conditions andbuilding age. The acquisition is scheduled for the end of March 2023 and the sale for the beginning of July 2023.
On the leasing front, the period-end occupancy rate of the entire portfolio turned around from the 32nd period’s 90.8% to93.0% as a result of steady progress in refilling of vacated floors amid the tenant departure rate decreasing with the end of thedeparture of a large tenant. In addition, for rent revisions, prevention of tenant departures through flexible negotiation of terms
and conditions and other strategic rent revision negotiations were conducted in order to maintain and enhance occupancy rates.
On the financial front, we pursued reduction of financial costs through such means as utilization of floating-rate loans amid
long-term interest rates rising and reduction of fees by switching to bilateral loans. In addition, we utilized sustainablefinancing upon refinancing, resulting in sustainable financing accounting for 21.2%, a level that is top class for office J-REITs.
For ESG, we made progress in initiatives, including setting “net zero CO2 emissions by fiscal 2050” as a new target for
reduction of CO2 emissions and implementing and disclosing quantitative financial analysis based on TCFD recommendations.
As a result, in the 33rd period, JEI recorded operating revenue of 10,699 million yen, operating income of 4,132 million
yen, net income of 3,502 million yen, and distribution per unit of 2,800 yen as initially planned (same amount as theprevious period).

About Future Asset Management
In the real estate transaction market, while transaction prices are expected to remain steady for the time being backed byfactors such as vigorous appetite for investment by market participants, JEI will continue to set the sponsor pipeline as themain source of property acquisition and advance talks with the sponsors. At the same time, JEI intends to earnestly workon acquisition from third parties as well.
In the office building leasing market, while trending toward inquiries and contracts gradually increasing for even large
floor space in mainly central Tokyo due to the emergence of moves to review office functions with an eye to post COVID
and such, there are concerns that the uncertainty over the office sector will not be dispelled for the time being given thefactors such as the state of entrenchment of remote work and the possibility of even further consolidation among mainly
large companies. Full-fledged recovery in office demand being expected to take a little more time and an increase in new
supply in central Tokyo in 2023 lead to the forecast that the vacancy rate will be in the mid 6% range, or in some cases inthe 7% range, and newly concluded rents will soften.
Under such circumstances, JEI believes that, headed for increasingly further polarization by the superiority/inferiority interms of conditions, such as location, environmental performance and comfort, in response to the discussion of “new work
styles,” large buildings that are superior in terms of conditions will fit into the new office strategy and thus attract demand
as core offices.
As to the policy on leasing activities for the time being, JEI will place upmost priority on “early refilling of vacated floors”
and “prevention of departure” of existing tenants. Especially with the vacated floors, JEI will work to achieve early refillingof vacated floors by cooperating with the sponsors, setting flexible terms and conditions taking into account the level ofdifficulty by property and other efforts.
As for rent renewal/revision, JEI will keep up initiatives for upward rent revisions, centering on regional properties, forthose with substantial negative rent gaps, while prioritizing prevention of tenant departures through flexible negotiation ofterms and conditions.
In terms of finance, JEI will strive for stable and sound financial operations by continuing to work to reduce financial costs,
extend average remaining period and diversify maturity dates with a basic policy of procuring funds for the long term atfixed interest rates. Furthermore, from the standpoint of maintaining and strengthening financing base throughdiversification of fund procurement means, JEI will work on environmentally or socially conscious or new methods offunding, including sustainable finance.
With regard to ESG, JEI intends to strive to further evolve and deepen its initiatives by keeping on taking on challenges
with priority themes being “net zero CO2 emissions by fiscal 2050,” a long-term target for carbon neutrality set in January2023, and TCFD, based on which we have disclosed qualitative and quantitative financial analyses, in addition to steadily
carrying out previous efforts.
Finally, as always, JEI remains committed to strict adherence to the Financial Instruments and Exchange Act and otherlaws and regulations, and in addition to promoting compliance, we also disclose information on the status of our operations
to our unitholders in an accurate and easy-to-understand manner.
We kindly ask for your continued understanding and support.
Asset Management Report for the 33rd Period (Semi-Annual Report for the 33rd Period)

1II. Asset Management Report
1. Outline of Asset Management Operation(1) Operating Results and Financial Position of the Investment Corporation
29th Period

Fiscal period
Operating revenue

30th Period

31st Period

32nd Period

33rd Period

July 1, 2020, to January 1, 2021, to July 1, 2021, to January 1, 2022, to July 1, 2022, toDecember 31, 2020 June 30, 2021 December 31, 2021 June 30, 2022 December 31, 2022
(Millions of yen)

11,043

10,567

10,666

11,065

10,699(Rental revenues)(Millions of yen)

(10,729)(10,567)(10,666)(10,267)(10,141)

Operating expenses(Millions of yen)

6,119

5,977

6,180

6,353

6,567

(Property operating expenses) (Millions of yen)

(5,487)(5,355)(5,563)(5,699)(5,944)

Operating income(Millions of yen)

4,924

4,590

4,485

4,711

4,132

Ordinary income(Millions of yen)

4,291

3,976

3,846

4,102

3,503

Net income(Millions of yen)

4,290

3,975

3,846

4,101

3,502

Total assets(Millions of yen)

294,004

293,970

293,960

291,430

294,540(0.2)(-0.0)(-0.0)(-0.9)(1.1)

152,418

152,335

152,206

150,461

150,218(0.2)(-0.1)(-0.1)(-1.1)(-0.2)(Period-on-period change)
Net assets(Period-on-period change)(%)(Millions of yen)(%)

Unitholders’ capital, net (Note 1) (Millions of yen)

147,907

147,907

147,907

145,907

145,907

Total outstanding investment units(units)1,353,000

1,353,000

1,353,000

1,337,598

1,337,598

Net assets per unit

(yen)

112,652

112,590

112,495

112,486

112,304

Net income per unit (Note 2)

(yen)

3,171

2,938

2,842

3,052

2,618

(Millions of yen)

4,059

3,975

3,846

3,745

3,745

(yen)

3,000

2,938

2,843

2,800

2,800

(Profit distribution per unit)(yen)(3,000)(2,938)(2,843)(2,800)(2,800)(Distribution in excess ofearnings per unit)

(yen)

(－)

(－)

(－)

(－)

(－)

Total distribution
Distribution per unit

Return on assets (Note 3)

(%)

1.5

1.4

1.3

1.4

1.2

(%)

(2.9)

(2.7)

(2.6)

(2.8)

(2.4)

(%)

2.8

2.6

2.5

2.7

2.3

(Annualized rate)

(%)

(5.6)

(5.3)

(5.0)

(5.5)

(4.6)

Capital ratio (Note 5)

(%)

51.8

51.8

51.8

51.6

51.0

(%)

(0.0)

(-0.0)(-0.0)(-0.1)(-0.6)(Annualized rate)
Return on equity (Note 4)(Period-on-period change)
Payout ratio (Note 6)

(%)

94.6

100.0

100.0

91.3

107.0

Number of investment properties(properties)

34

35

36

35

36

Number of tenants (Note 7)(tenants)

191

187

587

585

617

Total leasable area (Note 8, 9)(m2)

331,112336,375

341,070

335,534

337,389

Occupancy rate

(%)

98.0

96.4

93.1

90.8

93.0

Depreciation(Millions of yen)

1,824

1,847

1,891

1,937

1,931

Capital expenditure(Millions of yen)

1,127

1,547

1,305

1,298

1,188

Net operating income (NOI)(Note 10)

(Millions of yen)

7,066

7,059

6,994

6,504

6,128

Funds from operation (FFO)
per unit (Note 11)

(yen)

4,287

4,303

4,240

3,918

3,665

FFO multiples (Note 12)(times)

15.0

18.3

15.8

15.5

18.0

Debt service coverage ratio(DSCR) (Note 13)(times)

13.9

13.2

13.2

14.4

12.8

Interest-bearing debt

(Millions of yen)

125,600

125,600

125,600

125,600

128,600

Loan-to-value (Note 14)

(%)

42.7

42.7

42.7

43.1

43.7

Number of days in operation(days)

184

181

184

181

184

2

(Note 1) The amount of unitholders’ capital after subtracting any deduction from unitholders’ capital is shown. This does not accountfor any deduction from unitholders’ capital that is due to the implementation of distribution in excess of earnings related tothe allowance for temporary difference adjustments.
(Note 2) Net income per unit is calculated by dividing the net income by the weighted-average number of units outstanding during thesix months period.
(Note 3) Return on assets = Ordinary income / [(Period beginning total assets) + (Period end total assets) / 2] × 100(Note 4) Return on equity = Net income / [(Period beginning net assets) + (Period end net assets)/ 2] × 100(Note 5) Capital ratio = Period end net assets / Period end total assets × 100(Note 6) Payout ratio = (Distribution per unit (not including distribution in excess of earnings per unit) / Net income per unit) × 100(Figures are rounded to the first decimal place.)
For the 32nd period, as buyback and cancellation of own investment units took place, the formula below was used to calculate
the payout ratio.
Payout ratio ＝ (Total distributions (not including distribution in excess of earnings / Net income) × 100(Note 7) Number of tenants indicates the number of end tenants in each property as of the end of each period in principle, starting fromthe 31st period. When a tenant has multiple tenancies in the same property, it is counted as one tenant, and when in multiple
properties, it is counted as multiple tenants. However, for properties in which the residential portion or the percentage of theinterest owned by JEI is relatively low, the number of tenants indicates the number of master lease companies for the property,
considering a master lease company as a tenant. In addition, for land with leasehold interest, the number of tenants is counted
as one based on the lease agreement for the leased land.
(Note 8) For properties with joint ownership (including quasi co-ownership of trust beneficiary interest; the same applies hereinafter),the figure is obtained by taking the leasable area of the entire property and factoring in the percentage of the interest owned
by JEI, regarding the figure as JEI’s leasable area. The same applies hereinafter.
(Note 9) Spaces are rounded to the nearest specified unit. The same applies hereinafter.
(Note 10) NOI = Rental revenues – Property operating expenses + Depreciation(Note 11) FFO per unit = (Net income + Depreciation – Gain on sale of real estate + Loss on sale of real estate + Impairment loss) /Total number of outstanding investment units (the figure is rounded down to the whole number).
(Note 12) FFO multiples = Period end investment unit price / Annualized FFO per unit
(Note 13) DSCR = (Net income before interest and taxes + Depreciation (*)) / (Interest expenses + Interest expense on investment
corporation bonds)* Includes depreciation except for property operating expenses.
(Note 14) Loan-to-value = Period end interest-bearing debt / Period end total assets × 100

3

(2) Asset Management Development
Japan Excellent, Inc. (JEI) was founded on February 20, 2006, under the Law Concerning Investment Trusts andInvestment Corporations of Japan (Law No. 198 of 1951, as amended; hereinafter referred to as the “Investment
Trust Law”). On March 15, 2006, it completed the corporate registration to the Kanto Local Finance Bureau(registration number 52, issued by the Head of the Kanto Local Finance Bureau) and listed on the Real Estate
Investment Trust Section of the Tokyo Stock Exchange (Securities Code: 8987) on June 27, 2006.
Since the listing, JEI has continued investment management primarily in office buildings with the aim of maintaining
sound corporate growth and stable revenues from the medium- to long-term perspectives. On December 31, 2022,
JEI settled its 33rd period.
1) Business conditions and results
In the period under review (33rd period ended December 31, 2022), the world economy was hard hit by the
impact of rising energy and raw material prices arising from the situation in Ukraine, and Europe and the U.S.
moved to raise policy interest rates in phases from the perspective of curbing inflation, but entering 2023, were
shifting to a cautious monetary policy stance on economic outlook as evident by the smaller interest rate hikeincrements to assess the easing of inflation and such.
In Japan, as the impact of COVID-19 wanes, robust capital investment, increasing number of foreign visitors toJapan and other signs of economic recovery were gradually emerging, but unable to fully pass on increases in
raw material, labor and other costs, the economic outlook continues to remain uncertain. Amid such, although
the Bank of Japan maintains a monetary easing stance, factors such as globally rising interest rates, surging
domestic prices and the Bank of Japan’s December 2022 expansion of the range of fluctuation for long-term
interest rates resulted in long-term interest rates showing movements of gradually rising. The price and wage
trends as well as any resulting change in the Bank of Japan’s policy management stance and such need to bewatched carefully ahead.
In the real estate transaction market, the acquisition appetite of investors within and outside of Japan is strong
due to the favorable fund procurement environment on the back of the Bank of Japan’s monetary easing stance,
differences in interest rates in Japan and abroad and other factors, making the property acquisition environment
still severe. Under such circumstances, JEI acquired a medium-sized, high-grade office building, Bizcore
Shibuya (acquisition price: 6,640 million yen), from a sponsor in August 2022.
Meanwhile, in the office building leasing market, there were even moves of active corporate activity with aneye to post-COVID-19, relocations aimed at improving the work environment from the perspective of workstyle reform and such emerging, but moves were yet to become full-fledged as particularly those of large demand
are at the stage of considering office utilization measures, options are increasing with the increase in vacancies,
etc. Although new supply was thus limited, vacancy rates remained unchanged and new rent levels were still
yet to bottom out. The vacancy rate in the five central wards of Tokyo, which was 6.4% at the end of June 2022,
stood at 6.5% at the end of December 2022 (published by Miki Shoji Co., Ltd.).
At JEI, the occupancy rate, which had dropped to 90.8% at the end of the previous period (end of June 2022)
due to the impact of the departure of a large tenant, showed movements of turning around. However, despite
steady progress in the refilling of vacated floors at office buildings in central Tokyo, there was delay in therefilling of vacated floors at Kowa Kawasaki Nishiguchi Building. As a result of mainly that, the occupancy
rate (Note 1) at the end of the period under review was 93.0%.
The total number of properties owned and managed by JEI at the end of the period under review was 36 with a
total acquisition price of 287.8 billion yen and total leasable area of 337,388.63 m2 (102,060.06 tsubos).
2) Fund procurement highlights
JEI will work on stable and sound financial operations over the medium to long term with a basic policy of
procuring funds for the long term at fixed interest rates.
In the period under review, in August, JEI took out a short-term loan of 3.0 billion yen through a revolving
credit facility to fund the acquisition of Bizcore Shibuya. In addition, JEI refinanced loans due for repayment
with a sustainability loan (2.0 billion yen for borrowing period of 2.5 years) in September, a green loan (1.0billion yen for borrowing period of 5 years) in November, and a green loan (5.75 billion yen for borrowing
period of 7.1 years) in December.

4As a result, as of the end of the period under review, the average remaining period of interest-bearing debt
(Note 2) was 4.0 years (shortened by 0.1 years from the end of the previous period), the period-end averageinterest-bearing debt interest rate (Note 3) was 0.69% (down 0.03 points from the end of the previous period),
and the loan-to-value ratio of total assets (total assets-based LTV) (Note 4) was 43.7% (up 0.6 points from theend of the previous period) due to the new borrowing of funds for the acquisition of Bizcore Shibuya.
In addition, JEI continues to have commitment lines with a credit limit of 14.0 billion yen to reduce refinancing
risk and enhance stability for fund procurement, etc.
As of December 31, 2022, JEI has been granted the following rating.
Credit rating agency

Issuer rating (outlook)

Individual debt issue rating(Note 5)

Japan Credit Rating Agency, Ltd. (JCR)

Long-term issuer rating
AA- (Stable)

AA-3) Sustainability initiatives
JEI has worked to reduce the environmental burden and to cooperate/collaborate with stakeholders to achieve asustainable society through corporate social responsibility, while recognizing the importance of consideration
for the environment, society and governance (ESG) in the real estate investment management business.
With regard to CO2 emission intensity, in fiscal 2021, JEI set a medium-term target to reduce emission intensity
by 46% by fiscal 2030 compared with fiscal 2013. To meet the target, JEI has promoted a shift to LED lighting,air-conditioning equipment with excellent energy-saving performance, and carbon-free energy sources, such as“RE100” compatible electricity, at properties it owns. In addition, in January 2023, JEI newly set a long-termtarget of net zero CO2 emissions by fiscal 2050. In order to reduce our environmental impact, JEI has set targets
to reduce energy consumption and water consumption intensities by 1% per year compared with the previous
period, and over the medium to long term, to reduce average consumption and emission intensities by 5% ormore when comparing the rates between fiscal 2015 and fiscal 2019 with the rates between fiscal 2020 and fiscal
2024. Furthermore, JEI has continuously promoted the acquisition of Green Building Certification and thenumber of certified properties now stands at 26, accounting for 89.2% of leasable area (as of December 31,
2022; excluding land with leasehold interest).
Such initiatives for sustainability by JEI earned high recognition, specifically an eighth year straight “GreenStar” rating (Note 7) in the Global Real Estate Sustainability Benchmark (GRESB) (Note 6) Real Estate
Assessment conducted in 2022, as well as a third year straight “5 Star,” the highest rating in “GRESB Rating”(Note 8), and JEI has been a constituent of the MSCI Japan ESG Select Leaders Index (Note 9) since May 2021.
In addition, JEI’s asset management company Japan Excellent Asset Management Co., Ltd. (hereinafter,“JEAM”) compiles the policy, initiatives and such of JEI and JEAM for each of the four items (“governance,”“strategy,” “risk management,” and “metrics and targets”) recommended by the Task Force on Climate-related
Financial Disclosures (TCFD) (Note 10) based on the TCFD recommendations for which it expressed support
in June 2021, and discloses them on JEI’s website.
4) Financial results and distribution highlights
As a result of the management above, for the period under review, JEI posted 10,699 million yen in operating
revenue, 4,132 million yen in operating income, 3,503 million yen in ordinary income, and 3,502 million yen in
net income.
Concerning distributions in the period under review, JEI decided to distribute the entire amount (except for the
portion of less than one yen per unit) of unappropriated retained earnings with the addition of 243 million yen
for reversal of reserve for reduction entry to unappropriated retained earnings through partial reversal of reserve
for reduction entry along with the intention to have the amount of profit distribution deducted from its taxable
income by application of the special provisions of the tax system on investment corporations (Section 67-15 of
the Special Taxation Measures Law). As a result, distribution per unit was 2,800 yen.

5

(Note 1) Occupancy rate is a percentage of total leased area to total leasable area of real estate or real estate in trust.
(Note 2) Average remaining period of interest-bearing debt is calculated by applying a weighted average of theremaining period until the repayment date or redemption date of borrowings and investment corporation bonds
at the end of the period to the balance of each interest-bearing debt, for all interest-bearing debt.
(Note 3) Period-end average interest-bearing debt interest rate is calculated by applying a weighted average of interestat the end of the period under review to the balance of each interest-bearing debt, for all interest-bearing debt.
(Note 4) Loan-to-value ratio of total assets ＝ (Period end interest-bearing debt / Period end total assets) ×100
(Note 5) The rating is for 7th series unsecured investment corporation bonds, 8th series unsecured investment
corporation bonds, 9th series unsecured investment corporation bonds, 10th series unsecured investment
corporation bonds, 11th series unsecured investment corporation bonds, 12th series unsecured investment
corporation bonds, 13th series unsecured investment corporation bonds, 14th series unsecured investment
corporation bonds, 15th series unsecured investment corporation bonds and 16th series unsecured investment
corporation bonds.
(Note 6) A benchmark established by a European pension fund group that measures ESG considerations of real estatecompanies and management institutions which is used by major European, American, and Asian institutional
investors for decision-making on investments.
(Note 7) “Green Star” is given when a high evaluation with a score exceeding 50% is made in the two evaluation axes(“Management Policy” and “Implementation & Measurement).
(Note 8) “GRESB Rating” is a rating of the overall score according to the global ranking, and “5 Star” is a rating given
to the top 20% of participants, “4 Star” to the following 20% and so forth.
(Note 9) The MSCI Japan ESG Select Leaders Index is an index consisting of companies that have high Environmental,
Social and Governance performance selected from among the constituents of the MSCI Japan Investable
Market Index (IMI). The Index has been selected as one of the ESG indices for passive investment by theGovernment Pension Investment Fund (GPIF).
(Note 10) The TCFD (Task Force on Climate-related Financial Disclosures) is an international initiative established in2015 by the Financial Stability Board (FSB) at the request of the G20 to discuss climate-related issues to beaddressed by the financial sector.

6

(3) Capital Increase
The outline of the changes in the total number of outstanding investment units and unitholders’ capital, net, for themost recent five years up to the end of the period under review are as follows:
Unitholders’ capital, net
Capital transaction (units)
Remarks(Millions of yen) (Note 1)
Paid-up Date
Capital transaction
ChangeBalance
ChangeBalanceJanuary 21, 2020
February 13, 2020
April 28, 2022

Public offering
Third-party
allotment
Cancellation

43,0001,348,700

7,213

147,186(Note 2)4,300

1,353,000

721

147,907(Note 3)

-15,402

1,337,598-1,999145,907(Note 4)(Note 1) The amount of unitholders’ capital after subtracting any deduction from unitholders’ capital is shown. This does not accountfor any deduction from unitholders’ capital that is due to the implementation of distribution in excess of earnings related tothe allowance for temporary difference adjustments.
(Note 2) New investment units were issued at an issue price of 173,355 yen per unit (purchase price of 167,754 yen per unit) througha public offering in order to repay debts procured to acquire properties and partially fund property acquisitions.
(Note 3) New investment units were issued at a purchase price of 167,754 yen per unit through third-party allotment in order to partiallyfund future acquisitions of specified assets or partially fund repayment of loans.
(Note 4) Buyback of own investment units through market purchase on the Tokyo Stock Exchange based on a discretionary transaction
contract with a securities company took place from February 18, 2022, to April 13, 2022. All 15,402 own investment units
from the buyback were cancelled on April 28, 2022, based on the resolution passed at the board of directors’ meeting of JEI
held on April 18, 2022.
(Note 5) At JEI, there exist no investment units held by JEI (investment units without voting rights provided in Article 308-2 of the
Corporate Law which will be applied mutatis mutandis pursuant to Article 94 of the Investment Trust Law) or cross-heldinvestment units (investment units without voting rights provided in Article 160 of the Investment Trust Enforcement
Ordinance) as of the end of the period under review.

[Market price of the investment securities]
The period-on-period fluctuations in the highest and lowest (closing) prices of JEI’s investment units listed on theReal Estate Investment Trust Section of the Tokyo Stock Exchange during each period is as follows:
Fiscal period
29th period
30th period
31st period
32nd period
33rd period(closing date) (December 2020) (June 2021) (December 2021) (June 2022) (December 2022)
Investment
unit market Highest (yen)127,900
163,300
158,400
136,600
139,400
price
Lowest (yen)110,600
120,000
132,800
121,600
118,900(Note)The highest and lowest prices of investment units refer to the closing prices on the Real Estate Investment Trust Section of
the Tokyo Stock Exchange.

7(4) Distributions Paid
Concerning distributions in the period under review, JEI decided to distribute the entire amount (except for the
portion of less than one yen per unit) of unappropriated retained earnings with the addition of the amount of reversalof reserve for reduction entry to unappropriated retained earnings along with the intention to have the amount of
profit distribution deducted from its taxable income by application of the special provisions of the tax system on
investment corporations (Section 67-15 of the Special Taxation Measures Law). As a result, distribution per unit
was 2,800 yen.
Fiscal period
Accounting period
Unappropriated retained
earnings at end of period(Thousands of yen)
Retained income(Thousands of yen)
Total cash distribution
amount (Thousands of yen)
(Cash distributions per unit)(yen)
Of which, total profit
distributions(Thousands of yen)
(Profit distribution per unit)(yen)
Of which, total refund ofinvestment equity(Refund of investment
equity per unit)
Of total refund of investment
equity, total distribution
amount from reserve fortemporary difference
adjustments(Of refund of investment
equity per unit, distribution
amount per unit from reserve
for temporary difference
adjustments)
Of total refund of investment
equity, total distribution
amount from distribution
reducing unitholders’ capitalfor tax purpose(Of refund of investment
equity per unit, distribution
amount per unit from
distribution reducing
unitholders’ capital for tax
purpose)29th period

30th period

31st period

32nd period

33rd period

July 1, 2020, to January 1, 2021, to July 1, 2021, to January 1, 2022, to July 1, 2022, toDecember 31, 2020 June 30, 2021 December 31, 2021 June 30, 2022 December 31, 2022
4,291,443

3,975,882

3,846,920

4,102,019

3,502,198

232,443768

341

356,744－

4,059,000

3,975,114

3,846,579

3,745,274

3,745,274(3,000)(2,938)(2,843)(2,800)(2,800)4,059,000

3,975,114

3,846,579

3,745,274

3,745,274(3,000)(2,938)(2,843)(2,800)(2,800)

－

－

－

－

－

(－)

(－)

(－)

(－)

(－)

－

－

－

－

－

(－)

(－)

(－)

(－)

(－)

－

－

－

－

－

(－)

(－)

(－)

(－)

(－)

8

(5) Policy and Issues on Future Investment Management
1) Outlook for business environment
In the real estate transaction market, although transaction prices are expected to remain high for the time being withthere continuing to be vigorous appetite for investment by market participants, JEI believes that there is a need toclosely monitor changes in the political, economic and geopolitical situation ahead.
In the office building leasing market, while starting to gradually gain momentum for even large floor space with thereclassification of COVID-19 to Class V Infectious Disease, review of office functions by companies and such,recovery in office demand is expected to take a little more time given the factors such as the state of entrenchmentof remote work and the possibility of even further consolidation among mainly large companies. Under suchcircumstances, there are concerns that vacancy rates will remain unchanged or slightly rise and newly concluded
rents will soften in light of new supply increasing in 2023. On the other hand, office building conditions, such as
location, environmental performance and comfort, are expected to increase in weight based on new thinking on
offices with the work-style reform, leading to also increasingly further polarization by the superiority/inferiority interms of such conditions.
2) Policy and issues on future investment management
A. External growth
JEI will work to acquire competitive properties by means of well-balanced investments based on size and area withthe aim of expanding asset size over the medium to long term. JEI will continue to have the asset managementcompany newly cultivate and refine property information sources in an effort to promptly gain access to market
information on disposition of properties and thereby keep seizing the right business opportunities while maintaining
a focus on cooperation with sponsor companies. At the same time, in order to improve its portfolio over the medium
to long term, JEI will consider disposition of properties that are old or are likely to lose competitiveness in the future,assuming replacement.
B. Internal growth
JEI will continue to make efforts to capture the needs of existing tenants in a timely manner by further strengthening
finely-tuned relationships.
As to properties with vacancies at present or with expected vacancies, JEI will focus on filling those vacancies at an
early stage by collaborating with the sponsors, setting flexible terms and conditions taking into account thedifficulties, etc. for each property, etc. As for rent revision, although JEI will respond in a flexible manner toprioritize prevention of tenant move-outs, JEI is to review such stance in an agile manner once the environment
turns for the better. In addition, JEI will work on measures to curb the impact of rising electricity prices, such as
switching to variable unit prices for those tenants billed at fixed unit prices.
Over the medium to long term, JEI aims to enhance earnings of the entire portfolio and improve its ESG evaluation
by making additional strategic investments to maintain asset value and improve property competitiveness while
conducting sustainability initiatives, BCP measures and such.
C. Financial strategy
JEI will consistently work on stable and sound financial operations by continuing to procure funds based on thebasic policy to fix interest rates of loans, extend and diversify maturity dates while continuing to reduce financial
costs. In addition, JEI will work on new procurement methods such as green finance and sustainability finance fromthe perspective of maintaining and strengthening its procurement base through diversification of fund procurementmeans.
JEI will set the upper limit of total assets-based LTV at 60% and manage it at around 35% to 50%.
D. Sustainability initiatives
JEI will continue to work to reduce the environmental burden and to cooperate/collaborate with stakeholders toachieve a sustainable society, deeming such as its corporate social responsibility.

9(6) Subsequent Events
Not applicable.
(Reference Material)
1. Acquisition of Asset (Shin-Yokohama Arena-dori Building)
JEI concluded a transaction agreement for trust beneficiary interest in real estate on February 10, 2023, as
described below.
<Overview of the Asset to Be Acquired>
Asset to be acquired

Trust beneficiary interest in real estate

Name of property

Shin-Yokohama Arena-dori Building

Location

3-7-7 Shin-Yokohama, Kohoku-ku, Yokohama-shi,
Kanagawa

Planned acquisition price (Note)

2,077 million yen

Date of execution of agreement

February 10, 2023

Scheduled handover date

March 31, 2023

SellerNot disclosed, as consent for disclosure has not been obtained
from the seller(Note) Planned acquisition price does not include acquisition-related consumption tax and local consumption tax or fees required for theacquisition.

2. Transfer of Asset (Pacific Square Sengoku)
JEI concluded a transaction agreement for trust beneficiary interest in real estate on February 10, 2023, as
described below.
<Overview of Asset to Be Transferred>
Asset to be transferred

Trust beneficiary interest in real estate

Name of property

Pacific Square Sengoku

Location

2-29-24 Honkomagome, Bunkyo-ku, Tokyo

Planned transfer price2,300 million yen

Date of execution of agreement

February 10, 2023

Scheduled handover dateJuly 3, 2023

Transferee

Not disclosed, as consent for disclosure has not been obtained
from the transferee102. Outline of the Investment Corporation(1) Investment Units
Fiscal period
Total number of units
authorized
Total number of units
issued and outstanding

29th
As of December 31,
2020

30th
As of June 30,
2021

31st
As of December 31,
2021

32nd
As of June 30,
2022

33rd
As of December 31,
2022

10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

1,353,000 units

1,353,000 units

1,353,000 units

1,337,598 units

1,337,598 units

Unitholders’ capital, net(Note)

147,907
147,907
147,907
145,907
145,907
million yen
million yen
million yen
million yen
million yen
6,914
6,797
6,978
7,556
7,193
Number of unitholders
individuals
individuals
individuals
individuals
individuals(Note) The amount of unitholders’ capital after subtracting any deduction from unitholders’ capital is shown. This does not accountfor any deduction from unitholders’ capital that is due to the implementation of distribution in excess of earnings related tothe allowance for temporary difference adjustments.

(2) Unitholders
Major unitholders as of December 31, 2022, are as follows:
Number ofunits held
(Units)Ratio of number ofunits held tooutstanding
investment units(%) (Note 1)

1-8-12 Harumi, Chuo-ku, Tokyo

385,927

28.85

2-11-3 Hamamatsu-cho, Minato-ku, Tokyo

219,470

16.41

1-8-1 Akasaka, Minato-ku, Tokyo

71,5605.35

2-2-2 Otemachi, Chiyoda-ku, Tokyo

59,4694.45

Mizuho Securities Co., Ltd.

1-5-1 Otemachi, Chiyoda-ku, Tokyo

52,676

3.94

STATE STREET BANK WEST
CLIENT - TREATY 505234

1776 HERITAGE DRIVE,NORTH QUINCY, MA 02171,U.S.A.

20,762

1.55

The Dai-ichi Life Insurance
Company, Limited

1-13-1 Yuraku-cho, Chiyoda-ku, Tokyo

20,6601.54

SSBTC CLIENT OMNIBUS
ACCOUNTONE LINCOLN STREET,BOSTON MA USA 02111

16,094

1.20

The Shinkumi Federation Bank

1-9-5 Kyobashi, Chuo-ku, Tokyo

14,4091.08

DFA INTERNATIONAL REALESTATE SECURITIESPORTFOLIO

6300 BEE CAVE ROAD, BUILDING ONE
AUSTIN TX 78746 US

13,652

1.02

Total

874,679

65.39

Name
Custody Bank of Japan, Ltd.
(Trust Account)
The Master Trust Bank of Japan,
Ltd. (Trust Account)
Nippon Steel Kowa Real EstateCo., Ltd. (Note 2)
The Nomura Trust and Banking
Co., Ltd.
(Investment trust account)

Address(Note 1) Ratio of number of units held to outstanding investment units is rounded to the second decimal place.
(Note 2) JEI has received from Nippon Steel Kowa Real Estate Co., Ltd. (the core sponsor of JEAM) a notice that it has additionallyacquired investment units of JEI as shown in the table below. For details, please refer to “Notice Concerning Completion of
Additional Acquisition of JEI’s Investment Units by Nippon Steel Kowa Real Estate Co., Ltd.” dated January 12, 2023. The“Acquisition” in the table below is as outlined in “Notice Concerning Additional Acquisition of JEI’s Investment Units by
Nippon Steel Kowa Real Estate Co., Ltd.” dated August 18, 2022.
Before the Acquisition
Number of units held by Nippon
Steel Kowa Real Estate Co., Ltd.
Ratio of number of units held tooutstanding investment units

At the Acquisition

After the Acquisition

71,560 units

62,867 units

134,427 units

5.35%

4.70%

10.05%

11

(3) Officers
1) Directors and accounting auditor
Compensation or fee forthe six months ended
December 31, 2022
(Thousands of yen)

Name

Major additional post

Executive
Director

Shuichiro Kayama

President, Japan Excellent Asset Management
Co., Ltd.

Supervisory
Director

Shunichi Maekawa

Professor Emeritus, Meikai University

1,800Supervisory
Director

Eiji Takagi

Eiji Takagi Certified Public Accounting Office

1,800Supervisory
Director

Osamu Hirakawa

Adviser, Foreign Law Joint Venture, Anderson
Mori & Tomotsune

1,800

Accounting
AuditorErnst & Young
ShinNihon LLC

–

Post

–

12,200(Note 2)

(Note 1) There are no investment units of JEI held by either the Executive Director or the Supervisory Directors. Although
Supervisory Directors may have additional posts in companies other than those listed above, there are no conflictsof interest between those companies, including those listed above, and JEI.
(Note 2) The total amount of compensation or fee shown above is an estimated amount and includes the amount paid ascompensation for auditing during the period under review (11,000 thousand yen) and the fee for the English financial
statements audit.

2) Policy on dismissal and discontinuation of re-election of accounting auditor
The board of directors of JEI shall deliberate dismissal of accounting auditor in accordance with the provisions set
out in the Investment Trust Law, and deliberate discontinuation of re-election based on circumstances in all respects.
3) Matters concerning compensation agreement between directors, etc. and Investment Corporation
Not applicable.

(4) Matters Concerning Directors and Officers Liability Insurance Agreement
JEI has concluded the directors and officers liability insurance agreement as follows:
Scope of the insured

Executive Director andSupervisory Directors

Overview of the directors and officers liability insurance agreement(Overview of insured event covered by the insurance)
Compensation payment, dispute costs, etc. incurred by the insured as aresult of a damage compensation claim arising from an act performed by
the insured based on his or her position will be covered.
(Burden ratio of insurance premium)The entire amount is borne by JEI.
(Measures to ensure the appropriateness of the execution of duties of
directors and officers)
Damages and losses incurred by the insured for an act which was
performed acknowledging that such is a criminal act or violation of laws
and regulations will not be covered by the insurance.

(5) Asset Management Company, Asset Custodian, and Administrative Agents
JEI’s asset management company, asset custodian, and administrative agents as of December 31, 2022, are as
follows:
Classification

Name

Asset management company

Japan Excellent Asset Management Co., Ltd.

Asset custodian

Mizuho Trust & Banking Co., Ltd.

Administrative agent(Transfer agent and other administrative work foraccounting and institution operation)

Mizuho Trust & Banking Co., Ltd.

Administrative agent(Investment corporation bonds)

Mizuho Bank, Ltd.

12

3. Investment Portfolio of the Investment Corporation(1) Investment Portfolio by Area
32nd Period(As of June 30, 2022)

33rd Period(As of December 31, 2022)

Total
acquisition
price(Millions of yen)
(Note 2)

Investment
ratio inportfolio
(%)

Total
acquisition
price(Millions of yen)
(Note 2)

Investment
ratio inportfolio(%)

Area I

10,886

3.7

10,919

3.7

Area II

5,388

1.8

5,346

1.8

Area IV

1,613

0.6

1,608

0.5

Area I

125,53343.1

131,053

44.5

Area II

10,752

3.7

10,741

3.6

Area III

83,75728.7

83,34028.3

Area IV

25,262

8.7

25,458

8.6

Total

263,194

90.3

268,467

91.1

Equity interest in anonymous association (Note 3)

5,241

1.8

5,241

1.8

Deposits in bank and other assets

22,994

7.9

20,831

7.1

Total assets

291,430100.0

294,540

100.0Classification

Use

Real estate
property
Officebuilding
Trust beneficiaryinterest in realestateArea(Note 1)

(Note 1) Areas are classified as follows:
Area I: Six central wards of Tokyo (Chiyoda, Chuo, Minato, Shinjuku, Shinagawa and Shibuya)
Area II: Central Osaka (Umeda, Dojima, Nakanoshima, Yodoyabashi, Honmachi, etc.), Central Nagoya (Meieki, Fushimi,
Sakae, etc.), and Central Fukuoka (Tenjin, Hakata-ekimae, etc.).
* Central Osaka refers to the areas within about a 10-minute walk of Osaka Station (JR), Osaka-Umeda Station(Hankyu Railway, Hanshin Electric Railway), Umeda Station (Osaka Metro), Yodoyabashi Station (Osaka
Metro), or Honmachi Station (Osaka Metro), respectively. Central Nagoya refers to the areas within about a 10minute walk of Nagoya Station (JR, Nagoya City Subway, and Nagoya Railroad), Fushimi Station (Nagoya City
Subway), or Sakae Station (Nagoya City Subway and Nagoya Railroad), respectively. Central Fukuoka refers to
the areas within about a 10- minute walk of Hakata Station (JR and Fukuoka City Subway), Tenjin Station(Fukuoka City Subway), and Nishitetsu Fukuoka Station (Nishi-Nippon Railroad), respectively. They are,however, not always in line with administrative districts.
Area III: Tokyo other than Area I, and its vicinity (Kanagawa, Saitama, and Chiba)
Area IV: Areas in Osaka, Nagoya and Fukuoka other than Area II, and other government designated cities.
The same applies hereinafter.
(Note 2) Total acquisition price is based on the amounts accounted for in the balance sheets as of the settlement date (amounts of realestate property and trust beneficiary interest in real estate are based on the book value after depreciations).
(Note 3) Equity interest in an anonymous association with Akasaka 2-chome Godo Kaisha as the business operator.

13

(2) Major Properties
The principal properties (top ten properties in net book value) owned by JEI as of December 31, 2022, are as
follows.
Ratio of rental
Occupancy
Leasable area Leased area
revenue to total
Book
value
Name
rate
Major use
(Millions of yen) (m ) (Note 1)(m ) (Note 2)
rental revenues(%) (Note 3)(%)
OfficeAKASAKA INTERCITY
26,462
11,021.03
9,206.25
83.5
4.9
building
Nisseki Yokohama
Office21,85940,440.72
40,219.59
99.5
11.8
Buildingbuilding
OfficeOmori Bellport D
20,49225,828.29
24,236.13
93.8
8.0
building
Kowa Kawasaki
Office18,79624,944.17
13,970.30
56.0
2.8
Nishiguchi Buildingbuilding
HAMARIKYU
Office16,627
19,718.11
19,221.24
97.5
7.2
INTERCITY
building
Musashikosugi Tower
Office12,12824,986.15
22,024.03
88.1
6.4
Place
building
OfficeMansard Daikanyama
11,0915,420.80
5,278.27
97.4
2.3
building
Kowa Nishi-Shimbashi
Office10,9198,949.04
8,949.04
100.0(Note 4)
Buildingbuilding
Kowa Kawasaki
Office10,733
18,612.72
18,612.72
100.0(Note 4)
Higashiguchi Buildingbuilding
OfficeBizcore Jimbocho
9,965
5,261.75
4,702.31
89.4(Note 4)
building
2

Total

159,076

185,182.78

2

166,419.88

89.9

－

－

(Note 1) Leasable area refers to area available for lease of which ownership is attributable to JEI as of December 31, 2022. For
properties with joint ownership (including quasi co-ownership of trust beneficiary interest), the figure is obtained by taking
the leasable area of the entire property and factoring in the percentage of the interest owned by JEI, regarding the figure as
JEI’s leasable area.
(Note 2) Leased area refers to area with lease contracts or master lease agreements that guarantee a certain amount of fixed rent payment
concluded with end tenants as of December 31, 2022. For properties with joint ownership, the figure is obtained by taking theleased area of the entire property and factoring in the percentage of the interest owned by JEI, regarding the figure as JEI’sleased area. For properties which are used for profit by the master lease company, leased area refers to the portion used, andthe figures indicate area which can be reasonably calculated based on the lease agreement on the master leasing. The leased
area of end tenants who terminated their lease arrangement but have not yet moved out as of the end of period is included in
the leased area. This also applies to any figure which is calculated based on “leased area” in this document.
(Note 3) Occupancy rate is a percentage of total leased area to total leasable area of real estate or real estate in trust.
(Note 4) Not disclosed, as consent for disclosure has not been obtained.

14

(3) Portfolio Ownership Breakdown
Real estate properties and their forms of ownership as of December 31, 2022, are as follows:
Property
No.

Property nameLocation (Residential address)

Ⅰ-1

Omori Bellport D

6-26-3 Minami-Oi, Shinagawa-ku, Tokyo

Ⅰ-2

Shiba 2-Chome Building

2-6-1 Shiba, Minato-ku, Tokyo

Ⅰ-3

JEI Hamamatsucho Building

2-2-12 Hamamatsu-cho, Minato-ku, Tokyo

Ⅰ-8

AKASAKA INTERCITY

1-11-44 Akasaka, Minato-ku, Tokyo

I-10

Daiba Garden City Building

2-3-5 Daiba, Minato-ku, Tokyo

Ⅰ-12

HAMARIKYU INTERCITY

1-9-1 and 15 Kaigan, Minato-ku, Tokyo

Ⅰ-13

Shintomicho Building

3-10-9 Irifune, Chuo-ku, Tokyo

Ⅰ-14

Kowa Nishi-Shimbashi Building

2-1-1 Nishi-Shimbashi, Minato-ku, Tokyo

Ⅰ-15

Mansard Daikanyama

10-1 Sarugakucho, Shibuya-ku, Tokyo

I-16

AKASAKA INTERCITY AIR

1-8-1Akasaka, Minato-ku, Tokyo

I-17

Bizcore Akasaka-mitsuke

3-1-2 Akasaka, Minato-ku, Tokyo

I-18

Bizcore Jimbocho

3-9-2 Kanda-ogawamachi, Chiyoda-ku,
Tokyo

I-19

Bizcore Shibuya

1-3-15 Shibuya, Shibuya-ku, Tokyo

Ⅱ-1
Ⅱ-3

NHK Nagoya Housou-Center
Building
Osaka Kogin Building(Land with Leasehold Interest)

Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estateAppraisal value
at end of period Net book value(Millions of yen) (Millions of yen)
(Note)
25,70020,492

14,100

9,011

9,450

7,968

30,80026,462

10,1009,166

28,50016,627

1,280

1,028

13,70010,91913,80011,091

8,170

6,448

6,680

6,138

10,300

9,965

6,950

6,652

179,530

141,972

Real estate

6,250

5,346

4-1-1 Koraibashi, Chuo-ku, Osaka-shi, Osaka

Trust beneficiaryinterest in real estate

2,750

1,865

Trust beneficiaryinterest in real estate

5,050

4,895

Trust beneficiaryinterest in real estate

Area I
1-13-3 Higashi-Sakura, Higashi-ku,
Nagoya-shi, Aichi

Ⅱ-4

GRAND FRONT OSAKA(Umekita Plaza·South Building)

4-1 Ohbuka-cho, Kita-ku, Osaka City, Osaka(Umekita Plaza)
4-20 Ohbuka-cho, Kita-ku, Osaka City, Osaka(South Building)

Ⅱ-5

GRAND FRONT OSAKA(North Building)

3-1 Ohbuka-cho, Kita-ku, Osaka City, Osaka

Ⅲ-1

Musashikosugi Tower Place

Ⅲ-2

Kowa Kawasaki Higashiguchi
Building

Area II
1-403 Kosugi-machi, Nakahara-ku,
Kawasaki-shi, Kanagawa
1-53 Nisshin-cho Kawasaki-ku,
Kawasaki-shi, Kanagawa

Ⅲ-3

JEI Hongo Building

2-38-16 Hongo, Bunkyo-ku, Tokyo

Ⅲ-5

Kawasaki Nisshincho Building

7-1 Nisshin-cho, Kawasaki-ku, Kawasaki-shi,
Kanagawa

Ⅲ-7

JEI Ryogoku Building

3-25-5 Ryogoku, Sumida-ku, Tokyo

Ⅲ-9

Kowa Kawasaki Nishiguchi Building

66-2 Horikawa-cho, Saiwai-ku, Kawasaki-shi,
Kanagawa

Ⅲ-10

Pacific Square Sengoku

2-29-24 Hon-Komagome, Bunkyo-ku, Tokyo

Ⅲ-11

Core City Tachikawa

2-37-7 Akebono-cho, Tachikawa-shi, Tokyo
1-1-8 Sakuragi-cho, Naka-ku, Yokohama-shi,
Kanagawa
4-59 Bentendori, Naka-ku, Yokohama-shi,
Kanagawa
Area III
2-2-48 Kata-machi, Tsushima-ku, Osaka-shi,Osaka
14-4 Hacchobori, Naka-ku, Hiroshima-shi,
Hiroshima
1-1-2 Kitananajonishi, Kita-ku, Sapporo-shi,
Hokkaido

Ⅲ-12

Nisseki Yokohama Building

Ⅲ-13

Yokohama Bentendori Dai-ichi
Seimei Building

Ⅳ-2

JEI Kyobashi Building

Ⅳ-3

JEI Hiroshima Hacchobori Building

Ⅳ-4

SE Sapporo Building

Ⅳ-5

Aoba-dori Plaza

3-2-1 Chuo, Aoba-ku, Sendai-shi, Miyagi

Ⅳ-6

Daiwa Minami-morimachi Building

2-6, 2-chome Kita Tenjinbashi, Kita-ku,
Osaka-shi, Osaka

Ⅳ-7

JEI Naha Building

2-8-1 Kumoji, Naha-shi, Okinawa

IV-9

Hiroshima Dai-ichi Seimei OS
Building
Senshin Building

IV-10

Sapporo Otemachi Building

1-2-21 Matoba-cho Minami-ku,
Hiroshima-shi, Hiroshima
1-6-27 Chuo, Aoba-ku, Sendai-shi, Miyagi
4-5-1 Minami Ichijo Nishi, Chuo-ku,
Sapporo-shi, Hokkaido
Area IV
Total

IV-8

Form of ownership

Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Real estate
Trust beneficiaryinterest in real estate

3,820

3,980

17,87016,08722,70012,12810,50010,733

4,620

4,897

4,740

4,187

2,720

2,523

16,00018,796

1,550

1,596

9,940

5,937

33,50021,859719

679

106,989

83,340

4,010

2,688

4,230

2,762

10,200

5,072

4,770

2,269

5,320

4,219

2,110

1,587

3,580

2,770

1,690

1,608

4,564

4,088

40,474
344,863

27,066
268,46715

(Note) Appraisal value at end of period indicates the appraisal value described in the real estate appraisal report prepared by real estateappraisers belonging to Japan Real Estate Institute, Chuo Real Estate Appraisal Co., Ltd., Japan Valuers Co., Ltd., Daiwa Real
Estate Appraisal Co., Ltd. and The Tanizawa Sogo Appraisal Co., Ltd. as of December 31, 2022, pursuant to the articles ofincorporation of JEI and the regulations stipulated by the Investment Trusts Association, Japan. For properties with joint
ownership (including quasi co-ownership of trust beneficiary interest), the figure is obtained by taking the value of the entire
shared real estate and factoring in the percentage of the interest owned by JEI.

16

The leasing business at each office building invested by JEI is as follows:
Property
No.

Property name

I-1

Omori Bellport D

Ⅰ-2

Shiba 2-Chome Building

32nd Period
33rd Period
January 1, 2022, to June 30, 2022
July 1, 2022, to December 31, 2022
Ratio of rental
Ratio of rental
Total number of Occupancy Rental revenue revenue to Total number of Occupancy Rental revenue revenue to
rate
rate
tenants
tenants
total rental
total rental(Interim)(Interim)(At end of period) (At end of period) (Millions of yen)
(At end of period) (At end of period) (Millions of yen)revenues
revenues(Note 1)
(Note 1)
(%)
(%)
(%)
(%)
22
2
(Note 1)

93.8

889

8.7

99.2

374

3.7

4

100.0

244

2.4

12

87.6

559

5.4

2

82.6

319

3.1

24
2
(Note 1)

93.8

809

8.0

100.0

378

3.7

4

100.0

244

2.4

14

83.5

499

4.9

3

91.0

327

3.2

97.5

731

7.2

I-17

JEI Hamamatsucho
Building
AKASAKA
INTERCITY
Daiba Garden City
Building
HAMARIKYUINTERCITY
Shintomicho Building
Kowa Nishi-Shimbashi
Building
Mansard Daikanyama
AKASAKA
INTERCITY AIR
Bizcore Akasaka-mitsuke

I-18

Bizcore Jimbocho

5

I-19

Bizcore Shibuya

－

－

－

－

6

87.5

157

1.6

Area I
NHK Nagoya HousouCenter Building
Osaka Kogin Building(Land with Leasehold
Interest)
GRAND FRONTOSAKA (Umekita
Plaza·South Building)
GRAND FRONTOSAKA(North Building)Area II
Musashikosugi Tower
Place
Kowa Kawasaki
Higashiguchi Building
JEI Hongo Building
Kawasaki Nisshincho
Building
JEI Ryogoku Building
Kowa Kawasaki
Nishiguchi Building
Pacific Square Sengoku

86

92.1

－

－

103

94.1

－

－

39

99.1

355

3.5

41

100.0

363

3.6

1
(Note 1)

100.0

92

0.9

1
(Note 1)

100.0

92

0.9

2
(Note 1)

90.4

(Note 2)

(Note 2)2(Note 1)

91.4

(Note 2)

(Note 2)

5(Note 1)

98.6

(Note 2)

(Note 2)

5(Note 1)

97.7

(Note 2)

(Note 2)

47

98.1

－

－

49

98.5

－

－

45

81.3

533

5.2

47

88.1

645

6.4

1

100.0

(Note 2)

(Note 2)1100.0(Note 2)

(Note 2)5100.0(Note 2)

(Note 2)5100.0(Note 2)

(Note 2)

18

76.9

143

1.4

24

85.2

166

1.6

18

100.0

115

1.1

18

100.0

126

1.2

21

52.5

475

4.6

21

56.0

285

2.8

10

100.0

61

0.6

10

100.0

62

0.6

24

98.4

321

3.1

25

100.0

315

3.1

44

98.4

1,202

11.7

45

99.5

1,198

11.8

13

100.0

41

0.4

13

100.0

42

0.4

Ⅰ-3
Ⅰ-8
I-10
Ⅰ-12
Ⅰ-13
Ⅰ-14
Ⅰ-15
I-16

Ⅱ-1
Ⅱ-3
Ⅱ-4
Ⅱ-5

Ⅲ-1
Ⅲ-2
Ⅲ-3
Ⅲ-5
Ⅲ-7
Ⅲ-9
Ⅲ-10
Ⅲ-11
Ⅲ-12
Ⅲ-13
Ⅳ-2
Ⅳ-3
Ⅳ-4
Ⅳ-5
Ⅳ-6
Ⅳ-7
IV-8
IV-9
IV-10

Core City Tachikawa
Nisseki Yokohama
Building
Yokohama BentendoriDai-ichi Seimei Building
Area III8(Note 1)
11

100.0

74

0.7

10
(Note 1)
10

93.9

49

0.5

5

100.0

(Note 2)

(Note 2)5100.0(Note 2)

(Note 2)7
1(Note 1)
7

78.0

221

2.2

97.4

237

2.3

95.8

(Note 2)

(Note 2)

83.9

(Note 2)

(Note 2)

88.9

148

1.5

10
1
(Note 1)
7

88.9

129

1.3

72.5

(Note 2)

(Note 2)789.4

(Note 2)

(Note 2)

95.7

714

7.0

199

86.1

－

－

209

88.9

－

－

JEI Kyobashi Building
JEI Hiroshima
Hacchobori Building
SE Sapporo Building

22

100.0

180

1.8

22

100.0

189

1.9

41

85.6

154

1.5

44

96.0

138

1.4

43

100.0

428

4.2

43

100.0

441

4.4

Aoba-dori Plaza
Daiwa Minamimorimachi Building
JEI Naha Building
Hiroshima Dai-ichi
Seimei OS Building
Senshin Building
Sapporo Otemachi
Building
Area IV

49

94.4

157

1.5

47

94.4

184

1.8

10

100.0

195

1.9

10

100.0

192

1.9

18

100.0

85

0.8

18

100.0

87

0.9

27

97.2

143

1.4

29

100.0

147

1.5

16

96.2

50

0.5

16

96.2

53

0.5

27

98.5

131

1.3

27

98.5

134

1.3

253

97.1

－

－

256

98.7

－

－

Total

585

90.8

10,267

100.0

617

93.0

10,141100.0

17

(Note 1) Total number of tenants indicates the number of end tenants in principle. When a tenant has multiple tenancies in the same
property, it is counted as one tenant, and when in multiple properties, it is counted as multiple tenants. However, for properties
in which the residential portion or the percentage of the interest owned by JEI is relatively low, the number of tenants indicatesthe number of master lease companies for the property, considering a master lease company as a tenant. In addition, for landwith leasehold interest, the number of tenants is counted as one based on the lease agreement for the leased land.
(Note 2) Not disclosed, as consent for disclosure has not been obtained.

(4) Securities Portfolio
The securities owned by JEI in its portfolio as of December 31, 2022, are as follows:Book value
Name

Asset type

Equity interest inanonymous association
with Akasaka 2-chome
Godo Kaisha as
business operator
Total

Equityinterest inanonymous
association

Quantity

Assessed value (Note 1)

Valuation
gains/losses
Amount(Thousands(Thousandsof yen)of yen)Remarks

Unit priceAmount(Thousandsof yen)Unit price－－

5,241,564－

5,241,564－(Note 2)－－5,241,564－

5,241,564－－(Note 1) The assessed value states the book value.
(Note 2) The asset under management is trust beneficiary interest in ARK Hills Front Tower.

(5) Renewable Power Generation Facility
None(6) Right to Operate Public Facility
None

18

(7) Other Assets
1) Contract amount and fair value of specified transactions and foreign exchange forwards transactions
Fair value
Contract amount (Thousands of yen) (Note 1)
Classification
Type(Thousands of yen)
(Note 2)
Over one year
Interest rate swap
transactions
Over-the-counter
Floating interest rate－
34,640,000
29,370,000
transaction
receivable
Fixed interest rate
payable(Note 1) Contract amount of swap transactions is calculated based on notional principal.
(Note 2) Fair value is omitted for presentation as over-the-counter transactions meet requirements for special accounting under the
Accounting Standard for Financial Instruments.

2) Shares
Name (Note 1)
KMO Corporation

Number ofsharesAcquisition price(Thousands of yen) (Note 4)

Assessed value(Thousands of yen) (Note 5)

Unit price

Unit price833 shares

50

Amount42,06950

Amount42,069Valuation
gains/losses－

Remarks－(Note 1) With the acquisition of GRAND FRONT OSAKA (North Building) (part of trust beneficiary interest in real estate), JEI
purchased 833 common shares of KMO Corporation, an entity that conducts facility management and business development
for Knowledge Capital (Note 2), and acquired the restitution rights of funds (Note 3) of Knowledge Capital’s funds. Moreover,said common shares may not be transferred separately from quasi co-ownership of the trust beneficiary interest in GRANDFRONT OSAKA (North Building).
(Note 2) Knowledge Capital, a center for industry-academia collaboration, is one of the main uses of GRAND FRONT OSAKA (North
Building).
(Note 3) The details of the restitution rights of Knowledge Capital’s funds are recorded below under “3) Securities other than shares”(Note 4) Acquisition price includes the costs of acquisition.
(Note 5) The assessed value of these unlisted shares is stated as the book value.

3) Securities other than shares
Asset type (Note 1)

QuantityBook value (Thousands of yen)
Unit priceAmountAssessed value(Thousands of yen) (Note 2)
Unit priceAmountValuation
gains/losses

Remarks

Restitution rights of
1
－
2,659
－
2,659
－
－
funds
(Note 1) With the acquisition of GRAND FRONT OSAKA (North Building) (part of trust beneficiary interest in real estate), JEI
acquired the restitution rights of funds of Knowledge Capital’s funds. Moreover, said restitution rights may not be transferred
separately from quasi co-ownership of the trust beneficiary interest in GRAND FRONT OSAKA (North Building).
(Note 2) The assessed value of the restitution rights of funds states the book value.

4) Other assets
Asset type (Note 1)

QuantityBook value (Thousands of yen)
Unit priceAmountAssessed value(Thousands of yen) (Note 2)
Unit priceAmountValuation
gains/losses

Remarks

Restitution rights of
－
－
－
－
1
454
454
funds
(Note 1) With the acquisition of GRAND FRONT OSAKA (Umekita Plaza·South Building) and GRAND FRONT OSAKA (North
Building), JEI acquired restitution rights of funds concerning GRAND FRONT OSAKA TMO General Incorporated
Association, which runs businesses related to the revitalization of the area centering on GRAND FRONT OSAKA, theimprovement of the environment and the formation of communities.
(Note 2) The assessed value of the restitution rights of funds states the book value.

(8) Status of JEI’s Properties by Country and Region
None for JEI’s properties are in countries or regions other than Japan.

19

4. Capital Expenditures for Owned Properties(1) Scheduled Capital Expenditures
The following table shows major items of scheduled capital expenditures for repairs and maintenance planned for theproperties owned by JEI as of the end of the 33rd period (ended December 31, 2022). The values below include
portions to be expensed for accounting purposes.
Property nameLocation

PurposeSchedule term

Estimated construction costs(Millions of yen)
Payment for the Total of
Total six months ended advance
December 31, 2022 payment

Musashikosugi Tower
Place

Kawasaki-shi,
Kanagawa

Update of waste
disposal equipment

From September 2022
To March 2023

66

－

－

JEI Hiroshima
Hacchobori Building

Hiroshima-shi,
Hiroshima

Renovation of airconditioning systems(Phase 5)

From January 2023
To June 2023

64

－

－

Daiwa Minamimorimachi Building

Osaka-shi,
Osaka

Update of hot and cold
water generator

From June 2022
To February 2023

55

－

－

Nisseki Yokohama
Building

Yokohama-shi,
Kanagawa

Repair of exterior walls From February 2023
and such (Phase 2)
To June 2023

55

－

－

Shiba 2-Chome Building

Minato-ku,
Tokyo

Maintenance of
mechanical parking
equipment

From June 2023
To June 2023

52

－

－

Musashikosugi Tower
Place

Kawasaki-shi,
Kanagawa

Renovation of airconditioning systems

From May 2023
To May 2023

47

－

－

JEI Naha Building

Naha-shi,
Okinawa

Renovation of
restrooms (Phase 2)

From September 2022
To March 2023

44

－

－

Nisseki Yokohama
Building

Yokohama-shi,
Kanagawa

Update of atrium
blinds (Phase 1)

From February 2023
To June 2023

37

－

－

NHK Nagoya HousouCenter Building

Nagoya-shi,
Aichi

Update of elevators(Phase 1)

From March 2023
To March 2023

34

－

－

Kowa Kawasaki
Higashiguchi Building

Kawasaki-shi,
Kanagawa

Update of lighting in
exclusively-owned
sections (Phase 4)

From January 2023
To June 2023

33

－

－

SE Sapporo Building

Sapporo-shi,
Hokkaido

Update of central
monitoring equipment

From December 2022
To June 2023

30

－

－

Yokohama Bentendori
Yokohama-shi,
Dai-ichi Seimei Building Kanagawa

Update of elevators

From April 2023
To June 2023

27

－

－

Yokohama Bentendori
Yokohama-shi,
Dai-ichi Seimei Building Kanagawa

Update of outdoor-air
processing units

From June 2023
To June 2023

15

－

－

20

(2) Capital Expenditures for the Six Months Ended December 31, 2022
The following table shows constructions conducted by JEI during the period ended December 31, 2022, and expensed
as capital expenditures. Capital expenditures for the period ended December 31, 2022, were 1,188 million yen and,
when combined with repairs and maintenance costs of 137 million yen classified as expenses in the period underreview, the amount of constructions completed totaled 1,325 million yen.
Property nameLocation

PurposeAmount Paid
(Millions of yen)Term

JEI Hiroshima
Hacchobori Building

Hiroshima-shi,
Hiroshima

Renovation of air-conditioning systems(Phase 4)

From September 2022
To November 2022

70

Kowa Nishi-Shimbashi
Building

Minato-ku,
TokyoUpdate of hot and cold water generator

From March 2022
To August 2022

65

Kowa Kawasaki
Higashiguchi Building

Kawasaki-shi,
Kanagawa

Update of emergency elevators

From May 2022
To August 2022

63

Kowa Kawasaki
Higashiguchi Building

Kawasaki-shi,
Kanagawa

Renovation of seals around exterior walls(Phase 3)

From July 2022
To October 2022

57

JEI Naha Building

Naha-shi,
Okinawa

Renovation of restrooms (Phase 1)

From July 2022
To December 2022

51

Shiba 2-Chome Building

Minato-ku,
TokyoUpdate of central monitoring equipment

From July 2022
To December 2022

41

NHK Nagoya HousouCenter Building

Nagoya-shi,
Aichi

Repair of heat storage water tank

From February 2022
To December 2022

36

Kawasaki Nisshincho
Building

Kawasaki-shi,
Kanagawa

Renovation of seals around exterior walls(Phase 2)

From July 2022
To November 2022

35

Kowa Kawasaki
Higashiguchi Building

Kawasaki-shi,
Kanagawa

Update of lighting in exclusively-owned
sections (Phase 3)

To December 2022

Daiwa Minamimorimachi Building

Osaka-shi,
Osaka

Update of elevators

JEI Naha Building

Naha-shi,
Okinawa

Replacement of mechanical parking lot parts

From July 2022
From September 2022

To December 2022
From December 2022
To December 2022

Other constructions

34
34
22
674

Total

1,188

(3) Reserved Funds for Long-Term Repairs and Maintenance Plans
Based on the long-term repairs and maintenance plans developed for each property, JEI has set aside the following
cash reserves, derived from depreciation and other excess cash flows, in order to fund large-scale repairs, maintenanceand other construction.
(Unit: Millions of yen)Item29th Period
30th Period
31st Period
32nd Period
33rd Period
July 1, 2020, to January 1, 2021, to July 1, 2021, to January 1, 2022, to July 1, 2022, toDecember 31, 2020 June 30, 2021 December 31, 2021 June 30, 2022 December 31, 2022

Reserved funds at
beginning of period

473

250

380

298

555

Increase

260

963

1,217

1,123

620

Decrease

484

834

1,299

866

729

Reserved funds at theend of period

250

380

298

555

447

21

5. Expenses and Liabilities(1) Expenses Associated with Asset Management(Unit: Thousands of yen)Account

32nd Period
January 1, 2022, to June 30, 2022

33rd Period
July 1, 2022, to December 31, 2022(a) Asset management fees

467,085444,830(b) Custodian fees

21,877

21,700(c) Administrative service fees

40,36040,594(d) Compensation for directors

5,400

5,400

(e) Accounting auditor fees

11,00011,000(f) Other

108,215

99,114653,938

622,639

Total(2) Borrowings
Borrowings by each financing source as of the end of the 33rd period (ended December 31, 2022) are as follows:
Classification

Averageinterest rate(%)
(Thousands of yen) (Thousands of yen)
(Note 1)
Balance at
beginning of
periodBalance at
end ofperiod－3,000,000－

3,000,000

2,000,000－

500,000－

500,000－

1,950,000－

2,000,000－

1,200,000－

600,000－

2,000,000

2,000,000

3,000,000

3,000,000－

420,000

MUFG Bank, Ltd.

－

250,000

Sumitomo Mitsui Banking
Corporation－

140,000－

1,560,000－

1,500,000

Resona Bank, Ltd.

－

500,000

Aozora Bank, Ltd.

－

750,000

The Bank of Fukuoka, Ltd.

－

150,000

LenderShort-term
Mizuho Bank, Ltd.
loans

Drawdown
dateAugust 1,
2022

SubtotalMizuho Bank, Ltd.
Sompo Japan Insurance Inc.
Tokio Marine & Nichido Fire
Insurance Co., Ltd.

September 30,
2020
November 30,
2017

Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.

December 29,
2014

Resona Bank, Ltd.
Development Bank of Japan Inc.
Long-termloans due The Dai-ichi Life Insurance
within one Company Limited
year
Mizuho Bank, Ltd.

Mizuho Trust & Banking Co., Ltd.
The Norinchukin Bank

June 30,
2015
June 29,2018

November 30,
2015

Maturitydate

0.26659

June 30,2023

0.27756

September 30,
2022

Repayment
methodUse

Lump- Purchase ofsum
real estate

Remarks

Unsecuredand nonguaranteed

0.35000 November 30,(Note 2)2022

0.93625(Note 2)

December 30,
2022

1.20250(Note 2)0.46000(Note 2)June 30,
2023

Lumpsum

Repayment Unsecuredof existingand nonborrowing guaranteed

0.84375 November 30,(Note 2)2023

22

Classification

Averageinterest rate(%)
(Thousands of yen) (Thousands of yen)
(Note 1)
Balance at
beginning of
periodBalance at
end ofperiod－1,000,000－

3,500,000－

500,000

Aozora Bank, Ltd.

－

500,000

Subtotal

13,750,000

15,770,000

Mizuho Bank, Ltd.

420,000－

MUFG Bank, Ltd.

250,000－

Sumitomo Mitsui Banking
Corporation

140,000－

1,560,000－

1,500,000－

Resona Bank, Ltd.

500,000－

Aozora Bank, Ltd.

750,000－

The Bank of Fukuoka, Ltd.

150,000－

MUFG Bank, Ltd.

1,000,000－

Sumitomo Mitsui Banking
Corporation

3,500,000－

500,000－

500,000－

3,500,000

3,500,000

Mizuho Bank, Ltd.

870,000

870,000

MUFG Bank, Ltd.

590,000

590,000

350,000

350,000

1,560,000

1,560,000

Resona Bank, Ltd.

1,000,000

1,000,000

Aozora Bank, Ltd.

750,000

750,000

The Bank of Fukuoka, Ltd.

150,000

150,000

1,000,000

1,000,000

0.42000(Note 2)－2,000,000

0.26364Mizuho Bank, Ltd.

3,700,000

3,700,000

MUFG Bank, Ltd.

1,000,000

1,000,000

400,000

400,000

1,000,000

1,000,000

1,000,000

1,000,000

The Bank of Fukuoka, Ltd.

700,000

700,000

Resona Bank, Ltd.

200,000

200,000

Mizuho Bank, Ltd.

850,000

850,000

850,000

850,000

600,000

600,000

1,450,000

1,450,000

LenderDrawdown
date

MUFG Bank, Ltd.
Long-term Sumitomo Mitsui Banking
loans due Corporation
within one
Resona Bank, Ltd.
year

Mizuho Trust & Banking Co., Ltd.
The Norinchukin Bank

Resona Bank, Ltd.

November 30,
2017

November 30,
2015

November 30,
2017

Aozora Bank, Ltd.
Development Bank of Japan Inc.

Sumitomo Mitsui Banking
Corporation
Long-term
Mizuho Trust & Banking Co., Ltd.
loans

Nippon Life Insurance Company
Mizuho Bank, Ltd.

November 30,
2015

December 12,
2019
September 30,
2022

Sumitomo Mitsui Banking
Corporation
The Norinchukin Bank

June 29,2018

Shinkin Central BankMUFG Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.
The Norinchukin Bank

November 1,
2018

Maturity
date

Repayment
method

0.64801 November 30, Lump(Note 2)
2023
sum

Use

Remarks

Repayment Unsecuredof existingand nonborrowing guaranteed

0.84375(Note 2)
November 30,
2023

0.64801(Note 2)0.68431(Note 2)

May 31,2024

0.96275 November 30, Lumpsum(Note 2)
2024

Repayment Unsecuredof existingand nonborrowing guaranteed

December 12,
2024
March 31,2025

0.67400(Note 2)June 30,2025

0.70600(Note 2)

November 1,
2025

Asset Management Report for the 33rd Period (Semi-Annual Report for the 33rd Period)

23

Classification

LenderDrawdown
date

Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank,
LimitedNovember 29,
2021

Averageinterest rate(%)
(Thousands of yen) (Thousands of yen)
(Note 1)
Balance at
beginning of
periodBalance at
end ofperiod520,000

520,000

540,000

540,000
0.39310

1,080,000

1,080,000

1,620,000

1,620,000

Mizuho Bank, Ltd.

2,200,000

2,200,000

MUFG Bank, Ltd.

1,750,000

1,750,000

1,100,000

1,100,000

The Norinchukin Bank

850,000

850,000

Aozora Bank, Ltd.

500,000

500,000

Mizuho Bank, Ltd.

850,000

850,000

850,000

850,000

600,000

600,000

1,450,000

1,450,000

1,300,000

1,300,000

1,300,000

1,300,000

1,000,000

1,000,000

700,000

700,000

2,000,000

2,000,000

1,000,000

1,000,000－

500,000－

500,000

Development Bank of Japan Inc.

2,000,000

2,000,000

Mizuho Bank, Ltd.

1,175,000

1,175,000

1,175,000

1,175,000

1,000,000

1,000,000

Mizuho Trust & Banking Co., Ltd.

1,087,500

1,087,500

The Norinchukin Bank

1,162,500

1,162,500

The Dai-ichi Life Insurance
Company Limited

1,000,000

1,000,000

2,000,000

2,000,000

1,950,000

1,950,000

2,000,000

2,000,000

1,200,000

1,200,000

600,000

600,000

Sumitomo Mitsui Banking
Corporation

MUFG Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.

September 29,
2017

March 8,2019

The Norinchukin Bank
Development Bank of Japan Inc.

September 29,
2017

Mizuho Bank, Ltd.
MUFG Bank, Ltd.

June 29,2018

Long-term Sumitomo Mitsui Banking
loans
Corporation
Sompo Japan Insurance Inc.
Tokio Marine & Nichido Fire
Insurance Co., Ltd.
Sompo Japan Insurance Inc.
Tokio Marine & Nichido Fire
Insurance Co., Ltd.

January 31,
2022

November 30,
2022

MUFG Bank, Ltd.
Sumitomo Mitsui Banking
Corporation

Development Bank of Japan Inc.

January 31,
2020

June 30,
2021

Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.
Resona Bank, Ltd.

December 30,
2021

Maturity
date

Repayment
methodUse

Remarks

November 29,
2025

0.83441(Note 2)

March 31,2026

0.57100(Note 2)0.83071 September 30,(Note 2)2026

0.79100(Note 2)

December 30,
2026
Lumpsum

0.28000(Note 2)

Repayment Unsecuredof existingand nonborrowing guaranteed

January 31,
2027

0.34000 November 30,(Note 2)2027
0.68778(Note 2)0.71200(Note 2)0.77000(Note 2)
0.55801(Note 2)0.49544

July 31,2028

January 31,
2029

December 30,
2029

December 30,
2029

Asset Management Report for the 33rd Period (Semi-Annual Report for the 33rd Period)

24Classification

Averageinterest rate(%)
(Thousands of yen) (Thousands of yen)
(Note 1)

Drawdown
dateLenderBalance at
beginning of
periodBalance at
end ofperiod－1,950,000－

2,000,000

Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Long-termloans

Mizuho Trust & Banking Co., Ltd.

December 30,
2022

0.43818－

1,200,000－

600,000

2,000,000

2,000,000

2,000,000

2,000,000

Subtotal

73,850,000

71,830,000

Total

87,600,000

90,600,000

Resona Bank, Ltd.
The Dai-ichi Life Insurance
Company Limited
Development Bank of Japan Inc.

June 30,2021
June 30,
2022

Maturity
date

Repayment
methodJanuary 31,
2030
Lumpsum

0.65000(Note 2)
1.08125(Note 2)Use

Remarks

Repayment Unsecuredof existingand nonborrowing guaranteed

June 28,2030
June 30,2031(Note 1) Average interest rate is calculated by applying a weighted average to the loan balance during the period. Borrowings hedged
by interest rate swaps to avoid interest rate fluctuation risk are calculated by applying a weighted average rate in considerationof the effect of the interest rate swaps.
(Note 2) Loans are fixed-rate loans (including loans with fixed-rate interest using interest rate swaps).

(3) Investment Corporation Bonds
The outstanding investment corporation bonds issued by JEI as of December 31, 2022, are as follows:
Classification

Unsecured investment corporation bonds

Issue

Issuance
date(Thousands of yen)

Balance at end ofInterest rate
period(%)

Maturity date(Thousands of yen)

Repayment
methodUse

7th series unsecured
investment corporation bonds

March 10,2014

8,000,000

8,000,000

1.13000

March 11,2024

(Note 1)

8th series unsecured
investment corporation bonds

September 9,2015

5,000,000

5,000,000

1.03000

September 9,2025(Note 2)

9th series unsecured
investment corporation bonds

October 27,
2016

2,000,000

2,000,000

0.45000

October 27,
2026(Note 3)10th series unsecured
investment corporation bonds

December 20,
2016

2,000,000

2,000,000

0.39000

December 20,
2023

11th series unsecured
investment corporation bonds

April 25,2017

7,000,000

7,000,000

0.65000

April 23,2027

2,000,000

2,000,000

0.24000

April 20,2023

2,000,000

2,000,000

0.95000

April 20,2033

1,000,000

1,000,000

1.07000

September 9,2039

29,000,000

29,000,000

12th series unsecured
investment corporation bonds
13th series unsecured
investment corporation bonds
15th series unsecured
investment corporation bonds

April 20,2018
September 10,
2019

Subtotal
Green bonds

Balance at
beginning of
period14th series unsecured
investment corporation bonds

August 10,
2018

4,000,000

4,000,000

0.63000

August 10,
2028

16th series unsecured
investment corporation bonds

October 29,
2020

5,000,000

5,000,000

0.75000

October 29,
2035

Subtotal
Total(Note 1)
(Note 2)
(Note 3)(Note 4)9,000,000

9,000,000

38,000,000

38,000,000

Remarks

Lump-sum (Note 2) (Note 4)(Note 3)(Note 2)Lump-sum (Note 2) (Note 4)

The funds were used for redeeming existing investment corporation bonds and repaying existing borrowings.
The funds were used for repaying existing borrowings.
The funds were used for redeeming existing investment corporation bonds.
The bonds are with special pari passu conditions among specified investment corporation bonds.

(4) Short-Term Investment Corporation Bonds
None(5) Subscription Rights for New Investment Units
None
Asset Management Report for the 33rd Period (Semi-Annual Report for the 33rd Period)25

6. Condition of Investment Transactions(1) Transactions of Property, Asset-Backed Securities, Etc. and Infrastructure Assets, Etc.,
and Infrastructure-Related Assets(Millions of yen)
Name ofreal estate property
or asset-backed
securities, etc.

Type of asset

Acquisition

Transfer

Acquisitiondate

Acquisition
price

Trust beneficiary
Bizcore Shibuya
interest in real estate

August 1,
2022

6,640

－

－

－

－

Shintomicho
Trust beneficiary
Building
interest in real estate (40.0% quasi coownership interest)－－

July 22,
2022

1,240

689

530

Total

－

6,640

－

1,240

689

530

Transfer
date(Note 1)

Transfer
price

Net book
value

Gain (loss)
on transfer(Note 1)

(Note 2)

(Note 3)(Note 1) The acquisition/transfer price indicates the amount excluding related expenses (brokerage fee, taxes, etc.) required for theacquisition/transfer of the real estate property or asset-backed securities, etc., and is the purchase amount of the real estate
property or asset-backed securities, etc. stated in the purchase agreement.
(Note 2) Net book value at the time of transfer is indicated.
(Note 3) Gain (loss) on transfer indicates the amount obtained by deducting net book value and other transfer expenses from transfer
price.

(2) Transactions of Other Assets
None(3) Appraisal and Research for Specified Asset Value, Etc.
1) Real estate, etc.
Acquisition
Name of property
or transfer

Type ofasset

Acquisition/transfer date

Acquisition/transfer price(Millions of yen)
(Note 1)Trust
beneficiaryinterest inreal estate

August 1,
2022

Shintomicho
Trust
Building
beneficiary(40.0% quasi cointerest inownership interest) real estate

July 22,2022

Acquisition Bizcore Shibuya

Transfer

6,640

1,240

Appraisal
value

Appraiser(Millions of yen)

The Tanizawa
6,950 Sogo Appraisal
Co., Ltd.
Chuo
836 Real Estate(Note 2) Appraisal
Co., Ltd.

Appraisal
date

July 1,2022

February 1,
2022(Note 1) The acquisition/transfer price is the purchase price amount of the property stated in the purchase agreement (excluding
the amount equivalent to consumption taxes, etc.).
(Note 2) The appraisal value is the amount obtained by multiplying the appraisal value for the entire property by 40.0%, which is
the ratio of quasi co-ownership of the trust beneficiary interest subject to transfer.

2) Others
None

Asset Management Report for the 33rd Period (Semi-Annual Report for the 33rd Period)

26

(4) Transactions with Interested Parties
1) Transactions
Acquisition price or disposal amountClassification

Acquisition priceTotal amount

Disposal amount－ million yen

6,640 million yen

Breakdown for transactions with interested parties
Nippon Steel Kowa Real Estate Co., Ltd.
(Note)

6,640 million yen(－%)－ million yen(100.0%)－ million yen
(－%)
Total
6,640 million yen(100.0%)Interested parties refers to the interested parties of the asset management company, which has concluded an asset managementagreement with JEI as prescribed in Article 123 of the Investment Trust Enforcement Order and Section 26, Paragraph 1, Item
27 of the Regulations for Management Reports Concerning Investment Trusts and Investment Corporations of the Investment
Trusts Association, Japan.

2) Amounts of fees paid and other expenses(Unit: Thousands of yen)
Breakdown of transactions with interested parties
Classification

Total amount paid (A)B/APaid to

Property management
costs and fees

Property transaction
brokerage fees
Total

Amount paid (B)The Dai-ichi Building Co., Ltd.

517,550

32.7%

Nippon Steel Kowa Real EstateCo., Ltd.

508,747

32.2%

Sohgo Housing Co., Ltd.

101,907

6.4%

Akasaka Intercity Management
Co., Ltd.

21,471

1.4%

Nippon Steel Kowa Real Estate
18,600 Co., Ltd.

18,600100.0%

1,168,277

73.0%

1,580,846

1,599,446–(Note 1) Figures indicate fees paid to interested parties of the asset management company with whom JEI had direct transactions during
the six months ended December 31, 2022.
(Note 2) Other than the Total amount paid indicated above, the following payments were made for maintenance and repair work, etc.
which were ordered to interested parties during the period.
Kowa Real Estate Facilities Co., Ltd.
356,774 thousand yen
The Dai-ichi Building Co., Ltd.
16,752 thousand yen
Nippon Steel Kowa Real Estate Co., Ltd.
13,731 thousand yen(5) Transactions with Asset Management Company Concerning the Additional Businessesof the Asset Management Company
The Asset Management Company (Japan Excellent Asset Management Co., Ltd.) does not conduct any additional
business falling under the categories of the type I financial instruments business, type II financial instruments
business, building lots and buildings transaction business, or real estate specified joint enterprise, and had no
applicable transactions.

Asset Management Report for the 33rd Period (Semi-Annual Report for the 33rd Period)27

7. Accounting(1) Assets, Liabilities, Principal, and Profit and Loss
For assets, liabilities, principal, and profit and loss, please refer to the attached Balance Sheets, Statements ofIncome and Retained Earnings, Statements of Changes in Net Assets, Notes to Financial Statements andDistribution Information.
The data for the previous period in Balance Sheets, Statements of Income and Retained Earnings, Statements of
Changes in Net Assets, Notes to Financial Statements and Distribution Information are for reference, and not subject
to the audit by a financial auditor pursuant to the provisions of Article 130 of the Investment Trust Law in the period
under review.
In addition, Statements of Cash Flows is not subject to the audit by a financial auditor pursuant to the provisions ofArticle 130 of the Investment Trust Law and has thus not been audited by a financial auditor (accounting auditor).

(2) Change in Depreciation Calculation Method
No changes were made during the period.

(3) Change in Asset and Infrastructure Assets, Etc. Valuation Method
No changes were made during the period

8. Others(1) Notice1) General unitholders’ meeting
There were no applicable items during the period.
2) Board of directors’ meeting
There were no applicable items during the period.

(2) Disclosure of Investment Trust Beneficiary Certificates Incorporated by JEIThere were no applicable items during the period.

(3) Disclosure of Juridical Persons Owning Overseas Real Estate and Status of the Owned
Real Estate
There were no applicable items during the period.

(4) Other
Unless otherwise stated, monetary amounts have been rounded down and percentage figures have been rounded
off to the nearest indicated unit in this report.

Asset Management Report for the 33rd Period (Semi-Annual Report for the 33rd Period)28

Financial Statements
Japan Excellent, Inc.
For the six-month periods ended
December 31, 2022 and June 30, 2022with Independent Auditor’s Report29

Japan Excellent, Inc.
Balance Sheets
As of December 31, 2022 and June 30, 2022

As of
As of
December 31, 2022
June 30, 2022
(Thousands of yen)
AssetsCurrent assets:
Cash and cash equivalents including trust accounts(Note 4)
Rental receivables
Prepaid expenses and other current assets
Total current assets

17,839,723
423,472
398,862
18,662,058

20,203,741
310,786
333,753
20,848,281

Property and equipment (Note 7) :Buildings and building improvements
Machinery and equipment
Furniture and fixtures
Land
Construction in progress
Buildings and building improvements for trust accounts
Machinery and equipment for trust accounts
Furniture and fixtures for trust accounts
Land for trust accounts
Construction in progress for trust accounts
Less: accumulated depreciation
Net property and equipment

7,996,956
6,253
60,452
10,609,617
7,891
120,488,936
1,297,180
309,970
160,156,315
85,232(41,740,127)
259,278,678

7,890,044
6,253
60,452
10,609,617
5,560
118,264,650
1,233,150
306,734
155,514,243
51,656(39,912,836)
254,029,527

Intangible assets:
Leasehold rights
Leasehold rights for trust accounts
Software
Other intangible assets for trust accounts
Total intangible assets

1,721,607
7,382,016
2,933
85,456
9,192,013

1,721,607
7,382,016
4,033
61,0859,168,743

Investments and other assets:
Investment securities
Deferred tax assets
Security deposits
Long-term prepaid expenses
Other assets
Total investments and other assets

5,286,294
15
19,029847,050
1,139,775
7,292,165

5,286,294
6
19,029834,138
1,116,334
7,255,803

115,521
115,521294,540,438

128,378
128,378
291,430,734

Deferred assets:
Investment corporation bond issuance costs
Total deferred assets
Total assets

The accompanying notes are an integral part of these financial statements.
30

As of
As ofDecember 31, 2022
June 30, 2022
(Thousands of yen)
Liabilities
Current liabilities:
Accounts payable – trade
Short-term loans (Notes 5 and 8)
Investment corporation bonds due within one year
(Notes 5 and 9)
Long-term debt due within one year
(Notes 5 and 8)
Accounts payable – otherAccrued expenses
Accrued corporation taxes
Accrued consumption taxes
Advances received
Total current liabilities
Long-term liabilities:
Investment corporation bonds (Notes 5 and 9)
Long-term debt (Notes 5 and 8)
Security deposits from tenants
Security deposits from tenants for trust accounts
Total long-term liabilities
Total liabilities
Net assets (Note 10)
Unitholders’ equity:
Unitholders’ capital
Deduction from unitholders’ capital
Unitholders’ capital, net
Surplus
Voluntary reserve
Reserve for advanced depreciation of non-current
assetsRetained earnings
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets

1,356,841
3,000,000

1,127,498－

4,000,000

2,000,000

15,770,000
439,168
155,647679－
45,412
24,767,749

13,750,000
471,107
152,137714
321,024
59,892
17,882,374

34,000,000
71,830,000
1,239,716
12,484,549
119,554,265
144,322,015

36,000,000
73,850,000
1,233,667
12,003,193
123,086,860
140,969,234

147,907,649(1,999,960)
145,907,689

147,907,649(1,999,960)
145,907,689

808,535
3,502,198
4,310,733
150,218,422
150,218,422
294,540,438

451,790
4,102,019
4,553,810
150,461,499
150,461,499
291,430,734

The accompanying notes are an integral part of these financial statements.
31

Japan Excellent, Inc.
Statements of Income and Retained Earnings
For the periods from July 1, 2022 to December 31, 2022
and from January 1, 2022 to June 30, 2022

For the period
For the period
from July 1, 2022 tofrom January 1, 2022
December 31, 2022
to June 30, 2022
(Thousands of yen)
Revenues (Note 13) :Rental business revenues
Other
Gain on sales of real estate properties (Note 14)
Dividend income from investment in anonymous association
Total revenues
Operating expenses (Note 13) :Property operating expenses
Asset management fees
Custodian fees
Administrative service fees
Compensation for directors
Other
Total operating expenses
Operating income
Other income:Interest income
Other
Other expenses:
Interest expense
Loan arrangement fees
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance costs
Other
Ordinary income
Income before income taxes
Income taxes (Note 12) :Current
Deferred
Net income
Retained earnings at beginning of period
Retained earnings at end of period

9,271,175
869,919
530,613
28,214
10,699,922

9,566,772
700,680
797,682－
11,065,136

5,944,541
444,830
21,70040,594
5,400
110,114
6,567,180
4,132,741

5,699,906
467,085
21,87740,3605,400
119,215
6,353,845
4,711,290

89
229

119
384

309,718
155,105
151,969
12,856286
3,503,124
3,503,124

302,452
137,555
149,430
12,856
7,092
4,102,406
4,102,406

936(9)
3,502,198－
3,502,198

732(3)
4,101,677
341
4,102,019

The accompanying notes are an integral part of these financial statements.
32

Japan Excellent, Inc.
Statements of Changes in Net Assets
For the periods from July 1, 2022 to December 31, 2022
and from January 1, 2022 to June 30, 2022

Balance as of June 30,
2022
Changes during
the fiscal period:
Provision ofreserve for
reduction entry
Distributions fromretained earnings
Net income
Total changes during
the fiscal period
Balance as ofDecember 31, 2022

Balance as ofDecember 31, 2021
Changes during
the fiscal period:
Distributions fromretained earnings
Net income
Acquisition of treasury
investment units
Cancellation oftreasury investment
units
Total changes during
the fiscal period
Balance as of June 30,
2022

For the period from July 1, 2022 to December 31,2022
Net assets
Unitholders’ equity
Surplus
Voluntary
reserve
Reserve for
Deduction
advancedfromdepreciation ofunitholders’ Unitholders’non-current
Retained
capitalcapital, net
assetsearnings
Total surplus(Thousands of yen)Totalunitholders’equityTotal net
assets4,553,810

150,461,499

150,461,499(356,744)

－

－

－

－

(3,745,274)(3,745,274)(3,745,274)(3,745,274)－－

3,502,198

3,502,198

3,502,198

3,502,198－－

356,744(599,821)(243,076)(243,076)(243,076)(1,999,960)

145,907,689

808,535

3,502,198

4,310,733

150,218,422

150,218,422

Treasury
investment
units

Total
unitholders’equityTotal net
assetsNumber ofunits in issue

Unitholders’capital1,337,598

147,907,649(1,999,960)

145,907,689

451,790

4,102,019

－

－

－

－

356,744

－

－

－

－

－

－

－

－

－

1,337,598

147,907,649

For the period from January 1, 2022 to June 30,2022
Net assets
Unitholders’ equity
Surplus
Voluntary
reserve
Reserve foradvanceddepreciation ofUnitholders’non-current
Retained
capital, net
assetsearnings
Total surplus(Thousands of yen)

Number ofunits in issue

Unitholders’capitalDeduction
fromunitholders’capital1,353,000

147,907,649－

147,907,649

451,790

3,846,920

4,298,711－

152,206,360

152,206,360

－

－

－

－

－

(3,846,579)(3,846,579)－(3,846,579)(3,846,579)

－

－

－

－

－

4,101,677

4,101,677－

4,101,677

4,101,677

－

－

－

－

－

－

－

(1,990,960)(1,990,960)(1,990,960)(15,402)－(1,999,960)(1,999,960)

－

－

－

1,990,960－－(15,402)－(1,999,960)(1,999,960)－

255,098

255,098－(1,744,861)(1,744,861)

1,337,598

147,907,649(1,999,960)

145,907,689

451,790

4,102,019

4,553,810－

150,461,499

150,461,499

The accompanying notes are an integral part of these financial statements.
33

Japan Excellent, Inc.
Statements of Cash Flows
For the periods from July 1, 2022 to December 31, 2022
and from January 1, 2022 to June 30, 2022
For the period
For the period
from July 1, 2022 tofrom January 1, 2022
December 31, 2022
to June 30, 2022
(Thousands of yen)
Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of investment corporation bond issuance costs
Interest income
Interest expense
Decrease (increase) in rental receivables
Decrease (increase) in consumption taxes refundable
Decrease (increase) in prepaid expense
Increase (decrease) in accounts payable – trade
Increase (decrease) in accounts payable – other
Increase (decrease) in unpaid consumption taxes
Increase (decrease) in advances received
Decrease (increase) in long-term prepaid expenses
Decrease in property and equipment for trust accounts due to sale
Decrease in property and intangible assets for trust accounts due
to saleOther, net
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchases of investment securities
Purchases of property and equipment
Purchases of property and equipment for trust accounts
Purchases of intangible assets for trust accounts
Proceeds from security deposits from tenants
Payments for security deposits to tenants
Proceeds from security deposits in trust accounts from tenants
Payments for security deposits in trust accounts to tenants
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from short-term loans
Proceeds from long-term debt
Repayment for long-term debt
Payments for acquisition of treasury investment units
Distributions to unitholders
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 (Note 4)

3,503,124
1,932,841
12,856(89)
461,688(112,685)(94,779)
31,364
194,190(30,920)(321,024)(14,479)(12,911)
689,433

4,102,406
1,938,149
12,856(119)451,882(489)－(55,235)(69,921)
16,047
19,037
19,21826,5394,820,295－(28,163)
6,210,445
89(458,178)(714)
5,751,642

309
18,68911,299,667
119(454,792)(638)
10,844,356(1,422)(74,957)(7,782,045)－
24,980(18,930)
1,434,979(953,623)(7,371,020)(5,239,163)(122,579)(1,560,737)(61,394)
72,600(24,204)
645,479(1,058,052)(7,348,050)

3,000,000
8,750,000(8,750,000)－(3,744,640)(744,640)(2,364,018)
20,203,741
17,839,723－
5,000,000(5,000,000)(1,999,960)(3,846,183)(5,846,144)(2,349,838)
22,553,580
20,203,741

The accompanying notes are an integral part of these financial statements.
34

Japan Excellent, Inc.
Notes to Financial Statements
For the periods from July 1, 2022 to December 31, 2022
and from January 1, 2022 to June 30, 2022

1.

Organization

Japan Excellent, Inc. (hereinafter, “JEI”), established on February 20, 2006 under the Law
Concerning Investment Trusts and Investment Corporations of Japan (the “Investment TrustLaw”), is a real estate investment corporation which primarily invests in office buildings.
JEI is externally managed by a licensed asset management company, Japan Excellent AssetManagement (“JEAM”). JEAM was originally owned 45% by NIPPON STEEL KOWA REALESTATE CO., LTD., 20% by The Dai-ichi Life Insurance Company, Limited, 15% by Sekisui
House, Co., LTD., and 20% by other corporations. Due to the transfer of ownership by Sekisui
House, Co., LTD., on May 12, 2014, ownership interests of 9% and 6% were each acquired by
NIPPON STEEL KOWA REAL ESTATE CO., LTD., and The Dai-ichi Life Insurance
Company, Limited, respectively.
JEI was listed on the Tokyo Stock Exchange on June 27, 2006.
As of December 31, 2022, JEI held 36 properties with 337,388.63 square meters of total
leasable space and had leases with 617 tenants excluding residential tenants.
2.

Basis of Presentation

JEI maintains its accounting records and prepares its financial statements in accordance withaccounting principles generally accepted in Japan (“Japanese GAAP”), including provisions set
forth in the Investment Trust Law, the Corporation Law of Japan, the Financial Instruments andExchange Law of Japan and related regulations, which are different in certain respects as to theapplication and disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the financial statements of JEI,
which were prepared in accordance with Japanese GAAP and presented in the securities reportof JEI filed with the Kanto Local Finance Bureau. In preparing the accompanying financial
statements, certain reclassifications and modifications have been made for the convenience ofreaders outside Japan. In addition, the notes to the financial statements include information thatmight not be required under Japanese GAAP but is presented here in as additional information.
The amounts have been rounded down to the nearest thousand yen in the accompanying
financial statements in accordance with the financial statements originally prepared in Japaneseand filed with the regulatory authorities in Japan.

35

3.

Summary of Significant Accounting Policies

Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks and short-term
investments which are highly liquid, readily convertible into cash with an insignificant risk ofprice fluctuation and with an original maturity of three months or less.
Investment securities
Available-for-sale securities without market value are stated at cost determined by the moving
average method. For ownership interests in an anonymous association, JEI adopts the methodof factoring in the net amount of anonymous association income (loss) in proportion to its
ownership interests.
Property and equipment including trust accounts
Depreciation is computed by the straight-line method over the estimated useful lives of therespective assets as follows:
Buildings and building improvements
Machinery and equipment
Furniture and fixtures

2 – 62 years
6 – 16 years
3 – 15 years

Intangible assets
Depreciation is computed by the straight-line method over the estimated useful lives of therespective assets as follows:
Software5 years

Deferred assets
Investment corporation bond issuance costs are amortized using the straight-line method over
the amortization periods.
Revenue recognition
The content of main performance obligations related to revenue arising from contracts withcustomers of the Company and the normal timing for satisfying such performance obligations(the normal timing for recognizing revenue) are as follows:・Sale of real estate, etc.
Sale of real estate properties: The Company recognizes revenue from the sale of real estate
properties when the purchaser, as the customer, obtains control of the real estate property byfulfilling the delivery obligations stipulated in the contract for the sale of real estate property.

36

3. Summary of Significant Accounting Policies (continued)
・Utilities income
Utilities income: The Company recognizes utilities income based on the supply of electricity,water, etc. to the lessee as the customer, in accordance with the terms of the real estate lease
contract and related agreements. Of utilities income, in the case that the Company determines
it is an agent for utilities income, the utilities income is recognized as income at the net amountreceived as charges for electricity, gas, etc. supplied by other parties, less the amount paid tosuch other parties.
Income taxes
Income taxes are accounted for on the basis of taxable income for financial statement purposes.
The asset and liability method is used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying amounts andthe tax bases of assets and liabilities.
Consumption taxes
Consumption taxes received and paid are not included in the accompanying statements ofincome and retained earnings. Consumption tax related to properties, which has not been
deducted, is included in the cost of the properties.
Property-related taxes
Principally, property-related taxes including property taxes, urban planning taxes anddepreciable property taxes are imposed on a calendar-year basis and are expensed as property
and other taxes (refer to Note 13).
JEI capitalizes the property-related taxes allocated to the sellers of properties to JEI at the timeof acquisition of such properties including trust accounts.
The capitalized amount for the period from July 1, 2022 to December 31, 2022 was ¥10,572
thousand.
The capitalized amount for the period from January 1, 2022 to June 30, 2022 was ¥0.
Derivatives and hedge accounting
JEI utilizes interest-rate swap agreements as derivative financial instruments solely for the
purpose of hedging its exposure against fluctuation risk in interest rates. JEI has therefore
entered into certain interest-rate swap contracts in order to hedge the risk of variable rates for
its long-term debt obligations.
Each corresponding interest-rate swap is not required to be re-measured to fair value, because
it meets the criteria for the special hedge accounting treatment under Japanese GAAP, which
JEI applies to each interest-rate swap agreement.
Under this special hedge accounting treatment, the differentials paid or received under the swap
agreements are recognized and included in interest expense of the hedged loans, and theinterest-rate swaps are not required to be measured at fair value separately. For interest-rate
swaps that meet the specific criteria for the special accounting treatment, assessments of hedge
effectiveness are not performed.

37

3. Summary of Significant Accounting Policies (continued)
Properties in trust accounts
All assets and liabilities held in trust, for which real estate in possession of JEI was entrusted,
and all earnings and expenses resulting from such trust, are properly reflected in theaccompanying balance sheets and statements of income and retained earnings, respectively.
4.

Cash and Cash Equivalents

Cash and cash equivalents including trust accounts in the accompanying balance sheets andcash and cash equivalents in the accompanying statements of cash flows at December 31, 2022
and June 30, 2022 consisted of the following:

Cash and cash deposits
Cash and deposits in trust
Cash and cash equivalents including trust accounts

5.

As of
As of
December 31, 2022
June 30, 2022
(Thousands of yen)
6,392,183
9,139,249
11,447,539
11,064,492
17,839,723
20,203,741

Financial Instruments

For the periods from July 1, 2022 to December 31, 2022 and from January 1, 2022 toJune 30, 2022
Overview(1) Policy for Financial Instruments
JEI borrows from banks, issues investment corporation bonds and issues investment units
to procure funds required to grow its assets under management and to repay liabilities,
based on the financial policy set forth by JEAM and the JEI’s Annual Funding Procurement
Plan. When procuring funds by means of interest-bearing debt, matters such as seeking
longer durations and maturities, securing fixed interest rates over the entire term of the
instrument in order to benefit from the recent favorable financial environment with low
interest rates, and diversifying maturity dates are taken into consideration to achieve a morestable financial situation and avoid the risk of future interest rate hikes. Surplus funds may
be invested in deposits and safe, liquid financial assets and investment securities, but are,in principle, placed in fixed-rate term deposits. Derivative transactions are used solely forthe purpose of hedging against the risk of fluctuations in interest rates of borrowings andinvestment corporation bonds.

38

5.

Financial Instruments (continued)(2) Types of Financial Instruments, Related Risks and Risk Management System(a) Market Risks (Interest rate fluctuation risk)
Borrowings and investment corporation bonds are primarily used to acquire properties
or to refinance existing borrowings or bonds. Some of such debt were floating rate
instruments and thus were exposed to the risk of interest rate fluctuations. Based oninterest rate forecasts developed through constant financial market monitoring
activities, JEI has concentrated on hedging against the risk of interest rate fluctuations
principally using interest-rate swaps, through which a floating interest rate is swapped
for a fixed interest rate, which finally led to 84.2% of existing borrowings being
covered by a fixed interest rate swap for the entire maturity as of December 31, 2022.
To reduce credit risk, derivative transactions (interest-rate swaps) are entered into
exclusively with counterparties that are financial institutions with high credit ratings.
For hedging accounting methods, hedging instruments, hedged items, hedging
policies and methods for evaluation of the effectiveness of hedging activities, see“Derivatives and hedge accounting” under Summary of Significant Accounting
Policies.
(b) Liquidity Risk (Risk of being unable to procure funds required for repayments)
Borrowings and investment corporation bonds are exposed to liquidity risk. This risk
is reduced through diversification of maturity dates and funding sources, andarrangement of commitment line agreements (as described in Note 8, “Short-Term
Loans and Long-Term Debt,” and there is no balance outstanding under the facility
agreements as of December 31, 2022). Liquidity risk is also mitigated through theconstant management of liquidity on hand.
(c) Credit Risk
Investment securities represent ownership interests in an anonymous association andexposed to credit risk of the issuer. JEI regularly evaluates the financial condition of
the issuer, etc.
(3) Supplementary Explanation of the Fair Value of Financial Instruments
Since various assumptions and factors are reflected in estimating the fair value, different
assumptions and factors could result in a different fair value.
In addition, the contract value of derivative transactions, which is presented in Note16.
“Derivative Transactions” does not represent the market risk attributable to derivativetransactions.

39

5.

Financial Instruments (continued)

Fair value of financial instruments
The following are carrying values and fair values as of December 31, 2022 and June 30, 2022
of financial instruments and the differences between them. Please note that the following table
does not include ownership interests in an anonymous association (Note B).
In addition, since “Cash and cash deposits”, “Cash and deposits in trust”, and “Short-term loans”
are cash and due to be settled in a short period, and their fair values approximate their bookvalues, the notes are omitted.
As of December 31, 2022
As of June 30, 2022
Fair value
Fair value
Carrying value(Note A)
Difference
Carrying value(Note A)
Difference(Thousands of yen)
Investment corporation bonds(1) due within one year (Note C)
Long-term debt
(2) due within one year (Note C)
Investment corporation bonds(3) (Note C)(4) Long-term debt (Note C)
Total liabilities(5) Derivative transactions *4,000,000

3,999,254(746)

2,000,000

1,999,286(714)

15,770,000

15,821,551

51,551

13,750,000

13,791,969

41,96934,000,000
71,830,000
125,600,000－

33,288,272
71,464,009
124,573,086－(711,728)(365,990)(1,026,913)－

36,000,000
73,850,000
125,600,000－

35,841,035
74,111,144
125,743,434－(158,965)
261,144
143,434－*The value of assets and liabilities arising from derivative transactions is shown at net value.

(Note A)
Methods for calculating the fair value of financial instruments and matters related toderivatives transactions(1) Investment corporation bonds due within one year and (3) Investment corporation bonds
The fair value of investment corporation bonds issued by JEI is based on quoted market
prices.
(2) Long-term debt due within one year and (4) Long-term debt
Where floating rates apply, book value is generally considered appropriate as fair value.
The fair value of such liabilities is considered to approximate book value, since floating
rates reflect market interest rates within a short period of time.
If the loan is part of long-term debt, in the case of floating-rate debt hedged by an interestrate swap, the fair value is calculated in a similar manner using the total principal andinterest amount, treated in combination with the interest-rate swap, given that the interestrate swap is subject to the special treatment of interest-rate swaps under Japanese GAAP.
The fair value of long-term fixed-rate debt and long-term fixed-rate debt due within one
year are calculated by applying a reasonably assumed interest rate as a discount rate, which
was determined to be applicable for the borrowings under similar conditions.
(5) Derivative transactions
Please refer to Note 16, “Derivative Transactions.”

40

5.

Financial Instruments (continued)(Note B)Of investment securities, for ownership interests in an anonymous association, the fair value
is calculated by applying the treatment stipulated in Paragraph 24-16 of the Implementation
Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31
issued on June 17,2021). No notes are provided on matters prescribed in Paragraph 4 (1) of
the Implementation Guidance on Disclosures about Fair Value of Financial Instruments(ASBJ Guidance No. 19 issued on March 31, 2020).
The balance sheet amount for ownership interests in an anonymous association to which thistreatment is applied is ¥5,241,564 thousand as of December 31, 2022. Investment securities,
other than ownership interests in an anonymous association are omitted because they lacksignificance.
(Note C)
Security deposits from tenants and Security deposits from tenants for trust accounts are omitted
because they lack significance.
(Note D)The scheduled redemption amounts of borrowings, investment corporation bonds and otherinterest-bearing debt after the balance sheet date.

1 year or less
Investment corporation bonds
due within one year
Long-term debt
due within one year
Investment corporation bonds
Long-term debt
Total

As of December 31, 2022
2 to 3 years
3 to 4 years(Thousands of yen)

4 to 5 years

Over 5 years

4,000,000

－

－

－

－

－

15,770,000－－
19,770,000－
8,000,000
9,770,000
17,770,000－
5,000,000
17,510,000
22,510,000－
2,000,000
14,450,000
16,450,000－
7,000,000
4,000,000
11,000,000－
12,000,000
26,100,000
38,100,000

1 year or less
Investment corporation bonds
due within one year
Long-term debt
due within one year
Investment corporation bonds
Long-term debt
Total

1 to 2 years

1 to 2 years

As of June 30, 2022
2 to 3 years
3 to 4 years(Thousands of yen)

4 to 5 years

Over 5 years

2,000,000

－

－

－

－

－

13,750,000－－
15,750,000－
10,000,000
14,270,000
24,270,000－－
14,270,000
14,270,000－
5,000,000
17,660,000
22,660,000－
9,000,000
7,300,000
16,300,000－
12,000,000
20,350,000
32,350,000

41

6.

Investment and Rental Property

For the periods from July 1, 2022 to December 31, 2022 and from January 1, 2022 toJune 30, 2022
JEI owns rental office buildings and other properties in Tokyo and other regions for the purposeof generating rental income. The following is the carrying value and fair value as of December
31, 2022 and June 30, 2022 for such real estate for lease.
Carrying value
As ofJuly 1, 2022

Change during period
As of
(*2)
December 31, 2022
(Thousands of yen)

263,194,237

As ofJanuary 1, 2022

Fair value

5,273,521

268,467,759

Carrying value
Change during period
As of
(*1)
June 30, 2022
(Thousands of yen)

268,610,977(5,416,739)

263,194,237

As of
December 31, 2022
345,443,000
Fair value
As ofJune 30, 2022
338,814,000

A) Carrying value represents the acquisition cost less accumulated depreciation.
B) Details of change during period:(*1) The decrease of ¥5,416,739 thousand during the period is mainly due to a decrease of¥4,600,935 thousand related to the disposal of Kowa Shirokanedai Building and adecrease of ¥1,937,049 thousand for depreciation costs.
(*2) The increase of ¥5,273,521 thousand during the period is mainly due to an increase of¥6,668,164 thousand related to the acquisition of BIZCORE Shibuya, and a decrease of¥689,433 thousand related to the part disposal of Shintomicho Building, and a decreaseof ¥1,931,741 thousand for depreciation costs.
C) Fair value
Fair value as of December 31, 2022 is Shintomicho Building’s transfer price and for otherproperties, appraisal value provided by third-party real estate appraisers.
Fair value as of June 30, 2022 is Shintomicho Building’s transfer price and for otherproperties, appraisal value provided by third-party real estate appraisers.

42

7.

Property and Equipment

Property and equipment at December 31, 2022 and June 30, 2022 consisted of the following:
As of December 31, 2022
Acquisition
cost

Accumulated
depreciation

As of June 30, 2022

Net
book value

Acquisition
cost

Accumulated
depreciation

Netbook value(Thousands of yen)
Buildings and building
improvements

7,996,956(2,482,230)

5,514,725

7,890,044(2,361,514)

5,528,530

Machinery and equipment
Furniture and fixtures

6,253
60,452(5,304)(41,530)949
18,921

6,253
60,452(5,034)(37,861)

1,218
22,591Land
Construction in progress
Buildings and building
improvements for trust
accounts
Machinery and equipment
for trust accounts
Furniture and fixtures
for trust accounts

10,609,617
7,891

－
－

10,609,617
7,891

10,609,617
5,560

－
－

10,609,617
5,560

120,488,936(38,308,003)

82,180,932

118,264,650(36,656,911)

81,607,738

1,297,180(684,400)

612,779

1,233,150(644,539)

588,610Land for trust accounts
Construction in progress
for trust accounts
Total

8.

309,970(218,658)

91,312306,734(206,975)

99,759160,156,315－

160,156,315

155,514,243－

155,514,243

85,232301,018,806－(41,740,127)

85,232259,278,678

51,656
293,942,363－(39,912,836)

51,656254,029,527

Short-Term Loans and Long-Term Debt

Short-term loans and long-term debt as of December 31, 2022 and June 30, 2022 consisted of
the following:
As of December 31, 2022
Weighted-averageinterest rate (*1)

Amount(Thousands of yen)

As of June 30, 2022
Weighted-averageinterest rate (*1)

Amount(Thousands of yen)

Short-term loans:
Unsecured loans from a bank due on June 30, 2023
Subtotal

3,000,000

0.26659%

3,000,000－－

Long-term debt due within one year:
Unsecured loans from a bank due on September 30, 2022－

0.27756%

2,000,000

0.27809%

Unsecured loans from insurance companies due on
November 30, 2022－

0.35000% (*2)

1,000,000

0.35000% (*2)

Unsecured loans from banks due on December 30, 2022－

0.93625% (*2)

5,750,000

0.93625% (*2)

Unsecured loans from a bank due on June 30, 2023

2,000,000

1.20250% (*2)

2,000,000

1.20250% (*2)

Unsecured loans from an insurance company due on June30, 2023

3,000,000

0.46000% (*2)

3,000,000

0.46000% (*2)

Unsecured loans from banks due on November 30, 2023

5,270,000

0.84375% (*2)－

Unsecured loans from banks due on November 30, 2023

5,500,000

0.64801% (*2)－

Subtotal

15,770,000

13,750,000

43

8.

Short-Term Loans and Long-Term Debt (continued)

Long-term debt:
Unsecured loans from banks due on November 30, 2023－

0.84375% (*2)

5,270,000

0.84375% (*2)

Unsecured loans from banks due on November 30, 2023－

0.64801% (*2)

5,500,000

0.64801% (*2)

Unsecured loans from a bank due on May 31, 2024

3,500,000

0.68431% (*2)

3,500,000

0.68431% (*2)

Unsecured loans from banks due on November 30, 2024

5,270,000

0.96275% (*2)

5,270,000

0.96275% (*2)

Unsecured loans from an insurance company due on
December 12, 2024

1,000,000

0.42000% (*2)

1,000,000

0.42000% (*2)

Unsecured loans from a bank due on March 31, 2025

2,000,000

0.26364%

Unsecured loans from banks due on June 30, 2025

8,000,000

0.67400% (*2)

8,000,000

0.67400% (*2)

Unsecured loans from banks due on November 1, 2025

3,750,000

0.70600% (*2)

3,750,000

0.70600% (*2)

Unsecured loans from banks due on November 29, 2025

3,760,000

0.39310%3,760,000

0.39407%

Unsecured loans from banks due on March 31, 2026

6,400,000

0.83441% (*2)

6,400,000

0.83441% (*2)

Unsecured loans from banks due on March 31, 2026

3,750,000

0.57100% (*2)

3,750,000

0.57100% (*2)

Unsecured loans from a bank due on September 30, 2026

1,300,000

0.83071% (*2)

1,300,000

0.83071% (*2)

Unsecured loans from banks due on December 30, 2026

3,000,000

0.79100% (*2)

3,000,000

0.79100% (*2)

Unsecured loans from insurance companies due on
January 31, 2027

3,000,000

0.28000% (*2)

3,000,000

0.28000% (*2)

Unsecured loans from insurance companies due on
November 30, 2027

1,000,000

0.34000% (*2)－

Unsecured loans from a bank due on July 31, 2028

2,000,000

0.68778% (*2)

2,000,000

0.68778% (*2)

Unsecured loans from banks due on January 31, 2029

5,600,000

0.71200% (*2)

5,600,000

0.71200% (*2)

Unsecured loans from an insurance company due on
January 31, 2029

1,000,000

0.77000% (*2)

1,000,000

0.77000% (*2)

Unsecured loans from a bank due on December 30, 2029

2,000,000

0.55801% (*2)

2,000,000

0.55801% (*2)

Unsecured loans from banks due on December 30, 2029

5,750,000

0.49544%5,750,000

0.49235%

Unsecured loans from banks due on January 31, 2030

5,750,000

0.43818%－

Unsecured loans from an insurance company due on
June 28, 2030

2,000,000

0.65000% (*2)

2,000,000

0.65000% (*2)

Unsecured loans from a bank due on June 30, 2031

2,000,000

1.08125% (*2)

2,000,000

1.08125% (*2)－

Subtotal

71,830,000

73,850,000

Total

90,600,000

87,600,000(*1)The weighted-average interest rate is weighted-average figures during the period. As for the borrowings hedged by interestrate swaps for the purpose of mitigating interest rate fluctuation risk, the fixed interest rates after entering into the interest rate
swap transactions are used to calculate the weighted-average interest rate.
(*2)These are fixed-rate debt (incl. fixed-rate debt through each interest-rate swap agreement).

44

8.

Short-Term Loans and Long-Term Debt (continued)

The scheduled repayment amounts of long-term debt as of December 31, 2022 are as follows:
1 year or lessLong-term debt

1 to 2 years

15,770,000

9,770,000

2 to 3 years
3 to 4 years(Thousands of yen)
17,510,000
14,450,000

4 to 5 years

Over 5 years

4,000,000

26,100,000

JEI has commitment lines of ¥14,000,000 thousand with three financial institutions to mitigate
refinancing risk and enhance financial stability. As of December 31, 2022, these commitment
lines have never been utilized.
9.

Investment Corporation Bonds

Details of total investment corporation bonds outstanding as of December 31, 2022 and June30, 2022 are summarized as follows:
As of December 31, 2022
Weighted-averageinterest rate

Amount(Thousands of yen)Unsecured bond #7
due on March 11, 2024
Unsecured bond #8
due on September 9, 2025

As of June 30, 2022
AmountWeighted-averageinterest rate

(Thousands of yen)

8,000,000

1.13000%

8,000,000

1.13000%

5,000,000

1.03000%

5,000,000

1.03000%

Unsecured bond #9
due on October 27, 2026

2,000,000

0.45000%

2,000,000

0.45000%

Unsecured bond #10
due on December 20, 2023

2,000,000

0.39000%

2,000,000

0.39000%

Unsecured bond #11
due on April 23, 2027

7,000,000

0.65000%

7,000,000

0.65000%

Unsecured bond #12
due on April 20, 2023

2,000,000

0.24000%

2,000,000

0.24000%

Unsecured bond #13
due on April 20, 2033

2,000,000

0.95000%

2,000,000

0.95000%

Unsecured bond #14
due on August 10, 2028

4,000,000

0.63000%

4,000,000

0.63000%

Unsecured bond #15
due on September 9, 2039

1,000,000

1.07000%

1,000,000

1.07000%

Unsecured bond #16
due on October 29, 2035

5,000,000

0.75000%

5,000,000

0.75000%

Total

38,000,000

38,000,000

The scheduled redemption amounts of investment corporation bonds as of December 31, 2022
are as follows:
1 year or less
Investment corporation bonds

4,000,000

1 to 2 years
8,000,000

2 to 3 years
3 to 4 years(Thousands of yen)
5,000,000
2,000,000

4 to 5 years
7,000,000

Over 5 years
12,000,000

45

10.

Net Assets

In accordance with the Investment Trust Law, JEI issues only non-par value investment units
and maintains net assets of at least ¥50,000 thousand.
Information on the cancellation of treasury investment units during the six-month period ended
December 31, 2022 and June 30, 2022 is as follows:
Six-month period
ended
December 31, 2022
Total number of treasury investment units
cancelled (units)
Total amount of cancellation (Thousands of yen)11.

Six-month period
endedJune 30, 2022

15,402

15,402

1,999,960

1,999,960

Per Unit Information

Net assets per unit as of December 31, 2022 and June 30, 2022 were calculated based on thenumber of units outstanding as of each date, (1,337,598 units) and (1,337,598 units),
respectively.
Net income per unit for the periods from July 1, 2022 to December 31, 2022 and from January
1, 2022 to June 30, 2022 was calculated based on the weighted-average number of units
outstanding during the corresponding periods, (1,337,598 units) and (1,343,871 units),
respectively.
Accordingly, net assets per unit were ¥112,304 as of December 31, 2022 and ¥112,486 as ofJune 30, 2022. Net income per unit was ¥2,618 for the period from July 1, 2022 to December
31, 2022 and ¥3,052 for the period from January 1, 2022 to June 30, 2022.
12.

Income Taxes

JEI is subject to income taxes in Japan.
JEI’s policy is to make dividend distributions in excess of 90% of distributable income for eachfiscal period in order to meet the condition set forth in the Special Taxation Measures Law ofJapan concerning the deductibility of cash dividends paid for income tax purposes.
Details of significant components of deferred tax assets and liabilities as of December 31,
2022 and June 30, 2022 are summarized as follows:
As of
As of
December 31, 2022
June 30, 2022
(Thousands of yen)
Deferred tax assets:
Accrued enterprise taxes
Total deferred tax assets
Net deferred tax assets

15
15
15

6
6
6

46

12. Income Taxes(continued)
A reconciliation of the differences between the statutory tax rate and the effective tax rate forthe periods from July 1, 2022 to December 31, 2022 and from January 1, 2022 to June 30, 2022
is as follows:

Statutory tax rate
Reconciliation:
Deductible distributions paid
Provision of reserve for reduction entry
Other
Effective tax rate

13.

For the period
from July 1, 2022
to December 31,
2022
31.46%For the period
from January 1,
2022 to June 30,2022
31.46%(33.63%)
2.18%
0.02%
0.03%

(28.72%)(2.74%)
0.02%
0.02%

Breakdown of Revenues and Expenses
For the period
For the period
from July 1, 2022 tofrom January 1, 2022
December 31, 2022
to June 30, 2022
(Thousands of yen)
Revenues:
Rental business revenues
Rental revenues
Common area revenues
Other rental revenues
Subtotal
Other
Utilities revenues
Other revenues
Subtotal
Total rental revenues
Property operating expenses:
Property management costs and fees
Utilities expenses
Property and other taxes
Insurance
Repairs and maintenance
Depreciation
Other
Total property operating expenses
Profit

7,783,514
1,217,834
269,826
9,271,175

8,031,228
1,261,873
273,671
9,566,772

693,763
176,155
869,919
10,141,094

575,877
124,803700,680
10,267,453

1,580,846
1,156,926
976,992
22,127137,117
1,931,741
138,789
5,944,541
4,196,553

1,566,340
935,493980,795
21,478126,108
1,937,049
132,640
5,699,906
4,567,546

47

14.

Breakdown of Gain or Loss on Sales of Real Estate Properties
For the period
For the period
from July 1, 2022 tofrom January 1, 2022
December 31, 2022
to June 30, 2022
(Thousands of yen)
Shintomicho Building
Proceeds from sale of real estate
Cost of sales of real estate
Other related sale expenses
Gain on sale of real estate

1,240,000
689,433
19,952
530,613－－－－

For the period
For the period
from July 1, 2022 tofrom January 1, 2022
December 31, 2022
to June 30, 2022
(Thousands of yen)
Kowa Shirokanedai Building
Proceeds from sale of real estate
Cost of sales of real estate
Other related sale expenses
Gain on sale of real estate

5,400,000
4,600,935
1,382
797,682－－－－

15．Leases
JEI leases properties on which rental revenues are earned. At December 31, 2022 and June 30,
2022, future lease revenues under non-cancelable operating leases are summarized as follows:
As of
December 31, 2022
Due within one year
Due after one year
Total

As of
June 30, 2022

(Thousands of yen)
2,289,514
5,215,421
7,504,935

1,908,779
3,164,842
5,073,622

48

16.

Derivative Transactions

Derivative Transactions as of December 31, 2022
(1) Transactions to which hedge accounting is not applied:
Not applicable.
(2) Transactions to which hedge accounting is applied:
The following are the contract values or values corresponding to the principal amount as
stipulated by contracts as of December 31, 2022 for each hedge accounting method applied.

Hedge
accounting
methodType of derivativetransaction

Hedgeditem

Contract amountMore than
one year
Fair value(Thousands of yen)

Method ofcalculating
the fair value

Specialtreatment ofInterest-rate swap
Longinterest-rate
Receive floating,
term
*
swaps
pay fixed
debt
34,640,000
29,370,000* Since the above interest-rate swap meets the criteria for the special hedge accounting treatment underJapanese GAAP and therefore qualifies for hedge accounting, the swap is not revalued at fair value on theaccompanying balance sheets, as described in the summary of significant accounting policies.
In addition, since the swap and the long-term debt hedged by the swap are accounted for as a unit, the fairvalue of the swap is disclosed as part of the fair value of the hedged long-term debt in the fair value disclosurein Note 5, “Financial Instruments.”

Derivative Transactions as of June 30, 2022
(1) Transactions to which hedge accounting is not applied:
Not applicable.
(2) Transactions to which hedge accounting is applied:
The following are the contract values or values corresponding to the principal amount as
stipulated by contracts as of June 30, 2022 for each hedge accounting method applied.

Hedge
accounting
methodType of derivativetransaction

Hedgeditem

Contract amountMore than
one year
Fair value(Thousands of yen)

Method ofcalculating
the fair value

Specialtreatment ofInterest-rate swap
Longinterest-rate
Receive floating,
term
*
swaps
pay fixed
debt
40,390,000
34,640,000* Since the above interest-rate swap meets the criteria for the special hedge accounting treatment underJapanese GAAP and therefore qualifies for hedge accounting, the swap is not revalued at fair value on theaccompanying balance sheets, as described in the summary of significant accounting policies.
In addition, since the swap and the long-term debt hedged by the swap are accounted for as a unit, the fairvalue of the swap is disclosed as part of the fair value of the hedged long-term debt in the fair value disclosurein Note 5, “Financial Instruments.”

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17.

Related Party Transactions

For the period from July 1, 2022 to December 31, 2022
(1) Parent Company and Major Corporate Unitholders
Not applicable.
(2) Subsidiaries and Affiliated Companies
Not applicable.
(3) Sister Companies
Not applicable.
(4) Directors and Major Individual Unitholders

Name
Shuichiro
KayamaDescription of transaction
Payment of asset
management fees to JEAM

Amount(Thousands of yen)Account
Accounts
444,830 payable

Balance at the endof period(Thousands of yen)369,656

For the period from January 1, 2022 to June 30, 2022
(1) Parent Company and Major Corporate Unitholders
Not applicable.
(2) Subsidiaries and Affiliated Companies
Not applicable.
(3) Sister Companies
Not applicable.
(4) Directors and Major Individual Unitholders

Name
Shuichiro
KayamaDescription of transaction
Payment of asset
management fees to JEAM

Amount(Thousands of yen)Account
Accounts
467,085 payable

Balance at the end of
period(Thousands of yen)
395,99650

18.

Segment Information

For the periods from July 1, 2022 to December 31, 2022 and from January 1, 2022 toJune 30, 2022
Since JEI has been engaged in the real-estate leasing business as a single segment, segment
information has been omitted.
Information about products and services
Since revenues from external customers for a single segment of similar products and services
accounted for more than 90% of total operating revenues, information about products andservices has been omitted.
Information about geographic area
(1) Revenues
Since 100% of the total operating revenues were generated from external customers within
Japan, geographical breakdown of revenues has been omitted.
(2) Property and equipment
Since 100% of total property and equipment on the balance sheet are located within Japan,
geographical breakdown of such property and equipment has been omitted.
Information about major clients
Since no single external client represents 10% or more of JEI’s total operating revenues,
information about major clients has been omitted.
19.

Distribution Information

In accordance with Section 33.1.2 of the bylaws set forth by JEI for distributions of cash
dividends, the amount of dividends payable, which is limited by the amount of retained earnings
at end of period, shall be in excess of 90% of its distributable income for the fiscal period as set
forth in Section 67.15 of the Special Taxation Measures Law.
JEI determined to distribute the whole amount obtained by adding the reversal of reserve for
reduction entry due to the transfer of real estate properties in accordance with Section 65.7 of
the Special Taxation Measures Law from unappropriated surplus.
Consequently, JEI set income available for distributions of dividends at ¥3,745,274,400, whichis the maximum integral multiple of the 1,337,598 units issued, but not exceeding¥3,745,274,400, which is the amount of retained earnings at December 31, 2022.
No cash distribution exceeding the income amount set forth in Section 33.1.4 of the bylaws of
JEI shall be made.
On February 16, 2023, the Board of Directors approved a resolution to make a cash distributionof ¥2,800 per unit aggregating to ¥3,745,274,400 to unitholders of record as of December 31,
2022.

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20.

Revenue Recognition(1) Breakdown of revenue from contracts with customers
For the period from July 1, 2022 to December 31, 2022
Revenue from contracts withcustomers *Revenue from external customers(Thousands of yen)
Sales of real estate properties
1,240,000
530,613
Utilities income
693,763
693,763
Other－
9,475,545
Total
1,933,763
10,699,922* Rent revenues subject to Accounting Standard for Lease Transactions (ASBJ Statement No. 13) areexcluded from “Revenue from contracts with customers” as such revenues are not subject to AccountingStandard for Revenue Recognition. Revenue from contracts with customers mainly represents revenues
from the sale of real estate and utilities.

For the period from January 1, 2022 to June 30, 2022
Revenue from contracts withcustomers *Revenue from external customers(Thousands of yen)
Sales of real estate properties
5,400,000
797,682
Utilities income
575,877
575,877
Other－
9,691,575
Total
5,975,877
11,065,136* Rent revenues subject to Accounting Standard for Lease Transactions (ASBJ Statement No. 13) areexcluded from “Revenue from contracts with customers” as such revenues are not subject to AccountingStandard for Revenue Recognition. Revenue from contracts with customers mainly represents revenues
from the sale of real estate and utilities.

(2) Information that provides a basis for understanding revenue from contracts with customers
For the period from July 1, 2022 to December 31, 2022 and from January 1, 2022 to June30, 2022
As described in the Summary of Significant Accounting Policies.
(3) Information about the relationship between the fulfillment of performance obligations undercontracts with customers and cash flows arising from those contracts, and the amount andtiming of revenue expected to be recognized in subsequent periods from contracts withcustomers that existed at the end of the current period
For the period from July 1, 2022 to December 31, 2022(a) Balance of contract assets and contract liabilities

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

July 1, 2022 to
December 31, 2022
(Thousands of yen)
224,317263,261
－
－
－
－

52

20.

Revenue Recognition (continued)(b) Transaction price allocated to remaining performance obligations
As of December 31, 2022, the total transaction price allocated to the remaining
performance obligations for the sale of real estate is 1,860,000 thousand yen for the realestate for which a sale contract was executed on February 17, 2022. JEI expects torecognize revenue for such remaining performance obligations upon delivery of such
real estate properties, which is expected to occur on January 26, 2023. In accordancewith Paragraph 19 of the Guidance on Accounting Standard for Revenue Recognition,
JEI recognizes utility revenues at the amount it has the right to charge, because JEI has
the right to receive from the customer the amount of consideration that directly
corresponds to the value to the customer, the lessee, of the portion of the performancecompleted by the end of the fiscal period. Accordingly, JEI has applied the provisionsof paragraph 80-22(2) of the Accounting Standard for Revenue Recognition and has notincluded in the notes the transaction price allocated to the remaining performanceobligations.
For the period from January 1, 2022 to June 30, 2022(a) Balance of contract assets and contract liabilities

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

January 1, 2022 toJune 30, 2022
(Thousands of yen)
233,782
224,317－－－－(b) Transaction price allocated to remaining performance obligations
As of June 30, 2022, the total transaction price allocated to the remaining performanceobligations for the sale of real estate is 3,100,000 thousand yen for the real estate forwhich a sale contract was executed on February 17, 2022. JEI expects to recognize
revenue for such remaining performance obligations upon delivery of such real estate
properties, which is expected to occur on July 22, 2022 and January 26, 2023. In
accordance with Paragraph 19 of the Guidance on Accounting Standard for Revenue
Recognition, JEI recognizes utility revenues at the amount it has the right to charge,
because JEI has the right to receive from the customer the amount of consideration that
directly corresponds to the value to the customer, the lessee, of the portion of theperformance completed by the end of the fiscal period. Accordingly, JEI has applied theprovisions of paragraph 80-22(2) of the Accounting Standard for Revenue Recognitionand has not included in the notes the transaction price allocated to the remaining
performance obligations.
21.

Significant Subsequent Event

Not applicable.

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